Can You Withdraw an Offer On a House?

 




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20% down? How to help buyers who don’t know that’s a myth

Can You Withdraw an Offer On a House?

Santa Clara County Highs and Lows

Los Gatos Home of the Week 

Santa Clara County Price Reductions 

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20% down? How to help buyers who don’t know that’s a myth

Introduction and Overview

Debunking the 20% Down Payment Myth


What happens if you don't have a 20% down payment? You don't need to have 20% down. You need to have income to justify what you're buying. The more down payment you put into a house, the lower your payments are going to be.


If you buy a million-dollar house and put 3% down, and yes, you can do 3% down in the conventional, but your income has to justify it. The underwriters and the loan must agree to it. You don't need to have 20% down. That's a myth. It might be a thing that's stopping you from buying a house.


Look, if you have a decent income. And not so great a credit score and you have high debt work on the debt. Let's get you in front of one of my lenders and we can go through a process of, how can we get you into a house? It's not that difficult. 


Exploring Loan Options


And look, there's USDA and VA, which is 0% down, right?

There's hard money, which you don't really want to do unless you are. Experience in buying a house, a conventional loan, which is Fannie Mae and Freddie Mac. There you go. You don't need to have 20% down. You can go 15% down. You can go 5% down. You can do stuff that's a little different.


When I first bought my first house, it was 80. 15 five, I had 5% down. I had an 80% mortgage, and that's a 15% second, and the second was like 150%. It was ridiculous. But I got into a house and I didn't have the greatest, credit because I was a kid, but it doesn't matter.


Get into a house and your life will become economically locked to that date. You're never gonna have to struggle for tenant's rights being evicted, seeing your rent go up. Shitty landlords, right? Get into a house. This is a great time to buy. I know affordability sucks right now, but there's just not a lot of homes.


Tips for First-Time Home Buyers


Don't buy the house. That's brand new on the market. Look for the houses that have been on the market price reduced. There is something wrong with it. You're a first-time buyer. You're not gonna get the I love me, this is my forever house. Just understand, especially in Silicon Valley, unless you have help, 20% down here, it goes through its typical.


Today's typical down payment is a common misconception that buyers have to have 20% down. The typical down payment size first first-time buyers has ranged from six to 9% since 2018. Not everybody has $400,000 to put down on a $2 million house. I get it. It should not stop you. So don't let that be an excuse.


Understanding Down Payment Sources


Where's the money coming from? Most first-time buyers rely on savings to fund their own down payments. One in four uses gifts or loans from family members. 7% use their inheritance, which is a record high. Right now I'm setting my children up so that they have homes for when I'm dead.


They're very young, so I'm structuring it so that they have a nest egg Are they gonna have their forever home? No. They're gonna have at least a nice little down payment so that they can move on with their lives and not have to struggle as renters.


And they get economically locked into today because, in 20 years, this house is gonna be worth $4 million. So think of different ways of helping out your kids get into houses, because right now is a great time to do it. I'm gonna show you why. Popular loans for first-time repeat buyers make all-cash offers. Indicate that 74% of all buyers and 91% of first-time buyers, investing in primary residences afford their purchase. The majority of both groups use conventional loans.


Again, Freddie Mac and Fannie Mae are conventional. There are multiple options, so if you go to a bank and they try to stick. A round peg into a square hole that's not gonna fit. The best thing for you to do is talk to a loan broker, and I have three of 'em you can talk to.


Happy to share them with you. I don't get anything from it other than knowing that I'm helping you. Okay? 


Navigating the Offer Process

Can you withdraw an offer on a house? Yes. Caveat, right? You could put an offer on a house until the seller accepts that offer. You're not in contract, so you can withdraw that offer anytime until that seller accepts an offer.


Okay, let's go a little bit deeper into that. What happens if the seller counters it? You're still not in contract until you accept it. You can go back and forth until everything is just right for both parties, 


Most times today, when the market's hot and there are 50 offers on one house, you can just say, This is what I want. Take it or leave it. And then ultimately, somebody's gonna take it Are you in contract to buy? Not until everybody has agreed to all the terms, right? There's the purchase price, close, date down payment, contingencies, who's gonna move out, when, who's gonna move in, when, who's going to do repairs?


That kind of stuff. These all have to be figured out. When you're doing it with an FSBO, they're like, This is as is. You're taking this house as it is with an agent. You can negotiate little pieces back up.  


Contingencies and Accepted Offers


So let's just say that the counteroffer dance is done and everybody's in the contract.


If your agent's good, you have a contingency somewhere to make sure that your. Protected a little bit. You have a loan contingency, appraisal, contingency property condition contingency. And need to sell your house contingency. Those are the four main ones. It's not all of 'em, but those are the four main ones.


There's like a preliminary title report. There might be a cloud on the title, and it has to be done before this. There might be a solar lean thing then, but that goes into the loan. So there are a lot of little things, but the four main categories are loan, appraisal, property condition, and the COP, which I call the need to sell your house.


Contingency. Once those are gone, you're standing on the ledge ready to jump off. You can withdraw, but then you'll have penalties. What about an accepted offer? If you're in the contingency period, you're safe. If you are out of the contingency period, you put your deposit down, you've done all the inspections and appraisals, and you have the full loan approval that you're ready to go. Just pull the trigger, sign the documents, and be ready for the bank to fund the loan. You're absolutely welcome to walk away from that.


Offer, but there's something called a 3% earnest money down payment. And that's why that's important, because once you're out of the contingency period, that 3% is up for grabs. And yes, you can argue it as a buyer, you can say, oh I didn't know. No, you're signing a document. You're an adult, and if you whine and complain about it, there's something called a liquidated damages clause.


That's an option to sign, but I suggest you sign it. And then arbitration, which is something that you have to sign saying, I'm not going to sue you. We're just gonna go to a third-party non-binding arbitrator and have our case heard from both sides. Yes, we have buyers who have buyer's remorse, and all of a sudden, they need one thing to pull them out of the thing.


And yeah, absolutely. There's always a way to get out of it. But we're talking about good faith. We're talking about adults writing and accepting contractual agreements to purchase million-dollar homes and multimillion-dollar homes. And if you are a man, be pamby buyer. Shame on you. You should not be in that world.


Shame on you. How dare you.


The point is if you are going to buy a house understand no house is perfect. No house is perfectly square, plum level ever. It's gonna be cracks and creeks and different things. They're just not perfect in any house. I don't care if you buy brand new or if it's 50, 60 years old, or especially if it's a hundred years old.


Nothing is going to be perfect. So, just understand that. So, what happens if you walk away from an offer and there are no contingencies? You stand to lose that 3% earnest money deposit. That's why that 3% is important. If you come in and show me a thousand dollars deposit and then I have a 3% deposit, which AM I gonna go with? Which one would you go with?


We just had an offer go bad within the contingency period. It was on the last day, but there was a qualification issue. It doesn't affect you as a buyer, but it does affect the relationship between the two agents.


Since they're two good agents and one agent has to come up with the, they don't qualify thing, I can hold their feet to the fire and say, I need proof. You need to show me some kind of proof. You lose face with me as an agent.


You're canceling an offer, It's going to make you look bad. The likelihood of my ever doing business with that person again is almost zero.


There's no perfect thing, right? And I don't have anything against that agent. It just didn't work out, but I felt like there was some kind of game being played, and that's okay. I don't get hurt. I don't get emotional about it, but my sellers are a little upset, 'cause now we have to go back on the market.


And that's just the way it is. It does happen, and it happens more often than we think.


It happens about 20 to 30% of the time, especially when the market's slow. When the market's slow, buyers feel like they can walk around and do whatever they want. And that kind of sucks, right? But it is what it is. Just life. So there you go. 


Luxury Home of the Week

Santa Clara County Price Reductions 

This is Santa Clara County luxury Home of the week.

Waverly Street. $18 million it sold in seven days, with six bedrooms, five bathrooms, and two half baths in 5,700 square feet. Built in 1920. Let's take a look at this one. This one is in Palo Alto. That's where it is. And let's take a look at the pictures inside.


That looks like the 1920s. You look at those period films, World War II, and families sitting around the oak table. That's awesome. I love that. Let me open this up for you.

Los Gatos Home of the Week 

A yoga room. That's awesome. That's the best prop I've seen. This is Los Gatos home of the week, and it's right by Santa Cruz. There's pizza in my heart over there, so that's cool. This is. San Mateo Ave is not my listing.

$3.6 million, three bedroom, three bath, 2,500 square feet built in 1930 and on market 25 days. Nice rusty Tuscan look. See that look and feel right there with that older, richer-looking granite countertop. That really fits in the setting of this house, 3,500 square feet, I guess you could have a litwine-tasting room. That would make sense. Nice.


Yep. That's a pretty house. I like that. And then, oh, what is this? This is the list price decrease of the week. We've had 304 so far. That's 23% of the entire active listing population right now. And I picked this one randomly. That's one is in Blossom Valley, Callier Verde. It's been on the market for 95 days. Three bedroom, two and a half bath, 1,940 square feet, it's priced at 1.45 right now, down 105,000. I wonder if this one has HOA.

So this one's vacant, but a three-bedroom. Here's the thing, right? I think more and more people are looking for four bedrooms. Look, I just bought my mom and dad a three-bedroom. That's for the two of 'em. One wants to have an office and the other one has a spare bedroom, and then the other office has a bed.


But, it's mostly for, the purpose of that is that they can have their family come. My Filipino family and my European family can visit and have a place to stay. My aunt can visit for as long as she can handle them. Love my parents. But it is what it is.


 

Santa Clara County Highs and Lows

Market Trends and Expired Listings

This is important because I wanted to talk about the expired, I have to give you the list price reduction. The number of expired listings. Let me open this up for you. There we go. Single-family homes. No condos or townhouses.

I got this from the MLS in the last five years. 2022 was the big spike, and if you remember, 2022, that was when the rates went up, right? One thing that I do want to point out is that this graph right here, that's right here today, actually last month, but the number of expired listings has popped up over the last five years. Something to keep an eye out for. I went here to the 30-year fixed on Fred, and this is November 2023 when rates went from 2%, 3to % all the way up to 7%. So yeah, that's gonna put a damper on sales. When you triple the interest rate, it just does.


That's what happened here. And look right afterward, everything calmed down, and everything started chittering up. This is not concerning, but it's something to keep an eye out for. Just keep an eye out for expired listings, and we'll go through this exercise every couple of months. What this could mean is if this starts to trickle up, that means there's a lack of confidence in the market, the economy, not just real estate, but the economy. And we need to see rates come down. This right here could present deflationary measures within our economy. There you go.


 


Conclusion and Contact Information


That's it for now. Thanks for watching. I'm Vito with Abano. Call me when you're ready to buy or sell a house. We'll see you out there. 


Vito Scarnecchia

Real Estate Broker, Veteran, Dad

DRE#: 01407676

408-705-6817

Vito@abitano.com

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