Don't accept a Rolex as your home purchase deposit

As soon as you accept an offer for someone to buy your home, the buyer has to send over an all-cash good faith deposit.

This deposit is typically 3% of the purchase price of the property and is held by the escrow company in an escrow account just in case the buyer breaches the contract and you want to try to collect for damages.

If the buyer wants to send over anything but cash as their deposit, say no!

I have heard of buyers trying to use necklaces, #Rolex watches, and all types of other items for their deposit.

There are a few problems with this.

1) Will the escrow company hold a physical item as a deposit?

2) What is the true appraised value of the item?

3) Is that item real and authentic?

Because so many problems can arise out of this, only accept cash as your deposit.

If the buyer refuses, find yourself another buyer.

You can buy a home under a secret name

Did you know that when you buy a home, you don't have to put the title of the property in your name?

If you have a living trust set up, you can buy the home under the name of the trust.

For example, if the name of your #trust is "Banana Family Trust", and you buy the home under your trust, the owner’s name on the title will appear as "Banana Family Trust" and not your legal name.

This also works if you buy the home under a #LLC.

Use this hack if you want to keep the purchase of your home a secret.

Why you should make sure you are all in on a property

As soon as escrow opens up on a property, the buyer has to wire over their deposit money.

The deposit is typically 3% of the purchase price of the home.

This 3% is held by the escrow company.

They hold on to the money just in case the buyer breaches the contract and the buyer and seller go to an arbitrator to decide who the money should be awarded to.

If the buyer backs out of the deal because of one of their contingencies (inspection, appraisal, loan), and they are within their contingency period, then the buyer gets their deposit back without any problems.

But if the buyer backs out of the deal, and all the contingencies have already been removed, that's when the seller can come after the buyer's deposit for damages they incurred.

An arbitrator will hear both sides of the story and ultimately decide who gets to keep the deposit money.

Changing your mind is not a home buying contingency

When buying a home, your offer will have a few contingencies written in the purchase agreement.

Here is 1 example of a contingency:

The purchase of the home is contingent upon the home passing your inspections.

If the home doesn't pass your inspections within your inspection contingency period, you can back out of the deal and get your 3% deposit back.

However, once you have removed all of your contingencies, you can't back out of the deal just because you wake up one day and decide you no longer want to buy the home.

If you do that, the buyers could come after your 3% deposit as damages.

Always remember, changing your mind about the purchase of a property is not a contingency.

Can I fire my real estate agent?

Check the first page of your listing agreement for the contract’s expiration date.

Once that date passes, the contract then becomes expired, your agent no longer works for you, and you are free to hire a new agent.

If you sell your home through a new agent before the listing agreement with your old agent expires, you will have to pay the new agent AND the old agent a full commission. ☹️

HGTV wants you

HGTV reached out to me... they are casting for a show where a buyer of a property is then planning on gifting that property to someone else.

If this sounds like something you are interested in being a part of, contact me and I’ll set you up with the casting director.

Episode 31 of The #AskDanielLosAngeles Show

On this episode, I answer the following four real estate questions:

1) I heard the Holiday season, in general, is not a good time to sell a property. What are your thoughts?

2) I bought my home a couple of months ago and now all of a sudden I received a "supplemental tax" bill in the mail. Who is supposed to pay that tax bill, me or the previous homeowner?

3) Which month is better to put a home up for sale, January or February?

4) I'm about to close escrow and sell my home. Do I have to hire a professional cleaning company before I move out?

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Virtual staging is better than showing an empty room

If you are getting ready to sell your property, you should consider staging your home.

That is when a home stager comes in and furnishes your house with modern, new, clean furniture. It makes your home look like a model home.

The problem with staging is that it costs money. The minimum cost will be around $3k.

If you refuse to do that, you should consider virtual staging.

This is where you take a picture of an empty room in your house, then a graphic designer edits the picture and ads computer-generated furniture.

In most cases, your marketing pictures will end up looking great.

You will definitely get a lot of attention to your online listing and will bring people in to see your home.

The problem arises when the buyer shows up to tour the home.

They came to see a beautiful model looking home and they end up taking a tour of a bunch of empty rooms.

This is not the ideal situation to put a buyer in.

But, virtually staged photos are better than showing a vacant room or a room filled with furniture from the 1980's.

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When to adjust your budget

Agents are strategically putting the asking price on their listings lower than fair market value.

By doing this the listing gets a lot of attention and gets multiple offers.

The property then sells for above-asking price, usually at fair market value.

Now that you know this info, be prepared to put in an offer on a home above your budget.

You could also look at properties below your budget and anticipate that the price will go up to your original budget.

Be the home buyer that is outbidding the others

Are you constantly being outbid when submitting an offer on a home?

Having a lower asking price is a widely used strategy by real estate agents to get multiple offers on their listing.

If you are seeing this a lot in your search area, adjust your budget!

Let's say your budget is $800k and you notice you have been outbid now a couple of times by buyers offering $25K above the asking price.

Adjust your budget down to $775K.

That way you can now be the one to submit an offer above the asking price.

You will now be the one who is outbidding all the other buyers by $25k.

Of course, have your agent do a market analysis on the property to make sure whatever amount you are offering is fair market value for the property.

Once we find a buyer for our home, is it safe for us to move out?

After reviewing the buyer's purchase agreement, you will most likely find that the buyer's purchase contingencies will all be removed by day 21 of the escrow period.

After all, contingencies are removed, it is fairly safe to start moving out.

I say fairly safe because a buyer could still back out of the deal after their contingencies are removed.

Most buyers don't do that because if the contingencies are removed, you as the seller can go after the buyer's deposit.

The buyer's deposit is usually 3% of the purchase price.

So if the home is $1,000,000 the deposit is $30,000.

Most buyers would continue with the purchase rather than lose $30K... but you never know.

In my opinion, it's reasonably safe to start moving out once all contingencies are removed.

When are home sales the slowest?

Although right now is typically a slow period in real estate, I am predicting a hot real estate market for the 4th quarter of 2019.

The reason is that buyers have been experiencing heavy competition for the last several months, have had their offers rejected, but are still very motivated to buy a home.

All those buyers that have not had any luck lately will be hungry and ready to pounce on any new listings that come up.

That should make for an interesting end to the year.

Home sales are the slowest in the 4th quarter

The 4th quarter of the year (October, November, December) is usually when home sales are the slowest.

The reason is that everyone is busy with the holidays that come up during those months.

A buyer may put their home search on hold because they are having their family stay at their home for #Thanksgiving.

Or maybe it's more important to a home buyer to go to all the holiday parties instead of focusing on finding a home.

No matter what the reason is, the 4th quarter is typically the slowest time of the year in real estate.

Having said that, the real motivated buyers and sellers are still out there trying to make a deal happen.

Some of the best deals I have seen have gone down during the holiday season.

Episode 30 of The #AskDanielLosAngeles Show

On this episode, I answer the following four real estate questions:

1) At what point during the year are home sales usually the slowest?

2) Now that we found a buyer for my home and we are in escrow, is it safe for us to start moving out?

3) A lot of the homes I am touring are selling for more than the list price. How am I supposed to buy a property if everything I am interested in keeps selling over the asking price?

4) I do not want to spend a dime on staging my home. What other options are out there to make my home look more attractive to buyers?

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