[schema type="organization" orgtype="LocalBusiness" url="http://4salebydonna.com" name="Real Estate Agent Donna Baker" description="Real Estate Agent showing homes for sale and available real estate in Monrovia, Pasadena, Arcadia the San Gabriel Valley in Southern California." city="Monrovia" state="Ca" postalcode="91016" email="donna@4salebydonna.com " phone="(626) 408-7766 "]
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Best and Final: the Dreaded Multiple Offer

 

Those who have been paying close attention to how the houses for sale in the San Gabriel Valley have been performing may have experienced the results of the dreaded “multiple offer situation.” When a closing price seems to rise unexpectedly, it could be because of something called the “Notice of Best and Final.” That notice can be issued by a listing agent as soon as more than one offer is on the table. Experienced real estate agents sometimes choose this strategy to win the best price for their client. It instructs all interested buyers to submit their “best and final offer” by a deadline (usually within 24 – 48 hours). Since usually no counters or escalation clauses are allowed, one blogger has aptly called it Multiple Offer Sudden Death. Here’s how it works:  

  • The seller’s asking price is listed at, say, $720,000.
  • Buyer A is interested; bids $710,000.
  • After a few rounds of negotiation, the seller and Buyer A near agreement at $716,000
  • Buyer B, not knowing that the seller is nearing agreement with Buyer A, submits her own bid at $718,000.
  • The seller initiates Notice of Best and Final, giving both parties two days to submit their last offer.
  • Buyer A begrudgingly goes up to the full list price and now offers $720,000.
  • Buyer B shoots all the way up to $729,000 – the offer which is accepted.

In this scenario, Buyer B not only paid $13,000 more than Buyer A was about to pay, but also paid $9,000 more than needed to beat Buyer A’s top price.

Great news for the seller, for sure — but less exciting for the buyers, since what was a great deal just becomes so-so. That’s why I advise my buyer clients to do their best to remain emotionally detached. I suggest deciding on the true value you believe the home is worth, then sticking to it, no matter what!

On the other hand, today’s market is seeing a significant rise in all-cash offers.  Many buyers are losing out on the home of their dreams because they can’t compete in multiple offer situations.  This makes it even more important to put your best foot forward when submitting your first offer as soon as a new listing hits the market that interests you.  Prepare to be frustrated, no matter what price range you’re in.  I have seen even $2,000,000 buyers get overbid in multiple offer situations. 

Regardless, real estate is still one of the best investments you can make. 

Top 3 Ways Homes in Monrovia Can Save on Insurance

For most area homeowners, the 110-decibel wail of nearby fire engines may not be a sought-after feature when selecting the ideal neighborhood. Nonetheless, according to The Wall Street Journal, living close to firehouse has its advantages. Safety is one. A reduction in your homeowner’s insurance bill, another.

Not all homes in Monrovia can have the advantage of being next door to a firehouse, but just about everybody knows that having the proper insurance is important to protect not only the structure itself but also the valuables within. Here are three possible actions you could take this month, any or all of which might reduce the cost of your homeowner’s insurance premium:

Shop Around – We are much more likely to spend our time “liking” dancing cat photos on social media annually than in planning advanced insurance plan strategies. Nonetheless, a visit to the website of the National Association of Insurance Commissioners can help identify important nuances when selecting a vendor. Example: review complaints.

Reduce Coverages – Most people insure their homes for the full amount they paid at the time of purchase. If you bought your home in Monrovia for $450k, you automatically insured it for that amount. But in the event of a loss event like a fire, you don’t necessarily need the full purchase price to rebuild the property—remember, that purchase price included the cost of the land. This idea should be weighed realistically against today’s costs. Take care not to go light on the replacement cost of your belongings (many folks do). A new inventory can help in that department.

Just Ask! – While discounts vary with each insurer, the following details might qualify your home in Monrovia for a discount if you just go ahead and inquire:

  • Multi-policies with the same company.
  • Length of time with the same company.
  • A smoke detector or sprinkler system.
  • An alarm system, deadbolt locks, or other security measures.
  • You have not made a claim in recent history.
  • Your household doesn’t include smokers.
  • You qualify for a senior discount.
  • Your credit score has improved.

While not all of us are willing to move next door to a firehouse to save on our home insurance, there are multiple ways to whittle down policy premiums. I’m here as a resource for your Monrovia property-related questions anytime: just give me a call!

The 5-Year Tesla Plan for Monrovia Renters

My 5-year Tesla Plan is fanciful, but based on what could be the situation some Monrovia renters can probably relate to.

The imaginary 5-year Tesla Plan participant could be any gainfully employed Monrovia renter who has been living comfortably in a nice rental for the past few years. It’s either a comfortable home or a nice apartment: that doesn’t matter. What’s important is that the monthly rent has been rising. It’s now $1,570. This is now gobbling up just about every spare dollar of the Monrovia renter’s income, perhaps leaving only an annual $6,000 bonus for savings, which the tenant has banked religiously for the past five years. The renter is driving a seen-better-days Subaru, newly paid-off. In fact, the renter has recently been tempted to take that $30,000 bonus savings and buy a brand new Tesla Model 3 sports sedan—but so far, prudence has won out (besides, the trove is $5,000 short of the Tesla’s price tag).

The 5-year Tesla Plan gets started with a call to my office (actually, any Monrovia Realtor® could be called—but this is my Tesla Plan, after all!) The object is to find a suitable Monrovia home to buy. This we accomplish with a spacious 3-bedroom 2 ½ bath in an out-of-the way location. Its asking price is low because the motivated seller has been absent for months and now, in July, the yard looks terrible. So it’s a real buy at the just-reduced asking price of $210,000. (Whether the actual number is $210,000 or $2,100,000—the logic remains).

The average nearby comps come in at $240,000, so the bank has no trouble offering a home loan at that week’s rate of 3.835%. The bonus trove will cover nearly 15% as a down payment (saving those annual bonuses instead of buying the Tesla was certainly a good idea)! Because the down payment was less than 20%, the new homeowner will have to add about $65 a month extra for private mortgage insurance (PMI)—but even so, it’s still a great deal.

The bottom line is a monthly mortgage payment of $1,137 including property tax, house insurance, and the PMI insurance. So the proud new Monrovia homeowner is now saving $433 every month. This might seem to be an annual saving of $5,200—but that’s not so! There are two other financially lucrative things going on that weren’t available to renters.

First is the appreciation in the value of the house once the yard is back in shape. But that’s not part of the 5-year Tesla Plan—it’s just a long-term bonus.

The second advantage most definitely is: a hefty income tax break. During those first five years, the mortgage interest paid equals $32,636—the entirety of which is a federal income tax deduction. So is the $3,900 in PMI payments. In the 25% tax bracket, that comes to $9,134 less headed to Uncle Sam. When you add everything together, during the first five years, the new homeowner will have pocketed about $35,134.

That’s good because it just so happens that the Tesla Model 3 is being advertised at a starting price of $35,000. So who needs to even trade in the now-rusty Subaru? 

That’s my fanciful 5-year Tesla Plan—which gets you your new Tesla at the same time you are establishing a long-term Monrovia real estate investment. Individual tax situations differ, and should be always be referred to a tax professional—but you don’t have to be driving a rattletrap Subaru to benefit from the moral of this story—which is the undeniable financial advantage in store for Monrovia renters who make the arithmetic work for them when they choose to become Monrovia owners. Also, it’s easy to start: just give me a call!

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