In Marin’s hyper-competitive home market, all-cash offers give prospective buyers a sizable leg up on the competition.
On average, cash offers are 4X more likely to get the deal.
“Cash buyers have the advantage of being able to close quickly and are often willing to forgo any contingencies in their offers. These two factors are very attractive to sellers!”Jim Freeman, Senior Loan Advisor at CrossCountry Mortgage
We explore some options to help buyers who do not have cash on hand compete:
- What options exist for those who don’t have cash on hand but already own a home?
- What solutions exist for those who don’t have available cash or existing home equity?
- Can you be a loan buyer and still win the deal?
Options to compete in cash if you already own a home:
- Cash-out refinance can be an option when you already own your home outright. You aren’t paying off an existing mortgage, so most or all of the loan will come to you as a lump sum of cash. You can typically borrow up to 80% of your home’s value.
- Bridge Loans are used to eliminate a cash crunch and “bridge the gap” while buying a new home prior to selling your current home. For someone who owns their home outright or with a very low loan amount and wants to buy a new home, these can be an interesting option. You can borrow 65-70% of the combined value of both homes and use it to purchase the new home for cash. After the sale of the departure residence, some of the margin loan is paid down and then the balance is paid off by putting a permanent mortgage in place on the new property. Cons – Bridge loans are costly, typically about 2% upfront and charge around 8% interest Pros – A bridge loan allows you to compete effectively on the purchase of your new home and allow times to maximize the value of your old home. The resulting savings may offset the costs. Some of the points and interests may be deductible or offset capital.
- Hard Money Loan is a type of loan that is not secured by real property. Hard money loans are considered loans of “last resort” or short-term bridge loans. The lender generally is an individual or companies and not banks. The cost of a hard money loan to the borrower is typically higher than financing available through banks or government lending programs, reflecting the higher risk that the lender is taking by offering the financing. According to Jim Freeman, they can cost a couple points and have rates in the 10%+ range but allow for quick access to capital for a relatively fast close. They are typically paid off by putting a permanent mortgage in place after closing.
- FinTech Platforms for Homeowners like Revive offer a buy before you sell solution. Revive makes an all-cash offer on a buyer’s behalf. The buyer can move into the new home immediately and rent it from Revive (based on fair market value) for up to 12 months. When the old home sells, the buyer exercises the purchase of their new home. The fees for services like these are typically in the 1 to 3 point (%) range.
Options if you don’t own a home:
- Delayed financing allows buyers to use cash and stocks, to buy a house and obtain a mortgage after the home is purchased. Essentially, they’re enjoying the advantages of being a cash buyer while still getting the benefits of using a mortgage for leverage.
- Margin Loan or Liquidity Line against an equity portfolio or brokerage accounts can be a great option for folks who have a large brokerage account but may not want to sell shares and pay capital gains taxes. The rates are typically low and the ability to access the cash is quite fast. The risk to a margin loan or liquidity line is if equity prices drop you can be at risk of the brokerage having to sell your stock to pay back the loan. After the purchase they put a permanent mortgage in place and pay off the margin loan.
- iBuyers & Fin-Tech Companies for First Time Buyers have stepped in to capitalize on the fact that many prospective buyers without collateral assets are struggling to compete with cash rich wealthy people and investors. iBuying companies like Better, HomeLight, Opendoor, or Ribbon, make all-cash offers on buyers’ behalf. Then the buyer pays back the company. Fees, rules, and market availability vary.
“…for a fee of 1-3% companies will provide you with cash for a purchase and allow you to make a non-contingent offer to purchase a property and then put a permanent mortgage in place. Our company just announced a partnership with Ribbon to provide this service to borrowers on purchases up to $1mm using conventional mortgages for the permanent financing.”Jim Freeman of CrossCountry Mortgage,
Based on the calculations from the National Association of Realtors, the cost of obtaining a cash-backed offer is not much higher than the 3.7% to 4.4% average percent above the list price that buyers have already been offering to sweeten their loan backed offers.
How to win the deal even if you are a loan buyer:
Non-Contingent Offer – A loan buyer can effectively compete with a cash buyer when they write a non-contingent offer and close relatively quickly (21 days or so).
“Our job as loan advisors is to put a potential borrower in as strong a position as possible to purchase with a loan. Ideally we pre-underwrite the borrower so in some cases they can make a non-contingent offer to compete effectively with cash buyers.”Jim Freeman of CrossCountry Mortgage
Parameters for non-contingent offer:
- Pre-underwritten by their lender (rather than just pre-approved). In essence the lender has “credit approved” the buyer for a new loan
- Excess cash and assets beyond the necessary down payment, closing costs and any required reserves that could make up the loan gap if the appraisal comes in below purchase contract price
- Property is a single family home as opposed to a condo or townhouse which require a project approval from a lender a loan contingency in those offers are recommended
Sweeten the Deal
Even with a non-contingent offer, buyers would still need to be aggressive offering a higher price than the cash buyer to ensure the seller prefers their offer. The offer should be well written and have terms favorable to the specific seller’s needs such as flexibility on timing and an option for up to 60 day free rent back period.
The landscape of options is complex and every buyer’s situation varies. Please reach out if you have questions about what approach and solutions might be best for you. Boulevard prides itself on providing the resources and insight you need when buying or selling luxury properties in Marin County.
Boulevard Real Estate was founded by fourth-generation Marin native Elizabeth “Bitsa” Freeman. Bitsa’s expertise in the local market, reputation for genuineness, honesty and deep community connections have made her a top-producing luxury agent throughout Marin County. Boulevard is proud to be certified as a Green Business by the California Green Business Network, and awarded Marin IJ Readers Choice Best Realtor Honor for four years running- 2019, 2020, 2021, 2022.
- How Delayed Financing Gives Homebuyers Cash Power| Bankrate
- Ways to Compete With An All Cash Offer | Brickunderground
- Services Help Buyers Make All-Cash Offers For Next Homesource | Forbes
- Cash Sales Rise to 23% with Growing Entry of iBuyers and Fin-tech Companies | National Association of Realtors
Increased incidents of wildfires and the resulting damages are a major concern for California homeowners (See Recent Statistics Below). As billions of dollars in insured losses mount for carriers, it is increasingly becoming a challenge for some homeowners to protect themselves and their property.
I interviewed several agents representing different segments of the local insurance market to get their varied opinions and advice on what homeowners can do to protect their homes, families and communities.
Expert Advice: To counter the tightening insurance market, Jen Bair offered some suggestions for home buyers to improve the chances of their home being insured.
Seven Tips from Jennifer Bair for Buyers:
- Entryways – Choose a home with multiple entry options.
- Hill Position – Choose lower on a hill vs. being at the top; Consider if the road is wide enough for a fire truck to access.
- Don’t Delay – Call your insurance broker right away so they have time to shop the market as the industry is bogged down due to non-renewals and time required to write new business.
- Admitted Coverage – Seek admitted coverage first (carriers licensed to write in California); If not available, there are many good non-admitted options (carriers not licensed in California) as carriers are adding Excess and Surplus (E&S) lines to their repertoire to meet demand.
- Building Materials – Stucco homes and concrete tile roofs are preferred over wood exteriors from a wildfire safety perspective.
- Open Space – Look for homes more than 1,000 feet from expanses of open space.
- Fire Hazards – Remove easily ignitable trees like Italian Cypress and wood chips that are within the carrier’s defensible space requirements.
Each agent offered their expert advice for homeowners on navigating the market and thoughts on industry outlook.
Q: (Bitsa) Which insurers are still writing policies in Wildland Urban Interface (WUI) areas in California?
A: (Nima) The best source to retrieve that information is the California Department of Insurance website which has consumer links to help you find all types of insurance including auto, life and homeowners. They even have a Consumer Hotline phone number to help you navigate the process and learn what reputable carriers might be writing policies.
A: (Susan) Most companies are still writing insurance subject to wildfire mapping. In high brush /wildfire areas, it is very difficult to secure terms through an admitted company (carriers licensed to write in California).
A: (Jennifer) Each carrier’s capacity is different and doesn’t necessarily coincide with a WUI (the zone of transition between unoccupied land and human development). A carrier’s willingness to underwrite a home is situation specific. To counter the tightening market, there are things prospective homeowners can do to improve the chances of their home being insured.
Q: (Bitsa) How many carriers have dropped out of the market?
A: (Jennifer) Currently High Net Worth carriers Nationwide Private Client (NPC) and AIG are no longer writing in California due to capacity constraints. As a result, AIG decided not to renew home collections and umbrella policies in their admitted markets in California. Most AIG clients will have the option of transitioning to an AIG E&S option. Some mid market carriers (eg. Travelers and Liberty Mutual/Safeco) still write in California. However, they may not write in certain zip codes due to capacity issues. This is why brokers today have to truly “shop” your insurance portfolio to find where capacity exists, if it exists.
A: (Nima) Using the resources of the California Department of Insurance as a guide to who is writing policies currently will also give homeowner clues as to who is leaving the territory. Some insurers, like State Farm, grandfather existing policy holders – but that is not the case for all carriers. During the pandemic, Insurance Commissioner, Ricardo Lara, has been working with Governor Newsom to ensure that insurance companies wait a minimum year grace period before they can take action to alter policies in catastrophe zones. During concurrent pandemic and weather events, State Farm has refrained from underwriting review – specifically with regard to billing issues.
A: (Susan) The main carrier exiting the market is AIG. Others stopped writing new policies in California a couple of years ago and the balance of companies have introduced much stricter underwriting.
Q: (Bitsa) What is the future for insurance rates in WUI or high fire danger areas?
A: (Jennifer) Insurance rates are probably at an all time high. The increase in premiums is due to a number of factors which includes a larger percentage of losses and the cost of rebuilding homes in California. If you have gone to bid recently for a remodel or reconstruction, you have noticed the higher cost per square foot being quoted. Compounding those costs are supply chain constraints and inflation. That being said, some of our carriers are not taking rate changes this year due to corrections taken over the past couple of years. The future is unclear due to disruption in the financial and economic markets.
A: (Nima) For the first time after many years, State Farm has made adjustments to raise rates in accordance with the Department of Insurance to ensure adequate reserves for losses. I have not seen huge waves of rate increases and they vary region to region. The incremental risk for areas with extreme wildfire danger is spread over that entire region. For example, if an area’s wildfire risk increases 50%, the premium might increase only 30%. The 50% will be offset by other smaller increases over other parts of that region.
A: (Susan) I believe the California Department of Insurance will need to allow insurance companies to offer either wildfire deductibles or a wildfire sublimit or exclusion in areas of high wildfire.
Q: (Bitsa) Does being a Firewise USA community help rates?
A: (Nima) Yes. Some households may see rates go up by 50% if they don’t have Firewise certification. State Farm recognizes when a coalition of homeowners make an effort to create defensible space. Safe structure and updated utilities are rewarded with anywhere from 20-40% annual savings. There are techniques that homeowners can implement to save. It is about awareness. Factors include pricing of the building materials, fire resistant home structures and proper ventilation. Cement infused materials are more fire resistant. If you are in a renovation, simple things help. Install smoke/burglar detector monitoring systems and sprinklers and have endorsements attached to your home policy. Make sure that your building ordinance code enforcement components are not neglected in policy quotes.
A: (Jennifer) Possibly. If a location is insurable, a Firewise designations may offer a premium discount. It is unlikely that it will change an underwriting decision to insure a property. Firewise communities sprung up after residents of these communities complained they were not able to find homeowners insurance. This trickles down to auto and collections insurance because if a home is considered in high brush, automobiles and collectibles are also likely to be lost in a fire. Clients that require coverage were being turned away for their entire insurance program. The California Fair Plan (CFP), typically a last resort for homeowners, does take into account this designation and in some instances may offer a discount. Most of our carriers are focused on the overall insurability of the location vs. a designation.
A: (Susan) Honestly, no. It has not made a difference in premium or acceptability.
Q: (Bitsa) Can a new insurance commissioner affect policies that Californians can obtain?
A: (Susan) Yes, the Department of Insurance can change the requirements and filings for insurance companies in the state of California.
A: (Jennifer) The Insurance Commissioner definitely affects policies. However, their reach and impact is not immediately realized. The Commissioner straddles a line between protecting insureds while also trying to entice desired carriers to write in the state of California – goals often at odds with one another. The DOI created the Fair Plan as a solution for homeowners without options. They also increased the Total Insured Value (TIV ) of a home from $1.5M to $3M. Nevertheless, they also have requirements to minimize the state’s financial risks, such as proof the home is being properly maintained. The DOI continues to take action against unscrupulous brokers and agents, which often involves jail time and making financial reparations. The last few years have been extremely painful for a majority of insureds. More options are necessary to help alleviate the difficulty and expense associated with California homeowner insurance, especially since this can impact the resale value and marketability of a home.
A: (Nima) Governor Newsom and Commissioner Lara are communicating on this issue and watchdog groups are continuing to monitor it. Policyholders who are not renewed and have trouble finding coverage on the standard market are putting pressure on leadership. For-profit prospective carriers are reluctant to provide coverage and risk being over exposed. Carriers that leave California are an indication that appropriate premiums are not collected.
Help on the Way For Consumers:
In response to complaints, Commissioner Lara recently announced new regulations to improve wildfire safety and drive down the cost of insurance. Proposed regulations incorporate the “Safer from Wildfires” framework to protect existing homes and communities. The regulations, which could be in effect by this summer, require insurance companies to factor consumers’ wildfire safety actions into their pricing of coverage. They also will provide consumers with transparency about their “wildfire risk score” that insurance companies assign to properties.
“With more Californians rolling up their sleeves and reaching into their own pockets to protect their homes and businesses, insurance pricing must reflect their efforts… My new regulations will help encourage a competitive insurance market for all by putting safety first and driving down costs for consumers.”Commissioner Ricardo Lara
Thanks Jennifer, Nima and Susan for the inside perspectives! Please reach out if you have any questions about fire insurance or buying or selling a home in Marin County. You can find all kinds of information on how to protect yourself, your family and your home at firesafemarin.org and Recent Statistics on California fires below.
Boulevard Real Estate is a Certified Green Company committed to sustainability and fire safety. Bitsa is Fire Committee Chair for the Kent Woodland Homeowners Association. She led the efforts for her community to become Firewise Certified. We love to focus on local experts who serve our community like Jennifer, Susan and Nema.
- Scientists continue to warn of the effects of climate change. The latest sobering statistics on California wildfires support the importance of homeowners carrying the right insurance for wildfires.
- After a record year of wildfires in 2018, 350,000 California home and business owners could not purchase adequate property and casualty insurance because of the increased risk facing providers. This created significant issues for homeowners trying to satisfy mortgage requirements.
- Wildfires continue to be on the rise. 2020 was a record year with a 17% increase from 2019 and a 223% increase since 1983. Based on data from The Insurance Information Institute, the top seven costliest wildland fires in United States history were all in California. Each caused several billions of dollars in insured losses. In 2020 alone, California suffered more than 9 thousand fires, 4 million acres burned and 10 thousand structures destroyed.
- With nearly triple the number of properties at-risk in 2020 as the second-highest state, California is by far the most at-risk state for wildfires in the U.S.
Each option has pros and cons and different choices fit better depending on the type of project you are looking to pursue.
- No Lawn – grassy meadows, landscaped areas and patios can replace traditional lawns
- Dymondia Margaretae – a lower water, no mow ground cover alternative
- Lower Water Sod Varieties – like Delta Bluegrass
- Artificial Lawns – low maintenance but plastic can cause a heat island
- Kurapia – a lower water, no mow ground cover alternative
Where will your water be coming from?
- Municipal Water – has been the old stand by and we need to move away from
- Greywater Systems – collected from wastewater from washbasins, showers, and baths within the home
- Recycled Water – brought in during times of extreme drought (MMWD gives away recycled water in the summer)
- Captured Rainwater – collected in tanks; we should all really be doing this and greywater!
Contact The Water Champions for water-smart greywater solutions to create green abundance and water security in your home and community!! See what options are available, especially if you are in the build/remodel process.
Erin’s Expert Tips:
“Consider Kurapia, as a highly versatile, drought tolerant groundcover to replace traditional lawns. It can be mowed into a low cushiony turf or you can let it bloom into a lush groundcover. It is not a great fit for every project as It can take time to establish and may require weeding maintenance but worth considering.”
“Have your heart set on lawns, roses and hydrangeas? If you capture, recycle and conserve water and select other drought resistant plants, go ahead and incorporate some in moderation into your overall landscape design…the key is balance”
Erin Werner is a landscape designer who works in Marin County, CA specializing in planting design and spacial layout.
Boulevard Real Estate is a Certified Green Company committed to sustainability and fire safety. We love to focus on local businesses like Erin Werner Design which work to improve community resiliency and whose mission aligns so closely with our own. Erin got interested in plants and landscape design following in her father’s career footsteps and is a rare woman out in the field on installation job sites.
Anyone else make a New Year’s resolution to clear out all the excess accumulations cluttering your home, your life and your mind?
What steps have you taken to start that journey..?
If you are serious about letting go of clutter, The Joy Filter may be just the tool you need to let go and live a cleaner, less cluttered and stress free life.
Jenna Carlsson, owner of The Joy Filter and a Certified KonMari Consultant discovered the benefits of KonMari as she sought help organizing her own busy career and life. Learning that the key to organizing was both a physical and emotional journey of letting go, Jenna found Marie Kondo’s KonMari Method® an amazingly therapeutic means to living a more joyful, less cluttered life.
As a result of the experience in 2019, she launched her business, The Joy Filter, to help others attain the joy of living and working.
Jenna inspires and supports folks to let go of clutter and create lives of more organization, joy and ease. Need help working through all that you have accumulated over the years? Are you in transition and need to clear your space before you move? Downsizing and needing to get rid of what doesn’t give you joy? Jenna and The Joy Filter work in partnership with you, guiding you through the process, while honoring that every decision is yours. KonMari requires an investment of effort as you declutter and downsize, but it comes back around tenfold in relief, organization and joy. You can think of the method and Jenna as a big of a “space therapist.”
The first step in the process is creating a vision of what you really want in your home and life. Then, the KonMari Method® helps you alight your space to that vision, by deciding if pieces in your home or office advance your vision. Jenna see’s decluttering way to align with our lives with what we love, connecting to our intuition to decide what we want to keep.
She teaches that KonMari is not only a method of decluttering, but also as a tool we can use in all aspects of our lives. This is a method that will always stay with you after you are decluttered and living a life of joy.
If you are interested in learning more about the KonMari Method® or Jenna’s services, get a coupon code to come to a free Clutter Clear-out Parties here. Or, set up a free consultation here to see if KonMari is a good fit for you. Jenna offers both virtual and in-person services and even makes the process fun.
Are you ready to declutter your space and create a life of more organization, joy and ease?
An Exclusive Community of Abundant Natural Beauty.
Approximately 25 homes sell every year in Kent Woodlands with last years average sale price at $4,300,000.
Kent Woodlands is a residential community located at the base of Mt. Tamalpais surrounded by open space lands. Woodland Road is the only access into the coveted “Woodlands” community and residents choose this neighborhood for its seclusion, privacy and convenience. Consisting of approximately 570 residential lots, 481 lots are members of the Kent Woodlands Property Owners Association (KWPOA). The KWPOA represents members’ interests in regards to traffic safety, fire preparedness, architectural design review, social activities, as well as on county-wide issues, and maintenance of community development standards.
Why I Love Living in Kent Woodlands…
Proximity to Mount Tamalpais.
Hopping on your bike or stepping out the door directly onto our network of fire roads and trails makes meeting a daily step goal or Strava challenge easy to achieve. If dogs are your favorite exercise partner, the 3 miles of flat fire road, where dogs can roam off leash, as well as numerous trail extensions along the route (dogs on leash) make trail runs and vigorous hikes the best with our furry friends.
Every year the neighborhood HOA (Kent Woodlands Property Association) hosts a number of community events. One of the neighborhood favorites is the Halloween Parade when lower Woodland Road is closed to traffic and Kentfield Fire trucks lead a procession of ghosts, goblins, witches and action hero’s to neighbor treat tables. The annual holiday party, usually held the first Sunday in December, is hosted in the exterior annex at Guesthouse. Recently the community began hosting food truck events held in our Acorn parking lot at the entrance to Kent Woodlands in May and September. In a hillside community with no sidewalks to meet and greet your neighbors, this has proven to be a popular event
Shopping & Dinning
Woodland’s Market and Cafe, located at the entrance to Kent Woodlands, is a neighborhood favorite and the unofficial community center of the neighborhood. Known for gourmet food to go, catered meals, custom and speciality sandwiches and a wide selection of organic and locally sourced foods it is also the after school crowd’s favorite post school hangout. A few blocks from the entrance to the neighborhood is Rustic Bakery known for their decadent scones, cinnamon rolls, croissants and fresh baked breads. The lunch hour usually means lines out the door but if you order to go you’ll miss the lines and the long wait. GuestHouse is a fairly new addition to the neighborhood and has become the go to dinner spot with innovative menu items and a very popular full bar with some of the friendliest bartenders in the area
Another great aspect of living in Kent Woodlands would be the excellent public schools; Bacich, Kent and Redwood High School are the reason so many families choose this location when fleeing urban living. The demographics of this community are a good mix of young families with school age children and older retirees and empty nest boomers. Many Kent Woodlands homewoners have been in their homes for over 25 years.
If you are interested in buying in Kent Woodlands check out our current listings.
Privacy, Seclusion & Move-in Ready!
4 Bed ~ 4 Bath ~ 2,850 Sq/f ~ 48,300 Sq/f Lot ~ HOA Fees ~ Pool
Kent Woodland’s latest luxury home sale: A private paradise in Marin County; rare, single level, and move-in ready. This home sits on a lush, 1(+)ac. forest filled, street to street lot. Surrounded by soaring Redwoods and an ephemeral creek this beautifully updated and meticulously maintained home is designed for indoor/outdoor living.
The dramatic, large scale rooms and open floor plan features warm-toned hardwood flooring, soaring, exposed beam ceilings and plenty of windows bathing the home in natural light. A spacious kitchen/great room combo includes an impressive granite topped island, breakfast bar w/seating, a wet bar, an indoor grill and two fireplaces, ideal for entertaining and large family gatherings.
The living room with warm wood paneling features a dramatic, floor to ceiling fireplace an impressive barn door which can close off an additional space, ideal as a playroom and two additional en suite bedrooms. The main bedroom is an oasis of tranquility and relaxation, featuring a luxurious spa like bath and generous walk in closet.
View the gallery below, along with property features and the houses floor plan. Interested in more details or scheduling a showing, see more at boulevardmarin.com
- Hardwood floors, vaulted, exposed beam ceilings, skylights
- One level /Open Floor plan
- Kitchen features large island, breakfast bar, granite counters, indoor grill and fireplace
- Bonus room off kitchen with wet bar, built in shelving & fireplace
- Warm wood paneling and floor to ceiling plaster of Paris finished fireplace accent the living room
- Updated baths with high end finishes and fixtures
- Air conditioning
- Main living areas open directly to pool/spa area
- Private trail through property to lower Kent Woodlands
- Gated, fenced and irrigated yard
- Separate 2 car garage
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