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Week of October 16th-October 22nd

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Analysis paralysis and risk-free returns

Finding a home that has 100% of what you're looking for is a wonderful thought but is nearly impossible. While there is nothing wrong with having a long list of must-haves to guide your home search, finding a home that meets every criteria on your wants and needs list while also being located within your search radius and fitting within your budget could hinder your ability to seize the best opportunity. Enter the 85% rule.

What is the 85% rule? If a home checks off 85% of what you are looking for, you should consider moving forward and trying to negotiate a purchase on the property. No matter the price point, there are always compromises to make. Unless, of course, you decide to build your own custom home, which comes with its own set of challenges, including managing a build, making literally thousands of decisions on everything from materials, landscaping, and siting to finishes, colors, and vendors, as well as a longer timeline from start to finish. The 85% rule is meant to help you eliminate analysis paralysis that can lead to missed opportunities.

Speaking of opportunities, I'm starting to notice more of them in the market, albeit in specific segments. Earlier this week, I discussed with a client a spacious house in Pebble Beach that recently reduced its price, featuring a motivated seller. Although it sits on a sizable lot in an excellent location, it lacks an ocean view. This particular market segment now offers opportunities for the right buyers, owing to shifting preferences and market dynamics. A year or two ago, this property would have been an ideal purchase for my client, but with the $6MM they have in cash currently earning them around $300,000 nearly risk-free, they are waiting for a 100% match and are content with their secure return for now. They plan to rent a home for a month or two at a time here. While it's hard to predict which approach will yield the best financial gain for them, I believe that, for certain buyers exploring specific market segments, the timing could be ripe to embrace the 85% rule and negotiate a home purchase, even with the opportunity cost of the nearly risk-free return.

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Jonathan Balog

DRE# 01980970
Broker
M: 831.747.0310
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Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.

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