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Making the transition from renting to buying.

Here are a few points to consider as you weigh the pros and cons of home ownership.

No doubt you've thought of how nice it would be not to write a rent check every month, but have you done the math? Nothing can make you feel more secure than owning your own house, unless buying a home will create financial problems of its own. Here's a discussion of the most important financial costs associated with home buying to stack up against your monthly rent check.

Instead of the standard deduction on your income tax return, most homeowners itemize their deductions, allowing them to deduct the following (and save on taxes): home mortgage interest, property real estate taxes, state income taxes, gifts to charity, medical and dental expenses over 7.5% of your income, personal property taxes, and most moving expenses.

Figure your monthly payments if you were to buy. Compare your monthly rent to a calculation of the following: purchase price and down payment of your home, your annual income (and debt!), property tax rate, home insurance rate, interest rate and length of loan. For best results, contact a home-buying specialist.

Other costs

Expect other costs to homeowning. Along with your monthly mortgage and down payment, there's property tax and homeowners insurance premiums, and fees known as "closing costs." These include everything from a credit check to "points"- interest paid up-front in return for a lower interest rate. Others: title insurance fee, survey charge, attorney/escrow fees, and loan origination. So do your research!

Long-term equity

No discussion of home ownership is complete without considering the long-term benefits of owning. What your house will be worth when you sell depends on the state of your mortgage and the housing market, in particular. Consult with real estate professionals, read up, and do your math to get a realistic sense of your future home value.

Lifestyle and mobility

Mobility is part of renting. Freedom to take the next job or move for a relationship is easy to come by when you rent a home. And when you do move, there's often more choice of specific location, and price, when you seek rental housing. Want an apartment near a park in western Philadelphia? You may find an easier time looking to rent than buy.

Many renters say they love knowing they're not tied down - and don't have to assume financial responsibility for their living space. This is of course a big difference from home ownership: who does the work.

Who does the work

While you don't receive the joys of making a place truly "your own," you do have limited costs in renting. Landlords are responsible for general upkeep and safety, allowing you to focus on the fine points. Homeowning, in contrast, puts you in the driver's seat. You shoulder the expenses and reap the rewards of home improvement - both great and small. Think about whether you want to put in additional time and money.

Choices, choices

Whether you decide to take the step of home ownership is a personal choice with its own ups and downs. Hopefully we've helped dust off the magic ball a bit; what you see in your future is up to you!

LA's Median Home Price Tops $500k For First Time Since 2007

Los Angeles County median housing prices hit $510,000 in May, their highest point since December 2007, according to the LA Business Journal. Prices bottomed out around $300,000 in April 2009 and again in January 2012. So how'd they shoot up 66 percent in only about two and a half years? (One broker calls it "a harp and definite turn in the market, like a switch being turned on ... Everybody tried to jump back in all at once.") Mostly it was the arrival of fresh rich people: the tech boom on the Westside brought a crop of techies to town and foreign investors realized they could score sweet all-cash deals in Los Angeles. The bidding wars started in earnest in spring 2012 and "Most purchases were 100 percent cash. Mortgage lending standards were still very tight." Meaning anyone who couldn't afford to lay out all cash on a house was still SOL.

High-end is doing great but low-end is still way of.                       

Predictably, the Westside and other "high-end, desirable markets" have benefitted most from this swift rebound. The high-end overall is only 10 percent off its pre-housing-crash peak, but the lower-end is 30 percent below the peak. That major imbalance is probably preventing any further bubbling ("The increases have recently slowed to the single-digit range."), because there are only so many buyers who can pay top dollar (especially now that it's harder to get a mortgage). As one broker says, "This recent price rise has brought the whole affordability issue back into the picture."

 

Don't Forget Your Pre-Approval Letter

Here are five reasons why getting a pre-approval letter is a good idea.

Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. But the reasons for this advice aren't always clear, and buyers sometimes are dismayed by the amount of paperwork involved. Here is some of the reasoning behind the advice: 

1. A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a "pre-qual" from a Web site is just as easy. Enter some information, click "submit" and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight. 

2. You'll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there's no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors -- down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on -- are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history. 

3. You'll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you'll be able to obtain a mortgage. 

4. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you're a well-qualified buyer who is serious about purchasing a home. The increased likelihood of a closed sale -- and a commission -- will naturally motivate your agent to devote more time and energy to you. In fact, some agents won't even show property to buyers who don't have a pre-approval letter. 

5. A few caveats: Pre-approval letters aren't binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.

 

Men and Women and the Homebuying Process. Couples Therapy?

A Short Guide to Real Estate Lingo and Acronyms

Real estate ads are usually full of acronyms and terms that are unfamiliar to first-time buyers. Here's a cheat sheet to let you in on the lingo.

 

4B/2B -- four bedrooms and two bathrooms. "Bedroom" usually means a sleeping area with a window and a closet, but the definition varies in different places. A "full bathroom" is a room with a toilet, a sink and a bathtub. A "three-quarter bathroom" has a toilet, a sink and a shower. A "half bathroom" or powder room has only a toilet and a sink.

 

assum. fin. -- assumable financing 

closing costs -- the entire package of miscellaneous expenses paid by the buyer and the seller when the real estate deal closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney's settlement charges, transfer taxes, recording fees, title insurance and so on. Closing costs are generally paid through escrow. 

CMA -- comparative market analysis or competitive market analysis. A CMA is a report that shows prices of homes that are comparable to a subject home and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.

contingency -- a provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer's contractual right to obtain a professional home inspection before purchasing the home. 

dk -- deck 

expansion pot'l -- expansion potential mean that there's extra space on the lot or the possibility of adding a room or even an upper level, subject to local zoning restrictions. 

fab pentrm -- fabulous pentroom, a room on top (but under the roof) that has great views 

FDR -- formal dining room 

fixture -- anything of value that is permanently attached to or a part of real property. (Real estate is legally called "real property," while movables are called "personal property.") Examples of fixtures include installed wall-to-wall carpeting, light fixtures, window coverings, landscaping and so on. Fixtures are a frequent subject of buyer and seller disputes. When in doubt, get it in writing.

frplc, fplc, FP -- fireplace 

gar -- garage (garden is usually abbrevated as "gard.") 

grmet kit -- gourmet kitchen 

HDW, HWF, Hdwd -- hardwood floors

hi ceils -- high ceilings

in-law potential -- potential for a separate apartment, subject to local zoning restrictions 

large E-2 plan -- this is one of several floorplans available in a specific building 

listing -- an agreement between a real estate broker and a home owner that allows the broker to market and arrange for the sale of the owner's home. The word "listing" is also used to refer to the for-sale home itself. A home being sold by the owner without a real estate agent isn't a "listing."

lo dues -- low homeowner's association dues. But find out how "low" the dues are compared to other dues in the area. 

lock box -- locked key-holding device affixed to a for-sale home so real estate professionals can gain entry into the home after obtaining permission from the listing agent 

lsd pkg. -- leased parking area. May come with additional cost. 

MLS -- Multiple Listing Service. An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. Membership isn't open to the general public, although selected MLS data may be sold to real estate listings Web sites. MLSs are local or regional. There is no MLS covering the whole country. 

nr bst schls -- near the best schools 

pot'l -- potential

pvt -- private 

pwdr rm -- half bathroom or powder room

REALTOR® -- a real estate broker or sales associate who is a member of the National Association of REALTORS®. Not all real estate agents are REALTORS®.

title insurance -- an insurance policy that protects a lender's or owner's interest in real property from assorted types of unexpected or fraudulent claims of ownership. It's customary for the buyer to pay for the lender's title insurance policy. 

upr -- upper floor

 

OPEN HOUSE SELLERS CHECKLIST

HAPPY FATHERS DAY!

STAGING WORKS! SELL YOUR HOME FASTER!

Many years ago, I heard the saying “The investment in staging your home will always be less than a price reduction on your home!” And that statement is as true today as it was all the way back...
The math is pretty simple. Imagine a $300,000 home that’s been on the market for six months without selling. The seller is becoming more and more frustrated and considers a price decrease of 5 percent. That’s $15,000. Now imagine investing only a fraction of that sum in staging and selling the home much faster.

That’s what staging will do, and the numbers are in to prove it – time and time again.
Recent statistics show that 94 percent of homes staged by an Accredited Staging Professional sold in 29 days or less, compared to an average of 145 days for homes that were not staged. What’s more, homes staged by Accredited Staging Professionals stay on the market 83 percent less than a home that has not been staged.
For home stagers and real estate agents alike, it’s imperative to showcase the positive impact of home staging, both visually by showing examples of past staging projects AND by sharing statistical evidence that home staging works and that the investment is worth it many times over.
So next time a seller brings up the subject of a price reduction, make sure to share the positive impact of home staging. The investment will be less and the impact most likely more.

THE HOME SELLING PROCESS - A VISUAL GUIDE

 

 

Escrow, step by step.

The first step in the home buying process is for you to get approved for a home loan.

 

After finding a property that interests you, I will show you the comps (comparable sales) to help us determine the value of the property. The best comps are in the same building (if a condo/townhome) or in the surrounding area (if a single family home or income property).

 

 

Appraisers are generally required to focus on the past 6 months when reviewing area sales so I try to do the same when verifying the property’s value.

 

At this point we are ready to make our offer, which will consist of 4 separate items:

1. The offer contract itself. It is written on a standard California Association of Realtor’s contract, which I complete and then review with you either in person or over the phone. I offer my clients the option of signing electronically, which can save a lot of time and paperwork hassles.

2. A pre-approval letter from your lender (let me know if you would like me to e-mail you contact information for the local lender that my clients most highly recommend).
3. Verification of funds (copies of bank and/or investment statements showing liquid funds to cover the down payment and closing costs).

4. Buyer’s intro letter. This explains who you are, what you do and what you like about the property. I usually write about 95% of this letter for you and then e-mail it to you for final editing and approval.

The offer is presented to the sellers and we wait for their response. Often times they may not sign off on our offer initially but instead write a counter offer which addresses items in the contract that they would like changed (price is the item that is countered most often). It may take several counter offers before the price and terms are agreeable to both parties.

After the offer is accepted, escrow is opened. Escrow is a neutral 3rd party and their job is to make sure all obligations of the contract are fulfilled before the seller gets their money and the buyer gets keys to the property. The most standard escrow length is 30-45 days.

 

I will send a copy of the completed contract to the lender and you will need to promptly provide them with any additional information and/or paperwork that they require. The lender takes care of scheduling the appraisal.

You will schedule the physical inspection with an inspector of your choice. I can give you a list of inspectors that my clients have been very happy with. The physical inspector checks all the major systems in the property (plumbing, electrical, heating, etc) and also looks for cosmetic damage and problems (sloping floors, doors that stick, cracks in walls/ceilings, etc). For a condo/townhome inspection, the inspector only inspects the unit and not the common areas (building, hallways, pool, etc) but if you are purchasing a home the inspection will also check out the exterior (roof, foundation, garage, etc.). I recommend that my clients always get a mold inspection done and if the property has a fireplace then you should also have that inspected. Whenever purchasing a single-family home it is very important to have a sewer inspection. Geotechnical inspections are especially important if you are buying a home in a hillside area. You can also schedule additional specialty inspections if you would like. After reviewing all inspection reports we will usually complete a Request for Repairs form (asking for a credit and/or repairs)… depending on what was found in the inspections.

You will also need to call an insurance company to verify that the property is insurable and get quotes for the cost of insuring the property. For a condo/townhome you are generally just insuring your personal contents (the building is almost always insured by the Homeowners Association).

The other inspections that take place during escrow include the termite inspection, which is usually paid for by the seller. A retrofitting inspection will also take place to make sure the property is up to code with smoke detectors/carbon menoxide detectors, water heater strapping and the gas shut-off valve (retrofitting requirements vary from city to city).

If the property you are purchasing is a condo/townhome, you will receive copies of all the homeowner’s documents to review. You generally have 5 days to review this paperwork which includes: copies of the meeting minutes for the past year, budget and financial information (including the amount currently in the HOA reserves) and a copy of the CC&R’s (Covenants, Conditions and Restrictions).

Loan docs are usually signed as early as a week prior to closing.

Five days or less prior to closing we do a walk-thru of the property. This gives us a chance to verify that any seller repairs were completed and we also make sure the property is in the same condition as is was when we initially wrote our offer.

Two days prior to closing you wire any additional down payment & closing costs to escrow. The loan proceeds are wired to escrow one or two days prior to closing.

On closing day we wait to hear from the title company that you are listed on the county records as the new owner and then you get keys to your new home.

 

 

 

 

THE ESCROW PROCESS EXPLAINED

MVP REAL ESTATE GROUP CLOSES ANOTHER DEAL!

MVP REAL ESTATE GROUP just closed on this fabulous home, representing the happy buyer!

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