Are You Ready To Buy?

As with any major purchase, it pays to be informed prior to making any decisions. 

As experienced buyers already know, buying a home is a complicated process, so it's important to start at the beginning and thoroughly understand each step. Whether you're buying your first home or your third, make sure you have the necessary financial resources and have explored all your options before you purchase a new home.

If you're a first-time buyer, you should weigh the pros and cons of homeownership versus renting. There are many advantages and disadvantages to consider. For example, renters have the freedom of mobility if they choose to move, but their monthly rent checks do not establish long-term equity or produce any other benefits. And while homeowners' mortgage payments accumulate equity, these payments are generally higher than rent payments and come with the responsibility to manage the care and upkeep of the property.

Both new and experienced buyers have their own sets of financial considerations when it comes to buying a home. Move-up buyers should evaluate their financial situation to ensure they're prepared to meet the higher mortgage payments involved with relocating. Likewise, first-time buyers should determine if monthly mortgage payments fit in their budgets. In addition, you'll need to be prepared to cover the downpayment and closing costs. And, you should consider whether you meet the basic criteria to qualify for a mortgage; lenders prefer that applicants offer a stable job history and a good credit record.

Determining Your Home's Value

Appraisals and CMAs

Appraisals are primarily used to protect the lender's interest in the property. Just like lenders can be hesitant to issue a mortgage to credit-risky borrowers, they don't like to underwrite properties for more than they're worth. Appraisals also are used when other factors have made it difficult to assess your property's value, such as a lack of real estate activity in your area.

REALTORS® stress the importance of understanding that an appraisal is just the opinion of a trained professional: Five different appraisers could attach five different price tags to your home. Appraisals are based on past sales data, the location of the home, the size of the lot and the condition of the home. If the buyer's mortgage is insured through the FHA, the appraiser must disclose potential problems relating to the physical condition of the home; there are no similar stipulations for non-FHA mortgages.

Your REALTOR® may recommend an appraiser for your home. Also, the Appraisal Subcommittee of the Federal Financial Institutions Examination Council offers a member directory on its Web site. You can check the status of California appraisers? licenses through the Office of Real Estate Appraisers.

To determine an accurate measure of what your home is worth, REALTORS® can supply a comparative market analysis (CMA), which provides information on recent selling prices of similar properties in the same market. With a CMA, you can monitor the closing price of specific house types in certain areas (e.g., a condominium in a metropolitan area). Again, consult your REALTOR® if you're interested in learning more about a CMA.

Setting The Price

In establishing the listing price for your home, you need to strike a delicate balance between a figure that will scare off potential buyers and a low price that doesn't represent your home's worth. Buyers will compare your home's price with other properties on the market. Therefore, you should use a CMA to assess what consumers are paying for similar homes. CMAs also include information about area homes that failed to sell in recent months along with their corresponding list prices. Your REALTOR® can assist you in obtaining and analyzing that information.

The NATIONAL ASSOCIATION OF REALTORS® suggests some additional steps to help you set your list price. After analyzing sales data, conduct some market research on your own. Attend an open house or two and make an impartial assessment of how those homes compare to yours in terms of size, location, amenities and condition.

Your REALTOR® can be a vital resource in analyzing all the pertinent information with you to develop a list price. Trust your REALTOR®'s judgment, as he or she offers experience in this arena. However, the final decision on the listing price for your home is your choice to make.

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.

 

 

 

 

4 Types Of Home Renovation: Which Ones Boost Value?

"Fix it and flip it" is a phrase often associated with real estate investing. The idea behind the concept is that the completion of a few choice remodeling projects will add significant value to the price of a home. 

With this in mind, many homeowners undertake major renovation projects before putting their homes up for sale with the idea that sprucing up the place will result in big bucks. More often than not, these upgrades fail to pay for themselves. Read on to find out how to renovate strategically and which renovations really add value to your property.

The Difference between Investors and OwnersUpdating an investment property is generally a sound strategy because successful advocates of the fix-it-and-flip-it philosophy buy run-down homes at bargain prices and save money on the repairs by doing most of the work themselves. A little sweat equity goes a long way toward making a real estate investment profitable.Investors carefully choose their remodeling projects, focusing on those that will result in the most value for the least amount of effort and cost. Part of the process includes paying attention to the other homes in the neighborhood to avoid over-improving the property. If none of the other houses in the area have crown moldings and Corian counter tops, adding these amenities is unlikely to result in a significantly higher selling price.

Owners, on the other hand, often take a less strategic approach to remodeling when sprucing up their homes prior to putting them on the market. As a result, they can end up putting significantly more money into the project than they will get back out of it when they sell.

To make the most of your remodeling projects, it pays to keep four types of projects in mind : basics, curb appeal, value added and personal preference.

The BasicsThe basic are the things that buyers expect when they purchase a home. This includes a roof that doesn't leak, functioning gutters and downspouts, a dry basement, a good furnace, solid floors, walls that are in good repair, retaining walls that work and all of the other common-sense items that you expect to find in a home.

In upscale properties, this includes air conditioning, a certain number of bedrooms, bathrooms and garages, and any other amenities that are common to the neighborhood, such as a swimming pool.

Adding these items to a home that lacks them doesn't add value, it merely brings the property up to the standard level of the rest of the homes in the area. Money spent on these items is unlikely to be fully recovered, but should at least result in ensuring that the home sells for a price that is comparable to other homes in the area.

Curb AppealItems that add curb appeal help the property to look good when prospective buyers arrive. While these projects may not add a considerable amount of monetary value, they will help the place sell faster. Curb appeal items include a nice green lawn, attractive landscaping, fresh paint inside and out, new carpet and new appliances. If you know that a prospective buyer is due to arrive at a certain time, baking an apple pie just before the arrival is an easy way to set the stage, make your house smell good and create a warm, inviting atmosphere. 

Adds ValueThe projects that add considerable value are big favorites of fix-it-and-flip it advocates. While most of these efforts will not recoup their costs, some will come close. Projects that offer the most bang for the buck include new siding, kitchen remodeling, bathroom remodeling, new windows, decks and the addition of living space. The National Association of Realtors cites siding, kitchens and windows as some of the most beneficial projects, often recouping 80% or more of their costs during resale.

Personal PreferencePersonal preference projects are nifty items that you want but that other people may not like or be willing to pay to get. In most areas of the country, these include amenities such as swimming pools, tennis courts, hot tubs, wine cellars, basement game rooms and ponds. There's certainly no harm in adding these items to your house, but don't expect potential buyers to be willing to pay a premium to get them when you are ready to sell.

House and HomeRegardless of the project that you are considering, remember that your primary residence is not just a house, it's your home. If you plan to live there for many years to come, add amenities that you want to have regardless of their impact on resale. When it's time to sell, do the basics to get the property up to par for the neighborhood and add some curb appeal, but don't bother undertaking an extensive array of projects strictly in an effort to increase the value of the property. Even with the projects that are known to add value, the chances are good that you will spend far more money than you will get back in return.