As a real estate agent, what do you think is the most important thing to find in a lender?
A lender is his or her own brand. The moment I see a pre-approval letter, I know many things in one instance: Whether or not the deal will close; whether or not the deal will close on time; and whether it will close without hiccups—all because of the person behind the letter. It’s about trust and doing what it takes to get the job done and going above and beyond to be sure it happens!
To do what you say you are going to do is a very important aspect in a lender, especially in this economy where at times it’s hard to get a loan through. It’s about calls, emails, follow up, action- communicating the status of the loan to all parties in the transaction is very important! Also, always be loyal to your lender!
I’m preparing to sell a home, what do inspectors look for during their inspection?
For home sales, meaning listings, typically there are two inspections done concurrently. One is the Home Inspection by a licensed contractor and the second is the Wood Destroying “Pest” Inspection which is done by a termite company. Both reports complement each other.
The property inspection provides the seller with a punch list of items that are in need of repair and items to look forward to dealing with in the future. The pest report also shows the amount of dry rot and any wood destroying organisms in the structure. Typically, many lenders actually require the Section 1 items to be clear prior to close of escrow.
I encourage my sellers to do the reports upfront because often times many repairs are done prior to getting the house on the market. In fact, the home’s condition, and thus the reports, can affect the actual value of the home. Reports ahead save time and money. In fact ALL home owners should get both a contractors and pest inspection even when they do not plan to sell. It’s a good way to keep your home in tip-top condition.
Surveying Today’s Real Estate Opportunities
If you are thinking of entering the real estate market, whether as a newcomer or after having taken a break, it’s important to understand some of the new developments that have occurred since the recent market upheaval and how you can use those changes to your advantage to make good choices and solid investments that are right for you and your financial goals.
Whether you’re looking to buy an investment property, second home or even a primary residence, there are some new property options that are well worth exploring. Three types of properties that have become very prevalent in today’s real estate market are short sales, foreclosures and REOs. If you’ve never had to deal with buying such a property, your initial reaction might be that the sale will be complicated or protracted, but that’s not necessarily the case.
The common thread for all these types of properties is that the lender has some level of involvement in the sale of the property, rather than just an individual owner. Because so many homeowners owe more than their home is worth or have been unable to keep up with their mortgage payments, it’s not surprising that more of these properties are being listed.
Let’s take a closer look at short sales, foreclosures and REOs to clear up any misconceptions and to demonstrate that these are every bit as solid an opportunity as any other home sale:
Short sales
In a short sale, a homeowner who has experienced some kind of financial hardship and cannot afford to pay the mortgage and the lender that sold them the mortgage enter into an agreement in which the home will be sold for less than the balance of the loan. This represents a good opportunity for the buyer, because the home will be more competitively priced.
Now, you might have heard that short sales are time-consuming and can end in frustration. That’s no longer the case in most instances, thanks to rules that went into effect under the Department of Treasury’s Home Affordable Foreclosure Alternatives Program (HAFA), which have streamlined the process.
In a short sale, you should work with an agent that has some expertise in short sales (the National Association of REALTORS® offers a special certification, in fact). You make your offer directly with the seller’s agent, who coordinates with the seller’s lender. Not long ago a short sale could drag on for months, leaving the buyer and seller in limbo while the lender took its time making decisions; new laws have significantly cut down on the wait time and many short sales are accomplished within a much shorter time frame now.
Foreclosures
Foreclosure is a little more tricky. A home goes into foreclosure when the current owner defaults on his or her mortgage. The home can then go into a foreclosure auction, where it is possible to bid on the home. There is a minimum bid the lender is asking for. Winners must pay the full amount of the winning bid at auction. For a typical homebuyer, this is usually not a realistic scenario.
Any unsold auction property reverts back to the lender and becomes an REO, or real-estate owned property, and the lender must find another way to sell it.
REOs
When a home is put up for sale in a foreclosure auction but is not sold, it becomes an REO. The lender repossesses it, owns it and needs to sell it. Often, REOs represent a good opportunity for prospective buyers, because lenders aren’t in the business of owning homes, so they are motivated to sell.
That said, remember that the lender is still in the game to get the most money it can for the property, and many lending institutions operate departments that oversee their REO properties and take offers on them. Typically, both the lender and the buyer are represented by real estate agents.
REOs are usually somewhat maintained, but can be rough around the edges and need some sizable repairs. This can have a bearing on price. While you will be able to conduct an inspection of the home as you would in any real estate transaction, REOs are often sold “as is,” so if the inspection uncovers costly necessary repairs, the terms of your offer might change.
Perhaps the most important thing to keep in mind when it comes to short sales, foreclosures and REOs is that while they represent excellent home-buying opportunities, they are not fire sales. The sellers, whether the owner or the lender, want to get the most money possible for the property, so it is important to manage your expectations about what constitutes a good bargain.
As you can see, there’s nothing mysterious or hard to understand about these different types of properties in today’s real estate market. I’d love to answer any questions you might have about how these types of properties, and discuss how they can provide solid opportunities for anyone in the market.
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What should one consider when placing an offer on a short sale property?
Short Sales have come a long way, especially with so many on the market right now, the process has refined as the number has grown. One of the first items to consider with a short sale is how many banks are involved. There may be up to 3 different banks on any one home! Obviously the more banks there are, the more challenging it can be to close escrow. Also consider which bank(s) are involved is important as well. Each bank has its own criteria which can be a moving target during the process of trying to close the home. Always ask if the listing agent is a trained short sale specialist. There is an art to handling short sales and having a great listing agent who is qualified makes all the difference in the world. If you happen to be first time buyers, my best advice is to stay away from short sales. It’s better to go for a regular sale or perhaps a bank owned property for your first home buying experience!
What makes San Bruno unique and why is it a great place to buy a home?
San Bruno is a city that offers the perfect balance for a home buyer, especially for new home buyers looking for their starter home. The location, the downtown scene, and the weather are all high points that recommend it!
The location of San Bruno, between San Francisco and Silicon Valley, gives any home buyer a convenient compromise for those couples who may be working areas, as many couples in the area do. Also, getting to downtown San Francisco is faster from San Bruno than from the Sunset District of SF because of the easy access to the 101 and 280 freeways!
San Bruno is also very close to SFO and has a friendly business climate. The class “A” office spaces have attracted companies such as Walmart.com, YouTube and United Airlines! Lastly, the northern part of San Bruno is considered the “end of the fog line” meaning you will have more warm and sunny days while living in San Bruno, as compared to many parts of San Francisco.
All of these things and more make San Bruno an amazing city to live in and a great place to buy a home, raise a family and work!
In your opinion, what is the most common myth that home buyers or sellers think about real estate agents and how they operate?
Sellers and buyers often times think that a real estate agent is only trying to have a quick easy sale of their home. That there is nothing more to the transaction than the transaction itself! This couldn’t be further from the truth and agents know that this manner of working is the easiest way to choke off future business.
Real Estate agents depend on the referrals of their past clients. The clients’ happiness is paramount to the transaction and the future success of the agent is dependent on clients’ satisfaction! Happy customers who send their friends and relatives to an agent they’ve worked with is the easiest, cheapest way for the agent to enjoy a successful career.
What exactly is a short sale and how do I know if it’s right for me?
Short sales happen when the loans that are existing on a property do not add up to the current value of the home. When the values in the housing market dropped dramatically many people found that they owed more on their property than it was worth, which is why there are so many short sales on the market currently.
Fortunately, short sales are slowing down; however, it will still take some more time to cycle through as the market recovers. We are very lucky on the Peninsula to not have a high percentage of inventory that are short sales!
Why should you hire a real estate agent when buying or selling a home, rather than trying to do it on your own?
This is one of those questions that is frequently asked, but despite the many great answers the attractiveness of saving some money I’m going to reiterate a few key points!
The first is, if your are a buyer, working with a buyers agent is always a good idea because they are someone who knows the area and will be able to find you the key things you’re looking for in a home. But, most of all, the commission of the agents is customarily paid by the seller so you don’t have to worry about the cost of working with the agent!
Sellers, since they do pay the commission of the agents need to hear these few key things agents do that increase your home sale! First, with the market the way it is and the excessive amount of ‘short sale’ and ‘foreclosure’ properties, you need to understand how to successfully price your home for your area.
These troubled properties have brought investors and opportunists out of the woodwork looking to “steal” a home. It’s hard for the buying public to recognize the difference between homes that are priced competitively and those that are put on the market at a steep discount to attract a lot of buyers. Those homes prices are then jacked up during the bidding process.
The main thing a seller needs to be sure of is that their home is priced competitively but not so competitively it is lumped into the same category as the troubled homes in the area. An agent also has the marketing skill to get your home in front of the right eyes, and show, negotiate, and close the transaction with the least amount of hassle to you!
The Rental Market is HOT!
Investors who purchase apartments are seeing better deals now than at anytime in the past. In contrast to housing, where prices are low, inventory is growing, and loans are difficult to get, apartment vacancies are down, rents are near all times high again, and cash flow can be positive from day one.
Why is it a good time to invest in apartments? Rents nationwide now average $991, which is up from $930 in 2006. In the San Francisco Bay Area, the average rent has gone from $1,025 in 2006 to $1,200 in 2011. This is partly due to fewer rental units available as well as less new building being done over the last few years. This is evidenced by the national vacancy dropping to 6.2% in the first quarter 2011 from 8% a year ago. Additionally, demographic trends are also favorable:
- 3 million young adults now living at home will equal about 1/3 of rental demand going forward
- 2.8 million homes and another 5 million homes will have been in foreclosure by 2012, which
means 2-3 million families will have to rent for up to 7 years
If you are looking at purchasing an apartment, here is what to consider:
- You want a property that produces at least 6% return on cash investment in the first year
- If the property requires a property manager, plan on a 2-4% fee
- Repairs, etc. run about 5-6%
- Expenses should not exceed 40% of income
And, if you don’t want to be an owner, consider a real estate investment trust (REIT), which are popular again. They typically pass along on average 90% of their income to their investors and currently some are returning 20%+ on the initial investment.
What are three things buyers or sellers can do to make the transaction smoother?
1) Choose a Realtor and be loyal to that Realtor. The relationship between the buyer and seller and their realtor is one of trust. That’s why choosing the right Realtor to work with is important. You need to be able to be honest with your agent and know that the agent understands what you’re looking for and trust that they have your best interests in mind!
2) Pre-Approval is actually the first step to home ownership. So, get pre-approved! To do this, contact your lender of choice and answer a few simple questions. This sets it up so that when you’re ready to make an offer on a home you can add a letter of pre-approval to the offer and look more attractive to a seller!
3) Accept the fact that things will change in this process. I cannot tell you how many times people have told me “I do not want a ranch home,” and guess what they end up buying…..a ranch home!! A few months ago I had active buyers who wanted a town home only and to not be in the hills. Guess what they ended up buying: An adorable home in the hills because it reminded her of her mother’s neighborhood. Things change, all the time!!
