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.
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!!
Taking Advantage of Today’s Market: Investments, Retirement and Second Homes
Housing inventories are up, which means prices are low, and interest rates are still great. Put those together and you’ve got the perfect opportunity to buy a new home. But what if you already have a home you love? Are you out of the market?
Not necessarily! Have you considered buying a second or investment home, or planning for your retirement? If you are in good financial standing with good credit, this is a way you can be part of this amazing real estate market — there may never be a better time to buy! This could be the chance of a lifetime to purchase additional real estate before rates are no longer at these historic lows.
Location, Location, Location
If you’re looking for a vacation or second home, there are a lot of highly desirable areas hard hit by the downturn in the housing market that will yield great bargains. Locations with a lot of foreclosures such as Arizona, in the Phoenix and Scottsdale areas; Central and Southern California, in San Diego, San Jose and Salinas; and Miami and Panama City in Florida still have lovely properties in good shape — and these are historically great vacation spots, for you or for renting out to other travelers! Look to a national real estate company to find an agent who can help you review properties in another state.
But a vacation home doesn’t have to be a plane ride away. If you want to be able to pack up the family and drive a couple of hours to your vacation destination, saving some travel money and ensuring you’ll use the property more than once a year, then just take a look around your home state. If you’re in the city, consider a country cottage; leave your beach bungalow for a mountain retreat. If you’ve always wanted a change of scenery available when the mood strikes you, now is your chance to make that desire a reality.
If you’re pondering a retirement home, there are other factors you’ll need to consider. Do you need to stay close to family for frequent visits, or should your home be a getaway for the grandkids? Do you want a strong senior community with lots of planned activities and meetings to keep you busy, or a quiet retreat where you can be left to your own devices? These factors will influence whether you choose a retirement community in Florida or a city like Austin, Texas, with a lively arts and music scene, for your next home.
Rentals Rise
Another way to take advantage of today’s rates and housing prices is to purchase property that you then turn around and rent. Rental properties are commanding higher and higher prices as foreclosures rise and fewer people are making home purchases. In cities around the country you should be able to charge enough rent to cover your mortgage and a home repair program — and still possibly even make a little profit on top. Be sure you research rental prices in your selected area before you buy, however, so you don’t end up pricing yourself out of the market.
Prices are so low in some areas that you also have the option of just buying and holding property instead of needing to rent it out. Cities in Oklahoma, Pennsylvania and Tennessee currently have very low home prices, but Forbes.com predicts they’ll gain value in the next year. Buy low, sell high — even in a crazy housing market like this one, some tenets stay true.
Expert Advice
Look for a real estate agent who is well-versed in investment properties, especially if you are buying a property to rent in a location far from home. If you’re looking at investing in a townhouse or single-family home, you’ll need their knowledge of the area to ensure you buy in a neighborhood well-suited to renting; if you’re plunging into the apartment market, you’ll need them to help you find a property in good shape, and probably to select a management company or reliable repair service you can line up in advance. Another option is to partner with a seasoned real estate investor, providing the capital and relying on your partner’s instincts to make good choices and get a decent return on your investment.
If you’re looking for a home to use yourself or to move into upon retirement, your best bet is to visit the area yourself and engage an agent while you are there. This way you can be sure the home has all the features and amenities that are important to you and your family.
It’s a great time to jump into the real estate market as an investor or to make that second-home or retirement-home purchase, but it won’t last. Interest rates are beginning to creep up and market watchers are seeing signs of an end to this low-cost, high-inventory period. Talk to me today about your financial goals and take advantage of today’s market before this opportunity is gone!
Contact me today to learn more.
The Magic and Frustration of Real Estate
The real estate market can be both magical and frustrating all at the same time. In many parts of the Bay Area, such as PaloAlto, the Sunset, Burlingame, or Mill Valley, it’s as if we are back in the 2004 real estate market where every property hadmultiple offers and lots of them were all cash offers. In other parts of the Bay Area, however, like Oakland, Novato, Vallejo, and parts of San Jose, the market is much softer and has not yet rebounded. Sales still happen in these areas, but only if the property is priced right. Additionally, much of the inventory is still made up of foreclosures and short sales. Even if these areas may not be hot, they still present a great opportunity for investors and first time homebuyers. It is amazing how locations a few miles apart can see diverging trends.
While markets like Palo Alto can bear price increases, multiple offers, and a healthy pace of sales, there are several other markets throughout the Bay Area that cannot. In real estate, it is all relative. Each sale needs just one seller and one buyer. The value is determined by who is the seller, the profile and capability of the buyer, the support of the lender, the type of real estate you are buying or selling, inventory, days on the market of the competition, list / sales price of past sales, and whether you are in a negotiating situation or a competitive world fighting against all cash multiple offers.
The key to navigating all of this is education. You need to know what market you are selling or buying in and what will it take to get the house sold or to buy one. The rules are not only different in different areas, but they can also change daily based on what is selling and at what price point. Additionally, the media confuses us even more. ZIllow will tell us that home prices fell 3% in the first quarter, the steepest decline since 2008, and Fiserv Inc. is predicting home values still have 5-10% more to decline. Yet, this is not what homebuyers who are trying to buy a home in Palo Alto or the Sunset are experiencing.
So, what does all of this mean? What we can say is that what should be is sometimes, what seems logical is sometimes, and what can be often is just because it can be. That’s the magic and frustration of real estate. There are no set rules and the journey is often not the one we expected. In the end, buy in a good location, take out a conservative loan, and wait 5 years. From Palo Alto to Novato, real estate will reward you.
Rehabilitating Your Dream Home
Home buying can be a nerve-wracking experience. You sift through multiple properties, visit the ones that grab your interest, and then finally decide on your dream home — but there’s just one problem: it’s a fixer-upper desperately in need of some TLC.
That dilemma is not uncommon today. Perhaps the home was treated poorly by a long string of renters, the owner ignored a serious problem or key fixtures were even sold off. Whatever the case, don’t be shocked or overly disappointed. Increasingly, home buyers are faced with the prospect of buying a fixer-upper in today’s real estate market.
Often, attractively priced properties that are foreclosure sales can sometimes come with cosmetic problems that may seem huge. It is not uncommon for a homebuyer to walk through a foreclosed home and discover that the kitchen was gutted by the former owners who sold off not only the appliances, but the cabinetry to boot.
This can even turn into a real problem that could hamper obtaining financing because often missing fixtures such as toilets and sinks can render the house “unlivable” per code. Who wants to buy a home they legally cannot inhabit?
Fortunately, there’s a government loan program available that can help you with that fixer-upper you wish to purchase. The Federal Housing Administration created the 203(k) loan specifically to help homebuyers rehabilitate homes they wish to purchase to live in, but that are in disrepair. A 203(k) loan lets a qualified borrower not only finance the purchase price of the home, but also include the price of the necessary repairs to the home.
A Closer Look
Again, the goal is for the buyer to live in the home, so this is not for investors. So the types of properties that qualify for the loan are:
* Single-family dwellings up to units that house no more than four families
* The residential portion of a mixed-use property (i.e., a property that is both commercial and residential in nature)
* An existing construction that has been finished for at least one year
* A home that will be torn down, but where the foundation will still remain
* A home that will be moved to a new foundation
* FHA-approved condos
There are two types of 203(k) loans, and the one that is right for your intended property depends on how much work needs to be done.
In terms of amount, a streamlined 203(k) provides up to $35,000 that can be added to the loan to cover the improvements, in addition to the purchase price of the home. For a standard 203(k), the homeowner can borrow the purchase price of the home, plus the price of the improvements, up to 110 percent of the home’s expected value after the improvements. (And again, this is assuming you can qualify for the total loan amount.) The money for the improvements is actually put into an escrow account that is used to pay for materials and the parties being contracted to do the work to the home.
Time is an important element of 203(k) loans. You must start construction within 30 days of the close of the loan and your work must be completed within six months. This might leave you wondering: what do you do if the house isn’t habitable? With a standard 203(k), you may be able to finance up to six months’ mortgage payments so that you can afford to live somewhere else while the construction is in progress.
Another critical time element is the paperwork. FHA rehab loans can take longer to close with a lender that doesn’t have experience with them, because there is more paperwork. So to avoid those sorts of delays, make sure you work with a lending professional that is experienced with 203(k) loans.
What kind of improvements are covered? 203(k) loans support a broad range of rehab work, including painting; room additions and second story additions; decks and patios; grading and drainage; bathroom and kitchen remodels; finished attics and basements; structural changes and repairs; environmental rehab such as removing lead paint or making energy conservation improvements; roofing; flooring; and accessibility upgrades for disabled residents. But what’s not covered are major luxury upgrades, such as a swimming pool or hot tub. That said, when upgrading your bathroom, for instance, you might be able to install a whirlpool bath tub. Again, the key is to speak with an experienced 203(k) lender that is well-versed in the details of the program.
Ultimately, what does a 203(k) loan mean for you? Freedom. The freedom to choose the home that is perfect for you and that you love, even if it needs some work that you would otherwise not be able to finance. If you or anyone you know is currently home shopping, but some of the properties you’re finding need some attention, I would love to help you review your financing options. Please contact me at the information provided on this message — and happy hunting!
Contact me today to learn more!
