Real Estate Tidbits

Buyer's First Step: Talk to a Lender

Anyone considering buying a home wonders what to do first.  In today's competitive real estate market, buyers need to be fully prepared when they start looking for a home to buy. Preparation, as with anything, is especially critical in real estate.

Of course, one of the most important things a buyer can do to get prepared to buy - their first step - is to meet with a lender and get pre-qualified for a mortgage/loan. Better yet, get pre-APPROVED, but either is fine.

Talking with a lender BEFORE looking for a home is beneficial to buyers in four ways:

1. They learn IF they even qualify at all to buy.
2. They learn HOW MUCH they can afford to pay each month for a mortgage payment.
3. They learn WHAT STEPS THEY MUST TAKE to ensure they can actually obtain a loan.
4. They learn THE PRICE RANGE of the property they must focus on (buyers don't want to look at $300,000 homes if all they can qualify for is under $200,000).

A competent, professional Realtor will ensure their buyers are working with a successful, experience lender before they start looking at homes. This ensure the buyers are in the best position possible to buy the best home that they can afford.

Feel free to call me at (916) 241-8000 if you would like me to recommend an excellent Sacramento-area lender to speak with.

December 2009: This Month in Real Estate

Four Reasons Now is a Great Time to Buy Real Estate

Is now the time to buy?  That's a question I hear often from would-be buyers (both from buyers who want to live in the property and from investors). And many buyers wonder if they should at least wait until after the holidays.

Here are four reasons that NOW is a GREAT TIME TO BUY REAL ESTATE:

1. There's LOTS to choose from. They are still a lot of homes on the market in all price ranges. Foreclosures, short sales, and regular "equity" sales.
2. Interest rates are still at historically-low levels... and they WILL go up eventually.
3. Prices are LOW.
4. There's less competition (from other buyers) during the holidays since many buyers do actually wait until after the holidays.

So, if you've considering buying, then now is truly a great time.

First-Time Homebuyers Play Major Role in Real Estate Market

According to a recent press release by the National Association of Realtors (NAR), first-time homebuyers account for almost half (47%) of all recent home sales nationwide. This is, of course, partially due to the current home buyer tax credit available to those who hadn't owned a home in the last five years. That's up from 41% of sale in 2008 and only 36% in 2006.

It's expected that this tax credit, recently extended through June of 2010 (see blog post below) and expanded to other types of buyers, will continue to play a major role in the real estate market's recovery.

This Month in Real Estate: SPECIAL EDITION - Home Buyer Tax Credit Extension

November 2009: This Month in Real Estate

Home Buyer Tax Credit Extended

OK... it's official. The $8000 home buyer tax credit has been extended through April 30, 2010. Actually, you must be in contract by that date and close by June 30, 2010.

The credit, which previously was targeted to first-time buyers, now includes "move-up" or "repeat" buyers - those who have lived in their principal residence for at least five years. The tax credit for these buyers will be up to $6500.

And, remember... this is a tax CREDIT and not a "deduction." 

Of course, there are conditions and restrictions for this tax credit, including income limits, so it's important to call our office at (916) 241-8000 or contact a lender for more information and how it may apply to your specific situation.

Click here for additional info.  www.FederalHousingTaxCredit.com.

Home Buyer Tax Credit May Continue After November 30th

OK... things are finally looking up for the extension $8000 home buyer tax credit that is scheduled to expire at the end of this month.  Sacramento real estate buyers are excited that this benefit may be extended.

We are awaiting final passage of the extension from Congress and, if things go well and the President signs the bill, we may have a few more months of this great home buyer benefit.

Stay tuned...

The Single Most Important Thing When Buying a Home

When starting on the home buying journey in the Sacramento real estate marketplace (in fact, ANY market), the most important thing a buyer must possess is patience.

With today's low prices, competitive interest rates and great deals, there are many other competing buyers looking for great deals, too. Often, well-priced properties receive multiple offers and sell above list price.

It's not uncommon for a buyer to make several offers on different properties before they get an acceptance. Patience in today's challenging market is critical.

Of course, it's also vitally-important to work with an experienced and knowledgeable Realtor who can navigate through the often-frustrating waters of buying a home. Buyers must be willing to listen to their Realtor's guidance, advice and recommendations. The buyers that "want to do it their own way", are often the most frustrated and wonder why they're not getting their offers accepted. An experienced Realtor knows how to best write offers that have the best chance at getting accepted.

The bottom line is to be patient, work closely with your Realtor, and understand that it may take a few times writing offers before you get that home you've been looking for.

Patience will certainly pay off. Hang in there.

Sacramento Real Estate Update: Homes Under $200k Selling Fast

Everyone knows the real estate market has struggled over the past few years, but we are starting to see some improvement in the lower price ranges.

While many homes are still declining in value and struggling to find their footing, many properties in the Sacramento real estate market under $200,000 are selling fast and retaining their values fairly well.  There's even some signs of appreciation in that price range.

Of course, a large number of homes in this price range are bank-owned (foreclosure) properties and therefore don't have sellers that then move up to higher priced homes (thus stimulating those price ranges, too). This is really what we need to see a stronger recovery in our market.

Overall, this is a positive sign and we hope to see continued support that these lower levels. It should eventually "trickle up" and affect higher price ranges, too.  Although we will not likely see a return to 2004 and 2005 price levels for a long, long time.

Mortgage Payment Not the Only Cost Buyers Must Consider

When renters are considering buying a home, it is important that they not only look at the monthly mortgage payment compared with their monthly rent payment, but that they also consider other costs associated with home ownership.  These can include homeowner association (HOA) fees, insurance, property taxes, maintenance, and utilities, which most renters are not responsible for paying.

Of course, working with a professional, experienced Realtor is critical when buying in today's marketplace.  That Realtor can provide guidance with all aspects of evaluating and buying a home, including the costs of ownership.

October 2009: This Month in Real Estate

What is an REO Property?

One of the many questions I get asked regularly is "What is an REO Property?"  "REO"?!?!  Yes, another acronym. It seems like in real estate, as in the technology industry, there are just too many acronyms.

OK... so this one is easy. REO means "real estate owned".  Owned by whom, you ask?  A bank or other lender.

"REO" and "real estate owned" are synonymous with "foreclosure".  An REO property, also known as a "bank owned" property is simply a home that has been taken back via the foreclosure process and is now owned by the lender.

REO = foreclosure.  It's that simple.

What is an FHA 203k Loan?

More and more Sacramento area home buyers looking for a loan to help rehab or make repairs to a property are looking to use the Federal Housing Administration's (FHA) 203k rehabilitation loan. It enables home buyers to finance both the purchase of a house and the cost of its rehabilitation (repairs) through a single mortgage.

There are two versions of this product:

• FHA 203k loan
• FHA 203k streamline loan (up to an $35,000 in repairs allowed to be financed)

Eligible improvements and repairs include:

• structural alterations and reconstruction
• modernization and improvements to the home's function
• elimination of health and safety hazards
• changes that improve appearance and eliminate obsolescence
• reconditioning or replacing plumbing; installing a well and/or septic system
• adding or replacing roofing, gutters, and downspouts
• adding or replacing floors and/or floor treatments
• major landscape work and site improvements
• enhancing accessibility for a disabled person
• making energy conservation improvements

HUD does require that properties financed under this program meet certain basic energy efficiency and structural standards.

To get the information you need to see how this may be able to work for you, contact a lender who works with these FHA 203k rehab loans. Since they are unique, you'll want someone who has experience in getting them done. And since this programs terms and conditions could change at any time, talking to an experienced FHA 203k lender can provide you the most current and accurate information.

And if you'd like even more detail, click herefor the Department of Housing and Urban Development's (HUD's) website for a thorough (and very dry) explanation.

Also, for a list of FAQ's from HUD's website, click here.

By the way, even though I specifically mention the Sacramento real estate market, this program is available throughout the United States.

September 2009: This Month in Real Estate

Real Estate "Myth-Understanding" #4: It's a Bad Real Estate Market

In the fourth in a series of real estate myth-understandings, I discuss one of the most commonly held beliefs of today's marketplace... that it's a horrible real estate market.  This belief is truly a myth.

Myth-Understanding: It's a horrible real estate market and I should wait for things to get better.

Truth:  The strength of any real estate market and the opportunities within it depend on what someone is looking to do in that market.  While today’s market is certainly not ideal for most would-be sellers, it is certainly a phenomenal market for buyers and investors. And for homeowners thinking of selling within the next two to five years, NOW may be the BEST time to sell.

Looking back a few years from now, many buyers and sellers may realize that this market provided a golden opportunity... and many, unfortunately, will regret they sat on the sidelines and watched.

Home Buyers Try to Time the Real Estate Market

Some buyers are trying to time the bottom of the market and purchase once it appears that prices are at their lowest.  Many housing forecasters and real estate professionals advise against this approach as buyers should not view their homes solely as investment opportunities. And trying to time a market bottom can be risky. 

Of course, the only proven way to truly know when a market - any market - has bottomed out, is when it starts rising again.  And, by that time, the best opportunities may already be gone.

Historically, the average annual rate of return on a home lived in for five years or more is nearly 12 percent, based on data California Association of Realtors has collected over the last 40 years. So, buying "the right property at the right price" in any market is often the smart way to go.

First-time home buyers can certainly take advantage of the amazing opportunities available right now in today's market.

Be sure and connect with an experienced, savvy Realtor to assist you in your home search.

Other great articles include:

Buyers Often Miss "Great" Deals for "Better" Deals

The 3 Most Important Steps on the Path to Buying a Home 

Looking for Even More Real Estate Tips, Tricks & Techniques?

Sacramento Real Estate: Distressed Properties Help Homes Sales Soar

Sales of existing homes are soaring as many investors and first-time buyers purchase distressed properties (foreclosures, short sales, fixers, etc.).  It is estimated that about 50 percent of current sales involve distressed properties, and it is expected by many that the trend will continue as foreclosures rise in the months ahead. This is happening in the Sacramento area and throughout the country.

It is truly a great time to buy, either as an owner-occupant or as an investor. Due to extremely low home prices, first-time home buyers are again able to afford to buy. This is a nice relief for renters and those who have wanted to make their first purchase since they were priced out of the market just a few short years ago.

And, contrary to popular belief, not all foreclosures are dumps.  While some are, most are in good shape or require very little work - sometimes just some paint and new carpet.

$8000 First-Time Buyer Tax Credit Helps Fuel Home Sales

Sales are up!  That's good news.  Many housing analysts believe the first-time home buyers tax credit has helped fuel home sales in recent months.  According to a recent survey, nearly 40 percent of first-time home buyers said they would not have purchased a home if the tax credit was not offered.  Sincethe tax credit has helped so many first-time buyers purchase a home, many believe it is critical that Congress extends the credit beyond the December 1st deadline, and include all buyers, not just first-timers.

There is currently a bill being proposed extending the credit and changing some of the guidelines. It's H.R. 2801: Home Ownership Moves the Economy (HOME) Act of 2009.

Click here for information about the current tax credit:  http://www.federalhousingtaxcredit.com 

More Foreclosures May Be Coming

Despite efforts by lenders and the government to prevent foreclosures, many economists and housing analysts predict there will be another wave of foreclosures by the end of 2009, and many of those properties will be offered for sale.  According to the U.S. Comptroller of the Currency, 53 percent of loans that were modified in the first half of 2008 fell back into arrears.

More foreclosures on the market for sale may put additional downward pressure on property values, but if released slowly into the marketplace, may not have too much of an effect.  It's hard to predict what the market may do over the next 12-18 months, but if you've been thinking of buying or investing, it is truly a great time.

August 2009: This Month in Real Estate

Larger Down Payments and Documented Income are Now a MUST

Obviously,the requirements for buying a home have changed from just a few years ago. It used to be that if you "had a pulse" and a "wallet with some cash in it," you could buy a home (OK... I am exaggerating a bit... but I'm not too far off with that statement). But, with everything that's happened in the real estate market and economy, it's no longer that easy.

Most financial institutions/lenders have tightened their lending guidelines and increased their down payment requirements.  It's no longer that easy for someone purchase a home without a down payment or documented income, nor can owners refinance multiple times without sufficient equity in the home.

Of course, could this change in the future?  Sure anything's possible... but, hopefully, the lenders and other financial institutions have learned their lesson.

So, if you're thinking of buying real estate, either to live in or for investment, then plan accordingly.  And if you'd like to discuss your situation, please give us a call at (916) 241-8000.

Multiple Offers Common and Frustrating Most Buyers

Multiple offers are common these days.  It seems like we've been here before... and we have... just a few years ago.  This time, however, it's mostly the foreclosure properties that are attracting more buyers and multiple offers.

Multiple offers often lead to a higher sales price and many disappointed buyers. If, for example, a home attracts 6 offers, then 5 of those potential buyers will be let down.  Obviously, only one buyer will win. And, it's not uncommon for some homes to receive 10-15 offers or more.

Most buyers end up having to write offers on many, many properties before they end up getting a home. Unfortunately, it may take several losing offers in order to "learn the lessons" necessary to compete in this market.

While there's never a guarantee that a buyer's offer will be the "winner," there are a few things buyers and their agents can do to increase their odds of being the offer selected by the seller (who in most cases these days are banks):

1. Be an ALL CASH offer. (yes, I realize this isn't all that easy for most people, but if you can buy with cash, you put the odds in your favor of winning - unless, of course, you write ridiculously low offers thinking cash will always win out... it won't).
2. Get pre-approved by a lender in advance (not just pre-qualified, but pre-approved which means your financial information has been more thoroughly reviewed by a lender).
3. Don't ask the seller to pay for a pest inspection or home warranty. While both of these items should be included when buying a home, the buyers can pay for these themselves.
4. Shorten your inspection time periods.
5. Put down a strong deposit and a large down payment.
6. Be reasonable in your offer price. Your Realtor is your best guide here since every property and every situation is different. Many bank-owned properties these days are already priced well, so by offering well below the list price almost guarantees you either get a counteroffer or get rejected outright.

Of course, always consult your Realtor in regards to all these issues (and others) since no one answer works for everyone.

Many buyers go in to an offer situation thinking they can ask for the world and offer a low price thinking the seller will come back with a counteroffer.  While this is sometimes true, when there are multiple offers, a buyer may get only one chance to get that home they love.

So... consider going in with your highest and best offer from the start. If you lose out, at least you know you gave it your best shot.

Buyers Should Check Credit Reports and FICO Scores in Advance

One of the primary factors financial institutions/lenders consider in their decision to lend is a strong credit record.  Borrowers can dramatically increase their chances of being approved for a home loan by requesting their credit report and FICO score at least six months prior to applying for a loan.  This allows the consumer to dispute errors and/or pay any outstanding debt. 

Check the following credit reporting companies' websites:

- www.experian.com

- www.equifax.com

- www.transunion.com

 

New Loan Guidelines in Place to Protect Consumers

A new set of consumer-protection rules took effect on July 30, including requiring lenders to provide consumers with initial disclosures of the estimated mortgage costs within three business days of the loan application; prohibiting lenders from collecting any fees prior to the consumer receiving the loan-cost disclosures; and prohibiting quickie closings on loans.

 

Traditionally, many mortgage brokers and lenders collected fees covering appraisal, credit, and other charges at the time of application.  The new rules eliminate this practice and prohibit lenders from collecting any fees until the consumer has received the truth-in-lending disclosures and an annual percentage rate (APR) calculation of the loan costs.

 

The new rules also require lenders to deliver a copy of the real estate appraisal to the home buyer three business days before the scheduled closing on the loan.  Previously, federal regulations guaranteed that consumers could request and obtain a copy of the appraisal, but many home buyers were not aware of this right.

 

Additionally, the rules prohibit quickie closings on loans by requiring a seven-day waiting period after applicants are handed their early disclosures or the disclosures are mailed.  This provides applicants a week to think about the transaction and to decide whether it is right for them.  Final truth-in-lending disclosures are due three business days before closing.

 

This information is from the California Association of Realtors.