Saturday, January 16, 2010

5 Tips How FHA and VA Buyers Can Succeed


First time home buyers grow frusted! Good homes at good prices are being snatched up by All Cash and Conventional buyers. Homes that are priced well below the market value, a technique called Power Pricing, are meant to get multiple offers in record time. The frenzy created by a low priced home creates an atmosphere of desperation amongst buyers. Each buyer outbidding one another in an effort to secure the great deal.

Unfortuately, there is a heirarchy of loans: "All Cash" is the best, then Conventional, FHA and lastly VA loans. How is an FHA or VA buyer to compete?

1. Representation. Serious buyers must employ the help of a qualified Realtor who can help them catch the brass ring. However, they need the experienced agent to help them understand that everyone is looking for the elusive great deal! They need a representative that can help find a home with their needs in mind, at the same time being realistic.

When buyers are first exploring the market, there are many websites (i.e. Realtor.com, Trulia.com, Redfin.com, etc.) for them to investigate on. However most of these websites have a 48hr filter delay. In this market, those great deals may have multiple offers and not even available in 48hrs.

A Realtor can set up an automated search that is directly connected to the MLS, such as Gateway, notifying buyers immediately of new listings or changes.

2. Ready to Jump. Buyers need to check their personalized online searches daily. They have to be ready to go, to make a quick decision. While a buyer is thinking it over, another one has put an offer in on it. What buyers need to remember is that they can change their mind within a certain period of time defined in the purchase agreement without risk of losing any money.

3. Closing Costs.For sellers, FHA & VA buyers are less desirable when compared to "All Cash" and Conventional loan buyers. The FHA and VA buyers have less down and are less financially stable, often needing assistance from the seller with closing costs, and may not qualify for a loan at the end of the road. Where the all cash and conventional loan buyer may have more money and if the appraisal comes in low, they are more apt to pay the difference. So what is an FHA and VA buyer to do? The price and conditions are the only way to stand out.

The all cash and conventional buyers know they have an advantage and may make lower offers. However the FHA and VA buyer has to come up to the plate with a reasonable or higher offer. With a Realtor's assistance, carefully analyse the comparable home prices and consider the condition of the property and make a reasonable offer. The offer may be higher than the asking price.

If you have the money for closing costs, pay your own closing costs. While you are searching for a home, continue to save your money for the down payment. This will help give you an advantage. If you need the closing costs paid for by the seller, you will need to add those costs into the offer.

4. Ask for Less. When buying a Bank owned property or a short sale, the less a buyer asks for the better. In a normal market, the buyer may ask for appliances or additional items such as a home warranty that the seller would typically pay for. However, the banks don't want to give any frills.

While normally in Southern California, the termite inspection is paid for by the seller, in Northern California the buyer pays for it. In the case of Short Sales and Bank Owned properties, the tide seems to be turning. While VA buyers have to have a termite inspection and clearance, the buyer should put a maximum price tag on the repairs. Banks don't deal well with unknowns.

FHA buyers may want to avoid asking for a termite inspection with repairs altogether, if the appraiser will allow it. Especially, on condominiums where the HOA usually pays for the exterior termite inspections once a year. Buyers should let the home inspector know this so that they can look for any issues of wood rot under sinks.

In regards to houses, if the seller of the short sale home purchased it in the past few years it more than likely had a termite clearance at that time and less likely to have costly damage and repairs needed. However, if the house shows lots of signs of deferred maintence, this may not be the house for a first time home buyer. The bank wants to give you a great price for the house "as is".

5. Stand Out. Buying a home is an emotional purchase. By appealing to the emotional side of a seller, buyers may beat out the competition. In a letter, buyers should give the seller a little history of themselves and reasons for them to like them. Especially Veterans, they need to use their service to our country to their advantage to tug on those heart strings. Even add a nice photo.

These tips will hopefully help a FHA and VA buyer succeed. But the biggest tip is to patient and persistent.

--Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585DRE#01409760

Sunday, December 20, 2009

Cautious, but Good News for the San Diego Housing Market in 2010


With prices up 6.6% in San Diego County, the medium priced home now $325,000, and the number of homes sold up 18% compared to one year ago, it is fair to say that San Diego County is in a stabilizing market. Just last week appraiser, Leon Crowell, confirmed, "We can no longer say we are in a declining market. "

While some are cautiously optomistic about the unemployment rate improving from 10.7% in October, the highest rate since the Great Depression, to 10.3% in November. According to Chrisopher Thornberg, who was one of the first economists to forecast a major recession, said the recession has hit it peak. "All the data shows that the U.S. economy has more or less bottomed out. We should only be surprised if unemployment wasn't peaking. The bigger issue is how fast of a recovery we're going to see," said Thornberg, who works for Beacon Economics in Los Angeles.

Coupled with the news that foreclosures rates are dropping. According to the MDA DataQuick, San Diego County Foreclosures by all lenders totaled 11,393 from January to October was down from 15,414 for the same period last year. The reduction continues, the number of foreclosures in October 2009 numbered 1,346 dropping 4.7% to 1,283 in November. Some believe under government pressure and incentives, banks are delaying or canceling foreclosures while working with home owners to modify their loans or arrange for short sales.

In the short term, the reduction in foreclosures and the reduction in unemployment could help stabilize the economy and housing market, prompting homeowners with equity, not in distress, to sell and buy another home. Some believe that many owners will still hold back because of loss in value compared to a few years ago. Since 2006, prices tumbled as a result of many homes being lost to foreclosures. But as one of my wise sellers recently said, this is the time to sell and move up because "while my home value has fallen, I will get a better deal on my new home and 10 years from now, the home I am buying will be worth much more in proportion."

So while I agree with Thornberg, the question is how quickly the recovery will occur, it does seem there is hope on the horizon.

--Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Friday, December 11, 2009

Uncle Sam's Christmas Gift


While everyone is bustling around buying gifts and attending parties, there are still serious buyers out there making multiple offers on well maintained homes.

If you atticipate the need to sell your home, now is a great time to market it. The number of homes for sale are typically lower at this time of year due the holidays. With fewer serious buyers trampling through your home and the Christmas decorations adding a romantic ambience, make it the perfect time to sell.

If you need to sell, it definitely won't get sold unless you have it on the market. Worried about theft? Hiring a Realtor who uses computerized Sentri lockboxes, provides the ability to track agents and their clients entering the home.

Many sellers think waiting until spring is the best time to sell. However this year, with the Tax credit extension, buyers must have an accepted offer by April 30, 2010 and close by June 30,2010 leaving only a few more months. So if you are facing a possible foreclosure and want to sell your home before that, you need to consider that banks typically take several months to approve short pay sales.

If you are moving up, you may qualify for the $6500 tax credit. The tax credit does have income limits and the home-price cannot be above $800,000. Read more about it in Homebuyer Tax Credit Extension & Expansion . However, if you can afford to move up, this is the perfect time to sell and buy a bigger or better home.

Many move-up home buyers say they are waiting for home prices to go back up to regain the equity that they have lost in the last couple of years. For those who have lost all of their equity, there is no choice. They must wait for the equity to return. However, for those who have some equity and plan to wait until they regain what they have lost, may find themselves behind the curve.

Several years from now when home prices begin to rise again, as they historically do in San Diego County, the home equity growth will all be in proportion to the price of the home. For example, if you purchase a home of $350,000 versus a home of $700,000, in 10 years from now if the home value rises 10% then you will have gained $70,000 in the $700,000 versus $35,000 in the $350,000 home. During the downturn, if you have lost about 30% of your home equity, on your $350,000 house, then you will be down about $150,000 in equity. In comparison, the $700,000 house has lost about $300,000 in equity, twice as much. So in the long run when home prices go back up as they historically do, by moving up now, then you will be up $150,000 in equity.

Don't delay take advantage of Uncle Sam's Christmas Gift.

Saturday, November 7, 2009

Homebuyer Tax Credit Extension & Expansion


If you haven't heard the news already, the First Time Home Buyer Tax Credit has been extended, as well as the new bill includes a tax incentive for existing homeowners as well. Homeowners who have owned their current homes at least five years, are now eligible for tax credits of up to $6,500 when they purchase a new home. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010 and close by June 30.

The credit is available for the purchase of principal homes costing $800,000 or less, excluding vacation homes. Single individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000 would not be eligible.

Other provisions in the bill, include taxpayers will be eligible to claim the credit on purchases made in 2010 on their 2009 income tax returns. The bill also established that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

While some may feel the tax credit may be adding to the National debt, according to the National Association of Realtors, economists estimate that the current tax credit has already contributed approximately $22 billion to the general economy, and approximately 2 million people will take advantage of the tax credit this year.

Some think that they didn't need to give such large tax credits. Or was it large enough? What do you think?

If you would like more information, please contact me.

Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Monday, October 19, 2009

Buyers, Don’t Forget Your Pre-Approval Letter!


Many buyers consider shopping for a home, like a buying a car. When is the last time you checked with your lender before buying a car? However, it is a much bigger investment and by getting a preapproval letter, you can step smoothly into home ownership.

But you looked on-line at a mortgage calculator. These wonderful tools are helpful to get a rough idea of what your monthly payment might be, but a lender will use many factors to decide what type of loan you qualify for and for how much.

If you are serious about buying a home, check with your Realtor® on who they might refer. Realtors® know which lenders will deal with their clients in a professional, timely manner and will find any obstacles upfront, rather than half way through the purchase that might cause a problem.

A preapproval letter from a lender, before you begin seriously shopping for a home, will save you hours of wasted time and frustration for the following reasons:

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 in no time you have a letter. 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 Realtor® 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 are not 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, apply for credit 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.

--Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Sunday, October 4, 2009

Clear Choice: Upgrading Windows


If you feel a draft every time you walk by your windows, it’s probably time to replace them. Likewise, windows that stick, glass that is cold to the touch, and costly energy bills despite new insulation and other home repairs are all signs that you’ve put off replacing them for too long.

Whether you intend to buy and install the windows yourself or have a pro do it for you, do the research first. Know your window type: double-hung windows that slide up and down, casement windows that swing out, awning windows, etc. Then pick your preferred framing material, such as wood, vinyl or fiberglass. Each has its advantages and disadvantages, from style to price to longevity.

You must also consider where you live; energy needs in the Northwest differ from those in the Deep South. Ratings for energy efficiency, light visibility, air leakage and other factors are available from government programs such as Energy Star, publications such as Consumer Reports and industry sources such as the National Fenestration Rating Council.

Armed with the right information, you can shop smarter. Have a target price in mind, get estimates and have the patience to wait for the best possible price.



Sources: http://www.energystar.gov.www.nfrc.org/

Handy tip: The sun’s rays cause window streaking, so save that part of spring cleaning for a cloudy day. Source: www.realsimple.com

Saturday, September 26, 2009

3 Low Cost Tips for a Sure Sale: Preparing Your Home to Sell


As home prices begin to slowly rise, homeowners think about preparing their homes to sell. The goal of taking some time to prepare your home is to sell in the shortest time for the most money. A good place to start is contacting an experienced Realtor®, a few months in advance, for advice on how to prepare your home.

Where do you begin?

1. Clean and De-clutter. The least expensive, yet the most important task, that people underestimate is a thorough scrubbing of the home. When you are selling your home, you need to cleans every corner, bleach out spots or replace grouts in kitchen and bathrooms. Aluminum, mirrors and windows must shine. Clean walls, or touch up paint, and lastly clean carpets.

If you have been squeezing by furniture, you need to remove a piece furniture to open up the room. Clear out as much as possible to make the home look bigger. Clear off counters and table tops. Visit a few open houses to see what works. Remove all personal photos or items. Think Model Home, impersonal. Preparing a home to live in and sell, are two very different things.

2. Curb Appeal. Mow and edge the lawn or weeds. With the water regulations, you may need to add some Ammonia Sulfate to your lawn and water a bit more to green it up. Check with your local nursery for more information. Right before listing the home, add some colorful plants out front.

3. Repair or Replace. Some homeowners begin with a home inspection by a qualified home inspector, before putting it on the market, to correct any issues that may be used to negotiate the price down. A few hundred dollars in an inspection and repairs, may save the homeowner thousands of dollars in the price.

While quite often homeowners know where the problems are, but may not have the money needed to deal with them. To save money, they may try to do the repairs themselves. Simple repairs may be okay, but often you need an expert to fix the problem. Otherwise, you may fix it so no one else can fix it. Then it may end up costing more in the long run. Anyone who has ever looked under a kitchen sink and thought replacing a garbage disposal would just be a easy fix, a matter of unscrewing a few screws and screwing on a new one, can attest to this.

If you do not have the money to make the repairs, the price may need to be adjusted or credits may be given to the buyer. So knowing up front what you need to do will save time and money.

Another issue that impacts many homes in San Diego County due our expansive soil includes cracked foundations. Signs that may turn buyers away such as cracks in walls and flooring should be investigated before trying to repair or cover them up. The expert's report may say it is nothing, putting the buyer at ease, or it may say it will cost thousands of dollars to repair. Either way, the law requires that you disclose material facts like this to the buyers. While you may not have the money to make the repairs, this has to be disclosed. The buyer has a right to know what they are buying. This may impact the price, but save you a visit to court.

Other issues that need to be disclosed, if you have knowledge of it, include unpermitted rooms. If you are uncertain, it is up the buyers to investigate. However, knowing up front, could save time with FHA or VA buyers who may not qualify for their loans as a result of unpermitted rooms. See my blog FHA & VA Buyers Be on Look Out--10 Most Common Home Problems .

Using these 3 simple tips will help you sell your home faster and for top dollar. For other home selling tips see my blog Price Wars and Beauty Contests--8 Simple Tips to Win.


--Virginia Hall
ABR, CRS, e-Pro, GRI
Coldwell Banker Residential Brokerage
(619)258-8585