First-time Home Buyer Tips

The following suggestions will help the First-time Home Buyer to make the most of the market:

Find a Real Estate Consultant. The First thing to do is seek out the free advice of a Realtor. You will want to find just one Realtor that can advise you and represent your best interests. You will want a Realtor who is willing to answer questions and educate you on the process. It is not uncommon to sign a Buyer Broker Agreement with an experienced committed Realtor. The agreement outlines the agents' responsibilities, as well as the buyers'. Figure out what is the best way to communicate--be it email, phone, or text.

Discuss Affordability. One of the first people you should talk to is a lender or mortgage broker. They can help you see where you are and where you need to be. How much have you saved for a down payment? How much can you budget to spend each month? Will you need to factor mortgage insurance into their monthly payments? What can you expect to pay in property taxes? Working through questions up front can help you get a better handle on what you can truly afford. Also do not make any large purchases on credit until after the close of escrow to avoid changes in your credit scores.

Discuss Home Ownership Goals. What are your goals and why do you want to buy? How long do you plan on staying in the home? What are your needs in the future? When you first start it is easy to look for your dream home and when you are first entering the market you may need to lower your expectations. Remember that you need to just get on the bus and work your way up as your income improves and you grow your equity.

Match Your Expectations to Your Price Range. Many first-timer home buyers live in small apartments, but when buying will not settle for anything but a house. Understanding that you are at an entry point in the marketplace, and that you are not likely to get all the bells and whistles with your first home in a price range that you can comfortably afford.

Familiarize Yourself with Starter Home Inventory. Begin looking at your market with a fresh eye toward affordable entry-level homes, including properties that may not have been considered before. Falling prices have opened up some areas that have been out of reach to first-time buyers for years. Knowing the inventory inside out will help your expectations as to the type and condition of homes that fit your price range. Once you have a good feel for the homes in your price range, then you are ready to buy.

These are the keys to a successful First Time Home Buyer purchase.

--Virginia Hall
ABR, CRS, e-Pro, GRI, SFR
Coldwell Banker Residential Brokerage
VirginiaHall.com
Direct (619)258-8585

Limited Time $18,000 in Combined Homebuyer Tax Credits

Wow! What an opportunity for first time California homebuyers and move-up buyers purchasing brand new homes. Between now and April 30, 2010, if a first time buyer enters into an accepted contract and closes before June 30, 2010, they may qualify for up to $18,000 total in Federal and California State tax credits during a brief window of opportunity.

Move-up buyers, who are not first-time buyers, purchasing a brand new home and have lived in their present home for at least five years, may also use the same time frames to receive up to $16,500 in combined tax credits as permitted under the federal law.

According to the California Association of Realtors, "Under a newly enacted California law, a home buyer may receive up to $10,000 in tax credits as a first-time buyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits."

California lawmakers allocated $100 million to first time buyers and another $100 million for buyers of brand new homes to be applied in equal amounts over a period of three taxable years. So the new tax credits will only be available until the funds run out and there are certain limitations. The funds are limited, so don't dally.

For more information and details, visit the official
California Franchise Tax Board website


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

They're Back....Multiple Offers in the San Diego Housing Market

While the medium home prices in San Diego County may be climbing slower than in 2003 in, due to the uncertainty of the economy, the bidding atmosphere with Multiple Offers is back.

As the inventory of homes decreases below the normal 6 months of inventory in most areas of San Diego County to 2-to-3 months and the number of buyers increased 10%, compared to a year ago, the competition for good homes is driving buyers into a competetive bidding frenzy. Buyers are making offers on multiple properties, and sellers in the lower end of the housing market are getting multiple competing offers.

"My goal is to get a house this year," said one of my serious first time home buyers. Many are racing towards that goal before the $8,000 Tax Credit expires, before the giant carrot disappears from underneathe their noses April 30th. To add to the mix, the government added in a $6500 tax credit for repeat buyers. And then there are the investors buying while prices are low.

Sellers and banks are looking for the cash to back up those rising offers, should the appraisal not come in and the buyer may have to pay more cash to make up the difference.

So what are buyers to do?

1. Lite Fixer. Look for a home that may not be perfect. Look for the potential in a home. Cosmetic repairs can always be done one at a time. Look beyond the stained carpet and scuffs on the walls. Ask the seller to help with your closing costs so that you can use that money to replace the carpet and paint. Also, the tax credit can be used in the near future for needed repairs or updating. But beware, avoid homes that require too many "honey do's" unless you have lots of money to sink into the home. Watch "The Money Pit" with Tom Hanks and Shelley Long before jumping into a home with lots of issues.

2. Buy Low. Buy a home below your means, below your maximum preapproved price, so that you have room to bid up. While you think you are doing good by giving the seller his asking price, multiple offers pushes the price upward and you may need room to meet that higher price.

3. Be Realistic. Most importantly, listen to your Realtor's advice and be realistic. Listing agents toss the low ball offers aside, unless you have "all cash" for a quicker sale. Know what the comparable homes are running in the area and plan to make a fair market value offer.

For more tips on being a successful buyer in this challenging market, read 5 Tips How FHA and VA Buyers Can Succeed

--Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
"2009 & 2010 FIVE STAR Real Estate Agent(SM)”.
Coldwell Banker Residential Brokerage
Direct (619)258-8585

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

What are FHA Buyers to do? The New FHA 203K Loan Option

First time home buyers are growing frustrated as the number of available homes for sale in San Diego County declines. They can't seem to find a home that will qualify for their FHA loan or they can't seem to beat out the all cash and conventional loan buyers.

FHA loans have strict guidelines on what and won't qualify. Homes that will not qualify include those that are missing kitchen cabinets, heaters, toilets, worn roofs, unpermited garage conversion, or perhaps the seller won't pay for the required termite work.

What are FHA buyers to do? Don't give up. Looking through all those foreclosures and homes with deferred maintenance may now be the way to go. A new loan called the FHA 203K has recently emerged onto the scene. It will give buyers the opportunity to buy a home that may be in need of up to $35,000 in repairs. The repairs can include termite work, a new roof, a new kitchen or bathroom updates, converting back an unpermited garage. Often the seller or the bank won't pay for these improvement. Yet without many of these repairs being addressed the home would be uninhabitable. So there is usually less competition for these homes.

How does the FHA 203K loan work? Buyers still need to meet the FHA loan guidelines and bring in their 3 1/2% down . However, the big difference is the cost of needed renovation or upgrades will be added to the loan. The contractors have to be approved and the repairs must be completed within 6 months following the close of escrow. The added inspections and paper work can extend out the escrow a couple of weeks. While the interest rate may be higher than the traditional FHA loan, some sellers may be willing to help with closing costs to pay down interest rates to keep the loan affordable for the buyer and get the home sold.

So FHA buyers don't despair. There is still time to find that first home and collect the $8,000 tax credit. For more information on the tax credit, see my blog Uncle Sam Giving Money Away to First-Time Homebuyers .

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

FHA & VA Buyers Be on the Look Out--10 Most Common Home Problems

With no more 100% conventional financing available, many first time home buyers are turning to the FHA and VA lending. While the FHA loans require 3.5% down and, if you qualify, the VA loans requires zero down, these loans do have their challenges.

With the interest rates still reasonable, many investors and conservative borrowers are out making their moves on lower end properties that can make the offers from FHA and VA borrowers less appealing because of the stringent property condition requirements and financial volatility of the buyer and their qualifications.

The number of well maintained homes grows limited in San Diego County, increasing the number multiple offers. While it is possible to find a clean home that qualifies for FHA or VA lending and still have the seller pay your closing costs, it is more challenging. When competing with multiple offers, being able to pay some of all of your closing costs will definitely help your position.

However, if you have limited funds and need the seller to help pay for your closing costs, then you should plan to look at homes in a slightly lower price bracket and plan to offer above the asking price, or be prepared to settle for a home that is slightly dated but functional.

While the home condition guidelines for the FHA and VA loans are very similar, they are not always clear cut. The home will be inspected by a specially trained appraiser who will note any safety or health issues that may pose a risk for the buyer and require they be fixed before close of escrow. Below is a list of some of the most common list of repairs that will require attention before having an appraisal for a FHA and VA loan:

1. Any useful components (appliances if present, floor covering, etc.) of the home, especially the roof, should have 2 years of useful life remaining. A roof should not be leaking and have no more than 3 layers of shingles.
2. If the homes was built prior to 1978 , exterior and interior paint that is peeling must be scraped and painted.
3. Must have a functioning heater. Wall heaters must be designed to heat the entire home.
4. Health and Safety Hazards (ie. electric garage door opener won't reverse with resistance; burglar bars, etc. )
5. Broken windows and doors should be replaced.
6. Safety handrails should be installed in open stairwells of three or more stairs.
7. Termite inspections required, as well as any infestations of any kind should be exterminated (ie., insects, mice, bats, etc.)
8. Damaged or inoperable plumbing has to be repaired.
9. Structural or foundation problems must be repaired. Crawl spaces must be accessible for inspection.
10. Electrical box/system should have no frayed or exposed wires.

VA and FHA requires that Condo complexes be approved. Since very few FHA and VA loans were being used when many of the newer developments were being built and some of the developers did not want to pay the extra fees required to get that approval, you may want to check these websites for complexes that are approved . For FHA see https://entp.hud.gov/idapp/html/condlook.cfm and for VA http://condopudbuilder.vba.va.gov/2.2/frames.html.

Sometimes, the buyer can negotiate in the purchase agreement that certain obvious conditions be fixed. However, quite often the sellers may not be able to or won't repair these items. So it may be in your best interest to avoid the problem homes all together.

--Virginia Hall
DRE License 01409760
Coldwell Banker Residential Brokerage

Grab That Golden Housing Ring!

The NEWS is out! While the Economic Stimulus Package waits for President Obama to sign the bill, the Senate has passed the Economic Stimulus Bill, which included some good news for Home Buyers.

The President of the National Association of Realtors announced this morning, "So here's what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10."

While most people have ambivalent feelings about the costly Economic Stimulus Bill, it is almost here and you or someone you know might as well take advantage of it. There are certain qualifications first time homebuyers need to meet, but what an opportunity for new as well as move up buyers. Grasp that golden housing ring and run with it!

--Virginia Hall