Let’s Get Crystal Clear On How Real Estate Agents Are Paid

So you’re thinking about buying or selling a house? Odds are good that the first thing you did was contact a real estate agent to help you out. According to the 2013 Profile of Home Buyers and Sellers published by the National Association of Realtors, 88% of buyers purchased their home through a real estate agent or broker.

So how exactly do real estate agents get paid?

SHORT ANSWER:

Real estate agents work for real estate brokerages, and they earn money via commissions when they assist buyers and sellers buy or sell homes.

Now let’s dispel a false assumption right off the bat…

REAL ESTATE MYTH – Agents must be rolling in the cheddar. Word on the street is that some of them make 6% or even 7% commission on every house they sell! Not exactly… Most agents are not living the lavish lifestyle you may assume they are. The income is much more modest than you might expect. Real estate agents have a median income of $40,990 with the top performers making more.




LONG ANSWER:

First, let’s go over some terminology.

When brokerages hire real estate agents they typically set them up on what is known as a commission split. This means that when a commission is paid to a real estate brokerage, it’s split between the brokerage and the real estate agent. Some common commission splits are 50/50, 60/40, 70/30 & 80/20. This will vary from brokerage to brokerage and even from agent to agent. There may be a brokerage with 5 real estate agents who all have different commission splits.

Generally speaking, in any given real estate transaction there will be between 1 and 4 real estate agents or brokerages involved in the transaction — all of whom expect to be paid.

Listing agent – This is the person who meets with a homeowner who is interested in selling their home. This person works for a real estate brokerage. This person is then hired by the sellers to sell their home. The sellers signed a contract which explained the amount of money they were going to pay this listing agent’s brokerage to sell their home. This contract is known as a listing agreement.

Listing brokerage – All real estate agents work for real estate brokerages. Every real estate brokerage has a licensed real estate broker who is in charge of the real estate agents working at that brokerage. Every real estate agent you meet will work for a brokerage like one of those mentioned. The brokerage that employs the listing agent is the listing brokerage.

Buyer’s agent – This is the real estate agent who meets a person who wants to buy a home. This agent will show a potential home buyer homes that are listed either by themselves or other listing agents.

Buyer’s brokerage – The brokerage for whom the buyer’s agent works.

It is important to note that these roles can be different in each transaction. A real estate agent can be a buyer’s agent, or a listing agent depending on the deal. A real estate agent can even be both the buyer’s and seller’s agent.

Let’s go over some different scenarios to illustrate how each of these agents and their brokerages get paid.

Scenario A

A buyer wants to buy a home. She meets a real estate agent named Brian. Brian works for The Holton Wise Property Group. Brian is on a 60/40 commission split with The Holton Wise Property Group. Brian takes his buyer to a home that is listed by Carla. Carla works for Century 21. Carla is on a 50/50 commission split with Century 21 and has been hired by the owners of a home on 123 Main Street in Cleveland, Ohio. The price this home has been listed at is $249,900.00 The sellers have agreed to pay the brokerage Carla works for 6% of whatever she can sell the house for.

Brian and his buyer put in an offer on 123 Main Street for $225,000.00 That offer is accepted by Carla’s sellers. Carla’s brokerage is going to get paid 6% of the sales price by the sellers, but why did Brian take his buyer to Carla’s home on 123 Main Street? Who is going to pay Brian and The Holton Wise Property Group?

Answer: Carla and her brokerage.

When Carla was hired by the sellers of 123 Main Street she entered their home into something called the multiple listing service (MLS). This is a website that real estate agents and brokerages use to help their clients buy and sell homes search for homes. When Carla put 123 Main Street on the MLS she offered all other real estate brokerages a share or split of the commission she gets from the sellers of 123 Main Street if they were able get their buyers to buy the house. In this situation Carla and her brokerage offered Brian and his brokerage 50% of the commission for the sale of 123 Main Street.

So let’s see how this whole thing played out.

The house sold for $225,000.00 The sellers agreed to pay a commission of 6% to Carla’s brokerage. That amount is $13,500.00.

Carla’s brokerage agreed to pay 50% of the commission to Brian and his brokerage. Carla is on a 50/50 split with her brokerage and Brian is on a 60/40 split with his.

Here is the breakdown of the commissions earned by all who were involved.

• Total commission paid by the sellers $13,500.00
• Total commission paid by the buyers $0.00
• Carla’s commission $3,375.00
• Carla’s brokerage commission $3,375.00
• Brian’s commission $4,050.00
• Brian’s brokerage commission $2,700.00

Scenario B

As I stated before these roles can change by the deal. There is not always that many people involved in the scenario.

Let’s assume Brian’s buyer did not like Carla’s house. Instead, Brian’s buyer liked a house that Brian had listed himself. This house was also listed for $249,000. The sellers signed a listing agreement with Brian that paid him a commission of 6% of the sales price. Brian’s buyer put in an offer of $225,000.00 that was accepted by the sellers.

Here is the breakdown of the commissions earned by all who were involved.

• Total commission paid by the sellers $13,500.00
• Total commission paid by the buyers $0.00
• Brian’s commission $8,100.00 (60% of the total)
• Brian’s brokerage commission $5,400.00 (40% of the total)

Source: LighterSide of Real Estate, 

http://lightersideofrealestate.com/real-estate-life/how-real-estate-agents-are-paid

10 Ways Home Buyers Self-Sabotage Their Chances At Homeownership

Let’s face it, you need a strong stomach, a large dose of hang-in-there-and-hold-on-tightly, as well as an ounce or two of patience stored away to make it through a real estate transaction these days. Even “easy” deals can and often do get hung up over minor details. With all the pitfalls ready to snare prospective buyers before they take the keys and begin moving into their love nest, the last thing these consumers need to do is get in their own way!

So, long before you take possession of that cute craftsman, jump for joy at the views from your new condo, or strip down and run around your new private acreage, you need to do everything in your power to avoid these 10 real estate loan killers.

1. Just Sign Here
Although it is tempting to sign up for all those snail mail credit card applications, show some restraint, at least until after you close on the home. Getting approved for more credit can actually lower your credit score and give creditors pause about your ability to repay any new debt. The lenders I know are all great peeps, but they universally do not want to suddenly see credit surprises, so do your utmost to avoid the temptation to acquire more credit card bling.

2. Early Payoff Temptation
Figuratively, just keep your extra cash under the mattress until you are a new homeowner. When you pay off debt it updates your credit score date of last activity. Generally, while paying off debt early can be a smart move, during the home loan process is not the ideal time to have that revelation, as it can have a negative impact on your credit score. Sleep on the funds and pay off those nagging debts after you have the house keys in hand, not before. If you must indulge, make an extra payment across all your balances at the same time.

3. Charge It!
The new thingy, bright and shiny, must have, want so badly can nearly taste it, and fill-in-the-blank item can wait! It.Can.Wait. There is no quicker way to sabotage your home loan than to run up your credit cards while waiting for your loan to get through all the wickets. Your credit score will drop quickly and you may find that incredibly reasonable interest rate is no longer available to you, or worse yet, you no longer qualify for the home loan. A good rule of thumb is to ensure your card balances remain below 30% of their available limit.

4. Credit Card Consolidation
You could get penalized by moving around your balances and maxing out one (or more) card(s). Again, either wait until you own the property or complete the debt consolidate long before you decide to buy a home. If your lender gives you the green light, go for it, otherwise your best move is to make no move at all.

5. Cash is King
It can be, especially if you have fully documented where the money came from. Undocumented funds might as well be fool’s gold as your lender will ignore this unsubstantiated cash. The cash may be legit but it cannot be used to verify your income or as a down payment without a paper trail.

6. Avoid Closure
This is not a Dr. Phil moment! It is a prudent move to avoid closing credit card accounts while getting a home loan. Your debt ratio will go up, your credit history will be affected, and your lender, agent, significant other, etc. will not be happy with the outcome. Check with your lender before making this move, but the exception is closing old accounts showing an available balance if you believe they are already negatively affecting your credit score.

Source: LighterSide of Real Estate, Anita Clark
http://lightersideofrealestate.com/real-estate-life/10-ways-home-buyers-self-sabotage-chances-homeownership

The Do's and Don'ts of Home Equity Loans

With home values rising, homeowners who have equity, a much-valued resource, might be tempted to tap some of that wealth and use it for other purposes. But depending on your personal situation and how you’d like to use the equity, it may not necessarily be the right thing to do.

Here’s when a home equity loan, which allows you to use the equity of your home as collateral, makes sense — and when it doesn’t.

DON’T: Fund a lifestyle

Remember a decade ago when homeowners yanked cash out of their homes as if they were bottomless piggy banks to fund affluent lifestyles they couldn’t really afford? These reckless borrowers, with their boats, fancy cars, lavish vacations, and other luxury items, paid the price when the housing bubble burst. Property values plunged, and they lost their homes.

Lesson learned: Don’t squander your equity! A home equity loan should be looked at as an “investment,” and not as “extra cash” when making spending decisions.

DO: Make home improvements

The safest use of home equity funds is for home improvements that will add to the home’s value. If you have a one-time project (for example, you need a new roof), then a home equity loan might make sense.

Need access to money over a period of time to fund ongoing home improvement projects? Then a home equity line of credit (HELOC) would make more sense. HELOCs let you pay as you go, and usually have a variable rate that’s tied to the prime rate, plus or minus some percentage.

DON’T: Pay for basic expenses/bills

This is a no-brainer, but it’s always worth reiterating: basic expenses like groceries, clothing, utilities, and phone bills should be a part of your household budget.

If your budget doesn’t cover these and you’re thinking of borrowing money to afford them, it’s time to rework your budget and cut some of the excess.

DO: Consolidate debt

Consolidating multiple balances, including your high-interest credit card debts, will make perfect sense when you run the numbers — who doesn’t want to save potentially thousands of dollars in interest?

Debt consolidation will simplify your life, too, but beware: It only works if you have discipline. If you don’t, you’ll likely run all your balances back up again, and end up in even worse shape.

DON’T: Finance college

This may seem like an attractive use of home equity for those with college-age children. However, the potential consequences down the road could be significant. And risky.

Remember, tapping into your home equity may mean it takes you longer to pay off the loan. It also may delay your retirement, or put you even deeper in debt. Furthermore, as you get older, it will likely be more difficult to earn the money to pay back the loan. Don’t jeopardize your financial security.

Source: Zillow Blog, Vera Gibbons
http://www.zillow.com/blog/dos-donts-of-home-equity-loans-192836/

Going Solo: 5 Steps to Buying a Home on Your Own

The home-buying experience often portrayed in advertising generally seems to focus on couples and families. But these days, only 40 percent of first-time home buyers are married, down from 52 percent in the late ’80s, according to Zillow research.

The process of purchasing a home for a sole owner may be fairly similar to that of anyone else, but there are a few slight differences in how a single buyer might approach the home-buying experience.

Here are five ways to make your solo house hunt a success.

Find your agent

Don’t choose the first real estate agent you find in an online search. Try posting a query on social media to get insights from your friends and family, and search for agents in your area, taking plenty of time to read reviews. Look for positive agent reviews that may comment on purchasing alone versus as a couple.

Once you find a few agent options, meet with each of them. You’ll want to ask plenty of questions — don’t let them do all the talking.

Read up on your resources

So you’ve met with multiple agents and found the one for you. Great! But having a wonderful real estate agent doesn’t mean you don’t need to read up on your own.

Don’t rely on your agent to explain every detail of the process. They probably will, and should, but it’s your job to be an informed buyer. Head to the library or check out online resources to find out your rights as a buyer and learn about home-buying programs.

When you’re deciding how much home you can afford, consider all recurring expenses that come with owning a home. Think beyond mortgage payments and closing costs — include expenses such as home maintenance and repairs.

And if you’re nervous about being turned down for a loan because you’re buying on your own, try not to be. While qualifying for a loan on one income may mean you purchase a smaller home, it doesn’t mean you can’t buy. In fact, banks are not allowed to discriminate against potential home buyers based on marital status.

Singles buying a home on one income should consider an FHA loan, as borrowers with good credit can qualify for a small down payment.

Choose the right home type for you

Are you looking for something to grow into? Or do you want a small starter home you can rent out in the future? Whatever your current and future home needs are, know that you have options regarding the type of home you purchase.

Buying a condo or townhouse may leave you with a lower mortgage, but don’t forget about possible homeowners association dues and storage fees. And while a smaller place means less to maintain for one person, regular maintenance is still a homeowner must.

House hunt with confidence

Pursuing homeownership on your own doesn’t mean you have to decide everything solo. Bring one or two of your close friends who have recently purchased a home and who you know can offer honest feedback.

If you plan to move to the suburbs to get more house for your buck, consider if you’d really be happy living away from your favorite downtown spots. Try commuting to and from your potential home from work, your friends’ homes, and your favorite shops and restaurants. If you discover it’s a tad too far for comfort, narrow your home search.

Once you find a few neighborhoods you love, look at the crime data. There are plenty of online tools that can help you check the safety of a neighborhood. And as you scope out houses and communities, take note of enclosed backyards and security gates. Because there may not be someone home during hours you’re typically away, you’ll want to be mindful of security precautions during your house hunt.

Make an informed offer

If you’re buying as a singleton, you may not have someone by your side to help you figure out what to offer or how to negotiate. This is where finding the best real estate agent for you will serve you well. Talk to your agent about how your offer may stack up against recent sales in the area, as well as the possible concessions you can get from the sellers.

Whether you’ve just started considering purchasing your first home or you’re newly single and buying on your own for the first time, these five steps will ensure you’re a smart and savvy solo buyer, and help you land a home of your own.

Source: Zillow Blog, Sarah Pike
http://www.zillow.com/blog/buying-a-home-on-your-own-192824/

Hey, Homeowners! These Little-Known Tax Deductions Can Save You Thousands

Sawayasu Tsuji/Getty Images

You probably already know that owning a home comes with some sweet tax benefits, like the mortgage-interest and property-tax deductions. But did you know there’s a whole list of other homeowner-related tax breaks that you might be leaving on the table?

We’re not talking chump change, either. Homeowners already save an average of $3,000 a year in taxes from mortgage-interest and property-tax deductions, according to the National Association of Realtors. When you add in some of the lesser-known homeowner tax breaks, you could really be amping up the savings—and beating the IRS at its own game.

Back in December, Congress passed the Protecting Americans From Tax Hikes Act of 2015, which extended many exemptions that were about to expire and made others permanent. But to reap the benefits, you first have to know about them.

So, here we go! Check out these common—and not-so-common—homeowner deductions that you should take advantage of this year:

1. Mortgage interest deduction

If you’ve taken out a loan to buy a house, you can deduct the interest you pay on a mortgage, with a balance of up to $1 million. To access this deduction, you will have to itemize rather than take the standard deduction. The savings here can add up in a big way. For example, if you’re in the 25% tax bracket and deduct $10,000 of mortgage interest, you can save $2,500.

Of course, there are some limitations. For example, if you’re helping a family member pay his or her mortgage, you can’t deduct that interest on your tax return.

2. Private mortgage insurance

Qualified homeowners can deduct payments for private mortgage insurance, or PMI, for a primary home. Sometimes you can take the deduction for a second property as well, as long as it isn’t a rental unit. Here’s the catch: This only applies if you got your loan in 2007 or later.

Another restriction: This deduction only applies if your adjusted gross income is no more than $109,000 if married filing jointly or $54,500 if married filing separately.

3. Property taxes

You can include state and local property taxes as itemized deductions. An interesting note: The amount of the deduction depends on when you pay the tax, not when the tax is due. As a result, paying property taxes earlier could have a positive impact on your return.

4. Capital gains on a home sale

The dreaded capital gains tax can be avoided when the gain from selling your personal residence is less than $250,000 if you are a single taxpayer or $500,000 if you are a joint filer. To qualify, you must have owned and used the home as a primary residence for at least two years out of the five years leading up to the sale.

5. Medical improvements

If you’ve made improvements to your home to help meet medical needs, such as installing a ramp or a lift, you could deduct the expenses—but only the amount by which the cost of the improvements exceed the increase in your home’s value. (In other words, you can’t deduct the entire cost of the equipment or improvements.)

“A lot of this comes down to fact and circumstance,” says Gil Charney, director of The Tax Institute at H&R Block. “For example, if you’ve recently installed a heated therapy spa or hot tub in your home, you may be able to deduct the expense if there’s also evidence that, say, a physical therapist visits your home three times a week and you’re over a certain age.”

6. Home office

If you have a dedicated space in your home for work and it’s not used for anything else, you could deduct it as a home office expense.

“It doesn’t have to be an entire room,” Charney says. “It can just be a dedicated space.”

7. Renting out your home on occasion

If you rented out your home for, say, a major sports event like the Super Bowl or the World Series, or a cultural event such as Mardi Gras, the income on the rental could be totally tax free—as long as it was for only 14 days or fewer throughout the course of a year.

8. Discount points

Discount points, which are paid to lower the interest rate on a loan, can be deducted in full for the year in which they were paid. In addition, if you’re buying a home and the seller pays the points as an incentive to get you to buy the house, you can deduct those points, Charney explains.

9. Energy-efficiency tax credit

You can take advantage of an energy-efficiency tax credit of 10% of the amount paid (up to $500) for any green improvements, such as storm doors, energy-efficient windows, and air-conditioning and heating systems.

10. Loan forgiveness deduction

If you’re the owner of a foreclosed or short-sale home, you can take advantage of mortgage-debt forgiveness. For example, if you make a short sale of your primary home at $250,000 but owe $300,000 on your mortgage, the lender will forgive the extra $50,000 owed—and you don’t have to pay taxes on that amount.

For more tax tips, check out IRS Publication 530 for a list of what homeowners can (and cannot) deduct.

Source: Realtor.com, Renee Morad
http://www.realtor.com/advice/finance/these-little-known-tax-deductions-can-save-you-thousands/?iid=rdc_news_hp_carousel_theLatest

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Source: Keeping Current Matters

The Most Common Questions Asked by Home Sellers—Answered!

Selling a home you’ve lived in and loved over the years isn’t exactly like unloading your collection of old Slayer LPs on Craigslist (or is it…?). It’s hard. It’s emotional. And above all else, it’s complicated. A slew of questions will likely pop into your head throughout the process—and possibly keep you up at night.

Last week, we revealed the most common questions asked by home buyers. Since people on the other end of this deal have a lot on their minds, too, today we’ll tackle the most common questions that real estate agents hear from sellers—along with some answers, of course.

Q: How much needs to be done to my house before putting it on the market?

“Many sellers have extreme anxiety over the thought of having to clear out and fix up their home, so much so that it can prevent them from putting the place on the market in the first place,” says Alyssa Blevins with Pierce Murdock Group. But in most cases, there’s no need to panic here—or to overshoot your goals. “Very often, there’s far less to do than homeowners think.” So before spending months and millions (figuratively) upgrading your place—or just throwing up your hands and giving up before you begin—show your home to a Realtor®. You might be pleasantly surprised by your current sales prospects.

Q: How much is my house worth?

While the median house price in 2016 is $228,000, the exact price of your own home will depend on its size, neighborhood, and lots of other factors. Further complicating matters is your own skewed perspective: We tend to mentally inflate our home’s positives and airbrush out the flaws that are all too apparent to the cold, calculating eyes of buyers. “People always seem to compare their house to the most expensive sale in the neighborhood,” says Mary Ann Grabel, an agent at Douglas Elliman in Greenwich, CT. Instead, look at the prices of similarly sized homes that have recently sold in your area—data that agents call comparative market analysis, or “comps.” Then, price your place strategically. “If you price too high, the home is likely to linger on the market,” says Grabel. Meanwhile, pricing low can have major upsides, resulting in multiple bids that could ultimately jack up your price. So, do your homework. Then, discuss a number with your Realtor that feels right—and is realistic.

Q: How long will it take to sell my home?

Right now, nationally, houses spend around 100 days on the market before they sell, although the time varies wildly based on area and price. So, price competitively and make sure that you and your Realtor are getting the place in front of as many eyeballs as possible. “The higher the exposure, the faster the offers,” says Felise Eber, a real estate associate affiliated with Coldwell Banker Residential Real Estate and part of the Miami Beach luxury real estate sales team The Jills. Spread the word through your own social networks——real ones and virtual ones. You never know whose passing it along to that special someone will lead to a sale.

Q: Is staging really important?

On average, a staged home sells 88% faster—and for 20% more money—than a home that’s left as is. The reason it works, of course, is it gives buyers a “stage” onto which they can play out their home-owning fantasies and envision themselves living in your home. “Choose neutral paint colors and remove any family photos,” says Johnson. Give would-be homeowners a blank canvass that they can mentally fill with their loved ones and themselves.

Q: Should I be present when buyers view my house?

“NO!” says Johnson. (Hey, no need to shout. We’re right here!) “There is not any situation in which this is appropriate. Having the owner in the house makes the buyers uncomfortable. They feel as though they can’t make comments or ask questions that could be offensive. The owner—who has a history and attachment to the house—has the tendency to argue if a potential buyer makes a comment that could be a little negative. This can turn off buyers and lose you offers.” Got it.

Q: What is the agent’s commission?

While the commission can vary, it is typically 6% of a home’s sale price—and that’s usually shared with the buyer’s agent. But what’s implied by this question is “What are Realtors doing to earn that fat check?” Here are some facts to keep in mind: Unlike lawyers who get paid by the hour, or doctors who are paid by the appointment, listing agents don’t get paid unless they make a sale. For every hour an agent spends with a client, he or she will typically spend nine hours on average working on that client’s behalf doing everything from networking to finding potential buyers to filling out paperwork. And no, not all agents are created equal. Since most contracts last for a year, Realtor Susan Ratliff recommends that sellers “interview three agents prior to selecting one to represent them. It’s no different from choosing an attorney, accountant, or the doctor who will deliver your baby. You want to be sure that you trust that person and are comfortable with them.”

Amen.

Source: Realtor.com, Margaret Heidenry
http://www.realtor.com/advice/sell/most-common-questions-from-home-sellers/

Bay Area home sales: Strongest January in three years

The winter doldrums gave way to some surprising winds in Bay Area real estate last month. Across the region's nine counties, 3,372 single-family homes were sold -- the strongest January in three years.

Likewise, the median cost of homes rose by 16.5 percent from the year before, to $635,000, with similar year-over-year gains posted in Silicon Valley and the East Bay. In Santa Clara County, the $830,000 median was up by 11.4 percent from a year earlier, while in Alameda County, the $660,000 median represented a 14.8 percent gain from January 2015.

"There continues to be a lot of stress on the affordability front," said Andrew LePage, research analyst for the CoreLogic real estate information service, which released the latest numbers. He observed that the region's $635,000 median would once again buy next to nothing in the Silicon Valley hub, "except maybe a small vacant lot."

Alain Pinel broker Rainy Hake, based in Saratoga, concurred: "Most of the homes that you have at this price point are kind of nondescript. It would be interesting to take that money and move to Portland, (Oregon), or Austin, Texas. We're seeing a lot of exits from the Bay Area to some of these marketplaces that are more affordable and have an up-and-coming lifestyle."

That said, the relative strength of the Bay Area market remains a matter of perspective.

For while the year-over-year numbers were robust, the volume of home sales across the region dipped markedly from December to January: down 36.1 percent for the region. Santa Clara County's month-over-month sales were down 37 percent, while Alameda's dropped 40.7 percent.

And viewed historically, January's three-year sales high was actually about 20 percent lower than the average January, going back to 1988, which is as far back as CoreLogic's database extends.

Still, LePage cautioned against reading too much into the month-to-month numbers, which also show a small decline in median prices.

January and February typically are slow months, as many people avoid house hunting during the winter. Also, December sales were unusually high as agents and loan writers finally got the hang of new federal mortgage rules that went into effect in October and delayed many closings until year's end. Hence, the January sales drop-off may look unnaturally steep.

Amid the stock market downturn and China's slowing economy, some agents have sensed a softening in home prices, especially in luxury homes.

While it's possible that high-end sales "could eventually be impacted by an ongoing stock market downturn," LePage said, "it's also possible ... that you would see what some people consider 'safe haven' investing, where wealthy individuals choose to park money in high-end real estate."

Such trends are hard to measure, he said, but "as deals close over the next few weeks, we'll begin to see whether there's been an impact."

Source: Mercury News, Richard Scheinin
http://www.mercurynews.com/business/ci_29528329/bay-area-home-sales-strongest-january-three-years

The Most Common Questions Asked by Home Buyers—Answered!

Buying a home is thrilling, scary, sometimes weird, often epic, and never dull. You’re ponying up a huge wad of cash for a place you’ll inhabit hopefully for years to come. As such, you’re bound to have a lot of questions throughout every step of the process. So to head you off at the pass, we asked real estate agents to spill the beans on most common questions buyers ask them—and the answers, of course. You’re welcome.

Q: What home can I afford?

That depends, of course—on your income and other financial obligations; plug them into realtor.com’s Home Affordability Calculator for a ballpark figure. And do it before you start shopping, says Alyssa Blevins of Pierce Murdock Group in Alexandria, VA. “If you see houses you love outside your price range, it opens you up to disappointment,” she says. Meet with a lender to get pre-approved for a home loan (added bonus: pre-approval makes you much more attractive to sellers).

Q: Can I buy a home and sell my current one at the same time?

Yes, you can—but it’s the real estate equivalent of walking a tightrope. “This is one of the trickiest questions to answer,” says Cedric Viquerat of Coldwell Banker Residential Real Estate in Bradenton, FL. On the one hand, if you buy a home before you sell the one you’re in, you’re overextended financially; if you sell before you buy, you might need to rent awhile before finding a new place. But there are ways to do both at once, and one option is to instate a “sale contingency” in your contract. This means you only agree to buy a home if you can sell the one you’re in. The only downside is if your seller doesn’t agree (which is possible if they want the timing set in stone).

Q: How many homes should I see before making an offer?

Up to you, sport! While home shoppers these days can look at hundreds of homes online, they only hoof it to check out 10 homes on average before they put in an offer. But keep in mind, “This varies tremendously for each person,” says Will Johnson, a Realtor® in Hendersonville, TN, and founder of Sell and Stage. “Some people find their home within hours of hunting. For others, it takes months.” If you want to streamline the process, it can help to really hone in on a particular neighborhood you’re keen on; that said, if you feel limited by your options, it may be time to expand to surrounding areas.

Q: What do you think the seller will accept as a fair price?

As a rule of thumb, knocking 5% off the list price won’t ruffle any feathers. If it’s been sitting on the market for months, you can venture below that, but the bottom line is, “You never know how low a seller will go, as they have different motivations for selling,” says Marc Castillo of Coldwell Banker in Atlanta, GA. If the sellers are eager to move, you could luck out and score a deal.

Q: How do I know if the property is a good deal?

While there’s no crystal ball on whether a certain home is a bargain and will appreciate, rest assured that with research, you can keep surprises to a minimum. The best way is to check out comps—what similar properties are selling for in the area—“and whether those prices have been going up or down in the recent past,” says Felise Eber, a Miami Beach real estate associate with Coldwell Banker.

Q: How quickly can I close?

“Typical escrow periods are 30 to 45 days,” says Rina Camhi, a Houston, TX-based agent and brokerage owner of 10MinRealty. “This gives you enough time to do the investigation on the property and get a loan completed.” And yes, this due diligence counts (see our next point).

Q: Should I get a home inspection?

While buyers often wonder if a home inspection is truly necessary, most Realtors unequivocally say yes, yes, and yes. “A home inspector takes a weight off of your shoulders by looking into the condition of the roof, electricity, heating and air, plumbing,” says Johnson. “Ensuring these things work prevents you from paying to fix them in the future. If some things are not up to par, you can negotiate with the seller to get those fixed before you sign the paperwork.”

Q: When can I back out if I change my mind?

While buyers can always back out of a deal, doing so without good reason may forfeit their earnest money (the cash put down to secure the offer, typically around 1%-2% of the home’s price). But there are some ways to walk with your earnest money in hand.

“Contingencies are great loopholes,” says Bridges. “For example, upon an unsatisfactory home inspection, the buyer can ask for their deposit back. Another loophole is ‘subject to appraisal.'” That means you can back out if the lender for your loan doesn’t think the property is worth what you offered.

Home buyers aren’t the only ones with questions; home sellers have plenty on their minds, too. Find out what they’re wondering in a new article next week!

Source: Realtor.com, Margaret Heidenry
http://www.realtor.com/advice/buy/top-questions-home-buyers-ask-realtors/?iid=rdc_news_hp_carousel_theLatest

Renovation Realities

5 Steps to Ease Home-Buying Anxiety

Many consumers have misconceptions about what it takes to qualify for a mortgage. Most believe the requirements are tougher than they actually are, according to a recent Fannie Mae survey.

When asked about key mortgage qualification criteria (such as down payment percentage, credit score, and debt-to-income ratio), roughly half of consumers selected “don’t know” or provided an invalid answer.

“This research suggests there are too many eligible home buyers sitting on the sidelines due to misperceptions or anxiety about being turned down for a loan,” says Steve Deggendorf, director, business strategy for Fannie Mae’s Economic & Strategic Research (ESR) Group.

To be sure you’re ready to buy a home, and ease any anxiety you have about the process, Fannie Mae offers the following five suggestions.

1. Learn all you can about mortgages

Mortgages have changed a lot in recent years as lenders and investors make adjustments reflective of American households. For example, several adults in the household may be working and contributing to the household budget.

Fannie Mae’s HomeReady mortgage lets lenders consider income from other household members when qualifying the borrower. Additionally, some buyers may qualify for zero-down options, including VA loans (guaranteed by the U.S. Department of Veterans Affairs) for veterans, service members, and surviving spouses, and U.S. Department of Agriculture loans for low- to middle-income borrowers in qualifying rural areas.

Use of both loan types is on the rise, according to the Census Bureau’s American Housing Survey, especially among first-time buyers.

2. Talk to a professional

Don’t know how to save or what your credit score is? No problem. The U.S. Department of Housing and Urban Development (HUD) sponsors counseling agencies nationwide that provide free or low-cost pre-purchase counseling to help you understand the terminology you’ll hear from lenders and assess your own financial situation.

“Our job as home credit counselors is to demystify this crucial transaction by educating the people who come to us, so that when it comes time to buy a house, they know what questions to ask and what issues to look out for,” says Rick Harper, a senior vice president at San Francisco’s Consumer Credit Counseling Services.

3. Explore down payment assistance

Seventy percent of U.S. adults are unaware about down payment programs available for middle-income home buyers in their community, according to NeighborWorks America, a national nonprofit community development corporation based in Washington, D.C.

“I would argue that percentage is even higher,” says Rob Chrane, president of Down Payment Resource. There are dozens of down payment assistance programs and homeowner education options in most areas, he notes. His organization maintains a database of programs you can search for free.

4. Compare mortgage quotes

Only one-third of home buyers shop around for a mortgage, according to ESR research — and that’s often at a later stage of the home-buying process, which means they could be missing out on saving money.

“As large and infrequent as the mortgage transaction is in most people’s financial lives, borrowers may be leaving money on the table by not shopping around and negotiating for the best terms they can get,” comments ESR’s Sarah Shahdad. “Getting a better deal can help borrowers sustain their mortgage even in the case of unexpected increases in expenses, or decreases in income.”

5. Consider long-term costs

As any home buyer knows, there are costs you can anticipate: your monthly mortgage or homeowners association fees, for example.

There are also unexpected costs like paying for a new roof. Angie Hicks (of Angie’s Lists) advises that homeowners set aside three to five percent of the value of their home every year to use for repairs and improvements. “You’ll want to tuck that money away so you don’t get stressed when something goes wrong — because things can, and will, go wrong,” she says.

Source: Zillow Blog, Laura Haverty
http://www.zillow.com/blog/ease-home-buying-anxiety-192511/

House Flipping: A Guide For Success

Flipping a house means buying a home with the intention of fixing it up and selling it within six months for a profit. Americans flipped 26,947 single-family homes in Q3 2014, accounting for 4 percent of all home sales in that period, according to real estate data firm Realtytrac. The average gross return for investors was $75,990 per home, up 2 percent from Q2.

Flipping houses can be profitable, particularly when home values are rising and interest rates remain at historically low levels. The Federal Housing Administration stopped enforcing anti-flipping regulations—which prohibited insuring any home for less than 90 days—in 2010. If you're looking to get into the home flipping business, follow these four guidelines for the best chance of success.

Build a Bankroll

Everything in life requires money, and house flipping is no exception. You could take out loans to buy properties, but then you are just creating debt in the hopes of making money. A smart house flipper who wants to profit immediately will often use his or her own money.

The best way to build a bankroll is by saving over time. Consider selling your own home if the proceeds will pay off the mortgage and leave you with enough to get started. Those currently receiving regular payments from a structured settlement or annuity can consider selling their future payments to a company like J.G. Wentworth for a lump sum of cash now. Make sacrifices like selling off an extra vehicle, disconnecting cable television and giving up the $5 lattes in the morning to pad your bankroll further.

Buy at Discount

You'll make the most money if you buy a house for less than its actual value at the time of purchase. The best way to do this is by seeking out motivated sellers. These are people who need to sell quickly to relocate for a job or simply need to make fast money.

Use your social media networks to generate referrals. Inform friends and followers that you are looking to buy properties. Knocking on doors in prime neighborhoods can also generate leads—target homes with "for sale" signs and distressed properties that appear neglected.

Location, Location

The total value of all homes in the U.S. was $27.5 trillion at the end of 2014, according to data compiled by Zillow. That represents a 6.7 percent increase from 2013 and the third consecutive year of positive gains. But certain markets are doing even better.

Miami, Atlanta, Houston, Orlando and Las Vegas experienced the largest gains for 2014, with each up at least 11.5 percent on the year. These markets offer the largest margin for error for those flipping homes, particularly with a major housing market correction being predicted by several economists for 2015. This is mostly due to the Federal Reserve ceasing its quantitative easing program and no longer artificially inflating the markets.

A good rule of thumb when buying in areas that experienced low or negative year-over-year home value change (i.e., Indianapolis and Phoenix) is to only purchase homes at 10 percent or more below current market value.

DIY Where Possible

You'll likely need to hire plumbers, electricians and other contractors to tackle major home improvements. But the more you do yourself, the higher your profits will be. You and a few friends can install new sinks and countertops and even shingle a roof. Youtube has hundreds of instructional videos that cover everything from replacing water heaters to installing shower faucets. Creative landscaping can increase the value of a property by 13 percent, according to a study by Virginia Tech University. The DIY Network has several ideas for easy landscaping projects that anybody with a little ambition can complete.

House flipping is a cyclical endeavor that is only profitable when economic conditions are positive. Now is a great time to get started.

Source: RealtyTimes
http://realtytimes.com/consumeradvice/buyersadvice1/item/42438-20160219-house-flipping-a-guide-for-success

Saturday Stats

MLSListings Silicon Valley and Coastal Regions Housing Market Overview

(Monterey, San Benito, San Mateo, Santa Clara, and Santa Cruz Counties)

Home Sales Take a Leap in the Region, Inventory Stalls Year-Over-Year

Compared to January 2015, median sales price in January 2016 rose 18% in Monterey County, 12% in San Benito County, 11% in San Mateo County, 9% in Santa Clara County, and 3% in Santa Cruz County. Compared to December 2015, it’s a different story. Median sales price is showing signs of flattening with San Mateo up 7%, Monterey up 5%, Santa Clara zero change, San Benito down 2%, and Santa Cruz County down 6%.

Single family home year-over-year sales made gains in all MLSListings counties, compared to January 2015. San Benito showed the largest gain of 52%, San Mateo 36%, Santa Clara , Santa Cruz 7%, and Monterey 5%. January sales fell well below December levels in four of the five MLSListings counties: San Mateo and Santa Clara sales dropped 59%, Santa Cruz 58%, and Monterey 20%. San Benito showed the only gain with 15%.

Month-to-month inventory shows slight gains in three of the five counties, with San Mateo up 7%, Santa Clara up 6%, and Monterey up 3%. Santa Cruz and San Benito Counties inventory dropped 5% and 2%, respectively. Inventory is split among the counties compared to 2015, with San Mateo up 9%, Monterey up 3%, and San Benito up 1%. Santa Cruz is down 23%, and Santa Clara is down 7%.

Compared to last year, Total Dollar Volume rose 69% in San Benito County, 44% in Monterey County, 20% in San Mateo County, 11% in Santa Clara County, and 10% in Santa Cruz County. Compared to a strong December, sales Volume dropped 80% in San Mateo County, 74% in Santa Cruz, 71% in Santa Clara, and 39% in Monterey County. Only San Benito County showed growth with a gain of 16%.




Printable PDF version of report


Source: mlslistings.com

Investors With Cash Edging Out First-Time Home Buyers

Many Realtors here in the Silicon Valley already know this to be true. Cash investor buyers are a significant part of this real estate market and are partly responsible for home prices being as high as they are. Case in point, just last week I made an offer for my buyer clients. They both work in the high tech field. They are both engineers with two kids and they made an offer with a 50% down payment, over asking and they still didn't get the home. They were outbid by an All Cash buyer.

The case in the same for many first time home buyers in this and other hot real estate markets. Many of these buyers are working, married couples with kids and are very well finally qualified with modest to high down payments but often times, if they are not ready for it, they get out bid by a cash buyer investor.

So if you are one of these first time home buyers looking to purchase your first property in this hot market what are you to do?

First off be pre-approved for a loan. That should go without saying and many agents, myself included, won't bother showing you a homes if you are not pre-approved with a lender.

Second, if you can afford it, is a good idea to come to the table with a higher down payment. In this market, 20% is really not enough. I hate to say it, but the reality is that in order to make your offer stronger, you have bring more money to the table. If you need to borrow money from your parents or cash-in some of your other investments such as stock options, then go ahead and do so.

Third, be prepared to pay as much as 3 to 5% over asking. You are going to be competing with other first time home buyers and the cash investors so to make an offer At or Below asking is not being realistic in this market and you kind of make yourself look silly. Not to mention that many agents will feel like you are wasting their time if you don't go at least a little over asking. Believe it or not, your agent knows this market better than you and they know what works and what does not for your market so their advice on how to offer on a property is usually correct.

Next, in order to make your offer stronger in the eyes of the seller, you might consider making other terms of the purchase contract more favorable for a seller such as a shorter escrow period or fewer days for the inspection contingency removal or none at all (be careful if you chose No inspection contingency. . . ). Of course course your Realtor should be able to realistically advise you on what is likely to work in this market and whether or not it makes sense for the property you are looking to buy.

Lastly, I often recommend that my buyers write a personal, heart-felt letters to the sellers. A hand written letter with a nice family photo with some pictures of the kids explaining why your family love the neighborhood and adore the house can go a long way with getting an offer accepted. The personal letter can be especially powerful if the sellers are a married couple that are longtime owners in the neighborhood and perhaps raiser their family there.



Investors With Cash Edging Out First-Time Home Buyers

During the housing bust, investors pounced on foreclosures and short sales—houses that sell for less than the amount owed on the mortgage—to use for cheap homes they could rent out or flip for a quick profit.

Now, those easy pickings are gone, but the investors are still swarming over local housing markets, offering all-cash deals and creating headaches for the first-time home buyers who compete with them.

Regan Austin, 25 years old, and her husband lost out on an Orlando, Fla., area home earlier this year to an all-cash buyer.

“It was very disappointing. We had our heart set on that home,” said Ms. Austin. She and her husband, who are first-time home buyers, are still looking. “We never thought of the concept of having a cash buyer come in and take that out from under you.”

During the housing bubble, investors, lured by easy mortgages, helped send home prices to record levels. In the crash that followed, investors appeared again, this time offering all-cash deals on thousands of bank-owned properties to sell or rent out.

Some economists and real-estate agents say the market is going through an uneasy transition. While the foreclosure starts rate is back down to where it was before the crisis, cash and investor buying in some cities remains far above historical levels. That creates difficulty for buyers of low-price homes because more buyers are competing for fewer properties.

In October, 25% of home sales nationwide were to investors, down from a 32% peak in 2012, according to real-estate data firm CoreLogic, but still 8 percentage points greater than in 2000, before the housing boom and bust.

Meanwhile, the supply of homes for sale dwindled to 1.79 million in December, according to the National Association of Realtors, enough to last 3.9 months at the current sales pace and well below the six months considered a normal market.

The problem has become acute for buyers focused on low-price properties. According to the NAR, between December 2014 and 2015 the number of homes for sale priced below $100,000 fell 11.1%, in part because of a decline in foreclosure sales.

“Home supply is diminishing but investor demand is not going away,” said NAR chief economist Lawrence Yun.

Many economists expect housing prices to cool over the coming year, and rather than try to flip homes for a profit, some investors say they are making a long-term bet on demand for rentals, which has boomed in many parts of the country. The U.S. Census Bureau last month said 7% of rental units were vacant in the fourth quarter, near the low for the last decade and down from the peak of 11.1% in 2009. The median asking rent was $850, up 11% in the past year.

Some housing advocates say they have mixed feelings about the strong investor demand.

“Low inventory is a problem and making sure first-time home buyers have a shot should be a priority. But on the other hand, we have a rental affordability crisis,” said Sarah Edelman, director of housing policy for the left-leaning Center for American Progress.

Investor Ken Weiner, a former financial-services executive who lives in Wantagh, N.Y., didn’t buy his first single-family rental property until November, but since then has closed with an investment partner on six homes and on another three on his own, including ones in South Carolina, Illinois and Georgia. He said he plans to close on at least another seven properties by mid-year.

Mr. Weiner, who is buying homes sight unseen through investor startup Home Union, said he thinks demand for rentals among millennials and others delaying homeownership will make investing in single-family homes a fixture of the market.

“I’m not counting on appreciation,” he said. “If that comes, that’s great. I’m looking for income.”

Some real-estate agents in cities that have seen their foreclosure crisis ease said investors have moved up from bank-owned properties and now are competing for traditional, low-price homes that normally would be fodder for first-time buyers.

Lisa C. Ford, secretary for the Orlando Regional Realtor Association, said buyers there can expect to compete against at least one cash offer for any home priced below $300,000.

In Orlando, 39% of sales in October were all-cash, according to the latest data available from CoreLogic, down 5.6 percentage points from a year earlier but 23 percentage points greater than in 2006. Miami and West Palm Beach, Fla., also have seen declines but about half of homes there still sell for cash.

Don Ganguly, CEO of investor startup Home Union, has recently expanded the company’s business to facilitate investor purchases in markets such as Columbia, S.C., and Huntsville, Ala., which some investors think could have strong rental demand despite little price appreciation recently. Some investors through the site are buying newly constructed homes directly from home builders, he said.

In some cities still suffering from foreclosures, such as Newark, N.J., and New Orleans, cash purchases climbed in the past year through October, according to CoreLogic. Of the 100 largest metro areas, nearly all in the year through October saw the all-cash share of purchases fall, but only 10 have fewer all-cash sales than in 2006.

Daniel Brown, an investor who lives outside Los Angeles, met with real-estate agents in Kansas City, Chicago, Cleveland, Detroit, Pittsburgh and other cities looking for investment opportunities. He bought his first U.S. home in January 2015, and said he now owns about 60 homes with 75 units.

“An average normal city goes through its ups and downs, but most people there need somewhere to live, and next year, they’ll still need somewhere to live,” said Mr. Brown.

Source: Realtor.com, Joe Light
http://www.realtor.com/news/trends/nvestors-with-cash-edging-out-first-time-home-buyers/?iid=rdc_news_hp_carousel_theLatest

Cities Plagued by Shrinking Inventory - and guess which one is #1. . . .

Low inventory means higher home prices and buyers competing with each other with multiple offers. It's a reality going on here for awhile in the silicon valley, which is why many agents prefer working with sellers and getting a listing (home for sale) rather than work with buyers. It's not that those agents refuse to work with a buyer because they will, it's just that when you're working with a buyer, it's harder in this market to get them into a home, which means no commission if they don't succeed. 

If you are a buyer looking to get into a home in this market, you must be very serious, pre-approved for a home loan and willing to listen to the advice of your Realtor if you want to stand a chance of getting into the home. Be prepared to compete with other buyers, some of whom will be making All Cash offers. Also be prepared to make an offer possibly well over the asking price (depending on the neighborhood, school districts and some other factors your Realtor will discuss with you). 

The article cites San Jose California as the #1 city with the lowest inventory. San Jose is the heart of the Silicon Valley, and the story is the pretty much the same for the surrounding cities here in the valley. The tech giants here in the valley, such as Google, Apple, Facebook and Intel, keep bringing in more and more workers thus putting strain on housing market. Evidence for this can be seen with low inventory and developers coming in and building mega apartment blocks and charging sky high rents.


Cities Plagued by Shrinking Inventory


More than 1.3 million – or 1.6 percent of the nation’s nearly 85 million residential properties – are vacant. That’s down 9.3 percent from the third quarter of 2015, according to RealtyTrac’s first quarter 2015 Residential Property Vacancy Analysis.

“With several notable exceptions, the challenge facing most U.S. real estate markets is not too many vacant homes but too few,” says Daren Blomquist, vice president at RealtyTrac. “The razor-thin vacancy rates in many markets are placing upward pressure on home prices and rents. While that may be good news for sellers and landlords, it is bad news for buyers and renters and could be bad news for all if prices and rents are inflated above tolerable affordability thresholds.”

RealtyTrac analyzed 147 metro areas with at least 100,000 residential properties and found that the following cities had the fewest number of vacant properties in the first quarter:

1. San Jose, California: 0.2%
2. Fort Collins, Colo: 0.2%
3. Manchester, N.H.: 0.3%
4. Provo, Utah: 0.3%
5. Lancaster, Pa.: 0.3%
6. San Francisco: 0.3%
7. Los Angeles: 0.4%
8. Boston: 0.5%
9. Denver: 0.5%
10. Washington, D.C.: 0.5%

Meanwhile, vacancies were highest in the first quarter in these cities:

1. Flint, Mich.: 7.5%
2. Detroit: 5.3%
3. Youngstown, Ohio: 4.4%
4. Beaumont-Port Arthur, Texas: 3.8%
5. Atlantic City, N.J.: 3.7%
6. Indianapolis: 3%
7. Tampa, Fla.: 2.9%
8. Miami: 2.8%
9. Cleveland: 2.8%
10. St. Louis, Mo.: 2.6%

Source: Realtor Magazine Online from RealtyTrac
http://realtormag.realtor.org/daily-news/2016/02/16/cities-plagued-shrinking-inventory?om_rid=AAFmZk&om_mid=_BWw4bMB9Ku34LR&om_ntype=RMODaily

Zillow Explained… And Why It’s Not To Be Trusted!

Let me just go ahead and say it bluntly: stop listening to Zillow.

Look, relying on Zillow to accurately determine your home’s value is, at best, a crapshoot. Zillow itself even encourages buyers, sellers and homeowners to conduct other research such as “getting a comparative market analysis (CMA) from a real estate agent” and “getting an appraisal from a professional appraiser.”

Sure, Zillow’s Zestimates® are quick, easy, and free… but so is dating advice from your twice-divorced Uncle Larry. The point? Just let a local real estate professional (who will actually see your home’s unique features in person) determine its fair market value.

Let’s dive in a bit further, shall we?
First, I don’t believe that Zillow is inherently evil. In other words, they don’t set out to intentionally mislead the general public. In fact, they do have their positive points. Nevertheless, what is the net effect when buyers and sellers use Zillow? They often get inaccurate information, rely on it (even swear by it, ugh!), thus causing migraines for Realtors and agents everywhere.

See, for those of you not working in the real estate industry, you assume that Zillow is a trusted resource to find out what your property is worth. You assume the information is factual, based on homes that have sold in your area (also known as comparables or “comps”), and therefore are to be considered true market value. I’m here to explain to you why this website is feeding you misinformation and why it should not be trusted.

To put it simply…
The fine folks at Zillow don’t have the slightest clue about your market. There are approximately 43,000 zip codes in the United States, and each one has variables that affect property values, such as: school district, knowledge of declining or flourishing areas, property taxes, proximity to interstates, hospitals, attractions and shopping, and bodies of water to name a few.

Let’s pretend that you live in a 3 bedroom, brick ranch with basement in “Perfect Town, USA”. When you plug your address into the search bar on Zillow, you will see a bunch of dots near your home. Those dots represent other homes that have sold, have foreclosed, or that are for sale or for rent. When you click on the dots, it will show you what the home sold for and the dot on your own home is just an average (also known as a “Zestimate”) of what all the others sold for, regardless of how it compares to yours.

Let’s say that half of those homes are colonials, are vinyl sided and not made of brick, don’t have a basement, or have 4 bedrooms or more, or are on the water, while yours is across the street from the water. Those are huge differences in the world of real estate, and especially to the appraiser who will seal the fate of what your home will inevitably sell for.

Zillow does not account for the condition of your home.
Your home may have been recently remodeled and has as updated kitchen and bathrooms, a new roof, new windows, new furnace, etc… and some of the homes being used as comps are stuck in the 1980’s.

It could also be the opposite and you may see an inflated value put on your home because others in the area have sold for more because they are new construction or have been renovated. Just because your neighbors’ homes sold for $500K doesn’t mean yours will too.

Appraisers need to compare apples to apples, so unless you live in a neighborhood where all the homes are identical cookie cutter houses, don’t ever expect to sell for what your neighbors sold for. Values change with every season, and the only true indicator of what your home is worth is the buyer. A Realtor can run a thorough comparative market analysis (CMA) for you and give you a pretty accurate value and suggested listing price, but what a buyer is willing to offer you is ultimately what your home is worth.

What a buyer is willing to pay is based on many variables too, including the location, the updates and amenities your house includes and how much competition you have. If you live in an area where it’s a sellers’ market, it means you have little competition and more buyers in the area than homes for sale. This is when you want to list your home, and can expect top dollar, as indicated by the buyer!

This doesn’t mean you ask an outrageous amount, because anything over-priced will not sell. If you live in an area that is a buyer’s market, then you need to compete with many other homes for sale and can expect your home to sit on the market longer. No matter what city you live in or how the market is in your area, one thing remains the same:

Zillow is not correct and you need to call your Realtor today to find out the value of your home! It takes a few minutes, it’s FREE and, most importantly, it will be accurate!

Source: LigterSideofRealEstate.com, Sarah D'Hondt
http://lightersideofrealestate.com/real-estate-life/zillow-explained-and-why-its-not-to-be-trusted

Why Buy A Home?

Happy President's Day

Happy Valentines Day!

Happy Valentines Day!

From The Mimi Wang Team

Why Home Buying Is (or Isn’t) Like Dating

Just in time for Valentine's Day.

There’s something desperately missing in your life. You decide to do something about it now, and so you sign up for one of a slew of websites that aim to help yearning hearts like yours find a match. You flip through profiles late at night, and certain phrases or well-lit photos make your heart skip a beat. And when you think you may have found “The One,” you figure it’s time to make an assessment in person.

Dating? Or house hunting?

It could be either.

Neither buying your dream home nor finding true love comes without effort. But just how deep does the comparison go? To find out, we pulled together some data about both—the emotional highs and devastating lows that people experience on their journeys. You be the judge.

Before you even begin to look for homes, you’ve probably heard all about rising home prices, bidding wars, stringent mortgage standards, and other rough-and-tumble tales (especially if you’re a regular reader of realtor.com®!). If you feel a little disheartened, you’re not alone. A little over half of home buyers (52%) believe they will find their dream home in their price range, while 48% say it’s impossible, according to a 2014 survey by BMO Harris Bank.

People are way more optimistic when it comes to love. A 2011 Marist poll showed that 73% of Americans believe that they are destined to find their soul mate.

But while some say that positive thinking is the key to success, thinking alone won’t get you there. It’s all about the numbers, baby! Which leads us to…

Life would be so much simpler if the first house you ever visited, or the first person you ever kissed, was The One—but you don’t live in a fairy tale. (Do you? If so, please contact us!)

Home buyers, be prepared for the long haul: Buyers typically search for 10 weeks and look at 10 homes before purchasing, according to the National Association of Realtors®.

Love doesn’t come easily, either. According to a British study, an average adult woman will have five relationships, four disaster dates, 15 kisses with different men, and two heartbreaks before meeting The one.

What about the guys? The “player” stereotype doesn’t really hold up: The average man will have six relationships and be stood up twice before finding his perfect half.

The Internet has made finding a home much easier than ever. The NAR report shows 92% of home buyers use the Internet at some point during their search. Online websites (such as, ahem, realtor.com) are deemed a very useful information source by 82% of buyers, while not quite as many (but still a high number: 78%) say the same about their flesh-and-blood real estate agent.

Although there’s been a sea change in the way that people view online dating (the idea of finding love on the Internet once fell somewhere on the scale between dubious and pathetic), people aren’t quite as quick to jump online to seek a mate as they are to look for a house.

A 2013 Pew Research Center survey showed 38% of Americans who were single and actively looking for a partner had used online dating sites or mobile dating apps. But among those who have, the majority say dating sites and apps help people find a better romantic match because of the wide range of potential partners they can access.

The first few minutes home buyers spend at an open house go a long way in influencing their decisions. Three-quarters (77%) of home buyers say they’ll know immediately when they’ve found their ideal house, says the BMO Harris Bank survey.

About half (52%) of Americans say they believe in love at first sight, reveals a Gallup poll. Another study shows it takes only 12 minutes for people on a first date to decide if they’re interested in the other person. As soon as people sit down, they will be immediately judged on their smile (64%), whether they make eye contact (58%), and their tone of voice (25%).

Just like the sexy-hot European sports car you bought which turns out to get 4.5 miles per gallon and not even have room for a suitcase in its trunk, the house that you spend months buying may turn out to be a bummer. About 80% of home buyers have at least one major regret about their new home, says an HSH.com survey. Some top complaints include being too small, not having enough storage space, neighbors, and school system. 

What about people? Well, the person that you pledge to share your life with can also turn out to be Mr. (or Mrs.) Wrong. A whopping 72% of married women have considered leaving their husband at some point, and more than half (57%) sometimes regret marrying him, according to a poll by Woman’s Day and AOL Living. Relax, that doesn’t mean all of them are getting a divorce. Despite the regrets, 71% still expect to be married to their spouse for the rest of their lives.

The reality, of course, is that neither homes nor relationships are ever truly perfect. But if you really work at understanding what you want and what you need, and taking the time to assess a variety of options, you’re likely to find a pretty good fit. Maybe even one that will improve with time.

Source: Realtor.com, Yuqing Pan

http://www.realtor.com/news/trends/why-home-buying-is-or-isnt-like-dating/

Home Prices Shot Up Across the U.S. in Late 2015

San Jose at the top of the list with a median home price of $940,000! This is really a great time to be a seller with this market.



Just as we’d predicted, home prices are heading up, up, up—good news for home sellers, But not so much for prospective buyers.

National median housing prices shot up 6.9% to $222,700 in the fourth quarter of 2015, according to a recent report from the National Association of Realtors®. That’s up from $208,400 for single-family homes in the last quarter of 2014.

Home buyers in the West (which includes pricey Silicon Valley) and the South saw the biggest price hike—and would-be buyers there are experiencing the worst sticker shock.

Four of the most expensive markets in late 2015 were (unsurprisingly) in California. San Jose, seat of the tech industry, topped the list, with median price of a single-family home at a whopping $940,000. The city was followed by San Francisco, at $781,600; Honolulu (those tropical breezes don’t come cheap), at $716,600; Anaheim-Santa Ana, Calif., at $708,700; and San Diego, at $546,800.

San Jose’s appeal has long been centered on its high-paying tech jobs, good schools, and friendly neighborhoods. But San Jose agent Holly Barr with the Sereno Group says she sees more and more local homeowners playing Take the Money and Run: selling their homes, pocketing the cash, and moving to lower-cost cities in Washington and Oregon.

Housing prices are up in the South as well, because companies are moving jobs out of higher-priced, metropolitan hubs to the cheaper—and warmer—locales. Those workers are then essentially competing with one another to buy homes, says Joanna Keskitalo, a Greenville, S.C.-area real estate broker at Joanna K Realty.

The last property she listed, a three-bedroom, two-bathroom house in a suburb of Greenville, received three offers in under 24 hours. The $165,000 home sold for well over its asking price.

The housing shortage is compounded by the lack of new home construction—shrinking the pool of available homes even further, says realtor.com’s chief economist, Jonathan Smoke.

The high price tags in cities, combined with lower gas prices for commuters, are compelling more people to consider a move to the suburbs, he adds.

“We’ve shifted from having too much inventory, driven by foreclosures, to one where we have nearly record low levels of homes for sale on the market,” says Smoke.

Source: Realtor.com, Clare Trapasso
http://www.realtor.com/news/real-estate-news/home-prices-increase/?iid=rdc_news_hp_carousel_theLatest

The Pros and Cons of Merging Finances

Seeing how it is Valentines Day weekend, I thought this article from Zillow might give some food for thought to all you couples out there.



Whether you’re a newlywed or have recently moved in with your significant other, you two have a lot to decide about the best way to handle household matters. Figuring out how you’ll divide laundry duties, grocery shopping and other mundane responsibilities is a piece of cake compared to the big question: finances.

If you’re thinking about combining your finances, here are a few pros and cons to consider.

Pros

Teamwork
If you’re on the same page, with your short- and long-term financial goals synced up, and financial priorities fully aligned, there’s nothing more fulfilling than knowing you’re in this together via a complete financial union.

By combining all your assets and liabilities, you’re looking beyond your personal wants and needs, and ultimately making the commitment to succeed or fail — together, as a unit.

Simplicity
One of the benefits of joining accounts is that it makes bill paying and record keeping a whole lot easier (particularly if you’ve established a budget).

Furthermore, combining your loan accounts, such as credit cards, could help you get additional loans in the future.

And if you’re making consistent, timely payments, both of your credit scores will improve. If you had kept that credit account separate, only one of you would have the benefit of a higher score, which could hurt you down the road when you apply for additional credit.

Taxes
Sure, filing separate returns may be beneficial in some instances. (For example, if one spouse has large medical bills and can meet the deduction threshold by considering only his or her income.)

But joint filing saves time, and possibly money, too — particularly if you both work and one of you makes considerably more than the other. Combining incomes could bring the higher earnings into a lower tax bracket.

Also, some tax credits are only available to a married couple when they file jointly. Talk to your accountant for additional information about minimizing the tax bite.

Cons

Attitudes
Some couples may not agree on certain issues, like creating a spending/saving plan, setting retirement goals, or even how much debt they should carry. After all, opposites do attract, and in many relationships, there is, in fact, a spender and a saver.

If your financial philosophies don’t align, and you’re combining your financial life with someone who has vastly different expectations, goals, systems, ideals and habits, this could bring challenges and unwelcome relationship conflict.

Dependence
If you’ve been managing your money on your own for years, and have been relatively successful in doing so (from choosing your 401K funds to setting a budget to planning a vacation), you may not want to relinquish your financial autonomy.

Sure, there may be more bookkeeping for you to do if you keep your finances separate, and opt for more of a yours/mine/ours account type arrangement (commonly referred to as the “three pot system”), but it may ultimately provide you with the independence and comfort you desire.

Disentangling
You may be in la la land now, but what happens if the relationship doesn’t work out in the long run? Joint mortgages, credit cards, and bank accounts can be very difficult to separate, even with a formal court-ordered divorce decree.

Souce: Zillow Blog, Vera Gibbons
http://www.zillow.com/blog/pros-cons-merging-finances-192186/

Santa Clara County Local Area Market Update for February 11th 2016

Happy Friday everyone! Great real estate market data for our area.

The Nightmare Next Door: What To Do When Your Neighbor Is a Nuisance

The animals that live in the house across the street bark incessantly. The people two doors down play their music so loud you now know all the lyrics to every Kendrick Lamar song ever written. And something, presumably a dog (you hope) keeps leaving presents on your lawn. Annoyances like these can make it unpleasant to live in your neighborhood. And, they can quickly escalate, becoming dangerous or even in need of legal intervention.

So how do you know how to handle a nuisance neighbor, and what should you do when the situation gets out of control? Knowing who you're dealing with is step one.

Annoying but (probably) not dangerous

The situation: Your neighbor is a busybody, always in everyone's business and clearly enjoys spreading it around. The animosity she creates is making it hard to enjoy social outings in the neighborhood.

The strategy: Have a talk with her. Perhaps the simple act of honest discourse is enough to get her to curtail her behavior. After all, no one wants a "Desperate Housewives" scenario.

Multiple people may need to be in on this act to get the point across that her behavior won't be tolerated. As a worst case scenario, disinviting her from social events may be necessary. Uncomfortable, but necessary.

Could go off the rails if provoked

The situation: Your neighbor complains about EVERYTHING. The way your kids' friends park on the street in front of your house. Your dog that barks exactly one time a day, for a 30-second period, when the mail is delivered. Even the way your trash can faces on trash pickup day.

And it's not just you. He's been terrorizing the neighborhood since the day he moved in, and everyone's too scared to confront him.

The solution: Kill him with kindness - but only if it seems safe. Could be the neighbor is a lonely man who doesn't know how to reach out and is channeling his sadness/lack of social interaction in a negative manner. Taking over some cookies, bringing in his newspaper, or offering to water his flowers might be the icebreaker you need to start breaking down those walls.

But, being able to judge a situation is key to knowing how to handle it. If you're not sure if your neighbor is just sad and lonely or if he's going to turn into a psychopath and burn your bunny, you probably want to keep your distance.

You should definitely watch your back

The situation: There has been a rash of vandalism in the neighborhood, with cars being keyed and landscaping being ruined. Or perhaps you've experienced hostile behavior from a neighbor yelling profanity at you or your kids.

The solution: There are some situations that can't be resolved any other way but getting the police involved. If you feel unsafe or if anybody is being threatened, don't be afraid to get the police involved. It could be that the scare is enough to alleviate the situation.

Involving the police could also be necessary if a neighbor is breaking the law.

"When only one person or a small number of people are disturbed by a nuisance, it is a private nuisance," said the Chicago Tribune. "Examples include a noisy neighbor, a barking dog, a trash-filled vacant lot and trespassers attracted to a vacant building. If a state or federal law or a local ordinance is being violated, the police or other officials should be notified to abate the nuisance."

Sometimes, a neighbor's antics affect more than your daily enjoyment of your home. If money or land are involved, things can get beyond testy. If keeping things calm and out of the hands of professionals isn't working, it may be time to take legal action.

"Consider having the property surveyed, which should resolve any questions about property lines. (And a survey could nip the problem in the bud, since the person who wants something to happen usually pays, said Emily Doskow, an attorney in Berkeley, California, and the editor of Neighbor Law: Fences, Trees, Boundaries & Noise on CNN. "The cost can vary anywhere from $300 to $1,500, depending on where you live and how complicated the survey is."

Be aware that there are several defenses that could derail your plight (knowing about the private nuisance when you moved to the neighborhood or tolerating it over a period of time are a few of them). Your attorney should be able to advise you of whether or not you have a legitimate case.

Source: RealtyTimes, Jaymi Naciri
http://realtytimes.com/consumeradvice/homeownersadvice1/item/42105-20160204-the-nightmare-next-door-what-to-do-when-your-neighbor-is-a-nuisance

Finding a Bay Area starter home: 5 tips for millennials (and others)

Here are 5 Tips for Finding a Starter Home.

We spoke to Wendy Kandasamy, a Pacific Union agent in Palo Alto, where a single family home with three bedrooms, two baths and a modest yard can easily cost $2 million.

1. Think creatively about what kind of property you can afford to get into -- and what you are willing to accept. Your starter home may turn out to be a condo or townhouse, rather than the single-family home that you had envisioned.

2. Prioritize what you want. If it's location, compromise on everything else: Forget about pristine condition, square footage and the floor plan that you love. If you must have something new and spacious, look in Gilroy or the East Bay suburbs where better deals are to be found.

3. Think strategically: Look for properties that will draw less competition. Most people want two bathrooms. Go after a property with one bathroom. You can improve and expand later.

4. Buy a duplex with a partner: Find a friend, find a relative, someone who's like-minded and wants to remain in the area. You can live in one of the units. When the property appreciates, sell it. Then buy the starter home you had dreamed about.

5. Work up to what you want. If you can't afford a condo here, buy a single family home in Texas. Rent it, watch it appreciate or flip it and use the funds to buy your Bay Area home. You'll be generating income from another part of the country in order to be able to afford to live here.

Source: Mercury News, Richard Scheinin
http://www.mercurynews.com/business/ci_29500345/5-tips-finding-bay-area-starter-home