How to Buy a Home Without a 20% Down Payment

One of the first things you’ll hear when you start considering homeownership is that you’ll need a hefty chunk of change upfront. Most financial planners recommend putting down a 20% down payment. On the current national median home price of $306,700, that comes to $61,340. And that’s serious money.

But if you don’t happen to have that kind of cash on hand, you’re not alone. Quicken Loans Vice President of Capital Markets Bill Banfield notes that the most common barrier to homeownership isn’t being able to afford the monthly mortgage payment—it’s being able to save the down payment.

Thankfully, there are other ways to go about buying a home that don’t require you to put 20% down, like the following:

Federal Housing Administration loans

The Federal Housing Administration requires a down payment of only 3.5%. Compared to 20%, that’s pretty sweet—but these government-backed mortgages aren’t for everyone. To be eligible, you’ll need a decent credit score, of at least 580. Scores as low as 500 may qualify, but then you’ll need to put 10% down.

Another stipulation is that you’ll have to pay mortgage insurance, an extra fee that’s required on home loans where less than 20% has been put down. There are also limits on how much money you can borrow, with a minimum and maximum between 65% and 115% of the median home price in an area—on average between $271,050 and $625,000. Still, in spite of these restrictions, these loans are plentiful and a boon to home buyers, particularly those who are entering the housing market for the first time.

VA loans

If you or your spouse has served in the military, Uncle Sam has your back! You may quality for a Veterans Affairs loan, which requires 0% down and, unlike FHA loans, no mortgage insurance, since the Department of Veterans Affairs insures the loan on your behalf.

To get a VA loan, you’ll need to present a certificate of eligibility, proving one of the following requirements:

• 90 consecutive days of active duty during wartime (including from Aug. 2, 1990, to the present; see other qualifying dates), or 181 days during peacetime.
• six years in the National Guard member or reserves.
• You were wounded in service, even if you served for less than the specified time.
• You’re a widow or widowers of a member of the military forces who died in action or from injuries suffered while on duty.

USDA rural development loans

The United States Department of Agriculture also offers 0% money-down loans to home buyers who qualify as having low or moderate income. And the threshold for “moderate” can be quite high depending on where you live; in San Francisco, it amounts to $141,000 for an individual.

And while eligible properties are typically in rural regions where space isn’t at a premium, this doesn’t necessarily relegate you to the sticks. A full 97% of the United States is covered under USDA loans; check whether any address or area is covered at USDA.gov.

State and local home buyer programs

The federal government isn’t the only one offering down payment assistance. In fact, there are 2,290 down payment programs across the country that offer financial assistance, kicking in an average of $17,766, according to one study.

Generally, these programs have income limitations and require you to take a home-buyer class. Find programs in your area on the National Council of State Housing Agencies website, or at the Down Payment Resource, which offers a calculator that can show you what you may be eligible for.

Credit unions

You may be able to get a mortgage with no down payment or a limited down payment from a credit union—a nonprofit banking cooperative whose members can typically borrow at lower rates.

In order to qualify, you will probably have to meet limited income requirements—such as a maximum of 80% of the median area income. You’ll also need a decent credit score. But the policies can vary widely, so check. For instance, the San Francisco Federal Credit Union recently offered 100% financing for up to $2 million to borrowers with an average credit score of 747 and $219,000 income.

How to find down payment help in your area

Start by talking with a lender, mortgage broker, or your Realtor to determine not only what home you can afford, but also what programs and financial assistance you might be eligible for. You can also see how much home you can afford by punching your numbers into realtor.com’s mortgage calculator.

Source: Realtor.com, Nichole Odijk DeMario
http://www.realtor.com/advice/finance/20-percent-down-payment-for-a-home/

7 Reasons to Work With a REALTOR®

7 Reasons to Work With a REALTOR®

REALTORS® aren’t just agents. They’re professional members of the National Association of REALTORS® and subscribe to its strict code of ethics. This is the REALTOR® difference for home buyers:

1. Ethical treatment. Every REALTOR® must adhere to a strict code of ethics, which is based on professionalism and protection of the public. As a REALTOR®’s client, you can expect honest and ethical treatment in all transaction-related matters. The first obligation is to you, the client.

2. An expert guide. Buying a home usually requires dozens of forms, reports, disclosures, and other technical documents. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes. Also, there’s a lot of jargon involved, so you want to work with a professional who can speak the language.

3. Objective information and opinions. REALTORS® can provide local information on utilities, zoning, schools, and more. They also have objective information about each property. REALTORs® can use that data to help you determine if the property has what you need. By understanding both your needs and search area, they can also point out neighborhoods you don’t know much about but that might suit your needs better than you’d thought.

4. Expanded search power. Sometimes properties are available but not actively advertised. A REALTOR® can help you find opportunities not listed on home search sites and can help you avoid out-of-date listings that might be showing up as available online but are no longer on the market.

5. Negotiation knowledge. There are many factors up for discussion in a deal. A REALTOR® will look at every angle from your perspective, including crafting a purchase agreement that allows enough time for you to complete inspections and investigations of the property before you are bound to complete the purchase.

6. Up-to-date experience. Most people buy only a few homes in their lifetime, usually with quite a few years in between each purchase. Even if you’ve done it before, laws and regulations change. REALTORS® handle hundreds of transactions over the course of their career.

7. Your rock during emotional moments. A home is so much more than four walls and a roof. And for most people, property represents the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on the issues most important to you.

Souce: RealtorMag
http://realtormag.realtor.org/sales-and-marketing/handouts-for-customers/for-buyers/7-reasons-work-realtor

Why that million-dollar home is sitting on the market

By the time it sold last week for $4.8 million, a six-bedroom lakefront mansion in Winnetka had been on the market for most of the past six years and the sellers had already moved to California.

They're not the only high-end sellers who've had to wait: Luxury-priced homes all over the city and suburbs are taking a long time to sell.

Homes priced at $1 million and up are selling slower on average this year in 18 of 22 expensive Chicago neighborhoods and suburbs, according to Midwest Real Estate Data. Luxury homes are selling faster in just four locations: Streeterville in the city and in the suburbs of Evanston, Glencoe and Highland Park.

Agents blame an oversupply in the price range, reluctance of homeowners to head for the suburbs and the protracted struggle to clean up the financial mess in Illinois and Chicago.

"We've got these high property taxes, sales taxes and income taxes, and these crazy pension problems we'll never be able to pay for," said John Phillips, a Jameson Sotheby's International Realty agent in Winnetka. "Why buy an expensive house when you can buy a smaller one and use the rest of the money on something else, like a second home in another state?"

In Deerfield, where the slowdown has been steepest, the average home that went for $1 million or more in the 12 months ended July 31 sold in 233 days, up from 144 in the year-earlier period, MRED's data show.

Househunters in Deerfield "are seeing they can get a better deal in Highland Park," said Margie Brooks, a Baird & Warner agent with high-end listings in both Deerfield and Highland Park, to the east. "They get more of a downtown and the beaches."

Highland Park's better deals are available in part because so many homes are for sale there, which leads to price wars. There are 91 homes on the market at $1 million-plus in Highland Park, almost twice the 46 upper-end homes that sold in the previous year.

That should mean that Highland Park's high-end homes would be selling slower as well, but they're not.

In the city, the biggest slowdown is in North Center, where $1 million-and-up homes are selling in an average of 116 days this year, up 41 percent from the year before. There were 122 sales last year and 116 this year.

"It's because there's so much supply on the market," said Sean Glascott, an @properties agent. He sold a newly built home on Waveland Avenue in North Center that was on the market for 18 months before selling in June for slightly over $1.8 million.

While the 5,000-square-foot home was under construction, "there were 10 other homes being built in the immediate area, all within a couple hundred thousand dollars of ours, and we knew about more that were coming," Glascott said.

SALES UP

Although the time it takes to sell million-dollar-plus homes has lengthened this year, more of them are selling. This year, a combined 1,711 high-end homes have sold in the 22 areas, according to MRED, an increase of 3 percent from a year earlier.

Buyers may be coming for the prices. The Waveland Avenue home that Glascott sold started out at just over $2 million but eventually went for 13 percent less.

"We knew it was time to let this thing go before we were competing with 20 houses," he said.

Sales have slowed in city neighborhoods from the South Loop up to Lincoln Square. Only Streeterville has speeded up, but not by much. Million-dollar homes are selling in 140 days, down from 143 last year. But at the same time, the number of Streeterville sales is down 20 percent at 75 this year.

In the market overall, homes at all prices are selling faster than they were a year ago, according to MRED. While a single regional figure is not available that corresponds with the time period in the million-dollar study, MRED's end-of-August report showed that everywhere but Lake County had homes selling faster year-to-date than in the first eight months of 2015. In Lake County, they were selling 4 percent slower.

Evanston stands out as the bright spot for million-dollar sellers. Luxury homes are selling 35 percent faster—in 92 days this year, down from 142—and the number of sales, 45, is up 20 percent from last year.

"Evanston has always been a mini-Chicago," said Debbie Magnusen, an @properties agent who works there. "It has restaurants and culture; and if you want to go into the city easily, you can."

'THEY REALLY DON'T WANT TO GO FARTHER NORTH'

That's always been true, but Magnusen said it's become even more important in recent years as two-earner couples try to stay close to job centers and raise kids at the same time.

"They really don't want to go farther north," said Magnusen, who said listings in next-door Wilmette are getting considerably fewer showings than those in Evanston. High-end sales are taking 63 percent longer in Wilmette, an average of 101 days, up from 62 last year.

Agents in other, farther north suburbs have been saying the same recently: that younger affluent adults don't want to make longer commutes.

Phillips, the Jameson Sotheby's agent, said keeping to a shorter commute is a pragmatic choice the younger generation is making, in part because in these days of slow price recovery,

When home values "were going up 4 or 5 percent a year, you had the fun of living in it and made money at the end," Phillips said. "Now you can have a lot more fun with that money somewhere else, like Florida."

Source: Crain's Chicago Business, Dennis Rodkin
http://www.chicagobusiness.com/realestate/20160913/CRED0701/160919978/why-that-million-dollar-home-is-sitting-on-the-market

Info Graphic - Aging Gracefully

Preparing Your Home for Sale

When you’ve decided to sell your home, the last thing you want to do is spend money to spruce the place up. After all, whoever buys it is going to replace those outdated kitchen cabinets and grungy bathroom tiles anyway, right?

“We’re often asked why any money should be spent freshening,” said Mickey Conlon, an associate broker with Douglas Elliman Real Estate. “The answer has to do with the psychological effect of assessing a renovation on a prospective purchase. Buyers assign dollar values to repairs that typically exceed the actual cost of remediation.”

To get the best return on your investment — and avoid turning off potential buyers — you need to ensure your home looks its best when it hits the market. At the same time, you don’t want to waste effort or money on improvements that won’t pay off.

To find out what you absolutely must do before putting your home on the market, I reached out to several real estate professionals for their essential presale fix-ups. Here are their top suggestions for making sure your house or apartment is market-ready.

1. PAINT THE WALLS A fresh coat of paint is a cost-effective way to make a place feel new again. But stick with neutral tones like grays and whites, which let the best features of your home stand out, rather than going with bold colors that might not suit everyone’s taste. You can find painters starting at $60 an hour on a site like Handy, which offers on-demand handyman and cleaning services in New York and other major cities. “As an added bonus,” said Mr. Conlon of Douglas Elliman, “the faint whiff of paint can be as alluring to home buyers as new-car smell is to auto shoppers.”

2. SHINE THE FLOORS “Unless your floors are severely damaged, it doesn’t make sense to have them refinished,” said Pat Christodoulou, who stages homes for sale in Connecticut and New York. Instead, she hires a handyman with a floor buffer, paying anywhere from $300 to wax and polish the floor of a small living room to $1,500 for a Classic Six. “Many good buildings have a buffing machine,” she said, adding that if yours doesn’t, you could try asking for a handyman at another building down the block.

3. CLEAN UP THE BATHROOM Replacing missing tiles and re-caulking moldy areas are must-dos. Small upgrades, like swapping out an old faucet, can brighten up the space. If your tub is looking dingy, a professional refinisher can repair dents, rub out rust spots and recoat it with a new finish in a day or so, for about $500 for a standard-size bathtub, according to Homeadvisor.com, a home-improvement website. This technique, called reglazing, can be applied to those dated pink wall tiles as well, so long as they are in good shape. And if your bathroom is already in decent condition, a new bath mat, shower curtain and fresh towels may be all the sprucing up you need.

4. UPGRADE THE KITCHEN While remodeling an old kitchen is a sure way to help your home sell faster and at a higher price, it is possible to transform a dated space without a complete overhaul. A fresh coat of paint and new hardware will help refresh old cabinets. Peel-and-stick wall tiles, which can be found at home improvement stores for as little as $8 a square foot, make adding a backsplash easy on the budget.

And if you’re feeling a little more ambitious, an epoxy coating, sold at most home improvement stores for about $20, can give laminate countertops a new look and feel. Louise M. Devlin, an agent with Brown Harris Stevens who does a fair amount of business in 1960s co-ops, swears by this trick. “It’s a fantastic affordable option,” said Ms. Devlin, who hires a handyman to do the work, which involves sanding the countertop and mixing and applying several coatings of epoxy. The end result, which can be finished in a weekend, she said, “looks like a granite industrial finish.”

But what about those old appliances? While real estate professionals agree that replacing them can add value, it may not be worth the time involved or the cost of new high-end appliances. If your budget allows, consider buying steeply discounted appliances at stores that sell used kitchens, like BIG Reuse in Gowanus, Brooklyn, and Astoria, Queens, or Green Demolitions in Fairfield, N.J.

5. CLEAR THE CLUTTER “Sellers don’t realize how much stuff they have and how it deters most buyers,” said Kathleen Perkins, an associate broker at Douglas Elliman. “A good rule of thumb is to get rid of 50 percent of your stuff.” This includes books, furniture and the clothes hanging in your closets, and it has the added effect of making small spaces seem bigger. Coffee tables, kitchen counters, windowsills and other surfaces should be cleared of family photos, plants and tchotchkes. Also, be sure to put away any personal effects — razors, hair dryers, shampoo bottles, toothbrushes — before showings.

6. DO A DEEP CLEANING Wash the windows inside and out and vacuum all the dust that’s accumulated in those exhaust fans, said Heather McMaster, an associate broker at the Corcoran Group: “Deep cleaning is so important, because while an apartment can show very neatly, it’s the details that people pick up on.” According to Handy, the handyman and cleaning service, it usually takes about four or five hours to thoroughly scrub down a two-bedroom two-bath apartment — including inside the cabinets, oven and refrigerator — and costs $100 to $135.

7. LIGHT IT UP “Every room should have at least three points of light,” said Alison Draper, an agent with Halstead Property who writes for a company blog about design and staging. That means a table lamp, a floor lamp and a task light, for example, or an overhead fixture and a couple of table lamps. Her go-to resource for inexpensive lighting is Ikea.

Source: The New York Times, Michelle Higgins
http://www.nytimes.com/2016/09/18/realestate/preparing-your-home-for-sale.html?_r=1

New report shows rents falling in San Jose and San Francisco

Falling rents? What a concept — especially in the Bay Area, ground zero for out-of-sight rent increases over the past few years.

Yet a new study indicates the trend could be changing. Abodo, an apartment search website, says monthly rents dropped markedly from August to September in San Jose and San Francisco. Those cities were on Abodo’s Top 10 list for the “Biggest Fall” in rents for one-bedroom apartments during that period.

The website’s National Apartment Report for September shows the average monthly rent for a one-bedroom apartment in San Jose dropping from $2,790 to $2,455, a 12 percent decline — and the second-largest decrease among U.S. cities. A one-bedroom in San Francisco fell 6 percent, from $3,952 to $3,698, the seventh-largest decline.

Of course, Abodo’s findings for a single month must be taken in context — as one piece of a continually unfolding picture. Still, the website’s numbers fit a pattern: Over the last year, a variety of organizations and experts have said the pace of rent hikes is slowing in much of the Bay Area, and perhaps is flattening.

Some observers are emphatic: “The prices have reached their saturation point,” said Ron Stern, CEO of Bay Rentals, a housing relocation service. “Tenants cannot be soaked for one extra dollar.”

Particularly in Santa Clara County, he said, “the rental market has slowed down to almost a crawl. We do a lot of credit reports, and the number of reports we’re doing has declined. … Landlords say, ‘Is my price too high? I’m not getting any calls.’ ”

The cooling apparently has yet to reach Oakland. From August to September, according to Abodo, rents climbed from $2,254 to $2,299, a 2 percent increase — the nation’s 23rd-largest increase in rent price.

The notion that Oakland rents still are playing catch-up with the Peninsula and San Francisco was also born out by data reported in July by Novato-based RealFacts. Its second-quarter report showed Oakland rents rising a hefty 5.4 percent on a year-over-year basis. Still, that was down from 7.2 percent and 13.7 percent increases, respectively, in the previous two quarters.

Across the Bay Area, the years-long run-up has put the squeeze on typical income earners, who easily can spend half of their pretax wages on rent.

“While incomes have gone up dramatically, rents also have gone up to the point where we’ve reached an equilibrium,” said Jeffrey M. Mishkin, regional manager at the San Francisco office of Marcus & Millichap, a real estate brokerage firm. For much of the region, rents “either can’t or don’t need to go up anymore.”

From August 2015 to August 2016, he said, San Francisco’s rental market “was flat.” “One-bedrooms were down 7.7 percent year-over-year, from $3,395 to $3,150. Two-bedrooms were down from $4,500 to $4,300, a 4.7 percent drop.”

Plus, he just had received an informal report about a “very large owner” of apartments on the Peninsula “who said that rents are down on every one of his properties.”

And yes, Oakland rents have continued to rise as the city attracts young professionals looking for some affordability and easy access to jobs across the bay. Even so, Mishkin said, East Bay brokers sense a slowdown: “The smaller units are renting quickly. The larger, more expensive units are taking longer.”

Stern advised apartment hunters to look in smaller apartment developments, rather than the larger — and often more expensive — complexes.

“You can get a nice place for $1,600 or $1,700, maybe less,” he said. “There’s a nice duplex in Campbell for $1,850 in a good neighborhood. The landlord says, ‘I don’t want to squeeze it for an extra 200 bucks. I just want to get it rented.’”

“Landlords beware,” he warned. “People are shopping price, not quality, right now.”

If so, Abodo’s future reports could show continuing declines. It based its September findings for San Jose, San Francisco and Oakland on a sampling of 6,701 properties, according to Sam Radbil, the website’s spokesperson.

At a glance

Here are a few other highlights of the report:

• Miami led the nation for the biggest rise in rent for one-bedroom apartments: a 9 percent increase, from $1,599 to $1,739.
• Seattle scored the largest fall in rent: 13 percent, from $2,170 to $1,890.
• Three California cities made the Top 10 for “Biggest Rise”: Bakersfield, up 9 percent; Fresno, up 6 percent; Riverside, also up 6 percent.
• And four California cities made the Top 10 for “Biggest Fall”: In addition to San Jose and San Francisco, they are Los Angeles, down 8 percent, and Long Beach, down 7 percent.

Source: San Jose Mercury News, Richard Scheinin
http://www.mercurynews.com/2016/09/25/new-report-shows-rents-falling-in-san-jose-and-san-francisco/

Even the CEO of Zillow thinks you should ask a real-estate agent what your home is worth

A decade ago, when the real-estate bubble was reaching its peak and homeowners were giddy about the rise in home values, plugging in addresses at the new website Zillow became a national pastime.

“People ‘Zillowed’ their Christmas list. They would go and look up the home value of their boss and ex-girlfriend and ex-wife and their neighbors,” said Spencer Rascoff, Zillow’s CEO. The site was originally built around these automated valuations (or “Zestimates”)—in 2006, not a single for-sale listing was posted on the site. It now has millions of listings and agent reviews, among other features.

Knowing the estimated value of a home was power—or at the very least, juicy gossip. That’s why it was so surprising that Rascoff sold a Seattle investment property earlier this year for $1.1 million—far less than its Zestimate of $1.7 million. This particular house, he said, was located on a major arterial street, a fact that wasn’t baked into the Zestimate. The company has worked that data into its algorithm since then, he said.

According to the Real Deal, a Los Angeles real-estate news website, he also recently paid more than the Zestimate for a Los Angeles mansion. But Rascoff said it doesn’t really matter.

“It wasn’t top of mind. When we were trying to figure out the price for the house that we bought, we relied on the expertise of the real-estate agent to help us decide what to pay. The Zestimate, at that point, was less important,” he said.

The founders of the site always viewed the Zestimate as a starting point, a figure that would give a general sense of a home’s worth, Rascoff said. Zillow Z, -0.53%  was never meant to replace real-estate agents (as travel sites such as Hotwire, which he co-founded, essentially did for travel agents), but to give consumers access to home-value information that real-estate agents were once gatekeepers of, he added. It’s also worth noting that real-estate agents now pay for advertising on the site, so the professionals have become an integral part of Zillow’s business model.

“We call it a Zestimate and not a zeppraisal and not a zeprice. It’s meant to be a starting point,” Rascoff said. “To determine a more accurate opinion of a home’s value you should hire a real-estate agent, or more to the point, you should sell the house and then you will know how much it’s worth.”

After the bubble burst and home prices plummeted, Zillowing all the homes on your Christmas list, let alone your own home, likely was a depressing exercise. Those who got carried away counting the Monopoly money building up in their home suddenly realized that values didn’t always go up. And perhaps people realized the importance of a real-estate professional when the market wasn’t on an upward trajectory. In today’s seller’s market, agents also are relevant, Rascoff said. In fact, his best piece of real-estate advice is to find a good agent, he said.

“Whether it is finding off-market inventory or helping figure out the home’s value and what bidding strategy to take, real-estate agents play a really important role,” he said. “There are 5% fewer homes available for sale today than there were a year ago, and we’re supply constrained and there’s plenty of demand because of low mortgage rates, and therefore home values are rising.” Over recent months, there has been somewhat of a softening in the housing market because builders have been building more homes, he said. Still, many markets are low on for-sale inventory, making it important for buyers and sellers to have a helping hand, he said.

Another misstep people make: not spending enough time mortgage shopping, he said. A recent Zillow survey found people typically spend more time shopping for a car than a mortgage, and that’s a mistake, Rascoff said. The mortgage rate you are able to snag will have a great influence on monthly payments.

He also cautions people not to think of homes in black-and-white terms, that they’re either for sale or not. “Increasingly, homeowners view their home in a more fluid state,” he said. For instance, the home he recently sold in Seattle used to be a rental he lived in; he approached his landlord about buying it. After buying it, he ended up renting the home out before recently selling.

Even off-market properties might be available—at the right price, he said. And he encourages people to knock on doors and write letters to the owners of homes in which they’re interested.

After all, while you can likely thank sites like Zillow for real-estate voyeurism as we know it, the sites have also contributed to more people paying regular attention to their home’s value. An estimated two-thirds of people using Zillow are actively interested in buying or selling, while one-third of people are using the site to keep track of the market and their home’s value, Rascoff said.

“More people are more attuned to real estate than they used to be, whether they are in the market or not in the market,” said Rascoff. “Nowadays, the internet and the smartphone have blurred the lines.”

Source: Market Watch, Amy Hoak
http://www.marketwatch.com/story/even-the-ceo-of-zillow-thinks-you-should-ask-a-real-estate-agent-what-your-home-is-worth-2016-09-15

4 Things to Know About Buying a 'For Sale by Owner' Home

During the home-buying process you’ll see tons of homes, mostly listed by real estate agents. But from time to time you might encounter a home listed for sale by owner (FSBO). You may even have a friend or relative who wants to sell you their home directly.

While it may seem that buying a FSBO home without involving real estate agents would simplify the process, this isn’t necessarily true. Here are some points to keep in mind when you’re looking at a home for sale by owner.

Most sellers will work with your agent
Smart home sellers know that most buyers work closely with a buyer’s agent for weeks (if not months or years), and they will plan to compensate the buyer’s agent just like any other seller would.

Buyer’s agents act as advisers through the ups and downs of the home search. If a FSBO opportunity crosses your path, ask your agent to make the first contact. Most likely they can still work for you and get paid for their efforts.

You shouldn’t think of the home differently
If you find a great home in a prime location that meets all of your criteria, don’t think of it as any different if it’s listed FSBO rather than listed by an agent.

The main thing to keep in mind is that you will meet and see the owner face to face. A home sale is more emotional and personal than, say, the sale of a used car or a piece of furniture. As such, seeing the owner might make you uncomfortable.

Try to get past it and keep your eye on the prize: your dream home. Leverage your agent, and be ready to ask for time alone in the home if you need it.

Laws still apply
If the law stipulates that the seller has a duty to disclose problems, inspect the home, or perform any repairs, the FSBO must cooperate.

The problem some sellers have with going solo is that they aren’t familiar with real estate processes or procedures. Or they want to do it their own way.

Trust your gut and your agent’s judgment if you think the seller is neglecting a duty or not allowing you to do your due diligence.

Even if the home is great, it might not be the right opportunity for you. If it doesn’t feel right, move on.

Pricing may be off
Homeowners who list their home themselves tend to share one thing in common: They reject local agents’ opinions about their home’s value. Sellers (FSBO or not) who are unable to emotionally detach from a home or who don’t have a solid plan post-closing sometimes self-sabotage their sale by overpricing.

These sellers typically meet with local agents before they list. But they don’t like the agent’s pricing strategy and want to give it a stab on their own.

Sometimes, when they fail to sell solo, they enlist the help of an agent, and get the home on the market at the right price. Why? Because when it comes time to get serious, sellers often want representation.

But if you love a home, and the price is off, move on to the next, whether listed by owner or agent.

A home for sale without an agent isn’t off limits. Ask your agent about the listing, and be open to seeing it and treating it just like any other opportunity you or your agent finds.

A good real estate pro should tell you up front that they could represent you in any sale. Go in with your eyes wide open and know that, just like any negotiation, it may or may not work out.

Source: Zillow Pourchlight, Brendon Desimone
http://www.zillow.com/blog/buying-for-sale-by-owner-home-204781/

Saturday Stats - Silicon Valley Housing Market Overview

MLSListings Silicon Valley and Coastal Regions Housing Market Overview

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

Home Sales Slowing, Prices Holding, DOM Growing in Key Northern California Housing Markets

After a slow July, single-family home sales rebounded in four of five MLSListings counties in August, compared to the same month last year. San Benito County sales increased 50%, followed by Santa Cruz County which increased by 14%, Monterey County rose 6%, and San Mateo was up 5%. In the heart of Silicon Valley, Santa Clara County sales dropped 9%. Compared to July, sales dived 17% in San Benito, 4% in Monterey, and 1% in Santa Clara Counties, while Santa Cruz County grew a healthy 27% and San Mateo County increased 7%.

Year-over-year single-family homes inventory rose by 26% in San Benito, 4% in San Mateo, and 3% in Monterey Counties
while dropping 12% in Santa Cruz and remaining flat in Santa Clara Counties. Compared to July 2016, inventory grew 6% in San Benito County but dropped 7% in both San Mateo and Santa Cruz Counties, 5% in Santa Clara County, and 1% in
Monterey County.

Compared to 2015, median prices in August remained positive in all counties. San Benito County showed the most strength up 19%, followed by Santa Cruz County at 15%, Monterey County rose 10%, and Santa Clara and San Mateo Counties increased 2% and 1%, respectively. Compared to July, median price grew 11% in San Benito County and 9% in Santa Cruz County, but dropped 8% in San Mateo County, 6% in Santa Clara County, and 4% in Monterey County.

Year-over-year average days on market (DOM) jumped 68% in San Benito County, 45% in San Mateo County, 16% in Santa Clara County, and 13% in Santa Cruz County, but dropped 12% in Monterey County. Compared to last month, DOM grew 30% in Santa Cruz County, 24% in San Mateo, 17% in San Benito, 14% in Santa Clara, and 10% in Monterey Counties.

Source: MLS Listings Inc
http://www.mlslistings.com/media-center/resources/market-data-reports?udt_3729_param_detail=999

The really bad money decision millennial homeowners are making

Millennials are often described as prioritizing leisure and entertainment, but many are going into debt to fund them.

Most financial planners caution homeowners against using home-equity loans to fund short-term expenses, including vacations. Yet that is the most popular use of the money for the more than half of U.S. homeowners between the ages of 30 and 34 who have owned a home for three years or more and have taken out a home-equity loan, according to results of a recent Discover Home Equity Loans survey.

“It mystifies me that they’re taking out additional debt,” said Jackson Mueller, deputy director of the FinTech Program for the Center for Financial Markets at the Milken Institute, a nonpartisan think tank that aims to increase global prosperity. “But it doesn’t really surprise me that they’re using alternative financing to fund certain things.”

Many millennials are shunning credit cards, looking for less expensive ways to borrow, he said.

Borrowing against a home can be a less expensive way to attain funds than credit cards. The average interest rate on a home-equity loan was 4.88% for the week ending Aug. 17, according to Bankrate.com; the average rate on a home-equity line of credit was 4.75%. The average credit-card rate was 16.1%. Interest on home-equity loans also may be tax deductible, said TJ Freeborn, spokeswoman for Discover Home Equity Loans.

The survey findings show that for many borrowers, “the home not only is the place they live and create memories, but also a financial asset,” Freeborn said. The results of the survey showed that 30 to 34 year-olds were also more likely than other age groups to view their home as an investment property.

But borrowing against your home comes with risks. “It’s because people took money out of their homes that they went underwater,” said Deidre Campbell, global chair of the financial services sector for Edelman, a communications marketing firm that has done research on millennials and money. When housing prices fell during the last housing crash, some who took money out of their homes ended up owing more than the homes were worth — leading to a rise in foreclosures and short sales.

Edelman research paints millennials as a group that is very traditional, and one that worries about money, which Campbell said may run counter to the Discover findings. This is a generation that is concerned about its financial stability, and having equity build up in a house creates more stability, she said.

The Discover report found that 51.3% of those homeowners between 30 and 34 (who have owned for three years of more) have taken a home-equity loan out against their home. Only 29.4% of those between 35 and 44, 19.9% of those between 45 and 54, 25.7% of those between 55 and 64, and 22.3% of those 65 and older also said they took out a home-equity loan against their home. The results come from a survey of 1,428 consumers, conducted earlier this year. The survey didn’t cover the dollar amount of the loans.

The most popular reasons the youngest group took the loans were vacations (43.3%) and emergency cash (41.8%), followed by home remodels (41.1%), medical expenses (36.2%) and weddings (31.2%). For the other age groups, debt consolidation and home remodels were the top responses.

“Home-equity loans should never be used for something like a vacation or other short-term wants,” wrote Ryan Fuchs, a financial planner with Ifrah Financial Services in Little Rock, Ark., in an email interview. Using a home-equity loan for emergency cash can be wise in some cases, he added. “For example, if your home or car is damaged in a storm, and you need to get something fixed before the insurance check will be received, then that can make sense.” Once the insurance money is in hand, that loan can be paid off.

Home remodels that add value to the property, such as redoing a kitchen or a master bath, can be a good use of home equity, Fuchs said. He also prefers home-equity lines of credit over closed-end home-equity loans. A HELOC only accrues interest if and when you draw money from the line; when you take out a chunk of money via a home equity loan, “it starts accruing interest immediately no matter when you actually spend the money from the loan.”

Source: Market Watch, Amy Hoak
http://www.marketwatch.com/story/millennials-are-tapping-home-equity-for-vacations-and-emergency-cash-2016-08-24?dist=realestate

Boomers on the Hunt

Important Things To Know About Home Inspections

If you're hiring someone to inspect the home you want to buy, or you're a seller trying to find out if there are any hidden problems that need fixing before you put your home on the market, here are five things you need to know:

1. You can choose your home inspector.

Your real estate professional can recommend an inspector, or you can find one on your own. Members of the National Association of Home Inspectors, Inc. (NAHI), must complete an approved home inspector training program, demonstrate experience and competence as a home inspector, complete a written exam, and adhere to the NAHI Standards of Practice and Code of Ethics.

2. Home inspections are intended to point out adverse conditions, not cosmetic flaws.

You should attend the inspection and follow the inspector throughout the inspection so you can learn what's important and what's not. No house is perfect and an inspection on any home is bound to uncover faults. A home inspector will point out conditions that need repair and/or potential safety-related concerns relating to the home. They won't comment on cosmetic items if they don't impair the integrity of the home. They also do not do destructive testing.

3. Home inspection reports include only the basics.

A home inspector considers hundreds of items during an average inspection. The home inspection should include the home's exterior, steps, porches, decks, chimneys, roof, windows, and doors. Inside, they will look at attics, electrical components, plumbing, central heating and air conditioning, basement/crawlspaces, and garages.

They report on the working order of items such as faucets to see if they leak, or garage doors to see if they close properly. Inspectors may point out termite damage and suggest that you get a separate pest inspection. The final written report should be concise and easy to understand.

4. Home inspectors work for the party who is paying the fee.

The NAHI Standards of Practice and Code of Ethics clearly state that members act as an unbiased third party to the real estate transaction and "will discharge the Inspector's duties with integrity and fidelity to the client." A reputable home inspector will not conduct a home inspection or prepare a home inspection report if his or her fee is contingent on untruthful conclusions.

The inspector should maintain client confidentiality and keep all report findings private, unless required by court order. That means it is your choice whether or not to share the report with others. If you're a seller, you don't have to disclose the report to buyers, but you must disclose any failure in the systems or integrity of your home.

5. Inspectors are not responsible for the condition of the home.

Inspectors don't go behind walls or under flooring, so it's possible that a serious problem can be overlooked. Keep in mind that inspectors are not party to the sales transaction, so if you buy a home where an expensive problem surfaces after the sale, you won't be able to make the inspector liable or get the inspector to pay for the damage. In fact, you may not be entitled to any compensation beyond the cost of the inspection.

As a buyer, you need the home inspection to decide if the home is in condition that you can tolerate. You can use the report to show the seller the need for a certain repair or negotiate a better price. You can also take the report to a contractor and use it to make repairs or to remodel a section of the home.

One thing you should not do when buying a home is skip having the home inspected because of cost or undue pressure by the seller. A home inspection is reasonable, it can save you money in the long run, and it's required by many lenders, particularly for FHA loans. There's a reason why buyers should beware, and a home inspection gives you the information you need to make a sound buying decision.

Source: RealtyTimes, RealtyTimes Staff
http://realtytimes.com/consumeradvice/buyersadvice1/item/47467-20160916-important-things-to-know-about-home-inspections

What Is Interest? The Fee That Can Tack Thousands Onto Your Mortgage

You’ve probably overheard homeowners boast that they nabbed a “great interest rate” on their mortgage. But what is interest, exactly?

Essentially, interest is an extra fee you pay your lender for loaning you the money you need to buy a home. Lenders, after all, don’t just fork over their money out of the goodness of their hearts.

“They want to be compensated for putting money in your pocket,” says Jack Guttentag, author of “The Mortgage Encyclopedia.” Since mortgage lenders are providing cash upfront to make homeownership possible, they require you to repay the debt plus interest.

Now, if you’ve got a lot of dough lying around and want to pay for the whole house upfront with an all-cash offer, you can avoid paying interest. But let’s face it, most of us aren’t living in this dreamy scenario, which makes home loans and interest par for the course—so it pays, literally, to know how it all works.

How interest rates on home loans work

When you get a mortgage, your interest payment is calculated as a percentage of the total loan amount. For example, say you get a 30-year $200,000 loan with a 4% interest rate. Over 30 years, you would end up paying back not only that $200,000, but an extra $143,739 in interest.

Month to month in the above scenario, your mortgage payments would amount to about $955 per month. Part of that monthly payment would go toward paying back what you borrowed (an amount known as your principal), and the rest goes toward interest.

The exact proportion varies month to month—early on, homeowners typically pay more interest and less principal—but that composition changes as the loan matures. For instance, in your very first month for the above scenario, you’d pay $288 to your principal and $666 to interest. By your last check to your lender 30 years later, you’d pay $951 toward principal and $3 toward interest (check out realtor.com®‘s mortgage calculator to punch in your own numbers).

So what does this payment schedule mean for homeowners? It means it will take time for you to build equity in your home, since you’re largely paying interest during the early years. Yet there’s an upside to this reality: Interest on a home loan is deductible on your taxes, so early on you will get a big tax break that dwindles as your equity rises.

Why interest rates fluctuate

Fluctuations are based on several factors.

“During a period of slack economic activity, [the Federal Reserve] will provide more funding and interest rates will go down,” says Guttentag. Conversely, “when the economy heats up and there’s a fear of inflation, [the Fed] will restrict funding and interest rates will go up.”

These financial shifts could be stressful if they affected your monthly mortgage payments, but luckily when you get a home loan, there’s a way to shield yourself from this roller coaster by getting a fixed-rate mortgage, which locks in your rate at whatever level it is at the time you apply. It remains the same over the life of your loan (typically 30 years). Or else, if you don’t mind the market’s ups and downs, you can opt for an adjustable-rate mortgage.

How to get a low-interest loan

Not everyone who applies for a home loan gets the same interest rate. It varies widely depending on a variety of factors.

Probably the biggest variable is you: Interest rates for home loans vary depending on the borrower’s credit score. Good credit leads to lower interest rates, which is why it’s important to know your credit score and keep it stellar.

Your interest rate can also vary based the type of loan you get: 15-year loans, for example, typically offer lower interest rates than 30-year loans. ARMs have lower interest rates than fixed-rate mortgages (at least at first).

The bottom line: Paying interest may be a reality to homeownership, but how much interest you pay runs a wide gamut, so make sure you grasp the basics before you apply.

Source: Realtor.com, Daniel Bortz
http://www.realtor.com/advice/finance/what-is-interest-home-loan-mortgage/?is_wp_site=1

Bay Area home prices down from August, up from…

The median sale price for Bay area homes fell in August to $675,000. It was the second consecutive month of price declines across the nine counties since since the median hit an all-time high of $710,000 in June.

The price for all homes — single-family homes, condos, townhouses — fell 2.9 percent from $695,000 in July. On a year-over-year basis, however, the median was up 5.2 percent from $641,750 in August 2015.

“The region’s median sale price has risen on a year-over-year basis for nearly four and a half years, and while those gains were consistently double-digit — as high as 33 percent — between mid-2012 and mid-2014, they have since been single-digit and fairly steady, averaging about seven percent over the past two years,” said Andrew LePage, research analyst for the CoreLogic real estate information service, which released the latest numbers.

“In July and August, those year-over-year gains dropped to around 5 percent,” he continued in a statement. “Given seasonal and other forces, including affordability constraints, it’s possible that the Bay Area’s median sale price hit its peak for 2016 in June when it was $710,000, the region’s all-time high.”

According to CoreLogic, 8,374 homes sold in August in the region’s nine counties — up 8.3 percent from July 2016 and up 3.2 percent from August 2015. The sales uptick reversed a months-long decline in sales.

“San Francisco Bay Area home sales perked up a bit in August, rising slightly above a year earlier for the first time since March of this year,” said LePage. “Job growth, low interest rates, household formation and other factors helped drive sales.”

In Santa Clara County, the median price rose year-over-year by 2.3 percent from $811,000 to $830,000. In San Mateo County, the rise was nine percent from $975,000 to $1,062,500.

In Alameda County, the median was up 6.4 percent year-over-year, from $639,000 to $680,000. In Contra Costa County, the increase was more marginal — up 1.3 percent from $502,500 to $509,000.

Source: Mercury News, Richard Scheinin
http://www.mercurynews.com/2016/09/20/bay-area-real-estate-prices-down-from-august-up-from-a-year-earlier/

Transit Talks

First-Time Home Buyers Come Out in Force—but Face New Challenges

If there’s one thing that characterizes the residential real estate market for most of the past four years, it’s that the supply of homes for sale has been low, low, low. Month after month, buyers have told us in our surveys that the biggest challenge they face in making a purchase is simply finding a home that meets their needs.

For the past 47 months straight, the level of existing housing inventory—the overall supply of houses available on the market—has never exceeded 6 months worth. In July, the National Association of Realtors® reported that we had a 4.7-month supply of existing homes; the new-home supply in July was even lower. (Six to seven months of supply is typical of a balanced supply-and-demand market.) Inventory might be low, but demand is still high. The number of home buyers visiting realtor.com® in August was up 16% over last August. And yet the number of homes for sale was down 8%.

But a startling thing happened in August. Finding a home was no longer the No. 1 reported issue holding back buyers. No, the new No. 1 problem was time—as 35% of buyers said they had just started to explore so were not ready yet to buy.

Indeed, in August, 59% of buyers had been looking for less than three months. The number of people just starting to explore went up last August as well, but not as dramatically, nor did they represent the majority of active buyers.

OK, so what’s going on here, anyway?

The high number of those just starting to dip their toes into the market this year is related to a sizable shift toward first-time buyers. Last August, 35% of buyers identified themselves as first-time buyers. This August, the share of first-time buyers jumped to 51%.

As a result, new challenges, mainly financial, are also emerging as more of a concern for the market. After all, the supply-demand imbalance has also been driving up home prices.

This August, 9.4% of buyers reported having difficulty qualifying for a mortgage. That was up from 5.6% last year.

The need to improve credit scores doubled as a problem from last year, increasing from 9.7% of all buyers in 2015 to 19.5% this August.

And not having enough funds for a down payment? That rose from 16% last year to 25% this year.

The market has seen growth despite higher prices in part because of pent-up demand from very qualified buyers who were able to meet the challenging mortgage qualifications that are the norm these days. You want proof? Just check out the higher average credit scores on purchase mortgages.

A key question for the months ahead is whether a higher share of first-time buyers is ready or capable of qualifying for a loan and closing on a house.

If you are among those first-time buyers who are just starting to look, there are a few things that you can do now that will improve your chances of success in the future:

1. Get your financial house in order. Know your FICO score, and work to get it above 700 to improve your ability to qualify and to get a better rate.
2. Understand what you can afford to put down. The average down payment this year is 11% nationally, but it varies dramatically by market and by loan type. If you are struggling to come up with a down payment necessary for your market or type of mortgage, research down payment assistance programs.
3. Get all of your financial records organized, including recent bank and financial statements, the past two years of income tax filings, and pay stubs.
4. Record the details of any debts you may have, from revolving credit card balances to car payments and student loans. You will need all of this before you can work with a lender.
5. Finally: Find a lender and get pre-approved. We still have very limited supply, so being pre-approved continues to be a key part of a successful buying strategy if you intend to finance a purchase with a mortgage. A pre-approval letter as part of an offer will communicate to the seller that you have the ability to close.

Source: realtor.com, Jonathan Smoke

http://www.realtor.com/news/trends/first-time-home-buyers-face-different-challenges/?iid=rdc_news_hp_carousel_theLatest

3 Situations Where It Pays to Buy a Fixer-Upper

It’s every home buyer’s worst nightmare: Finding a house within striking distance — of your price range and work— that quickly turns into a money pit.

On the flip side of the fixer-upper experience is someone like Jordan Brannon, a director of digital strategy in Spanaway, WA, near Tacoma. Although he’s sunk considerable money into his two-story, late-1990s home, he feels it was a good investment.

“It was about finding a home that we could add value to — and could purchase at a below-market rate,” he says of his 3,000-square-foot home. But there was one crucial caveat: “The fixer-upper work that we wanted to do, we had to be able to do.”

While that fixer-upper you’ve got your eye on may not be the steal you’re expecting — the average fixer-upper lists for just eight percent less than market value, according to a new analysis from Zillow Digs — it’s still a tempting prospect for many buyers.

Should you make a fixer-upper your next home? Here are three scenarios where the answer may be “Yes!”

When the upgrades are simple

Knowing that hiring contractors was out of the question — in part because Brannon works from home — Brannon and his wife focused on finding a home they could revamp themselves.

This meant forgoing homes with any foundation, electrical, or plumbing issues, and eyeing properties where cosmetic upgrades were the name of the game.

This isn’t to say the couple didn’t put in a lot of hard work; the project took nearly three months.

“We basically gutted the first floor down to drywall — did a full repaint, with all new trim; replaced the kitchen cabinets and countertops, and added new light fixtures and door handles,” Brannon says. New toilets and sinks are recent installments.

“The home looks 10 years younger, and feels cleaner and brighter,” Brannon remarks. “We’re more comfortable living in it, and I’m confident we’ve made an improvement in the home’s resale value.”

Combined estimates from contractors put the value of the improvements around $55,000, minus one bathroom. Altogether, Brannon says the couple spent about $15,000 on the work, plus 240 hours in labor (yes, he’s been tracking). For Brannon, it was a worthwhile endeavor.

When the numbers add up

“Fixer uppers [only] make sense as long as the numbers pencil out,” says George Vanderploeg, a luxury real estate broker with Douglas Elliman in New York. In other words, “Is the money that I have to put into it going to make the property worth at least that much when I do it?”

In general, people will price a property based on what others sell for, Vanderploeg explains. “If I were just to pick a block in Manhattan, say on 63rd Street, between Lexington and Third Avenue, the renovated townhouses there might sell for $3,000 per square foot,” he continues. “An un-renovated townhouse might sell for maybe $2,000 per square foot. If you have the money to put in, it may all work out.”

Of course, for many home buyers, especially those without a big — or any— renovations budget, this is easier said than done.

When the timing is right

Every municipality has a building code, says Vanderploeg, and the work that you do on the home must fall within legal bounds. “An architect usually will supervise the work, and then at the end of the process, they’ll sign off on it,” he says. However, this can be time-consuming.

You can also run into hurdles if your contractor falls behind schedule, has trouble staying on budget, or is just unreliable. “Where people go wrong sometimes is having a bad contractor,” says Vanderploeg.

If you’re unable to live in the home or get stuck waiting for permits, you could also find yourself in a bind. “Sometimes we have to find people a place to live for six months to a year while they’re waiting for something to be finished,” Vanderploeg adds.

For these reasons alone, homeowners need to be clear-eyed about the renovation process.

Remember, committing to upgrade a fixer-upper is more than a labor of love — it requires a time and financial commitment. But if you’re willing to go all in, think about the bragging rights!

Source: Zillow Porchlight, Jill Krasny
http://www.zillow.com/blog/when-to-buy-a-fixer-upper-203311/