Buying A Home Moves Beyond Just “Location, Location, Location”

FIRST-TIME AND MOVE-UP BUYERS: 87% OF THE MARKET

The U.S. housing market is strong.

According to the National Association of REALTORS®, home resales totaled 5.50 million in September on a seasonally-adjusted, annualized basis -- a 9% increase as compared to one year ago.

Plus, as a signal of the housing market's staying power, home sales are no longer fueled by speculative real estate investors. Everyday consumers comprise the majority of this year's action.

First-time buyers and move-up buyers account for 87% of today's home sales.

For most of these buyers, purchasing a home will be the largest asset purchase they make in their life; and it can be tricky, confusing, and frustrating for those who fail to prepare.

In addition to mortgage concerns, such as "Do I have to put 20% down on a home?" and "Which is the best mortgage for me?", buyers should approach the home-selection process with the same level of detail.

There are a number of red flags to consider when buying a home, for example, and a number of signals that all's clear to move ahead.

Recognizing the difference between the two can be the difference between getting a great deal on a home or having regrets about the purchase you've just made.

WILL YOUR HOME SERVE YOU TODAY, AND TOMORROW?

In its most recent profile of home buyers and sellers, the National Association of REALTORS® reports that the typical home buyer lives in their home for a period of approximately 10 years.

Therefore, as a home buyer, you should consider your purchase of a home within the context of "a decade".

It's terrific to be in the school district you want, for example; or, to be near amenities which are important to your household, but it's important to look at your potential purchase and the health of its systems.

Be alert to potential problems and you'll increase the chance that your new home will treat you well for the time you expect to reside in it.

1. What is the condition of the roof?

There are few "replacement costs" higher to a homeowner than the replacement cost of a roof. Depending on the size of your home, replacing a roof can cost tens of thousands of dollars. Sometimes, these costs can be covered by hazard insurance.

Many times, they are not.

When you in the home search process, then, ask current homeowners about the age of their home's roof. Most roofs last 20 years with little maintenance. Some roofs will last longer.

If the current homeowner does not know the age of their home's roof, be on the lookout for missing or curled shingles, which can be a sign that the roof is aging and reaching the end of its useful life.

If you’re unable to uncover the age of a roof and cannot determine its condition via eyesight, consider asking the seller for a formal roof inspection be completed prior to purchase.

2. What is the condition of the HVAC system?

Another expensive item to replace in a home is the HVAC system.

HVAC stands for Heating, Ventilation, and Air Condition. HVAC systems typically last 10-12 years, but with regular, seasonal maintenance, they can last up to 15 years or more.

Therefore, when looking at homes, it's a good idea to ask the current homeowner when their HVAC system was purchased, and how regularly the system gets serviced.

If a home's HVAC system looks "old", similar to with the roof, you can request that an inspection be performed prior to closing. This will help ensure, as a new homeowner, the HVAC system you inherit is in good, safe, and working order.

3. What is the condition of neighboring homes?

"Location, Location, Location" -- it's a common refrain among real estate professionals. And, for good reason.

When you’re buying a home, the location of the home can affect its long-term value and utility than its number of bedrooms or total square footage, as examples.

Some of the information you should seek to includes:

What is the plan for future development near this home?
How do the local schools perform versus the state, and nationally?
How close is this home to public services including fire and police?
You should also consider the home's real estate tax bill, which affects your monthly mortgage payment.

Tax costs are often listed on a home's listing sheet and you can plug them into a mortgage calculator to see the home's true cost.

4. What is the home's efficiency rating?

The cost of heating a home and cooling it is often overlooked as part of the home purchase process. A home with leaky windows or poor insulation, though, can suck thousands of dollars from your annual budget  -- the cost of several months of groceries.

A home with window which fail to seal tightly or which are generally inefficient will yield larger heating and cooling costs as compared to a home with new, efficient windows. Similarly, a poorly insulated home will lose heat during the winter months, adding to energy costs which temperatures are low.

Sometimes, small changes can yield large savings in terms of energy consumption. For example, changing light bulbs and replacing appliances can reduce a home's energy footprint. Other times, large changes are needed -- and this may include replacing windows and roofing.

Ask a home's current owner about its monthly utility costs, or seek more information from your local utility company. Small changes can sometimes be handled prior to closing by the seller.

For larger items, consider using the FHA 203k loan, which is especially suitable for energy-efficiency improvements on a home.

Source: The Mortgage Reports Dan Green Blog, Kyle Hiscock
http://themortgagereports.com/18408/buying-home-location-mortgage-structure

7 Simple Ways to Increase the Value of Your Home

Unless you have a luxury shoe habit that rivals Carrie Bradshaw’s (who needs 400K in shoes?), your home is probably the most valuable thing you own. But just because it’s already worth a lot doesn’t mean you can’t bump up the value a few more notches. Whether you’re planning to sell in the near future – or you just want to grow your investment – these seven easy adjustments will make your home worth more money!

1. Hire the Right Person for the Job
When you're hiring a contractor to care for your home, you're basically putting your biggest asset in the hands of someone else. Make sure it's the right contractor by using Angie's List. By taking the time to find a reputable contractor, you'll ensure that your home is up to snuff, which will save you money in the long run and increase the value of your home.

2. Inspect Early and Often
When prospective buyers get close to pulling the trigger, one of the first things they’ll do is have your home professionally inspected. If any nasty surprises are uncovered – such as mold or water damage – things are going to change. At best, you’ll have to lower your asking price. There’s also the possibility that the buyer will take their business elsewhere and simply disappear in a puff of smoke. Avoid this problem by inspecting your house regularly! A few important areas to check are your basement, attic and bathrooms.

3. Add Extra Seating
This one is so simple that a lot of people don’t even think of it! By adding some chairs and a table to an open part of your house, you instantly create a second dining or seating area. The furniture helps show the potential of the space, which can translate to a higher perceived value to the buyer. This is especially helpful for outdoor areas, such as your deck or patio.

4. Paint Your Cabinets
Replacing your entire kitchen-cabinet setup can be expensive and time-consuming, but a fresh coat of paint can accomplish almost the same thing! Not only will this hide any scratches your cabinets may have picked up over time, it will give your kitchen a new look, too. For more places around the house that can benefit from a coat of paint, read: Paint: It’s Not Just for Walls.

5. Use Potted Plants
A beautiful, lush garden on either side of the front door is great, but it’s not always feasible. If you don’t have the time to let your green thumb thrive, try placing little groups of potted plants on your front porch, instead. Your curb appeal will get an instant upgrade, but you won’t have to hire a part-time gardener to handle the upkeep.

6. When In Doubt, Add Storage
This is less about providing a ton of storage for potential buyers (although that’s important) and more about establishing an organized atmosphere in your home. You don’t need to fill every open spot in your house with cabinets or wardrobes, but there are probably a few simple additions you can make that will tie a room together. Need some ideas? Start in the kitchen!

7. Make It Shine
When you want to make a great impression at a party, you spend some extra time on your makeup, right? The same principle applies to your house. Except instead of perfecting your eyeliner, you can shine some fixtures! Anything that’s stainless steel (like your sinks and faucets) is a perfect place to start, because it’s easy to really make them sparkle.

Source: Brightnest, Brian
https://brightnest.com/posts/7-simple-ways-to-increase-the-value-of-your-home

INFOGRAPHIC: How are international buyers buying?

Santa Clara County South Bay Events for November 2015

Does an FHA Loan Limit Your Home-Buying Options?

In many housing markets, there is more demand than supply, which can create intense competition. Let’s say you’re pre-approved for an FHA loan and find a home you like, but your competition comes to the table with cash—here’s what you need to know.

Stigma tied to FHA loans

FHA loans unfortunately have a stigma that they are problematic and harder to obtain, due to their credit standards and property conditions for appraisals.

If we rewind the clock a few years, many listings on the market were short sales, foreclosures, and distressed properties. Buyers working with FHA loans typically had problems, because the FHA is very particular about a property being acceptable to meet health and safety concerns. However, in general, the types of properties on the market today are far different from the homes on the market just a few years ago. In other words, today’s listings tend more to have equity and meet appraisal standards.

Still, there’s a misconception that buyers working with FHA loans are not as strong on paper, due to having only 3.5% down, and the possible likelihood of buyers falling out of escrow because they cannot qualify. This can be taken care of upfront by making sure you are properly pre-approved with the loan application, credit report and giving the lender with whom you’re working full authority to review your financials to make sure you are bulletproof.

Furthermore, a good loan officer will call the listing agent (with your buyer’s agent’s permission) to let him or her know how qualified you are and ease any concerns about your qualifying integrity.

But let’s have a look at the competition you may face, and how to improve your odds. Many of these scenarios can also apply even if you have a conventional loan, so keep reading.

All-cash offers

No matter what, there’s a chance you will lose out on a particular home you’d like to purchase, because of someone making an all-cash offer that is more attractive than yours. This type of offer is considered the cream of the crop, as there’s no financing contingency and usually no appraisal contingency, which mean a quick, easy close for the seller.

However, an all-cash buyer may also try to make a lowball offer. If your real estate agent tells you there’s interest from an all-cash buyer, don’t let that be a deterrent. I’ve seen many situations where all-cash buyers are looking to get a deal. Just remember that all-cash buyers do not necessarily get preferential treatment, especially if they’re making a lower-priced offer on a home for which the seller’s motivation is to get the highest and best offer.

Loans with big down payments

Generally, a buyer with a conventional loan with 20% down looks stronger on paper than a buyer with less than 20% down. This usually means the buyer might be able to perform more easily, which can be appealing to a seller. While this might not always be the case, the general consensus among real estate professionals is that a loan with a bigger down payment is better. If you are working with less skin in the game, a higher offer from you—if it’s within your budget—may offset an offer from a buyer who has more money down.

Big bank accounts

If you can produce a bank statement showing you have additional funds in the bank, this can go a long way when negotiating a real estate deal independent of your down payment. A large cash balance in the bank is appealing to a seller, even if you’re taking out financing to buy a home. Perhaps it’s more advantageous for you to take out financing considering the tax benefits than it is for you to pay all cash for a home. There can be many reasons for your using financing to buy a home rather than cash. Even if you do not plan to use all cash, showing proof of funds to close makes a strong statement to a seller you are serious.

Seller motivation

When sellers list their home they consider the following:

• Price
• Speed
• Flexibility

If you can match the seller’s expectations on all three of these, or even two out of the three, you increase your chances of getting your offer accepted. While price is important, speed may be more important, for example, if the seller is closing on a replacement property of his own, has a separate escrow, and is limited by a contractual timeline. Ultimately, cash and price go hand in hand. A reputable buyer’s agent and loan officer working in tandem can help convey your strength as a buyer to the listing agent and ultimately to the seller, to help get you in contract sooner rather than later.

Having good credit can also help position you as a strong buyer. If your credit isn’t all that strong, it doesn’t necessarily keep you from qualifying for a loan, but it can get you access to better interest rates, which can give you more buying power. If your timeline allows it, building your credit before you buy a home can be beneficial. If you’re just starting out, you can get an idea of where you stand by getting your credit reports and scores. You can get your free annual credit reports on AnnualCreditReport.com, and several resources offer free credit scores, including Credit.com.

Source: Realtor.com via Credit.com
http://www.realtor.com/advice/finance/does-an-fha-loan-limit-your-home-buying-options/

How to Make Sure Your Dream Home Is a Good Investment, Too

You’ve probably heard real estate can be safer than the stock market, while still yielding decent returns. This can be true, but adding real estate to your portfolio is very different from investing in stocks, bonds, and certificates of deposit. Finding success in the housing market often requires being able to find good deals and ripe opportunities. Check out some tips below to help you launch your housing market investment career.

1. Assess your goals

It’s important to check your credit and have your finances in order before you get into the housing market. (You can get a free credit report summary from Credit.com to see where you stand.) If you are struggling to make your own mortgage payments, real estate investment might not be the right move. But if you are willing to put the time in to research a good location and deal, crunch numbers to test a property’s financial potential, and can manage the maintenance needed, then it might be a good fit for you. Just be sure you know what you are looking to gain from the experience and understand what it will take to get there.

2. Know the market

It’s a good idea to spend some time learning about the process of real estate investing. Real estate rules vary by state, so it’s important to know about the state you are looking at. You can read books or ask a local real estate expert.

3. Consider multiple buying sources

You can look beyond the local multiple listing service to find homes available for purchase. With your criteria set you can check the newspaper, Craigslist, and real estate auction sites for properties that match what you are looking for. You can also find good opportunities through word of mouth.

4. Find a good real estate agent

Not all real estate agents have experience or know how to help investors find the right type of properties. Before the real estate crash, only a small percentage of real estate professionals would even work with housing investors. As the market slowed, more became open to the idea and some have even taken courses to understand the ins and outs. It’s a good idea to choose a real estate agent who has sold several investment properties and understand your goals as well as the ideal return on investment.

5. Play by the numbers

If you are investing in real estate to increase your net worth, it’s a good idea to make sure it’s part of a balanced financial plan. Whether you are trying to build up a retirement fund or eventually replace income from a traditional job, it’s important to make sure the choices you’re making continue to fit into that plan.

You may find you need to hold on to a home you intended to flip, if repair or closing costs were more than expected. In this case, you can consider renting it out until you are able to sell it for the profit you are aiming for. Likewise, if you were planning to rent out the property, but someone offers you more than expected to buy it, you may want to sell and move onto the next property. It can be a good idea to let your goals and the numbers be your guide.

Source: Realtor.com via Credit.com, AJ Smith
http://www.realtor.com/advice/finance/how-to-make-sure-your-dream-home-is-a-good-investment-too/

This is Where the Equity-Rich Live

If there was ever in doubt in the minds of some of you wondering about the robustness of the real estate market here in the silicon valley, then this new report by RealtyTrac should help drive the point home. If you you can afford to buy now, you should because you are most likely going to reap the benefits in excellent equity appreciation later on down the road. San Jose California makes the top of the list, the heart of the Silicon Valley.


This is Where the Equity-Rich Live


The following metro areas with a population of at least 500,000 are seeing the highest share of equity-rich residential properties – those with at least 50 percent equity – according to RealtyTrac’s Third Quarter 2015 U.S. Home Equity & Underwater Report:

San Jose, Calif.: 43.9%
San Francisco: 37.9%
Honolulu: 36.5%
Los Angeles: 32.1%
New York: 30.4%

Rising home prices in Seattle have prompted more owners to now be in the equity position as well.

“Given the price growth we are seeing in the Seattle housing market, it’s not surprising that equity is growing as well,” says Matthew Gardner, chief economist at Windermere Real Estate in the Seattle market. “This is a sign that many owners who were able to hold onto their homes through the housing crisis have recovered much, if not all, of their lost equity.”

But just because owners now have equity doesn’t mean they’re looking to cash in right away.

“Unfortunately, even though the number of equity rich home owners is on the rise, this isn’t translating into additional inventory in the Seattle market,” Gardner says. “As a result, we find ourselves in the proverbial ‘chicken-and-egg’ situation where there are plenty of people who want to sell, but won’t list their home until they can buy something new. But they can’t buy something new until there are more homes for sale. Unfortunately, I see no end in sight to this cycle in the near term.”

For home owners facing foreclosure, they may be able to avoid it altogether and cash out with the sale of their home.

As home prices rise, the share of in-foreclosure properties that are seeing equity is growing too. The following major markets are seeing the highest share of in-foreclosure properties with positive equity: Denver (85.9%); Austin, Texas (83.3%); Honolulu (79.5%); Scranton, Pa. (77.8%); San Jose, Calif. (77.3%); Pittsburgh (75.9%); McAllen, Texas (75.6%); Baton Rouge, La. (71.6%); and Nashville, Tenn. (71.4%).

Source: Realtor Magazine Online via RealtyTrac
http://realtormag.realtor.org/daily-news/2015/10/26/where-equity-rich-live?om_rid=AAFmZk&om_mid=_BWLng0B9G7tAJR&om_ntype=RMODaily