May 31, 2012

I Love the House! How Much Should I Offer?

Posted by martikilby under Buying a Home, Realtor, San Diego Home Values | Tags: , , , , , |
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You’ve found THE house and you’re ready to take the big step and write an offer.  But what is the right price?  Should you start low or come in at full price?  Should you offer more than asking price to seal the deal?

Determining the best offer price is based on a variety of factors, the first being the price of comparable properties.  Your Realtor will research sales and current listings, usually going back no more than 6 months.  She will try to find homes that have a similar number of bedrooms and baths and square footage.   She will also look for properties in the same or similar neighborhood of the same age.  Other factors she will consider might be upgrades and amenities, such as a remodeled kitchen or swimming pool, or view.  The more like the home you hope to buy, the better the comps.

Reviewing the prices of the comparable sales and listings will usually give you a reasonable price range.  The next step in determining your offer price is to look at the condition of the home.  If there are obvious repairs needed, such as new carpet or paint your offer price might be at the lower end of the price range for the comps.  On the other hand, if the home is in move-in condition or has other outstanding features or upgrades, your offer price should be closer to the top end of the range.

Another important factor is the competition.  How long has the home been on the market?  How long were the comps on the market?  Are you competing against other offers?  Is there a scarcity or over-supply of similar homes in this price range?  As with any commodity supply and demand are important factors in determining price.

And finally there is an emotional component.  If this truly is your dream home and you can’t bear the thought of having your offer rejected, you might be inclined to offer above the asking price and even above the comps.  Just be aware that if you are getting a mortgage on the property and it doesn’t appraise as high as you are willing to pay, the difference will most likely have to come out of your pocket.  You should also be cautious about buying at the top of your personal price range or depleting your savings as it will be difficult to enjoy your dream home if you’re house poor.

As I noted in a post earlier this year price isn’t everything when it comes to getting your offer accepted, but it is the most important factor.  Work closely with your Realtor; listen to her guidance, ask questions and carefully weigh all of the factors.  In the end the decision is yours so please, do everyone a favor and don’t waste time with a ridiculously low offer!  If you want the house, bid like you mean it…you might not get another chance!

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March 25, 2012

Discrimination Against VA Buyers?

Posted by martikilby under first-time buyers, mortgage, VA loans | Tags: , , |
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I live and work in San Diego County, which is a big military town for the Navy, Marine Corps and Coast Guard.  Over the years I’ve had the opportunity to work with many active military and veteran buyers using a VA loan to purchase a home.  But lately, I’m struggling to help my VA buyers complete a purchase as they are facing what I see as a marketplace that discriminates against them.

Most of my VA buyers are young, first-time buyers who have steady income, but not necessarily much money saved for a down payment.  As a VA loan offers 100% financing, this would seem to be a perfect solution and a great opportunity.  However, here are the obstacles they face:

  • The price point for many of the young VA buyers in San Diego Countyis relatively low, so when bidding on a house they are often competing with cash buyers.
  • As the buyer is  not allowed to pay certain closing costs on a VA transaction, and most VA buyers need a considerable concession, the seller in this competitive market is more likely to select a buyer that doesn’t ask for closing costs.  Even if the VA buyer comes in with a  higher offer to allow the seller the same net profit, there is the risk  that the property won’t appraise at the higher value and the deal won’t go through.
  • The VA also requires a termite clearance, and the buyer is not allowed to pay for it.  So, this pretty much rules out every short sale as the seller is not going to pay for an inspection, repairs or clearance, and it is highly unlikely that the seller’s bank will pay.
  • The properties themselves often pose the biggest challenge in this market of REOs.  According to VA guidelines, the home      must be habitable with a working stove and heat source, floor coverings, no large holes in walls, or missing window trim or baseboards, no mold or  mildew, and plumbing that does not leak.       So buying a fixer is out of the question as the VA buyer is not  allowed to pay for any repairs.

I would like to think that sellers might choose to actually make an effort to sell to a member of our military, but I think the VA itself has made it unnecessarily difficult.  I understand the VA’s desire to reduce the financial burden for the military buyer, and make sure they are protected in the transaction, but from where I stand, I see that the rules that are meant to protect them are actually hurting their chances of successfully buying in this market.

 

December 21, 2011

La Mesa, CA Real Estate Market Update – November 2011

Posted by martikilby under Buying a Foreclosure, Buying a Home, Real Estate Sales Statistics, Real Estate Values, San Diego Home Values, San diego Neighborhoods | Tags: , , , , |
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La Mesa, CA Real Estate Market Update – November 2011

 

                                                 

 

 

 

La Mesa,CA is a great place to call home!  From the quaint downtown filled with restaurants and antique shops, to the views from Mt.Helix, there are many wonderful neighborhoods with their own distinctive vibe.  But like most everywhere throughout the county, real estate values continue to slip, as noted in this real estate market update.

La Mesa, CA Single Family Home Sales – November 2011

Total number of sales                       51

            Short sales                                 9

            REO sales                                   8

Average price                                     $381,197

Average days on market                 71

Average price 2010                          $417,252

Average price YTD 2011                 $387,727

Prices for single family homes have not showed a significant decline throughout the year, which may be a sign that the market is starting to level out.

La Mesa, CA Attached Home Sales – November 2011

Total number of sales                    14

            Short sales                             3

            REO sales                                2

Average price                                  $190,807

Average days on market              51

Average price 2010                        $190,580

Average price YTD 2011               $167,587

The average price for November for attached homes is surprisingly high when compared to the preceding months.  As we enter 2012 we will have to see if this is a trend, or merely a month with more sales of higher priced units.

To learn more about the La Mesa, CA real estate market, just give me a call!  I’ve lived in the area for over 20 years and would love to show you why this is such a great place to call home.

 

October 7, 2011

Mortgage Interest Rates Hit Historic Lows

Posted by martikilby under Buying a Foreclosure, Buying a Home, Buying Investment Property, Interest rates, San Diego Home Values | Tags: , , , , |
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Freddie Mac announced yesterday that for the first time in history, the average interest rate for a 30-year fixed rate mortgage has dropped below 4.00%  to 3.94%.  Rates for 15-year fixed rate mortgages are even lower, at 3.26%.  Last year at this time the 30-year rate was 4.27%  and the 15-year at 3.72%.

When you combine the low rates with prices that have generally declined throughout the county you have a great opportunity to buy more home for less money.   On a $300,000 mortgage the principal and interest payment at 4.27%  is $1479 per month.  At 3.94%  the monthly payment is $1421 per month.   That is a savings of $58 per month which may not sound like much, but over the length of the mortgage, that is a savings of over $20,880.

So whether you’re looking for your first home, a move-up, or an investment property, now is a great time to buy!  Curious about what’s available?  Give me a call and I’ll be happy to send you some listings of homes and investment opportunities throughout San Diego County.

 

September 5, 2011

How to Buy a Foreclosure

Posted by martikilby under Buying a Foreclosure | Tags: , , , |
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As we all know, foreclosures are a big part of the current real estate market, and they can offer buyers a great deal….or a disaster.  Here are a few important things to know before sinking your money into a foreclosure.

#1.  The biggest difference between buying a foreclosure and a traditional sale is that the current owner has no knowledge of the property and most likely has never even seen it!  With a traditional sale, the owner is legally bound to disclose anything and everything they know about the property that could impact the functionality or value of the property.  Not so with a foreclosure.

#2.  The second thing to understand is that the property is sold “As Is”.  This could mean anything from the home simply missing a refrigerator or stove to missing all the toilets, floor coverings and windows.   This also includes everything you don’t want, such as any old belongings or outbuildings that were not cleared.

#3.  Now this may sound like, what you see is what you get….but that would be too simple.  You also get what you often can’t see such as termites, bad electrical wiring or a failing roof or rotting pipes.  This is why it is imperative that you spend the money for a general home inspection by a qualified home inspector, and then spend the extra money for additional inspections of any areas that seem to be waving a red flag, such as a roof or plumbing.  Unless otherwise stipulated in the contract, in California you have 17 days after acceptance of your offer to complete your inspections and pull out of the deal with all of your money if you don’t like what you discover.

#4.  I’ve seen this one trip-up would-be buyers too often….make sure that the condition of the property is consistent with what your lender will approve.  For instance, if you are doing an FHA or VA loan, the house has to be habitable; no mold, floor coverings must be in place and appliances and heater must all be in working order.  Talk with your Realtor about the type of loan you are getting and make sure the houses you’re seeing will qualify.

#5.  You will be asked to sign a bank Addendum which basically relieves them of any liability.  A part of the Addendum will cover late closing.  Make sure your loan is in place and ready to close on time.  If there is a late close of escrow and it is the fault of the buyer, it will cost you about $100 a day for each day that you’re late to close escrow.

And finally, make sure you work with a Realtor who is experienced in foreclosures!  There are way too many pitfalls and potential hazards to risk your deal in the hands of an inexperienced agent.

If you have any specific questions, or would like to see foreclosure opportunities in San Diego, please don’t hesitate to give me a call!

 

July 15, 2011

Buying a Home with Less Than Perfect Credit

Posted by martikilby under Buying a Home, Credit Scores, Loan qualification | Tags: , , , , , |
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As I’ve recently noted, getting a home loan these days can be extremely difficult unless you have a 20% down payment, a credit score in the mid 700’s and sufficient income so that your housing costs are no more than 28% of your gross income.  In fact, according to the Financial Institutions Examination Council, roughly 25% of all conventional home loan applications submitted in 2010 were rejected. 

These stringent qualification requirements are for loans backed by Fannie Mae and Freddie Mac, but luckily they aren’t the only game in town.  Today, more and more borrowers are taking advantage of the less demanding criteria for FHA loans. The Federal Housing Administration has been in existence since 1934 and has become the largest government insurer of home loans in the world today.

Although every lender might have slightly different requirements, here are the basics needed to qualify for an FHA insured loan:

  • Technically, 580 is the minimum acceptable score, but in practice lending institutions require a minimum of a 620 mid score.  The mid score is the middle score when credit is pulled from all three major reporting agencies; Experian, Equifax, and Transunion.
  • Housing expenses, (mortgage, taxes and insurance) must not equal more than 31% of your gross income, and all payments, (including cars and credit cards) must not exceed 43%.
  • The down payment must be at least 3.5%.  If the down payment is less than 10%, most lenders require a credit score of 640.
  • There is also an Upfront Mortgage Insurance Premium paid at closing and usually financed into the loan.  This premium is 1.75% of the base loan amount.  There is also an annual premium paid on a monthly basis.  This amount will be based on the loan-to-value ratio.

An FHA loan is an excellent choice for first-time buyers, or anyone with less than perfect credit or a small down payment.  If you’re thinking of buying in San Diego,Orange orRiverside County, please give me a call.  The time to get qualified is before you start looking for a home.  There is nothing worse than finding the perfect home, only to discover you can’t get a loan!

 

April 13, 2011

Fannie Mae Dollars in Your Pocket?

Posted by martikilby under Buying a Home, Fannie Mae | Tags: , , , |
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Do you know a first time buyer?  Well, now might be the time for them to make their move.  On Monday, Fannie Mae announced the launch of a new incentive aimed at moving some of their REO inventory off the shelves.  For a limited time, buyers purchasing a Fannie Mae owned home, sold through their REO disposition operation known as HomePath may receive up to 3.5% of the purchase price in closing cost assistance.

Fannie Mae has successfully used similar incentives in the past, and hopes that this program will encourage buyers to step forward and purchase a home now.  The company acquired 262,078 homes through foreclosure in 2010, which is a considerable increase over the 145,617 homes they added in 2009. As of the close of the year their inventory was 162,489 single family homes with a carrying value of $15 Billion. Like I said, they have to move some inventory.

In order to qualify, buyers must be purchasing a home they will live in – the incentive is not offered for investor purchases.  The initial offer must be submitted no earlier than April 11, 2011, and must close escrow by June 30, 2011. Buyers may also have the opportunity to take advantage of Fannie Mae HomePath Financing and Homepath Renovation Financing which offer loans with as little as 3.00% down payment.

To a new buyer, this basically means that all their closing costs will be totally covered as those costs generally equal about 3.00% of the purchase price.  On a $300,000 home they would need just a $9,000 down payment in order to get into a home of their own.  Pretty sweet deal.  If you know someone who might be interested, please have them give me a call as I have access to all available qualifying homes in San Diego County.