Weekly Real Estate

Welcome to our weekly blog, dedicated to the wild world of real estate! We've had many different adventures with our clients as we've helped them to achieve their real estate goals. Without a doubt, we've encountered some unique situations! We hope you enjoy our posts and that you will share your experiences with us, too.

 

Jan. 21, 2018

The Squeeze on Buying a Home in Sacramento is Loosening its Grip

Because buying a home has long been a hallmark of the American dream, whenever that possibility seems to weaken for the average Joe, it comes as sobering news. Back in June, CNN Money ran a downbeat story focused on how the rising cost of housing had been “putting a major squeeze” on some Americans. For Sacramento home buyers who took it to heart, that kind of grim analysis could have been enough to cause them to reassess their own prospects.

But now there is evidence that the “squeeze” may be losing its grip.

The CNN story focused on what most experts agree is the maximum of monthly income that should be allotted toward buying a home. That number is 30%. The authors found that rising real estate prices had made that goal unattainable “for millions of Americans.” It pointed to nearly 19 million who were then devoting more than 50% of their income to housing costs.

Back in June, it did seem as if the nation’s economic prospects were showing signs of better news and since then, the consensus has brightened steadily. As one consequence, Sacramento home buyers are now likely to experience the affordability prospects that look a good deal different.

Last week, CNBC reported Fed data showing that household wealth rose a healthy 2% in the third quarter alone. That made it “near double the level it was during the financial crisis.” Particularly if wage growth continues to quicken, it’s a trend that, combined with continued historically low mortgage interest rates, should support a rosier affordability picture.

In fact, the National Association of Realtors composite Housing Affordability Index has been on the rise in every month since CNN’s June feature. If the NAR’s latest estimate of median mortgage payments for existing American homes is accurate (they have it at only 15 ½% of family income), that early summer housing “squeeze” may have already lost its grip on many families.

Buying a home in Sacramento should result in a more stable, predictable family housing budget and a bottom line that’s headed in the right direction. It’s one of the reasons it’s a pleasure for me to guide buyers through the home buying process. If you are looking to make your home buying process a bit smoother while being fully educated on the ins and outs of buying, call me!

Posted in Weekly Real Estate
Jan. 16, 2018

Nudging Renters into Becoming 1st Time Sacramento Homebuyers

Last week’s “Moneywatch” article on CBSNews.com was a surefire attention grabber. It promised to reveal a single “must do” tip for first-time homebuyers. The main point covered familiar ground but within the supporting information were some facts that could nudge some Sacramento renters into becoming first-time homebuyers.

Although the headlined “Don’t Buy a Home Without Doing This First” tip was good enough advice (building your budget), the details for how to accomplish that were hardly groundbreakers:

•Experts advise holding mortgage payments to a maximum of 28% of gross income. 

•Budget for more than just the mortgage amount: allow for upkeep and extras, remembering that “rent is the most you will pay, but the mortgage payment is the least.”

•Budget no more than three to five times annual earnings…etc.

Since it’s all but impossible for Sacramento first-time homebuyers to land a home without first demonstrating to lenders that the purchase makes financial sense, prospective buyers may be familiar with the need to lay out some budgetary groundwork.

On the other hand, some of the supporting information was data I haven’t seen elsewhere. Sacramento first-time homeowner candidates may have been feeling the impact of what was revealed, but seeing the numerical proof could be decisive. There were two sobering pieces of data:

First, in 2017, renters nationwide spent an average of $2,000 more to keep a roof over their heads than they had in similar periods. The source is a research study based on a comparison with previous typical housing markets. Whereas the 2017 median U.S. rental required 29.1% of income, in earlier periods that percentage was just 25.8%.

Second, while renting a home continues to get pricier, current owners are experiencing the opposite. They are spending less on housing payments—about $3,300 less!

Sacramento renters may have suspected the first piece of news, but until now have had no way to confirm the second. It’s definitely a change in how the rental versus homeowner market is being affected overall compared to what we have seen in years past. If you are interested in making the leap to become a homeowner, make sure you reach out and give me a call!

Posted in Weekly Real Estate
Jan. 4, 2018

Are Sacramento Real Estate Appraisals Going to the Robots? Edging Toward Automation

Some predictions for New Year 2018 may be controversial, but one trend is beyond question: almost every sector of everyday life in Sacramento will continue to be transformed, either incrementally or massively, by automation of one sort or another.
Hordes of self-driving cars and trucks aren’t likely to take over Sacramento streets this year, nor will Robocops start patrolling our neighborhoods. But one area that’s being affected more quickly than expected comes in the realm of Sacramento real estate appraisals.

Needless to say, since Sacramento appraisals establish the collateral value of any piece of real estate, that’s a change that could affect both Sacramento home buyers and sellers. Our human expert appraisers won’t soon to be out of a job, but when it comes right down to it, the semi-governmental duo of Freddie Mac and Fannie Mae are now beginning to tilt toward accepting a robot’s word for it. As The Washington Post headlined, “Fannie and Freddie say appraisals are not always necessary.”

Without getting too far into the technical ins and outs of home appraisals, Fannie and Freddie have been rolling out versions of ACE (Automated Collateral Evaluation) models for transactions that qualify for certain mortgages. They say it calls on “big data and advanced analytics”, buzzwords that signify machines that promise to be smarter than we are. Since they are able to integrate more than 40 years of historical data, they might have a point.

In practice, a buyer in qualifying transactions is offered the option to purchase a house without having to pony up hundreds of dollars for a human-generated real estate appraisal. If the offer is accepted, an automated evaluation is produced electronically.

The upside is that not only is the appraiser’s fee avoided, but closing times can be reduced by as much as 10 days since the services of Sacramento real estate appraisers are always in high demand.

The downside is that the buyer is not afforded the protection that comes with an in-person visit by an experienced Sacramento real estate appraiser, whose eyes and ears aren’t duplicated by a data-only approach. As you would expect, the Appraisal Institute takes that view, arguing that Fannie’s and Freddie’s programs “create unnecessary and unacceptable risks for taxpayers and homeowners

If you are concerned about how your appraisal is being completed and the necessary of having an in person valuation of a home, make sure you reach out and I’d be happy to guide you through the proper channels.

 

Posted in Weekly Real Estate
Dec. 20, 2017

3 Reasons To Buy Your Adult Child A Home

Are you considering buying a home for a child or family member? Well, you are in the right place and I am here to help you!

There are actually plenty of great reasons for parents to buy a house for their children. I recently have been working with a couple of families, in particular, parents who are purchasing a home for their children. These parents either want their children to get a better jump start on life or allow them to purchase a home for a cheaper payment compared to a rental. This has become more common for parents in the recent years as it can be financially beneficial to both sides—the parents and the children.

There are three main things that you should really take in consideration when you are looking at doing this and when you are seeing it if it is a good option for you. 

1. A stable place to live

One main thing you have to consider is how stable it is. When you are looking for a rental, oftentimes, they are not a long-term option. They are either month-to-month or a lease that's perhaps only a year or two long. With that said, you also may have your landlords coming in for visits, inspecting the unit, and other things like these that just make it a little bit tougher to remain there long term. 

2. Rents increasing, payments are not

The other main thing to consider is going to be the increase in rental rates in the next few year. Here in the Sacramento area, the rent increase has been substantial. Every year it has been increasing and I'm constantly talking with people about their increasing rent payments. That's one thing that we are not seeing going away anytime soon and will cause you limitations as a homeowner in the future. With a mortgage payment, they typically offer a fixed rate so that the payments do not increase in the future. 

3. Benefits of appreciating in value

The last main thing to consider when you are looking at this option is the appreciation, it is the increase in the value of your home over a period of time. For the last several years, we have seen the values of home consistently increasing and with that being said it's made it a lot better for the parents that have helped purchase a home to be able to get some of those funds back. It has also helped a lot of adult kids be able to have more equity in the home and have more options in their future, while some parents have been able to do a cash out refinance and get those initial funds back.

Buying a house for your children is also one effective way to teach them a lesson in financial responsibility. Aside from that, it has a financial advantage for parents. For example, parents might be able to take some significant tax deductions for this purchase. 

These are just a few of the reasons on what you should consider before buying your child a home if they are currently renting. Once you have decided, be sure to talk to a professional, like your Realtor, to guide you through the process and help you make the right choices. If this is something that you are considering, please do let me know. I'd be happy to see what we can do on both sides for you.

Posted in Weekly Real Estate
Nov. 15, 2017

The 3 Main Things Required For Down Payment Assistance

One of the most common issues I see coming up with new home buyers is the down payment. Generally the main solution we look at is down payment assistance programs and grants that can help minimize your out of pocket costs. Down payment assistance programs are important for home buyers because it can allow them to minimize costs, avoid being burdened with additional debt and other benefits. These programs are can be a second mortgage, grant, or other payment methods that can provide benefits such as 0% interest rates, and deferred payments. The assistance amount varies in amount depending on your job and which programs can be used towards certain transactions of the home buying process. There are often additional benefits or even entirely separate programs for educators, protectors, health care workers, veterans, and households as well. 

We do work with a lot of these helpful programs to open the door of home ownership. We usually are closing around 8 to 10 homes per year by utilizing these programs. On average, we have clients purchasing a home for less than $1,500 out of pocket! I have listed here the 3 main requirements that will allow you to avail this kind of assistance in the near future. 

1. Your overall stated/traceable income 

When applying for these programs, a lender will need to review your overall income to determine how much you can be approved for and also what programs you can use. Each program has different limits on income and it's important to see which ones will work the best for you. We also will use more than one program if we can make it of benefit for a client.

2. Monthly bills/debts

Lenders will also be looking at your revolving debts. These are the total amount of bills or expenses that you have every month and will be taken into consideration when deciding how much a lender can approve you for. Things like high credit card balances, auto payments, and student loans can make it much more challenging. 

3. Your credit score

The other thing they're going to be looking at is going to be your credit score. These programs work in conjunction with loans like an FHA loan that may allow for a lower credit score. Unfortunately, with these programs, they do require a higher credit score in order to qualify. If you are close though, generally a lender can give you some guidance to improve your score and provide a plan of action for you! Generally for the down payment programs specifically, we’ll be looking for a 640 credit score. 

There are dozens of these programs available. In many cases, finding one to help you is just a matter of searching and connecting with the right folks. With the help of a real estate professional, you can easily find a program that matches your needs. So if you're looking to be able to purchase a home, you have limited funds out of pocket but you'd really like to get into a home I love to make that a reality for you! Make sure you give me a call and we'll get things started for you thank you.

 

Posted in Weekly Real Estate
Nov. 8, 2017

The Top 3 Things To Be Aware Of When Buying Vacant Land

Buying a vacant land is one of the greatest investments and adventures out. There are a lot of potential uses including building your own house, using it as a property for a long-term investment, leasing it out, or even to start up a business with it. Just like any other investment, buying vacant land can be a risk but if done correctly, it can be the greatest investments available. In order to make sure you will have a great investment and know what to be aware of in advance, here is a list of useful information that will surely help if you are considering buying raw land.

1. Increased down payment/funds

One of the main things you should take into consideration when first doing your homework is these loans usually require a higher down payment. If you're not purchasing with cash you'll definitely need the loan and the higher down payments that come with it can make a significant difference. Typically, we see around 50% or higher down payment and it rarely goes below that. So make sure you are prepared to have funds for that.

2. Where are the utilities?

The second thing you should really keep in mind is the utilities. These can include power and phone lines, water, and sewage systems. Is the lot able to have utilities brought to it or they perhaps are already where you’re trying to build? These questions can be very important when trying to figure out the total cost and duration of finishing your property. If the utilities are not located close to the lot or your planned building site, it can be very costly to have them brought in and may also require the city/county to assist.

3. Permitting, can you build the home you want?

The third thing is going to be your permitting and actually building. Whatever you're trying to build, make sure that you are able to get a building permit to actually build it. A building permit is a type of authorization that must be granted by a government body, typically the county and or city that the land is located in. While inspections and understanding what your lot has to offer for building, you really want to make sure that the plans you have are realistic for the area and lot itself.

Buying a vacant piece of land may seem easy at first glance but it can be just as stressful and rewarding as buying a home that has already been built. With the help of the right people and a well thought out plan, your dream can be achieved! So if you are considering buying some land, feel free give me a call. I've worked with land quite a bit and I'd love to work with it with you. Please do give me a call and I look forward talking to you soon.

Posted in Weekly Real Estate
Oct. 25, 2017

3 Easy Steps To Go From Renter To Homeowner

Deciding to buy a home instead of renting one can be very overwhelming to anyone. Although it can cause a lot of stress, especially to those who aren’t prepared, it also can give you the greatest satisfaction once all is said and done. There are things you can do now to be prepared to buy a home that you may not expect and do not require much on your behalf. In order for you to be ready for it, here is a list of some useful information for all my renters out there who are looking to become a homeowner in the near future.

1. Utilize credit correctly to reflect positive payments

One thing that you can do to help put you in a better position that will allow you to purchase a home is to use your credit correctly to reflect positive payments for a pre-approval. Your credit score will be an essential factor to your plan on buying a home and one of the major aspects of that is your payment history. It also helps to stay on top of your credit score and check your report periodically to make sure that it contains accurate information. If you're making regular payments, make sure that when you're paying your credit card, that you're keeping the total balance typically under 10%. Also, make sure that you're paying it off every month so it shows that you're making regular payments in order for you to build a good credit history.

2. Report your rental payments to the credit bureaus

Another way you can also help build a good credit is by reporting your rent payments to the credit bureaus. By doing this, you can show lenders in the future that you're making a large, mortgage like payments on time which could help you substantiate a mortgage. Your credit tells a lender how likely you are to make timely payments on your mortgage. This information helps them decide if they will give you financing on a home and how much they will pre-approve you for.

3. Save money!!

The third way you can help lower and minimize your costs to be able to buy a home is lacking socializing. So much money is being spent when you go out, you’re usually spending at least a $100 in a night doing a fun activity or going out. Therefore, if you're looking to be able to purchase a home, seriously saving those funds or at least some of it, can really make a big difference for you down the road. The sooner you start saving, the better.

Posted in Weekly Real Estate
Oct. 18, 2017

3 Ways To Lower Your Closing Costs

The process of buying a home loan can be intimidating, especially when you’re faced with the costs, including the closing cost. Closing costs run between 2-3% of the purchase price and that can represent a great sum of money. Yet this cost can be lowered to not only allow you to decrease the cost of purchasing a home but also allow you to save some funds upfront. Here are 3 different ways you can lower your overall closing costs. 

1. Review lender fees

One of the main ways you can lower your closing cost is by reviewing your closing cost worksheet or loan estimate with your lender to see what fees are charged for the actual loan. Some of these items can be narrowed down or change from lender to lender. Have the lender walk you through each charge and discuss what it includes. Some lenders will charge more than others so it always helps to compare and make sure that you're getting the best deal not only on the interest rate but also on other smaller costs such as the funding fees and loan origination fees.. Also, watch out for fees with vague names that might include things like application fees and ask your lender about them, make sure you know what you are getting. Take notice of cost estimates that are particularly higher or lower than the rest. If one lender is charging significantly more for fees than the others, ask about it.

2. Lender credits

One of the other ways that we can do is to ask the lender to issue a credit themselves. Usually they'll need to increase the percentage or your interest rate overall.  However, this will allow you to have more funds built in to be able to purchase the home. Sometimes when all the fees and down payment comes up, this can be a massive help with the possibility to refinance the home later. Remember that you’re also free to choose your lender so you can avoid settling on one without weighing your options.

3. Seller contributions

The third way to be able lower closing costs overall is to have the seller contribute to the costs. Depending on the market and the home, a seller might willingly contribute money toward your closing costs and we can write this into an offer so that the seller will pay much or all of your closing costs. Generally the best way to get everything accomplished is to write a slightly higher offer amount, but having the seller paying more of your costs. Most loans allow sellers to contribute the full amount of closing costs to the buyer as a closing cost credit.. It's a way to seal the deal and get your dream home for a price that makes sense. In a struggling market, a desperate seller, or a home that's been on the market a long time, these are all perfect situations to ask the seller to pick up at least a portion of closing costs.

If you are looking to purchase a home, having the funds available shouldn’t hold you back. Between the closing costs and down payment, we actually have quite a few options, from the ones above to down payment programs. Feel free to reach out to get more information about these programs and the best options for YOU! 

                                                        

Posted in Weekly Real Estate
Oct. 4, 2017

How Many People

Generally speaking, when we think of buying a home, we often think of just a few people that we may talk to or work with. A few days ago, I was talking with a client and we were discussing how many people are actually involved in the real estate transaction as a whole, starting from the beginning until the end—everything from the buying side to the selling side, from the time that we start the process and the time that you get the keys.

A real estate transaction is actually quite a lengthy process to have only a few people involved in it. You can expect there will be several people included in it.. Actually, there are going to be, on average, 21 people through the entire escrow process that may only last thirty days or so. These individuals can include the buyer or seller themselves, the real estate agents, a loan officer, an insurance agent, the appraiser, inspectors, escrow companies and much more depending on the situation and type of transaction. It is pretty crazy to think there's going to be that many people involved but there really will be that many, even when you are not speaking with them all directly or at the same time.

Each of these professionals plays a different and important role in a real estate transaction and have different skills and expertise that are needed to ensure that the buying and selling transaction goes smoothly, on time, and staying within our contractual agreement. Whether you’re planning to sell or buy a property, it’s a must to be familiar with some of the people who may work directly with you or behind the scenes because each person has an important role in the transaction in order for it to be successful.

Being informed about how these professionals can help you is useful whether you are buying or selling a property. Keep in mind though that even when working with these professionals, you are still the decision-maker in your real estate transaction. These professionals are not there to make decisions for you but rather to provide you information and advice that will help you make educated decisions which will result in a more fruitful, stress-free, and satisfying real estate transaction for you.

Real estate transactions can become stressful processes that require full cooperation and due diligence from all individuals involved in the transaction to bring a successful closing. If you want to learn a little bit more about what the process is like to purchase a home and who those people are that are involved I'd be happy to help out feel free make a call and talk this out thank you.

 

 

Posted in Weekly Real Estate
Sept. 27, 2017

Appraisals

Have you ever wondered what it would be like to get pre-approved for a home loan and get a golden ticket to spend a lot of money? When a bank is pre-approving you though, they have their own limits and safeguards in regards to home appraisals and how its value is actually determined to ensure they are not giving you too much money.

Appraisals are an important part of every real estate process. These are detailed reports compiled by licensed appraisers wherein a property's market value or its sales price is determined through the use of approved and standardized methods such as size and comparable homes. In many states, appraisers are required to be licensed. However, appraisals are opinions and will vary with the appraiser.

Appraisals are only intended as a guide to pricing and a rough estimate can be requested from real estate salespeople to get a better ballpark idea on value for freeThis are called comparative market analysis (CMA’s), they are not definitive and have no legal standing. When requesting a CMA, it is recommended that you contact a real estate agent who is familiar with the area in which your property is located. These are estimated by knowledge of the local area and recent sale prices and should only ever be used as an actual price.

The appraisal process evaluates all of the data that may affect the value of the property. The data can be classified broadly as general data such as the neighborhood, city, and region of the real estate, or the specific information concerning the property itself such as condition and any upgrades.

We're going to look at area's sales in terms of its price per square foot, the home’s size and its condition. If the home is heavily upgraded that obviously is going to help raise its value and if it's all original, that’s generally also going to help bring its value down a little bit. Determining that value is something that requires both homeowners and home buyers to look at a lot of numbers to really make sure that they’ll have a full picture of what they're looking at.

The main reason we want to make sure we're looking at these numbers is when we price your home so that when buyers express interest in purchasing your home, they have a benchmark price to base their offer on. They will also need to review the local areas and sales as their bank will not lend for more than what the home is appraised for. This is because the bank will require an appraisal to be done on the home through the escrow process. The lender will only consider the appraisal as the only basis for valuation when deciding whether to lend the money to the buyer. Lenders require appraisals when buyers use their new homes as security for their mortgages or when refinancing. An appraisal provides the lender with an assurance that the property will sell for at least the amount of money it is lending. Naturally, the bank will not loan a higher amount than what the appraisal amount is due to the fact that they do not feel that the home is worth more than what the appraisal is. Should we encounter any issue about this, it is something that we would have to negotiate with either the buyers or the sellers but it can make it a little bit tougher in the end of course.

If you do have additional questions as far as appraisals on how they work what are comparable home compared to yours please feel free to reach out to me more than happy to discuss that little bit further with you thank you.

Posted in Weekly Real Estate