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.

 

Dec. 10, 2018

Flips

We’ve had a lot of clients to ask us about flipped properties. Well, there are a couple of key things to know. Essentially a flip property is a property that was once a fixer. If you go for a fixer-upper, you're committing to improving the home, which takes time and money. If you buy a foreclosed property in an auction or from a bank, you could get a better price for the home to complete repairs. Remember that if the previous owners couldn't pay the mortgage, they probably couldn't pay for the upkeep either -- so you might have to deal with deferred maintenance or other neglected issues.

 

If the home was in distress, it needed some work done. Generally, a construction team or real estate crew came in and basically gave it a facelift or remodeled the property and put it back on the market for sale. Basically, they take a property that is not as desirable, they flip it by remodeling it, updating things and put it back on the market for general buyers to be able to purchase. Now, the main things to look at when you're looking at these types of homes are the "details.” When you're looking at the homes, a couple of things I like looking at our crown molding if the home has it or baseboards. Usually, those are going to be items that can tend to be thrown together a little bit quicker, they may not have the quality workmanship there, and those can be indicators of what's going on throughout the property.

There are a lot of different levels of a flip property as well. There's going to be a home that may have just had a light facelift, maybe had some paint or maybe doing the flooring and some landscaping while other homes are completely remodeled top to bottom. They'll remodel the kitchen, all the bathrooms, the bedrooms, they may even do an addition or expand rooms. The main point that they're trying to do as a contractor is trying to make a product that's beautiful at the end. They want to make sure it has nice floors that are attractive, make sure that the kitchen looks very homely, and overall, bring the house into the 21st century with the upgrades and updates that it has. Now, remember you when you're looking at these homes, if you are seeing concerning things in the details, there may be bigger issues. If you're seeing the floors that are not seemed together all the way that may have little gaps in them, little things like this will really be a huge indicator of what's going on with the home

 

If you are looking at a flip property or even considering doing a flip yourself, make sure that you're looking at the details, and make sure give me a call, because I can talk to you a little bit more about what to be aware of throughout the process!

 

Posted in Weekly Real Estate
Dec. 3, 2018

Short Sale

Have you recently noticed a home that was a “short sale”? When we are seeing a short sale property, they can be a little different than a traditional sale. With the traditional sale, we're going to be having a homeowner selling their property. They're going to get net profits basically on the equity they have at home, and they're going to take those funds typically and use it for another purchase or a down payment on their next home. With a short sale, there’s not going to be any additional proceeds and typically the homeowner is looking to be able to walk away from that situation and be able to basically start over with their lives.

With that being said, a seller is taking a loss on the home and will not be making a profit while a bank will also be taking a loss based on the money they have lent for the home. Let’s say we have a property that is currently worth $300,000, but the seller has taken a loan against the home and now owes a total of $325,000 for the home. At this point, the seller is underwater or owes more on the home than it is currently worth. When the seller needs to move and they put the home on the market for sale, they will likely sell around the $300,000 that the home is worth. This is where the bank will come into play with the $25,000 that cannot be recovered. When we make an offer on these homes, the seller review gives a preliminary acceptance and then the offer goes to the bank. Once at the bank the offer is really reviewed in depth financially by the bank to see what the most they are willing to lose on that home and see if they are ultimately willing to accept that offer. When the bank is lending money, their goal is to make a profit and a return on their investment in the way of interest on the loan. When the property is sold for less than what it is worth, it can be a more timely process as the bank is taking a loss. The main thing to know is that as a buyer when you're going in to look at those properties, they're typically going to be in rougher shape. The homeowners are looking to be able to get out of a situation and they typically do not have additional funds for the upkeep of the home.

The second part is they do take longer to close. When we are making an offer, we typically will be making it directly to the seller rather than the bank. The actual bank is the one reviewing that offer though and doing the official acceptance. Generally, we will submit an offer to a seller after an acceptance but have to wait for a couple days but more likely a couple of weeks to actually get a response to the bank in terms of our offer truly accepted. It's a little bit more of a process, these take a little bit longer to close than a typical 30 or 45-day escrow. Generally speaking, you may be able to get a little bit better value out of these homes but make sure that you understand how and what you're getting yourself into in terms of the homes condition issues that we may not see offhand. It's definitely important for getting inspections for those reasons.

If you are looking at a short sale property, just keep in mind that it is a little bit tougher of a situation for the homeowner. You're likely not going to be able to get repairs done before closing, and generally speaking, we're ultimately going to be dealing with the bank.

For homeowners, what does that mean for you? As your real estate agent, my goal is when we go to sell your home; we want to be able to get the highest net profit that we can. A short sale will be a little bit different because there's more owned on the house so no funds will go back to the homeowner. My goal is to make it a smooth process, make sure that all the paperwork with the bank is properly completed and working with the bank to complete the process. There are a lot of fine details, especially in the contract, which is why you will want to have an agent that is aware of the best practices and ways to complete your short sale. It’s not a scarier process but it's something that you do want to have someone in your corner with and get hands-on with the experience behind them.

 

If you do have any questions and if you're possibly in a for short sale situation or if you're looking at purchasing a short sale, make sure you reach out, I'd be happy to guide you through the process!

Posted in Weekly Real Estate
Nov. 25, 2018

House Deeds

I wanted to talk on an aspect of real estate that is very helpful to know as a homebuyer so you can have more information and more knowledge going into the buying process. One question that comes up often is, what is “recording”? You often hear we're officially on record, or that we may have recorded from escrow in regards to your home closing. But what does that really mean? At closing, right before we get keys, we're going to have what's called our “signing" where we're going to be signing all of our loan documents and any documents regarding transfer with things like the HOA's and the deed of the home. That's going to be the main important factor for your name to be on the deed of your new home!

 

Generally, after getting an offer accepted, the next question home buyers want to know is how long will it take for the home to close and get keys. Unless the buyers are paying all cash for the home, it is the buyer's lender who will determine the length of time required to process the loan and close most of the time as that is one of the longer processes. A buyer and seller can agree to an earlier closing date in the purchase contract, but if the lender can't process the loan during that window, it can create stress and confusion for the buyers and sellers. Unfortunately, we will only be able to close when the lender is ready to close and it is not something we can typically rush.

The seller is going to be signing the into the new buyer’s name via the title of the home or deed. The buyer is going to be the new homeowner and the new homeowner is also signing that they're accepting the new title into their name. Once this is done, the loan documents will go back to the lender and any additional documents are sent to their respective parties. The next main step for us is to have the documents sent via courier to the county recorder's office to officially record the deed into your name. When they're going down to the county recorder’s office, they're actually recording the new deed into your name from the previous homeowner and that's what the official “recording” means. You are actually doing the transfer of the name on the title from the previous owner to the new owner and once they do that they call that being “on record”. At that point, the home is officially yours and you are officially a new homeowner! Generally, by that time, you are able to get keys that same day.

 

If you're deciding to purchase a home, make sure you know some of the key terms used frequently so you understand the major steps going on through the home buying process. If you do have any questions, make sure you reach out I'd be happy to explain things.

Posted in Weekly Real Estate
Nov. 19, 2018

Moving Day

I recently had an experience with a client of mine who I am helping to purchase a home that I wanted to share. This mainly has to do with renting and when is it an appropriate time to give notice to your landlord that you're going to be moving to a new home. Often times when you're renting a property, you need at least a  minimum of 30 days’ notice to your landlord before you move, this allows them time to repair any problems and complete paperwork to find a new tenant. When you're purchasing a home, once we get an offer accepted and once we're in the contract, you will want to wait in order to tell your landlord you're officially moving and that you have officially purchased a new home. We will have quite a few steps to go through still such as the inspections and appraisal, but most importantly, a loan contingency. 

Generally speaking, we're going to wait at least two to three weeks into the escrow process, before we officially know that we're going to be able to move forward with that property. If the inspections come back reasonable and if we have an appraisal that is good, we likely will be able to make things work. These will be positive signs that we're going to be able to move forward, and once the loan has been fully underwritten, we will likely be able to close from there. The main thing to consider when we're doing this is to allow time for the loan to process. Generally, the loan contingency is the longest time framed item we need and it will usually be about a week before we actually close. While it is close to the actual closing date, that may be a little bit closer than what you prefer for your 30-day notice, it allows you more time to be able to move into your new home or even clean your new home before you're officially moved in. If not, we've had clients who have given notice before that time and it creates a very stressful situation all the way around and the uncertainty if they will have a home to live in if they have to move before we actually close.

Sometimes there are delays that come up, and if we do experience those, it can make a significant impact on the actual closing date and when you'll be able to get those cues to move in. If you are excited about your new home purchase, by all means, be excited and that's awesome! However, give a little bit of time before you actually tell your landlord you're moving. The last thing we want as a real estate agent is for our client to be homeless if you're giving a 30 days’ notice too early. It is very crucial for us to make sure that the time frames line up and it really takes your help and cooperation and be able to do that. 

 

If you are renting and you're looking to purchase a home give yourself a little bit of time and don't stress about it. Try to allow some time to be able to find your new home and get through that escrow process before you really know you're fully committed to that home. If you are renting and want assistance lining up your time frames, please feel free to reach out!

Posted in Weekly Real Estate
Nov. 8, 2018

What is an open house?

What’s an open house about anyway? Generally, when you're going to an open house, the seller is not going to be there. You have an opportunity to view the property at your own leisure, and it gives you a little bit more time to look at the property more thoroughly. There are a few things you may want to aware of when viewing properties. Some of the things we're seeing currently with today's technology are that sellers are putting in audio or video in their home to be able to record what is happening in their home while they're not there. Sometimes this is to protect belongings, sometimes they just want to know what's going on. Most importantly, as the buyer, you need to be aware and know of this.

 

Sometimes your comments, things that you may say about the home or the decor can ultimately go back to the seller and may not have a positive opinion with them when it comes down to writing your offer. So, when you're out doing an open house, always be respectful of the home and keep in mind that you may be on audio. Therefore, you can always talk about these things once you leave the property and freely talk amongst yourselves.

 

When you sell your home there are also a few things to consider with an open house. A few things you can do for your open house with your agent are to remove a lot of your personal belongings that may not necessarily be the best idea to leave out for everyone. Make sure you're putting away any jewelry, firearms, medications, etc to make sure that it's safe for people to view your home. So, make sure that when you're preparing your house for the open house, put those belongings away in a more secure spot or even better if you're able to just remove them from the property altogether.

The last piece of advice you also want to consider is this will be the first impression for home buyers. You'll have a little bit of time to prepare for that open house so really make your home stand out. Make sure you do that last cleaning before you leave the property for your agent to hold the open house, just so that your home really shows its best. There's nothing worse than when you walk into an open house and you can tell that they left in a hurry and nothing has really been prepared. Whereas, if you walk in and everything is neat, orderly and looks nice, it really makes a significant difference to a buyer and gives a better opportunity to sell your home.

 

 So, if you are looking to go visit an open house or you're going to be holding an open house that your property, make sure you take these tips into mind.

Posted in Weekly Real Estate
Nov. 8, 2018

What's an EMD (Earnest Money Deposit)

What is the earnest money deposit anyway? It is the good faith deposit that you'll submit typically within three business days of an offer being accepted on a home. Typically this deposit is roughly 1% of the purchase price, sometimes a little bit lower, sometimes a bit higher depending on the individual situation. Generally speaking, the higher we make it, the more aggressive we're trying to be with our offer and it helps really stand out to the seller in general. Now, what happens with those earnest money deposit funds though? It's an important thought.

 

The point of having a deposit when we submit an offer is to safeguard the process of bidding and the time and resources spent during the process by all. If this is not done, any bidder will withdraw at any stage and the offer process would be taken much less seriously. With no such financial guarantee, the home buyer would not take the bidding process seriously in terms of time, process, offer and conditions. After the offer process is over and the contract is finalized, the home buyer also has to start working at their time frames noted in the contract. In short, an EMD is one type of guarantee that once the home buyer enters the offer process and the owner accepts the offer, the home buyer can neither withdraw nor change any terms of the contract of the bid and has to perform per the contract terms unless all parties agree.

 

Once the offer is finalized, escrow is opened and the funds are held by escrow. Escrow is a neutral third party. They do not work for the seller nor the buyer, they work for both. If anything were to change with the contract or anything changed with the finances, they need to have mutual instructions from both parties before they release any funds or make any changes. While they hold your deposit funds, we continue through the escrow period. If we end up canceling on the transaction and not proceeding with that home, then the deposit is actually returned back too you shortly after cancellation assigned.

Should we proceed forward with that home, let's say we put down a $5,000 deposit. You'll be required to come up with $5,000 less of your total out-of-pocket cost to purchase the home once we close. Let’s say you owe $40,000 for the out of pocket costs, you’d now bring in $35,000. All your final costs are going to be at the end. This is when you need to bring in the final funds for the home and at that time your deposit amount will be reduced from those.

 

If you do have questions, if you are looking to submit an offer, make sure you reach out and be happy to point in the right direction on how to best handle the deposit portion.

Posted in Weekly Real Estate
Sept. 24, 2018

What’s The Point Of An Appraisal?

Why do we really need an appraisal? We've already run the comparable sales. They’ve already accepted our offer and we've already seen the home. What's the point of the appraisal? The main point of the appraisal is to have a base value for the bank of how much they should be willing to lend on that specific property. This will enable the bank to make an educated and intelligent decision on whether or not to purchase the home using their loan. They will also know the approximate amount to pay for it. When you get a pre-approval from the bank, they lend you up to a certain amount, subject to the actual property and that’s where the appraisal comes in. It’s the bank's last opportunity to make sure what they are lending, makes sense for the home.

 

Once you're in escrow the bank will actually send an appraiser out to view the property. The appraiser conducting the study analyzes the condition of the property, ensures size is correct and the cost of the renovations. The appraiser will then prepare an estimate of what the property's value will be after the improvements are made. They're going to be looking at the condition of it, the size, the lot size, things like that to help determine the value in comparison to other recent sales in that direct area. It's important because if the appraisal comes in lower, then the bank is only willing to lend up to that specific amount which makes it a little bit tougher from the buying side. This is because those additional funds need to come out of the pocket in addition to your down payment and closing costs or from the seller with reducing the overall price of the property. This does not always happen though so it’s important to not count on that alone.

For a seller, that's also difficult because then the value is not what you anticipated and you may have to lower and do a price reduction in order to meet a buyer in order to have them continue forward with you through escrow and close. This can also have a significant impact when you go to purchase a property as well. If we have comparable sales that have a lower average price than the home that we're looking, there are no other real properties that justify that extreme of a difference and there's nothing in the property that really shows that extreme of a difference should be justified, then there may be concerns that are ultimate with the appraisal and further down the road. These can all be indicators of what to watch out for before getting too far into escrow.

 

If you are looking to have an appraisal done during your escrow, make sure that you’re looking at the comparable sales well in advance and make sure that you understand and you're comfortable with the values that are presented.

Posted in Weekly Real Estate
Aug. 14, 2018

Home Buying With Appliances

Imagine, you're walking through a home, you're viewing it for the first time. Somebody still lives there, but you see all the appliances there. Dishwasher still in the counter, the stove is still in its place, a refrigerator is still there, and then you have the washer and dryer of course. Just because those appliances are there though, does not mean that they're necessarily included with the home. A dishwasher, were it is built in, is going to be left with the property, and won’t be as much of a concern since it is a build in appliance, but the stove, refrigerator, washer, and dryer are going to be something you will want to address in your offer to make sure that they either are included with the property or that they're excluded from the property once you close. If there are any doubts, be sure to put it in writing — and be specific. Make sure that "existing" appliances are their included, or excluded in your original offer to avoid confusion later on.

This can oftentimes be a concern at the time of closing where someone thinks appliances are again being included or excluded and it turns out they are or not. These things can raise a concern and create a less than exciting closing time. When writing your offer, there is a point in the offer agreement that you can write in what appliances will be included and which not be included in. When you do a counter offer, make sure you also keep an eye out for the appliances because those can be countered out or included in a typical negotiation.

Typically when we're viewing a vacant home where we see all the appliances installed but obviously nobody is living there or they've already removed out of the property, those appliances are generally included with it upon closing. However it's always good to clarify which appliances are going to be included or excluded, and they can always be negotiated in your offer.

When you're writing the contract, you're viewing the home, make sure that you keep in mind that 'yes you do want these appliances' or 'no you do not want these appliances'. For sellers, make sure that you understand where your new home will be, will you need a new refrigerator, stove, washer, and dryer at your new home or would it be easier or more efficient to purchase those at the new location? These questions can be helpful to understand before you put your home on the market! If you are looking to buy or sell a home and you're trying to figure out the appliances, make sure you reach out and I'd be happy to point you in the right direction. 

 

Posted in Weekly Real Estate
Aug. 5, 2018

What is Escrow?

What is Escrow about anyway? When you are about to sell a property, oftentimes it's suggested that you may want to open pre-escrow. The reason you want to open pre-escrow is to help clear up any title concerns, any differentiation between names, if it's a property in a trust corporation, and other things like that can aid to make the process a little bit simpler once you're actually in escrow with your buyer. For buyers, escrow will be basically the entire length that you are purchasing the property, from the time that you have accepted to offer until the time the home is actually closed, and you get keys.

Escrow is a neutral third party who does not work for neither the buyer nor the seller. They work on mutual instructions from both parties, if it's not agreed upon by both parties, escrow will not proceed. So, what's the main reason that escrow is there how do they help? They often time help with preparing the preliminary title report which gives us a good idea of the property any liens against the property.  Any restrictions on the property in terms of building easements, things like that, that will help make sure that the property is fully usable for what you would like to use it for. 

Escrow also helps with getting the CC&R's for the neighborhood as far as what their restrictions may be, and they also order the HOA documentation for us when a home is located in an HOA. They order directly from the homeowners association, they collect the documents and will transfer them to all parties. Once we have them and we're able to review, we make sure ultimately what the buyer would like to do with the property, they can in fact do. This will all happen during our inspection contingency period and allow us to have time to review these things and address any concerns we may have. They have a few other items they order for us as well such as a natural hazard disclosure and different loan documents as needed.

In terms of how escrow proceeds as we close, they are the wheelhouse with getting everything signed, bringing all the loan documents together and getting the deed recorded in the new owner's name. Escrow will help coordinate with the actual signing of loan and title documents, the actual closing and the recording of the deed. Escrow has a huge part in what we do and they are very vital for the entire process. It ensures that all buyers and sellers are protected equally and that one party can not override the other.

If you are looking to open up escrow here soon and want to make sure that you have any concerns straightened out beforehand, make sure you reach out, I'd be happy to point you in the right direction.

Posted in Weekly Real Estate
June 18, 2018

3 Ways to Make Your House Hunting More Efficient


Let’s be honest, house hunting can be tiring! You’ve been thinking about buying a home and you think you are ready for it, but buying a house is a huge financial commitment as you’ll need to take steps to make sure it is right for you. When you're going out looking at homes, there are a few items you should really consider before you buy, more specifically your financing options, secure financing, and the process itself.

First, when you're going to get pre-approved, ultimately know where your monthly payments are going to sit in comparison to the overall approval amount. Oftentimes we have clients approved for a really high amount to buy for their overall pre-approval amount but the monthly payments will ultimately be a more significant number when reviewing the budget and what price range we want to stay within. We need to make sure we stay within the approval amount, that we're comfortable with for the monthly payments, and not push higher to find better homes. This can lead to long-term finical strain if you are not prepared. 

The second main thing are your “must-haves.” These are the items you've got to make sure that you're very strict on what you absolutely must have. If there are things you're flexible with, make sure you understand you're flexible with them. If there's something you must have such as needing to have a backyard because you have a big dog, looking at the small condo with little backyard will not make a whole lot sense and it may not be the best use of your time compared to looking a home that has a bigger backyard. If you are expecting to have a growing family in the future or perhaps having children move out, prepare for that in advance as well.

The third and last main thing is to make notes when you're actually out viewing homes. Sometimes when you're looking at quite a few homes they all blend together. We have a tendency to forget which features, upgrades, and positive features were at different homes. It can be tough when you view the home that has accepted your offer but you realize the main feature was actually at another home. Make sure you're writing down these general notes about the home and anything specific that stands out to you, give it a big cross off if it's a no-go for sure, and also during the house visit, make sure to ask questions and don’t be shy to ask anything.

Buying a home is the biggest purchase of your life. Before making a leap, make sure you do a research and careful planning in terms of money and time. This is not easy especially to those first-time homebuyers but the key to get there is to know the efficient way for house hunting and it will be all worth it.

 

So if you are going out viewing homes and you're trying to get your house hunting started, make sure you need to remember these 3 tips and take them into consideration.

Posted in Weekly Real Estate