Making the Decision to Buy

If you are considering buying a home for the first time, there are a few factors to take under consideration when deciding whether or not you are ready to buy a home.

Stability

  • Renters are subject to rate changes every year.  As a homeowner with a fixed rate mortgage, you will pay the same monthly rate for the whole life of the loan.   You also don’t have to depend on a landlord or management company to address repairs or problems with the property.
  • Owning a home can provide families and communities with more stability.  Some studies suggest a connection between home ownership and higher graduation rates as well as lower crime rates.

Finances

  • Employment.   Are you steadily employed?  If you need a loan, will your employment history qualify you? Do you expect any changes in employment within the next couple years?
  • Credit.  Is your credit good?  Will you be able to afford the monthly payment with your new home?
  • Savings.  Do you have enough savings for a down payment?  Most loan types require a 20% down payment on the property.  Do you have reserve emergency fund set aside?  It’s a smart idea to have at least 6 months worth of reserve in the bank, enough to be able to cover all of your monthly expenses for each month.

Once you decide you’re ready, now is a perfect time to buy a home!

For more info and talk about your options, please feel free to email us at debraandpat@bermankandel.com, or visit our website here.

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New Carbon Monoxide Detector Law

As of July 1, 2011, California Senate Bill 183, a law aimed at regulating the installation of Carbon Monoxide detectors, will begin taking effect.  The new law has a couple different elements that will affect the buying and selling process.

What it is:

  1. The first part of the new law requires that, as of July 1, 2011, the Transfer Disclosure Statement disclosure will include a line item regarding the presence or absence of a Carbon Monoxide detector.  This applies to most types of occupied dwellings, from single family homes, to rentals, to condos, etc.   If the property has gas appliances, fireplaces, and/or attached garages, the property must also include a Carbon Monoxide if it’s being sold.
  2. The second part enacts the Carbon Monoxide Poisoning Prevention Act of 2010.  This portion of the law requires that ALL residential properties that are equipped with a fossil fuel burning heater or appliance, fireplace, and/or an attached garage, must be equipped with a Carbon Monoxide detector.  This pertains to all single family homes, and multi-family properties with up to 4 units, whether owner or tenant occupied, regardless of whether or not it’s being sold.

What it means for you:

The new law is a regulation for disclosure, not a regulation for a fix.

As of July 1, 2011, all Single Family Residences must have a Carbon Monoxide detector.  All other types of residential dwellings must have Carbon Monoxide detectors installed by January 1, 2013.

Home Buyers and Sellers will see the new requirement on the Transfer Disclosure Statement.  Sellers will be required to disclosure now the presence or absence of a working Carbon Monoxide detector, starting July 1, 2011.

“Pending Home Sales Turn Around in May”

In a press release issued Wednesday, June 29, 2011, Realtor.org reported that May’s housing activity indicates a rise in home sales in the second half of the year.  The projected increase is due to a strong rise in Pending home sales in May, with all regions showing gains from a year ago.  According to Realtor.org:

“The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 8.2% to 88.8% in May from an upwardly revised 82.1 in April and is 13.4% higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.”

The article implies that this “absorption of inventory” will play an important role in stabilizing prices, a sure sign of improvement for the housing market, and welcome news for homeowners and buyers.

Article in full available here.

Short Sale: 101

The latest edition of the CAR’s bi-monthly magazine, California Real Estate, is focused entirely on understanding the short sale process.  One article in particular, “Anatomy of a Short Sale,” did an excellent job of breaking it down.  

“With nearly 1 out of every 3 homeowners nationwide owning homes that are worth less than their mortgages, the number of short sales tatewide is expected to increase as owners and banks seek a solution to the underwater market dilemma.”

Navigating a short sale  can be daunting and time-consuming process.  As a seller, the right agent–one with exceptional negotiation skills, who is overly-attentive to paperwork, and whose patience never seems to end–can make a WORLD of difference.

Experts in the short sale process advise that it would be wise for sellers to seek a Realtor with short sale training, “on the issues, options, and solutions involved in handling these transactions, which are changing from minute to minute in today’s economy.”

Step 1: Is a short sale right for you?

The 1st step in the process is determining whether or not a short sale is even the best option available.  Sellers should speak with a CPA or attorney BEFORE listing their home with an agent to determine the right course of action for their particular situation.

Step 2: Who is the lender?

The process for a conventional short sale will be different at every bank, while FHA loans will use the same guidelines every time.  Negotiating a short sale with Wells Fargo will be different from Bank of America, or Citibank.

“Sellers may also qualify for the Home Affordable Foreclosure Alternatives (HAFA) program, a government-sponsored program that sets certain standards for the short sale process and provides financial incentives to lenders that participate. Requirements, however, are numerous. If a seller does not qualify for the HAFA program, short sale terms can still be negotiated with the lender outside of HAFA.”

Step 3:  Offer and Approval

In a short sale situation, the short sale involves the seller’s lender approving a loan payoff that is less than the balance owed.  Once the seller is presented with an offer that they subsequently accept, the offer and other paperwork–i.e. documentation of the seller’s financial hardship, status of their finances–are submitted to the lender to review.

“Unfortunately, that first offer is usually a teaser…The agent is forced to do this in order to find out what offer the bank will accept. If the bank counters with a price that’s higher than the buyer can afford, the agent will have to go through the process again, resubmitting all the paperwork with a new offer.”

As a Seller:

It is up to your agent to make sure that the bank receives all of your documents for submission.  Time is of the essence, and delaying at any point could seriously impact your short sale eligibility.  Ultimately, the sooner that you contact agents regarding a short sale situation, the better your position will be.

As a Buyer:

Waiting for a decision from the bank on a short sale can take a lot of time.  It’s not uncommon for buyers to continue seeing other properties even after the contract has been entered into.  In the interest of protecting the buyer,  the standard short sale contract will have a 45-day commitment clause, which allows the buyer to walk if, after 45 days, they see other opportunities.

You can find this month’s edition of California Real Estate in full here.

Sellers Q and A: Making your Home Market Ready

For a lot of people, there’s a lot to consider before and after making the decision to list their home or condo. Here’s a question we hear all the time from people all the time:

 

We will be selling our home sometime this year and are in the process of gathering information regarding what we should and should not do to our home to make it market ready.  I guess what I’m asking would be what improvements should we make to get the biggest bang for our buck? I love watching all the television shows about redoing your home but my budget doesn’t allow for too much of a makeover.

 

The first thing we would tell you is “the way you live in a home is not the way you sell your home.”  The two words you will hear us repeat over and over when we meet a potential listing client are “de-clutter” and “de-personalize.”  Here is a room by room guide of little or no cost improvements for you.

Curb Appeal:

This is the most important whether you’re in a single family home or a condominium.  During the walk to the front door and the sometimes awkward “finding of the key” by the Realtor, it’s important that everything look perfect.  This is where you put your money into plants whether in pots or in the ground.  This is the first impression the buyer will develop of your home and if it doesn’t look good, you may have already lost the buyer.

Living Room:

Remove some furniture then remove some more.  Everything you take out makes it seem larger.  Also, get rid of personal photos and keep surfaces clean.  We like to use the rule of three which means no more than three items on any surface.

 

Bedrooms:

Push the headboard to the far wall so buyers can see the top of the headboard when they enter the room which makes the room seem larger.  Buy new bedding and keep it simple—no big fancy designers.  In photos we don’t want the bed to stand out too much.

Bathrooms:

Get rid of anything dated such as brass cabinet handles and 80s light fixtures.  The bathroom should be spotless so a fresh coat of paint might be in order.  Buy new towels and bath mats.  Lock up and hide all prescription drugs.

Kitchen:

Ditch refrigerator magnets.  The counters should be clean and appliance free.  A cheap way to update a kitchen is with new hardware.

Closets:

Clean and organize them.  After you do that, take another third of your stuff and stash it elsewhere.  It will make your closets appear much roomier.

Paint:

It should be neutral but that doesn’t mean you should paint every wall beige.  Pick warm muted colors.

 

Hope some of these tricks help you without spending too much money!