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What a difference a year makes!

What a difference a year makes!

2012 was quite a year of change across the Bay Area!! Alameda County’s housing shortage continues as prices rise across the board.
Inventory at the end of 2012 was down 78% from the end of 2011 in Alameda County and prices rose 24.7% in the same time frame.

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A Financial Plan for Your Home

  • Home Financial Planning Home Ownership Budgeting Tips

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    A Financial Plan for Your Home

    Your home is probably your biggest investment. To manage it, create a financial plan that takes into account repairs, upgrades, mortgages, insurance, and taxes. Read

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Copyright 2013 NATIONAL ASSOCIATION OF REALTORS®

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Bay Area Homebuyers Eye 1% Mortgage Mirage

As we’ve been pleased to point out before, the Bay Area mortgage interest rates are not just ‘low’ – that would be like saying Michael Phelps is a ‘good’ swimmer. When you borrow at a rate below the inflation rate, you essentially borrow for free. Using someone else’s money to do a job for you is one of the less well-hidden secrets of successful people – so it should come as no surprise that some of today’s most prominent business names are right in there with everyone else, getting a mortgage that takes advantage of today’s environment. Only more so.

This is the basis for the (if you haven’t heard, sit down and take a deep breath) 1% mortgage rates currently actually being granted to some homebuyers. Such seemingly too-good-to-be-true rates are available only to those with exceptional credit and extremely high net worth. How exceptional and extremely? Mark Zuckerberg is a good example. The billionaire founder of Facebook recently refinanced his $5.95 million home in Palo Alto at a 1.05% interest rate on his 30-year mortgage. How in the world did he get this jaw-dropping loan?

The bank figured he was good for it.

Now, for those of us in the Bay Area who do not (at the moment) happen to have a few billion in the bank, the current average mortgage rate for those with qualifying incomes and credit hovers somewhere north of 3.375% and south of 3.65%.  That’s for those getting a mortgage at the 30-year fixed rate. But what about that 1% rate? If you are getting a mortgage in the Bay Area anyway, why not shoot for the stars?

Well, my high-flying friends, keep in mind that applying for (and getting approved for) the 1% mortgage rate is not for the faint of heart. As mentioned, the applicant needs to have a very high income and net worth to qualify, and the qualifying process can be a bit intimidating. But if your first thought is, ‘I’ll just have my people handle it,’ you’re in the right frame of mind!

For the rest of us, the good news is that the Federal Reserve seems unlikely to alter the already exceptionally low rates that are available right now to everyone.  We have about two to three years of low rates ahead of us according to analysts at Bankrate Inc., the private firm that tracks mortgage rates and trends. So getting a mortgage now puts us in the historic low range.

So, even if you aim high, you can keep in mind that these days the bottom ain’t so bad, either.  Considering getting a mortgage in the Bay Area?  I’m here to help you every step of the way.  Call me anytime for first-rate referrals.

Selling a Home Through Targeted Remodeling

Though things are looking up in real estate these days, selling a home in town is as demanding as ever. As in any serious business proposition, looking for ways to increase the value of your offering will always pay dividends.

One of the major ways you can make your own bay Area home more marketable is to do a bathroom remodel. It’s always a key focus for prospective buyers…and yes, it does sound like a lot of work (and a lot of money) — but there are a number of ways you can cut down on both.

First, step back and give a hardheaded look at the conditions a remodel would correct. In a surprising number of cases, all a bathroom really needs in order to look more glamorous and inviting is to add a fresh coat of paint or a change in lighting.

But such quick and easy fixes are not always enough to materially cut the time selling a home will take. The good news is that ideas for more comprehensive solutions are now easier to find than ever, thanks to the Internet. One such quick idea-generator can be found at www.Calfinder.com/bathroom-remodeling , where you can view all levels of bathroom remodeling ideas and their associated price tags. It is the site’s free estimate feature that can make it easier to financially plan your project.

Some of those ideas can include installing a new bath or adding a shower. Having a separate guest toilet is also a feature the market tells us is highly valued. Trimmings such as taps, mirrors and cupboards also increase the value of a bathroom (and decrease the time selling a home may require).

Everyone planning on selling a home in the Bay Area usually has the same two underlying goals: getting as much of a return on their investment as possible as quickly as possible. Since bathroom remodeling can be an easy way to earn as much as a 90% return on its cost while increasing the likelihood of a quicker sale, it’s well worth investigating. Other possible benefits are attracting better-qualified buyers while reducing the costs and preventing delays associated with inspections.

I am always available to provide my clients with information on which renovations are in demand, and where you might see the most return on your investment.  My experience and inside knowledge can give you the advantage of using your money as wisely as possible to optimize your home for future buyers. If you’re considering selling a home in town, call me anytime!

Flooring Choice Affects Bay Area Investments

Both hardwood and carpeted flooring can look great in any Bay Area property. However, when that property is purchased by an investor whose intention is to make it a lucrative long-term rental, hardwood floors can have a real advantage over carpeting — for both durability and enhanced aesthetic appeal.

 

Yes, the initial investment is definitely more expensive. But hardwood floors are extremely durable: they withstand years of the toughest use (by even the roughest of boots!). By comparison, carpets tend to rip and stain easily. With replacement costs starting in the neighborhood of $3.50 per square foot, that means their actual property management expense will usually be higher. The resulting value to present (or future) landlords can be considerable. Hardwood flooring also gives any property a higher-end feel to it, which could tend to attract higher quality tenants.

 

Canny Bay Area landlords know that there are both good and bad tenants out there; only time can guarantee which kind will wind up in any given house. Although hiring a great property management company is one step that goes a long way toward keeping an income unit in great condition, over the years there is always a risk that some renters may cause damage, leaving the landlord or property management agency to deal with the mess after they move.  And the fact is that any carpet can be ruined through one accidental stain — even by the most conscientious of occupants. Conversely, if hardwood floors get scratched, it’s a fairly simple matter to sand and re-varnish it a vacant property.

 

The only real downside to hardwood floors — aside from the initial expense — is that they can make a house seem a little ‘cold,’ while carpet can make a house feel cozier. It may not be the responsibility of a property management firm to make a house feel cozy, but it still can affect occupancy rates.  Nonetheless, many income property owners decide that it is not a good enough reason to choose carpeting. They hope that hardwood’s durability is equally valuable in the minds of the high quality tenants they hope to attract.

 

If you are a local investor considering buying an income property, or a current property owner looking for a great property management company referral – give me a call to discuss today’s options.  As an experienced and well-networked agent in town, I always have a number of sound referrals I will be happy to share with you.

Bay Area For Sale by Owner Pros & Cons

Bear with me on these numbers: they are meaningful to Bay Area home buyers and sellers alike. One of the most meaningful calculations The National Association of Realtors® makes is the Housing Affordability Index. An Index value of 100 means that the average (actually, ‘median’) family’s income is exactly the right amount to qualify for a typical 20% down mortgage on a median-priced home. It would be tight, but doable.

That’s what a “100” means. In the latest report this spring, the Index across the whole country was higher than 200! … 204.3, to be precise. Up there in “never-before” territory. And it’s been there since January!

Yet banks are still not lining up to approve mortgages – for the number of reasons we’ve talked about before. It’s why some buyers and sellers have started to look for alternative ways to sell and buy a home; and begun to look in the “for sale by owner” (“FSBO”) realm.

Bay Area homes for sale by owner aren’t being sold through a licensed agent, forcing a potential buyer or his agent to deal with the seller directly. If the home has sat on the market for an extended period and the homeowner does not have a mortgage to pay off, a buyer can sometimes interest the seller in owner self-financing. In such a deal, the buyer gives his or her down payment and installment payments directly to the seller. As anyone would guess, this approach has its own special Pros and Cons.

The biggest Pro for the buyer is, obviously, easier financing. The biggest Pro for a seller is the potential to make a sale where none was possible before. As can be inferred from the Affordability Index, many people can afford a mortgage, but cannot find a traditional lender.

But speaking of problems, there are some ‘Cons’ to consider. If the buyer stops making payments, the seller must evict and foreclose on the property — both time-consuming and costly procedures. A For Sale by Owner financing deal gone sour is especially problematic if the seller is dependent on the income from the home. And buyers need to pay attention, too. When dealing with a For Sale by Owner transaction, there are a variety of potential legal loopholes and title issues that traditional sale and mortgage disclosures and contracts are specifically set up to avoid.  In all cases, it is wise to consult a trusted financial professional and attorney before signing anything.

While a home listed For Sale by Owner with attractive terms (like owner financing) can be attractive, having a licensed real estate professional on your side can make all the difference.  If you are considering buying or selling in the bay Area, I am always here to be your real estate resource!

Buying a Bay Area Fixer Upper

These days the words “bank owned homes” have become practically synonymous with a single word: “opportunity.”  With prices and mortgage rates this low, first time home buyers, investors and seasoned property owners alike are looking at a raft of buying options unlike the Bay Area has seen in a very long time.

That option of buying a bank owned home has certainly opened a viable route for those looking to own a home at the fraction of what it cost just a few years ago. But not without a price:  the best Bay Area bank owned home bargains are almost certain to fall into the ‘fixer-upper’ category.

When considering the purchase of one of our Bay Area bank owned homes, I’ve found that my most successful clients have a few qualities in common:

–          patience – they wait until they’ve found a house that suits all their needs

–          prudence – they resist the temptation to take out too big of a loan

–          realism – they know how much hard work they will be willing to put into the house

Finding the right fixer-upper should be approached as a process: in other words, never buy the first home you see until after you’ve checked out some of its competition. There are more foreclosures on the market than ever – a phenomenon that works to your advantage. When you do find the right home, make sure to take out a loan that makes sense. Often people who are in a hurry to buy a house are tempted to take out a loan without giving enough consideration to its immediate and long-term implications.  Being coolly realistic as you work out the numbers will pay off for a long time.

Once a bank owned home is officially yours, the hard (often fun!) work begins. Buying a home in need of repair has always been the surest way to find a deal, but it is also the way to improve or develop home maintenance skills, bond with family members, and keep a tight rein on the family budget. Here, too, you need to be careful not to get carried away– you don’t want to overbuild or overdevelop beyond what is appropriate for the neighborhood setting. In other words, keep your end goals in mind.  My advice to clients varies depending on their individual needs: Is it an income property?  Or the family home for the next 15 years?

Foreclosures show no signs of slowing down in the near future, so this May’s buying market is opportune.  If you’re considering buying a bank owned home in town, call me today to go over your options and to put a plan into action!

Short Sales Rising, Foreclosures Falling

For quite a while now, bargain hunters have been able to take their time combing through Bay Area foreclosure listings.  They’ve been looking for the kind of terrific real estate bargains that the last few years have provided — and there have been plenty. But recent signs show that it may be time for them to step up their efforts.

According to ReatyTrac, the outfit that reports on current real estate activity of all kinds, banks are increasingly leaning toward short sales as a way to handle defaulted properties. There are good reasons why they would prefer short sales over the foreclosure track. You would expect that if that trend is for real, we should see a decline in the number of foreclosure-related notices being issued. Last month, that is exactly what happened.

In April, fewer than 190,000 of the notices were reported. That makes it the lowest monthly total in 5 years (and a decline of 5% from March). In other words, although it takes some time for a foreclosure to occur, the writing seems to be on the wall: the high water mark in foreclosures may well have been passed.

Another sign: the average price of completed foreclosures rose from the year’s average of $226,953 to $256,027. Lower supply, higher prices — if the early trend continues, Bay Area foreclosure bargain hunters may soon find themselves having to hunt a bit harder.

There are many online resources that provide foreclosure lists: properties that are in good shape as well as distressed foreclosure properties, pre-foreclosure properties, REO foreclosures and foreclosure auctions. Anyone thinking about taking advantage of the bargains that are still out there (and they ARE still out there) should consider consulting an experienced local agent to help with the process.

First and foremost, I can provide you with a current and accurate foreclosure list. There are many web sites out there that claim to list foreclosed properties, but most of them charge fees for their listings, and sometimes contain little or no contact information for accessing a property (or worse, are inaccurate).  Licensed real estate agents have the resources to obtain an accurate, timely list, as well as the experience in targeting the correct contact people.

Your agent can also be a guide through the sometimes tricky process of purchasing a foreclosed house. Many properties on the foreclosure list have not been well maintained; the lender may try to get more for the house than it is actually worth. If you intend to improve a property through your own sweat equity, our first-hand knowledge of Bay Area market values can help you project a property’s future value, too…either as an income-producing rental or to sell for profit.

To get the most bang for your buck, make sure to put your search in the hands of a professional.  Call me anytime!

Are Bay Area Mortgage Rates Creeping Higher?

The question at the top of the list for Bay Area residents thinking about buying a home is the one about mortgage rates. July’s rates are certainly low (really, really low: south of 4%)…but is it worthwhile to wait for them to head lower? Even more to the point, what are the odds they will suddenly reverse and jump through the roof?

If there were a dependable answer to that question, it would be well known. Of course, there isn’t – there are so many economic conditions that could cause mortgage rates to change, no one can be certain of the answer. But there is no shortage of pundits willing to try.

According to Bankrate.com last week, 21% of their panelists believed mortgage rates would rise this week, 21% thought rates would fall, and the rest believe rates will remain relatively unchanged (+ or – 2 basis points). Their published opinions change every week  — I follow them, and it’s unusual for the experts to be exactly divided about the direction — but that’s where they stand at the moment.

This would be almost comical were it not so important to anyone buying a home: those rates determine your purchasing power — the whole basis of your home search.  It’s an important factor to address early on. So how can anyone even start to go about buying a home?

Acknowledging reality is always the place to begin. Current economic conditions are keeping rates low for the time being, but this low yield can’t last forever. Since change (in either direction) is the only condition certain to occur, to begin the process of buying a home, draw plans based on that current reality. Then keep your eyes open for changes should they occur. This is also where thorough preparation lets you take charge. If you have been pre-approved by one of our Bar Area lenders, you will be ready to lock down the right deal when it is offered – rates and all. Then, for you, the guessing game will be over.

If you are buying a home and want to take advantage of today’s rates, an experienced mortgage broker will help you gain access to the different lending programs available from differing banks, even potentially securing a lower rate than you would get on your own.  The difference in percentages and points can have positive impacts on your monthly payment.

If you’re considering buying a home, I can help you prepare to put yourself in the position to take advantage of any and all conditions that present themselves. I hope you will turn to me as your local real estate expert: call me anytime with questions!

First-Time Home Buying in a Recovering Market

Many eager first-time homebuyers were sidelined by the worldwide economic recession. It’s hard to commit to any decision – much less such a major one – when you read almost daily that the market is falling or downward pressure continues. Who needs any kind of  pressure?

 So it’s not surprising that, after such an exceptionally lengthy period of down or nearly flat economic expansion, the optimism that drives sales of all kind has been slow to reappear. But for the home buying public, and especially for first-timers, that hesitation could prove costly if, as it now seems likely, the market is entering its recovery phase. So just what does a ‘recovering market’ mean for today’s buyers?

 The first sign will be a wakeup call: buyers will no longer find a market filled with purely bargain homes.  Already, foreclosures and short sales are selling above the asking price in some areas, with multiple and all-cash offers beginning to reappear. Veteran observers in a few areas report that it even eerily begins to feel like the old pre-crash days. Published reports remain mixed, but as with the stock market, by the time you are reading headlines confirming a certain trend (i.e. “the bottom”), you’ve already missed it. 

 This is not to say that home buying is already a missed opportunity in the Bay Area market.  ‘Market recovery’ is a phrase that only signifies that movement and prices are on their way up. For today’s potential buyers, it does mean that it is time to get serious about investigating what is being offered — what’s out there.

 Financing remains an issue.  Home buying candidates hoping to take advantage of the historically cheap loan programs may still be able to do so, but fees and insurance costs for the smaller down payment packages are on the rise. In any case, first-timers who encounter bank caution due to their inexperience with home buying will do well to seek help from an experienced real estate professional. 

 Every recovery is different, and the good news now is the presence of both the historically low interest rates and the survival – for the moment – of some bargain listing prices. Together they mean that regardless of any Bay Area resident’s buyer status, most can wind up paying less for more. 

 By seeking expert advice, it’s possible to take advantage of the benefits our changing market has created. With the assistance of a great agent, you can arm yourself with that kind of market knowledge.  Interested in learning what I can do for you during the home buying process in our area?  Call me!