Archive for July, 2009

Greenhaven (Pocket Area) Real Estate Market Update: June 2009

The real estate market in Greenhaven or the “Pocket Area” as it is fondly called has all but come to a halt. Even though unit volume has only fallen by 11.4% which is much less significant a number than other communities in Sacramento county, Greenhaven sees a drop in all categories we have been following. Foreclosure sales fell 10% and short sales also fell, but a much larger 50% over last June. Non-distressed sales reported no gain or loss in terms of sales numbers. They continue to inch upward however and now make up 61.3% of the sales pie as compared with 54% last June.

Average price per square foot in this 95831 area is now $165.88 down 10.7% from last June’s price of $185.82. Average sales price is at $289,644 down 18.4% from $355,027 year over year. Median sales price in Greenhaven currently rests at $272,000 also 18.8% lower year over year.

Inventory is at 4.9 months based on the last year of sales and 5.5 months based on the last six months of sales. Foreclosure inventory is at a little more than a month.

Rosemont Real Estate Market Update: June 2009

When foreclosures dry up, homebuyers’ interests are peeked by short sales and finally non-distressed sales. Since the entire real estate market is depressed anyway, there are some bargains to be found in non-distressed sales as well. And that’s exactly what has happened with Rosemont. The 95826 area has suffered a 20% decline in unit volume year over year but that’s largely due to foreclosure sales falling 48.8% year over year. Short sales gained 100% and non-distressed also gained 10.5% for the same period. 52 homes sold in all.

Average price per square foot is now $119.19 down 14.6% year over year from $139.62. Average sales price fell 16.7% below last June’s price of $197,066. It is currently $164,227. Median sales price is at $171,050.

Inventory is at 2.5 months based on the last year of sales and 2.8 months based on the last six months of sales. Foreclosure inventory is at 0.5 months and 0.6 months respectively.

Natomas Real Estate Market Update: June 2009

With a renewed interest in short sales in Natomas, sales are beginning to slow in the foreclosure and non-distressed sectors of real estate sales. A total of 161 homes sold in the area this month of which 105 were foreclosure sales, 24 were short sales and 32 were non-distressed sales. Which means foreclosures have tumbled 28% and non-distressed 22% while short sales have gained 50% in sales year over year.

Average sold price per square foot currently rests at $112.14 down 17% year over year from $134.97. Average sales price has followed the same curve and is now at $204,195 down 18.7% year over year. Median sales price rests at $200,000.

Inventory in Natomas is at 3.3 months based on the last 12 months of sales and 3.5 months based on the last 6 months of sales. Foreclosure inventory has dipped significantly and is currently at 0.5 months and 0.6 months respectively.

Land Park Real Estate Market Update: June 2009

Land Park looks like a normal healthy real estate market this month and the price gains from month to month have been pretty impressive. Even sales of homes have not suffered as a result. 22 homes sold this month in Land Park of which 18 were non-distressed sales, 3 were foreclosures and 1 was a short sale. Unit volume is up year over year by 46.7% while foreclosures are down 25% for the same period. Non-distressed sales gained a huge 63.6% over last June.

The price per square foot has recovered from last month: it is now $260.57 but has not yet reached the heights of last June when it was $305.89. That’s a 14.8% decline in value. Meanwhile homebuyers afforded themselves 9% bigger homes on average than last June. Average sales price is now 7.5% under last June’s high of $395,093. It is currently $365,514. Median sales price is 5% higher than last year at $367,500.

Inventory is at 4.7 months based on the last 12 months of sales and 4.8 months based on the last 6 months of sales.

Florin Real Estate Market Update: June 2009

Here’s a trend I am beginning to see: as soon as foreclosure inventory hits the half month mark or so, unit volume begins to fall. I’ve been seeing it all over Sacramento county local markets and Florin is no exception. A total of 138 homes sold this month of which more than 80% were distress sales. But foreclosure sales still fell by 21.4%. Short sales on the other hand gained ground by 83.3% year over year. Non-distressed sales were also up by 20% for the same period.

Average price per square foot is currently $102.28 – that’s a decline of 20.2% year over year from a high of $128.24. The average home sold was also interestingly enough 8% smaller year over year. Average sales price currently sits at $164,616 from a high of $224,126 – a drop of 26.6% year over year. Median price rests at $150,000.

Overall inventory in Florin is at 2.5 months based on the last year of sales and 2.7 months based on the last six months of sales. Foreclosure inventory is at 0.4 months and 0.5 months respectively.

Fruitridge Real Estate Market Update: June 2009

For the first time this year, real estate sales in the Elder Creek and Fruitridge areas were down year over year. Unit volume is currently down 15.6%. It comes as no surprise when we see foreclosure inventory beginning to dry up. It was down 17.1% year over year while non-distressed sales are also down 33.3% for the same period. Only short sales have gained 200% year over year.

A total of 76 homes sold in the area of which 58 (or 76.3% of all sales) were foreclosed properties, 6 were short sales (7.9% of all sales) and 12 were non-distressed properties (15.8% of all sales.)

Average price per square foot is at an unbelievable $70.64, a drop of 35% year over year. Average sales price is $82,677, also a big fall from last June’s average sales price of $125,967. Median sales price currently sits at $72,500.

Inventory is at 2.2 months based on the last year of sales and 2.3 months based on the last six months of sales. Foreclosure inventory is at 0.3 months.

Downtown Sacramento Real Estate Market: June 2009

Downtown Sacramento is a market unto its own and even though we follow it every month, it’s hard to track a trend because the amount of data is so small. Every little change seems magnified as a result. Nonetheless, here are the details.

A total of 14 homes sold this June as homebuyers showed some renewed interest. Foreclosures were the hardest hit in terms of sales however – just 1 REO sold this June as compared with 6 last June, a year over year drop of 83.3%. 2 short sales sold this month as well along with 11 non-distressed properties. Unit volume was down 30% year over year.

Average price per square foot currently stands at $272.48 which is 14.6% under last June’s $319.09. Average sales price actually shows a positive jump of 4.5% going from $383,732 last June to $401,089 this June. However, we can safely call that an anomaly since the average home sold was also 22.4% bigger! Median sales price is $384,500.

Inventory is at 8 months based on the last year of sales and 9.5 months based on the last six months of sales. Foreclosure inventory is at 1.6 months and 1.8 months respectively.

Arden-Arcade Real Estate Market Update: June 2009

Sales are now neatly balanced between distressed and non-distressed sales in the Arden-Arcade area. A total of 96 homes sold in the area of which 34 were foreclosures, 13 were short sales and 49 were non-distressed sales. Year over year, this represents a drop of 33.3% in foreclosure sales and 2% in non-distressed sales. Short sales on the other hand gained 225% year over year. Overall unit volume is down 8.6%.

Average sold price per square foot fell again since last month, unlike elsewhere in Sacramento county where we have seen it rise. It is currently $160.47 down 18% year over year from a high of $195.77. Average sales price peaked this month at $240,974 – down 16.2% from last June’s high of $287,475. Median sales price shows a 1% increase year over year from $200,000 to $201,920.

Inventory is at 5.2 months based on the last 12 months of sales and 5.5 months based on the last 6 months of sales. Foreclosure inventory is at 1.1 months and 1.2 months respectively.

East Sacramento Real Estate Market Update: June 2009

Foreclosures are drying up in East Sacramento. Year over year, we see a drop of 43% in foreclosure sales along with an increase in non-distressed sales of 35%. This has led to the tables turning from last June when 53% of all sales were distress sales to this June where 66% of all sales are now non-distressed. Overall unit volume is down by 4.7% for the same period.

For all this news however, prices haven’t fared that much better. Average price per square foot is currently $215.40 – a few dollars lower than last month and 6.8% lower year over year from a high of $231.12. Average sales price is $289,099 down 11.8% from last June’s high of $327,834. But the more accurate representation of the market is the average price per square foot since homes that sold this June were also 5.4% smaller. Median sales price is at $310,000.

Inventory in east Sacramento is at 3.7 months no matter how you look at it. Foreclosure inventory is at 0.6 months.

Rancho Cordova Real Estate Market Update: June 2009

As elsewhere, the slowdown continues in the Rancho Cordova real estate market. 25 homes sold in the area this June as compared with 32 last June. That’s a drop of 22% year over year. Hardest hit were non-distressed properties and foreclosure sales. Non-distressed sales were down 56.3% year over year and foreclosure sales were down 7.1% for the same period. Short sales gained ground by 150%.

Average sold price per square foot is currently $109.79 in Rancho Cordova. That is 15.8% under last year’s price per square foot of $130.47. Average sales price is $294,509 – 10.1% lower than last June’s $327,636. But the more accurate measure here is the price per square foot because the average home sold was also 6.8% bigger this June than it was last June. Median sales price is currently $280,000.

Inventory is at 3.8 months based on the last year of sales and 4.2 months based on the last six months of sales. Foreclosure inventory is at 0.6 months no matter how you look at it.

Orangevale Real Estate Market Update: June 2009

For the first time this year, we are seeing a slowdown in the Orangevale real estate market. 37 homes sold this June, about 5% lower than last June and the biggest change has occurred, as elsewhere, in the foreclosure sales. Foreclosures have dropped 16.7% year over year, while short sales gained 50% for the same period. There has been no change in the non-distressed sales. So for the first time in a long time in Orangevale, non-distressed property sales have inched past distress sales! 51.4% of all homes sold are now non-distressed sales.

This change reflects itself in average sold price per square foot as well. Prices headed up month over month by about $10 but they were still 14.7% under prices from a year ago. Average price per square foot is currently $152.66 down from a high of $179.00 last June. Average sales price is $261,605 which is 7.6% lower year over year from a high of $283,032. Median sales price is currently $206,000.

Inventory in Orangevale is at 4 months based on the last year of sales and 3.9 months based on the last six months of sales. Foreclosure inventory is under a month.

North Highlands Real Estate Market Update: June 2009

Real estate is always such a fascinating study and lately it’s been interesting to see some of the theory in action: mainly, when foreclosures dry up, prices start to go up. Homebuyers also start to see value in the better priced non-distressed homes in more affordable neighborhoods. That’s exactly what we are beginning to see in North Highlands. Foreclosure sales fell 65% year over year in this area and short sales also lost ground by 82%. Meanwhile, non-distressed sales gained a whopping 533% year over year! Overall unit sales were still down however by 42.3% for the same period.

Average sold price per square foot while still 11% under last June is inching slowly toward the $100 per square foot mark. It is currently $94.68 down from $106.15 a year ago. Average sales price is $108,666, down 9.7% year over year from a high of $120,380. Median sales price is $108,000.

Inventory in North Highlands is at 2.2 months based on the last year of sales and 2.6 months based on the last six months of sales.

Mather Real Estate Market Update: June 2009

Since we haven’t really been keeping up on sales and statistics in the Mather area of Sacramento county every month, I have nothing to compare the real estate statistics here with besides a year ago and the swings are pretty interesting. For instance, total unit volume fell 53.8% year over year, which also translates into 6 homes selling this June over 13 last June. But it is interesting to note that just 3 foreclosures sold this month as compared with 10 last June! The rest were short sales (2) and non-distressed properties (1).

Average sold price per square foot in Mather is now $125.98, a drop of 7.5% year over year. It was $136.27 last June. Average sales price is $206,950, also a fall of 28.6% year over year. If this seems drastic, it is: the average home sold was also 23% smaller than it was a year ago, so the more accurate measure of prices is the average price per square foot, not the average sales price. Median sales price is at $199,150.

Inventory is at 2.6 months based on the last year of sales and 3.2 months based on the last six months of sales. Foreclosure inventory is at 0.3 months and 0.5 months respectively.

Galt Real Estate Market Update: June 2009

Just 31 homes sold in Galt in the month of June, an area that had enjoyed significant interest in the heyday of real estate south of Sacramento just two years ago. This is a drop in sales of 11.4% year over year. The 21 foreclosure sales indicate a decline of 22.2% while non-distressed home sales increased by 50% for the same period. 4 short sales also closed escrow, the same number as last June.

Average price per square foot in Galt is now $121.93. That’s a decline of 13.2% year over year from a high of $140.50. The average home sold has been however 11.7% larger than it was last June – bargain hunters, rejoice! Average sales price in Galt is $200,787 – 3.1% lower than it was year over year and median sales price is $170,000.

Overall real estate inventory is at 3.4 months based on the last year of sales and 3.5 months based on the last six months of sales. Foreclosure inventory is at 1 month and 1.1 month respectively.

Fair Oaks Real Estate Market Update: June 2009

Homeowners in Fair Oaks can breathe a sigh of relief. Sales are up year over year and at least some seasonal price relief is being seen. A total of 33 homes sold this June, up 3.1% year over year. Meanwhile, foreclosure sales have fallen 40% for the same period and short sales have gained 100%. Non-distressed sales are also up 23.1%. Good news overall.

Average sold price per square foot has recovered from last month’s drop to $163.78. It still is 13.2% under last June’s high of $188.70. Average sales price for a house in Fair Oaks is currently $288,042, down 15% year over year from $338,416 but better than last month’s average of $278,519. Median sales price is at $241,000.

Inventory in Fair Oaks points toward the recent slowdown in sales we saw over winter: based on the last 12 months of sales, it is at 5.4 months but if you consider the last six months of sales, inventory is at 6.3 months. Foreclosure inventory is at 1.2 months and 1.5 months respectively.

Citrus Heights Real Estate Market Update: June 2009

92 homes sold in the area of Citrus Heights this month, an overall unit volume drop of 23.3% year over year. That’s about 30 homes less than last June. And the biggest drop has been seen in the foreclosure market. Overall drop in sales of 37.5%. Foreclosure sales now make up just 48.9% of the total real estate sales in Citrus Heights while short sales have gained ground. A full 28.3% of all sales now are short sales. The rest 22.8% are non-distressed properties. Non-distressed sales have also fallen year over year however by 25%.

Average sales price per square foot is currently at $121.74 which is 15.4% lower than it was a year ago at a high of $143.87. The average sales price is $171,914, which is 18.8% lower year over year from a high of $211,824. However, keep in kind that the price per square foot is more accurate since the average home sold was also 4% smaller this June than it was last June. Median sales price is currently at $169,500 for Citrus Heights.

Real estate inventory is at 2.1 months based over the last year of sales and 2.2 months over the last six months of sales – an indication that sales have maintained their equilibrium in this area of the county as compared with others in Sacramento. Foreclosure inventory is at 0.4 months and 0.5 months respectively.

Carmichael Real Estate Market Update: June 2009

Carmichael, like elsewhere in Sacramento county has seen a drop in recent sales but has yet to see even the seasonal price increases we are beginning to notice elsewhere in Sacramento. 44 homes sold this June of which 12 were foreclosure sales (27.3% of the total sales) 8 were short sales (18.2% of the total) and 24 were non-distressed properties (54.5% of all sales.) Overall, unit volume was down by 17% year over year and all categories except short sales saw declines year over year. Foreclosure sales fell 45%, non-distressed fell 14.3% but short sales gained 167%!

Average sold price per square foot is at $154.82 which is 21.5% lower than it was a year ago. This has resulted in home buyers affording themselves homes on average 7% bigger than they did a year ago. Average sales price is at $281,637 which is 16% lower than it was a year ago. Last June it was $335,386. Median sales price is at $248,450.

Inventory in Carmichael is at 5.8 months based on the last 12 months of sales and 6.3 months based on the last 6 months of sales. Foreclosure inventory remains at 0.7 months no matter how you look at it.

Antelope Real Estate Market Update: June 2009

Is it May showers that bring June flowers or June showers that dampen the real estate market? Well, it doesn’t look like the weather is to blame for the real estate market in Antelope, but the change in the REO inventory may have something to do with it!

Overall sales fell by 39% year over year in the 95843 zip code. Just 55 homes sold of which three quarters are still distress sales; but compare that with the fact that a year over more than 85% were distressed. Also, only 26 homes were foreclosure sales as compared with 67 last June. Foreclosure sales have dropped by 61.2% year over year while short sales gained 40% and non-distress sales gained 15.4% for the same period.

In terms of price per square foot, this did provide a boost. Sold price per square foot is currently at $114.38 higher than last month’s price but still 16.3% lower year over year. Average sales price is at $182,105, again 19% under last June’s high of $224,261. Median sales price is at $180,000.

Inventory is at 3.8 months based on the last year of sales and 4.5 months based on the last six months of sales. Foreclosure inventory is at 0.6 months and 0.8 months respectively.

Folsom Real Estate Market Update: June 2009

Our bastion of security in the real estate market updates that Folsom used to be is not any more. Is that because homebuyers were waiting until the markets around it started to recover and then went in to buy? Who knows? But one thing is for sure: Folsom is taking its time recovering from the real estate slowdown and sinking prices.

A total of 68 homes sold in Folsom in the month of June. Of these 40 were non-distressed homes, 16 were foreclosure sales and 12 were short sales. Homebuyers seem to be losing interest in foreclosures as they suffered a decline in sales of about 30% year over year. Short sales gained 20% while non-distressed home sales also fell by 15% for the same period.

Average sold price per square foot is at $175.02, a few cents lower than last month and about 12% lower than last June. The average sold home was also about 3% smaller than that sold last year. The average sales price is at $357,483 – 14% lower than it was last June. Median price also fell, but not as drastically year over year. Median price is at $367,500 which is 3.4% lower than it was last June.

Inventory in Folsom is at 5.1 months based on the last year of sales and 5.3 months based on the last six months of sales. Foreclosure inventory is at 0.6 months no matter how you look at it.

Elk Grove Real Estate Market Update: June 2009

It is rare for the real estate market in Elk Grove to be this unchanged month to month but this time that’s how it looks. 280 homes sold in June, the same as in May. Of these 155 were foreclosures (a decline year over year of almost 18%) 72 were short sales (a gain of 157% for the same period) and 53 non-distressed sales (also a gain year over year, albeit a smaller 10.4%). Overall unit volume gained 6.1% for the same period. A harbinger of things to come? Let’s hope so!

Sold price per square foot is at $112.38, a few cents higher than last month but 17.7% under last year at the same time. Average sales price is at $236,078, also a decline of 17% year over year. Median sales price currently rests at $230,000. Median price has declined by 13.2% since last June.

Inventory in Elk Grove is at 3.1 months based on the last 12 months of sales and 3.4 months based on the last 6 months of sales. Foreclosure inventory is at 0.6 months no matter how you look at it.

El Dorado County Real Estate Market Update: June 2009

Nothing much has changed in the real estate landscape of El Dorado county from month to month; change is always slow in this part of California. A total of 176 homes sold in El Dorado county, a 5% overall unit volume increase year over year. 61 of these homes were foreclosure sales, 21 short sales and 94 non-distressed property sales. While foreclosure sales and non-distressed home sales have remained the same year over year, we see a 75% jump in short sales.

Sold price per square foot is faring slightly better than it was last month at $158.16. It is still however a decline year over year of about 19%. Average sales price tells the same story at $378,291. Median sales price is at $340,000 in El Dorado county.

Inventory is at 10.4 months based on the last year of sales and 10.8 months based on the last six months of sales. Foreclosure inventory is at 2.3 and 2.2 months respectively.

Sacramento County Real Estate Market Update: June 2009

And the slowdown continues… But this might be for the better since prices are seeing some slightly better numbers since REOs have been down under a month’s supply of inventory. But let’s go into the details step by step. I’m jumping ahead of myself.

1852 homes sold in Sacramento county this month of which just 1000 were bank-owned. That’s a decline in REO sales by almost 26% year over year. Meanwhile, short sales at 302 sold gained 79% year over year. non-distressed homes of which just 550 sold this month are also seeing an increase year over year of 9.1%. Overall unit volume was down 8.4%.

Sold price per square foot is currently at $120.49, a little better than last month’s figure of $116.86. That is three months in a row now that we have seen price increases. Seasonal or will it stick? We’ll have to wait and watch! However, overall, prices have fallen 17.3% year over year. The average sales price is currently hovering just under the $200,000 mark at $196,672 (again, better than May’s numbers) and median sales price is at $175,000.

Inventory has not changed month to month – 3.2 months based on the last year of sales and 3.4 months based on the last six months of sales. Foreclosure inventory is at 0.5 months.

Homebuyers: Five Mistakes that Could Cost You (Part 2)

Welcome back! This is continued from yesterday’s post of the biggest mistakes homebuyers make that could end up costing them money, time and unmentionable amounts of heartache.

3. Not Getting all Inspections

Most often I notice that when investors are buying the property and it is bank-owned and the purchase price is paid all in cash that many recommended inspections are waived. This could be because some investors don’t live in the area and decide it will take them a while to close escrow if they also decide to throw inspections into the mix and besides inspections are only there to protect the lender, right? Because the bank has not seen the home and the only way it can judge if the home will appreciate or hold value in case of foreclosure is by enforcing the need for inspections. What do banks know anyway?

Think again. Sometimes it helps to see a home like an overcautious bank, not an excited homebuyer. Not the banks that decided to lend to anyone willy-nilly regardless of their credit history, but a sane, extra-cautious bank.

Brokers usually have a form we have homebuyers sign if they decide to waive any inspections. Amongst recommended inspections are termite / wood destroying pest inspections, roof inspections, septic inspections and a whole house inspections. In spite of all these inspections, some things can fall through the cracks. So it is a good idea to get all inspections done as early as possible in escrow. Remember that there is always a built in inspection contingency in your residential purchase agreement or offer. The default time you have to clear this contingency is 17 days, but the bank can decide to reduce this to 10 days. Get your inspections done early and you won’t regret it. If there are flaws in the home, you can always cancel escrow and get your deposit back. So much better than being stuck with a home with unknown flaws!

4. Not Knowing the Neighborhood

Most homebuyers look for homes in known areas. Either they have rented a house or an apartment in this certain neighborhood, or they have friends and / or relatives who live there or they work close to the neighborhood. In some way they have driven through the streets or walked in the area. This is usually a good idea. It is very difficult to get a feel for a strange place you have never been to just by looking at a few homes within that area. While you might be an expert at such a thing, it is nevertheless a good idea to stick to areas you know.

But what about relocation buyers? For such buyers, unfortunately, research is all they can depend on. However, even for these, it is not a bad idea to ask around amongst their friends or even just online. In my experience, advice given online has to be taken with a pinch of salt because some people can be pretty rude and obnoxious while others can be pretty honest. So take from it what you must!

5. Being Indecisive

Besides being difficult to deal with and avoided by Realtors, indecisive home buyers can be a hazard to themselves as well, and not just because they can pass up on good homes that they would otherwise buy because they are indecisive. Indecisive doesn’t mean that they don’t jump on what they are told is a “good deal,” I use “indecisive” in the larger sense here meaning they don’t really know what they want. As such, they wait and wait and wait to buy a home and then either don’t buy at all or pounce on the wrong home and realize they paid too much too late.

It’s always a good idea as a homebuyer to get a good idea of what you want in a home. And “I’ll know it when I see it” isn’t good enough. I have heard from a lot of people that when they tell their Realtor what they’re looking for, they still get shown the wrong homes. While this might be the case as well, I think there are also a lot of homebuyers out there that don’t know what in the world they want in a home. Why not make a list? You can always check it against reality and change it, but it might give both you and your Realtor a good idea!

Happy home shopping!

Homebuyers: Five Mistakes that Could Cost You (Part 1)

From what I’m hearing and seeing out there, the majority of homebuyers looking for homes currently are either investors or first time homebuyers. A more diverse group of homebuyers couldn’t exist – these two are diametrically opposite to one another. Investors have probably previously bought homes and have also perhaps been through times like these where home values are depressed. What’s more, many of them are buying homes with cash and – having been through markets like these before – they are aware of the general trend of the market and also the kind of offers to make to get banks to accept their offer.

On the other end of the spectrum is the first time homebuyer and this post is primarily written to help that first time homebuyer. These buyers tend to be more wary, have limited access to cash and also have never bought a home before. As a result with this being their first foray into the housing market they may have erroneous information about housing or may have heard other outrageous things they are still trying to work through. As a random example, I offer that once a first time homebuyer asked me if homes really could be bought in California for $75. Apparently his friend swore by it and he was upset at me for not showing him homes that were on the market for less than a hundred dollars!

So, first time homebuyers, here are five of the biggest mistakes that could cost you. And even though I have said this post is primarily oriented for the first time homebuyer, it wouldn’t hurt an investor to read it as well. In the world of real estate investing, there’s always more to learn and returning to basics is not just a good idea but an essential requirement of the job. (Now that I mention it, I think I will write another post just for investors.)

1. Not Knowing your Budget / Numbers

This one should be obvious. If you don’t know how much money comes in every month to your household and how much you spend every month on things like groceries and gas, you will be hard-pressed to know what you can afford to spend on your new mortgage. Get a monthly budget established first and then go ahead and contact your bank or mortgage broker for an idea of what you can afford for a final purchase price of the home. He should also be able to tell you the interest rate you will be paying on your mortgage and other details like fees and the like.

Without a good idea and good control over your spending habits, you will get into trouble very easily with your mortgage payments. While rent usually covers things like repairs on the home, taxes, insurance, water and garbage, remember to include these in your budget when you buy your home since you will not have a landlord any more taking care of these things and repairs will crop up from time to time.

2. Not Getting Prequalified

If you are in the market looking for a home to buy over the next six months or so, chances are that you are looking at a lot of distressed property. While this is an important fact to remember for the next point where we will discuss getting all your inspections done as well, getting prequalified is important when you are looking at distressed homes. Why, you might ask.
If you have never bought a home before, you should know that markets come and go. There was a time when potential homebuyers looked at a home, made an offer with just a letter to the home seller attached to it and provided the home seller like the offer, the terms and – most importantly – the letter from the home shopper, he or she would accept the offer and the home would be in escrow. Then the homebuyers had the responsibility of getting approved for a loan and so on.

This can be risky for a homebuyer. For one thing, what you don’t know about your credit could come back to bite you. Are you absolutely sure you can buy a home? Credit standards have gotten stricter in the last few months. Also, even if you’re absolutely certain you can buy a home, do you know what your interest rate would be? Would you be paying fees? What would your monthly payment be? Isn’t it a good idea to get a good faith estimate so you can plan your finances?

Be sure to come back tomorrow for part 2 of this post!

Home Sellers: Five Fixes that Aren’t (Part 2)

To continue our previous discussion from July 3rd, here are the rest of the so-called quick fixes! Let’s get right into them!

3. Patching holes in the wall by hanging an art or mirror frame

It seems odd that people would still do this, but I’ve seen it in a few homes. No matter that they are bank-owned homes. And because the bank has never lived in it, it is even less attached to it. But you wouldn’t do such a thing. Would you?

This “fast fix” bothers me more than the others perhaps because it’s possible it could never be discovered until the day the new homeowner moves into the house. It’s one of those things that could be missed by the home inspector, perhaps because it’s so obvious. And then you can imagine the trouble you would be dealing with. Why not sell the home and be done with it? Why not actually get the wall patched? (By the way, how did you make that hole in it anyway?) Why leave a bad taste in the homebuyer’s mouth at the end of escrow? And then have to talk to your real estate agent and theirs and also deal with small claims court?

4. Using better curtains and light fixtures to make the place look better and then taking them down at close of escrow

While technically this is not a quick fix, I think far too many home sellers are unaware of this rule in real estate: basically, anything attached to the home like curtains and light fixtures goes with the buyer in the sale. In other words, it is included in the sale of the house. Which means you cannot put expensive curtains up and then take them with you to the new house. You also cannot change light fixtures towards the close of escrow.

If you do intend doing something like that, you should clearly spell it out in a counter offer to the buyer. Better yet, spell it out right in the beginning as soon as a homebuyer expresses interest in the home and thinks about making an offer. That way, all your cards are on the table and you avoid a potentially problematic escrow.

5. Leaks and Eeks

One thing I always do when I take a homebuyer into a home and they are especially concerned with leaks in the home (Remember: whether water or fire do more damage is debatable!) I always check under the sink in the kitchen and around the tub and the toilet seat in the bathroom for leaks. What do you do if you’ve discovered a leak in your home and it is on the market? If you have read so far, the answer should be obvious. Get it fixed!

Homebuyers are nothing if not terrified of leaks. Remember that the minute they see one they will run for the door. Especially if the majority of homes on the market are bank-owned and they don’t know what’s wrong with them, it is especially important that you distinguish your home as better than the others by fixing everything that’s wrong with it. Owner occupied homes get paid a premium especially for the reason that they are more cared for. Don’t cheat your homebuyers out of that!

So the idea is that whenever there is an issue that needs to be fixed, either bite the bullet and get it repaired by a professional or disclose it to your potential homebuyers. When in doubt, disclose!

Home Sellers: Five Fixes that Aren’t (Part 1)

We’ve all seen them – the little snickers that come from the home staging shows when someone lifts a piece of carpet or leans against a supposedly solid wall and it falls or – in the case of the carpet – completely lifts it off like it was the skin of a cat. Even if this is not a horror story or a home staging show, when it comes to selling your house, you want to be careful not to indulge yourself in these quick fixes.

Yes, all Realtors recommend you get the house ready for sale fast (I don’t really know why it has be to be that quick!) but try and avoid the following quick fixes. Because, seriously, they are not. Fixes, that is. You might get away with them during the Open House, but the same Realtors and real estate brokers that recommend you get your home ready for sale in a hurry because summer doesn’t last forever also recommend that your homebuyers get a home inspection. And the home inspector is being paid approximately $100 an hour to find flaws and uncover your badly hidden mistakes! So do it right the first time and don’t bother with these quick fixes!

1. Carpet / mat over broken tile or missing hardwood

This is my personal pet peeve, which is why I mention it first. Way too many people indulge in this one, especially when the open house is days away and they want to clean the house and get it ready without making any repairs to it. What we see most often is missing hardwood or cracked tile and the homeowner – as if he’s had a brilliant idea – decides he has an extra bathroom or kitchen mat to cover the area. What an idea! Except here’s the problem – sooner or later, that little mat will be lifted. Homebuyers are getting pretty smart when it comes to these things and know your tricks. It’s one thing to carpet the entire floor space, (Although I have come across many bank-owned homes with uneven floors with carpet on them. Homebuyers see right through these cheap tricks!) and quite another to cover it with something that resembles a place mat.

You’re almost better off to just leave the area uncovered and let them see the flaw. At least they will know you are not lying or trying to deceive. If the home seller covered this little thing up, they think, what else am I not seeing? Their trouble radar goes up. So avoid the homebuyers from thinking that. Because they might just decide the risk isn’t worth it and look elsewhere. And with homebuyers being almost as scarce as some endangered species around here lately, you really want to do your best to keep them in your home, safe and happy enough to want to buy it from you!

2. Electrical “fixes” by cousins

This supposed fix is not just a problem, it’s a fire hazard and an electrical hazard. Let’s say the day before the Open House the central air in the home decides to go kaput. And all this happens in the sweltering heat of August. You’re considering serving ice cream at the Open house to get more people to come in, just drawn by the enticement of something cool. What do you do? Do you decide it’s not worth getting it fixed right away and let the potential homebuyers know that it will be fixed before the home is in escrow? Or do you invite your cousin who you think might be able to fix the issue because he’s supposedly handy around the home and doesn’t mind fooling with some wires until he gets it right.

Seriously, I have nothing against cousins. The same goes for in-laws, siblings, whoever doesn’t have an electrical contractor license and offers to fix something for you for half the price a professional would charge. Again, remember the home inspection. While we have in the past found bad wiring in the attic of a HUD home we had bought and fixed it, (thanks to the fact that my husband is an electrician) there are still switches around the home that power things we have never found – a fact that still scares us a little bit! In the above scenario, it would be better to leave the air conditioner off and let your potential homebuyers know that you are willing to fix it before close of escrow.

Come back tomorrow for part 2!