First-time buyers have traditionally bought with zero down, or the help of a gift from a relative for a down payment. However, this traditional method of buying a home might be in trouble. According to my mortgage sources, at least two mortgage insurance companies will limit mortgage insurance to 95% loan to value by the middle of January in California. Chances are the others will follow.
This means that mortgages might have to be reduced to 95% of the value of the home. Therefore, no 100% financing.
First-time buyers, if you have a house in mind, now is still a good time to get in before the loan available to you is gone. Escrows are typically thirty days, so there might still be time to get in before this rule changes, as so many others have in lending lately.
Beyond the middle of January, be prepared to have at least 5% down to buy a home. Gifts from relatives however can count toward that 5%.
On a personal note, for this year, since I have family over at my house, I’ve decided avoid “The Holiday 10″ - you know, the 10 pounds that magically appear on your scale just as you’re making a New Year’s Resolution to lose “The Last Ten.” With this is mind, we’ve decided to go for long walks around our house in Pollock Pines every other day.
Believe me when I say this, Pollock Pines should not be considered a vacation home area any more. Although quite a few of our neighors have homes in Sacramento and come here only for the summer, the rest of us make it our year-round vacation-stay.
Gold Ridge is a community that boasts rural living in two story homes almost always overlooking a fantastic view of the pines. And if you should desire to go fishing, Jenkinson Lake isn’t more than ten minutes away. Recreational sports are available there and it’s no wonder almost all families here own a boat.
We are no more than 50 minutes from Sacramento and beautiful! If you’re considering buying in Pollock Pines, houses range from right around $265,000 all the way into the millions. We have something for every taste.
Well, provided you like pine trees.
While everyone else is bemoaning the housing market and saying how terrible their loans are, I’m introducing a thank your Realtor weekend for those of you that have made good purchases over the years with Realtors who did not put you in a house you couldn’t afford, or mortgage brokers who didn’t sell you loans that they knew would blow up in your face in a few years.
This Thanksgiving, I think it’s important to remember that there are some of us who are concerned about our clients, their needs, and not just about getting paid. Some of us are truly here to help you find the right home for your needs and really listen.
Be sure to thank those honest professionals this weekend. (And the best way to thank someone is to send them a referral.)
And have a very happy Thanksgiving!
We’ve been talking lately about making this blog more interesting and readable. And while we’re brainstorming about what we can add to make it so, I’d like to ask the question: Is there anything specific you would like to read about?
Sometimes because we’re focused on selling houses and inventory, market reports and so on, we tend to forget what gets read - in other words, we tend to focus on what we find interesting as opposed to what you the reader might see as good information.
So, let’s just put it out there: what would you like to read?
Let us know and we will do our best to respond.
One of the things I love about my job is that skipping out of a business meeting with John by saying, “I have to go watch Oprah” is a perfectly legitimate excuse.
But only if Suze Orman is on. So I can write about it the next day.
The financial guru was on yesterday and unlike her own show, which I don’t watch any more, she spent most of the time answering questions. Although the platitudes in the first half of the show got to me a little, here was some concrete advice for homebuyers, which I thought was pretty well-grounded.
1. Expect to add 40% more expenses per month to your rent if you wish to buy a home.
2. Have 20% down. If you don’t, buy PMI (Private Mortgage Insurance) upfront.
3. Unless you know what you’re doing and have a plan for it or you are a sophisticated investor, stick with a fixed rate loan.
4. If you can’t afford your home, you must sell it and buy something you can afford.
5. Sellers must drop the price of their homes to the point where they sell and lose all attachment to any numbers they may have in their heads.
And lastly,
6. After saving six months of reserves for emergencies, the best investment is to save 20% for a home. It’s the best tax advantage a person will have in the years to come.
Yes, I know. I’ve become a bit of a T.V. correspondent for Sacramento-Home lately, but then who else is watching out for you and bringing you the latest trends? One thing I observe again and again from clients and others is that when they start to renovate a home and / or want to sell a home (a flip or otherwise), a lot of them want to tear down a wall and make a space more open.
While there is a lot to be said about light and bright spaces, you can also consider building a wall. Surprised? You shouldn’t be. “Designed to Sell” recently had a show in which an awkward area with a platform of sorts stuck out like a sore thumb, invading the family room and drawing attention away from it.
The solution? A wall. The wall was built to hide the platform and hide the awkward space, making it more of a storage area, but in a way that didn’t take away from the family room. Of course, it was done very professionally and molding was added to make sure it matched the rest of the home.
Sometimes, adding a wall can add more value than tearing it down.
I was watching Oprah the other day and she had her designer Nate Berkus on. And although the show focused on makeovers for people drowning in cutesy country things and stuck in a time warp, I’ve seen enough homes and heard enough potential buyer responses to know that what Nate suggested was right.
Often I hear home sellers say, well, it’s a work in progress. Really, in this market your house cannot be a work in progress.
Here are some notes I took while watching the show so I could share them with you out there having trouble selling your homes. There’s not that many people out there looking for a house, so you must make the ones that are looking want to make an offer.
How? Price is important. But here are some other tips you might want to follow to not drive buyers away:
1. The emphasis seems to be on simplicity. Throw away things you don’t use any more and put other things in storage. Remember, we don’t show our homes the way we live in them. I wouldn’t dream of letting a buyer through my home right now - I’m absolutely not the neatest person in the world!
2. Overaccessorizing is always a problem. So stick with simple accessories. Get rid of anything more than three things on any surface. If possible, try to stick with one thing on each surface. Think an orchid.
3. Finish all projects that are not complete. Do not hide things by covering them up with rugs. That makes buyers wonder what else in the home has not been fixed.
Sometimes, it’s a good idea to let your neighbors walk through the home before you think you’re ready to call an agent. Are you wondering why? Do you have to? 
The National Association of Realtors finally answered this question for frustrated sellers. In fact the number one answer has not changed since 2004 - it’s central air.
The second thing rated most important by home buyers is an oversized garage. In 2004 it used to be a walk in closet in the master suite.
The last few on the list are: Backyard, Cable/Satellite TV ready, High-speed internet access, Separate showers in the main bath, a patio and fencing around the home.
In fact, the majority of buyers are willing to pay a premium for the walk-in closet, hardwood floors, and granite countertops. Sellers, are you listening?
If you like long walks with the leaves changing colors and a quiet town to hide in away from the busy Sacramento area, Cool might be just the place for your vacation home. On historic Highway 49, bordering a state park, Cool is a town of some 2500 residents and homes with acreage. At an elevation of just 1500 ft above sea level, the temperatures are a little Cool-er than Sacramento.
Median prices this year have Cool-ed (all right, I’ll stop!) from $454,000 last year to $385,000 so far this year. Only 34 homes have sold compared to 77 last year.
There are 59 homes currently available for sale from a low of $249,000 to $1,590,000.
There’s been some talk lately of vacation and second homes are the best investments especially in a slow real estate market and I would like to offer my own hometown here as a perfect place for such an investment.
Pollock Pines, CA is a little “city” of about 4700 people about 50 miles from Sacramento. Described by many in the past as a bedroom community or a place people retired in, this friendly city is now home to many who work in Folsom, Placerville, and even Sacramento.
The great diversity in home prices seems attractive to many as well. In 2006, 156 homes sold in Pollock Pines for a minimum price of $179,000 to a high of $873,000. In 2007, 103 homes in Pollock Pines have sold for a low of $87,500 and a high of $830,000.
Currently on the market are still 147 single family homes for sale between $129,000 and $2,650,000 putting the median at just under $360,000.
But you better be prepared for snow in the winter - Pollock Pines is at 4000 feet above sea level.
They’re going to live there for a while, so it’s technically not a flip. But my clients that bought a fixer close to Curtis Park last October have made such a difference to their house I was amazed. I spent some time with them this morning and came away quite stunned.
The stairs leading to the front door have been redone. The house has been painted. The floors are new (bamboo) and the bathroom has been completely gutted and redone with new fixtures and vanity. (They did it for $1000 which is extremely thrifty!) The kitchen cabinets have been removed and all new appliances have been put in. The garage which was almost falling over has been stood back up. The lawn is back (there was carpet on the ground!) and all new plants and flowers dot the backyard and front. The termite-ridden back deck has been removed and a new one will be put back up.
And it is all sweat equity.
In their own words, they never spend a single weekend doing anything but working on the house and if they do anything else they feel guilty. Oh, to be young and working on your first home! Sigh!
It’s nice to know I’m not the only person running around saying, Buy, buy, buy.
I was listening to the radio the other day and heard someone very respected for his opinions on finance (no, I will not drop names, but I will say this person is respected because he’s a self-made millionaire) say that if you are a first-time buyer you have almost nothing to lose by buying now. So what if prices fall another 10% - if you plan on holding on to the house for five years or so, you will still walk away with a nice profit, tax-free. However, if you get too cute about trying to time the bottom of the market, you will most likely miss it.
And yes, I know I get paid to sell homes. But even if I weren’t, this would be my advice: buy a home. Especially if you’re a first-time buyer. The opportunities are out there. And so are the bargains.
Ever since Elite Properties fell out of favor with a certain search engine we all love, John has been having sleepless nights and in general been very negative. So imagine my surprise when he came up with the most positive thing he has said in a long time with the fortune cookie.
It’s like I don’t know him at all.
But I think some people are like that. They need a challenge to show their true colors. No, I’m not rambling. This is related to real estate, I promise. Because see, those are the people that are selling real estate today. We like challenges. We also like our first time buyers, and we like this not rushed phase where our clients can actually feel like they’re shopping and we have enough time to devote to our very best clients.
Those of us are making very strategic moves. Slowly but surely. And we’re here to stay.
Remember that when the market turns around and you want to hire a discount broker who will list your home for $1,000 because he just got his license yesterday. (Sorry to be bitchy, but now that John’s the optimist, we need some balance around here.)
And oh yeah, we’re back at the number one (and number two) spot!
I had to open the door for an appraiser yesterday for a property where I represent the buyers in a purchase and he seemed a little opinionated. I know, appraisals are supposed to be “opinions based on market comparables” but he seemed a little too happy about the market going down. And I kept thinking, Should I be worried for my buyers? The home is a cosmetic fixer and seems like someone’s failed flip, but perfect for my buyers that wish to put sweat equity into it and are first time buyers.
But the appraiser said he had no sympathy for investors because they drove prices through the roof and now we’re hurting because of them. And so, no - I did not mention that I was an investor and owned rental properties of my own. Why this hatred toward investors?
I’m worried. I have a problem with passionate appraisers.
I did a home inspection yesterday with my first-time buyers in Colonial Village of Sacramento and had some pretty interesting things happen. The house is a short sale and during escrow the price has jumped about $7,300. (Net sheet blunder on the part of the listing agent and banks that don’t want to talk!)
Anyway, my clients love the home, see the potential and - eventually when they have built up enough equity - will rent it out and move to a bigger, better home. The house has two bedrooms and one bath and was someone’s failed flip. A rough wall has been placed between the kitchen and dining area in the hope of turning it into a third bedroom. (By the way, I see people do this all the time - bedrooms must have closets to be bedrooms!) So we went from room to room turning on switches and then waiting for some light or something to come on.
In the bathroom, as soon as the switch turned on, there was a “whirrrr!” sound. Except there was no exhaust fan. Well, there wasn’t one we could see anyway!
Any wonder the last few flippers failed?
I have a listing coming up in Cameron Park soon, so I went around to preview the competition and came away thinking, This is perfect! Of the four homes in a five mile radius around the listing coming up, three are non-competition. I only saw one as a real threat.
Let me explain. These are approximately 2000 square foot homes on pretty decent sized lots, but some of them are dark and dingy, some of them still have nails on the wall, some are not freshly painted and others are cluttered. All in all, only one of them was ready to be showed. And the price tag on the homes? Almost a half million dollars!
I know we’re spoilt here in California. There are million dollar fixer-uppers on the market still. But if you want someone to plunk down quite a bit of cash to buy your house, at least give it a fresh coat of paint.
Or drop the price and market it as a cosmetic fixer.
I wrote about the free 1031 seminar and a little bit about why it’s important for investors and landlords to know about a 1031 exchange but it seems like we’ve all been hit with the lazy bug lately and have received no responses so far.
So I must reiterate in John Lockwood style, maybe:
It’s free.
“Free, really free?”
Yes. You pay nothing.
What is a 1031 exchange?
“It’s a vehicle that allows you to exchange your non-cashflowing rental into a cashflowing property - even a commercial property, if you so choose - and defer paying taxes.”
Details?
“Attend the seminar.”
When?
“Just drop me an email and let me know you’re interested at purvabrown@msn.com and I’ll let you know! Seriously, shouldn’t you learn more if you could save thousands?”
Of dollars?
“Cut it out, John. You know I mean dollars!”
The Sacramento Bee published this story today which is worth reading. Anyone would admit there is a lot of information out there about the housing market today and it comes at us from all over the country. In all this panic, I begin to wonder: does no one realize that all real estate is local?
Just within Sacramento there are neighborhoods that are far more stable than others, as mentioned in a previous post. Sales in certain zip codes just “zip along” as the Bee put it.
All real estate is local. And as long as the local economy is doing fine, it will bounce back.
I don’t know why it is, but somehow everyone online loves Mondays. We get more hits reading this and our other blogs on Mondays than any other day of the week.
Yup, including Sundays.
So what are we Realtors doing on Mondays? Mostly recovering from showing homes all weekend and yes, submitting short sale and REO offers to lenders.
But not cold calling. I promise. Not on a Monday.
This is a by the way post, but I believe it is an important by the way post. After the recent wildfire in Tahoe which I have written about http://www.sacramentohomeshopper.com/blog/2007/06/26/tahoe-fire-and-this-realtors-realization/ I realized most people are not prepared for the worst if it happens. Most people have home insurance, but what about replacing all the things we have in our houses? Here are some tips:
- Do check your home insurance regularly to see if you’re fully protected. Do not assume you are.
- Do not let your home insurance lapse. If your mortgage company is paying the bill through an impound account, make sure they have paid it each year.
- Real estate is one of the best investments precisely because you can insure it. Can you imagine insuring the value of your stock portfolio? If you do move from your primary residence and turn it into a rental property, do not forget to change your insurance to “tenant-occupied investment property.” Your homeowner’s insurance will not protect you in this case.
- Take a home inventory. Most home insurance will cover articles in your home, but it helps to have a list of everything in your house. There are quite a few internet sites that will let you do just that - upload pics for every room and list inventory. I use A Safe Spot at www.asafespot.com but there are others. Google “home inventory” and pick the one you like.
- Lastly, do not use your home insurance unless you really need it. If you do, be sure to save receipts of what you fixed. When it comes time to sell your home, the buyers might run into trouble getting home insurance if there’s been a claim in the last three years on the property unless you can prove that there has been work performed. After a 45 day escrow, you don’t want something like this to hold you back from the sale!
The Sac Bee today reports that an Irvine-based foreclosure liquidator sold a house a minute to investors hungry for a bargain on Sacramento homes. For all the fear of a real estate bubble that everyone seems to be talking about, you have to admit a house a minute bodes well for all of us invested in our homes and investment properties.
Buyers on the fence, are you listening?
I just ran across a really good mortgage blog that I hadn’t seen before, Mike’s Mortgage Minute. Mike really shows his strong sense of human decency (in marketspeak, we say “consumer oriented focus”) in his post, No Sersiously. Thinking one great post might be a fluke, I scrolled down to The System and found the same compelling prose and a man with a very well developed BS dectector indeed.
Apropos nothing, he’s also worked with the same software I use all the time to blog with, Windows Live Writer.
He’s worth a read. Go check him out.
