Recently, I have been doing transactions around the state, not just in the Bay Area. Over the past few years, I have also done many REO (bank owned) sales where the escrow was out of Southern California.
Here in NorCal, Escrow and Title, which are really two separate functions, are handled by one company. Your Escrow and Title officers are the same person.
Escrow is the third party handling of the execution of the entire contract, including the terms, and the transfer of moneys between parties.
Title is two parts. The first is the title search, which is the discovery process for the insurer, who shares that information with the principal parties to the transaction through a Preliminary Title Report. The second part is the generation of the Title insurance policy itself, which protects a buyer or seller from "occult" liens and title transfers.
In Southern California, these are two different companies.
For some unknown reason, Southern California Escrow companies charge from three to four times what Northern California Escrow/Title Companies charge, and then have additional charges to the Title company, referred to as "sub-escrow" charges. We are not talking small amounts here. The cost in the north for a recent escrow was $1170, plus $150. The cost for the exact same escrow in Southern CA was $3260, plus $200, plus $70, plus $150. I believe that is a $2,360 difference. For nothing, as far as I can tell.
I don't have any idea how or why SoCal gets away with this, because it offers no other services to buyers and sellers that I can see. In fact, the SoCal escrow I just finished, didn't provide the seller with a DVD of all the transaction documents and my local company does.
On another note, aside from the increased costs, I have found that having an addition company involved in transaction, adds to the potential for problems. My southern escrow experiences have never, without exception, gone as smoothly as their northern counterparts.
Finally, Real Estate Brokers have "affiliations" with escrow companies in the Southern part of the state, and that is no where to be found up here. Those affiliations lead to loyalty to the agent they represent more often then those who are unaffiliated. This is not a good thing for the unaffiliated party to the transaction.
Saturday, April 19, 2014
Wednesday, April 10, 2013
Are you really "ready" to buy, or are you still just dreaming about it?
If you want to buy a house, you have to win a contract, often against a dozen or more other buyers.
I have previously likened home buying in a seller's market to war. Hopefully, that's a stretch. It should be easier and more fun than it is, especially in this market.
Let's continue to use that analogy...
Only you can decide if you are truly "ready" to win the illusive Purchase War. If you feel after reading the first half, you are "ready", please read further to decide if we are a good match to work together.
What exactly do I mean by "ready"?
There are two weapons Realtor®s ask you to bring to the battleground when making a purchase - documents are the first, but most importantly your time!
Your first weapon will be two specific documents, needed up front. If you are a "Cash" buyer, you will need only one. Most of us need to obtain a loan, and the second is related to financing.
PROOF OF FUNDS should be provided to your Realtor® as early as possible. This is solid evidence of your source and ability to pay for a house, or the portion referred to as your down payment. Smart Realtor®s will want to see that evidence before doing very much, if ANY work on your behalf. You might not know your Realtor® very well, and trusting someone with that information is a leap of faith. We understand, but it is a reasonable requirement if we are to commit our time to you. Your Realtor® is your general!
Ask your Realtor® to introduce you to at least two Loan Officers with whom they have a proven track record. Once you have pre-approved with one of them, you may also seek one with a Loan Officer of your choosing if you wish.
Why do Realtor®s ask buyers to pre - approve with their own Loan Officer? Because it will be difficult for your Realtor® to "sell" you to a seller, unless you have proven yourself creditworthy to someone your Realtor® trusts, who has already proven their own ability to close on time. Your Realtor®'s confidence in your Loan Officer as well as your own ability to perform must be evident, for a Seller's Realtor® to feel confident in you as a buyer.
The second weapon you bring to your purchase is YOU!
Your attitude is your body armor. Your availability and accessibility are your big guns!
Do you have text on your phone? That will be important ammo!
You will want to be as accessible as possible. Can you remember to carry your phone, keeping it turned on, and answer communications in a reasonable time?
Do you have a scanner/printer at home? More ammo! If you don't, please make sure you have access while at work, and can be where you can reliably access phone service and/or email all day and evening from the time your Realtor® begins writing contracts on your behalf.. A flatbed scanner costs about $60 and is extremely easy to operate, so you will have less stress if you have one. Can you use online signing? Yes, in some cases, but Brokers don't always accept online signatures.
Are you willing to pay 20% over list price? This is the reality in many parts of the East Bay area. If that sounds crazy, you may not be ready. Ask your Realtor® if this is true where you are interested in buying. If so, you probably don't even want to look for properties within 25% of what you plan to spend. Figure out what you are comfortable spending and go backwards. If you want to stay below $500,000, might not want to look for anything over $400k, Low pricing by 20% or more is a crazy marketing strategy particularly common in Berkeley and Albany. From 5% low to 5% high is more common, but that is less warlike!
Are you serious enough to take vacation from work if necessary?
Each individual offer might include 2-300 pages of information for you to review and sign off, before your Realtor® can write or present an offer on your behalf. This involves HOURS of time on your part. Can you find time to commit to this process? This is also a huge commitment on your Realtor®'s part!
Can you pay even more than first offered? If there are more than three or four offers, your offer may not stand out enough for a clear win in the first battle. The fittest of the group may meet head to head for another round. Usually this is just a price war, but shortening contingency periods, may also help to create a winning contract.
You may not win your first offer battle. It might take sever offers before you really understand what it takes to get into contract. How aggressive are you willing to be, to win?
Are you willing to make greater than the traditional deposit? Perhaps as much as $50,000?
Are you willing to focus intently on the inspection process? Within as few as five days after acceptance, you may put that huge deposit at risk. There is little or no negotiation with sellers in the current market. You will want to have enough time to invest in gaining knowledge of the property, but offering a shorter amount of time than others may be what it takes to win.
Escrow, your major battle, is not an "if I feel okay today" after work, kind of thing. Once you are in escrow, four weeks of what might feel like marathon combat, mostly during business hours will ensue. The first and the last weeks, may be among of the most intense weeks of your life!
When you enter contract it is best to make your Earnest Money Deposit immediately. This tells the seller you mean business, and adds to the otherwise limited power you and your Realtor® will have during the Escrow period. More than likely, someone else is waiting in line for you to fail.
(To put your mind at ease, your money is safe in Escrow, until we release all contingencies. It comes back very quickly, if you cancel your escrow. The seller can't move forward with the next buyer while it is still there, so they want Escrow to give it back as quickly as possible.)
Your attitude is your body armor. Your availability and accessibility are your big guns!
Do you have text on your phone? That will be important ammo!
You will want to be as accessible as possible. Can you remember to carry your phone, keeping it turned on, and answer communications in a reasonable time?
Do you have a scanner/printer at home? More ammo! If you don't, please make sure you have access while at work, and can be where you can reliably access phone service and/or email all day and evening from the time your Realtor® begins writing contracts on your behalf.. A flatbed scanner costs about $60 and is extremely easy to operate, so you will have less stress if you have one. Can you use online signing? Yes, in some cases, but Brokers don't always accept online signatures.
Are you willing to pay 20% over list price? This is the reality in many parts of the East Bay area. If that sounds crazy, you may not be ready. Ask your Realtor® if this is true where you are interested in buying. If so, you probably don't even want to look for properties within 25% of what you plan to spend. Figure out what you are comfortable spending and go backwards. If you want to stay below $500,000, might not want to look for anything over $400k, Low pricing by 20% or more is a crazy marketing strategy particularly common in Berkeley and Albany. From 5% low to 5% high is more common, but that is less warlike!
Are you serious enough to take vacation from work if necessary?
Each individual offer might include 2-300 pages of information for you to review and sign off, before your Realtor® can write or present an offer on your behalf. This involves HOURS of time on your part. Can you find time to commit to this process? This is also a huge commitment on your Realtor®'s part!
Can you pay even more than first offered? If there are more than three or four offers, your offer may not stand out enough for a clear win in the first battle. The fittest of the group may meet head to head for another round. Usually this is just a price war, but shortening contingency periods, may also help to create a winning contract.
You may not win your first offer battle. It might take sever offers before you really understand what it takes to get into contract. How aggressive are you willing to be, to win?
Are you willing to make greater than the traditional deposit? Perhaps as much as $50,000?
Are you willing to focus intently on the inspection process? Within as few as five days after acceptance, you may put that huge deposit at risk. There is little or no negotiation with sellers in the current market. You will want to have enough time to invest in gaining knowledge of the property, but offering a shorter amount of time than others may be what it takes to win.
Escrow, your major battle, is not an "if I feel okay today" after work, kind of thing. Once you are in escrow, four weeks of what might feel like marathon combat, mostly during business hours will ensue. The first and the last weeks, may be among of the most intense weeks of your life!
When you enter contract it is best to make your Earnest Money Deposit immediately. This tells the seller you mean business, and adds to the otherwise limited power you and your Realtor® will have during the Escrow period. More than likely, someone else is waiting in line for you to fail.
(To put your mind at ease, your money is safe in Escrow, until we release all contingencies. It comes back very quickly, if you cancel your escrow. The seller can't move forward with the next buyer while it is still there, so they want Escrow to give it back as quickly as possible.)
If vacation is not reasonable, can your normal job be back-burnered for a week or more?
During your inspection period, you can probably expect to go to your future home several times that first week, defining what "as is", really means. This may cost you $1,200 or so, perhaps more, in addition to your time. If you don't like the information the inspections provide, are you able to walk away from that investment? Even if there are inspections already available you will probably want to invest in your own. Your inspections are your parachute!
Can you continue to do what you need on a daily basis to stay on schedule? A while back I was in contract with a Buyer who offered just over listing price. During the escrow, a much larger offer came in - for $77,000 more than the original contracted price. We prayed for the original buyer to fail! If one deadline had been missed, the original contract would not have been honored.
Do you have the resources to bridge the gap between appraised value and your offer? You may have to if your property doesn't appraise for the value you offered. Houses often don't appraise for offered value, when in a rising market. Consider this part of your strategic planning!
Throughout the whole process, you will have two fronts. Your Realtor® manages one, your Loan Officer the other. After the contingency period ends, you will be focused primarily on your loan. That is a battle for a different blog, but will remain a steady demand of your time and energy throughout the entire process, with a final push the last week.
If you do all of the above, you will conquer and will take possession of your own land and all of its improvements!
Or, you might just wait until the war is over, and then it won't be so tough... it might be at a cost to you of about $5-10,000 a month, added to the sales price of an average Bay Area home... but at least you won't need a warrior to win and it will definitely be easier on your blood pressure.
This analogy seems dramatic, but it is pretty accurate. If you think you can manage all of the above, it's time to choose your Realtor®, your combination general and wingman!
As your Realtor®, why chose me?
If you have actually read this far, but don't believe what I have written, you can probably find another agent, willing either to sugar coat the process or who simply doesn't understand what lies ahead. Another agent may tell you what you want to hear just to win your trust and you may find yourself bidding against a buyer represented by a Realtor® like me.
I must do a great job for you, nothing less. To begin with, I have a great team to help you prepare. Once we have you ready, I will write the lowest offers I believe will win. At the end, I want you to feel you paid the lowest possible price, for the best possible house. Once in contract, I will do my best to protect you from the stress I describe above, as well as unnecessary drama from the listing side of the transaction.
No Realtor® can guarantee to get you into contract. I can guarantee that you will be considered seriously, if I make an offer on your behalf, even if you are a borrowing buyer bidding against cash. I submit only strong offers which sellers and their Realtor®s love! And most often, I do win, (if you really have done all that I suggest.)
I learned by bidding against more experienced Realtor®s, who actually knew how to write a contract. Once, I made about 24 offers for a buyer. That buyer was ME!!! I didn't know what I was doing. When it became personal, I learned quickly. I am sitting in the home purchased in a previous seller's market as a result of my personal education. Many other buyer's agents still have not yet figured it out what it takes to win.
I have a naturally competitive nature and you will want that in your Realtor®. I like to win for the sake of winning! Other agents will be competing against warriors like me, if not me. We warriors are the only ones winning right now.
I will ask for referrals when we are done, because that is how my business grows. I won't get them, if you don't feel I did my job on all fronts.
I have a naturally competitive nature and you will want that in your Realtor®. I like to win for the sake of winning! Other agents will be competing against warriors like me, if not me. We warriors are the only ones winning right now.
I will ask for referrals when we are done, because that is how my business grows. I won't get them, if you don't feel I did my job on all fronts.
Last question:
Are you ready to accepting the responsibility of hiring me as your Realtor®?
Wow, did I just really say that?
The lack of listings in this market has made it more difficult for Realtor®s to make a living. Not just me, all of us.
I only succeed by closing. I have few problems getting buyers into contract. Unfortunately, keeping buyers in contract has become somewhat of an issue!
Much of my time in 2013, has been with buyers asking me to write offers when they were not truly ready to move forward. They won, I opened escrow, and then they walked away from great homes, simply because the price it took to win, scared them off. They didn't fully believe the value would hang in there for the price it took to win. Sometimes we don't even get to the acceptance before the buyer got cold feet. I can empathize with those buyers, but I can't continue to work with that type of buyer for free.
If we win a contract, you actually need to close. If you walk away simply because you can't stomach what you offered to win, I may ask you to pay me for my time. If you are not willing to consider my time that valuable, I am politely asking you to work with a different Realtor®! I am a professional, and I will do my job. You are asking me to make a commitment of my time to you. I am asking you to make a commitment to me, that you will only use my time in good faith.
If you respect and value me enough to move forward, then let's get you ready. By then my velvet glove should be back from the cleaners!
Saturday, March 23, 2013
A Sellers' Market is WAR!!! (My Velvet Glove is at the dry cleaners!!!)
I have been gently trying to convey to different buyers of late, how competitive the market is for purchasing at this moment. I don't want to upset them with me personally to a point that they seek another agent, nor do I want to scare them into quiting the process entirely. But...
in some cases, the latter is what is best for both parties involved.
To be perfectly honest, I my velvet glove is at the cleaners, trying to get the blood stains out! I try, but if that is what you really need, (more than a house) we are not a match. You are going to get the truth here.
War isn't fun and it's sure not pretty. But I am not the foot soldier - you are! I am your Captain, or perhaps your sword, leading YOU into YOUR battle.. You have to have your tank and body armor on, too!
If you are thin skinned, or simply not competitive, this is not your time to buy.
Here is the reality of buying right now in most bay area communities:
There are a more than a hundred buyers walking though every open house in a weekend! Thirty will likely ask for more information. Half of those will place offers on a fixer upper, and more on one that is move in ready. If it is a single story, you will be competing with retirees with CASH. So ONLY those who REALLY want a new home are succeeding in this market. Only agents who have experience and smarts are winning for their buyers!
As mentioned, sometimes my buyers feel like I am too strident in my efforts in conveying this message and perhaps legitimately so. Nonetheless, I would rather a ruffled or unprepared buyer walk away than ask me to do battle on their behalf, with neither of us prepared.
I have been foolish in the past, in setting a precedent with a few buyers, by touring with them without a full loan package completed, (including a Desktop Underwriting certificate). I shouldn't have even made a phone call or looked at a disclosure package when they were not ready. It became a waste of both of our resources because nothing materialized from it except for frustration and disappointment.
Yes, sharing some of this is with you is selfish on my part.
This is my job, and how I make my house payment, and I feel the need to have my time valued and respected. But shouldn't you as well????
I want to spare you the disappointment of losing a house you love, because you are not geared up properly.
Until you are fully committed, and geared up, I can't go forward on your behalf. It's not simply that I won't. I just can't. There are too many willing to be ready, and it is in both of our best interests for me to focus on the ready, rather than the almost ready.
Thursday, January 10, 2013
Buying in a Seller's Market...
Wow, times have changed since I first started this blog. Sometimes I get so busy helping clients that I don't look at it, or contribute to it for a long time.
I have had my best professional year, this past year. I sold one home for over 1.5 M, which made for a great year.
But the end was tough!!!
There is NO inventory. That creates a seller's market with dramatically rising prices! Vallejo topped out in Dec, 2009 at 1204 homes for sale. It bottomed out at 77 homes according to Solano Association of Realtors, and we are only in the 125 range today.
Vallejo is just one city, but it is that way all over CA right now. I just sold two in different parts of SoCal. Same story.
I have one buyer who has made 7 offers without success in entering into contract. She is picky, yes, and she has a right to be, but...
But she comes in just a little bit low every time. (She is not listening to me.) This is a rising market and she is just below the top of an upward spiral. An offer at $300k a few months ago would have bought a home that now sells for $400k. So it is expensive, not to go big. Now there is not much coming on the market that she can still afford, or she has to lower her expectations to buy now, or expect to commute a lot farther.
So GO BIG. I will do what I can to bring the price down with appraisals, etc, when possible.
You might say I am being self serving by saying "go big". Not true.
If my buyer had offered $300K instead of $285K for a home 3 months ago, she would have closed. Now if we buy the same type home, it will cost $400k. I make more by waiting.
But rather than wait, I would like to see you in a home now, before prices go up further. I will get you your home for the least amount I can to get you into contract. I promise.
I have had my best professional year, this past year. I sold one home for over 1.5 M, which made for a great year.
But the end was tough!!!
There is NO inventory. That creates a seller's market with dramatically rising prices! Vallejo topped out in Dec, 2009 at 1204 homes for sale. It bottomed out at 77 homes according to Solano Association of Realtors, and we are only in the 125 range today.
Vallejo is just one city, but it is that way all over CA right now. I just sold two in different parts of SoCal. Same story.
I have one buyer who has made 7 offers without success in entering into contract. She is picky, yes, and she has a right to be, but...
But she comes in just a little bit low every time. (She is not listening to me.) This is a rising market and she is just below the top of an upward spiral. An offer at $300k a few months ago would have bought a home that now sells for $400k. So it is expensive, not to go big. Now there is not much coming on the market that she can still afford, or she has to lower her expectations to buy now, or expect to commute a lot farther.
So GO BIG. I will do what I can to bring the price down with appraisals, etc, when possible.
You might say I am being self serving by saying "go big". Not true.
If my buyer had offered $300K instead of $285K for a home 3 months ago, she would have closed. Now if we buy the same type home, it will cost $400k. I make more by waiting.
But rather than wait, I would like to see you in a home now, before prices go up further. I will get you your home for the least amount I can to get you into contract. I promise.
Tuesday, November 8, 2011
Why I believe now is the best time ever to buy!
My ten years as a financial adviser, leads me to feel that this is perhaps the best time to buy in the past 50 years.
Your buying power is the strongest it has ever been, right now! This is mainly because of ridiculously low interest rates, the lack of buyers currently, and the number of increasing equity sales on a percentage basis.
Let's compare today, with two years ago when the biggest drops in home value occurred in most areas, and the stock market had just crashed.
There are about 50% fewer homes available now than there were then, keeping prices more stable. It was largely the volume of homes, combined with the percentage of bank owned homes on the market in 2009 that caused the dramatic price drops we saw then. The vast majority of homes for sale were REO's, some short sales and a very few equity homes (regular sales).
Things are VERY different now. As an example, if you do a search of Oakland, you will see that there are 1282 homes available for sale today with no accepted purchase contract. Last month there were 1315. in january of 2010, there were 2300! I am not sure what the bottom will be for number of available homes. But this is a very low number for Oakland, and it is the same all over the Bay Area. I didn't record the exact numbers of REOs back then but it was about 60%-70% as I recall, with 10-15% regular sales. The rest were short sales.
We went through a period a year or so ago, where about 50% of the homes on the market were short sales. That has dropped to about 25% today. REO's are down to about 20%. Regular sales are up to about 55% of all sales now!
Where are all these equity owners coming from?
Long time owners have come to realize, things are not going to get better immediately. Short term owners may have lost a little, and may want to sell to get into a better loan situation on a new property, knowing the net will save them money. (Loans were still at 7 percent just 3 years ago for many.) Newest owners may be profit taking after doing enough work to increase value beyond cost of selling. And then there are those in the business of flipping.
As the number of homes has decreased, so have the number of buyers! As we approach the holidays, there are fewer daylight hours to shop, and people are focused on nesting rather than moving. More generally, many first time buyers have already bought and are now mildly underwater, but not enough to consider a short sale. A lot have already bought hot deals and are equity ahead, and happy where they are. Many just don't qualify in this tighter lending climate.
Additionally, there are no government incentives to buy.
All it will take to have prices start to climb again, is for the government to re-incentivize the public to buy, or for lending to loosen a bit. With the number of homes available continuing to decrease, my personal belief is that we will not see another significant drop in prices. demand is still high enough to have multiple offer situations in many bay area communities. Unless things really fall apart in europe, far more than they already have, our leading indicators suggest economic improvement here in the usa. But if things do deteriorate in europe, it will make it even harder to get a loan here, which may impact prices, by making it impossible for many more to buy.
In the meantime, if you are renting...
You don't have the benefit of being in your desired home, nor the tax benefits of same. On a home with a 200K loan, your loan payment at 4% is $954, 42% of which is deductible, as are the taxes of about $165 a month. Just to use round numbers, your deduction is about 6,600 a year. If you are in a marginal tax bracket of only 15% that is about $85 in federal tax savings. If you are at 25%, that is getting closer to $200 a month, because you will also have state tax savings in most states. This brings your net payment down to about 1,015 a month in the short term. (Your net payment will increase as your principle decreases. Over 30 years you will probably pay on average around $13,500 a year for your home.)
Let's compare that with waiting for prices to drop another 10%. Maybe a year or two from now. Let's say that mortgage rates do not go up.
Today, rent costs more than a mortgage for the same house. rent for most 250k homes would average about $1,800 a month, (and rental rates are on the rise). That is $21,600, and if you look at the first years of the mortgage, which offer the most tax benefit, you are talking around $9,000 more in additional cost. It will take only two year and a half years to make up the savings IF your house purchased today drops another 10%. What you gain by buying now is enjoyment of your own home, the opportunity to build equity through improvements to offset a possible drop. Plus you can stop worrying about interest rate risk, rental increase risk, and credit availability risk. To me, that would be priceless. And if prices stay the same, you have saved around $9,000 a year, plus the lost opportunity of that money's growth over time. (Using the rule of 72's, at 5% that would be $36k for each year waited.)
I am not a financial adviser any longer. I am not a tax expert, but this is all simple math. You should consult your CPA or CFP and calculate the true cost of ownership now vs. waiting. I think you will find the majority of Financial Professionals would agree that this is a perfect time to buy.
Your buying power is the strongest it has ever been, right now! This is mainly because of ridiculously low interest rates, the lack of buyers currently, and the number of increasing equity sales on a percentage basis.
Let's compare today, with two years ago when the biggest drops in home value occurred in most areas, and the stock market had just crashed.
There are about 50% fewer homes available now than there were then, keeping prices more stable. It was largely the volume of homes, combined with the percentage of bank owned homes on the market in 2009 that caused the dramatic price drops we saw then. The vast majority of homes for sale were REO's, some short sales and a very few equity homes (regular sales).
Things are VERY different now. As an example, if you do a search of Oakland, you will see that there are 1282 homes available for sale today with no accepted purchase contract. Last month there were 1315. in january of 2010, there were 2300! I am not sure what the bottom will be for number of available homes. But this is a very low number for Oakland, and it is the same all over the Bay Area. I didn't record the exact numbers of REOs back then but it was about 60%-70% as I recall, with 10-15% regular sales. The rest were short sales.
We went through a period a year or so ago, where about 50% of the homes on the market were short sales. That has dropped to about 25% today. REO's are down to about 20%. Regular sales are up to about 55% of all sales now!
Where are all these equity owners coming from?
Long time owners have come to realize, things are not going to get better immediately. Short term owners may have lost a little, and may want to sell to get into a better loan situation on a new property, knowing the net will save them money. (Loans were still at 7 percent just 3 years ago for many.) Newest owners may be profit taking after doing enough work to increase value beyond cost of selling. And then there are those in the business of flipping.
As the number of homes has decreased, so have the number of buyers! As we approach the holidays, there are fewer daylight hours to shop, and people are focused on nesting rather than moving. More generally, many first time buyers have already bought and are now mildly underwater, but not enough to consider a short sale. A lot have already bought hot deals and are equity ahead, and happy where they are. Many just don't qualify in this tighter lending climate.
Additionally, there are no government incentives to buy.
All it will take to have prices start to climb again, is for the government to re-incentivize the public to buy, or for lending to loosen a bit. With the number of homes available continuing to decrease, my personal belief is that we will not see another significant drop in prices. demand is still high enough to have multiple offer situations in many bay area communities. Unless things really fall apart in europe, far more than they already have, our leading indicators suggest economic improvement here in the usa. But if things do deteriorate in europe, it will make it even harder to get a loan here, which may impact prices, by making it impossible for many more to buy.
In the meantime, if you are renting...
You don't have the benefit of being in your desired home, nor the tax benefits of same. On a home with a 200K loan, your loan payment at 4% is $954, 42% of which is deductible, as are the taxes of about $165 a month. Just to use round numbers, your deduction is about 6,600 a year. If you are in a marginal tax bracket of only 15% that is about $85 in federal tax savings. If you are at 25%, that is getting closer to $200 a month, because you will also have state tax savings in most states. This brings your net payment down to about 1,015 a month in the short term. (Your net payment will increase as your principle decreases. Over 30 years you will probably pay on average around $13,500 a year for your home.)
Let's compare that with waiting for prices to drop another 10%. Maybe a year or two from now. Let's say that mortgage rates do not go up.
Today, rent costs more than a mortgage for the same house. rent for most 250k homes would average about $1,800 a month, (and rental rates are on the rise). That is $21,600, and if you look at the first years of the mortgage, which offer the most tax benefit, you are talking around $9,000 more in additional cost. It will take only two year and a half years to make up the savings IF your house purchased today drops another 10%. What you gain by buying now is enjoyment of your own home, the opportunity to build equity through improvements to offset a possible drop. Plus you can stop worrying about interest rate risk, rental increase risk, and credit availability risk. To me, that would be priceless. And if prices stay the same, you have saved around $9,000 a year, plus the lost opportunity of that money's growth over time. (Using the rule of 72's, at 5% that would be $36k for each year waited.)
I am not a financial adviser any longer. I am not a tax expert, but this is all simple math. You should consult your CPA or CFP and calculate the true cost of ownership now vs. waiting. I think you will find the majority of Financial Professionals would agree that this is a perfect time to buy.
Wednesday, September 21, 2011
Sharing Private Information Securely (and in a super green way, too!)
today i was meeting with one of my favorite clients, who are making their second purchase with me. the time came for them to be pre-approved for a loan on their primary residence, which they will then use as an atm to buy their new residence, for cash.
my client's big concern was passing their info to the loan processor securely. the processor uses gmail and my buyer uses yahoo. neither is a secure site (https) to send credit card info, tax returns, w-2s etc. i used my favorite and free ethernet trick to solve this problem.
i discovered this because i have a big house, and we have computers on each floor i have a ton of docs i have to keep permanently for each client and no desire to store them physically, or even on my hard drive. so when i need to print something in my office, but it's on my upstairs computer, i attach said item to an email as a draft. the great thing is that you can attach as many files as you want to a draft. you can't send a large email, but you can save a large draft, and open it on any computer with matching software.
i also do this when i have a large doc i have to print, and i don't want to do it at my own expense. i can save a doc and print it at my office, and let my company pay for it. they make big money from my efforts; i have the right to ask them to bear the expense of printing a 160 page set of HOA docs for my new owner!
it occurred to me that this is the best way to send something to the cloud, as well. i have an account with my email provider with all my photos, another with my tax returns and yet another with other significant, but less private or important docs.
the beauty of this is that the email that has my very personal financial info, is also available to my CPA. we each have the password to an account created only for this purpose, eg. my2011taxes@.....com. within it, i create a draft with my financial work stored on it for each of the schedules, and another for my income statements- w-2's, 1099's, 1098's . if he has a question he just adds it to the draft's subject. when each schedule is completed, i can attach any supporting docs, spread sheets, scanned receipts etc. i can then send the file to myself, from myself, within the same email address, making a permanent record. i can access it from anywhere, but no one else can except my cpa.
it occurred to me that this has wider applications. anytime you want to share any info with someone else, you can create an account and attach your info to a draft. (legal and legit. purposes only!)
Today my client was being asked to send his personal info, which would allow anyone to completely steal his identity, should his or the recipient's email address be compromised. He balked, fairly.
So we created a new account, and had the recipient create the password, so it could be easily remembered by the person who needed the info. Then we attached a bunch of docs, which were too large to email, onto a draft. we made a second draft for the credit card info. Instantly, the processor who was logged in simultaneously, had all the info at his fingertips. He didn't even have to wait for an email! And, as the transaction progresses, they will have a secure place to send updated statements, etc. it never has to be downloaded onto anyone else's computer either! Plus it can be printed if a hard copy is needed for any reason, without ever storing it. When the transaction is complete, buyer has the option to change the password and have a record of everything all in one place permanently, or just delete the drafts.
It's funny how a situation of inconvenience in my home, became the solution to a really challenging problem!
It also just dawned on me that my previous employer, charged each buyer and seller $330 to do essentially the exact same thing!!!
my client's big concern was passing their info to the loan processor securely. the processor uses gmail and my buyer uses yahoo. neither is a secure site (https) to send credit card info, tax returns, w-2s etc. i used my favorite and free ethernet trick to solve this problem.
i discovered this because i have a big house, and we have computers on each floor i have a ton of docs i have to keep permanently for each client and no desire to store them physically, or even on my hard drive. so when i need to print something in my office, but it's on my upstairs computer, i attach said item to an email as a draft. the great thing is that you can attach as many files as you want to a draft. you can't send a large email, but you can save a large draft, and open it on any computer with matching software.
i also do this when i have a large doc i have to print, and i don't want to do it at my own expense. i can save a doc and print it at my office, and let my company pay for it. they make big money from my efforts; i have the right to ask them to bear the expense of printing a 160 page set of HOA docs for my new owner!
it occurred to me that this is the best way to send something to the cloud, as well. i have an account with my email provider with all my photos, another with my tax returns and yet another with other significant, but less private or important docs.
the beauty of this is that the email that has my very personal financial info, is also available to my CPA. we each have the password to an account created only for this purpose, eg. my2011taxes@.....com. within it, i create a draft with my financial work stored on it for each of the schedules, and another for my income statements- w-2's, 1099's, 1098's . if he has a question he just adds it to the draft's subject. when each schedule is completed, i can attach any supporting docs, spread sheets, scanned receipts etc. i can then send the file to myself, from myself, within the same email address, making a permanent record. i can access it from anywhere, but no one else can except my cpa.
it occurred to me that this has wider applications. anytime you want to share any info with someone else, you can create an account and attach your info to a draft. (legal and legit. purposes only!)
Today my client was being asked to send his personal info, which would allow anyone to completely steal his identity, should his or the recipient's email address be compromised. He balked, fairly.
So we created a new account, and had the recipient create the password, so it could be easily remembered by the person who needed the info. Then we attached a bunch of docs, which were too large to email, onto a draft. we made a second draft for the credit card info. Instantly, the processor who was logged in simultaneously, had all the info at his fingertips. He didn't even have to wait for an email! And, as the transaction progresses, they will have a secure place to send updated statements, etc. it never has to be downloaded onto anyone else's computer either! Plus it can be printed if a hard copy is needed for any reason, without ever storing it. When the transaction is complete, buyer has the option to change the password and have a record of everything all in one place permanently, or just delete the drafts.
It's funny how a situation of inconvenience in my home, became the solution to a really challenging problem!
It also just dawned on me that my previous employer, charged each buyer and seller $330 to do essentially the exact same thing!!!
Monday, July 11, 2011
Before you look for a new home...
Try imagining it!
Your realtor® can't help you, if you don't know what you want!
Let's start with some general questions.
1. How long are you willing to drive to work?
2. Is your home in a development with an HOA to maintain standards, or a house without the need for anyone's approval to make changes?
3. Do you care if you purchase a new construction home (yes, you should have an agent for this), REO, short sale or regular sale?
4. Are schools a personal consideration or only from a standpoint of resale?
5. Where is the nearest park and/or schools?
6. Which is more important, budget or amenities?
Now mentally drive up to your new home -
1. Is it in the city, suburbs, marina, beach or countryside? Does it have acreage?
2. Is it a single story or multi?
3. Is it set back from the street or is it close up with a small patch of grass?
a .Is there a garden in front?
b. A driveway?
c. Statuary?
d. Portico or porch?
4. Garage size? Location?
a. Is there rv parking?
b. Guest or street parking?
5. What is the lot size and characterisics? level or sloped?
6. Is it a corner lot or do you have neighbors on both sides?
7. How old/new is the house? stucco or wood, or something else?
8. Are the windows standard, bay, bow, stained glass?
9. Is it move in ready or an equity builder?
Let's walk in the front door.
1. It's floor plan style? Bungalow, rancher or something else?
2. Are you in an entry hall?
3. Is there crown molding or more of a contemporary feel?
4. What is the flooring? tile, hardwood or carpeting? Is it fairly consistant throughout or will you transition from one type to another as you move around the house?
5. What is the first room you walk into? Does the house have a formal floor plan or more of
a great room, open concept?
Walk through the living areas of the home…How is it laid out? Are there views? Of what?
1. Is there a formal dining room?
2. Is there a family room? on what floor?
3. Kitchen details... where is it relative to the living areas?
a. Is the kitchen a galley or separate room or does it open to the more social areas of the home?
b. Is there an island?
c. Granite counter tops or tile? what color is it?
d. Are the cabinets, white, light wood, cherry or espresso? Glass or solid doors?
e. Is the cooking surface gas or electric?
f. One or two ovens? are they a range or a separate unit?
g. What other appliances? Compactor? Dishwasher? Fridge? Convection oven or microwave?
h. Is there a nook or counter bar?
i. In what room will you eat?
j. Is there a built in desk/ work area?
4. How many bedrooms and baths? Are they on the same floor as the living areas?
5. Is there a full bath on the main floor? A half bath? Both, or more?
6. Are there hallways?
7. Are there stairs? Up or down? Straight, curved or spiral?
a. Where are they in the house?
b. Are they open to the room from which they originate? If so describe the rails- wood or wrought iron or something else?
Now walk into your master bedroom.
1. What floor is it on?
2. Is it one room or does it have a sitting room, nursury, office or retreat?
a. What time of day will you have sun?
b. Are there doors in addition to windows? If so to deck or yard? Are there views? Of what?
c. Are the closets walkin or wall? Is there one or multiple closets? Are they in the main room or more a part of the bath?
3. Does the master bath have a door or open entry?
a. Is there a full shower and a soaking tub, shower over tub combo or just a shower?
b. A water closet?
c. What is the counter surface?
4. Does the house have a jr master as well?
a. What floor is it on?
5. Other bedrooms?
6. Other baths?
7. Where is the laundry? Deep sink and/or counters?
Now let's walk outside. How did you get there?
1. Is the back yard mostly grass? Mostly rock? Planted garden? Covered patio? Deck?
2. Is there a pond or other water feature?
3. Patios? What are they made from, brick, rock, cement, paver tiles?
4. Is there a back neighbor, green belt, dock or park behind your house?
5. Is there a vegetable garden?
6. What can you hear in the distance? Is traffic okay? Trains? Fog horns?
7. Is there a built in barbeque area? Fire pit? Built in bar?
8. Is there a pool? A hot tub? Gazebo?
9. Is there an out building? Man cave, storage shed, guest or pool house?
10. Do you have a dog run?
11. If the next door neighbor has dogs, what kind are they?
If you can answer all of these questions, or provide any other details, your realtor® should have no trouble finding you a home.
The next question will be, can you afford what you find? Be realistic about what you want, based on what you can afford!
Your realtor® can't help you, if you don't know what you want!
Let's start with some general questions.
1. How long are you willing to drive to work?
2. Is your home in a development with an HOA to maintain standards, or a house without the need for anyone's approval to make changes?
3. Do you care if you purchase a new construction home (yes, you should have an agent for this), REO, short sale or regular sale?
4. Are schools a personal consideration or only from a standpoint of resale?
5. Where is the nearest park and/or schools?
6. Which is more important, budget or amenities?
Now mentally drive up to your new home -
1. Is it in the city, suburbs, marina, beach or countryside? Does it have acreage?
2. Is it a single story or multi?
3. Is it set back from the street or is it close up with a small patch of grass?
a .Is there a garden in front?
b. A driveway?
c. Statuary?
d. Portico or porch?
4. Garage size? Location?
a. Is there rv parking?
b. Guest or street parking?
5. What is the lot size and characterisics? level or sloped?
6. Is it a corner lot or do you have neighbors on both sides?
7. How old/new is the house? stucco or wood, or something else?
8. Are the windows standard, bay, bow, stained glass?
9. Is it move in ready or an equity builder?
Let's walk in the front door.
1. It's floor plan style? Bungalow, rancher or something else?
2. Are you in an entry hall?
3. Is there crown molding or more of a contemporary feel?
4. What is the flooring? tile, hardwood or carpeting? Is it fairly consistant throughout or will you transition from one type to another as you move around the house?
5. What is the first room you walk into? Does the house have a formal floor plan or more of
a great room, open concept?
Walk through the living areas of the home…How is it laid out? Are there views? Of what?
1. Is there a formal dining room?
2. Is there a family room? on what floor?
3. Kitchen details... where is it relative to the living areas?
a. Is the kitchen a galley or separate room or does it open to the more social areas of the home?
b. Is there an island?
c. Granite counter tops or tile? what color is it?
d. Are the cabinets, white, light wood, cherry or espresso? Glass or solid doors?
e. Is the cooking surface gas or electric?
f. One or two ovens? are they a range or a separate unit?
g. What other appliances? Compactor? Dishwasher? Fridge? Convection oven or microwave?
h. Is there a nook or counter bar?
i. In what room will you eat?
j. Is there a built in desk/ work area?
4. How many bedrooms and baths? Are they on the same floor as the living areas?
5. Is there a full bath on the main floor? A half bath? Both, or more?
6. Are there hallways?
7. Are there stairs? Up or down? Straight, curved or spiral?
a. Where are they in the house?
b. Are they open to the room from which they originate? If so describe the rails- wood or wrought iron or something else?
Now walk into your master bedroom.
1. What floor is it on?
2. Is it one room or does it have a sitting room, nursury, office or retreat?
a. What time of day will you have sun?
b. Are there doors in addition to windows? If so to deck or yard? Are there views? Of what?
c. Are the closets walkin or wall? Is there one or multiple closets? Are they in the main room or more a part of the bath?
3. Does the master bath have a door or open entry?
a. Is there a full shower and a soaking tub, shower over tub combo or just a shower?
b. A water closet?
c. What is the counter surface?
4. Does the house have a jr master as well?
a. What floor is it on?
5. Other bedrooms?
6. Other baths?
7. Where is the laundry? Deep sink and/or counters?
Now let's walk outside. How did you get there?
1. Is the back yard mostly grass? Mostly rock? Planted garden? Covered patio? Deck?
2. Is there a pond or other water feature?
3. Patios? What are they made from, brick, rock, cement, paver tiles?
4. Is there a back neighbor, green belt, dock or park behind your house?
5. Is there a vegetable garden?
6. What can you hear in the distance? Is traffic okay? Trains? Fog horns?
7. Is there a built in barbeque area? Fire pit? Built in bar?
8. Is there a pool? A hot tub? Gazebo?
9. Is there an out building? Man cave, storage shed, guest or pool house?
10. Do you have a dog run?
11. If the next door neighbor has dogs, what kind are they?
If you can answer all of these questions, or provide any other details, your realtor® should have no trouble finding you a home.
The next question will be, can you afford what you find? Be realistic about what you want, based on what you can afford!
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