Working the Numbers on Competing Purchase Offers
February 11th, 2013 categories: Buyers, Money and Mortgages
Sellers tend to go with the Highest-priced offer when they receive more than one. But, price is only one factor to consider. An offer with a lower purchase price, but a Large down payment and a quicker close could be the best!
The terms of a purchase offer can make or break a deal, especially given today’s tight mortgage qualification requirements. Buyers with large cash down payments usually have an easier time qualifying for a mortgage than do low-cash-down buyers.
However, today even Large-cash-down buyers need to qualify. Unlike in 2006, lenders now require verification of employment, a great credit score, and one or two acceptable property appraisals.
A large cash down payment can save a transaction that might otherwise fall apart if the property appraises for less than the purchase price. If the lender is willing to loan the buyer up to 80% of the appraised value, and the buyer needs a loan for only 60% of the price, the deal will probably stay together if the appraised value is 5 or 10% lower than the purchase price.
But if there is an appraisal contingency in the contract, the buyer could decide not to proceed with the transaction, or not at the purchase price, based on the fact that the property didn’t appraise for the price he agreed to pay.
The buyer might try to renegotiate the price to keep the deal together. If the seller doesn’t agree, the buyer can usually withdraw without penalty, depending on the wording of the appraisal contingency.
When the appraised value comes in under the purchase price and the buyer is making a low down payment, you’re sure to have a problem unless the buyer has More cash to put down or the seller agrees to lower the price, or a combination of the two.
Let’s say your home is listed for $775,000. You receive 3 offers from qualified buyers. One is for $850,000 from a buyer who has lost out in multiple-offer competition repeatedly. He will make a 10% down payment, and the contract includes an appraisal contingency.
The 2nd offer is for $825,000 with a 40% down payment and an appraisal contingency. The 3rd offer is also for $825,000 with a 35% down payment and NO appraisal contingency. You are told by the buyer’s agent that the third buyer has more money to put down, if necessary. All offers include an inspection contingency.
The terms of multiple counteroffers don’t need to be the same for each buyer. If the comparable sales don’t support a price even close to $850,000 for your home, the offer from the 10% down buyer is risky. You could counter this buyer and ask him to increase his deposit amount and waive the appraisal contingency. You could ask the second buyer to pay $850,000 and remove his appraisal contingency. And, you could increase the price to $850,000 on the third offer.
The risk of this approach is that you could lose one or all of the offers, particularly if the buyers think you’re greedy. All offers are for significantly more than the list price.
If you or someone you know is in the market to buy or sell their home, please feel free to call or email me for a free consultation. I look forward to working with you!
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Demand for Homeownership Remains High
February 6th, 2013 categories: Buyers, Money and Mortgages
Mortgage applications rise, as demand for homeownership remains high
Many prospective homeowners pushed to make the investment before the end of the new year, but the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending January 18 revealed applications increased yet again.
Data from the MBA found application volume jumped 7% on a seasonally adjusted basis from the week before, and was up 8% when measured on an unadjusted basis. This is a recovery from the lower amount of activity seen around the holidays.
Since refinancing has been popular, the Purchase Index has seen small gains throughout 2012, but the most recent survey revealed the adjusted PI increased 3% from the week before, marking the highest level seen since May 2010. When measured on an unadjusted basis, the PI was up 9% on a week-over-week basis, and it was also 26% higher than the same time a year ago.
Low mortgage rates have also contributed to more interest in refinancing, as current homeowners can also benefit from affordable conditions by altering their initial mortgage. The Refinance Index rose 8% from the previous week, while accounting for 82% of all applications, matching the level from the previous week.
If you or someone you know is in the market to buy or sell their home, please feel free to contact me by phone or email. I look forward to speaking with you!
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Make Your Home Green for the New Year
January 4th, 2013 categories: Home Improvements and Design
Many homeowners will likely set New Year’s resolutions to improve their health or to further their knowledge, but making your home more eco friendly could be a simple change. While buying new appliances and making green upgrades can yield a quick transaction when adding your property to the list of homes for sale in Los Angeles, living a more eco friendly lifestyle can lower your bills too.
One benefit homeowners in Southern California have when it comes to keeping their electricity bills is the nice weather characteristic throughout most of the year. Instead of cranking up your air conditioning in the summer, spend time outside and limit how long it runs. You can also be more eco friendly by using window shades and other insulation tools to keep your home’s temperature comfortable without having to overwork your HVAC system.
Trading standard cleaning products for ones made from plants can reduce the exposure of chemicals to your family and the environment. Many major name-brands have released cleaning products made without harsh chemicals. These cleaners should have a list of ingredients included on their labels.
If you or someone you know is in the market to sell their home, please feel free to call or email me with any questions. I look forward to working with you this New Year!
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Tax Benefits Promote Homeownership
November 19th, 2012 categories: Buyers, Money and Mortgages
Affordability still high!
Those considering investing in real estate in Beverly Hills or surrounding areas may benefit from beginning their home search and closing on a property before the end of the year. This is because there are many tax breaks and credits for homeowners. Below are some benefits prospective buyers should be aware of when making a decision to buy or wait.
Those who rent their home, one thing that they don’t pay are property taxes. While this is an additional payment required by homeowners, they can be deducted from both state and local taxes. In some cases, these are included in a single payment, while those who pay for them on their own may need to collect proper documentation to show how much is paid.
Not only will investing in eco-friendly appliances and materials save you money, but they can also provide a tax break when installed before the end of the tax year. Different upgrades can be worth varying percentage amounts, however, they must all meet standards of the Engergy Star Program.
For many homeowners, the greatest tax break is the Mortgage Interest Deduction. This allows those who have made the investment to deduct all the interest from their mortgage when filing taxes.
If you or someone you know is in the market to buy or sell their home, please feel free to call or email me. I look forward to helping you with your real estate needs.
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Mortgage Rates Remain Low
November 13th, 2012 categories: Buyers, Money and Mortgages
Fixed-rates still affordable!
Those considering purchasing real estate in Hollywood or in other parts of Southern California are urged to do so before the new year. Becoming a homeowner has many major benefits and mortgage rates continue to make the investment more affordable when compared to recent years.
According to the most recent Primary Mortgage Market Survey from Freddie Mac, during the week ending November 8, the average rate for 30-year fixed-rate mortgages increased to 3.4%, slightly higher than a week ago when it averaged 3.39%. Despite the small gain, rates continue to hover near the record low of 3.36% and are well below the average rate from this time last year of 3.99%.
Data from the survey shows the average rate for 15-year FRMs was down from the week before, reaching 2.69% from 2.7%. This time last year, the average was 3.30%, ultimately providing buyers a much more affordable marketplace.
While reports of higher home prices may be keeping some buyers off the market, those thinking of buying a home may benefit from beginning their search before both rates and prices increase. Economists say these housing market factors will continue trending upward as the overall economy stabilizes.
If you or someone you know is in the market to buy or sell their home, feel free to call or email me. I look forward to helping you with your real estate needs.
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Six Tax Facts Home Sellers Should Know
November 6th, 2012 categories: Money and Mortgages, Sellers
- If you’ve owned and lived in your home for 2 of the 5 years before selling it, you can generally exclude up to $250,000 of the gain from your income ($500,000 on a joint return, in some cases).
- You are not eligible for this exclusion if you sold another principal residence within the past 2 years and excluded the allowable gain from your income.
- If you can exclude ALL of the gain from the sale of your primary residence, you don’t need to report the sale on your tax return.
- If you have a gain on your principal residence that exceeds the allowable deduction, it is taxable.
- You can’t deduct a loss from the sale of your primary residence.
- Special rules may apply when you sell a home for which you’ve received the first-time home buyer credit. (See IRS publication 523, “Selling Your Home,” for details.)
If you or someone you know is thinking of selling their home, please feel free to call or email me for a free Market Analysis to help you determine the accurate market value of your home.
Source= The IRS
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Halloween Pet Safety Tips
October 30th, 2012 categories: Home Improvements and Design
Make this Halloween fun for your furry family members, too!
Halloween can be a festive and fun time of year for children and families, but for pets it can be stressful and even dangerous. Here are some ways to keep it fun and safe:
- This is the perfect time to make sure your pet is licensed, microchipped and wearing up-to-date indentification. A dog license helps Animal Service Officers get your lost pet safely home.
- Plan ahead to keep your companion animals in a room away from the front door when trick-or-treaters are visiting. It is too easy for them to become frightened by the “goblins” and slip out the door.
- Chocolate and other seemingly harmless ingredients can be poisonous to dogs and cats, so keep them out of reach. Dispose of the wrappers where pets can’t get to them to avoid choking. Also, remember that children may not understand why Fluffy can’t share their treats, so use this as a teaching opportunity.
- Tail wagging is a good thing- unless it’s done around a lit candle! Keep candles and lit Jack-o-Lanterns at an appropriate height where your pets can’t knock them over or get burned.
- A decorative collar is far more comfortable than a costume for your pet. Make sure your pet thinks a costume is as much fun as you do before you dress them up for Halloween.
By following these helpful tips, Halloween can be a fun and safe holiday for pets and people alike! Also feel free to call or email me if your family wants to buy or sell your home!
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Benefits of Homeownership for Children
October 26th, 2012 categories: Buyers, Real Estate News
A recent USC study shows that children are the biggest benefactors of home ownership!
The study was based on an analysis of the Panel Study of Income Dynamics (PSID) and was sponsored by the Research Institute for Housing America (RIHA). Richard K. Green, Gary D. Painter (USC) and Michelle J. White (University of San Diego) are the 3 SoCal professors that provide hard evidence to support these findings:
a) The size of the down payment has little effect on the outcomes for children except when borrowers put no money down, at which point the outcomes become no different from those of renters.
b) The impact of home ownership is particularly important for households with short term leases. Some had suggested that prior findings regarding the benefits of home ownership were simply due to a more stable housing situation, not necessarily ownership. These findings indicate that home ownership matters, particularly over the short term.
c) Parent’s marital status, income, race or age of the mother when the child was born had little effect on outcomes, after accounting for parental education, home ownership and other household characteristics.
“In a study conducted over 15 years, we found that children of homeowners fared better than children of renters.”
If you or someone you know wants to better the lives of their children by becoming home owners, feel free to call or email me. I look forward to helping you find your dream home!
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174 N. Canyon View Dr. Brentwood
October 10th, 2012 categories: Buyers, New Listings
Open this Sunday! Stunning Mediterranean on one of the best streets in Brentwood. Large marble tile floors in all public rooms and the ceiling volume is unprecedented with two fireplaces on main floor. Chef’s kitchen with granite counter-tops. Master bedroom suite offers his and hers closet with fireplace. Remaining bedroom suites are completely private. Floor plan is perfect with a seamless flow to the outdoors which offer a private, grassy yard, pool, spa, barbecue area and a waterfall. A rare find! Listed for $5,195,000. Also available for lease $19,500./Month.
Co-listed with John Williams (310) 779-1391 for showings
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The Housing Market is Ready to Enter a Good Cycle
October 3rd, 2012 categories: Real Estate Market Trends, Real Estate News
The latest housing figures, like many from recent months, looks pretty good!
On September 25, the S&P’s Case-Shiller Home Price Index showed a 1.2% price gain in July compared to a year earlier. Prices have risen for 3 consecutive months. The National Association of Realtors (NAR) reported on September 26th that sales of existing homes had risen by 9.3% in August, compared to a year earlier, and that the median price of existing homes sold was up 9.5% over the past year.
For the 12 months ended in July, sales of newly constructed homes were up about 25%, though the total was still only about half of the 700,000 units considered healthy. Experts are especially impressed that prices of the least-expensive third of homes lead the gains, going up a full 1% between June and July. Those homes had received the worst beating in the recent housing market collapse.
Is this the start of the long-awaited housing recovery? YES!
“It’s for real. This is absolutely for real,” says Susan Wachter, professor of real estate at Wharton. The market, she says, is poised to enter a “virtuous cycle” where positive trends will spur more positive trends. “This market recovery will continue,” she says, predicting that rising prices will prod potential buyers to buy before prices go up more. That demand will nudge prices up, drawing in even more buyers. “I have been optimistic about this market for 6 months or a year,” she adds.
From January through July, prices rose 5.9%, the strongest performance in 7 years.
Several factors have combined to strengthen the market such as extraordinarily low mortgage rates- about 3.5% for the standard 30-year, fixed rate loan have allowed millions of homeowners to reduce their monthly payments by refinancing. That has made it easier, and more attractive, to keep making payments even if their homes are “underwater” or worth less than the borrowers owe. And that has helped keep the number of foreclosures from being larger than it has been.
The Federal Reserve has announced its intention to continue its low-rate policy for at least 2 more years. Though other forces, such as action in the bond markets, could drive mortgage rates up, few experts expect that to happen anytime soon, and low rates will make it easier for potential buyers to become actual buyers, maintaining prices stable.
Even though unemployment is still high at over 8%, fewer workers feel the threat of layoffs. The stock market has been very strong, making those with investments feel wealthier. Data on the broad economy, while far from impressive, is generally positive, helping to ease fears of another recession. Taken together, factors such as these have given people a sense that things are getting better. Consequently, consumer confidence has risen.
Now, however, worries about a shadow supply are easing. People are less likely to walk away when they see prices rising. Although more than 20% of homeowners with mortgages remain underwater, many of them presumably want to stay in their homes and would prefer to avoid the taint and financial problems that follow a foreclosure. Even if they think they will remain underwater for years, many will continue making payments, since rising prices make them believe that they will get above water eventually.
Also, once prices stopped falling, investors began to move in, picking up homes and turning them into rentals. Investor demand for these properties appears strong. Prices are low enough to allow investors to purchase and profitably rent these homes until the market recovers.
If you or someone you know is in the market to buy or sell their home, feel free to call or email me for a free consultation. I look forward to working with you!
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