Home Buying

Here’s what you can expect to find in my new book, “Real Estate Exposed: The Ultimate Roadmap to a More Profitable and Empowered Home Sale.”

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Recently, I published a book entitled “Real Estate Exposed: The Ultimate Roadmap to a More Profitable and Empowered Home Sale.” It’s available on Amazon, but don’t go and buy it just yet—I’m going to be giving it away to you for free if it will be of use to you.

Getting a 10-year fixed loan instead of a 30-year fixed loan will reduce the interest you have to pay and give you more purchasing power as a homebuyer.

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A lot of homebuyers out there are chasing after the 30-year fixed mortgage, but does that make sense in your situation? Today I’ll tell you why I’ve always attained 10-year fixed terms for my loans and how this type of financing can benefit you.

I’ve always done 10-year financing because I’m aware of where I’m at in this stage of my life. When my wife and I bought our first townhome in Hillcrest, we knew we probably wouldn’t be there for 30 years—probably not even for six. Why, then, would we go with a 30-year fixed mortgage, which would raise our interest rate and reduce our purchasing power? For that property, we used a 10/1 ARM loan, and when we sold that house and bought our next one, we had the same type of loan.

The average American stays in their home for about seven to eight years, but in Southern California,...

As an experienced agent, I can confidently say that the real estate business is solely based on relationships. Many of these critical relationships are with our preferred vendors.  Those of us in the real estate industry have learned that if we treat our vendors well, then they will reciprocate the efforts by bending over backward for our clients. Relationships made with our vendors are established over the course of a decade and because each relationship is reliant upon performance if the vendor does not accomplish or exceed our expectations, then, unfortunately, they will no longer be recommended for our clients in the future.  

Recently, I closed a transaction with a buyer who opted to use a recommendation from a friend who is not in the home buying or selling business rather than our professional opinion, which ultimately caused much more stress and aggravation than anticipated. When the buyer and I first met at the end of this past year, I strongly encouraged them to speak to our preferred vendors—particularly my preferred lender.  At that time, he had not previously aligned himself with a mortgage advisor; however, I continued to explain that "although they have competitive rates, it’s all about performance!"

Fast forwarding a few months, the buyer elected to use the lender the friend recommended and we eventually identified a home to move forward with. On the anticipated closing date, the lender was nowhere to be found and the communication between all parties went dark.  The sellers became frantic, which naturally resulted in putting the buyer...

The market continues to heat up for both buyers and sellers with aggressive interest rates and the limited supply and high demand. A lot of buyers out there do not fully understand the types of different agency relationships that exist and their relative importance.

There are essentially three types of agency relationships. The first is "Buyer Agency" which means that there are agents that exclusively represent a buyer's interest during the search and purchase process. The second the relationship is "Seller Agency" which is where listing agents exclusively represent sellers with the sale of their home. Lastly, the third relationship is "Dual Agency." “Dual Agency” is a very misconstrued relationship as these agents represent both buyers and sellers in the same transaction. In this situation, although an agent may have a listing to represent the homeowner for the sale of their home, they also are to advise and consult the prospective buyer in the same transaction. While they are professionally committed to do this, it is almost impossible.

The biggest concern that should be on the buyer’s mindset when working with the seller's agent to represent them in this "Dual Agency" is a conflict of interest. The listing agent’s responsibility is to get their sellers the highest price and best terms. What the buyer may not understand is that in order to put themselves in the best position for negotiation relative to price, repairs, and other terms, they need to have the best representation for their rights as a buyer that is in their interest exclusively. Please feel free to contact our office with any questions regarding agency...

Some homeowners don’t fully understand or appreciate the importance of having a homeowners association. For all they know it is just another monthly payment that they are required to pay. However, what they don’t realize is that HOA’s can add far more value to the neighborhood. Not only do they enforce community rules and guidelines, but they also offer perks. Overall, the association protects the homeowner’s real estate investment.

Standard HOA’s fees include security, common area maintenance and landscaping, water, trash and cable services, complex community amenities (i.e., gyms, pools, spas, and recreational rooms), etc. Most assume that these fees pay for the homeowner’s pro rata share for amenities; however, homeowners often forget that they have several other privileges as a member of the community. For example, HOAs can offer limited liability insurance for their home. Some complexes are required to make necessary exterior repairs so that all homes are up to code and uniform, which helps maintain home values. There are many hidden values in a home being managed by an HOA.

The biggest attribute a homeowners association can offer is that they help communities appreciate over time. Imagine a home in a community in which policies and procedures are not enforced. The surrounding homes may be neglected, poorly maintained, have unkempt landscaping and piled-up trash, or have stored vehicles in the driveway. These “eyesores” can significantly affect the value of the community.

With an HOA regulating policies, homes and their common areas are diligently preserved...

A big part of purchasing a home is doing your due diligence and properly investigating the substantial purchase you are making.  Upon opening up escrow on your new home, you will begin to receive disclosure documents of the seller knowledge of the home (repairs, remodels, etc.) since they have owned it.  In addition to the seller disclosures, you will also have the right to hire an inspector of your choosing to fully inspect the home for you.  This is a very crucial part of the home buying process.  

A few months back, I opened escrow with a client on a home off the I-15 corridor.  The home appeared to be turn-key and in good condition.  The home was nicely staged and had beautiful cosmetic upgrades throughout, including a new kitchen and flooring.  My client was drawn to the home’s new materials and color scheme.  We opened escrow and were able to negotiate favorable terms.  We then received disclosures documenting all the

work that had been done to the home and it turned out the home had been an investment.  The sellers had bought the home and converted the dated older construction into the modernized floor plan we were now seeing.
...

Over the course of the past few months, we have seen some new trends begin to develop regarding the terms buyers are presenting to sellers. In the current market, some buyers developed a defeatist attitude as homes have often been selling above asking price.  This is based on the limited supply of homes and the increased demand for them.  This has forced me to be more creative in order to help buyers engage sellers and get them in the home that they desire. 

We have seen over a dozen situations in which the listing agent has countered the buyers offer with the terms to remove their appraisal contingency within the offer.  One key item for buyers to know is that this contingency is interconnected with the loan approval contingency. If the home in question does not appraise, then the buyer has their loan contingency to protect their interest in moving forward with the deal. 

Buyers are now catching on to this trend and are presenting offers without their appraisal contingency in place out of the gate.  These savvy buyers have quickly realized that they still have their loan contingency.  In other words, they still have their loan contingency to ensure they are approved and can move forward with the qualification and value of the home....

Unlike other states countrywide, California has a property tax of only 1% annually of a home's purchase price.  However, some Californians can be faced with an additional tax called Mello-Roos.  Mello-Roos calls for all newly developed areas that need cooperative homeowner financing to tax the homeowners of the community for building the necessary infrastructure of these districts.  The Mello-Roos funds go toward public facilities and service needs.    

Local developers build these new communities with the expectation that they will be able to function independently. These public facilities are financed through the Mello-Roos Community Facilities District (CFD) semi-annually. Some examples include New Public Roads, Schools, Police Stations, Fire Stations, Libraries, Paramedic & Ambulance Facilities, Natural Gas Pipeline Facilities, Telephone Lines, Electrical Transmission Lines, and a government facility, which is owned and operated by local governments.  

For various reasons, the tax amounts and duration can vary widely from district to district, street to street, and even house to house.  Once a Mello-Roos district has bonds and funding, it then has the authority to issue the necessary public services and facilities.  While each district is unique unto itself, the average bond period for a Mello-Roos bond is...

Over the past year, a large majority of the buyers we worked with were typically drawn towards floor plans that had upgrades throughout the home. There are certain improvements that will speak to buyers and make a difference when selling your house.  However, it is important to make improvements that you will enjoy while living in the house, yet at the same time make sense financially.

The most sought after upgrade for buyers this past year was a fresh coat of paint on the exterior and/or the interior of the home. Choosing a lighter color paint allows each room and the hallways feel much more open and inviting for buyers. There was a strong preference towards neutral and gray tone paints in the interiors of the homes. A couple of popular gray paint tone examples are Sherwin Williams Agreeable Gray or Benjamin Moore Gray Mist.  

Additional home improvements buyers tend to look for are clean, functional and low-maintenance landscaping. An easy-win improvement can be simply applying new mulch, even if you have no plans of changing your existing plants or trees.  Adding new mulch can give the entire landscaped area a refreshed feel and is much less invasive than other options.  This may be crucial in a resale as the front yard is the first impression a buyer will see before stepping foot in your home. 

Another cost-effective home improvement can be adding or changing existing fixtures.  Oftentimes, accessorizing your home with new fixtures can...

In this competitive sellers’ market with little inventory available, home buyers are going head to head and muscling each other out by offering higher prices and attractive terms to the seller which ultimately may be to their own detriment.  However, I recently encountered a situation giving my home buyer a distinct advantage.

One of our lenders had advised me about an advanced approval process that one of my buying clients proceeded with.  The lender and I had the buyer go through the underwriting process with approval already in hand.  The only outstanding item pertaining to the loan was the appraised value.  

After a few weeks of looking for the right home, the buyer and I identified that their preference was to be in 4S Ranch in a four-bedroom floor plan.  When we found our home and drafted the offer, we had the ability and advantage of closing escrow in a very short term (18 days or sooner) with our underwriting approval in hand.  We were able to reduce our closing date from the standard 30 days. 

Also, and most importantly, we were in a position to remove our full loan contingency considering the advanced approval the buyer had already obtained.  This positioned us to beat out five other offers (two of which were priced slightly higher than us) because our buyer not only waived their loan contingency but was also able to close and get the sellers their proceeds quickly.  This advantage ultimately helped them obtain their desired home.  

This is one of many tactics that we now highly...

Buying in a competitive market can be stressful. Here’s how we can reduce the stress for you, especially in this market.

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Many buyers in this market are finding that the homes their agents are showing them are homes that everyone else is already looking at and competing for. As a buyer, you want the right home, you want it now, and you want to stop competing like crazy for it. Right? Here are three strategies that we use day in and day out to get around that competition and find the perfect homes for our buyers:

1. Expired listings. These are properties that were on the market in the past that failed to sell and are now off the market. Maybe they’ve been off the market for a few months, maybe it’s been a few years. Either way, a lot of them may just be waiting for that one call from us to take the leap and sell again. By making the right calls, we are able to find inventory that isn’t yet available to the public.

2. Rentals. A lot of people who have owned rental properties for about a year are seeing their first leases come up and realizing that they either want to sell and cash in on their equity or that they don’t like being a landlord. We aim to turn these owners into sellers by targeting them and letting them know we have buyers ready to purchase their home.

"We use these methods day in and day out."...

Today I’ll be talking about value range pricing. Truthfully, it has no place in today’s market.

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Today we’re going to talk a little about the subject of value range pricing. You may have encountered a situation where this kind of pricing was used—where, instead of simply giving a single number for the list price, the seller says the home is available from $750,000 to $850,000.

But what does this mean, why do sellers use it, and does it make sense in this market?

Well, specifically in today’s low-inventory seller’s market, I hate it. Sellers have control, so they should show it. Personally, I don’t think that value range pricing has a place in this market. In fact, most people outside of our San Diego market have never even heard of it before.

However, between 2009 and 2011 when the market was very distressed, I myself was using value range pricing quite a bit. I used this strategy because back then, you could list a house between $675,000 to $725,000 with an actual goal of only getting $650,000.

In that market, buyers had absolute control. They would go in and make any offer at all. Because of this, sellers and their agents needed to be aware that a $650,000 buyer would be looking in ranges higher than that—up to $750,000 or maybe even $800,000.

Back then, I was playing into the psychology of the buyer. When we listed a home in a range above our goal, we knew the buyer would be tricked into thinking they...

So you’ve been searching for that perfect house to call a ‘home,’ and you finally found one! The price is right and in such a competitive market, you want to make sure you make a good offer so you can guarantee your dream of making this house yours comes true!

Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford
“While it's not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”
This ‘tip’ or ‘step’ really should take place before you start your home search process.

As we’ve mentioned before, getting pre-qualified is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been qualified for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast
“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”

According...

Why is it so difficult to purchase a home in this market? How can homebuyers beat the competition and find the home they want? We have a few tips for you today. 

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There are many frustrated homebuyers in our current market. Every time they see a good house, it already has a bunch of offers on it. How can you find a home in such a competitive market?

Every buyer is doing one of three things:

1. They are looking at Zillow or their other favorite real estate website.

2. They are going to open houses.

3. They are calling the numbers on ‘For Sale’ signs.

So, what is the one thing each of these methods has in common? Buyers are only looking at homes that are available to the public. If you use one of these three sources, then you will not see any unique inventory. You are just looking at the same homes that the entire buyer population is chasing.

Homes tend to go fast in this market, so the homes that are still available are the leftovers. It might feel like you are late to the party because even those homes have multiple offers on them. Since you are only looking at the same houses as everyone else, you are on the road to frustration. Many buyers throw up their hands and say, “That’s it! There’s nothing for me to buy!”...

It's true that homes can be "Plain Janes" when you first move into them. But even the most boring of homes have the potential become beauties with a bit of imagination and some simple enhancements.

If the rooms in your home lack personality, consider adding interest with easy to install features like built-in bookcases, window seats, faux raised paneling, chair rail and ceiling molding. Not only will they add architectural interest to your spaces, but they will add value to your property. Whether you're after period charm or contemporary pizzazz, you can also control clutter or corral collections with easy to accomplish, cost-effective solutions.

Missing Personality in Your Home?

If the square footage and general dimensions of the rooms in your new home meet your needs but don't excite you, analyze what you find appealing in other spaces and places. Like that wall at Starbucks or your friends living room? Determine what it is you like, and consider it for your home. Add personality by painting a wall or adding pattern with drapery fabric, graphic art or patterned rugs. 

But if you yearn for a more finished look or you find the architecture a little bland, consider adding crown molding at the ceiling line, a chair rail for the midsection of the walls, substantial baseboard at floor level or rosettes and corner details for drama. Even for modern surroundings, one can find millwork and trim that add character and distinctive...

If you are thinking of buying a home some time in the near future, you will want to be prepared. Even though you may spend a great deal of time ensuring that you personally are ready, it is just as important to confirm that the current real estate market is suited to your needs.

Here are four aspects of the home buying process to ensure a better overall investment.

If you have questions about your personal financial situation, ask your lender and/or a financial advisor what buying a new home could mean for you.

Asking Home Prices in Your Preferred Neighborhoods

The last thing that you want to do as a new home buyer is to find yourself priced out of a particular neighborhood. In some parts of the country, prices can shoot up rapidly in a very short period of time. Nationwide, the average price of homes increased by 6 percent from May 2016 to June 2016. That may not seem like a lot, until you realize that 6 percent on a $250,000 home is $15,000.

In some cities, double-digit growth over a period of a few years means that homes may be hundreds of thousands of dollars more than they were in 2011 or 2012. Select the neighborhoods that you prefer, and understand how the asking prices in are trending. That will give you a better sense of when to buy.

Dramatic Price Increases in Comparable Neighborhoods

In some cases, dramatic asking prices for new homes might signal an opportunity to wait and see what happens...

The first steps toward buying a new home aren't attending open houses and pouring over online listings. The first step toward home ownership is preparing yourself financially for the commitment of buying a home.

Speak with your lender or a financial advisor to see what kind of down payment makes sense for your financial situation.

Why Do Lenders Require a Down Payment?

One reason lenders require a down payment is that they want to be certain that the borrower is financially invested in the home. In a lender's mind, the larger the down payment, the less likely a buyer is to go into foreclosure on the loan.

How Much Down Payment Do You Need?

Down payments may vary by lender and program. A variety of financing options are available from conventional mortgages to government insured FHA and VA loans.

• A 20 percent down payment is usually the industry standard for a conventional loan. For example, a 20% down payment on a $300,000 home would be $60,000. While this can seem like a lot of money, a significant down payment creates instant equity and the buyer will, in most cases, not be required to purchase private mortgage insurance thus saving money on their monthly payments.
• A lower down payment of 5 to 10 percent is sometimes possible, but will often require mortgage insurance. Private mortgage insurance, or PMI, will drive up the monthly payment but protects the lender...

O lder homes have the potential to be great, but buyers looking for an older home must be careful when making their purchase. Some older properties can be a drain on financial resources, which can reduce the potential for return on investment.

As a buyer of an older property, knowing how to avoid the pitfalls and how to prepare yourself for ownership of an older home can help you make the most of your investment.

Get Multiple Inspections

Schedule multiple inspections of the property as soon as it makes sense. Remember that standard home inspectors may not look at all systems of the house. Fireplaces, chimneys and sewers often fall outside the purview of a standard home inspector.

Find out which systems your home inspector will examine and which systems your home inspector will not assess, then make arrangements to have those other systems examined by experts. 

Some of the major systems of your home, like the roof and windows, are so costly to repair or replace that you may want to get an expert opinion in addition to a standard home inspection. Doing this will give you an additional level of security that will help you avoid costly repairs in the future.

Budget for Upgrades

Older plumbing systems and electrical systems frequently fail to meet the needs of modern homeowners. Old pipes tend to break when undergoing changes and repairs, while an older electrical service may not deliver enough power to modern appliances.

If the home has all of its original plumbing and...