Home Buying

Step by Step
Choose & Meet Your Realtor
Building a solid relationship with a realtor is important. He or she will be
working closely with you in finding the perfect home to meet your unique
needs. Professional realtors have extensive market knowledge and will provide
guidance in your buying process.
Finding the Perfect Home
Your realtor will show you homes based on the criteria that you have
given him. The more precise and direct you are with your realtor, the
more successful your search will be.
Determine the Seller’s Motivation
Once you have found your perfect property, your realtor will research the
homeowner’s motivation for selling, helping leverage your negotiating
power in an offer to purchase.
Offer to Purchase
Your realtor will draft a purchase agreement, advising you on customary
practices, local regulations, and protective contingencies. You will need to
provide an "earnest money" deposit at this time, usually ranging from 1%
to 3% of the purchase price (deposit amount is not cashed until your offer
is accepted by the seller).
Your realtor will present your offer to the seller’s realtor. The seller will then
either accept your offer, counter your offer or reject your offer.
Seller’s Response
You and your realtor will review the seller’s response. Your realtor’s
knowledge of the process and strong negotiating skills will help you reach
an agreement you feel good about.
Open Escrow
Your realtor will open escrow for you once the purchase agreement is
accepted and signed by all parties. Your "earnest money" will be deposited at
this time. All funds associated with your transaction, either held, received, or
distributed, will be handled by your escrow or title company.

Obtaining your mortgage loan

Qualifying for a mortgage loan in today’s market may be tougher than it was just
last year. Lenders have tightened underwriting requirements for the loan approval
process and, in many instances, eliminated “stated income” and “no down
payment” loans. Many borrowers took advantage of these so-called “subprime”
loans over the last few years, but today are among those reported to be having
trouble making their monthly mortgage payments.
Here’s what you need to know about obtaining a mortgage in today’s market:
Understand Interest Rates
Fortunately, interest rates are at their lowest levels in many years, hovering around 6 percent
for a traditional 30-year, fixed-rate mortgage; and about 5.5 percent for a one-year adjustable-
rate mortgage, or ARM. To put the numbers into perspective, interest rates are relatively
close to where they were when the most recent housing boom began in 2000. By contrast,
they climbed as high as 9 percent during the last housing slow-down in the 1990s, and hit 12
percent in the 1980s.
Understand Points
Points are a form of pre-paid interest that you may be required to pay your lender upon the
closing of your loan transaction, above your other fees and interest. There are either origination
points, which cover your lender’s fees, or discount points, known as “buyback” points, which are
paid in exchange for lowering your monthly interest rate. With either option, one point is equal
to 1 percent of your loan amount. For example, one point on a loan for a home in California at
$500,000 would equal $5,000. Points may sometimes be charged based on your credit worthiness
and your debt-to-income ratio.
Get Pre-Approved
Getting pre-approved for a home loan will allow you to take a written letter of pre-approval from a
lender as you shop around for your new home. The pre-approval letter may indicate to a seller that
you are a serious buyer. When you go to a lender for pre-approval, you may be asked to produce
income statements, and have your credit and debt information carefully scrutinized -- be prepared,
and collect all documents ahead of time to facilitate the process. When you are attempting to get preapproved
or apply for a mortgage, lenders will review your credit report, which provides a snapshot of
your borrowing and repayment history, as well as any outstanding debt. A common credit score also is
called a FICO score. (FICO stands for Fair Isaac Corp., the company that developed the scoring method.)
FICO scores range from 300 to 850 points, and are rated poor, fair, good, or excellent, depending on
your debt load and repayment history. A score closer to 850, or excellent, will not only help you qualify
for a loan more easily, but may lower your points and fees. Understand Different Loans
FIXED-RATE LOAN: These loans are designed for those with solid credit histories, relatively
low debt, and who plan to remain in their homes for several years. Fixed-rate
loan payments are predictable and stable since the interest rate is set for the full
length, or term, of the loan. Using a fixed interest rate of 6 percent, a 30-year loan of
$400,000, on a $500,000 home, with a down payment of 20 percent, will produce a
monthly payment of $2,400.
ADJUSTABLE-RATE LOAN: Also known as an ARM loan, these are typically offered at a
lower initial interest rate than traditional fixed-rate loans, and can lower your monthly
payments for a specified time, which can range from a few months to a few years. Your
interest rate, however, will adjust at the end of the specified time period and will readjust
periodically thereafter. Depending on market conditions, the rate could be higher
or lower than your initial rate. A 30-year loan of $400,000 on a $500,000 home, with a
down payment of 20 percent, at an adjustable rate of 5.5 percent for the first 12 months,
will produce an initial monthly payment of $2,270.
JUMBO LOAN: These loans are for buyers who need to borrow amounts greater than
$417,000 for a single family home. Jumbo loans carry more risk and, in turn, often come
with higher interest rates. A 30-year loan of $420,000 for a home priced at $525,000,
with a down payment of 20 percent at a fixed interest rate of 6.7 percent, would produce a
monthly payment of $2,710.
LOANS FOR FIRST-TIME BUYERS: There are several programs available that offer loan assistance
options for first-time-home buyers. FHA-Insured Loans, for example, are insured by the
federal government against default, and are designed to help qualified borrowers who can’t
afford the down payment required by certain lenders. FHA loans provide up to approximately
97 percent financing (meaning the buyer puts down 3 percent), but you may be required to
cover other costs, such as mortgage insurance premiums, and you’ll need to meet certain credit
qualifications. VA Loans are guaranteed by the U.S. Dept. of Veterans Affairs, and offer low- to
no-down payment options for qualified first-time buyers who can provide proof of military service.
You also may want to check with your city government for referrals to local, state and federal programs
that offer home buyers’ assistance for qualified buyers.

Presented by:

Caroline Lesisick & Zeljka Schwachenwald
310.955.8683 310.696.6396
LAXagent@verizon.net Zeljka@shorewood.com

Equity sharing

EQUITY SHARING
While most people want to own a home, young singles and couples often find it impossible to scratch together enough cash to make the purchase. More established folks, too, sometimes discover that the down payment for their dream house is just too big a nut to crack.
It doesn't have to be that way. Simple financial strategies exist that allow disadvantaged buyers to split the cost of a house by sharing the wealth.
"We can do more when we join with other people's money," says Marilyn Sullivan, a real-estate attorney in Arroyo Grande, Calif.
Using a form of co-ownership known as equity-sharing, at least two people or entities can own one piece of real estate, and the second party—often a family member or friend—doesn't have to be a resident. Nor does the second party have to wait until the property is sold in order to benefit from the investment. Indeed, co-owners who itemize can use the arrangement to claim deductions on their income-tax returns.
Here's how to get by with a little help from a friend:
Basic Equity Sharing
In a traditional equity-share arrangement, one party occupies the property and pays for all of the expenses, while a nonresident investor—typically a family member, real-estate investor or the property's seller—supplies all or a portion of the up-front cash.
Mom and Dad might agree to bankroll the down payment in return for a proportional share of the home's appreciation when it is sold. In some cases, the sellers may be willing to take on the investor role if they haven't been able to recoup the full value of their house.
Whoever the investor is, he or she will want to be named on the title along with the occupant. But the investor may not want to be named on the loan. Being on the loan, says Andy Sirkin, a real-estate attorney in San Francisco, may hamper future investments if the investor has other loans, since lenders generally consider excessive debt to be risky.
Once the overall financing is taken care of, there is the matter of rent—and those promised tax benefits.
In equity-sharing, the occupant is required by the Internal Revenue Service to pay rent to the investor for the portion of the property that the investor owns. The amount depends first on what the property could rent for in the open market. Say the fair-market rental value is $2,000 and the investor's ownership stake is 20%. That means $400 a month is owed to the investor.
Then, if the investor pays for expenses such as insurance, maintenance, association dues and property taxes, the rent can just be considered reimbursement for those costs.
The investor can deduct those expenses from his or her taxable income in an amount equal to—and in some cases exceeding—the rental income. If the deductible expenses, which are considered "passive" investment losses, add up to more than the rent, the excess may be carried over to future years or taken as a deduction against other passive investment gains such as those arising from other rental income or the eventual sale of the property.
The success of co-ownership arrangements hinges on having a well-crafted equity-sharing agreement, which spells out various contingencies. The agreement "is critical for managing the tax complexities," says Matthew I. Berger, a real-estate attorney in Santa Barbara, Calif.
There are potential downsides for investors: If the value of the property has declined at the time of the sale, the investor must share the loss. In addition, "they are parking their money and aren't seeing any immediate profits," since the rental income is used to fund property expenses, says Mr. Berger.
Many equity-share or tenancy-in-common agreements, as they're also called, specify that the home has to reach a certain value before it can be sold. But the agreements can specify in some cases what both parties' responsibilities are if the occupant gets a job transfer.
At HomeEquityShare.com, a Web site that matches prospective home buyers with real-estate investors, individuals making successful connections receive a free equity-share agreement. Custom-made agreements prepared by an attorney can cost around $1,000.
Co-Occupiers
A second kind of strategy is known as a co-occupier arrangement, in which at least two parties fund a down payment, pay subsequent homeownership costs, occupy the property together and split the gains or losses from the sale of the home.
One caveat: Co-occupancy loans are typically shared, meaning if one owner skips town, the other is liable for the full loan.
"When you buy something with an unrelated person you are considered to be tenants in common," says Alexander Laufer, a real-estate attorney in Fairfax, Va. In this way of holding property, you can each sell your interest individually and designate who will inherit your interest if you die—otherwise your share of the property would pass to the other owner.
Avoid Personal Loans
Parents might consider making the down payment themselves, thus avoiding the complication of sharing equity. But a parent can't give a child more than $12,000 a year without incurring gift tax.
Parents also might think about making the down payment a loan. But this is a bad idea for several reasons.
The interest payments on the loan—especially if it's from Mom or Dad—won't be tax deductible unless the loan is legally secured by collateral. Moreover, if a mortgage lender is already lined up for the purchase, that lender may see the additional loan as increasing the borrower's risk level, and so increase its rate.
And finally, the ability to claim deductions and avoid taxes in the event of a property exchange requires being co-owners of the property. Just lending the money, says Marc J. Minker, an accountant and financial adviser in New York, is "squandering a tax deduction."
—Ms. Ransom is a staff reporter for The Wall Street Journal in South Brunswick, N.J.
Should You Learn to Share?
Here are some questions you should ask yourself if you're considering equity-sharing:
FOR BUYERS
FOR INVESTORS
• Am I willing to stay in one particular home for five years? Most equity shares have five-year terms, and require that the occupier remain in the arrangement for the full term. You forfeit some of your equity as damages if you end the equity share early.
• Can I afford to tie up money for five years? Although investors are permitted to sell their equity-sharing interests, finding a buyer may be difficult.
• Are my business and personal circumstances stable? Life changes such as a job loss can lead to default and loss of investment if, say, you can no longer afford the household payments.
• Would I feel comfortable delegating control? The everyday management of the equity-share property will be in the hands of the occupier.
• Would I feel comfortable discussing future financial troubles with my investor? The best way to avoid dispute and loss is to discuss trouble early and develop a strategy.
• Am I willing to consider investment decisions from a homeowner's standpoint? For the occupier, the equity-share property is both a home and an investment, and his primary motivation may not be investment return. For the equity share to run smoothly, you will need to compromise on occasions when quality-of-life concerns clash with investment concerns.
• Can I share control of my home? You will need to consult with your investor on major decisions.
Source: The Equity Sharing Manual by Andy Sirkin
Presented by:
Caroline Lessick Zeljka Schwachenwald
310.955.8683 310.696.6396
LAXagent@verizon.net Zeljka@shorewood.com

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Caroline's and Zeljka's video

C.A.R reports Attic ventilation makes a healthy home

If you're like most folks, you've probably never given any consideration to how well ventilated your attic is. But proper attic ventilation is very important to your home's good health, both in summer and winter. In the summer, a good flow of ventilation will remove unwanted heat that is trapped in the attic. That heat can damage the roofing, and it also makes it that much more difficult to keep your home cool.

In the winter, removing attic heat allows the underside of your roof to stay closer to the ambient temperature of the outside air, which helps prevent ice damming. And throughout the year, good attic ventilation removes excess moisture before it can accumulate and create the potential for mold growth or damage to wooden structural members.Properly installed, attic ventilation works on the natural passive movement of air. For the typical attic, this means a combination of low vents along the eaves of the roof, and high vents along roof's ridge.

Since the air in the attic is warmer at the ridge than it is at the eaves, lower temperature air is drawn in through the low vents, pushing the higher temperature air out through the high vents. While the movement of air is more dramatic in the summer when attic temperature differentials are higher, this movement actually occurs at all times and in all temperatures.

VENTILATION REQUIREMENTS

How much ventilation your attic needs depends on the size of your house and, to some degree, its shape. To determine ventilation requirements, most building codes rely on a simple mathematical formula of 1 square foot of ventilation area for every 300 square feet of attic area. For example, if your home has 1,500 square feet of living space, you would need 5 square feet of vent area to provide an adequate amount of air flow (1,500 square feet divided by 300 = 5). Since it is the passive movement of the air through the attic that creates the ventilation, the placement of the vents is a very important consideration in how effective they will be.

They need to be installed so that roughly half are in high locations along the ridge or in the gable ends, and half are placed low along the eaves.Attached garages can add to the ventilation load of the home as well. If your home has an attached garage and the attic of the garage is continuous with the attic of the house, then the square footage of the garage needs to be included as well. For example, if your 1,500 square foot home has a 500 square foot attached garage and the attics are continuous with one another, then the required vent area goes from 5 square feet to 6.67 square feet (1,500 square feet + 500 square feet = 2,000, divided by 300 = 6.67). If the garage is attached to the house but the attics are not continuous, you have a slightly different situation.

Because the attic of the garage is still going to get warm (even if the garage does not have a ceiling), that heat is still going to have an impact on both the garage roofing and the heat being transferred to the house, not to mention on the garage itself and all its contents. Therefore, the garage attic needs to be ventilated as well. You can use the same 1:300 formula, but the square-foot requirements and the layout of the vent locations for the garage should be considered independently of the house attic.

NET-FREE AREA

If you were to purchase a vent that is 12 inches by 12 inches (one square foot) in overall size, you would not actually be getting one square foot of ventilation area. The framework of the vent and especially the insect screening in it reduces the overall amount of area that the air can actually pass through -- sometimes by as much as half.For that reason, vents are rated in net-free area (NFA), which is the actual amount of open ventilation area that the vent contains after deducting out all of the space taken up by the frame and the screening.

The exact NFA will be printed directly on the vent by the manufacturer, and it's important to utilize this number as opposed to the overall size of the vent in making your calculations for how many vents you will need.With whatever type of vents you use, remember to keep them free of insulation and other debris that reduce their effectiveness, and to be certain that all bathroom, kitchen and other exhaust fans in the house are vented all the way to the outside, not into the attic.

Reprinted with a permission of California Association of Realtors.

From June 18th,2007

C.A.R reports Where are today's real estate bargains?

The housing market is soft. Hard times for some can mean opportunity time for others. Could now be a good time to step into the housing market and pick up a bargain?Generally, it is a better time to be a buyer than a seller, but this is not so in every market. In San Francisco, for example, there are still more buyers than sellers for prime upper-end properties. You're not likely to pick up a bargain there.

Many more markets are suffering from too much inventory and too few buyers. These markets would seem to offer the best opportunities. However, this is not necessarily so. Even though the price you pay is relatively low, it could take some time before the value of your investment increases.Anecdotal evidence suggests that the best housing investments are properties that are always in demand.

These are well-planned and well-constructed homes in prime locations that appeal to a wide cross section of home buyers. In a strong seller's market, virtually all listings sell if the inventory is low enough. For example, a small two-bedroom, one-bath home on a substandard lot in Rockridge, a trendy Oakland, Calif., neighborhood, might be snapped up quickly in a seller's market, and buyers feel an urgency to buy before prices rise further. In August, there was such a listing on the market in Rockridge. By mid-September, it had received no offers, even after a price reduction that would have triggered multiple offers in a stronger market.

HOUSE HUNTING TIP: Property that's not selling isn't necessarily a bargain if no one wants to buy it. A foreclosure that's selling for less than the defaulting owner paid for it isn't a bargain unless there is clearly upside potential.A property in a good location that suffers from deferred maintenance could be a prime property in the future. That is, as long as it doesn't have incurable defects, like the two-bedroom, one-bath home on a small lot with no expansion potential mentioned above. These starter homes sell well in a hot market.

The demand dries up quickly when the market slows because these homes don't satisfy most buyers' long-term needs.Good candidates are properties that are located in areas close to urban centers with good transportation and where the population is growing faster than new homes in the area are being built. These locations could be the next hot spots when the market turns around. Buyers have the luxury of being selective when there is a lot of inventory on the market. Before you waste time negotiating on a deal that can never come together on terms that you can accept, find out about the seller's situation.

Sellers who bought within the last few years may not be able to offer their property at a price that makes it a good deal for you. Many who bought in competition paid significantly more than the buyer who made the second to the best offer. In other words, they paid too much. Also, many buyers who bought in a multiple-offer competition bought the property "as is" regarding deferred maintenance. To make matters worse, some of these buyers waived their right to inspect the property. To avoid making this mistake, have any property you're seriously considering well inspected. And, keep in mind that a seller who paid a premium price for a property that he didn't inspect might not be willing or able to sell it to you at a price that's reasonable given current market conditions.

THE CLOSING: There are good buying opportunities in the current market for well-qualified buyers. Just make sure that you pick your bargains carefully.

Reprinted with a permission of California Association of Realtors.

From November 16th, 2007.

C.A.R reports Don't fix your house before you own it

Recently, a couple buying a home in the desirable Upper Rockridge neighborhood in Oakland, Calif., asked the seller if they could have some work done to the property before closing. Ordinarily, this is something that real estate agents discourage for a number of reasons.

However, in this case, the buyers wanted to have a chemical treatment done that was recommended in the wood pest inspection report. They have a baby and didn't want to risk exposing their young child to chemicals by having the work done while they were living there. The sellers were already out of the house, so they agreed to let the buyers have the work done early.An amendment to the contract was drawn up stipulating that the buyers could have the work done before closing, at their expense.

The buyers had purchased the property in its "as is" condition; the sellers weren't required to have this work done. The buyers' loan was formally approved; all contract contingencies had been removed. The work was scheduled for one week before closing. The risk factor in the above scenario was minimal. The work was being done by the sellers' pest company. The sellers knew the contractor and trusted that the work would be done properly. The cost of the work was $1,100 -- not an insignificant amount, but not a huge amount either.

The deal was firm and the buyers had made a considerable good faith deposit that would be at risk if they backed out at the last minute.In a worst-case scenario, if the buyers defaulted and the sellers had to remarket the property, it would be in better condition that it was the first time around.

HOUSE HUNTING TIP: In most cases, it's risky for buyers to have work done on a property they don't own. If the deal falls apart, the buyers have paid to improve someone else's property. The sellers could be left with a job that's half completed, or one that's done badly, which will need to be corrected before the house can go back on the market.It might seem like a good idea to have work done before closing, particularly if the house is vacant and no one will be disturbed by work in progress.

Refinishing hardwood floors and interior painting in particular are jobs best done when no one's around. From the buyer's standpoint, you could be out a sizable amount of money if for some reason the transaction never closes. Usually, neither buyer nor seller is happy when a deal collapses. Chances are slim that the seller will be inclined to reimburse you for your costs.Then there are concerns about such issues as to who's responsible if someone is hurt on the property during the course of the job.

And, who pays for damage inadvertently caused by one of the contractors? Some contractors won't do work on a property for someone who isn't an owner. In the above example, the contractor required that the work be authorized and scheduled by the property owner -- not the buyer -- even though the buyer was paying for the job.The sellers have potentially more to lose by letting a buyer do work before close. If the buyer doesn't close, they could be left with a mess to clean up before they can resell the property. This could cost a lot of time and money, not to mention inconvenience.

THE CLOSING: A better solution to buyers doing work before they own a home is for the buyers to delay their move-in date and schedule fix-up work to start the day the transaction closes.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

From April 20th,2007

C.A.R reports Why "silent" second mortgages are so risky

The term "silent second" is used to describe self-serving or perhaps fraudulent schemes where house sellers accept second mortgages as part of a sale transaction, without the full knowledge of the first mortgage lender. The "silence" refers to the absence of full disclosure to the first mortgage lender.

The smaller of the frauds arises when the second mortgage replaces part or all of a down payment. For example, the buyer and seller agree on a price of $200,000; the buyer has a commitment for a first mortgage loan of $180,000, but doesn't have the $20,000 required for the down payment. To make the deal work, the seller agrees to accept a silent second mortgage for $15,000. As far as the first mortgage lender knows, the down payment is $20,000, but in fact, it is only $5,000.

The silent second increases risk to the first mortgage lender because it takes only a 2.5 percent decline in home value to eliminate the borrower's equity -- rather than the 10 percent decline that the lender counted on. When equity is depleted, some borrowers stop paying on their mortgages.This silent second is also risky to the seller because it can't be recorded at the time of the sale -- that would give the game away.

This means that the seller has an unsecured loan until the transaction is completed and the lien can be recorded. How long the seller must wait before recording the lien is negotiated between the parties. The longer the seller waits, the greater the risk that other liens will be placed on the property, which will endanger the silent second. An even more serious deception of the first mortgage lender arises when the silent second is used to inflate the sale price beyond the true value of the house in order to increase the size of the first mortgage.

Assume the same house as before with buyer and seller agreeing on a true price of $200,000, but in this case the buyer has no down payment. They collude to set a fictitious price of $222,200, on the basis of which the first mortgage lender agrees to lend $200,000. This is 90 percent of $222,200 but 100 percent of the true value of $200,000. The seller agrees to a second mortgage for $22,200.In this case, the first mortgage lender knows about the second mortgage.

What the lender doesn't know -- where the silence comes in -- is that after the transaction is completed the seller will forgive the second mortgage. In this way, the lender is deceived into making a 100 percent loan, believing that it is a 90 percent loan. Borrowing Someone Else's Bank Account to Buy a House"I am in the market for a home. I have good credit but not the substantial assets needed to get a good rate. I know a real estate attorney who will temporarily move me on to one of his bank accounts so I will be able to show stronger reserves.

He charges a small fee for this, and once the deal is funded I will be removed from his account. I really need to know if this transaction is 100 percent legit?"How can showing someone else's money as your own be legit? When you sign the mortgage application, attesting to the truthfulness of the information shown there, you will be perjuring yourself.And to no purpose. Showing higher cash reserves will not get you a better price unless you use the reserves to increase your down payment. This you can't do because the money is not yours to be used. Lenders do want borrowers to have a cash reserve on top of the cash required for down payment and settlement costs.

Flashing someone else's bank account as your own could meet that requirement, but this required reserve is extremely modest, typically amounting to no more than two or three monthly payments. When you buy a house, you can be 100 percent certain that unanticipated expenses will arise. That is what the reserve requirement imposed by lenders is about. If you can't meet their modest requirements with your own funds, you should seriously reconsider whether you are ready to purchase a house. And that lawyer ought to be disbarred.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

From July 31st,2007

C.A.R reports Tips on the art of the home purchase offers

Home buyers now have more negotiating power than they have had in years. However, that doesn't necessarily make it easier to decide how much to offer.The goal is to buy the property at the best price and on the best terms. But, you don't necessarily get there by offering a very low price.One agent was ushered to the front door when he presented an offer for a buyer who thought there was no harm offering way less than the asking price.

The seller was insulted by the buyer's very low offer. After much encouragement by his listing agent, the seller finally issued a counteroffer. But the episode didn't sit well with the seller who was less than cooperative throughout the transaction.Another seller who received a very low offer debated long and hard about whether to counter the offer at all. He was inclined to reject the offer and tell the buyers to make another offer if they really wanted the house. He ended up countering at a price that was close to the asking price to send the message to the buyer that he wasn't giving his house away.Some buyers, particularly in the current market, don't want to make an initial offer that's close to the top price they're willing or able to pay.

They feel that if they do so, they'll have little room to bargain. You don't necessarily need a lot of bargaining leeway to strike a deal. If you start off with a price that is relatively close to the list price, you can stand firm or counter back at your best price along with a take-it-or-leave-it message. Just as a seller can decide not to sell if the price is too low, buyers can decide not to buy unless the price is right. HOUSE HUNTING TIP: Ultimately, your decision about what price to offer should be based on a careful analysis of your own financial situation. Other considerations are how well the house is priced for the market, current market conditions and anything you can learn about the seller's motivation level.In some markets, there's a wide range of pricing strategies. Sellers who understand the current market and who want their listing to sell within months and not years, price competitively.

Other sellers with unrealistic expectations overprice their homes, thinking their property has appreciated more than it has. In most areas, appreciation is flat at best compared to a year ago. Study the market carefully by looking at any listing that might suit your needs. Keep track of what these listings sell for so that you'll be able to determine if a home is priced right or is overpriced for the market. Even in the current market, there are times when the right offer price might be more than the list price. Buyers recently paid over the asking price on a well priced listing. The seller, who had already bought another property, listed her home for $35,000 less than the more recent comparable sale in the neighborhood. The buyers recognized a good deal and offered to pay $10,000 more than the list price so that the seller would sell to them and not keep the listing on the market until more offers showed up.

The seller had hoped that her competitive price would generate multiple offers and a higher price. But she was sufficiently intrigued by the over-asking price offer that she accepted it.

THE CLOSING: Your offer should be good enough price wise to catch the seller's attention. But, it shouldn't be for more than you can afford, and it should be justifiable given current market conditions.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

FromDecemebr 12th,2006

C.A.R reports Open House Don'ts

We spent some time over the weekend visiting some open houses. While we're not seriously thinking about moving,we'd like to see what's going on in our neighborhood.The thing we've learned recently is how sophisticated sellers in our neighborhood have become. For the most part, each home is a shining example of how to make lemonade with the lemons that exist in your own house. Mostly, the houses looked as if they've been staged into a showpiece that's really appealing.But one house we visited over the weekend had a classic case of what we call "Open House Don'ts." These are things you don't want to do if you've listed your house for sale:

DON'T leave dirty clothes all over the bedroom floor, your bed, in the bathtub or even in the laundry room. No one wants to see your dirty underwear, or even your son's sweater draped over a chair. Dirty clothes belong in a hamper. And, don't forget to make your bed.

DON'T leave dirty dishes in the sink, on the counter or anywhere except in a dishwasher. And even then, you should run the dishwasher so that you have time to empty it before you get out of the way for the showing. No one wants to imagine what you made for dinner last night. Be sure to sweep the house for coffee cups, milk or sippy cups, or other remnants of late-night snacking.

DON'T leave a filthy house, hoping the buyers will see past the dustballs near the couch -- they won't, and as they run their fingers over your dusty window frame, they'll just wonder what other maintenance projects you've let slip.

DON'T allow odors from pets, babies or other unappetizing smells (think bathrooms, garbage and smelly cheese in the refrigerator) to permeate your home. If you think your home might smell bad, ask a neighbor to give it a "whiff test." If your house does smell bad, don't try to mask it with a spray. Buy a roll of refrigerated cookie dough and slice and bake some on a piece of tinfoil just before the showing. It'll make your house smell good enough to eat.

DON'T assume Mother Nature is your friend. Prepare for whatever weather is seasonally appropriate. If it's winter, then be sure your walk is shoveled and salted. If it's wet, be sure to leave out a tray for wet boots. And while we're on the subject …

DON'T assume that prospective buyers will treat your house as if it were already theirs. If you don't want muddy shoes or boots on your white carpets, create a nice laminated sign that nicely asks everyone to remove their shoes. Then, provide a basket of booties or socks for buyers and agents to slip on as they walk through your home.

DON'T leave vacant rooms filled with junk, toys or spillover messes from other rooms. If you're lucky enough to have too much space in your house, make sure your empty rooms are pristine.

DON'T leave personal information such as mail or bills out in the open where anyone can see it. Be sure to lock down your computer and lock up your laptop and any other expensive, easy-to-pocket electronics, like iPods, before your showing.

DON'T leave money, jewelry or other valuables out in the open or even in typical hiding places, like the top dresser drawer. Invest in a safe or put your valuables in a brown paper bag and hide them somewhere unusual, perhaps in a box at the top of the closet, or in the basement.

DON'T use boxes and extra furniture to hide problems in your basement or attic. Don't use paint to cover up perennial problems. In other words, fix the leak, don't just paint over it.

DON'T leave your house in the dark. People want to buy light, bright homes. As you walk through the house for the final check before you clear out for the showing, be sure to turn on all the lights, including closet lights. While you may pay a few bucks more on your electric bill, a dark house simply won't sell.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

From March 23rd,2007

C.A.R reports Pros and Cons of Buying a home in today's market

When the housing market slows down, buyers often wait on the sidelines for a clear sign that the market has recovered. The only problem with this strategy is that you can only know for sure that a market has turned through hindsight. In other words, you can't time the market.

A slow market is perceived as an opportunity by some buyers, as it takes longer for listings to sell. The inventory of unsold listings tends to grow, giving buyers more choice than is the case in a hot seller's market when listings sell quickly.In a high-inventory market, there are usually fewer multiple offers so buyers can cut a better deal with the seller. However, it pays to be careful about what you buy and how you finance the purchase.

HOUSE HUNTING TIP: The least expensive home in an area may not be the best investment. Unless you are a contractor with years of experience fixing up properties, you should hire the best inspectors you can find to look carefully at the condition of a property before you buy. Many home buyers, particular first-timers, don't give enough attention to the cost of maintaining a home. Home maintenance is a necessary part of home ownership.

It can be expensive, particularly if you need to hire others to do the work.Some homes require more maintenance than others. A good inspector should be able to give you a good indication about how much work a home needs now and how much it will need on an ongoing basis. Buying a well-maintained home that will also have relatively low ongoing maintenance is one way to keep your overall housing costs down.

Inexperienced home buyers should resist buying a fixer-upper just because it's offered at a cheap price for the neighborhood. It's difficult to get a firm grasp on renovation costs during the inspection contingency period, particularly if it's a big job. Remodeling projects can run over budget because of unanticipated problems like faulty electrical or plumbing, or an old furnace that goes bad. Or the city inspector could require that you do additional work to correct non-code-complying improvements done by previous owners. These sorts of costs can mount up so that you end up with far more invested in the property than it's worth on the market.Try to avoid buying a home that has an incurable defect.

This is something that you can't change, like a location next to a freeway. These homes don't hold their value well when the housing market softens.A risk of buying in a slow market is that the value of what you buy might drop before it rises. Or, prices could stay flat for some time, which means that you won't build equity unless you pay down principal on your mortgage. If you should have to move during a time when prices are soft, you might not be able to sell for the amount you paid.

To decrease this risk factor, don't buy for the short term. Give careful consideration to how you finance your purchase. Stay away from mortgages that have short due dates and balloon payments. If the market in your area stays soft for longer than anticipated, you don't want to be caught having to refinance at a time when your home might not appraise for the price you need to complete the transaction.THE CLOSING: A benefit of buying in a soft market is that you have the opportunity to buy at a reasonable price, without having to compete with other buyers. But, it makes no sense if you put yourself at financial risk.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

From Decemebr 17,2007

C.A.R reports Get Started On Your House Hunt

Mortgage interest rates dropped recently and home prices have moderated in many areas, making it a good time to buy. If you've never bought a home before or if you currently own a home but have never bought and sold at the same time, the process can seem intimidating.

You can ease your anxiety by formulating a game plan and by assembling the best team of professionals you can find, including a mortgage person; a real estate agent or two if you're buying and selling in different locations; inspectors; an insurance agent; a closing agent or escrow officer; and an attorney, depending on where you're buying.The two key players on your team are the mortgage person and the real estate agent.

Once you have these selected, they can help you line up the additional help you need. The best recommendations for real estate professionals are from acquaintances who recently had a good experience buying in your area. Be sure to ask if they would use their agent or mortgage person again.The first step is to find out how much you can afford. Most buyers need a mortgage in order to complete a home purchase. A lender will qualify you for a certain loan amount depending on how much cash you have available for a down payment and closing costs -- the various fees associated with buying or selling a home.

Other relevant factors are your credit score, your verifiable income and what type mortgage you decide to use for your purchase. There are a lot of different mortgage options: 30-year fixed-rate mortgages, 15-year fixed, interest-only, as well as various types of adjustable-rate mortgages.HOUSE HUNTING TIP: You can work with a mortgage broker who will shop the mortgage market for you and place your loan package with the lender that offers the best deal. Or, you can work directly with a lender, such as Bank of America or Citibank. Just make sure that you understand what kind of loan is being offered. You might want to consult with an independent party like your accountant or financial advisor to determine which kind of financing is best for you.Once you know how much you can afford, ask your mortgage broker or lender to have you preapproved for the financing you need.

This requires that you complete a loan application and have your credit checked. This will put you in a good bargaining position with the seller.While you're checking on financing, you should also find a real estate agent. If you've never bought a home before, you should use an agent who is a good communicator and who will take the time to explain the process. Also, keep in mind that your agent will be interfacing with the other parties in the transaction. You want someone you trust and who you are sure will represent you professionally and work diligent on your behalf.Repeat home buyers who will be selling and buying using the same agent will also want to make sure that the agent has good marketing skills. It's a benefit if the agent is organized and has good resources.

A good seller's agent can help you get ready to sell your home by creating a task list of the things that need to be done before your home goes on the market. Your listing agent should be able to give you the names of reputable people who can assist you with cleaning, painting, hauling, storing, inspections, staging, landscaping and whatever else you need to prepare your home for a profitable sale.THE CLOSING: With this ground work completed, you are ready to seriously hunt for a home.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

From January 25th, 2008

C.A.R reports Making an attractive home purchase

It's easy to assume that negotiating is adversarial. You, the buyer, are on one side -- the side that wants to buy a property for the lowest price possible. The opposition on the other side is the seller who wants to sell for the highest price possible.

You're locked in a tug of war to see which side will win.It's more productive to look at a negotiation as a problem-solving process. You and the seller may have different ideas about what price the property should sell for. However, you're united in a common goal of consummating a deal. The challenge is to resolve your differences through a process of give and take until you either reach your common goal, or decide to go your separate ways.

Of course, you have to arrive at a mutually agreeable selling price for a sale to go through. Sometimes this will happen quickly; sometimes it's a drawn-out process that can last over days or even weeks.HOUSE HUNTING TIP: Patience can be your ally. Sometimes rushing the process can quicken its demise. In fact, you may be better off waiting before starting the process if you think that the asking price is too high.

For the first time in years, we are in a market where some home sellers -- typically those who bought recently -- won't be able to sell their home for a profit. But, they may need to test the market to be sure.If this is the case, the best negotiating strategy may be to offer nothing until the sellers are close to reducing their asking price.

There can be a benefit to making an offer just before a price reduction is made. If you wait until the price is lowered, you could end up paying a higher price if other buyers suddenly become interested.In order to make sure you know that the sellers are contemplating reducing the price, ask your real estate agent to talk to the sellers' agent and make sure that the sellers are made aware of your interest.

Don't be bashful about the fact that you are interested, but not at the current price. This way, you may receive a call when the sellers decide they'd like to see an offer from you.When you make an offer and there's no competition from other buyers, your initial offer price should leave you room to move up in price. But, it should not be so low that it's insulting to the seller. Otherwise he or she might not respond at all.

An offer that's much lower than the market would give the seller the impression that you can't afford more, so there's no point in issuing a counteroffer.Buyers often think that if they start too high initially, they'll end up paying too much. Your initial offer price should be good enough to entice the seller into a dialogue. It's a price to get the ball rolling. From there, you can move up in small increments, if necessary.Don't get so caught up in negotiating the price that you overlook other opportunities for consensus building. Most good negotiations have a sense of fairness about them.

During the process of your negotiation, you and your agent should brainstorm all the possible ways that you can accommodate the sellers.Do they need a quick close? If so, they might be willing to give more on price for a speedy close. However, you might want to hold up offering this information at the beginning of the dialogue. That way, you have something more of value that you can offer the sellers in exchange for a further price concession.THE CLOSING: When you get close on price, offering to split the difference can put a seal on the deal.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®
From June 18th,2007

C.A.R reports Budgeting

If you want to buy a house, start by estimating what you can afford and making a budget to buy. Many prospective buyers find it difficult to accumulate enough cash for a down payment, especially if they are saddled with heavy debt. With some discipline and creative strategies, you can probably come up with more cash than you think.

Check your current finances and investigate ways to save and raise extra funds:- Write down your monthly income, savings, and spending. If you have a lot of high-interest credit debt, try to move your balances to cheaper cards and plan to spend a year paying off as much of that debt as possible. - Identify your long-term financial goals.

Owning a house may be one, saving enough for retirement may be another. - Make a home-buying savings plan. Open a savings account just for this purpose and make regular deposits, even if you put asidejust $20 a week. - Look for other sources of down payment funds, such as a Roth Individual Retirement Account (IRA).

First-time buyers now have access to $10,000 of these funds penalty-free under certain conditions. - Cut back on non-essential spending. Your friends and relatives will understand that you can't spend $20 to go to dinner and the movies if you say you're saving to buy a house. Your children will understand, too. In fact, saving to buy a house can be a family activity. - Make saving for a house fun. Chart your progress on paper and post it somewhere to remind yourself of your goal.

Raising the Money : 20 ways to come up with a down payment

1. Ask your parents, other relatives or friends for help. If they can't give or loan any money, perhaps they'll agree to co-sign the loan.
2. Sell (or borrow against) other real estate you own.
3. Sell securities you own, or borrow against them through a loan from the stock brokerage.
4. Sell collectibles or heirlooms you own.
5. Cash in (or borrow against) the built-up value of any life insurance you have.
6. Withdraw money from your IRA. If you're a first-time buyer you can pull out $10,000 penalty-free (though you must pay state and federal income tax on it) to put toward your home purchase. If you're not a first-time buyer, pull out the very least amount you must. Otherwise, you will have to pay both the 10 percent penalty and income tax on an early withdrawal.
7. Borrow against your retirement funds. In some cases, the rate on the loan may be as small as 2 percent. If you add too much to your debt burden, however, you may not be approved for a loan.
8. Ask for help from your church, synagogue or other nonprofit organization. Fannie Mae has a "3/2" loan program that allows you to make a 3 percent down payment if a bona fide nonprofit puts down the other 2 percent.
9. Sell a boat, RV or second car you own and use the cash for the down payment. 10. Get a second job. It'll help you raise cash, and the extra income will improve your chances of qualifying for a loan. You can quit later.
11. Look for an investment partner who'll put up some or all of the cash in an equity-sharing partnership. You make the monthly payments and the two of you split the eventual resale profits.
12. Change the withholding taxes, if permitted, on your salary in anticipation of higher deductions when you get a mortgage. Your take-home pay will increase, giving you more funds to put toward a down payment.
13. Look for loan programs such as VA or FHA that require little or nothing down. 14. Use a lease option that lets you rent the house now and buy it after you save. 15. Look for a home with an assumable loan. Instead of buying out the owner's equity, ask the seller to carry back a second mortgage for an equal amount. That way you can buy the home without a down payment.
16. Pawn something you own and use the proceeds for a down payment. You can get the item back after you've moved in and can afford to pay the pawnbroker back.
17. Refinance your car or other vehicles and add the proceeds to your down payment.
18. Offer something other than cash (a car, boat, or collectibles) to the seller in lieu of a cash down payment.
19. Offer your services or expertise to the seller in lieu of a down payment. Some examples include $10,000 worth of auto services if you're a mechanic, dental work if you're a dentist, desktop publishing services if you're a designer, artwork if you're an artist or legal work if you're an attorney.
20. Look for foreclosure properties that require little or no down payment. Some lenders and government agencies will let you buy a foreclosure with no down payment if your credit is good and they're anxious to have the home occupied, or if you have skills (carpentry, landscaping or even painting) that you can use to increase the home's value.

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

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