Tuesday, December 24, 2013

How Important Is Down Payment in Determining Default?

Source: DSNews.com

The Federal Housing Finance Agency (FHFA) recently released a working paper on the impact of down payment amounts on loan performance at the GSEs and Federal Housing Administration (FHA). In light of new regulations and increased focus on underwriting standards, the agency issued the findings, and overall found a nonlinear relationship between loan-to-value (LTV) ratio and foreclosure rates.
Making sense of the story
  • For loans with FICO scores of 620 and debt-to-income (DTI) ratios of 31 percent, the foreclosure rate for GSE loans with 100 percent LTV is a little more than twice that of loans with 80 percent LTV.
  • When it comes to FHA loans with the same credit characteristics, the foreclosure rate is almost three times as much among loans with LTVs of 100 percent compared to loans with LTVs of 80 percent.
  • LTV ratios hold a stronger relationship with foreclosure rates among FHA loans than GSE loans.
  • The FHFA found that the LTV-foreclosure rate relationship is sensitive to FICO. This finding was evident when observing various LTV ratios among different classes of FICO scores.
  • According to the FHFA, once LTV rises above 95 percent, the foreclosure rate tends to correlate less with LTV ratio.
  • The relationship between LTV and foreclosure is most dramatic between LTVs of 90 and 95 percent when it comes to FHA loans.
Amid new regulations and increased focus on underwriting standards, the Federal Housing Finance Agency recently released a working paper on the impact of down payment amounts on loan performance at the GSEs and Federal Housing Administration (FHA).

Overall, the federal agency found a nonlinear relationship between loan-to-value (LTV) ratio and foreclosure rates.FHFA also determined that credit score plays an important role alongside LTV ratios in determining the likelihood of foreclosure.
LTV ratios hold a stronger relationship with foreclosure rates among FHA loans than GSE loans, according toFHFA. “The implication is that the same level of change in original LTV requirement would have a larger impact forFHA borrowers than for GSE borrowers,” the FHFA stated in its working paper.
Among loans with FICO scores of 620 and debt-to-income (DTI) ratios of 31 percent, the foreclosure rate for GSE loans with 100 percent LTV is a little more than twice that of loans with 80 percent LTV.
For FHA loans with the same credit characteristics, the foreclosure rate is almost three times as much among loans with LTVs of 100 percent compared to loans with LTVs of 80 percent.
When observing various LTV ratios among different classes of FICO scores, FHFA found, “the LTV-foreclosure rate relationship is sensitive to FICO.”
For example, raising LTV from 80 percent to 90 percent on a loan for a borrower with a FICO score of 620 increased the likelihood of foreclosure by 4.46 percentage points.
Making the same change in LTV to a loan for a borrower with a FICO score of 700 increased the likelihood of foreclosure by half that—2.23 percentage points.
For FHA loans, which are more sensitive to changes in LTVratio, the relationship between LTV and foreclosure is most dramatic between LTVs of 90 and 95 percent. This trend carries across all FICO scores observed.
Once LTV rises above 95 percent, the foreclosure rate tends to correlate less with LTV ratio, according to FHFA.
Meanwhile, DTI ratio correlated strongly with foreclosure rate. “As expected, across all LTV levels, borrowers with a higher DTI had a higher foreclosure rate,” FHFA stated.
However, the “LTV-foreclosure rate relationship has a relatively modest sensitivity to the DTI level,” FHFAfound.
When comparing LTV rates among delinquency rates,FHFA found similar relationships to what it found among LTVs and foreclosures.

Tuesday, October 15, 2013

Coldwell Banker's Cutting Edge Digital Marketing


Marketing a home has changed dramatically in just a few short years. It wasn’t that long ago that selling a property meant sticking a for-sale sign in the front lawn and taking out an ad in the local paper. Those days have changed!

Real estate marketing isn’t just print advertising anymore – or radio, or TV, or direct mail, or even online, social media, blogs or Twitter. It’s ALL of these marketing tools and more. And it’s critical if you’re thinking about selling your home to select a REALTOR® and a brokerage that understands how to market in the digital age.

When it comes to digital and social media marketing, Coldwell Banker Residential Brokerage leads the way.

We deploy a comprehensive, cutting edge marketing strategy that capitalizes on all the important new digital channels without forgetting the traditional marketing tools that still work well.

Why is digital marketing so important when it comes time to sell your home? Consider this:

•On an average day there are more than 400 million tweets, 500 million active LinkedIn and Google Plus accounts and 3.2 billion likes and comments on Facebook;

•More than one billion unique users visit YouTube each month;

•Over 6 billion hours of video are watched each month on YouTube (that’s almost an hour for every person on Earth);

•Nine in 10 homebuyers today rely on the Internet as one of their primary research sources, according to the National Association of REALTORS®.

As the leading brokerage in Northern California, we have been at the forefront of the revolution in real estate marketing, deploying a multi-pronged marketing strategy to reach consumers in the channels they use today – and that’s increasingly online, social media and mobile communications.

While some other real estate brokerages still rely primarily on traditional and limited marketing programs, we understand the vital role that social media and digital sources play in effectively selling a home to modern consumers.

At Coldwell Banker Residential Brokerage, we like to think about real estate marketing as spokes on a wheel. These various marketing tools, like spokes, may be pointing in all different directions. But they all work together, overlapping, reinforcing each other, and all pointing back to the center of the hub. That hub is our website, CaliforniaMoves.com, and by driving traffic to it, we are also increasing the visibility of your listing.

Earlier this year, we launched a comprehensive new digital marketing initiative which leverages Google advertising, local TV station websites, a wide variety of popular real estate sites, YouTube videos, Facebook, Twitter, and many of the other top-ranked social media sites -– in addition to major print publications.

It’s estimated that this new digital marketing program will attract an additional three million viewers every month and help drive more potential buyers to CaliforniaMoves.com, our Coldwell Banker Residential Brokerage website, and again, ultimately to your listing.

Real estate marketing has indeed changed dramatically over the years. So it’s more important than ever to work with a REALTOR® that “gets it” and truly understands how to use a cutting-edge digital marketing program to sell your home.

For more information about Coldwell Banker Residential Brokerage’s digital marketing strategy and how it can help you sell your property or help you find your next home, please contact me today. I’m ready to help! Visit me at www.RealtorLisaWu.com 

©2013 Coldwell Banker Real Estate LLC. All Rights Reserved. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Coldwell Banker Residential Brokerage Office Is Owned by a Subsidiary of NRT LLC. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. BRE License #01908304

Thursday, October 3, 2013

What Foreign Buyers Need to Know About Buying a US Property

Source: Bay East Association of Realtors
Summer 2013

The United States places very few restrictions non-US citizens buying, selling and owning real estate in the United States. As an international buyer purchasing property in the United States you may acquire, transfer, or be involved in a real estate transaction without the permission or approval from any federal, state, or local government. However, there are some countries that may place restrictions on its own citizens from buying real estate in the US – therefore you should check the rules of your country to verify you are not under any home country restrictions.
Buying real estate in the US is safe and secure, as all transactions are subject to US contract law and are handled by neutral third party escrow companies who oversee all aspects of the transaction between seller and buyer. For a successful efficient transaction, international buyers should have a good REALTOR®, a good attorney, and if you are financing, be working with a good bank.
International buyers and sellers also need to comply with visitor visas and immigration laws, federal taxation rules and reporting and compliance.

Withholding of Tax on Dispositions of U.S. Real Property Interests

This article, from the IRS, explains the rules for proper withholding of tax on the dispositions of U.S. Real Property interest. It also clarifies who is obligated to conduct the required withholding of tax upon the foreign investor’s disposition of real property interests.
For more details Visit Me at www.RealtorLisaWu.com

Survey: 1 in 3 Buyers Would Bid Over the Asking Price

Source: Inman News July 2013

One in 3 buyers are willing to bid higher than a home’s asking price, according to a survey conducted by Trulia in partnership with Harris Interactive.

That was just one of several other findings of the survey that appear to show that homebuyers are feeling the squeeze of market conditions that are significantly altered from those of a year ago. At the same time, they capture improved sentiment towards the housing market.

Today’s tight home inventory appears to be pushing some buyers to use aggressive tactics to beat out competing buyers, the survey found. In addition to a third of buyers being willing to make above-market offers, 1 in 4 said that they would offer to pay a seller’s closing costs.

“Tight inventory means slim pickings for buyers. Even though inventory is starting to expand, and rising home prices should bring more for-sale homes onto the market, people who actually want to buy within the next year are feeling the pressure of competing buyers and limited inventory,” wrote Trulia Chief Economist Jed Kolko in blog post about the survey.

Also seemingly a symptom of today’s limited housing stock, homebuyers who plan to buy within the next year said that finding a home that they like is their biggest worry.

And highlighting two other defining characteristics of today’s market, consumers who said they might buy someday indicated that their two greatest fears were that mortgage rates and home prices would rise further.

But in a sign that people’s attitudes towards homeownership have recovered significantly since the downturn, 60 percent of respondents said that they thought homeownership is one of the best long-term investments they could make, up from 47 percent two years ago.

Thursday, September 5, 2013

For Sale By Owner (FSBO): The Drawbacks of Going it Alone on a Home Sale

With housing on the upturn, multiple offers and rising sales prices are being reported in our market. Some potential home sellers might think that selling their home simply requires placing a “for sale” sign in their front yard. Many sellers have learned the hard way that selling a home in today’s marketplace is much more difficult than they imagined; their efforts to save money on commissions may have been more costly than they anticipated.
Before venturing into doing the do-it-yourself option of being a for-sale by owner (FSBO), you need to fully understand what is involved in the selling of real estate and then compare the perceived advantages and the actual disadvantages of trying to sell your property on your own.
Here are seven good reasons why hiring an experienced professional REALTOR® may actually net you more money on the sale of your home when all is said and done – as well as save you countless hours, headaches and stress in the process:

Being a FSBO may not actually save you as much as you think. While you might save some of the cost of hiring a professional real estate agent to represent you, you may still need to pay 2 percent or more to the buyer’s agent in order to attract a larger pool of buyers. Additionally, the true “savings” may be far less after you add all the other costs associated with selling – advertising, brochures and flyers, for-sale signs, attorney fees to draw up documents, etc.

You may get less for your home. The National Association of REALTORS® found that the typical FSBO home sold for $174,900 compared to a sales price of $215,000 for agent-assisted sales. That equates to an 18 percent loss for those do-it-yourselfers hoping to save a 6 percent commission. In addition, prospective buyers of a FSBO property, looking for a bargain, may automatically reduce their offer by the amount of the real estate commission the seller is attempting to avoid paying.

A LOT goes into selling a home. Less than 10 percent of sellers sold their home on their own last year, according to NAR®. Novice sellers may think you just stick a for-sale sign in the front lawn and buyers will beat a path to your door. Guess again! Professional agents develop comprehensive marketing plans, take professional photos, manage inspections and appraisers, oversee staging, hold open houses, place print and online ads, seek out potential buyers and negotiate with the buyer’s agents to get the best price possible for their seller. Homeowners need to ask themselves if they are ready and capable to do all of that work on their own.

FSBOs limit their potential pool of buyers. FSBO properties are usually not listed on as many of the home search engines and websites as listings handled by real estate agents. This is problematic given that 90 percent of buyers use the Internet to commence their home search, according to NAR®. Also, FSBOs typically can’t put the advertising, marketing and networking resources into reaching as many potential buyers as real estate professionals do. And with commissions reduced or even eliminated for buyer’s agents, there’s little incentive for real estate agents to show your home to their clients.

Setting the right listing price is hard to do. Real estate professionals review comparable sales and local market conditions, as well as the pluses and minuses of your home as they suggest the list price. As an owner, you may not have a clear or objective sense of what that price should be. The right price may get your home multiple offers and perhaps even bids over the asking price. However, if the list price too high then many potential buyers may not even look at your home, let alone make an offer. On the flip side, you could undervalue your home’s features that may justify a higher sale price.

It’s not always easy to be a “closer.” Getting a potential buyer to make an offer isn’t the end of the process. It is not uncommon for agents representing buyers and sellers to negotiate back and forth on many of the terms in the purchase contract, including price, occupancy requirements and other conditions of sale – and there are often additional negotiations regarding credits and repairs during the escrow process. FSBOs may find themselves sitting across from an experienced “closer” looking to drive a hard bargain and cut the best deal for themselves rather than working to reach a “fair” compromise between both parties. This is a critical part of the transaction; FSBOs should ask themselves who is looking out for their best interests? Working with a professional REALTOR® could help sellers avoid several of the pitfalls during the negotiation and closing processes.

Legal landmines in selling a home. There are a myriad of potential legal landmines for FSBOs. Who will write the purchase contract? What if a buyer’s contract proposal has clauses and other terms that could be detrimental to you? Sellers are obligated to disclose all material facts about their property and any omission or incorrect information could later be grounds for a claim or lawsuit. A REALTOR® can help you through that process by providing you with the correct advisories and disclosure forms.

Selling a home is a lot harder than most people realize, even in a good market. And it’s very easy for non-professionals to make mistakes along the way that will end up costing them in the long run. With the sale of a home being the single biggest transaction most of us will ever make, this is the time to use an experienced REALTOR® to manage the process. I’m ready to help. Visti me at  www.RealtorLisaWu.com

Tuesday, June 25, 2013

The Downsides of Cash Purchase Offers

Source: The Wall Street Journal 
June 14. 2013
All-cash offers usually trump all others because the seller can be sure that the lender won’t kill the deal by not approving the buyer’s financing or appraisal. Since cash buyers can close quickly, sellers who are ready to move on with another home purchase find that a plus, too. So cash buyers often can buy a house for less money than someone who must get a mortgage. However, there is a downside. Without a bank as a backstop, one can easily make a mistake, and the consequences will be the buyer’s responsibly alone.
  • Most buyers find getting a mortgage to be a nail-biting hassle because they have to go through various levels of approvals. They must make a down payment, meet loan-to-value ratios, and pay for independent  appraisals, title insurance, and homeowner’s insurance. These precautions are done for the bank’s protection and not the buyer’s. But they have the ancillary effect of protecting buyers who may be swept away by emotion after finding their dream home and making a purchase they shouldn’t.
  • Consider appraisals: Lenders always require them, but cash buyers rarely get them. Instead, cash buyers rely solely on comparable sales supplied by their agents, or plucked from websites such as Trulia or Zillow, to give them an idea of what to pay for a house.
  • In some cases, cash buyers don’t carefully compare the square footage, number of rooms, quality of construction, and other factors that appraisers do when they rule on a house’s worth. So the possibility that cash buyers could pay more than market value for a home is very real.
  • Ironically, there is a possibility that a cash buyer could lose a house in a bidding war because they bid too low, assuming that sellers will automatically choose cash over a mortgage. That is not always the case, especially if the buyers are prequalified and the sellers don’t need a quick closing.
  • In rapidly heating markets, some cash buyers may forego inspections to make their offers irresistible. That is one of the worst mistakes any buyer can make, since serious flaws can be hard to detect for untrained eyes.
  • Cash buyers also may be tempted to forgo getting title insurance, which protects them from claims made by previous owners, and even homeowner's insurance, which could have devastating consequences should the home be involved in a fire or other disaster.
So remember: Cash may be king, but it also may make you careless. Think like a bank, and protect yourself.

Wednesday, June 12, 2013

Home Builders Building Homes that Young Buyers Want

Source: NAHB - National Association of Home Builders

Home Builders Building Homes that Young Buyers Want, Says NAHB
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June 3, 2013 - During National Homeownership Month in June, the National Association of Home Builders (NAHB) is telling young people that the time is right to buy a home, and the nation’s builders are building the homes they want.
“As the economy recovers and young people who had to live at home with their parents move forward with their lives and achieve their dreams of homeownership, home builders are delivering homes that cater to the floor plans, features and affordability that this generation desires,” said NAHB Chairman Rick Judson, a home builder and developer from Charlotte, N.C.
More than 80 percent of Generation Y home buyers—people born in 1977 or later—said in NAHB’s 2012 consumer preference survey they prefer a highly energy efficient home that results in lower utility bills during the home’s lifetime over a lower-priced home without energy efficient features. Today’s new homes feature ENERGY STAR-rated appliances; windows, doors and insulation that better control the home’s interior climate; and other modern components such as tankless water heaters and HVAC systems that save costs on utility bills.
And cost-conscious young buyers will be happy to hear that a new home actually costs less to maintain than an older home. An NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Plus, mortgage rates are still very low, bolstering affordability for home buyers.
Generation Y buyers favor media and game rooms more than any other specialty rooms for their next home. New homes today not only contain these spaces, they are outfitted with the state-of-the-art electronic and wiring components that can accommodate high-definition televisions, full-house sound systems, hard-wired fire and security alarms and more.  
Young buyers can check out many of the outstanding designs and features being included in homes built by NAHB members at our social media communities facebook.com/homebuildrspinterest.com/nahbhome and google.com/+nahb. They can also access home buying and home building information and resources on NAHB’s website at nahb.org/forconsumers.

“The time has never been better for young people to become home owners, whether it be a new home or existing,” said Judson. “There are outstanding opportunities in the current market, with near record low interest rates, competitive prices and new homes being built that include open layouts, energy efficient components and other features that cater to young buyers.”

Housing Market Summer 2013

Source: The Los Angeles Times

Better times for home buyers will take a few years, experts say...
Low inventory and rising home prices are frustrating to many buyers, but unfortunately would-be buyers may have to wait a few more years for relief, according to experts.

Making sense of the story
  • Institutional investors, who have been driving the market with their all-cash purchases and buying houses for rental income, need to be in and out in two to three years, according to one real estate analyst. Otherwise they cannot make a profit.
  • For housing to normalize, individuals will need to come back to the marketplace and that will be driven by employment.
  • Among the signs that investors are buying up swaths of homes in a specific area are the lack of bank-owned properties coming on the market despite high foreclosure rates.
  • Consumer understanding has been a step behind what’s happening in the housing market. When the prices started going down, sellers were the last ones that got the memo. Today’s buyers may have to be willing to look in different locations, while prices continue to appreciate.    

Tuesday, June 4, 2013

Home Prices in California - March 2013

Home prices in U.S. cities post big increase in March
Source: Los Angeles Times

Tight housing supply and strong demand continued to fuel a robust market recovery in March, with the Standard & Poor’s/Case-Shiller index of 20 U.S. cities recording a 10.9 percent year-over-year increase.
Talking Points
  • Distressed home sales continued to decline in April, as previously underwater homes rose in value, and the share of REO sales registered in the single-digits for the first time in more than five years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported
  • The combined share of all distressed property sales registered its lowest level since February 2008, dropping to 24.4 percent in April, down from 27.9 percent in March and down from 45.8 percent in April 2012. The share of all distressed sales in most counties also declined significantly from the previous year, with Alameda, Contra Costa, Marin, Orange, San Diego, San Mateo, and Santa Clara registering in the single- or low double-digits in April.
  • The share of equity sales – or non-distressed property sales – now make up more than three-fourths of total sales, the highest share since February 2008. The share of equity sales in April increased to 75.6 percent, up from 72.1 percent in March.  Equity sales made up more than half (54.2 percent) of all sales in April 2012.
  • The available supply of homes was relatively unchanged from March but remained tight. In April, the Unsold Inventory Index for REOs dipped from 1.8 months in March to 1.7 months in April.  At 2.7 months, the supply of short sales remained unchanged in April.  The April Unsold Inventory Index for equity sales was 2.9 months, down from 3 months in March.

How Much Mortgage Loan You Can Qualify?

Fixed-rate jumbo mortgages make a comeback
Source: The Wall Street Journal

Just a year ago, 30-year, fixed-rate jumbo mortgages were hard to find in some high-price markets. Now, many lenders are offering fixed jumbos – with very competitive rates.
Making sense of the story
  • A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits imposed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. The conforming loan limit is $417,000 in most parts of the United States, but is $625,500 in the highest-cost areas, which includes California.
  • During the mortgage crisis, the vast majority of jumbos were adjustable-rate mortgages and hybrid adjustable-rate mortgages, which started at low fixed rates and switched to adjustable interest rates at the end of a set time period – typically of five, seven, or 10 years.
  • With the renewal of the secondary market for jumbo mortgages, more lenders today are willing to offer fixed-rates. Packaging the loans into mortgage-backed securities that are sold to investors can lessen the risk to lenders.
  • While interest rates for jumbo mortgages are significantly lower than a year ago, hybrid ARMs remain attractive to borrowers with other financial priorities.
  • The general wisdom when deciding between an ARM and a fixed jumbo is the same as with any mortgage. Borrowers should consider the length of time they plan to live in the house. If the length of time is near or less than the length of the ARM, then borrowers will save money with the ARM.
  • Still, borrowers should keep in mind that some lenders will push hybrid ARMs because the lender stands to reap a higher return on investment. Additionally, lower ARM interest rates and monthly payments can free up cash to purchase stocks and other assets.

Tuesday, May 28, 2013

Real Estate Auction Purchases, Foreclosure Auctions (Trustee's Sales) and REO Sales

Top 10 Title Insurance Complications with Auction Purchases, Foreclosure Auctions (Trustee's Sales) and REO Sales
Is the Price Worth the Risk??
Foreclosures and Auctions are situations where real property is auctioned off to the highest bidder without a title policy being issued.  REO (Real Estate Owned) is the sale of real property that a bank has acquired, most often as a result of a foreclosure, and are selling pursuant to a purchase contract which may include only a basic title policy.
For more information, visit www.RealtorLisaWu.com 

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, they are subject to change. Please note that individual situations can vary, therefore, please consult a professional for specific advice.  (Source: CornerStone Title Company)

Wednesday, May 15, 2013

Home Warranty Policy & Coverage Pre- During and/or After Close of Escrow

  • Some sellers wonder whether it is necessary to offer a home warranty, especially when inventory is low like it is currently.
  • The biggest advantage of a home warranty – which covers breakdowns in major systems – is that it is an incentive many buyers value, particularly if they are stretching to buy and don’t have a lot of money left over for repairs.
  • A home warranty is a relatively expensive form of insurance, and will set back the purchaser several hundred dollars, depending on the coverage selected. Also, there is a service fee for each call, which can be more than $100.
  • Home warranties have limitations. They don’t cover static elements like the roof or siding, but do cover operating systems that often fail, like major appliances including garbage disposals, electrical wiring, plumbing, and heating and air conditioning. Some companies allow the homeowner to add riders to cover extras like the mechanical elements of a pool system or hot tub.
  • Costs and exclusions vary widely, as do caps on what the warranty company will pay. Some companies also offer less coverage for systems that are near the end of their useful life. As in medical insurance, pre-existing conditions are usually exempted from coverage – and the warranty company makes the call as to whether the condition was pre-existing, as well as to whether the particular system should be replaced or just patched up.     

Sunday, May 5, 2013

How To Be The Most Attractive Home Buyer

Source: Fox Business News

As home prices continue to recover and interest rates remain at near-record lows, many houses are receiving multiple offers and to win the bid, buyers need to stand out from the crowd. According to the CALIFORNIA ASSOCIATION OF REALTORS®’ most-recent housing report, the median number of days it took to sell a single-family home decreased to 29.4 days in March.

Making sense of the story
  • Since markets are moving fast, housing experts recommend buyers have their loan pre-approved and their down payment ready before starting their search. With low inventory and demand high, buyers need to know their parameters.
  • Multiple offers are become the norm, so buyers need to be ready to compete and do their homework to seal the deal. The longer the negotiations, the bigger the chance a buyer could lose out to someone else who made a better offer.
  • Buyers also must be reasonable without being difficult because until an offer is signed, sealed, and delivered, other buyers can make offers on the property.
  • Even though it’s a competitive market, buyers should maintain their budget and not pay more for a house than it’s worth. Experts also warn that buyers should not cut corners like skipping the home inspection.
  • To be an attractive home buyer, consumers should plan ahead by checking their credit for accuracy and avoiding making any big purchases or taking on any big debt while house hunting.
  • Buyers who spot a good deal on a house should not wait days to make an offer. Since time is not on the buyer’s side, learning how to spot a great deal by researching an area’s home prices is pertinent.
  • In this market, cash is king. The more cash a buyer has, the more appealing they are as a buyer. Putting down 20 percent or more also makes a buyer look more financially stable and gives sellers comfort that they’ll qualify for a mortgage.                                                                    
  • Having as few contingencies as possible to be an alluring buyer. “Don’t overcomplicate your offer to the seller.”  Certain contingencies based on your ability to get a mortgage, the appraisal and home inspection are standard, but piling on more could make the seller less inclined to work with your offer.
  • Getting prequalified for a mortgage gives a ballpark for what you can afford to buy and will streamline your search process.  If you’re financing your house with a mortgage, have a pre-approval letter with you and if you’re paying cash, have proof of funds that shows you’re good for it.

Wednesday, April 24, 2013

10 Questions to Ask Home Inspectors

  • Whether purchasing a new home or an existing one, most real estate experts recommend buyers get a home inspection.
  • The inspector plays a critical role in the home-buying process, and to the extent you can, it is imperative that buyers verify that person’s credentials are up-to-date and that all of the important details are covered during the inspection.

10 Questions to Ask Home Inspectors

Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors:

1. Will your inspection meet recognized standards? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group’s standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI’s Web site also provides a database of state regulations.

2. Do you belong to a professional home inspector association? There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID.

3. How experienced are you? Ask how long inspectors have been in the profession and how many inspections they’ve completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner.

4. How do you keep your expertise up to date? Inspectors’ commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training.

5. Do you focus on residential inspection? Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular.

6. Will you offer to do repairs or improvements? Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state.

7. How long will the inspection take? On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in.

8. What’s the cost? Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true.

9. What type of inspection report do you provide? Ask to see samples to determine whether you will understand the inspector's reporting style. Also, most inspectors provide their full report within 24 hours of the inspection.

10. Will I be able to attend the inspection? The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector's refusal to let the buyer attend should raise a red flag.

Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org.

Friday, April 5, 2013

How to Compete in a Bidding War for this Seller Market?

Talking Points
  • Bidding wars are back, and while not every local real estate market is experiencing bidding wars, some home buyers find themselves competing for houses because there aren’t many for sale in their neighborhood.
  • To compete in a bidding war, buyers need to prepare financially for the home purchase. They have to familiarize themselves with property values in their target neighborhoods, and they must know what they want.
  • While offering the most money might seem the best way to win a bidding war, sellers don’t always choose the highest offer. Instead, some sellers prefer offers that are the most likely to go through and that meet certain conditions.
  • One way to be competitive in today’s real estate market is to select a lender and loan product, complete everything the lender requires, and have a pre-approval letter in-hand before beginning the house hunt.

Monday, March 18, 2013

More can afford a home, but lenders remain tight-fisted

Nearly half of all California households can now afford the median-priced home in the state – but that’s no help if they can’t get mortgages.
Making sense of the story
  • Six years after the subprime mortgage meltdown, banks remain tight-fisted, even with solid borrowers – a fact they attribute to shifts in government regulation and demands that they buy back bad loans.
  • Mortgage credit has not eased much since 2007, according to Federal Reserve surveys of loan officers, even while low rates and the housing recovery have borrowers lined up seeking financing.
  • First-time buyers and self-employed borrowers must jump through especially complex hoops. Even gold-plated applicants must justify the smallest quirks in their finances in excruciating detail. And, processing applications can take months.
  • Lenders say their cautions stems in part from uncertainty over a tougher new regulatory environment, along with unrelenting demands from government-sponsored mortgage buyers that the banks repurchase soured loans.
  • Salaried professionals with credit scores in the high 700s have the best shot at being approved for a mortgage loan in this environment, along with borrowers who have never missed a payment and want to refinance.
  • However, even these borrowers may face stiff documentation demands, including having to explain any bank deposit other than a regular paycheck.
Source: L.A. Times March 2013

Monday, January 28, 2013

What Should You Aware When Purchasing a Foreclosure Home with Tenants in there?

- Disclosure of Foreclosure to Tenants - 

As of January 1, 2013, property managers and landlords in California are required to disclose in writing to any prospective tenants, if a notice of default has been recorded against the property. The law applies to rentals of single-family homes and apartment buildings of no more than four units.

The disclosure also includes a notice that if a new owner takes ownership of a property following foreclosure, the owner will not be able to evict the tenants without a 90 days written eviction notice, in many cases.

For landlords who violate the disclosure requirement, tenants may be able to void any lease and recover one month’s rent or twice the actual damages—whichever is greater. Tenants may also be able to recover all prepaid rent from the landlord, if the landlord violates the disclosure requirement, according to the new law.

Should the tenant not be notified properly and the property is in escrow, it could delay the closing escrow and issuing title insurance.

If a title company is being asked to insure the sale of the property after a foreclosure, they may require an affidavit from the owner stating, if there are tenants or anyone else in possession of the property.

Source of Information from Cornerstone Title Company - January 2013

Saturday, January 26, 2013

Did Housing Price Went Up 33% or Less? Seller Market! Multiple Offers! Price Bidding Wars!

Data from professional sources such as DataQuick shows 33%
over year increase on median price.

This doesn't mean that the price of a particular house has gone up 33%  over the year,
so don't panic.  The median price is sometimes misleading because it shows the mid 
point of all selling price.  If the mix of people buying more expensive house goes up 
compared to lower priced house, median price goes up even if the price for individual 
house has not moved a single bit.  Also note that the monthly median price figure is
quote volatile (kind of like daily stock price) and can jump up or down significantly
from month to month.

With that said, this median price increase is a combination of the two.  My clients 
are definitely seeing solid competitions in making offers to buy properties.  The low end 
still has the most competitions with lots of investors with tons of cash in the mix.
However, I am seeing more action in the mid-range where many buyers are looking at also.
Whether this price increase will continue in the near term or move up a bit more or slow
down a bit is anybody's guess.  However, I think it is safe to say that the "great real 
estate sale of 2008-2012" is over.  If you still want to own your own place (it is as much
a lifestyle choice as it is a financial decision), time to get moving.

My Real Estate Team is very experienced in negotiation and seasonal advise, which includes among other things, an experienced real estate attorney.  Every transaction that I managed is also reviewed by multiple experienced people to ensure that things are done properly. Over the years, I have helped clients overcoming all sorts of thorny issues, before- during -and -after the real estate transactions,and in many cases, saved them tens of thousands of dollars.  Buying a house is a very important and complicated decision,   Make sure you have the right representation.

Call me when you are ready.  Have you gotten a loan pre-approval yet?  

Friday, January 18, 2013

Loan Modifcation - Red Flag!

Avoiding loan-modification hoaxes
Homeowners wary of being taken in by bogus “loan modification specialists” should not assume that a law office is the most reliable way to work with their lender.  Consumer advocates say a growing number of fraudulent modification services involve lawyers, or people who say they are lawyers.
Making sense of the story
  • Increasingly, lawyers are lending “their names, their offices, their credentials” to fraudulent operations that vaunt superior skills in obtaining loan modifications, according to a senior counselor at the Lawyers’ Committee for Civil Rights Under Law in Washington.
  • While Federal Trade Commission rules generally prohibit demanding upfront fees for mortgage relief services, there is a narrow exception for lawyers.
  • Under the rules, a lawyer may charge clients in advance for assistance if the service is part of their general practice of law, and not outside of that practice.
  • Certainly, many lawyers provide legitimate foreclosure-avoidance services, but borrowers should know that when going to a lawyer whose sole business is loan modifications, that is a red flag.
  • As more homeowners become aware of these tactics, some operations are changing their practices.  Instead of selling loan modification services, they are advertising so-called loan workouts and forensic loan audits. Some are even posing as nonprofit groups.
  • The Homeownership Preservation Foundation and the Lawyers’ Committee both belong to a coalition of public and private agencies that maintain a national database of loan-modification complaints.  Since March 2010, some 28,000 homeowners have reported potential fraud.  Their reported monetary losses total around $66 million.

Monday, January 14, 2013

Friday, January 4, 2013

Have Your Friend Bought a Property at Real Estate Auction? How Do Buyers to Determine - It's a "Good or Fair" Deal or Value of the Property Bought? How Much The Closing Costs, Premium plus Offered Price?

Talking Points
  • Many home buyers think that real estate auctions are the best way to get a good deal on a home.  While there are certainly deals to be had, auctions also can be dangerous for buyers.
  • Buyers planning to attend an auction are advised to do their homework and know what the property is worth, especially since auctions generally do not offer appraisal contingencies.
  • Buyers should know what repairs are needed and what it will cost to make the home livable.
  • Setting and sticking to a maximum price and not forgetting to include the buyer’s premium is critical.
  • Most importantly, maintain control.  Many auctions turn into feeding frenzies. The excitement of the moment leads to bidders getting carried away. 

Wednesday, January 2, 2013

Desperate Buyers in recent Seller's Market since April 2012 - Will you use Seller's (Listing) Agent to represent your interest to purchase the home listed? Why or Why Not?

What affect is this "heat-wave" having on the "Seller Market" condition since April 2012?  What are the desperate Buyers are doing.... with the "over priced" bidding war?  Will there be another Real Estate "bubble" ?

Why Seller (Listing) Agents represent both Buyers/Sellers in the same real estate transaction?  Is it better for seller interest or buyer interest being presented?  What if there is dispute between the parties - How do you know what to do to protect yourself as the Seller or as the Buyer?  

Read Seller Information or Buyer Information at  www.RealtorLisaWu.com