Is Buying a Home a Good Investment?

I just read an article about how most Americans still believe that buying a home is a good investment.

 Although part of me agrees with this, the other part of me is concerned about spreading the gospel of home ownership as an investment.

 If you are planning to live in your current location for a long period of time then owning is far better than renting. It still provides tax breaks on your mortgage interest and provides you with a home that is yours. The only way you can lose it is if you don’t pay the mortgage.

When you consider real estate over a long period of time, say 30-40 years, home ownership is a good investment. When you look at the past 10 years, it is it’s been far from it with millions of people losing money on this form of ‘investment.’

 Should you buy a home then? If you plan on living in one place – then yes. Buy because it provides the most stable home environment for you and your family. Buy because you can customize the home and make it yours. Buy because you want to become part of a community. These are the reasons to buy. If you make money over time, great…If not, you still enjoyed your life in the home.

 If, however, your life is an unknown, and there is the possibility in sight that you may move, buying a home for anything under than 5 years is not a smart move.  The economy is still incredibly uncertain and the housing market still has a long road to full recovery.

 Whether or not you make money on owning a home depends upon loads of factors that you have very little control over. The precise moment that you buy and sell will determine your net loss or net gain. At this moment, no one can predict what is going to happen with home values.

 Buy because it’s right for you and your family and it’s better than renting. In my humble opinion, that’s the only reason to buy a residential home.

Buying a home has several unique advantages when compared with renting. Aside from being to decorate as you choose, receive additional tax benefits, enjoy stability in your housing payments, and increase your ability to make future investments, it just feels good to own your own home!

A survey conducted last month by the PEW Research Center, a non-profit, non-partisan organization considered a “fact tank” on social & demographic trends in America, determined that the majority of adult Americans (81%) still believe “that buying a home is the best long-term investment a person can make.” It is interesting to note that while the same study showed that 47% of those surveyed felt that current economic factors have resulted in a decrease in their current home value, those same home owners felt that their home investment was a safe one.

Even renters seem to agree with the idea of investing in a home, with 81% wishing to buy a home at some point, even if individual circumstances prevent it currently. In fact, when asked to rate long-term financial goals, homeownership and “being able to live comfortably in retirement” were rated the highest by 80% of those surveyed. Survey participants seemed to understand that owning a home provides more than an avenue for generating savings – it also is a place to live and provides an element of physical and emotional stability unlike other investment options.

Further pursuing this question, the survey compared investments – trying to determine which held fast in the long run – the stock market or the housing market. The answer was variable, depending on the year of investment, however, and unable to be determined overall. One item not considered in the survey is that owning a home provides income tax benefits that are not likely to be found in other investments, which could affect the dividend bottom line and how you choose to invest. Click here to view the survey in its entirety.

Should You Search For a Home on Craigslist?I

I just answered a question about this on Trulia and thought I would share my thoughts here on my own blog.

Craigslist remains a very popular forum for searching homes. The best part about craigslist is that ads only last 7 days so they tend to be more up-to date than Trulia or Zillow.

That said, the real estate section in San Diego has gone to the dogs in the past year and there are huge amounts of spam on it. It takes a great deal to wade through it and at this point, I would suggest using Realtor.com or the website of a Realtor. These are directly linked to the MLS and updated daily.

 Loads of people search on craigslist and there is nothing in and of itself wrong with it. In past months however, it has turned into a free for all, and you honestly tell the difference between a real ad and a scam.

The very best source of real estate inventory is the MLS. Every agent’s website is a direct feed of MLS data. So, using an agent’s website is probably the best recommendation I can offer.

Location, location,location. You’ve heard time and time again that when buying a home, location is what matters most…. and for good reason! For that purpose the concept of Walk Score was created. Dedicated to the idea that “less time in the car means more time for the things you love,” Walk Score, developed in 2008, has made it easier for home buyers to find a home that is closer to the activities and places they love.

Providing ratings from 0 to 100 to determine a neighborhood’s walkability, buyers can decide if the area they are considering is more Car-Dependent, Very Walkable, a Walker’s Paradise, or somewhere in-between. If you are searching for a home, you will also enjoy visiting tools such as Transit Score which helps in calculating the cost of your commute and the even newer Bike Score!

Bike Score was introduced this week in honor of Bike to Work Week and suggests areas that are best suited and not so desirable for bike riding. Considering such issues as hills and bike lanes, along with “road connectivity” and a town’s biking population, communities have been rated using the same type of scoring system, with 70-100 being named Very Bikeable. Topping that list were Minneapolis, Portland, and San Francisco.

The goal of Bike Score is to help cities measure and then improve their bicycling ridership. Check it out and see where your town rates by clicking here. If you would like more in-depth information about places where you can walk and ride in our local community, please contact me.

Each day technology becomes even more impressive as new tools, products and apps are rolled out that truly have a place in your daily life. It can be exciting and exhausting to try to find the ones that will benefit you. As a homebuyer, it can be overwhelming to narrow down all the choices.  With that in mind, I’ve made my real estate website tech and mobile friendly in the hope that you will find the results you need in your search, however, when it comes to buying a home, these apps may of benefit to you as well.

Many of these apps are even offered free of charge, although they may request your location information in order to produce the results you desire. If you want more specific information or ideas on specialized apps for your tech devices, please give me a call so we can brainstorm on how I can help meet your real estate needs.  In the meantime, though, check these out!

Not sure where you want to live?

• Nabewise Get to know neighborhoods in-depth, complete with pictures, reviews and ratings ond rankings on the things you care most about.
• GreatSchools Get to know local school options and read reviews by staff and parents of children attending the schools. Schools are also scored based on scores and ratings.
• Yelp Find the best restaurants, shopping, and entertainment in the area you are researching directly from the people who live there. A true “insider’s view.”

Trying to keep track of everything?

• Evernote Keep track of your buying process, including the information on homes you have seen, complete with your personal notes!

Want to compare?

• House Hunter This tool allows you to set priorities on your wants and needs and match them to homes you are considering with the feature list and also has a mortgage calculator built in.
• Trulia – Easy to use and even includes a help button! Depending on your mobile device, you can check and compare listings and even search by feature using your voice.

Looking for actual numbers?

• Zillow Zestimates and make me move allow you to get an idea of what homes cost on any street and even permit you to make offers to home owners who do not have their property for sale.
• Realtor.com Get stats on new homes, sold homes, and homes for sale easily and quickly, including price changes in any neighborhood.

Play to Win When Buying a Home

Many areas of the United States are seeing a shift towards a seller’s market.

In a seller’s market, homes for sale may receive multiple offers and are often sold in less time. Home sellers get excited at that news, but if you are trying to purchase a home, it may make competition a bit tougher. If you have been searching for a home and have finally settled on one that you love, don’t delay on contacting your lender, or you may miss out on the home of your dreams.

Interest rates have been reduced to historic lows allowing you, the home buyer, to get more home for the same amount of money, which sounds fantastic. However, if you do not “lock” in your rate and then follow through with providing the necessary paperwork in a timely manner, you could lose your opportunity.

More than ever – now is the time for you to know the rules and play to win in the housing and lending market. If you are wondering about how you can make sure you are doing all you need to qualify for your loan and your home, contact me or consult the following list.

DO get your paperwork in time. Whether you are asked for a letter of employment verification or 27 pages of bank statements, do not delay in submitting these documents to your lender. Any delay can result in your loan taking longer than necessary, making the seller potentially question your ability to purchase, especially when back up offers have been submitted.

Do not encourage the seller to begin any construction work until after the appraisal, even if your inspection warrants changes being made. An appraiser could see the hardhats and debris and devalue the property. Wait until AFTER the appraisal is complete to request repairs OR agree to do the work yourself once you own the home.

Do not buy a new car or new furniture or go on a celebratory shopping spree until your escrow has funded! Credit ratios are VERY important at this time and if they become out of balance or new credit is extended, it can make you less likely to qualify for your home loan. It does not matter if the offer is ZERO percent interest… it still affects your credit line.

DO pay your current financial obligations. During the busy home buying time, it can be easy to forget to pay bills or miss deadlines – be careful because late payments will reflect negatively on your credit and could even result in your loan being denied.

Do not make changes in your employment – including changing jobs to make more money. The key to getting a mortgage is showing a picture of stability and a job change could tarnish that image. Wait until after escrow closes to accept the new position.

Contingent Status – The Devil is In the Details

The Contingent status on the MLS is a tricky little devil. Let me tell you why.

Contingent means a home hasn’t sold, but it’s not really available. If a home is placed in the contingent status, then it is a short sale. The seller has accepted an offer and sent it to their lender for review and approval.

The bank may or may not approve the buyer’s offer. Generally, the lender comes back with a list of demands for a short sale. The accepted offer may turn into a sale or the buyers may walk away if they don’t like the bank’s terms.

During this time, a period that often lasts 3 – 12 months, the contingent home stays on the MLS. Thus, there are thousands of homes in the contingent status which buyers can find and may want to see.

When working with buyers, I’m never quite sure whether to show them a contingent home or not. If a buyer is motivated and ready to buy, a contingent home will not meet his or her needs.

If however, the buyer has some time, I know that short sales fall out 50% of the time, and the home may become available.

Generally speaking, when asked about a contingent property, I try to determine if it can be shown, and if the seller is accepting back up offers. If I get a yes to both, I’ll show the property. If not, I try to interest the buyer in something similar that is available on the MLS.

When I’ve had short sale listings in the contingent status, I’ve always liked having 2-3 backup offers. If my seller will allow the property to be shown, that is my preference until it is sold.

By nature, a short sale is unpredictable. Ultimately however, buyers and sellers have to make decisions about how they want to approach this beast.

When listing your home for sale, you need to recognize what you are actually selling. In some ways, selling your home can be very similar to putting your car up for sale. You are selling a piece of your life, a subset of you, and in doing so, you must be prepared.

First and foremost, who will you have do the preparation and advertising?  Will you do it yourself or have someone you trust to represent you – someone who has experience?  Someone who knows your market best?

Secondly you should consider the type of home you have – is it more of a sedan-style or do you own a luxury home? Perhaps your home is uniquely architectural in style, a Lamborghini Countach so to speak, and would only appeal to a very select audience? If so, make sure your home receives the proper representation, rather than listing it yourself or through an unknown real estate agent.

Regardless, whether you are selling a favored vehicle or your much loved home, these five simple keys will help you to get the most out of your investment.

• Key 1: Know the Market – Evaluate information on homes that are similar to your own in your same location. Pay attention to the year, condition, and upgrades of comparable homes, as you would a car. Instead of mileage, however, consider square footage. Use the classifieds or rather Craig’s List to see “real” prices for quick sale homes. Make sure your pricing is in the ballpark before listing your home.

• Key 2: Recognize Your Home’s “Curb Appeal” - People make impressions quickly, with cars and with homes. Before you list your home, take care to do whatever “detailing” you can to spruce it up. You want your sellers to feel so “at home” that they won’t want to leave, similar to the feeling of wanting to drive a new car off the lot. Maintenance records and warranties that apply to your home are great to show, if you have them. Keep in mind that a well-loved and maintained home is a much more attractive purchase than a neglected one.

• Key 3: Showing Your Home - When you sell your home, people will also be catching a glimpse into your life. Buyers may be uneasy about their decision and answering their questions openly can smooth things over. If a potential buyer asks to have a home inspection (similar to having a mechanic review a car prior to purchase), recognize the validity of the request and ask to see the report once completed.

• Key 4: Negotiate Until Everyone is Happy - Once the inspection or “test drive” has been completed, most buyers will accept the home “as is” or want to negotiate fees in exchange for the “fixes”. As a seller, it is wise to consider all possibilities, perhaps the sale price could decrease to accommodate the needs, or perhaps a favorite contractor could make the changes quickly and easily. Make sure you reach an agreement with a buyer that is contingent on the sale closing before performing any repairs.

• Key 5: Finalize the Sale - Rules governing the sale of motor vehicles AND the sale of homes vary from state to state and even county to county at times. Having a trusted real estate agent and escrow company to guide you through the legal jargon can be invaluable. The money from the sale and proper paperwork required with each sale can be overwhelming and you will come to rely heavily upon those guides.

Once your home is sold, remember to remove your belongings, as you would with your car, and don’t forget to hand over the keys.

Bidding wars are back. Lack of inventory is making it more difficult for buyers, even those well qualified, to get that dream home. This is particularly true at the lower and moderate range of homes in San Diego County.

So, I thought it useful to share my tips for getting YOUR offer accepted in today’s market and winning a bidding war.

Be Prepared – This means having your pre-approval COMPLETED and a letter of approval in hand. It also means having financial records available of where your good faith deposit and down payment are coming from.

Go Out and See Desirable Homes Daily – yes, daily! Homes are selling the first day of the market. If it’s something that interests you – get there on that day that you find it. Speed counts. There are some sellers who will wait for multiple offers, but others just take the first good offer they receive.

Write Strong Offers – If you want the home, bid effectively. Your buyer’s agent should contact the listing agent and try to get a feel for how many offers they’ve had, as well as the range of the offers. Some listing agents will suggest where you need to be, others won’t – still, it’s worth a try!

Your offer should take into account the recent sales of comparable homes in the area, as well as any information gleaned from the listing agent. You may need to go over list price, as long as you agent feels it is appropriate to do so. With all this said, put your best offer first. You may or may not get a chance to come up in price after the fact.

In addition to price, put has much down as possible, both with your earnest money deposit, as well as your actual down payment.  Why does it matter? I’ve been asked this a million times. It makes a difference to the listing agent. The thinking is that with larger down payments and even cash offers, there is less chance of the deal following through.

Right or wrong, here’s the way the hierarchy works in the mind of listing agents:

Cash Offers Come First – They usually close more quickly and do not have the appraisal contingency.

Conventional Offers - These are typically offers with 10 – 20% down. These deals generally go smoothly and they are the most desirable next to the cash offer.

FHA & VA Offers – It’s not at all fair, but buyers with these loans often fall to the bottom of the preference list. If you do need to use one of these loans, I suggest that you bid more aggressively than you might if you were a cash offer.

The goal is present a strong, compelling offer. If you can’t compete on the down payment or on your type of loan then make sure your price is higher than anyone else’s.

Write a Personal Letter – This can be done either by your agent or the buyer. This is particularly useful if there is a real seller (as opposed to a bank). I have seen this work many times. For instance, if the buyer is VA and the seller is former military, they may be inclined to give another military member a chance. Sometimes, it can just be one line that touches the seller and predisposes them to accept your offer.

There are a few other tricks I’ve learned along the way but these basics will get you started. Feel free to contact me about your particular situation. Bidding wars are back but if you are prepared for them you can still buy your dream home.

6 Ways to Get a Great Mortgage Deal 

By Ismat Sarah Mangla @Money

MONEY Magazine) — Finding an affordable house is no longer a problem but qualifying for a mortgage can be. Six tips to getting a mortgage and a good rate.

Put your credit on ice. The higher your credit score, the lower your rate: The best rates go to those with a 760 or more, says credit-score expert John Ulzheimer.

So keep that plastic in your wallet (and don’t apply for new cards or other loans) for at least three months before you go loan shopping. One large balance — even if it’s paid off at the end of the month — can ding your score by 20 points or more.

Ask for time.  Most sales contracts give you 10 – 17  days to nab a loan or the seller can move on. Negotiate for an additional five to 10 days to give you some room to shop around.

Get at least six quotes. Rates on a 30-year fixed conforming loan can vary at least as much as a quarter of a percentage point. Get quotes from national lenders at mortgagemarvel.com and find out what your local credit union or regional bank is offering as well. Inquire about fees; while lenders aren’t required to give you a good-faith estimate of closing costs (which average 2% of the loan balance) until you actually apply, some will provide it if you ask.

Match the lock period to the loan. You now need 60 days or more to close a loan, says Wharton professor and mortgage expert Jack Guttentag of mtgprofessor.com, and getting an extension on a lock will cost at least a couple hundred dollars. Ask your lender how long it’s taking to close loans like yours — and don’t lock for less.

Opt for an ARM.  If you know you’re not going to be in a house for more than seven years, adjustable-rate mortgages can mean big savings, says Guttentag. The monthly payment on a $300,000, seven-year ARM at the recent rate of 3.23% is $1,302, vs. $1,455 for a 30-year

Talk to a broker. Those who need a jumbo loan or have an unusual situation (say, you’re self-employed) will get the best deal from a mortgage broker who has access to and experience with a lot of lenders. Find a fee-only one at upfrontmortgagebrokers.org.

Getting a great mortgage deal takes some work but it is just as important as the property you hope to buy.