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Archive for November, 2011

As we head into the cold weather months, one question that always comes up, “Is this the best time to buy a home”. The consensus among real estate professionals are November through January are and have always been idea times for purchasing a home. Buyers are preparing for the holidays and less likely or willing to trudge through the nasty outdoors to view open houses, this creates less competition and potential bidding wars that are so prevalent during other parts of the year. Buyers can use that to their advantage during negotiations. Winter has fewer buyers, which can also work to the serious house-hunting buyers favor.

In the winter months, sellers tend to be more motivated and willing to accept or at least consider a more manageable price than they would be during the spring and summer months, when the market includes many more buyers that need to be settled in their home before school starts. If a seller has a home on the market during these months, they mean business and need to sell in a timely fashion. Homes take longer to sell in the last few months of the year. The astute real estate professional can educate the homeowner and strongly encourage them to be more realistic with the price, which translates to money saved for the buyer. Here are a few rational reasons why this is the perfect opportunity for homebuyers to take the next step.

Mortgage Rates Are At Historical Lows: This is becoming old news and it might appear rates will stay this low forever. The fact of the matter is they will certainly rise and even a small interest rate increase can mean $1,000’s  of added expenses for the buyer, over the life of the loan. The current rate for a 30 year fixed mortgage stands at 3.98%. If you’re looking for a home, the rates that are now available are too good to pass up.

Motivated Lenders: The entire housing industry slows down this time of year, including the mortgage market. With so few loans being processed, the chances of having a smooth escrow increases. It’s less likely that busy appraisers or whole house inspectors can delay the process due to other obligations or appointments.

Decline In Home Prices: Buyers control the market and sellers are very much aware that times have changed. Our local market in Davis,California has depreciated by 25% over the last five years. Other communities around Davis have had over a 50% decline in home prices. The combination of adjusted prices and those low-interest rates, make this the best winter in years to purchase a home. Please visit my website at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my other informative blogs and easy access to view all local area homes for sale.

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Most of our life decisions are based on need, necessity or desire. This is certainly the case when deciding the right time to commit to a real estate purchase. In a time when our economy suffers with an abundance of foreclosures, unemployment, plus government and corporate greed, most folks might feel apprehensive about purchasing a home. Predicting when the housing market hits the bottom depends on who you listen to. The real estate industry feels a recovery is in the near future while the media pundits think we are years away from stability.

How can any particular entity knows when the housing market is poised to recover when all of the so-called experts are relying on data that is outdated. It’s agonizing for first-time or repeat buyers to make a decision when there is so much unreliable information floating around. The fact of the matter is no one can accurately predict when any market hits bottom.Ultimately, it will come down to your family situation, personal need and of course your ability to financially afford purchasing a home. If your present living arrangement is crowded due to space or life deals you a hand that dictates you move into action, that is the most opportune time to assess your financial ability in relation to your desire to pursue a home.

There are a number of factors that can create a confidence level for homebuyers and current homeowners. Most housing advocates say the federal government should do more to persuade lenders to make mortgages more affordable and easier to obtain the necessary financing. Slowing down recovery can be attributed to tighter lending guidelines that have prevented some buyers from qualifying for a home loan. Many experts believe lenders have went too far in the other direction to correct the freewheeling policies that led to the current housing crisis. These tighter lending standards are keeping many willing buyers out of the market.

The housing market in Davis,California is slowly recovering due to the historically low-interest rates and investors are now coming out of their hibernation of the last five years and see enough positive signs to start pursuing long-term investment properties. A low-interest rate is more economically efficient than a low price. Over the life of the mortgage loan , the lower interest rate will yield more savings than a lower price. That’s exactly why the low-interest rates now available are significant. The market corrected prices definitely sweetens the opportunities. No one knows what the future holds in real estate, but we do know the combination of price declines and desirable interest rates are authentic and have created the best   atmosphere for home buyers in over a decade. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my other informative blogs and easy access to view all local area homes for sale.

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As home prices and interest rates drop, investment properties become more appealing for the shrewd investor. Property values have adjusteddown by25% up to 60% in some locations, since the peak of the market. Interest rates are holding steady for investor loans at 4.5% for a 30 year fixed mortgage. Here are some possible pitfalls that might derail those plans.

Plan As You Go: This is one of the biggest mistakes a first-time investor makes, they buy a house because they think they got a good deal and then try to figure out what to do. That philosophy is working backwards. The best approach, find a plan first, then find an investment property that fits that plan. Don’t find the strategy after you find your home.

Get Rich Quick Scheme: Real estate investment should be a long-term course. You have to be smart and understand your risk tolerance.. Normal appreciation will net about 2% to 3% per year over time. Buying any type of property in todays housing market is hard work and not a get rich quick scheme that might have worked in years past. Go in with the correct mind-set.

Preparation is vital: A big part of your success will depend on the preparation before purchase. Have the right professionals on your team. Build relationships with a real estate specialist, house inspector and lender. For the immediate and distant maintenance and remodeling, your team should include a roofing contractor, painter, heat/air company, lawn and cleaning service and a licensed contractor or handyman.

Paying Too Much: What have other investments been selling for in the local neighborhood. Due diligence is imperative when it comes to the cost you pay for your property. Remember the profit is locked in immediately, once the investor buys the property.

Do Your Home Work Or Fail: That was a life long lesson you learned in school, but it also applies to the investor. Educate yourself before you put your families financial security on the line. There are a number of self-help books on the subject that will give you valuable information. Consult with other investors, they are a great source for both the good and bad points of owning investment properties.

Miscalculating Expenses: Make sure you have sufficient cash flow for necessary repairs now and into the future. Over time the roof will need attention as well as the heat and air system. Allocate your budget and make sure these expenses are part of the equation or end up having your asset turn into a liability.

Purchasing In A Bad Location: Be prepared for fluctuation’s in the real estate market. Know what the vacancy rate is and has been in the community where the investment is located. College towns and large active downtown districts have been favorable because demand usually outweighs supply. Having a large influx of potential tenants will cut down losses and tackle unexpected situations like rental market slumps.

Screen Your Tenants: Tenants can lose their jobs and stop paying rent. Evicting tenants can take months and can be an expensive process. Screen your tenants very carefully or pay a property management company to do it for you.

Protect Your Assets: Every successful real estate investor should take time to protect their assets. Work with an attorney to incorporate your investment, using the most appropriate business entity. Hire a CPA that can show you how to legally maximize your deductions and have a greater after-tax profit. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my other informative blogs and easy access to view all local area homes for sale.

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The latest housing market headlines are either encouraging or bleak, depending on your community. Foreclosures are steady, home prices are down and new-home-sales are stagnant. With so much bad news, many buyers are sitting on the sidelines, afraid to make a move. It’s hard to believe, but we are now five years removed from the peak of the housing bubble. Many experts and economist say waiting for the bottom may not be the smartest strategy.

For one thing, there’s no agreement on when or if the U.S. real estate market has officially touched bottom. Real estate is local and therefore what constitutes the bottom for the country is meaningless for those looking to buy or sell homes in their own neighborhoods. Prices in some markets have not yet hit their lowest point, but they aren’t that far off. In other areas,only the pace of total sales has been affected, prices have held firm or actually increased .

Just like the weather, there are large local variations in home prices. In the National Association of Realtors annual report on Metro home prices, almost half the markets posted price increases. In the most desirable neighborhoods like Davis,California, my area of expertise, there could be a price to pay by waiting. More than a few homes this year had multiple offers. In that scenario, this erases the potential savings you thought you achieved by waiting.

For some people, the value of the local public schools will play an important role in their buying decision. A well-designed house in an established area,with a good public-school district will hold it’s value. These communities don’t get hurt as much as the whole market and they recover faster. The other factor buyers need to consider is how much longer interest rates will be at these historical lows. Sometimes home buyers get so fixated on getting the lowest possible price, that they forget just how little difference an extra $10,000 in the home price can mean to their monthly mortgage payment.

Assuming a buyer pays $310,000 rather than $300,000, on a 4 percent thirty year loan, you would pay an additional $55 more a month. Over the long haul, buyers should be more concerned with an interest rate increase than if property values drop another two or three percent. Here are a few reasons why buyers should consider this an optimal time to pursue a home. Do your homework and verify how stable prices are in the neighborhood you are interested in, specifically prices within a mile radius of the subject property. Be rational and smart, if you plan on buying and then selling that home in less than five years, I would suggest renting instead. If you can stick it out for at least five years, economist say you’ll probably ride out any downturn and come out ahead in price.

If your rents rivals a mortgage payments. This is fairly obvious, why pay someone else’s mortgage off. Put that hard-earned monies toward your own mortgage. Every individual buyer will have to make that critical decision on the right time to buy a home based on many factors. Please visit my website at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my other valuable blogs and easy access to view all local area homes for sale.

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The United States Department of the Treasury in an effort to help more military service members qualify for short sales and deeds-in-lieu of foreclosures has clarified guidelines for the Home Affordable Foreclosure Alternative program. A caveat in the previous qualification guidelines stated that a military personnel’s permanent change of station was not considered a financial hardship. The change was made as a result of numerous phone calls the treasury received through the Homeowner’s Hope Hotline and officials were persuaded to make the clarification.

According to a directive sent to mortgage servicers, an example of hardship now includes a “Permanent Change of Station” order as the basis for his or her financial hardship when requesting HAFA even if the service member’s income has not been decreased, so long as the service member does not have sufficient liquid assets to make his or her monthly payments.

The HAFA program was launched in April 2010 to help military homeowners avoid foreclosure if they no longer were participating in a Home Affordable Modification Program trail or permanent workout. Please visit my website www.JohnnyBrooksHomes.com for helpful tips in buying or selling a home, scan my informative blogs and easy access to view all local area homes for sale.

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When shopping for a home many homebuyers are now debating “large home or small home”. But even though larger homes have become more affordable, do you really want to live in a mansion? A couple of generations ago, smaller homes were the preference. In the 1950’s, the average home size was about 950 square feet. But in 2004, the height of the housing boom the average home size was 2,340 square feet. That’s a huge difference in just a few decades. As the housing market starts heading back toward normalcy, the large home purchase is slowly fading away. Taking my area of expertise, Davis, California homes, the majority of  home purchases are smaller homes. Should you consider buying a small home? There are numerous benefits to consider.

The Cost Factor: Look at the overall cost of owning that behemoth two-story home. Think what it cost to heat and cool a 3,000 square foot home. Making home improvements like painting, roof replacement and kitchen remodel’s cost more because of the size of these properties. The smaller home reduces those same expenses because of the size. Monthly utility bills, maintenance, upkeep and taxes are all less costly since you have less square footage.

Save Time And Energy: It takes more time to clean the larger home and maintain the yard, unless you hire a cleaning crew and yard maintenance company and then assume the added expense. Living in a smaller home means you save time, week after week with the house cleaning and the usual maintenance that comes with homeownership. When you live in a small house, you can use that time saved toward family events or enjoy your hobbies.

Live The Simple Life: Living in that smaller home simplify’s your life. It forces you to make easy choices about what to keep or donate. Living in the smaller home offers less space to store belongings. After all, no one wants to be a certified pack rat.

Upgrade Splurges: Have you checked out the cost of countertop, cabinet or appliance upgrades, it can cost a fortune. With the McMansion, you have to buy more and therefore pay more for those amenities. Living in a small home means you can splurge on quality upgrades because you have less to buy.

Ease Of Selling Your Home: Energy efficient homes are vitally important and will continue being the top criteria for homebuyers in the future. The vacant mansions sitting on the market are an indication that value of oversized homes will depreciate over time. When you decide to move, your smaller house will be more desirable and easier to sell, due to the demand for that size home. In the changing economy the smaller homes are seeing a resurgence as people realize the time, cost savings and easier lifestyle that home offers over the long haul. The smaller home just makes more sense. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale.

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Home values are stagnant and prospective homebuyers continue being cautious. A large number of homeowners, reluctant or unable to sell their home, are now looking at another viable option, renting their home out. Others are becoming landlords out of necessity because of job transfers that require them to move. Using Davis, California homes for sale, we have a vacancy rate between 3% to 4%. This is fairly high compared to vacancy rates in the past. Is becoming a landlord a consideration for you?

Crunch Those Numbers: What are your mortgage payments compared to what your home may rent for. Would you come out ahead or at least break even. Will you have to make concessions with the prospective tenants that could be an added expense ( water or city services) or a detriment to the future home value ( allowing pets). Ideally, the rents should be at least 125% of the monthly mortgage payment to make financial sense.

Price It To Rent: Some communities might be in a rent control area that will limit your potential rents. Another concern will be the timing issue of when you’re attempting to rent the home. Just as you would look at comparable sales to determine home value, take a look at what properties are renting for in your immediate neighborhood. And don’t get greedy! Overpricing will result in your home sitting vacant. Vacancy is costly.

Find The Best Tenant: Finding a reliable tenant can be challenging in today’s economical downturn. Many potential tenants lost their home to foreclosure or short sale and have blemished credit. You  want someone who is gainfully employed and have been at their present job for a few years. Have they been evicted or broken a lease in the past? Never mind your gut instinct, treat the entire process like a job interview.

The Tax Ramifications: Rental income is taxable and there are a number of deductions on expenses and depreciation. If you rent your home out, limit it to one or two years, should you rent for three years or more and then sell, you forfeit a valuable tax break ( $500,000 in capital gains tax-free for married couples and $250,000 tax-free for singles). The law is very specific, you must have lived in your home as your primary residence for at least two of the last five years.

Landlord Responsibilities: For your protection, you need a landlord’s policy.This insurance will cover the house and might reimburse you for lost rental income due to damage. Your also protected if the tenant is injured in the house. Becoming a landlord takes patience, time, the inclination and the correct temperament. This means illogical complaints at 2am on a work week, maintenance and possibly legal issues. If this seems overwhelming, you can hire a property management company that can take care of most responsibilities but will charge 10% of the monthly rents. Please visit my website at www.JohnnyBrooksHomes.com for helpful tips on selling or buying a home and easy access to view all local area homes for sale

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