Blogtastic Articles!

Feb. 5, 2018

Whether You Rent or Buy, Either Way You're Paying a Mortgage!

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac,explains another benefit of securing a mortgage as opposed to paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Click here to get started!

Jan. 24, 2018

Thinking about Solar Panels for your Home?

We live in sunny California, so why not?

Here's a great place to start!

(This link takes you to Google Project Sunroof)

Posted in Real Estate Tips
Jan. 23, 2018

Home Purchasing Power: The Trend is NOT your Friend!

Much has been said about the rising prices of real estate in the Bay Area. But this is only half of the story.

Here's the other half:Home Purchase Power - How Much House at $2,500 a month

This chart is quite a bit different from your typical 'interest rate' graph.

The key idea behind this chart, is to keep you monthly payment the same, regardless of what happens with to the interest rate. 

Example 1: a monthly payment of $2,500 at a 6.5% interest rate, buys a loan of $396,000.
Example 2: a monthly payment of $2,500 at a 3.2% interest rate, buys a loan of $578,000.
Example 3: a monthly payment of $2,500 at a 3.95% interest rate, buys a loan of $525,000.
Example 4: a monthly payment of $2,500 at a 4.95% interest rate, buys a loan of $470,000.

Never under estimate the power of leveraged money! A change in interest rate of 1 point, changes your corresponding qualification amount by 10%!!

Let's look at the numbers another way:Effect of Home Appreciation AND rising interest rates on your monthly mortgage payment

The basic premise behind this scenario is that real estate prices are expected to rise about 4.7% and interest rates rising also to 4.6% by the end of the year. What this chart illustrates, is that the exact same purchase now versus the end of the year, will end up costing you $30,550 more, which equates to $405 MORE per month! The very same house!

What does all of this mean?

Buy your new home before it gets even more expensive!

Everyone's situation is unique. Therefore, I'll be happy to sit down with you and explain how this works for your particular circumstance. Call me at (510) 681-3499 or just click here to send a message to me. It's important to wrap your head around these concepts. Are these trends foolproof? Nope. But they are realistic. The fear, is that interest rates will rise even higher that these projections.

 

Disclaimer: This chart and the numbers used are rough estimates but are based on current values and realistic projections by economists. It is VITAL that you contact a lender to get personally pre-approved. Everyone has a different credit profile and your actual interest rate and payments will differ. I'll be happy to recommend one to you. Contact me

 

Dec. 13, 2017

What is the Cost of Waiting Until Next Year to Buy?

We recently shared that over the course of the last 12 months, home prices have appreciated by 7.0%. Over the same amount of time, interest rates have remained historically low which has allowed many buyers to enter the market.

As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.

The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 4.7% over the next 12 months.

What Does This Mean as a Buyer?

If home prices appreciate by 4.7% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:

Mortgage Payment Difference 2017-2018

Bottom Line

If buying a home is in your plan for 2018, doing it sooner rather than later could save you thousands of dollars over the terms of your loan. Contact me to get started!

Nov. 23, 2017

Happy Thanksgiving!

Posted in Holidays
Nov. 21, 2017

Getting Your Home Sold - Access is Important!

So, you’ve decided to sell your house. You’ve hired a real estate professional to help you with the entire process, and they have asked you what level of access you want to provide to potential buyers.

There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access that you can provide to your agent so that he or she can show your home.

Here are five levels of access that you can give to buyers, along with a brief description:

1. Lockbox on the Door – this allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.

2. Providing a Key to the Home – although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.

3. Open Access with a Phone Call – the seller allows showings with just a phone call’s notice.

4. By Appointment Only (example: 48-Hour Notice) – Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.

5. Limited Access (example: the home is only available on Mondays or Tuesdays at 2pm or for only a couple of hours a day) – This is the most difficult way to be able to show your house to potential buyers.

In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.

 

If you are considering the sale of your home then Contact me to get started!

Want to know how much your home is worth? Click Here!

Posted in Selling A Home
Oct. 3, 2017

How to Get the Most Money from the Sale of Your Home

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensure that you get the highest price possible.

1. Price it a LITTLE LOW 

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

Impact of listing price

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house.

Realtor.com gives this advice: “Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”

The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.  Contact me to get started!

Want to know how much your home is worth? Click Here!

 

Posted in Selling A Home
Sept. 29, 2017

Think of Selling? Competition is Coming!

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.7% over last year.

How will this impact buyers?

More inventory means more options. Danielle Hale, Realtor.com’s Chief Economist, explained this is good news for the housing market - especially for those looking to buy:

"It's not spectacular construction growth, but it's slow and steady in the right direction. Eventually, the pickup in single-family home construction will mean [buyers] will have more options. Especially with the limited number of sales right now, more options are really needed."

How will this impact sellers?

More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:

1. A great price on their home as buyers outbid each other for it

2. A quick sale as buyers have so little to choose from

3. Fewer hassles as buyers don’t want to “rock the boat” on the deal

With an increase in competition, the seller may not enjoy these same benefits. As Hale said:

"As new construction continues to increase, home shoppers will eventually have more [choices] and a bit more time to make purchase decisions compared to today's quick-moving housing market."

Bottom Line

If you are considering the sale of your home, it might make sense to beat this new construction competition to the market. Contact me to get started!

Posted in Selling A Home
July 12, 2017

Don't Be Afraid of the Dark

If you haven't marked your calendar yet, be sure to do it now! August 21, 2017 will be the date we have a total solar eclipse taking place across North America.

Unfortunately, for us Bay Area residents, only 75% of the sun will be obscured from our location. If you want to catch the eclipse in its grand totality, then the 'nearest' areas you'll need to travel towards are: Oregon, Idaho and Wyoming. Yup, just around the block ;).

Personally, I'm heading off to Idaho to catch the big event!
Pretty much every hotel, motel and campground is totally in booked in Oregon and Idaho, so you'll have to be creative if looking for accommodations. 

Want to know the exact timing and path of the eclipse? There's no better place than this NASA website: 2017 Total Solar Eclipse Interactive Map. And here's a great article in the The Mercury News about the event.

How does this relate to real estate? Who knows...

But what I DO KNOW, is that this a once-in-a-lifetime type of event and I'm not going to miss it!

Just be advised, if you care to take a look up at the center of our solar system, be sure to wear the proper eye-protection, like these from Amazon. Order now, so you'll have them in plenty of time before the event (which lands on a Monday in our area with maximum visible eclipse at about 10:15am).

Here's another good website for time-table info.

Posted in News
April 20, 2017

Tax Return Depressing? Owning a Home Could Help

Many Americans got some depressing news last week; either their tax return was not as large as they had hoped or, in some cases, they were told they owed additional money to either the Federal or State government or both. One way to save on taxes is to own your own home.

According to the Tax Policy Center’s Briefing Book -“A citizen's guide to the fascinating (though often complex) elements of the federal Tax System” - there are several tax advantages to homeownership.

Here are four items, and a quote on each, from the Briefing Book:

1. Mortgage Interest Deduction

“Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”

2. Property Tax Deduction

“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”

3. Imputed Rent

“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”

4. Profits from Home Sales

“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.”

Bottom Line

We are not suggesting that you purchase a house just to save on your taxes. However, if you have been on the fence as to whether 2017 is the year you should become a homeowner, this information might help with that decision.

Disclaimer: Always check with your accountant to find out what tax advantages apply to you in your area.