Happy Halloween

Happy Halloween from Renteria Real Estate!  Have fun and be safe!

 

Why Use A Listing Agent?

WHY USE A LISTING AGENT?

 

1.Education & Experience

You don't need to know everything about buying and selling real estate if you hire a real estate professional who does. Henry Ford once said that when you hire people who are smarter than you are, it proves you are smarter than they are. The trick is to find the right person. For the most part, they all cost about the same. Why not hire a person with more education and experience than you? We're all looking for more precious time in our lives, and hiring pros gives us that time.

 

2. Agents are Buffers

Agents take the spam out of your property showings and visits. If you're a buyer of new homes, your agent will whip out her sword and keep the builder's agents at bay, preventing them from biting or nipping at your heels. If you're a seller, your agent will filter all those phone calls that lead to nowhere from lookie loos and try to induce serious buyers to immediately write an offer.

3. Neighborhood Knowledge

Agents either possess intimate knowledge or they know where to find the industry buzz about your neighborhood. They can identify comparable sales and hand these facts to you, in addition to pointing you in the direction where you can find more data on schools, crime or demographics. For example, you may know that a home down the street was on the market for $350,000, but an agent will know it had upgrades and sold at $285,000 after 65 days on the market and after twice falling out of escrow.

4. Price Guidance

Contrary to what some people believe, agents do not select prices for sellers or buyers. However, an agent will help to guide clients to make the right choices for themselves. If a listing is at 6%, for example, an agent has a 6% vested interest in the sale, but the client has a 94% interest. Selling agents will ask buyers to weigh all the data supplied to them and to choose a price. Then based on market supply, demand and the conditions, the agent will devise a negotiation strategy.

5. Market Conditions Information

Real estate agents can disclose market conditions, which will govern your selling or buying process. Many factors determine how you will proceed. Data such as the average per square foot cost of similar homes, median and average sales prices, average days on market and ratios of list-to-sold prices, among other criteria, will have a huge bearing on what you ultimately decide to do.

6. Professional Networking

Real estate agents network with other professionals, many of whom provide services that you will need to buy or sell. Due to legal liability, many agents will hesitate to recommend a certain individual or company over another, but they do know which vendors have a reputation for efficiency, competency and competitive pricing. Agents can, however, give you a list of references with whom they have worked and provide background information to help you make a wise selection.

7. Negotiation Skills & Confidentiality

Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction and because they are skilled. It's part of their job description. Good agents are not messengers, delivering buyer's offers to sellers and vice versa. They are professionals who are trained to present their client's case in the best light and agree to hold client information confidential from competing interests.

8. Handling Volumes of Paperwork

One-page deposit receipts were prevalent in the early 1970s. Today's purchase agreements run 10 pages or more. That does not include the federal- and state-mandated disclosures nor disclosures dictated by local custom. Most real estate files average thicknesses from one to three inches of paper. One tiny mistake or omission could land you in court or cost you thousands. In some states, lawyers handle the disclosures, thank goodness!

 

9. Answer Questions After Closing

Even the smoothest transactions that close without complications can come back to haunt. For example, taxing authorities that collect property tax assessments, doc stamps or transfer tax can fall months behind and mix up invoices, but one call to your agent can straighten out the confusion. Many questions can pop up that were overlooked in the excitement of closing. Good agents stand by ready to assist. Worthy and honest agents don't leave you in the dust to fend for yourself.

10. Develop Relationships for Future Business

The basis for an agent's success and continued career in real estate is referrals. Few agents would survive if their livelihood was dependent on consistently drumming up new business. This emphasis gives agents strong incentives to make certain clients are happy and satisfied. It also means that an agent who stays in the business will be there for you when you need to hire an agent again. Many will periodically mail market updates to you to keep you informed and to stay in touch.

The Basics of Paying For Your House-Mortgage V. Cash

MORTGAGES


Amortized Loans: Most mortgages are "amortized loans" where equal payments (usually monthly) of the principal and interest are made over a certain period (usually 15 to 30 years). The payments cover both the principal and the interest.

Adjustable vs. Fixed Rate: An adjustable-rate mortgage (ARM) changes the monthly payment based on fluctuating interest rates and usually offers a lower interest rate. A fixed rate mortgage locks in the payment and interest rate for the length of the mortgage. If you can lock in a mortgage at a low fixed rate, woohoo! You win. Interest rates are set by state laws, and charging over that rate is usury.

Pre-Qualified vs. Pre-Approved: Pre-qualification is when a mortgage broker informally lets you know how much money you can borrow based on factors including your debt-to-income ratio (see below). Pre-Approval is a more intense process where you have to submit financial documentation and then the lender will agree to the loan in writing in a commitment letter. This, of course, carries much more weight when you're making an offer on a house than just a pre-qualification. This letter has an expiration date, so make sure you know your timing.

Debt-to-income Ratio: Basically, the percentage of your gross monthly income that goes towards paying your debts. These could be housing related (rent, mortgages, etc.) and debts like school loans and car loans. Use this calculator to figure out some more details.

Point: Points are packets of extra prepaid interest payments that equal 1 percent of the loan amount. Do you get points for being bad? Some mortgage plans might lower the interest rate in exchange for extra points paid upfront, which is known as a buydown. Some buydowns don't last for the whole loan but rather for just the first few years, while others last the whole loan.

Remember, this is just very basic info. Mortgages are complicated to the average Joe, but explained in much more detail by a professional. Do some scouting, get a recommendation and call up a mortgage broker for the whole shebang.

PAYING IN CASH

The thing to remember is that your cash needs to stay in the bank. It's not a good idea to walk around with cash. It isn't safe and it won't be accepted by any ethical professional entity you are dealing with. If someone is taking your cash, don't give it to them. The transactions are done from bank to bank. Checks are certainly good as a source of deposit but when it comes to the closing table if you are buying property the best way is by wire transfer.

You should know in advance of your closing how much money needs to be transferred, and the seller will provide wire instructions so it can go to one bank from the other. For smaller dollar figures (less than a few thousand) you can use a personal check but in most cases - in the absence of a wire transfer - you can use a cashier's check. However, wire transfers are replacing checks more and more.

The process is exactly the same for foreign buyers, except that I recommend that foreign buyers open a local bank account so the local bank can do the wire transfer on the same day to the closing agent. In some cases, depending upon the country of origin, wire transfers from a foreign bank can take more than three days. Generally with foreign banks the wire transfer is not an instantaneous transaction.

Basically, if you're paying in cash, especially if it's coming from another country, the primary concerns are security and timing. And, preferably, a wire transfer from a U.S. bank is the way to go. Never, ever carry around suitcases full of cash. That may seem obvious, but this must be said.

In summation, if you can get a mortgage in this market, good for you If you can pay in cash, good for you!

The Pro's and Con's of Paying Cash For a Home

Pros




No Credit History Needed

A long time ago I read a story of a guy who avoided credit cards and loans like the plague so he did not have a credit history, but he had considerable savings. When he wanted to buy a house no one would give him a loan, so he bought a house outright with his savings. In situations where you do not have the ability to get a reasonable loan, then paying cash might be the best option.

Risk Free Savings

If a mortgage costs 7% and you pay cash, you would essentially be saving 7% in interest risk free. So in the case where mortgage interest rates are higher than what you can get on your investments, you would come out ahead by paying in cash.

You Actually Own Your House

I think psychologically there is a big benefit in knowing that you own your house free and clear. You also free up quite a bit of income because you will have no rent or mortgage.

You Are Not Leveraged

Buying a house with cash means that if the value of the home goes down by 10% then the money you put in also goes down by 10%. The most you can lose is the amount of money you put in. In the case of a 20% down mortgage, if the house's value goes down 10% then you lose 50% of the money you put in because of leverage.

Negotiate a Better Deal

When you have the cash to pay for the full amount of a house, it means that there will be no contingencies on getting a loan and the amount of time needed to close a deal is shorter. This generally gives you the buyer more negotiating power for a discount on the price of the home.

Cons

Less liquidity

Having a mortgage lets you free up your cash for other investments. It is also not wise to put all your liquid assets into buying a house with cash because it is harder to free up that money in case you need to use it. If you buy a house with cash, any new mortgages would be considered refinances and carry a higher rate than a first mortgage.

You Are Not Leveraged

Leverage goes both ways, so if the value of the home goes up, then the percentage gain of an all cash buyer would be comparably lower than the person who purchased with a mortgage.

No Tax Advantage

Mortgage interest is deductible on income taxes in the United States. If you are in a high tax bracket that benefit lessens the bite of the interest by quite a bit. In contrast, buying a home with cash does not give you any tax deductions.

Do You Need A Home Warranty?

What Is a Home Warranty?
A home warranty is not the same thing as homeowners insurance, nor is it a replacement for homeowners insurance. Homeowners insurance covers major perils such as fires, hail, property crimes and certain types of water damage that could affect the entire structure and/or the homeowner's personal possessions. A home warranty does not cover these perils. Rather, it covers specific components of the home.

A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home's major components, such as the furnace, air conditioning, plumbing and electrical system. A home warranty may also cover major appliances such as washers and dryers, refrigerators and swimming pools. Most plans have a basic component that provides all homeowners who purchase a policy with certain coverages. Homeowners can also purchase one or more optional components that provide additional coverage at additional cost.

Home warranty companies have agreements with approved service providers. When something that is covered by a home warranty breaks down, the homeowner calls the home warranty company, and the home warranty company sends one of its service providers to examine the problem. If the provider determines that the needed repair or replacement is covered by the warranty, he completes the work. The homeowner only pays a small service fee, plus the money she has already spent to purchase the warranty.

What Does It Cost?
A home warranty costs a few hundred dollars a year, paid up front (or in installments, if the warranty company offers a payment plan). The plan's cost varies depending on the property type e.g., single-family detached, condo, townhome, duplex, and whether the homeowner purchases a basic or extended plan. The cost usually does not vary with the property's age, unless the home is brand new, which increases the cost of coverage. The home's square footage also does not affect the price in most cases, unless the property is more than 5,000 square feet. Separate structures, such as guest houses, usually are not covered by the basic policy, but can be covered for an additional fee. However, garages should be covered by the basic policy.

In addition to an annual premium, home warranties charge a service call fee (also called a trade call fee) of around $60 every time the warranty holder requests that a service provider come out to the house to examine a problem. If the problem requires more than one type of contractor to visit (e.g., a plumber and an electrician), the homeowner may have to pay the service fee for each contractor.

 

Having a home warranty doesn't mean the homeowner will never have to spend a penny on home repairs. Some problems won't be covered by the warranty, whether because the homeowner didn't purchase coverage for that item or because the warranty company doesn't offer coverage for that item. Also, home warranties usually don't cover components that haven't been properly maintained. Furthermore, if the warranty company denies a claim, the homeowner will still have to pay the service fee and will also be responsible for repair costs.

The Benefits of a Home Warranty
Like all warranties, a home warranty is supposed to protect against expensive, unforeseen repair bills and provide peace of mind. For a homeowner who doesn't have an emergency fund or who wants to protect their emergency fund, a home warranty can act as a buffer. Home warranties also make sense for people who aren't handy or who don't want to worry about tracking down a contractor when they have a problem. Warranties can also make sense for people with expensive taste in appliances.

The subject of home warranties often comes up during the sale and purchase of a home. A home warranty can provide reassurance to a homebuyer who has limited information about how well the home's components have been maintained (or how well the home has been built, in the case of new construction). A warranty can also be helpful for someone who has just depleted their savings to buy a home and wants to avoid any additional major expenses. For home sellers, offering the buyer a paid-up, one-year home warranty with the home purchase may provide a measure of protection against buyer complaints about any home defects that arise after the sale closes. However, providing a home warranty does not exempt the seller from her legal requirement to disclose any known problems with the home.

What Is A Home Warranty?

The last thing a home buyer wants to worry about after closing is what could possibly break or malfunction in her new home. Since that can cover a multitude of items and systems, for peace of mind, it's a good idea to get a home protection plan. It's especially a good idea to obtain a home warranty if you're a first-time home buyer with no experience maintaining a home.

What is A Home Warranty? 
Home warranty is an appliance service protection plan that covers the maintenance expenses associated with household items such as refrigerator, dishwasher, HVAC units, plumbing system, electrical wiring etc. Your home owner’s insurance will insure against natural disasters such as fire and flood but it will NOT cover the maintenance and repair charges.
When your air conditioner or heater stops working, you will place a service request with a home warranty company who will send the technician out for repair. Home warranty plan will also replace the equipment if it cannot be repaired. Home warranty will essentially give you the peace of mind. You don’t need to spend thousands of dollars if your dying air conditioner breaks apart at the middle of the night. On this website, we help you choose the right plan that fits your needs.

How Do They Work?
Although specific plans provide for specific types of coverage, most operate the same way.

• If a home system or appliance breaks or stops working, the home owner calls the home warranty company.
• The home warranty company calls a provider with which it has a business arrangement.
• The specific provider calls the home owner to make an appointment.
• The provider fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance.
• The home owner pays a small trade service fee (less than $100).

What is Not Covered?

• Outdoor items such as sprinklers
• Faucet repairs are not covered under all plans
• Not all plans pay for refrigerators, washers & dryers or garage door openers
• Spa or pools, unless specific coverage requested
• Permit fees
• Haul aways

What Can Cause Denial of Payment?

• Improper maintenance
• Code violations
• Unusual wear and tear
• Improper installation

General Coverage

• Air conditioning
• Dishwashers
• Doorbells
• Furnace / heating
• Water heater
• Ductwork
• Garbage disposal
• Inside plumbing stoppages
• Ceiling fans
• Electrical systems
• Range and oven
• Telephone wiring

Because coverage's vary from state to state and from policy to policy, ask to see a sample copy of a policy before you commit.

The Home Warranty Protection policy is a wonderful way to guard you and your buyer from unexpected repairs that can and do crop up without warning. During the home buying /selling process is no time for either party to have to disburse more money, especially for repairs.

1. It will potentially save you money
2. It will repair or replace any covered item
3. The cost of a Home Warranty is only a small part of the cost of replacing a major appliance
4. It gives an incentive to the sale to any potential home buyer
5. The Home Warranty will reduce any buyers worry about purchasing your home, mainly if you have an older home
6. It also relives a buyer of any worries that you failed to disclose a material defect on the home disclosure
7. Moreover, it will help put off the buyer from trying to sue you for failing to reveal any of the homes major defects on the home disclosure

A Long Government Shutdown Could Hurt Housing Market Recovery

A prolonged government shutdown could deliver a substantial blow to an already softening housing recovery.

If the political standoff lasts for weeks, it could stall sales because lenders can't use IRS documents to confirm borrower qualifications. The impasse could also threaten loans backed by agencies such as the Federal Housing Administration.

"With each passing day, the anxiety in the marketplace is building," said Stuart Gabriel, director of UCLA's Ziman Center for Real Estate.

The FHA's staff has been greatly reduced, which may cause delays in "processing or closing of FHA-insured loans," according to the U.S. Department of Housing and Urban Development, which oversees the agency. For now, the FHA — traditionally an insurer of loans to first-time and low-income buyers — will continue to endorse new single-family loans. The agency currently insures about 26% of all single-family home purchases.

"The longer the shutdown lasts, the more serious the impact will be," a HUD contingency plan said.

Some are already feeling the pain.

Ron Tanzman, an agent in Calabasas, said two of his buyers planned to use FHA-backed loans, but the deals are now on hold.

"You can't close any FHA deals right now," he said. "We just got notice from the lender that we are in a stalemate."

The federal government partially shut down Tuesday after Congress — amid a fight over Obamacare — failed to pass a budget, forcing the furlough of roughly 800,000 workers and the first federal shutdown in 17 years.

An extended mortgage market freeze could further stall a housing recovery that has cooled after rapid price increases earlier this year. The threat comes just as mortgage rates are falling again, which normally would entice buyers. Rates have tumbled for the third straight week, with Freddie Mac pegging the 30-year fixed loan at an average of 4.22%, down from 4.32% last week.

But a short government shutdown should cause only small headaches, because most loans close at the end of the month and take up to 60 days to do so, said Keith Gumbinger, vice president of HSH.com, which tracks mortgage rates. Lenders are still taking applications, Gumbinger said, expecting the shutdown will end soon.

Most lenders use IRS transcripts of borrowers' tax filings to confirm their income and ability to pay.

"A few days' delay in getting documentation shouldn't derail too many deals," Gumbinger said.

The shutdown entered its third day Thursday with major mortgage lenders such as Wells Fargo & Co. and JPMorgan Chase & Co. operating much as usual. They said they anticipated only minor disruptions — so long as the shutdown didn't stretch past, say, three weeks. Most borrowers near completion of a loan have already had items such as tax returns verified, they said.

New mortgage applicants were being asked to fill out the usual paperwork. Processing of government-backed loans from the Federal Housing Administration and the Department of Veterans Affairs also continued as usual at major lenders that are pre-authorized to issue such loans.

Wells Fargo is among the lenders with delegated authority from FHA and VA to write loans, which are computer-processed and approved. The only problem with such mortgages would occur if borrowers fall outside predetermined guidelines for credit scores or income, requiring them to get special approval for government loans, said Tom Goyda, a spokesman for Wells Fargo Home Mortgage, the largest residential lender.

Experts said mortgage seekers should discuss timelines and expectations with their lender, and inquire about longer commitments, longer rate locks and extension policies for each.

"Right now, it's business as usual," said Los Angeles area Realtor Rose Fahey, who hasn't run into problems with a deal currently in escrow, in which the buyer has a conventional loan.

The greater fear, economists say, is that Congress fails to raise the debt ceiling by Oct. 17, causing the nation to default on its debt and mortgage rates to skyrocket. Affordability would take a dive and potential buyers would grow increasingly uncertain about the economy, said UCLA's Gabriel.

"We are playing with something big and bad and nasty," he said of a possible default.

How Does A Government Shut Down Effect Housing?

A government shut-down can very easily delay housing sales and closings if the deal is being financed through a government backed entity.

Speaking with our local loan officer’s this morning, I was warned that if I had any clients who were planning to use an FHA loan-they will be delayed unless they were already assigned an FHA case number. Those without FHA case numbers before the shutdown-their deal will be stuck in limbo.  For those not in the business, FHA assigns every loan done through them a case number after the buyer gets a contract on a home.  This case number is used to track files and to record and order appraisals through FHA’s system.  If a loan doesn’t have an FHA case number, there is only so far that the bank can take the file before they just have to stop and wait for FHA.  With the government shut down, there is a good chance that FHA will be deemed non-essential, and therefore there will be no-one there to process requests for case numbers, causing banks to have to wait until the government gets back to business before they can proceed with any new FHA loans.

The good news is that once the case number is assigned the bank can keep sending info to FHA using the case number whether there is anyone there to record it immediately or not.  If your loan is in process now, you have nothing to worry about!

If the shutdown lasts for any significant amount of time, expect the sales numbers to be down from usual as the banks have to delay closings while waiting for FHA to get back up and running (and then catch up with the mounds of back paperwork that will build up during the shutdown).

Just what we needed…an interruption to the housing industry.

Seller Tips For Home Inspections

A thorough home inspection is a critical step in the home-buying process, which is one reason that it's typically thought of as something the buyer has to do. There are, however, a few things that a seller can do to make the process smoother and ensure that a property gets flying colors during the inspection.

What can sellers do to get ready for an inspection?

The first thing is make sure they aren't around during the inspector's visit, says Kenny Rhodes, a licensed home inspector with nearly 20 years experience. "It's really important that the seller not be here when we're being critical of his home," Rhodes says. If a homeowner does hang around, the potential buyer may not feel comfortable asking questions or discussing a property's issues openly and honestly.

A seller can also prepare the home for the inspection. The most important thing to do here is to keep all key areas of the house free, clear and accessible. This includes providing access to the furnace, boiler and circuit breaker.

The 3 Things a Seller Should do to Prepare for the Inspection:

• Pre Sale Inspection: It is a good idea to pre- inspect your home before it hits the market so you can address any issues before hand. 
• Leave the house: Leave your home while the official inspection is made with the buyers. If the homeowner does hang around, the potential buyer may not feel comfortable asking questions or discussing a property's issues openly and honestly.
• Tidy Up: An important thing to do is to keep all key areas of the house free, clear and accessible so the inspector can get to the furnace, boiler and circuit breaker.