Here are the news item that I liked today:
- White Water Rafting (expires at Midnight 1/31)
- Sacramento’s recession is over
- Charter schools growing in CA (I will blog about this in greater depth at some point soon)
- China ripping off “Top Gun”
Here are the news item that I liked today:
Fortunately for FHA buyers the “flip rule” has been extended again.
What this means for you, the buyer. The best news is, if you are looking to buy a home with an FHA loan (3.5% down) you can purchase flipped homes as soon as they hit the market, as opposed to having to wait 3 months to buy a home you love.
Beyond not having to wait to purchase a home, a flipped home offers many benefits (as anyone who watched HGTV or any of the other home TV networks can tell you). Having a remodeled home, while perhaps costing more then a home in need of repair, allows a home to be FHA-insurable. While a buyer can get an FHA 203k loan, that requires the buyer to hire a contractor and have the work done on their own, not to mention the appraisal process that goes along with the 203k loan is more of a nuisance then purchasing a flipped home.
If you are a buyer looking to purchase a home with little money down, I highly recommend using an FHA loan and thanks to this extension you can buy a remodeled home with 3.5% down.
Here are some articles I found interesting:
Hey Everybody, here are some news stories that piqued my interest:
If you see any news items that look interesting, please send them along to email@example.com
As a Realtor in the year 2011 (and 2007-2010) I know more then I ever wanted to know about short sales. I will not bore all of you with the details, but give you the broad stroke ideas of what a short sale is and how they work and then get to the point of this post.
A short sale is when someone owns a home, has a hardship (loss of job, divorce, etc.) and owes more on the mortgage then the house will currently sell for. A short sale means the bank that owns the mortgage is willing to accept less money then they lended on a house. For example, a person buys a home in 2005 for $425,000 with 100% financing, meaning they borrowed $425,00 plus any closing costs. In this example the person pays their mortgage for 5 years bringing their mortgage down to $400,000 (just using round numbers for sake of ease of understanding). This person then loses their job and can no longer afford the monthly payment. Historically, this person can sell their home for more then they owe and can make a profit. However, today home prices have dropped so significantly that this person is now forced to sell their home at a loss. As well, because this person does not have money to cover a loss they ask the bank to accept the loss. If in this example the home is now worth $200,000 (which is about right given the drop in home prices) the bank is accepting a loss of $200,000. With that said, this process takes a long time (typically 6-12 months, but can take much longer) and is what is making the current Sacramento real estate market so slow and holding back prices from going up (as well as many other things, but short sales are not fun at all).
With that said there are two great days when listing a short sale. The best day is when you receive an approval letter (when the bank tells you IN WRITING that they are accepting a specific price for a home). The second best day is when a BPO (Broker Price Opinion) is ordered. A BPO is when a Realtor in the area gives the bank a quote on what the home is worth today. Basically it’s an appraisal without paying an appraiser $400 to do it, but to pay a Realtor $75. The reason I bring this up today is my listing (found here: http://www.postlets.com/res/4989397) received a BPO today. So *knock on wood* I will know what the bank is looking for by the end of the week. Once we have the BPO we are looking at approximately 2-3 months to closing (on average, it can be shorter or longer), which is when the house actually changes hands.
So, after writing this post I realize that I will have to do a whole post (probably broken down into 2-3 separate posts) on short sales. If there are any topics of real estate you are interested in me writing about or just have questions about real estate please feel free to leave a comment or send me an email firstname.lastname@example.org
A couple of things I read today that I thought I’d share:
State of the Union Drinking game (http://reason.com/blog/2011/01/25/let-me-be-beer-play-along-with)
It was better when George W Bush was president but fun none the less.
NPR Planet Money: “The Double Whammy” http://www.npr.org/blogs/money/2011/01/24/133183016/the-double-whammy-unemployed-and-underwater
Same basic idea through a great blog Calculated Risk http://www.calculatedriskblog.com/2011/01/housing-bust-and-mobility.html
What Millennials are looking for in houses, sorry Vegas: http://www.lasvegassun.com/news/2011/jan/25/millennials-want-what-not-there/
Ok, so I know what you’re thinking “he’s going to tell us how great buying is and that renting is just throwing money away.” There may be a little bit of that, but in all honesty not all people should own a home.
I got to thinking about this after reading this article from Trulia (http://info.trulia.com/index.php?s=43&item=113). Today home prices in Sacramento are at such a low price that from a straight monthly cost approach, buying a home may be cheaper then renting. As well, the tax breaks that come with owning a home are very helpful. (For example, this year my wife and I paid $9,500 in interest which is a tax write off). So, a group of people who I would say are at a very good position to buy a home are married filing jointly making $137,051 or higher and single filers making more then $82,251. That would put you in the 28% tax bracket (at least in 2010). At that rate a tax break would be helpful, that’s not to say that all people wouldn’t want a lower tax rate. (As a libertarian I don’t believe in an income tax in general, but that’s for a separate post).
Now, my may have just made the case for owning a home and in all honesty the tax break is the key selling point for owning a home.
HOWEVER, if you (like me) don’t know which side of the hammer to use and have absolutely no idea how to do any sort of home repair renting may be a better idea for you. When, for example, our water heater goes out (it hasn’t yet, but it will they always do) we will have to buy a water heater (~$150) and then pay someone to come out and put it in for us (I don’t know how much that would cost, but I’m sure it’s not cheap). Same goes for all major appliances they can get very expensive especially ranges, air conditioners and refrigerators. There are home warranty companies that sell a warranty on all those major appliance that cost about $350 and $45 when someone comes out.
So, now after making the case against owning a house (for some people) I realized that my argument is not that strong. So, actually there is a reason to rent and that is if you think home prices will continue to fall it may be worth waiting. I can honestly tell you, I do not know where prices will go and most don’t because if you did you would have a lot more money.
So on only my third blog post I have not been able to form a good argument to even convince myself of what I was arguing for. I plan to update home prices towards the first of every month, so we can follow along together to see which way prices are going.
I do not always like the way the media tells people how to buy or sell homes. The tips they give are not always bad, just not always the best way (and don’t forget real estate is local and national ideas don’t always work in your local market). With that said, I was watching the Today Show this morning (OK, so I watch it every morning, my 7 month old isn’t a fan of doing much in the morning, so I don’t do much outside of the house in the morning.)
(I’m still trying to figure out how to embed video, if you know how, I’d appreciate any advice)
I disagree with not selling in January. If there are buyers (and there are, I’m working with a few right now) they are serious buyers who are looking to buy something right now. Don’t buy into no one is buying.
I completely agree with pricing. I know what you’re thinking: “You’re a Realtor, of course you want me to lower my price.” The reality is, I get paid a percentage of the sales price, I want every house I sell to be sold for a million dollars. As it turns out, I want to help YOU sell your house. By pricing a home too high, it won’t sell and likely won’t even be seen by many buyers. My job is to sell houses, that is done by pricing them correctly.
The other details she goes over are doing inspections which I agree you should almost always do a pest inspection first, they are cheap and can show buyers how motivated you are.
Offering to pay for closing costs can be a very good sales pitch. With a lot of FHA buyers currently looking to buy, they lack funds to do a conventional loan (typically 20% down payment). Your sales price may be higher because you are helping buyers close their loan (typically 3% of purchase price).
And the last point she makes about updating and putting money into your home before selling, I generally will tell people not to use that money on updates. Now, there are of course times that it is necessary. For example if you live in a house built-in 1965 and haven’t updated the neon green wallpaper or the shaggy blue carpet I would say it’s a good idea to do those things. However, if you are planning to put $10,000 into a new kitchen I highly recommend not doing that. (Again, there are times it may be appropriate, but you should contact a Realtor (*self promotion alert*) and find out if it would be worth the time, money and headache.)
Now for blatant self promotion: If you are in the market to sell your home, I would love to show you the way that I am able to sell homes even in today’s depressed market. I also promise that if it doesn’t make sense for you to sell, I will tell you that you should stay put (it would not be the first time I’ve turned down business). You can contact me through this blog by leaving a comment or can give me a call (916) 715-8417.
I will start with the basics:
The fourth point has led me to decided to try blogging. Because I follow all sorts of blogs ranging from politics to college football to real estate I thought that I would combine my interests and collect them into my own blog. What I hope to do is link to articles and comment on them or give a basic idea of the ramblings in my head. I’m obviously interested in all sorts of stuff and that’s what I figure this blog will focus on, things that I find interesting. With that said, my general principal will be real estate, but there is only so much that can be written about real estate, so I will also bring in other items specifically politics and during the fall college football. I will also likely write about my life, the day to day stuff (it’ll be like an unfunny, poor mans version of Curb your Enthusiasm.)
I must warn you that I’m not a very good writer and will likely write this very much in the way that I am thinking it in my head. I apologize in advance.