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  • Real Estate Advice: What can I do to close on time?

    Posted on February 9th, 2013 acimetta No comments

    This is a great question. So often closings are delayed and although we can’t control everything, there are definitely certain things a buyer can do that will help the process move forward as smoothly as possible.

    First, the loan itself can be a challenge. You have not given your lender much time to get the loan done. Much of the timing is going to depend on the bank’s timeframe. You should ask your lender how quickly they can fund the loan if all goes well.

    Second, in order for your lender to get their action items done on time, they will depend on you to get the paperwork they need. So anything they ask of you, try to get it back to the lender the same day, if possible.
    Here’s a tip: find out who in your company will provide the lender with your employment verification. Give this person/department the heads up that your lender will be contacting them. This will happen toward the end of the transaction. I’ve had quite a few clients lose days on the loan, because the lender could not get employment verification quickly.

    Third, get your appraisal ordered right away. The lender will do this for you, but they often need your go ahead, and your credit card, so they can order the appraisal. Have your agent follow up on the appraisal and make sure it gets scheduled, etc. Appraisals can be another time-suck. Sometimes, the appraisal order gets lost in the shuffle, or the appraiser can’t schedule the appointment for a few days, etc. You want to have your agent stay on top of this.

    Fourth, schedule all your inspections as soon as possible and negotiate any repairs immediately after you have done all your due diligence. You never know what an inspection is going to uncover, and it may lead you to additional inspections or bringing in an expert on something. You want to make sure you have the time to do all this.

    Fifth, make sure you start working on your homeowner’s insurance.The lender will require proof of insurance before they fund your loan. Don’t leave this to the last minute. Do your insurance shopping. Let escrow know who you will be using for insurance. Escrow will order it for your and you will pay for your first year’s premium in your closing costs.

    Sixth. make sure all your funds are in order. If you need to move money from accounts or take money out of retirement accounts, etc, this takes time. Don’t leave it to the last minute. Also, find out what your bank’s process/timing is for wiring money.

    Lastly, just make sure you don’t quit your job or buy a car or any other expensive items before you close on your new home. This may sound silly, but I’ve heard so many stories where the buyer did one of these things, and ultimately they couldn’t get the loan. Just make sure you consult your lender before you do anything that may adjust your financial situation.

    I always like to tell my clients that a close date is kind of like a pregnancy due date. It may happen on the scheduled date; it could be a day early; it could be a few days late. It’s an estimate. But as you can see there are many things you can do to help close on time.

  • Real Estate Advice: Buying an Upleg

    Posted on February 7th, 2013 acimetta No comments

    If both the homes are in nearby neighborhoods and you can find an agent who has a strong knowledge of both markets, then yes, you should absolutely use the same agent. Working with one agent will make it much easier to coordinate the process especially since you have to sell your home in order to get the money to buy a new one. There are a lot of details to consider and it’s much easier if one agent is managing everything so that nothing falls through the cracks.

    Now, the type of market you’re in will determine the best way to approach your sale and purchase. And what I mean by this is that if you’re in a seller’s market where there is low inventory and high demand (buyers competing over properties) then you may have a tough time getting your offer accepted if it’s contingent on selling your home. The seller will compare your offer to another offer that is not contingent; it will be an easy decision because the other buyer promises an easier transaction with fewer potential hurdles and hangups. On the other hand, if buyers are in control in your local market – there’s a lot of inventory, and little demand – then a seller may be more willing to accept your contingent offer and patiently wait while you get your house on the market and sell it.

    Since you have already identified your upleg (new home purchase), you should at least get your house on the market quickly, and make an offer on the other home. Have your agent explain to the listing agent that you are aggressively marketing your home to find a buyer. You should build into your contract a timeframe that allows you to market your home while the seller of your upleg pulls their property off the market. I normally have my clients ask for 30 days. This means that you would have 30 days to market your home and get a buyer. Then ideally, the escrow period (this is what we call it in California) for both properties will run concurrently and you can close the sale of your home one day before the sale of your new home. (This may differ a little bit in your state depending on your closing process.)

    If the seller does not accept your offer and you still want to move (and you are in a seller’s market), then I would get your house on the market and sell your house contingent on you finding a new upleg.

  • Real Estate Advice: Backup Offer in a Short Sale

    Posted on February 7th, 2013 acimetta No comments

    If the bank does not approve the contract, and submits a counter, and the buyer subsequently walks, then the seller will not necessarily have to relist the property. Once the current contract is canceled, the seller can accept the new offer and it will be submitted to the bank for approval. The good news is that at this point, the listing agent should know what terms are required to get an approval from the bank. And you can submit your offer with those terms in place, if both you and the seller agree to them. From this point forward what happens will really depend on who the lender is. Some lenders will be able to approve the short sale relatively quickly because the “investors” have already stipulated their terms and they are already far along in the short sale process. However, some lenders start from the beginning because it’s a new buyer.
    Your agent should be able to ask these questions of the listing agent so that you will know what to expect.

  • Home Buyer Tip of the Day

    Posted on June 10th, 2012 acimetta No comments

    I say it time and time again… it’s important for buyers to do all their inspections when they’re buying a home. But what does this actually mean? Typically, a buyer has 17 days (this timeframe is negotiable) to do all their due diligence and negotiate repairs, or cancel the deal. Within the first week they should ideally do a home inspection. A home inspector is a generalist who will look at all the major components of the home: foundation, roof, plumbing, electrical. The inspector will call out any possible red flags and recommend the buyer to hire a specialist to do further investigations. But even if the inspector doesn’t make any recommendations, there are a few other inspections that I think are crucial for a buyer. I always urge my clients to hire a mold inspector. Water is one of the most damaging elements to a home. A small leak that goes undetected can cause a lot of problems; I’ve seen it time and time again. Having a good mold inspector can help a buyer avoid expensive surprises. After these two inspections, it depends upon the property and the area. If it’s an older home, a sewer line inspection is always a good idea. Tree roots can damage sewer lines causing plumbing problems. An inspector puts a video camera down the sewer line to see if the line is clear or if there is any damage. A roof inpsection or foundation inspection may also be prudent. You can always ask your home inspector if they would suggest it. A home inspection will usually cost around $400 for a single family home with approximately 2,000 square feet. The bigger the hosue, the more expensive it gets. A mold inspection also costs around $350, give or take. Any samples (for mold) that are taken will cost another $100 each, for testing. Each additonal inspection you can assume another $300-400. All of these inspections are paid for at the time of service. Whether or not you buy the home, you incur the cost of the inspection. Sometimes you can negotiate for the seller to pay for something, but typically buyers pay for their own inspections. It can be $1,000+ out of your pocket as a buyer, but I look at it like an insurance policy. It’s better to spend $1,000 now to make sure that the hundreds of thousands of dollars you are about to spend are spent wisely. You can ask for the seller to make or pay for repairs based on the inspections you do (again all negotiable) or you can decide that the home needs too much work and you can cancel the deal based on your inspection contingency. The moral of the story is: do your inspections!

  • Home Buyer Tip of the Day

    Posted on April 24th, 2012 acimetta No comments

    When negotiating a contract on a home, everything must be agreed on or you don’t have a fully executed contract. Well, actually almost everything. There is one clause in the contract that if one party initials and the other party does not, you still have a deal. This is the Arbitration Clause. If there is a dispute between buyer and seller, they have agreed, per the contract, to go to mediation. If mediation fails, then there is the option to go to arbitration. If both parties agreed to the arbitration clause in the contract, then you are required to go to arbitration if mediation fails. Arbitration is binding whereas mediation is not binding and is usually an effort to come to a mutually agreed upon compromise. I have heard different things about arbitration. It may or may not be more expensive than going to court. The key is if you don’t sign the arbitration clause, you can always decide to go to arbitration later if there is a dispute. But if you do sign this clause, then arbitration is mandatory in the event that there is a dispute and mediation fails. If you don’t sign, you leave your options open for later.

  • House Hunting Tip of the Day

    Posted on April 5th, 2012 acimetta No comments

    Not only is it a good idea for buyers to check the permit history on a home before they buy, but sellers are wise to check the permit history on their homes before putting them on the market. This way, they can correct any permit issues before the listing goes public.

    Some cities require building reports to be pulled on properties before they are sold. There is a cost to pull the report, but it should be under $100. Normally, the seller pays for it, but like everything else, it’s negotiable.

    I just had a situation where the building report was delayed. When we finally got it, we were a week away from the close of escrow. The report indicated that there was a permit for use of the frontage of the property. Apparently, the city owned the first 20 feet from the street onto each lot. Each homeowner had to pay a permit for permission to use this footage. This permit was required to be transferred from one owner to the next at the cost of $700. Fortunately, the buyer and seller agreed to split the cost of the permit so they could close escrow.

  • The run down on AITDs

    Posted on December 29th, 2011 acimetta No comments

    All Inclusive Trust Deeds were big in the 80s and 90s. They are starting to see a resurgence today. Bbut there are some major downsides to AITDs that you should be aware of. Here’s a little background on it. In the 80s interest rates reached incredible highs up to 18%. It was so expensive to get a loan that many buyers and sellers found a way to work around the high interest rates. The buyer would take on the seller’s loan (which was at a much lower rate) and then they would get a second loan to cover the difference between the 1st mortgage and the sales price. The 2nd loan was wrapped around the first hence the term “wraparound mortage” or AITD. The title would transfer to the buyer, but the seller would remain on the first loan; the buyer would just make the payments. In the 90s, banks responded by including a “due on sale” clause in their loan documents. This clause stipulated that if there was a transfer of title, the bank would have the right to “call” the loan or in other words, require the borrower to pay the loan in full.

    In the past several years, interest rates have been so low that there hasn’t been a need for buyers to do a wraparound mortgage. However, today we have more and more sellers who are underwater. They don’t want to short sale, but they don’t want to continue to make huge mortgage payments either when they have lost so much equity in the property. Voila, the return of the AITD. A buyer can come in and take over the current loan. Again, the title is transferred but the seller remains on the mortgage. It sounds like a win-win for everyone. But so many things can go wrong. The buyer may decide he doesn’t want to make any more payments. The seller then is on the hook for the mortgage and he doesn’t even own the house any more. Or the lender could do a random check (which they do) and notice that there is a change in title. The “due on sale” clause kicks in. The bank can decide to call the loan. The bank will come after the seller for the money, and ultimately the the bank can foreclose on the property. An AITD sounds like a great way for a seller to remove himself from a mess, but if anything goes wrong, and there are so many different scenarios not discussed here, that I would recommend to stay far away from AITDs. If you do consider one, please consult an attorney.

  • Appraisals

    Posted on February 15th, 2011 acimetta No comments

    Well, the unbelievable happened. A lender had an appraisal done a few weeks ago on a property that my client was buying, and the appraisal came in higher than the sales price. It does happen! If you have an appraiser who is familiar with the area, you have a much better change of getting an accurate appraisal. And my client got some additional built-in equity.

  • The Nature of the Real Estate Market

    Posted on October 4th, 2010 acimetta No comments

    When people ask me how the market is doing, I can honestly answer that it’s not bad. Let me clarify, markets are local. There are definitely some bad markets out there. But if I’m speaking specifically about my local markets, i.e. Hermosa Beach, Manhattan Beach, Redondo Beach, and other South Bay cities, the market really isn’t that bad. There are plenty of buyers out there. There have been multiple offers on some properties. Qualified buyers do get financing. Interest rates are phenomenally low. But one of the biggest differences I do see is a buyer’s attitude toward real estate.  What I mean by that is when the real estate market was exploding and everyone was rushing to get into the game, buyers were somewhat careless about what they bought. They overlooked negative features. If the house was located on a busy intersection, they thought that the noise wasn’t that bad (once the TV was on, the windows were shut and they spoke really loud). If the 4th bedroom was more reminiscent of a modest walk-in closet, they called it an office and threw their old sleeper sofa in there. If the home inspection report provided a laundry list of problems, buyers refrained from asking the seller to do any repairs for fear that they would lose out on another property to another buyer who was a lot less concerned about dry rot, electrical problems, plumbing issues or any other number of red flags. But today, in this current market, buyers have changed their tune. Their threshold for problems or quirks is much lower. They won’t settle for a house just for the sake of becoming a homeowner. They will look and they will move on if they don’t feel the house will properly meet their needs. It’s definitely a buyer’s market and the buyers can afford to be selective.

  • Do Sellers Always Accept the Highest Offer?

    Posted on July 21st, 2010 acimetta No comments

    When you make an offer, it’s not always just about the sales price. There are plenty of terms that the seller will take into consideration when selecting a buyer. Here are some terms that can make or break a deal. First, the size of the down payment needs to be considered. Is this buyer going to have a hard time getting a loan? The ideal buyer is an all cash buyer. The seller does not have to worry about the bank giving loan approval. If there is a loan, the smaller it is the better. Conventional financing is much easier to secure than a jumbo loan. Second, is the buyer well qualified? This goes hand in hand with the down payment. If the buyer has substantial assets, and a low debt to income ratio, then there is a better chance to secure the necessary financing. Or if there is a hitch in the loan, it may be possible for the buyer to come up with more money. Third, the buyer’s contingencies and the length of the contingency period are crucial items to consider in an offer. The more contingencies in the contract, the more opportunities the buyer has to cancel. So a more attractive offer is one that does not have as many contingencies or the contingency period has been shortened. Fourth, if the buyer asks for any seller concessions, it weakens the offer. The more the buyer asks for, the less likely the seller will want to accept the offer. And if the concessions have a dollar sign in front of them, it will only serve to reduce the offer price in the eyes of the seller. Last, how long is the escrow period? Each seller will have a preference for a long or short escrow, but normally the shorter the escrow the better. Again, a long escrow just leaves more opportunity for the deal to fall through.Of course, markets are not created equal. Depending if we are in a buyer’s or seller’s market will help determine how negotiable a seller will be. But when a seller is comparing one offer to another, these are definitely some of the points of comparison.I’ve heard some buyers complain that they offered a sales price that was ultimately higher than the final price at which the property sold. Keep in mind that a lot of things go on during an escrow period. It’s always possible that a buyer made a highly competitive offer, but then negotiated the price down based on the home inspection or the appraisal. Or the winning offer may have had other terms that the seller found attractive and just as important as price.