I’ll be honest, it’s challenging in this market to compete with other buyers when you have VA or FHA financing. The reason being is there are so many buyers making offers on properties that sellers naturally gravitate to offers that are all cash or have heavy down payments, and those offers that remove certain contingencies such as appraisal or loan up front. There are two major issues that you are up against with a VA loan.First, the appraisal process can be sticky. If there are issues with the property, the appraiser will red flag these items which will need to be addressed prior to the close of escrow. In most cases, the seller knows that this responsibility will fall on them because someone who isn’t making a down payment, won’t be able to afford the cost of repairs either. Second, sellers equate (whether accurate or not) the size of the down payment to the strength of the buyer.It’s going to be crucial for you to work with an agent who can effectively educate the listing agent to why your offer is a strong offer. And there are things you can consider to make your offer stronger. For instance, you might not be making a down payment, but you can pay your own closing costs. Or if there are problems with the property, you may want to put in the offer that you will take care of these costs for repairs. You also may want to refrain from asking for a home warranty paid for by the seller. Doing things like this will help you structure a stronger offer.You may also want to make sure that you pick a lender with the shortest turnaround times. The time it takes to process a VA loan can be longer than conventional financing which is definitely a down side. With my VA clients, I also like to emphasize the patriotic angle of a VA offer. Veterans are being rewarded for their dedication to this country. They shouldn’t be penalized for not making a down payment. As long as the lender is giving the preapproval, there is no reason why the loan should not come through. I always want to encourage positive feelings with the seller if they decide to accept a VA offer.. it’s like they’re saying thank you for your service.It’s going to be challenging, but it’ s not impossible. You just have to be patient and keep trying.
Inventory in Redondo Beacn (as in all the Beach Cities) is still low. Multiple offers are running rampid. Prices are being pushed up. The question is how high will they go – or in other words, how desperate are buyers? There are certain properties that test the waters for us – that show that buyers have gone a little crazy, and the market is getting over-inflated. One of those properties is 2500 Ruhland. It’s a beautifully remodeled town home. It has 2800 sq feet with 4 bedrooms and 3.5 baths. With these stats alone, I absolutely agree with the price point of $899,000 in our current market with the most recent sales as comps. But the location is two doors away from the high tension power lines, locating it in the eastern most part of North Redondo. If this town home sells close to or above asking, I believe we’re experiencing an inflated market that will later be referred to as another bubble, albeit, a smaller one. Another town home that’s pushing the envelope is 2204 Plant Ave, #A. It’s an attached town home built in 2007. With 2500 sq feet and 4 beds, 2.5 baths, it’s a nice property that shows well. It’s potential downside is that it’s located across from Lincoln Elementary. The street gets congested with the loading and unloading of kids every day. Again, I like this property; It shows wells. But keep in mind, it sold in May 2008 for $830,000 and now they’re asking for almost a $100,000 more at $924,500. We’ll see if they get it, and if it is, this market may really be out of wack. There is always the possbility of sustainability in the market, but I think that the current pressure buyers are feeling right now are and the low supply is propelling the market at a much faster rate than what the industry experts were expecting for the next several years. One last property to earmark is 1933 Gates Ave, #B with the asking price of $949,000. I will keep you posted as additional data becomes available and I can further analyze which way this market is trending.
I sat down with Ray Kay of Searchlight Financial today. He reminded me of how low rates are… and I don’t mean the average 3.5% rates. I’m talking about rates even closer to zero. This is how it works. You get an interest rate of 3.5% but you’re in a 40% combined federal and state tax bracket so you get the 40% tax deduction. This calculates out to: 3.5% X .6 = 2.1% after your deduction.
Essentially you are paying 2.1% on the money you have borrowed!
Here’s another important perspective that Ray points out: You buy a home for $500,000 with 20% down and that home is worth $750,000 in 10 years. (I think you will agree that this is pretty conservative.) What is your profit? Most people would say 50% because $750,000 – $500,000 = $250,000 which is 50% of the original $500,000 sales price. But this is wrong. You only put 20% of the $500,000 down so let’s see:
Initial Capitial Investment = $100,000 (20% of $500,000)
Value of Home After 10 Years = $750,000
Increase in Equity = $250,000 ($750,000 – $500,000)
Profit on Your Original $100,000 is $250,000 or 250%
That’s not a bad investment!
Home buyers still appreciate travertine. It’s elegant and has a crisp, clean look. Travertine can be a challenge to keep clean however because it is porous. It’s important to seal the travertine – a couple of coats – to make it easier to clean. Otherwise, polishing powders, and such, can accumulate in the holes. Travertine is great for floors, but not as good an idea for highly used countertops.
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In this graph you can see that inventory continues to dwindle. And in the past few months, the number of transactions that have closed actually out numbers the number of homes for sale. Buyers are desperate for properties. This could be a great time to put your home on the market, if you have been considering it. As I stated in an earlier post today, many properties are get multiple offers and the prices are being pushed up.
Prices continue to go up in Redondo Beach. Case in point, 1625 Morgan Lane came on the market last week (brokered by KW). This is a 3 bedroom Tall & Skinny in the Golden Hills, close to Jefferson Elementary. It has been nicely remodeled. The kitchen has been redone, There are hardwood floors downstaris. And unlike most Tall & Skinnys, all the bedrooms are upstairs which is a huge selling point. The bathrooms were not remodeled, but are very clean. The biggest down side, in my opinion is that the living space (on the first floor) does not get much light. Anyway, it was priced at $759,000. In a few days, the seller had amassed 16 offers, going well over asking. I can reveal the final price once the property closes. This home is ultimately going to sell for more than it may even appraise at. However, the winning bidder may have removed the appraisal contingecny, eliminating this issue altogether.
A few more examples are:
1641 Ford Ave: Listed at $699,000. Sold at $720,000
1517 Stanford Ave: Listed at $739,000. Sold at $769,000. This was my listing. I had 4 offers and the winning bidder was all cash, no appraisal contingency.
1503 Stanford Ave: Listed at $759,000. Sold at $7990,000
1610 Van Horne Lane: Listed at $825,000. Sold at $840,000.
Buyers are being aggressive. If inventory continues to remain low, this marke could continue to rise. The question is are we creating another bubble?
The well recognized fencing has just gone up around the small 1967 built home at 2210 Robinson St in Redondo Beach. Just purchased for $505,000 which is, effectively, lot value, the owner/builder is going to tear it down and build a brand new single family home. This is a 5,000 sq. foot lot, zoned R-1. Redondo Beach will only allow a single family on this property which is largely the case up and down the south side of Robinson St. The north side of Robinson has larger lots and therefore town homes greatly populate this side of the street.
Construction is scheduled to take approximately 7 months and the finished product should be ready by October 2013.
This single family just came on the market in Redondo Beach. It’s listed at $829,000. I previewed it this afternoon during Broker’s Open. It has a unique and fun layout although it might not be for everyone. It’s been nicely updated and gets great light. There’s a 700 sq. foot bonus room along with 3 bedrooms and 2.5 baths. It gets great city and mountain views from the rooftop deck. (Brokered by RE/MAX Estate Properties)
It depends on what type of wood you choose. I just helped a client get their home ready for sale and we replaced the carpet with bamboo. It cost them $8 per square foot. Stairs are more expensive. The treads were $40 per lineal foot and the risers were $10 per lineal foot. They did a total of 425 sq feet of flooring which came to approximately $3690 (not including stairs) including removal of existing tile/carpeting, subfloor prep,and some additional items.
We chose bamboo because it was already installed in other rooms in the house. But the good news was that bamboo is less expensive than hardwoods. You could spend $10, $20, maybe more, per square foot, for some hardwoods.
You can also look into reengineered hardwood floors. I believe they are less expensive. The top is hardwood and underneath is plywood. It’s less thick than a real hardwood floor, but you can still sand them down a couple of times and refinish them unlike laminate floors.
It’s not that commom but there are sellers out there that will consider a “lease option”. In plain English, this is a property that you can rent with the option to buy. Now, you have to pay for the right to this option. Your offer should be structured in such a way that it dictates the rental fee, the sales price, and the cost and expiration of the option. If you decide to purchase the home, then the option normally gets applied to the sales price. If you decide not to purchase the home, then you forfeit the option money.
Otherwise, if you’re renting a property, you can always ask the seller if they would be willing to sell it to you. Or just make sure that they know you are interested, if they decide to put it on the market.