Buying and Selling When You're Ready

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Well, let's start with a few of the obvious things; first off, we have some of the most amazing weather in all of America! But I could be a little biased as I was born and raised here. Although most would agree that Southern California is one of the most temperate climates in all of California. We have neither severe cold spells and not often do we experience excessive heat. And the options environments are crazy good! Most of us can be in completely different landscapes in a little over an hour. In theory, you could be skiing in the morning and then surfing by the afternoon! I think we can all agree that Southern California is one of the best places to exist!

Now, let's talk Real Estate. As a Realtor, I often hear questions and concerns from people wanting to somehow predict our regions housing market. This, however, is not an easy answer. There are so many variables that can affect our housing market, I cannot overstate this point; there is not one way to predict what our housing market will do in the future for 100% certainty. With all of the knowledge, experience and information that the housing specialists have, like weather men, they might be lucky sometimes but they will not ever be right all of the time with their predictions. Interestingly enough, we all sound a lot like specialists when talking about the past. While it is true that the past can be a great indicator of the future, it's even more important to acknowledge that there has never been a time in history that is exactly like this one; politically, socially, economically, etc. These are just of a few of the many variables that have a trickle down affect on our housing market today. There are so many parts and pieces that are constantly moving and shifting, making it hard to know what to do and when to do it, from those standpoints.

With that being said, "how do we decide when to buy, sell or hold a property in Southern California?" The best answer is, BUY WHEN YOU"RE READY, SELL WHEN YOU'RE READY AND HOLD IF YOU'RE NOT READY!. For instance; if the needs of your family require more space, you have prepared and have the funds ready for an upgrade, interest rates are low and maybe you've started to notice some pretty shady characters lurking around your neighborhood, now might be a good time for you to start thinking about a move. In this case, whether or not the real estate market sky rockets in the next few years or whether it takes a dive, this may have no bearing on your move whatsoever. Because the good news is, your sole purpose is not the immediate investment, unless you are planning to "flip" the home by immediately trying to turn it for a profit; when you buy a home with the long term financial investment and life long investment for your family in mind, you cannot go wrong.  Try not to get hung up on all of the "what if's" of the decision, and try to consider the variables of "timing the market" as a guideline not as a deciding factor on your move. You will always be the best predictor for what works best for you. You cannot go wrong if you've made the best decision you know how to for your family's future!

Buying a Fixer

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Have you ever seen the movie The Money Pit? This was a great 80's movie that shows an exaggerated reality of a couples not so great home purchase. Obviously, this is not the norm situation, even with a "fixer-upper". But you get the idea that they have gotten way in over their heads as far as their initial expectations about the home.These days with TV shows like, "Flip or Flop and "Fixer Upper", we all think that a home that needs work would be the best way to save some money on a purchase, but this is not always the case. Yes you might be saving money on the list price on a property that needs a little "TLC", as some realtors describe it, but there are other considerations that need to be made before you sign those purchase docs.

Get an Inspection from Someone who has Experience with these kinds of Homes

During the first few days of your buying process, you will have an inspection done on the property. They will look for all kinds of issues with the home and they will be able to give you a good idea of what you should expect as far as any future maintenance and immediate maintenance is concerned. This individual should have experience working with fixer-uppers because they will be best suited to tell you about the home's specific issues. As they walk through the home, make sure to follow them as they will be pointing things out that you may have otherwise missed with an inexperienced inspector. Also, make sure to have a list of your own with items on it you wish them to check. Such as: roof, plumbing, electricity, foundation, general structure, windows and doors. Don't forget to take copious notes. These are all pretty standard but since you are looking at investing a good amount of money to fix up, you will want to be sure to dot every "I" and cross every "T".

Adequate Funds Earmarked for Fixes

Decide what kind of a fixer you will be able to proceed with. There are different levels of fixer uppers ranging from, a full "gut job" to simple cosmetic fixes. In addition to the funds needed for your total purchase, including your down payment and closing costs, you will need to have banked a significant amount of money for these inevitable repairs. The last thing that you will want to do is assume that you will be able to just "live" with the condition of a fixer until you have saved more money down the road in order to rehab, that could be more than you bargained for.

Loans for Fixers

Depending on what type of loan you qualify for, FHA or Conventional, the bank will have to approve the condition of the home in order to lend to you. Typically they will send out their own inspector to see what type of condition the home is in. As far as FHA's are concerned, they are easier for buyers to get qualified for, but these types of loans can be tricky because the banks are much more critical about issues with the home. Most of the time, they will want certain fixes to be made prior to the close of your escrow. Conventional loans are a bit more lenient. This loan is harder to qualify for but once you have, they are much more forgiving about the lending requirements for the fixes of the home.

The moral to this story is Do Your Homework! Make sure your expectations are reasonable and you understand this type of home purchase and the possible pitfalls.

How is the Real Estate Market?

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There's a lot of speculation that goes into people's various predictions of the Southern California real estate market. Some say that the market has "peaked", while others say that, "home prices are still rising with no end in sight". And some are left questioning, "could both be somewhat true?" These are the thoughts that one could be considering when deciding whether or not to make a move in the real estate market. Beginning your journey through the buying or selling process can be overwhelming in and of itself, so having the answers to some of these questions will help to put things in perspective and enable you to confidently move forward in your action.

"The Market Has Peaked"

This refers to the highest point that the prices of houses have risen to in a specific period of time. This statement could be true, but the truth is we don't yet know if the housing prices are at their peak yet. They could continue to rise or they could start falling. There are quite a few variables to be considered when deciding if houses have hit their highest point. I believe the best way to know this is by looking backward. You can see it in hindsight where the housing prices peaked within a certain period of time. But use this only as a relative measure to the many other factors that should be at play in your decision on whether it's the best time to buy or sell real estate.

One important variable that might help you to see things more clearly are the interest rates. The interest rates definitely have a crucial impact on the housing market. You will want to keep an eye on this as the rates can sometimes price you in or out of an area that you may have your eye on.

"Housing Prices are Still Rising"

Bottom line is, in a "normal" real estate climate, housing prices will always rise year over year. There have been few exceptions to this rule, but far and away houses gain value each year. If you look at any standard housing market table, you will be able to see that as far back as you can get reference for, housing prices tend to go up. Typically about 11% on average. There have been some slower rising years, being 5% or 6%, but nevertheless you will eventually see return on your investment in the long run. Like every investment, it has it's ups and downs, but generally speaking, investment in real estate will be a safe place for your money.

In addition, there are other variables that may help to gauge where the market is currently. A big consideration is in the law of supply and demand. When there are less homes available for purchase on the market, seller's can demand higher prices because there's more competition. Conversely, if all of a sudden people start putting their houses up for sale, so much so that there are more homes on the market than buyers, that will drive the prices down. A good real estate agent will be able to educate you on what the specific neighborhood homes are selling for in your area. In doing this, it will help you to get an idea of how much you will pay or what price you will need to list your house at so it will sell in an appropriate period of time.

Although it is important to consider these questions when thinking about a move in the real estate market, the number one variable for timing is YOU. When the timing is right for you and your family, we would love to help you through your process. Call us anytime for more information about your real estate options in today's market!

You can also visit our website: http://joshandshellyrealestate.com/

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                      How Do I Know I'm Making a Good Investment on My Home Purchase?

Here's the bottom line, you will never know for 100% certainty that you are making a good investment on your home purchase. The truth is, the Real Estate Market is and will always be extremely volatile. Ultimately we have no control nor are we able to predict successfully the investment in the long run. But, there are ways to curb the somewhat inconsistent behavior of the market by making good choices for yourself when picking a home. There are several things to keep in mind when owning a home, I have compiled a brief list:

1. Area, Area, Area!

Although there will always be some dips in the market, generally speaking, the values in real estate have been continuing to rise over time. The first thing that you may want to consider is the neighborhood. Choose a neighborhood that has been rising in value over time, a good realtor can help you do this research.  Some neighborhoods may rise at a slower pace and some quicker. And then there are those neighborhoods which continue to decrease in value, with hardly an end in sight. Those are typically the crime ridden or the severely dilapidated areas.  But, you can encourage the steady rise in the value of your purchase with the best neighborhood you can choose within your budget. Most anything can be changed about a house but you can't change the neighborhood itself. You will get the best return on your investment by buying a less expensive home in a great neighborhood than the most expensive house in an ok neighborhood.

2. Maintenance

Another thing you want to look at is the maintenance on your property. Over time it is important to keep up with regular fixes and updates, such as; plumbing, electrical, flooring, paint, roof and any outside maintenance. Although you may not be considering moving for a long while, you will not want to wait until the last minute and spend a ton of money and time on doing those things. If you defer, you may only have two options, to sell "as is" which means that all of those fixes and updates will be on the new owner, with a cost to you in the form of a lower sales price, or the other option will be to invest a lot of time and money into updating and fixing the deferred maintenance, hopefully getting the money out that you put in at the last minute. Like anything else, if you take care of a property, it will hold it's value in the long run.

3. Upgrades and Remodeling

While upgrading and remodeling are usually good things, some people do not stop to consider what their changes could do to the value of the home. For instance, deciding to make a four bedroom family home, in a family neighborhood, a two bedroom home. I have seen this done! This couple, wanting to update to their taste and needs went a little overboard by not considering the long term ramifications of their choices. While they clearly spent a great deal of money upgrading their kitchen by expanding it, upgrading the flooring to expensive tile and adding a "dressing room" in their master suite, they also thought it a good idea to tear down the walls to a bedroom to make a larger entry way and cut another bedroom in half, enlarging their master bathroom and making a separate dressing room. Now, although they updated to their ultimate vision, they failed to consider what the eventual resale value would be, in the eyes of the vast majority of people purchasing in that neighborhood. The result was that when it came time to sell their, now 2 bedroom 2 bathroom, home, it sat on the market for several months. This was in a highly desired neighborhood with low inventory! A 4 bedroom 2 bath, with a lot of square footage, home would've been snapped up immediately had they not deleted bedrooms. This couple eventually lowered the selling price considerably in order to get it sold. My guess is that they lost some money on their home because of their large investment in upgrades that would not be appealing to most buyers.

Something also to keep in mind is that everything is relative. If you plan on staying in a house until the day you die, you may not care about it's future resale value. But for the majority of people, do your homework when picking a neighborhood, do your regular maintenance and consider resale value when making major changes to your home. If you think about your asset for the long haul, you'll help to control the value of your investment in the future.

Why is it a Seller's Market?

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        You may have heard over the years, "It's a Seller's Market". But a lot of people are uncertain of what that means. The actual definition is this: A market which has more Buyers than Sellers. High prices result from this excess of demand over supply. This means that when there are more people seeking to buy a home than there is inventory, there may be several buyers who will want to bid on the same property. This, in most cases, will drive up the price of a home's value.

As you may have noticed, in the past several months that the real estate market trends have been shifting. For much of 2015, the market was a bit more balanced, the supply and demand were weighted about the same. Inventory in quite a few areas in Southern California has been declining recently. So again, most real estate analysis' are predicting that 2016 will be a "seller's market."

Generally, here are the characteristics of a sellers' market, according to Reality Times:


1. Booming local economy. Local businesses are hiring at a brisk pace. New companies are opening up shop.

2. Low existing housing inventory. More jobs are coming into a market where there's not enough inventory to house all the workers, thus creating financial pressure on local resale units.

3.  Home sales prices are escalating. Over the last several years, the national increase has been in the five to seven percent range. In a seller's market, it's not unusual to experience double digit increases. Some communities could double in price in just a year or two.

4. Buyer contracts begin to come in non-contingent. Buyers want to purchase a house, period. They no longer offer under list price, ask to sell their house first before settlement, or try to buy without financing already approved. There is no negotiating for the "perfect" terms. Getting the house, is the perfect term.

5. Seller subsidies disappear. While buyers used to ask for some sort of assistance -- lower price, points paid, closing costs -- the buyers must come to the table without any help from the seller.

6. High down payments become the norm. Buyers benefit from high appreciation and begin bringing down payments such as 25-plus percent to the transaction.

Does any of this ring true in your area?


While we are starting to see this trend emerging, it is still not too late for buyers to benefit from buying now. The rates are still at an all time low. The Feds are expected to slowly raise the interest rates over the next year or two, but we are not there yet. Buyers are in a very good position to take advantage of rates that may never be this low again. Another way buyers are still in a good position is the season. Typically we find that most people who are wanting to buy do so more often in the spring and summer. The benefit to a buyer who makes a purchase in the off season, is that even though inventory may be low, your competition with others buyers for the same home will also be extremely minimal. It's time to buy some Real Estate!

Staging vs. Empty When Selling a Home

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These days, home buyers usually start their home search online. One major factor that attracts them to a home is having good quality photos. In most cases, the more images of the home online, the better. In general, viewing  a room with furniture will give the buyers an idea of space. Viewing an empty room tends to be more ambiguous. The goal is to get as many interested buyers visually as possible, so by correctly staging your home before you sell it, you may get more than what you're asking.


Empty Rooms

You must show your home's potential! When you have an empty space, it may not send the right message to the prospective buyers. Typically, people have a hard time visualizing themselves in a vacant, empty room. By placing a few strategic pieces of furniture and decorations, suddenly the room comes to life and the buyers will be more drawn to that space.

Size Matters

By walking into an empty space, most people will have a hard time with the concept of space. It's hard to know what will fit in each room if there aren't markers to help them, such as furniture and décor. By decorating these rooms, considering the optimal amount of space, it gives buyers genuine perspective on how their furniture will fit in these spaces and therefore they will see the potential of the home for them.

Ideal Décor

The most important things to keep in mind when decorating are to maximize space in each room and show room potential appropriately. For example, placing a mirror on wall in a small room will create the illusion of more space. Also, putting potted plants around will bring to life an otherwise vacant home. Try to show as much usable space in each room as possible. Buyers love options, if they think there is a lot of usable space, even if the room happens to be somewhat small, it creates the illusion of a larger room.

Hallways

Hallways do not have to be just a means to get from room to room. Again, people want options for  rooms as well as potential, even hallways. For example, the end of a hallway is usually a great place for a mirror, a small table or some attractive artwork.

Room by Room

You will need to walk through each room and look for ways to spruce them up. Placing eye catching, modern décor will make your home memorable when buyers are looking at multiple houses. For example, having new dishtowels or brightly colored flowers in the kitchen can make it feel like the heart of the home. Do the same thing in the bathroom, find attractive details to stage with so that the house feels more livable. Going through each room and placing these items strategically will surely keep the buyers coming!

Don't Do This

Besides leaving a house completely empty, there are a few other things you will want to keep in mind when staging the home. Think about the size of the space, if it is smaller, do not use large bulky furniture, it will instantly make the room shrink. If you have a large space, you can be a bit more liberal with the size and amount of furniture you want to use. Adequately show the size of the room by using comparable sized furniture and décor to each room size. Also, do not put heavy window covering on the windows, this will only make the room seem dark and buyers tend to like light and bright spaces. Additionally, do not over decorate! This will also make the room feel cluttered and the buyers won't be able to see themselves in that space.

Stagers charge various amounts for their services. But they have access to a ton of inventory from warehouses. They can help you put together an appropriate and attractive theme that will most likely earn you some extra return on your initial investment!

Should I Buy a Condo or a House?

                                                   
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When it's time to buy a property, many first-time buyers consider two options, a condo or a house. Many people struggle with the various pros and cons of owning each. Ultimately there is no wrong answer to this question, you have to figure out what will work best for you. There are several things to keep in mind that may assist you in determining your best option.

Location and Lifestyle

Consider first where you want to live. The majority of the time condo buildings are clustered in certain areas, as well as single family homes. For example, urban areas tend to be a bit more impacted because those areas are centered around businesses, movie theatres, shopping and restaurants.Therefore, the type of housing that you will generally find here are condo complexes.
 Conversely, single family homes are usually clustered in suburban areas. These neighborhoods tend to be quieter, more spread out and can be several miles from shopping centers.

You also need to look at your lifestyle and figure out what makes sense for your needs. For example, if you work near the urban area, enjoy being able to walk to activities, have a small family, do not have a large budget, a condo may be a nice option for you. If you are beginning to build your family, you want more room for the long haul, or simply that you don't want to share walls with others and it fits within your budget, a house might work best for your growing needs.

Maintenance Costs

You can't avoid maintenance costs when you own any kind of  a property. But there are a few differences between what you can expect to have to pay for in a condo or a house. When you purchase a condo, you also agree to pay a monthly fee to the Home Owners Association (HOA). The good news is that this fee handles some of your maintenance costs for your property. They typically handle most things on the outside of the building and the upkeep of the amenities that the community offers. Such as; painting the building, landscaping, pool, gym, etc. Although, most issues with the inside will be the owners responsibility. Having said this, with these benefits that the HOA offers, they also will have a list of rules and regulations that you will need to abide.

When you purchase a single-family home that property is wholly the owners responsibility. Everything that the home needs, in the way of updates and regular maintenance is financially up to you. But with this, you are your own boss. You have complete domain over your property and you do not need to ask permission for anything.

Lending and Price

Another thing you want to consider when deciding between the two property options is, the lending process. You will want to get in front of a lender that will first get you pre-qualified to help determine your price range. This alone may narrow your options for purchase. But also, your lender will tell you what kind of a loan you will qualify for, whether it be Conventional, FHA or VA. Each of these loans requires a different minimum down payment and FICO score minimum. This may also help to narrow your search. And consider this, most condo complexes do not qualify for a FHA loans. That means that you will have to have a Conventional or VA loan only. Now houses on the other hand will take any of these loans, which widens your options greatly.

The price difference between a condo and a house is also something to look at. For example, you may be looking to get a nice, large condo in a good area. For the same price range in a home, you will find a smaller, fixer home, in an area that you may not like as well. Now of course there are exceptions to this rule, but generally speaking, you will spend a great deal more on a home  than on a condo.

Again, both of these options are good ones. Sometimes the process of deciding what's best can seem overwhelming. But, taking things step by step will help to lead you in the right direction!