Your home is up for sale, but the market is slow. Finally, you get an offer on your home, but it is for less than you would like to take. Should you reduce your price to get it sold? Perhaps not! Instead, you may want to offer to buy down the buyer's interest rate.
Monthly payments:
If you reduce the price by $20,000 on your listing you will save the buyer $103.00 per month-
however, if you use the same $20,000 to buy down the interest rate you will save the buyer $541.00 per month!
Qualifying for a loan:
Did you know that a buyer of your $450,000 listing needs $96,000 in income to qualify for the loan. However the buyer of your reduced $439,000 listing needs $94,200 in income to qualify for the loan. If you took that same $11,000 dollar reduction and paid down the interest rate, that listing needs only 474,400 in income to qualify for the loan!
Care for more examples? Feel free to contact me and I'll show you how it works! Remember, with many people, they don't care what the price is. The monthly payment, the down payment and the ability to close the escrow are what would make the difference!
Until next time,
Patti Phillips
Friday, January 4, 2008
Wednesday, January 2, 2008
The Real Estate Market in San Diego?
Everyone always asks, “What’s going on in the market? Has it reached the bottom? Is it a good time to buy or invest? Below is a synopsis of some recent articles discussing the San Diego market. 2007 has been a tumultuous year in real estate almost everywhere in the United States and San Diego was no different, although maybe a little better than some areas.
· Economic indicators remain good. Interest rates are at very low levels, local Employment levels are strong, inflation is under control and the gross domestic product is growing. The current unemployment rate in San Diego county is about 4.8%. Some experts predict a net gain of about 5,000 jobs over the next year.
· The loan debacle needs to be put into perspective. While the subprime loan situation is a tragedy for some only about 10% of homes are financed with subprime loans. Many subprime loans will never be foreclosed so most of those borrowers have had a chance to own a home they would not have owned otherwise. The foreclosure rate on prime loans is usually about 0.6% to give some perspective. Real estate is a long term ownership proposition, so hopefully those subprime homeowners that survive will have a chance to build some equity over time and to take advantage of some of the concessions that have been made by their lenders.
· Local construction is way down and we are running out of buildable land in San Diego which bodes well eventually for existing properties. Once builders finish discounting their existing inventories the pressure that puts on other resale homes will diminish.
· Housing prices in many areas are still above their levels of 3-4 years ago. Several “experts” predict prices will be level to down 4-5% in 2008, so buying a home now on the market for 95% of the listing price gives the downside protection most people desire and could get them into their new home at or near the bottom of the market.
· Foreclosure activity in San Diego has been most concentrated in the south bay areas of Chula Vista and National City, east county and the Route 78 corridor because this is where most of the subprime borrowing took place. When a foreclosure hits the market in these areas it often devalues the entire neighborhood, especially if these foreclosed homes have been left in poor condition by the departing owner. This reduces the "flipping" opportunities for those kinds of buyers. Most of the coastal locales have fared better. As close as I can calculate I think about 5% of our current for sale inventory is foreclosures, although about 25% of the sales closing escrow are foreclosures, meaning it is tougher for non-foreclosure listings to sell unless they price accordingly. Some estimates conclude that about 25% of the foreclosures are investor owned properties, many of which the investor probably hoped to flip for a quick profit. Often for legal reasons the lenders are not taking deeply discounted offers and almost all bank-owned property is sold “as-is”, which sometimes eliminates many buyers who are not in a position to inject significant amounts of capital to bring the home back into prime condition, especially after tenants or angry owners have done their last minute damage. As of 12/31/07, approximately 358 of the 6,019 (6%) active condo listings in San Diego County were identified as bank owned, foreclosure or distress sales and about 602 of the 12,132 (5%) active detached home listings were similarly identified. This is far better than the 25%-50% we hear about in many other parts of the country.
· Tourism, San Diegos dominant industry, remains strong with large numbers of visitors spending time and money here every year. Many of my clients either visited here and wanted to eventually live in San Diego or lived here and moved away for some reason and then moved back.
· Our level of new incoming leads from potential buyers is at high levels and has been for several months with a high percentage opting to start automatic listing alerts, indicating a higher level of interest. This tells me that we could be bottoming out as more and more people are studying the market in preparation for a possible purchase. In fact, last month was the second most productive month of 2007 in terms of the number of incoming buyer inquiries.
2008 should be an interesting year in Real Estate! One always needs to remember, there will always be someone who needs to buy or sell, no matter what the market is! People get married, have more children, have health issues, job changes, scale down..... on and on.
I caution you that in this market, when listing, you really need to make certain that you are working with a top agent who is willing to spend the time, effort and money in seeing that your home get sold!
Meanwhile, I wish you a Happy 2008!
· Economic indicators remain good. Interest rates are at very low levels, local Employment levels are strong, inflation is under control and the gross domestic product is growing. The current unemployment rate in San Diego county is about 4.8%. Some experts predict a net gain of about 5,000 jobs over the next year.
· The loan debacle needs to be put into perspective. While the subprime loan situation is a tragedy for some only about 10% of homes are financed with subprime loans. Many subprime loans will never be foreclosed so most of those borrowers have had a chance to own a home they would not have owned otherwise. The foreclosure rate on prime loans is usually about 0.6% to give some perspective. Real estate is a long term ownership proposition, so hopefully those subprime homeowners that survive will have a chance to build some equity over time and to take advantage of some of the concessions that have been made by their lenders.
· Local construction is way down and we are running out of buildable land in San Diego which bodes well eventually for existing properties. Once builders finish discounting their existing inventories the pressure that puts on other resale homes will diminish.
· Housing prices in many areas are still above their levels of 3-4 years ago. Several “experts” predict prices will be level to down 4-5% in 2008, so buying a home now on the market for 95% of the listing price gives the downside protection most people desire and could get them into their new home at or near the bottom of the market.
· Foreclosure activity in San Diego has been most concentrated in the south bay areas of Chula Vista and National City, east county and the Route 78 corridor because this is where most of the subprime borrowing took place. When a foreclosure hits the market in these areas it often devalues the entire neighborhood, especially if these foreclosed homes have been left in poor condition by the departing owner. This reduces the "flipping" opportunities for those kinds of buyers. Most of the coastal locales have fared better. As close as I can calculate I think about 5% of our current for sale inventory is foreclosures, although about 25% of the sales closing escrow are foreclosures, meaning it is tougher for non-foreclosure listings to sell unless they price accordingly. Some estimates conclude that about 25% of the foreclosures are investor owned properties, many of which the investor probably hoped to flip for a quick profit. Often for legal reasons the lenders are not taking deeply discounted offers and almost all bank-owned property is sold “as-is”, which sometimes eliminates many buyers who are not in a position to inject significant amounts of capital to bring the home back into prime condition, especially after tenants or angry owners have done their last minute damage. As of 12/31/07, approximately 358 of the 6,019 (6%) active condo listings in San Diego County were identified as bank owned, foreclosure or distress sales and about 602 of the 12,132 (5%) active detached home listings were similarly identified. This is far better than the 25%-50% we hear about in many other parts of the country.
· Tourism, San Diegos dominant industry, remains strong with large numbers of visitors spending time and money here every year. Many of my clients either visited here and wanted to eventually live in San Diego or lived here and moved away for some reason and then moved back.
· Our level of new incoming leads from potential buyers is at high levels and has been for several months with a high percentage opting to start automatic listing alerts, indicating a higher level of interest. This tells me that we could be bottoming out as more and more people are studying the market in preparation for a possible purchase. In fact, last month was the second most productive month of 2007 in terms of the number of incoming buyer inquiries.
2008 should be an interesting year in Real Estate! One always needs to remember, there will always be someone who needs to buy or sell, no matter what the market is! People get married, have more children, have health issues, job changes, scale down..... on and on.
I caution you that in this market, when listing, you really need to make certain that you are working with a top agent who is willing to spend the time, effort and money in seeing that your home get sold!
Meanwhile, I wish you a Happy 2008!
Sunday, December 30, 2007
Suggestions for Leaving a Vacant Home Ready for Sale
Suggestions and Requests for Leaving Your Home Vacant
While Listed for Sale
Once you move out of your home there are a few requests and suggestions that I have for you to keep your home in great condition for showing, so that it will sell as quickly as possible.
1. Please keep all of the utilities on!
It is important that agents can put on lights to best show the features of your home. Often, agents show vacant homes after dark, especially during shortened winter daylight hours. (I have had to show homes by the light of my cell phone! Doesn’t help a home to make a buyer fall in love with your home!)
It is important that the water be kept on. Often buyers will need to use the restroom after hours of house hunting. There is nothing more unappealing than an unflushed toilet, in a closed up home! YUCK! Talk about first impressions!
2. Please keep a few basics in the home. That way if something needs a little clean up to stay fresh and clean, it can be done by your listing agent!
Items to leave in the home:
Window cleaner
All purpose cleaner
1 or 2 rolls of paper towels
Toilet paper in each bathroom
A toilet bowl brush
A bucket or large plastic bowl
Spray air fresheners
Optional, but helpful items:
Tidy Bowl or other “bluing” agent inside each toilet bowl.
Broom & dustpan
Footmat outside and/or inside the front door.
Room air fresheners or potpourri
None of these items need to be expensive. The 99 cent store carries all of these items, and they are perfectly fine for the few times they will be used after you move.
There are open houses where things can get tracked in. Sitting toilets often form a “ring” which looks unappealing. If items are left to give the toilets a little quick clean up it keeps the home looking fresh. A bit of toilet bowl cleaner helps.
Solid air fresheners keep the home from smelling “stale”. Window cleaner can remove fingerprints on mirrors, doors, etc.
3. Please keep maintenance on your yard and pool active
Remember, you only have 1 chance to make a first impression. Weeds in the yard, straggly grass, dead plants, green scum on your pool all make the WRONG first impression. You want your home to sell for the best possible price. Don’t make it look like a distress sale by saving a few dollars on it’s upkeep!
Optional:
4. Hang a neutral, new looking set of towels in each bathroom
A nice looking set of towels makes each bathroom look more elegant, finished and homey.
Other suggestions
Talk to me about staging ideas that we could do to make your home look more appealing, homey and like a model home.
While Listed for Sale
Once you move out of your home there are a few requests and suggestions that I have for you to keep your home in great condition for showing, so that it will sell as quickly as possible.
1. Please keep all of the utilities on!
It is important that agents can put on lights to best show the features of your home. Often, agents show vacant homes after dark, especially during shortened winter daylight hours. (I have had to show homes by the light of my cell phone! Doesn’t help a home to make a buyer fall in love with your home!)
It is important that the water be kept on. Often buyers will need to use the restroom after hours of house hunting. There is nothing more unappealing than an unflushed toilet, in a closed up home! YUCK! Talk about first impressions!
2. Please keep a few basics in the home. That way if something needs a little clean up to stay fresh and clean, it can be done by your listing agent!
Items to leave in the home:
Window cleaner
All purpose cleaner
1 or 2 rolls of paper towels
Toilet paper in each bathroom
A toilet bowl brush
A bucket or large plastic bowl
Spray air fresheners
Optional, but helpful items:
Tidy Bowl or other “bluing” agent inside each toilet bowl.
Broom & dustpan
Footmat outside and/or inside the front door.
Room air fresheners or potpourri
None of these items need to be expensive. The 99 cent store carries all of these items, and they are perfectly fine for the few times they will be used after you move.
There are open houses where things can get tracked in. Sitting toilets often form a “ring” which looks unappealing. If items are left to give the toilets a little quick clean up it keeps the home looking fresh. A bit of toilet bowl cleaner helps.
Solid air fresheners keep the home from smelling “stale”. Window cleaner can remove fingerprints on mirrors, doors, etc.
3. Please keep maintenance on your yard and pool active
Remember, you only have 1 chance to make a first impression. Weeds in the yard, straggly grass, dead plants, green scum on your pool all make the WRONG first impression. You want your home to sell for the best possible price. Don’t make it look like a distress sale by saving a few dollars on it’s upkeep!
Optional:
4. Hang a neutral, new looking set of towels in each bathroom
A nice looking set of towels makes each bathroom look more elegant, finished and homey.
Other suggestions
Talk to me about staging ideas that we could do to make your home look more appealing, homey and like a model home.
Friday, December 21, 2007
Bush Signs Mortgage Forgiveness Into Law!
Mortgage Forgiveness Act Signed into Law
Yesterday, President Bush signed H.R. 3648, The Mortgage Forgiveness Act of 2007, into law, sparing homeowners the tax burden associated with canceled mortgage debt.
Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was considered taxable income. The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007 to the end of 2009. The bill also extends the tax deduction for mortgage insurance premiums through 2014.
"This is going to make a happy holiday for many homeowners," President Bush said yesterday before signing the bill in to law. During the press conference he added the following:
"When you're worried about making your payments, higher taxes are the last thing you need to worry about. So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. And it's a really good piece of legislation. The provision will increase the incentive for borrowers and lenders to work together to refinance loans – and it will allow American families to secure lower mortgage payments without facing higher taxes."
"There's more work to be done," Bush added, saying that Congress needs to pass legislation to strengthen Freddie Mac and Fannie Mae, to modernize FHA, and to allow the government to issue tax-exempt bonds for refinancing existing home loans.
H.R. 3648 Summary
Yesterday, President Bush signed H.R. 3648, The Mortgage Forgiveness Act of 2007, into law, sparing homeowners the tax burden associated with canceled mortgage debt.
Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was considered taxable income. The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007 to the end of 2009. The bill also extends the tax deduction for mortgage insurance premiums through 2014.
"This is going to make a happy holiday for many homeowners," President Bush said yesterday before signing the bill in to law. During the press conference he added the following:
"When you're worried about making your payments, higher taxes are the last thing you need to worry about. So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. And it's a really good piece of legislation. The provision will increase the incentive for borrowers and lenders to work together to refinance loans – and it will allow American families to secure lower mortgage payments without facing higher taxes."
"There's more work to be done," Bush added, saying that Congress needs to pass legislation to strengthen Freddie Mac and Fannie Mae, to modernize FHA, and to allow the government to issue tax-exempt bonds for refinancing existing home loans.
H.R. 3648 Summary
Thursday, December 20, 2007
Our Perspective on the Negative Real Estate Headlines
If you read the same newspapers that I do, all you see is "doom and gloom". Our own San Diego Union Tribune is the biggest proponent of the doom and gloom- on a daily basis. Often the headlines tout "the sky is falling, the sky is falling....", but when you read the article underneath, there really is very little to be negative about!
To share some perspective with you, I thought you might enjoy reading the following article by Prudential California Realty's President and CEO, Steve Rodgers. I think that he puts things very well concerning our real estate market.
"To be newsworthy, a story must be immediate. That’s why the current real estate market is such a hot media topic — and why the long view doesn’t get much ink or airtime. That’s too bad, because that’s where you’ll find the most compelling real estate story of all.
1969: “The goal of owning a home seems to be getting beyond the reach of more and moreAmericans. The typical new house today costs about $28,000.”– Business Week
1977: “The median price of a home today is approaching $50,000. Housing experts predictprice rises in the future won’t be that great.”– National Business1985: (Median home price $152,720.) “The golden-age of risk free run-ups in home prices is gone.”– Money Magazine
1996: (Median home price $194,382. Defense cuts had triggered steep home price declines.)“A home is where the bad investment is.”– San Francisco Examiner
In the three years following that last statement, California home prices rose 19.7%, wiping out the losses of the early ‘90s and ending the decade with a net gain of 9.35%. By 2000, the median home price had hit $273,713.In 2005, it reached $603,927.
The media continues to play up bad economic news, including real problems in the lending marketplace. The truth is, a home remains the most enduring investment most of us will ever make.
That’s because the return goes so very far beyond financial rewards. To own a home is to make a priceless investment in our lives — and a confident affirmation about our future.
We’ve noticed that real estate professionals at the top of their game are actually energized by challenging market cycles.It’s an exciting opportunity to show their clients just what they can do.
Teaming up with an agent like that is no challenge at all.Just look for the Prudential Rock."
I think that Steve says it well!
To share some perspective with you, I thought you might enjoy reading the following article by Prudential California Realty's President and CEO, Steve Rodgers. I think that he puts things very well concerning our real estate market.
"To be newsworthy, a story must be immediate. That’s why the current real estate market is such a hot media topic — and why the long view doesn’t get much ink or airtime. That’s too bad, because that’s where you’ll find the most compelling real estate story of all.
1969: “The goal of owning a home seems to be getting beyond the reach of more and moreAmericans. The typical new house today costs about $28,000.”– Business Week
1977: “The median price of a home today is approaching $50,000. Housing experts predictprice rises in the future won’t be that great.”– National Business1985: (Median home price $152,720.) “The golden-age of risk free run-ups in home prices is gone.”– Money Magazine
1996: (Median home price $194,382. Defense cuts had triggered steep home price declines.)“A home is where the bad investment is.”– San Francisco Examiner
In the three years following that last statement, California home prices rose 19.7%, wiping out the losses of the early ‘90s and ending the decade with a net gain of 9.35%. By 2000, the median home price had hit $273,713.In 2005, it reached $603,927.
The media continues to play up bad economic news, including real problems in the lending marketplace. The truth is, a home remains the most enduring investment most of us will ever make.
That’s because the return goes so very far beyond financial rewards. To own a home is to make a priceless investment in our lives — and a confident affirmation about our future.
We’ve noticed that real estate professionals at the top of their game are actually energized by challenging market cycles.It’s an exciting opportunity to show their clients just what they can do.
Teaming up with an agent like that is no challenge at all.Just look for the Prudential Rock."
I think that Steve says it well!
Thursday, December 13, 2007
Seniors- Taking your tax base with you....
When many seniors think about selling their home and "scaling down" or moving to a single story home they are concerned that they will be paying higher taxes, due to our "Prop 13" tax laws in California.
Are you aware of Prop 60/90? It is the tax provision that allows you to keep your tax base- on a one time basis- within California. Basically, this is how it works. Seniors need to buy a home that costs the same or less than the home they sold/ are selling. It works within the same county in most cases- some counties (few) have a reciprocal agreement that allows you to move within different counties and have the same privilege. (Note: San Diego County is the most lenient county in the state, allowing you to move here from ANY county and bring your tax base with you!)
Keep in mind that this is, for the most part, and with only a few exceptions, a one time allowance. You have a time period- I think up to two years to file for the transfer of the tax base. I suggest that my clients wait a while after moving before filing for the allowance. Why? because I have seen clients move from a detached home into a condo- only to find that they HATE condo living after 3 or 4 months. If they have already taken their one time allowance- and they decide to sell and move- they have lost it forever!
As a Senior Real Estate Specialist helping my clients negotiate through situations like this is one of my services.
If you have any further questions, take a look at the link below- or give me a call! I'm happy to help!
http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm
Are you aware of Prop 60/90? It is the tax provision that allows you to keep your tax base- on a one time basis- within California. Basically, this is how it works. Seniors need to buy a home that costs the same or less than the home they sold/ are selling. It works within the same county in most cases- some counties (few) have a reciprocal agreement that allows you to move within different counties and have the same privilege. (Note: San Diego County is the most lenient county in the state, allowing you to move here from ANY county and bring your tax base with you!)
Keep in mind that this is, for the most part, and with only a few exceptions, a one time allowance. You have a time period- I think up to two years to file for the transfer of the tax base. I suggest that my clients wait a while after moving before filing for the allowance. Why? because I have seen clients move from a detached home into a condo- only to find that they HATE condo living after 3 or 4 months. If they have already taken their one time allowance- and they decide to sell and move- they have lost it forever!
As a Senior Real Estate Specialist helping my clients negotiate through situations like this is one of my services.
If you have any further questions, take a look at the link below- or give me a call! I'm happy to help!
http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm
Friday, December 7, 2007
ARM Adjustment Relief is on the Horizon!
Adjustable interest loans, foreclosures, short sales, defaults....... What are homeowners to do? Relief may be on the way!
As you may have heard, President Bush announced a plan yesterday to help relieve homeowners who are facing adjustments to their ARM loan rates... The plan intends to reduce the number of future foreclosures and mortgage defaults and improve our housing market. Some critics feel it is too lenient. Others feel it is "too little, too late." In any case, help is much needed, and the bleeding needs to stop!
Following is an excerpt from today's San Diego Union Tribune.
"Who qualifies: People with subprime mortgages who live in the residence covered by the mortgage.... Homeowners who appear unable to refinance their loans would be eligible for the fast track to freeze their interest rates for five years. To qualify, they must have a credit rating below 660, must occupy their home and the reset must increase what they owe by at least 10 percent. Those above 660 could still qualify but must prove that don't make enough money to absorb a mortgage rate increase.
Under the plan, borrowers at risk of losing their homes must discuss their options with their mortgage servicers. These firms include giants that manage about 80 percent of affected mortgages, such as Wells Fargo and Countrywide Financial.
The servicers will attempt to determine which people who have kept up with their payments are likely to be able to refinance their mortgage, perhaps into federally insured FHA loans. That will include those with at least 3 percent equity in their homes.
Time frame: Loans must have been taken out between Jan. 1, 2005, and July 31, 2007, and have interest rates that will reset between Jan. 1, 2008, and July 31, 2010.
The problem: Subprime mortgages, many taken out with rates of 7 percent to 8 percent, are scheduled to reset at rates of up to 11 percent. That increase could add $350 to the typical monthly payment of $1,200.
The freeze: Rates will remain at the lower introductory rate for a period of five years."
If you would like more information, give me a call!
You can also access the entire Union Tribune article here: http://www.signonsandiego.com/uniontrib/20071207/news_1n7mortgage.html
I hope this plan is able to provide relief for many of those who so need it!
As you may have heard, President Bush announced a plan yesterday to help relieve homeowners who are facing adjustments to their ARM loan rates... The plan intends to reduce the number of future foreclosures and mortgage defaults and improve our housing market. Some critics feel it is too lenient. Others feel it is "too little, too late." In any case, help is much needed, and the bleeding needs to stop!
Following is an excerpt from today's San Diego Union Tribune.
"Who qualifies: People with subprime mortgages who live in the residence covered by the mortgage.... Homeowners who appear unable to refinance their loans would be eligible for the fast track to freeze their interest rates for five years. To qualify, they must have a credit rating below 660, must occupy their home and the reset must increase what they owe by at least 10 percent. Those above 660 could still qualify but must prove that don't make enough money to absorb a mortgage rate increase.
Under the plan, borrowers at risk of losing their homes must discuss their options with their mortgage servicers. These firms include giants that manage about 80 percent of affected mortgages, such as Wells Fargo and Countrywide Financial.
The servicers will attempt to determine which people who have kept up with their payments are likely to be able to refinance their mortgage, perhaps into federally insured FHA loans. That will include those with at least 3 percent equity in their homes.
Time frame: Loans must have been taken out between Jan. 1, 2005, and July 31, 2007, and have interest rates that will reset between Jan. 1, 2008, and July 31, 2010.
The problem: Subprime mortgages, many taken out with rates of 7 percent to 8 percent, are scheduled to reset at rates of up to 11 percent. That increase could add $350 to the typical monthly payment of $1,200.
The freeze: Rates will remain at the lower introductory rate for a period of five years."
If you would like more information, give me a call!
You can also access the entire Union Tribune article here: http://www.signonsandiego.com/uniontrib/20071207/news_1n7mortgage.html
I hope this plan is able to provide relief for many of those who so need it!
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