I want to take this opportunity to wish you the happiest of holidays. I know 2020 has been a challenge for all of us, but we made it. We’ve had the pleasure of helping many clients buy and sell homes, and I hope you’ve had a good year too. On a personal note, I look forward to spending time with my nieces and nephews and seeing the joy of Christmas through their eyes. Be safe out there, have a merry Christmas and a happy New Year, and I look forward to seeing you in 2021!
If you ever have any real estate needs, don’t hesitate to reach out to me. I’d be happy to help.
What’s behind the increased migration of homebuyers across the country?
Since the COVID-19 pandemic began, many companies have realized they don’t need all of their employees to physically come to work, which has convinced them to either close down their offices or move their offices to less expensive states. Similarly, many employees have realized that they don’t need to live in major metropolitan cities and are now moving to the suburbs or other less expensive areas.
According to a recent poll, roughly 67% of employees across American claim they don’t have to go into work as much as usual. Those who’ve been renting in the big cities can now afford to buy a home in the suburbs, a rural area, or even another state due to the low interest rates we’re seeing. National Van Lines, Inc. recently conducted a migration survey and found that these are the top five states from which people are moving:
New Jersey
Illinois
Connecticut
Kansas
Ohio
Meanwhile, these are the top five states people are moving to:
Vermont
Oregon
Idaho
Nevada
Arizona
There could be a variety of reasons behind these migration patterns. Here in California, for example, we have a high tax bracket and a high income tax, so many businesses and residents are leaving. Additionally, our average home price is about $500,000, which is twice as expensive as any other state in the union. The average yearly salary needed to live in San Francisco alone is roughly $350,000.
If you’d like to talk more about what’s driving people to relocate or whether or not it’s in your best interest to do so, feel free to call or email me anytime. I’d love to help.
The 2020 holiday season has officially begun! This has been a challenging year for so many of us, and I sincerely hope that, if nothing else, these upcoming holidays offer respite for you and your family.
We’d like to take a moment to express our gratitude to all of you this Thanksgiving. We have met some truly wonderful people, and we’re proud to have helped so many reach their real estate goals over the years.
We wouldn’t be where we are today without all of your support. Be safe in your travels, watch out for one another, and enjoy your Thanksgiving dinner—that’s what we plan to do!
In the meantime, please don’t hesitate to reach out to us if you have any real estate questions. We would be happy to help you.
I’m back once again with my good friend Dave Marzinke from Movement Mortgage to talk about a topic that’s been coming up a lot in my conversations. With a lot of homebuyers facing multiple-offer situations, people are unsure whether or not they should make an offer over list price just to get the home they want. The answer is that it all depends, but we have a tool that can help you make a decision.
It doesn’t always make sense to make an offer over list price.
It’s essentially an online automated valuation model that gives a forecasted home appreciation for a particular home over the next 12 months and over the next five years. In some cases, it may make sense to go in and make an offer over list price based on a great future forecast. Over the long term, it could be a great move.
If you have any questions or want a better idea of whether a home is worth buying over list price, reach out to Dave at (949) 449-2477. If you have any other real estate-related questions for me, don’t hesitate to reach out via phone or email anytime. We look forward to hearing from you soon.
I’m back again with Dave Marzinke from Movement Mortgage to talk about what’s going on right now in the mortgage industry.
A few weeks back, the Federal Reserve announced that they were going to keep the federal funds rate at 0% through 2023. Most buyers hear that and think it will keep rates down for another two years, but that might not be the case.
The truth is that mortgage-backed securities are a completely different instrument than the federal funds rate. The federal funds rate can be set by the Federal Reserve and they can change it whenever they want.
Mortgage rates themselves are affected by mortgage bonds, which are affected by inflation. When we start to see signs of inflation, that can push rates back up even if the federal funds rate is zero.
Mortgage-bonds affect rates more than anything else.
If you have a decent credit score, good income, and a solid debt-to-income ratio, you’re looking at an interest rate of 2.75% to 3% for a conventional mortgage if you were to buy a home right now. It makes a ton of sense to buy and lock in that rate for a 15- or 30-year term.
If you have any questions for Dave about interest rates or anything else related to mortgages, give him a call at (949) 449-2477. If you have any other real estate-related questions for me, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.
Usually, one of the first times I’ll ever hear from someone is when they call wanting to know the value of their home. More often than not, these soon-to-be sellers mention estimates they got from Redfin and Zillow; they want to make sure they’re looking at the most accurate comps and that they know what’s been happening in their market over the past 30, 60, or 90 days.
The main difference between Zillow and Redfin is that Redfin works with a smaller number of homes—about 74 million compared to Zillow’s 110 million. However, of the 74 million homes that Redfin uses, one million are actually active on the market. Zillow may have a larger total pool of homes, but a smaller percentage of those homes are active on the market.
Redfin takes most of their listings right from the MLS.
Additionally, Redfin factors in the list price of properties on the market, whereas Zillow does not. Instead, Zillow will use the square footage, room count, and general tax information to figure out an average of sorts. Redfin takes most of their listings right from the MLS, which is the most accurate source. Their margin of error for estimates of value is roughly 1.77%, which is very low compared to Zillow; a couple of years ago, Zillows margin of error was around 7.9%, but they’ve managed to get that down to 4%.
Redfin and Zillow are great tools to use if you’re looking for a place to start, but I strongly recommend reaching out to a professional who has a lot of experience working with your local marketplace.
If you have any questions about your particular property, don’t hesitate to call, text, or email me. I’d be more than happy to help you.
We have very low inventory in our market, and demand from buyers remains high. One of the ways to be creative as a homebuyer is to use the love letter strategy. Here are a few different reasons why this kind of love letter can help you win as a buyer in a seller’s market:
1. It shows your excitement about the property. If you’re willing to invest time and energy into a heartfelt letter, you have genuine passion and excitement. The seller will know that you really have done your research on the home.
I’ve had clients get their offers accepted because of a good love letter.
2. It lets them know you are working for them. You’re going above and beyond to try and get this home, and it shows that you care about it. It also shows the seller’s agent you’re working hard for them, too.
3. It humanizes the situation. It’s not just numbers and figures anymore. A real human, emotional connection can be made with a love letter for a home. I’ve actually had customers whose offers were accepted because of something that was included in their love letter.
These are just a few of the reasons why I encourage my clients to write love letters in a market like this. If you have further questions for me about this topic or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.
As a buyer, closing costs are a part of doing business when closing a transaction. Here are six such fees to prepare for when buying a home:
1. Title fees. Here in California, title representatives will conduct a background check to ensure the property is clear of any liens or other encumbrances, so they’ll have their own fees. How much this will cost you depends on the price of your home, but if you’re getting a loan for, say, $465,000, it will be in the neighborhood of $1,400.
2. Escrow fees. If you buy in California, escrow companies will cover all the documentation and act as middlemen between you and the seller. Typically, they account for 1% of the purchase price. These fees can include notary fees, so if you’re able to go to your agent’s office to sign any paperwork, you can reduce the cost of this fee.
3. Home inspection fees. You don’t have to order any inspections, but it’s highly recommended that you do. A general home inspection costs anywhere between $400 and $600—depending on whether the property is a condo or house.
There are six fees to prepare for when buying a home.
4. Lender fees. The exact cost for this fee depends on which loan you apply for—FHA, conventional, jumbo, etc. Talk to your lender and ask for a quick overview of the fees they’ll charge to get a good idea.
5. HOA fees. If the property is in an HOA neighborhood, you’ll have to pay the HOA transfer fee.
6. Property taxes. Real estate taxes are prorated at closing, depending on the day and month of your purchase.
On the seller side, these fees can be provided by your agent. You can also ask the escrow company to provide a detailed net sheet of each estimated cost before listing your home.
As always, if you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’m here to help.
If you’re an investor and own multiple properties, how do you protect yourself from a potential lawsuit? Here are four tips to limit your liability:
1. Be honorable and ethical. Treat your tenants honestly and make sure they’re taken care of. Being upfront with them goes a long way. Make sure your contracts are signed properly, the deposits are returned in a timely manner, and anything that needs to be fixed in your units is done so immediately. Simply knowing your tenants elevates your relationship with them to a richer level and can potentially protect you from being sued.
2. Set up an LLC (or multiple LLCs). I, for instance, have seven properties that are owned as part of LLCs. You can assign two properties per LLC, or assign them up to a certain value amount. This way, if you’re sued for one property, an established LLC will act as a legal veil that protects your assets.
There’s always the potential to lose your business assets, but your family needs to be taken care of first.
3. Set up a HELOC. A home equity line of credit ensures that you’ll have cash reserves if you need to hire legal counsel. If you don’t need them, then no harm, no foul—you’re not paying any interest on them.
4. Set up an umbrella policy with your insurance broker. This way, you can increase the insurance that will cover specific things related to the property. Your insurance company will cover you in case there’s an accident, and you can make sure your property is well-secured.
If you do get sued, it’s imperative that you protect your family. There’s always the potential to lose your business assets, but your family needs to be taken care of first. You can always buy real estate again, but it’s more important to have enough money set aside to take care of your family while the lawsuit proceeds, so have some money saved up or a mortgage that’s paid off for yourself.
If you were found guilty and needed to pay restitution, you’ll obviously want to pay what you can. During this process, though, you can set up a self-directed IRA or Roth IRA to put some money aside for the future that the tenant can’t touch.
If you have questions about protecting your assets or there’s anything else I can assist you with, feel free to call, text, or email me. I’d love to speak with you.
Preparing your home for sale seems simple at first, but can soon unfurl into a daunting campaign. Like most things, home prep becomes easier once you know what to focus on. Here are the top five things you should do as a soon-to-be home seller:
Have a consultation with your Realtor. I love to meet with a potential client to discuss some of their goals, establish a practical time frame for each step in the process, and share what sort of approaches we can implement to maximize their sale.
Tackle home improvements. If you’ve lived in your home for 10 years or more, you’ll more likely need to tackle some problem areas. Today’s buyers are savvy when it comes to scoping out a home; they’ll leave no stone unturned, so we need to make sure any issues to the front, back, and inside get addressed beforehand. Whatever we can do to make the home more turnkey ready will be worthwhile.
Make sure the home is decluttered. Before we can have photos taken, your home needs to be clean and photo-ready. I know everyone likes to think they always keep their home presentable, but selling is a different ball game; your home has to look like a model home—cleared out, clean, and minimally (yet tastefully) furnished. I suggest getting a few boxes and mark some for donation, trash, and the rest for storage. If you declutter thoroughly, you will get the highest value for your home.
Improve curb appeal. Now, I’ve already addressed a lot of this topic in a previous video, but here’s a quick recap of things that go a long way for a home’s exterior: power washing the driveway; planting new flowers and weeding the garden; painting your front door; trimming lawn edges and shrubbery; and laying fresh mulch.
Professionally stage the home. I have a couple of professional designers that come in and help us stage the property. So if you don’t have furniture that’s necessarily in the best shape, we can actually rent chic items and arrange them in the most conducive way for pictures. We could also just move your furniture around to maximize lighting and make each room appear larger. If you want your staging prepaid, we can deduct that money from the escrow at the end of the sale (this financing option also applies for any of the aforementioned projects if you don’t have the money to get them done yourself).
I hope this list provided you with a better sense of direction as a seller. If you have any questions, reach out to me via phone or email. I’m happy to answer your questions, refer you to great resources, or schedule that initial consultation with you.
Today I have four tips to share if you’re moving out of the area or state:
1. Talk to your agent. The real estate agent selling your house will have referrals in their database of agents in other areas, both in your state and outside of it. I have tons of referrals for Realtors I’ve worked with in other states. 2. Groups of real estate agents. This is another excellent resource to use. For example, I work with a VA representative (Veterans Association of Real Estate Professionals). They have over 40 chapters all over the country, and I’ve met them at conferences, spoken to them on the phone, and know their history. I’ve also worked with the Women’s Council of Realtors. These are fantastic resources. There are different organizations that your agent is either a member of or knows, and they have people who could be amazing resources to help you find a new property.
Your real estate agent will have contacts in their database for great Realtors in other areas.
3. The agent contacts the client. The out-of-area Realtor will contact the buyer moving to their area and have a long conversation about where they’re going to work, the school districts, different areas and cities nearby, and more. Then they’ll help the client make decisions based on their needs. These needs could include traffic concerns, activities they’re involved in, price, etc.
4. Find a national lender. If you’re selling your home from somewhere else, you’ll need a national lender, someone who is licensed in the state you’ve come from to the state you’re moving to. This will make the transaction a lot smoother than having to go through two different lenders.
These are just a few tips if you’re moving to a different area or state, but there are many more. Contact us if you’re interested in hearing more about this topic.
If you have any further questions, comments, or suggestions, feel free to call or text us. We look forward to helping you.
If you want to add value to your home before you sell, there are two things you actually shouldn’t add to your house:
1. Windows. I had a client who wanted to replace his windows but was planning on moving in about two years. Within this time, he would not get all his money back. However, he decided to go ahead and get them because his current windows weren’t working properly.
New windows are a great idea if you’re improving your home for the long term. However, if you’re only going to be there for a short time, you won’t get your money back for that investment. (Of course, get them if you need windows that work correctly, like my client.)
New windows and solar panels are expensive, and you may not see a return.
2. Solar panels. Another client of mine had 22 panels installed on his house. At the time, the state was offering a tax credit on solar panels, so he only had to pay half the cost. He’s retiring and plans to stay in his home for a long time. His solar panels will decrease his monthly electricity bill, so it was an excellent investment.
However, a different client of mine is selling their house and has a lease on their solar panels. That lease has to be qualified by the new buyer. If you have solar panels on your home, remember that when you sell, that payment you’re making on them must be qualified by the buyer, and they may not be able to afford or get financing for that extra cost. Bottom line: You’ll save on utility costs if you plan to stay in the house long term, but there are extra costs associated with solar panels.
Also, check out this link to my video about the pros and cons of installing a pool on your property.
If you have more questions about home upgrades to avoid or real estate in general, feel free to reach out via phone, text, or email. I look forward to speaking with you soon.
Right now, I’m working with a client who is in the process of building a new home. We had been working with them for about four weeks showing resale homes, but they suddenly came across a new construction home they wanted to purchase. You might be wondering what the difference is between buying a resale home and a new construction home. Here are the main points you need to know:
1. Base price. A base spec sheet for a new construction home will say that the home is worth x number of dollars. However, that number won’t include upgrades, landscaping, or anything additional you get added to the home. The base price is the bare minimum of features.
2. Agent involvement. If I’m showing resale homes, I’m in complete control of the process and negotiations. For new homes, I’m pretty much out of the picture. I’ll get a referral from the builder, but I’m not able to actively represent you in a transaction like this.
The base price has the bare minimum of features.
3. Contract. You won’t have an appraisal or inspections with a new construction home. The only contingency you’ll really have is a financing contingency. 4. Warranty. On a resale, your warranty will cover the home and its appliances for a year. With a new home, you’ll have a builder’s warranty, which covers the actual construction but not the appliances. You’ll have to get a separate warranty for that, but they will also be brand-new. 5. Taxes. New homes will have additional taxes, such as a Mello-Roos tax. They end up costing you more in taxes than a resale home.
I hope these tips were helpful for you. If you have any questions for me about buying a home or anything else related to real estate, don’t hesitate to reach out via phone or email today. I look forward to hearing from you.
If you’re thinking about selling your home, its online presence is more important now than ever. Here are a few tips to help enhance your online listing and ensure that it catches the eyes of homebuyers: 1. Plan ahead. Using your pictures and videos you can set up a website for your virtual open house. Buyers can sign up, sign in, and even make an appointment to see it in person. 2. Come prepared. Make sure that you have masks, sanitizer, and gloves if you do have buyers coming to see a home in person. Practice social distancing, too! Turn on the light switches and leave all the closets and doors open.
3. Do a walk-through. Before a buyer sees the home in person, you can take a virtual video tour of the home and post it on Facebook and your MLS listing.
If you have any questions about how to show your home virtually and/or in person right now, don’t hesitate to reach out via phone or email. I look forward to hearing from you.
A lot of people have been asking me if it’s a good time to buy or sell a home. Even though we’re still in a global pandemic, I want to reassure you that the real estate market is moving along. Over 2,300 home sales closed in March in Orange County across all price ranges. We’re still doing business, albeit in a more safe and socially distant manner. What can you expect in the coming months? To find out, watch this short video above.
Today I’m sharing some of the steps I take to help people who are otherwise unable to buy or sell in this ever-changing market. It all starts with arranging a virtual meeting for us to discuss your preferred time frame for buying or selling, and what features you’re looking for in your next home. I’ll set up a search criteria within a specified area for price ranges, amenities, build types, etc. and send matching properties directly to you via email. From there, we can carefully narrow down your options. Getting in and out of homes right now is difficult, but that’s where virtual tours come into play; I’ll be able to enter a home myself, showcase its features via a live or pre-recorded video, and answer your questions. To learn more about other awesome tools, like 3D Matterport virtual walkthroughs, watch the short video above.
Today I’m discussing the pros and cons of buying or selling a house during this pandemic. People who have lost their jobs may not be able to make their mortgage payments and might not be able to keep their homes. Of course, that’s heartbreaking, but they’re able to sell right now despite the health crisis. Also, more houses coming onto the market benefits buyers. Additionally, interest rates are currently extremely low. To learn more about buying and selling amid the coronavirus, watch the short video above.
Here are the top five tips you must remember if you want to avoid having a nightmare tenant:
1. Make sure they have a completed application. This way, you’ll be able to follow up with them and find out more about their personal and work history.
2. Make sure they have a good credit report. For this, I use companies like RentSpree and TenantReport.com. They charge anywhere from $20 to $35, and they’ll provide you with a complete credit report along with the potential tenant’s credit score. I typically look for a score above 720, but exceptions can be made, depending on the explanations. Find out the applicant’s current pay history, whether they pay on time, and make sure they don’t have any foreclosures or bankruptcies.
3. Ask for bank statements. I usually ask for two or three of the applicant’s latest statements. These statements will show you a pattern of their current bills, and you can compare them to their credit report.
4. Meet the applicant at the property. This verifies that the property is exactly what they’re looking for. It also gives you an opportunity to introduce yourself, establish a great rapport, determine the best means of communication, and go over a few ground rules (e.g., where they’ll be parking).
5. Beware of any applicants who want to move in immediately. Any situation where applicants want to move in immediately constitutes a red flag for me. Why do they need to move in so quickly? Haven’t they planned this out? This isn’t to say that everyone has to follow the typical 30-to-45 day moving timeline, but in this case, I recommend getting in touch with their current landlord and asking why they want to move out so quickly.
As always, if you have questions about this or any real estate topic, don’t hesitate to call, text, or email me. I’m happy to help.
Self-employed borrowers take a lot of deductions on tax returns to reduce their exposure come tax time, which is right around the corner.
So, instead of using their tax returns to come up with their qualifying income, David Marzinke and the Movement Mortgage team uses their net income to determine how much home self-employed borrowers can buy. They can look at either the borrower’s business or personal bank statements, depending on how they structure things, to come up with qualifying income based on those deposits.
Self-employed borrowers can increase their purchasing power.
This increases the self-employed borrower’s purchasing power, as they’ll be able to show their full deposits and present more income. There are some limitations, however: The self-employed borrower has to have been in business for at least two years, and they need to own at least 50% of that business.
As always, call, text, or email if you have questions about this or any other real estate or lending question. We’re here to help and would love to hear from you.
For those out there looking to sell their homes, iBuyers (or instant buyers) have become an increasingly popular option over the last few years. In fact, one particular business sold over 10,000 homes in 2018. These programs are run by companies like Zillow, Opendoor, Knock, and Offerpad.
They reach out to home sellers, ask them to fill out a home evaluation, and make a cash offer. Most of the time, the price that they offer you will be 20% less or more than your home’s actual market value.
Although you’ll take a discount on the sale price, iBuyers do offer convenience. They can get you the cash right away and let you close whenever you want. If you need to sell or move quickly, this could be a great option for you.
Another benefit is that nobody has to even come through your house or know that you're selling it. No open houses, no showings, and no nosy neighbors. If you prefer to keep your sale private, this could also be an attractive option.
iBuyers will typically ask you to make repairs after their initial offer.
The major con that you need to watch out for is the hidden fees. They can charge anywhere from 13% to 15% on commission, whereas a traditional agent will only charge you 5% to 7% with no hidden fees.
Another con is that they’ll typically ask you to make repairs. They offer the price, you sign the contract, then they find out you need repairs. Of course, they will want to reduce the offer at this point, and you may end up stuck doing them because you already signed the contract.
Finally, sellers typically aren’t represented in this type of transaction. Once you’ve signed on the dotted line, you can’t use representation. If you had an agent, they’d be able to negotiate on your behalf and in your best interest.
If you have questions about iBuyers or anything else related to real estate, feel free to give me a call or send me an email. I look forward to hearing from you soon.
Today I’m joined once again by Dave Marzinke of Movement Mortgage to discuss cross collateral loans.
I have a client who’s looking to sell a $1-million house in Mission Viejo that they only still owe $550,000 on. They’re also looking to purchase another house, so the plan was to sell their current home first, and close on their new home, which is listed at $1.2 million. However, this process comes with moving problems and whatever complications arise from needing to coordinate closings.
This is where the cross collateral loan can help. Nobody wants to be a contingent buyer and have to sell their current property and be in escrow before making an offer on a new home, so this loan allows you to place a loan on two properties at the same time. It also allows for more flexibility on the down payment you’ll need for your new home.
Nobody wants to be a contingent buyer and have to sell their current property and be in escrow before making an offer on a new home.
So hypothetically speaking, let’s crunch the numbers for my client. The combined value of their current home and future home is $2.2 million. The cross collateral loan can be up to 90% of that value—in this case, $1.98 million. After paying off the balance of their current home, that leaves them with a little over $1.4 million to buy their new home. They can technically buy with no money out of pocket.
To qualify for a cross collateral loan, you’ll need a minimum FICO score of 700 and a minimum debt ratio of 50%. You’ll also need six months’ worth of cash reserves for your loan payment.
If you have questions about cross collateral loans or any other real estate topic, don’t hesitate to reach out to me. I’d love to help you.
An important change has been applied to the VA loan in 2020, and today I’m joined by Dave Marzinke of Movement Mortgage to discuss this change and why it benefits you. Previously, you had to come up with a down payment if you were buying a house whose purchase price was over the county loan limit. The down payment was 25% of the difference between the purchase price and the loan limit. Now, you can use 100% financing even if the house you’re buying is over the loan limit.
If you have any questions about this topic or need help buying your next property with no money down, call or email me anytime. I’d love to help.
In 2019, we saw a very strong U.S. economy. Trade wars with China, Brexit, and the Trump impeachment dominated headlines.
Unemployment reached a 50-year low, and the GDP delivered on high expectations. The interest rate for a 30-year fixed mortgage ranged anywhere from 4.5% to 3.5% and finished at 3.75%.
Here in our Orange County market, the active inventory is at about 3,700 homes. That number may sound high, but it’s actually anemic for our market. As the year heats up, we’re anticipating inventory to rise; by summer, we can expect about 7,000 homes on the market.
For those selling homes right now, you have no competition, so take advantage of it. On the buyers’ side, there aren't a lot of homes to choose from. Still, if you find something to your liking, be sure to put in a competitive offer—I’m sure the seller will take it.
Overall, 2020 will look a lot like 2019, just a tad hotter.
We’ll likely see a 3% to 4% growth in demand around the spring and summer. The housing cycle for 2020 will mirror 2019: We’ll start slow in the first quarter, heat up in spring, top out in summer, and cool off come fall.
If you’re in the market for a luxury property, now is a fantastic time. Days on market for that bracket is currently between 175 and 275 days, so conditions are prime for striking a good deal.
I foresee interest rates remaining about the same in 2020. If our economy continues trending upward, we may even see a slight increase. However, if developments regarding trade wars or Brexit rock the boat, we could see a small decrease to about 3.5% to 3.75%. To any potential buyers on the fence: Lock those rates in, get the house now.
Overall, 2020 will look a lot like 2019, just a tad hotter. Buyers need to be patient, as multiple-offer situations will become more common. If you have any questions about what the year ahead holds or if you’re thinking of buying or selling now, please reach out to me. I’m always happy to help.
