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No Cost Loan

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I just came back from a social event hosted by Fremont Bank and they are offering a zero cost loan for purchases. This is a great opportunity for my buyers to save some money.

Typical fees from lenders include origination fees, doc prep, appraisal, underwriting, rate lock, etc. It can add up fast. Since every purchase contract should be accompanied by your buyer’s cost sheet, very often the lender’s fees can amount to over $2000. That is not too surprising, though, considering that the lender is working for the buyer and has to get paid somehow. However, Fremont Bank is apparently offering this new no cost loan and they told me to just present the coupon when I bring them a buyer and they will honor it. Sounds great and looking forward to try it sometime. It might sound too good to be true but nobody would turn down an opportunity to save money, which is why it is worth trying.

While Re/Max Active Realty already has their preferred lender inside the office (i.e. Bank of America), we really try to ally ourselves with various banks and try to spread the business around. We work hard to get the best rates for our clients and that is why we “shop around.”

2013 Housing Bubble:Truth or Conjecture?

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Many media sources have begun to discuss a real estate bubble is on its way– that housing prices here in the bay area have climbed too rapidly and that we are being setup for another disaster. While it may be plausible, there are also other empirical facts that I want to point out that say that a real estate bubble is not just true.

A real estate bubble, as most of us may already be familiar, is a period of time in which housing prices are temporarily inflated. You will notice right away that this claim is a retrospective one: one that requires commentators to first experience a peak in values followed by a decline in values. As I’m writing this now, there is not yet any sign of price decline, so it’s fair to say that either we have not reached a peak (evidence for a bubble) or we have not yet reached a stabilizing threshold (evidence against a bubble and evidence for the normal cyclical nature of real estate values).

Whatever the future will be, it is worth suspending judgement on it for now until the summer ends. Many of my clients are closely watching the real estate activity over the summer, wondering if inventory will increase or if they will remain the same.

As things stand, the bay area is suffering from a shortage of inventory and a high demand for homes. Buyers feel pressure from rising prices and rising interest rates and thus they want to buy sooner to avoid paying a future premium. With many buyers fighting over only a few houses, the bids get high rather quickly. Pretty soon, as the media points out, some cities (but not all) have regained their 2008 values.

The following key idea, however, does persuade me towards the thesis that the bubble may just be pure conjecture, but read on and comment to tell me if you agree or disagree: The foundational idea on why we do not have a bubble on our hands comes from the fact that our buyers are actually qualified to buy these homes. Lending laws are strict and only those with low debt to income ratios and sufficient savings can buy homes. This means that after they buy the home, it is expected, ceteris paribus, that they can continue to afford the payments. The consequence of qualified buyers making qualified purchases and making qualified payments while living in their home is that there is some reassurance in the next 5-10 years that there will not be a large deluge of supply/inventory returning to the market due to defaults. This is precisely the consequence of the most recent mortgage meltdown we experienced in 2007 and at least we have the aforethought to not repeat it.

Given this fact– that buyers are qualified– should give us some peace of mind that there may not be a housing bubble in the making. While I could be wrong, it is hard to avoid the fact that we have qualified purchases being made, thus reducing further negative consequences.

How to Properly Secure a House after Moving In

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It is a sad fact that sometimes houses are broken into after buyers close escrow and are moving into their house. This happens because a house that is advertised for sale has a sign and lockbox, which could be indicators for thieves that a house is vacant. There could be other factors as well, but I would like to briefly talk about how to secure the house you just bought. Below is a list of things to do:

  1. Setup your alarm systems on the same day you switch utility services
  2. Put alarm stickers on your windows and doors and stake the alarm sign in your front lawn (provided by your alarm company)
  3. Rekey exterior doors
  4. Add a 2 x 4 piece of wood to the inside of your garage door with fasteners  provide extra security to that entry way. You basically want to use hardware fasteners that let the wood rest perpendicularly to the door and make sure the wood is long enough to span past the width of the door. You just made a home made barricade. If you need to get through, simply left the wood and pass through the door. At night, put it back and be secure.
  5. Put window coverings on all windows to discourage people from looking inside. Home Depot sells vinyl blinds for less than $6 per blind and they are easy to install and inexpensive. Just measure your windows first, buy them, and install them. You just need a step-up ladder and a screwdriver (SUPER easy!).
  6. Use lamps and radios with store-bought timers (i.e. you plug it into the outlet, then plug the appliance into the timer) in rooms and garages. Vary the times these appliances turn on to make it seem that there are people inside the house.
  7. For the garage, add metal shafts that lock the metal roll-up door to the metal track (i.e. the skeletal track that the metal garage door’s wheels use to move back and forth) to prevent somebody from forcibly opening the garage door. Some newer homes have them built-in, but any cylindrical piece of metal that you can wedge between the railing and the metal roll-up door could work. To test, install the hardware and try opening the garage door with your garage door opener. It should stutter first but remain closed. Call your manufacturer first and see if they have these security products. While a DIY job might be cheap and fast, it could void your warranty, so getting the right hardware might be worth it.
  8. Add pieces of wood the same length as the window track and lay it down so the windows have extra security. This also works great for sliding doors.
  9. Add motion-sensor flood lights to the front of your house that will turn on whenever something moves. It might turn on a lot, but when it turns on at the right time, it will reveal any unusual activity taking place in front of your driveway.

While nobody is foolish enough to break into an empty house (with nothing inside), a thief/robber might wait until the new homeowner moves some stuff inside the house and leave to do the deed.

While termite, home, and roof inspections plus the Realtor’s Agent Visual Inspection are common inspection reports the buyer will read before purchasing, it is really up to the buyer to make sure that all entry points and windows of the house are secure and not compromised.

It’s always good to check for weaknesses in windows or other parks of the house– you do not want that to be an entry point. Weak or broken windows can be temporarily secured with screws (that prevent the window from being opened) or plywood nailed into the walls, covering the window completely. I’m not suggesting to push hard against the window to see if there is a weakness, but just make a visual assessment, open and close the window, maybe press against it and see if the wall is giving or if it is staying put (which is what it should do). If there is a weakness, find the appropriate contractor to make the repairs. Honestly, if someone really wants to break in, they will find a way, but it is your job to make it difficult for them to make them think twice about messing with you.

I hope you find these tips useful not just for moving in for the first time, but also for securing your home in general. None of these security tips cost more than a few bucks so consider using them. Discouraging the opportunity hopefully will deter the crimes.

Free Loan Modification Workshop for Homeowners 6/24/13

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Homeowners learn how to modify their home loan. Learn about eligibility requirements, basics of hardship letter writing, how to submit your documents, how to make trial payments, and learning other alternatives to foreclosure.

Homeowners generating a stable income but cannot afford their current mortgage payments are encouraged to attend. Unemployed homeowners may still attend to learn about their alternatives to foreclosure.

Where: Re/Max Active Realty 4056 Decoto Rd, Fremont, CA 94555 (Cross St: Fremont Blvd, we are the white, standalone 2-story building)
When: 6/24/13 7:30pm-8:30pm, doors open 7:25pm, you MUST RSVP to attend.
What to bring: a notepad and pen to take notes, and (optionally) a calculator and your income and expenses
Tickets/RSVP: go to http://dominguezteamloanmod2.eventbrite.com/ to RSVP. Space is limited to 20 seats.

Directions: Coming from the South Bay:
Take 880 North towards Oakland and exit on Decoto Rd/Dumbarton Bridge. Turn right on Decoto Rd and stay in the right lane. After passing two stoplights, be prepared to turn right into our office before passing the next stoplight which is Fremont Blvd. If you crossed the Fremont Blvd intersection or passed the 7-11 gas station, you went too far. We are directly behind the 7-11 gas station. Map view: http://goo.gl/maps/tTBdw

Coming from the North Bay: Take 880 South towards San Jose and exit on Decoto Rd/Dumbarton Bridge. Turn left on Decoto Rd and stay in your right lane. After passing two stoplights, be prepared to turn right into our office before passing the next stoplight which is Fremont Blvd. If you crossed the Fremont Blvd intersection or passed the 7-11 gas station, you went too far. We are directly behind the 7-11 gas station. Map View: http://goo.gl/maps/byf5k

Light refreshments will be served.

Contact the event coordinator, call or text: 510 304 6060.

(Buyers) How to Get Ready for Escrow Closing when Purchasing a Home and Interspousal Deeds

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How to Get Ready for Escrow Closing when Purchasing a Home/Interspousal Deeds

Escrow signing is one of the most important parts of closing a real estate transaction. For sellers and buyers they must come forward with valid, government issued identification and sign off on the documents that they approve. For buyers, they must approve all the costs that have been sent to escrow. For sellers, they are often releasing title and approving their seller net proceeds. There are many documents that need to be signed and the escrow officer or notary will explain what each document does. The seller and buyer have an opportunity to review all the documents until they are satisfied.

 

If you are a buyer, the best way to prepare for this day is to make sure to:

  1. Make sure that all your identification valid and not expired. Drivers license and passports work well. As long as it is government issued ID you should be fine. I recently learned from the notary of one title company in Cupertino that a certain form of ID called a Matricula, which is a form of ID that can be obtained from the Mexican Consulate in San Francisco, is not valid in order to sign off. This happened to us, and we were compelled to renew the Mexican passport in order to sign off on an interspousal deed. For this transaction, we were lucky because we were able to get a renewed Mexican passport within the same day. My Hispanic clients worked quickly to set an appointment at the Mexican Consulate and get the Mexican passport renewed the following day. As long as the buyer brings the documents asked of him to the Mexican Consulate, then the renewed passport is not a big deal. However, it is always better to get the renewed identification as soon as you get a contract accepted.
  2. Another valuable thing to check is how buyers will take title and what relationship they have with each other. One thing I recently encountered is that if a brother and sister take title, and if the brother and sister are married to their respective spouses, and they want the spouses off from title, then it is very likely that their spouses need to be present at escrow signing in order to sign the interspousal deeds. Interspousal deeds are instruments that remove the other spouse’s interest in the property. Signing this document is triggered when the other spouse does not want to be on title. This is because the state of California is a community property state, which means that whenever a spouse purchases a property, the other spouse is naturally included on title unless they sign this document.
  3. It is important to make sure that the spouses are available to sign and are not out of the country. If they are out of the country, they can use a nearby US Embassy in order to get an interspousal deed signed and notarized. After it is notarized, they can use an international overnight courier service to get these documents sent to escrow as soon as possible. Very often, these documents are a condition to fund a loan or to close the escrow.
  4. If the spouse is out of the country, another tool that you can use is a specific power of attorney wherein the spouse grants the specific power of attorney to sign on legal matters for them. This allows the spouse on title to sign off for the other spouse who’s out of the country, and this could be useful in avoiding delays in closing. Drafting a specific power of attorney should be done by your legal counsel and you should get legal advice before doing it.
  5. Very often, US embassies in foreign lands are very busy and their notary departments have limited hours. It is often the case that you do not need an appointment to sign with them, however it is prudent that you get an appointment so you know that you will be helped. By looking at the Tijuana US Embassy website, for example, they charge about $50 per signature and notary. If the US Embassy is just too busy and you are really strapped for time, it might be a good idea to cross the border and get the document signed by a notary. This works especially well for clients from Mexico might have the abilities to drive across the border and into San Diego to get a notary.

Many people wonder if a mobile notary can cross the border from San Diego to Mexico in order to get a notary signed. The answer to this question is: no they cannot. US notaries are licensed and permitted to make notaries only on US soil.

All in all, if you are signing off on a property that you are about to purchase, it is always good to have valid, not expired identification and make sure that all your spouses are available to sign with you. If they are not available then make other arrangements to make sure that your closing takes place smoothly. Thanks for reading.

How to get your offer accepted in Today’s Agressive Real Estate Market

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The same story is heard again and again: here in Calfornia the housing inventory is decreasing and demand for homes are on the rise. But what should sellers do and what should buyers do in this market? I’d like to offer some tips and tricks that buyers and sellers can use.

Sellers:

  1. Get your home informally valued by a Realtor. The Realtor will use active, pending, and sold data to suggest what your house will sell for in the open market. In some ways the Realtor’s report can be more accurate than appraisals. Appraisals are mostly backward looking, which means if there is a strong uptrend in price, they cannot account for that. Realtors, on the other hand, can use active and pending data to make adjustments to price.
  2. Manage the showings. Houses in today’s market will be like revolving hotel doors. Make sure you set the showing times and make sure people show on time. Seller still occupying the house need their privacy, too, and don’t want to deal with no shows.
  3. Choose the highest and best offer. While this applies in any market, it’s likely you might get presented with 20 offers. You can’t just choose the highest price; you need to choose the offer with the best terms. If a deal can close faster or with cash, you’re reducing the amount of risk by accepting that offer.
  4. Be careful about how you respond to backup offers. While you might want to hold an offer in backup, you need to do it correctly. If you accept another offer in backup, that backup might have priority to other incoming offers. If those incoming offers are superior to your backups and you committed to a backup, you’re stuck. But if you don’t get incoming offers, you need to somehow make the backups stick around for you. Talk to your Realtor to choose the best plan of action.

Buyers:

  1. Be mentally prepared to overbid on well-priced properties. Ask your Realtor to value the house, then determine how much anticipated competition there will be on the house. Decide how much you want the house based on your wants, needs, and means, and make your offer appropriately. It’s rather clear that if you keep getting beat by other offers, you need to get your price up and your terms clean.
  2. Increase your down payment. Needless to say, cash is king and cash offers will beat out financed offers most of the time, so you need to find a way to make your offer more attractive. Increasing your down payment gets you closer to the goal.
  3. Partner with other buyers in a syndicate. If you partner with other people, you might be able to make cash offers on investment property. Five people with $20,000 don’t have as much power as an LLC offering $100,000. Be creative and it’ll work out.
  4. If you really want the house and overbid, remove the appraisal contingency. Basically, sellers don’t want to deal with buyers who will ask sellers to pay for the difference when their financed offer does not appraise at the purchase price. If you want to be a strong buyer, remove your appraisal contingency and be prepared to pay the difference in the appraisal. Make sure you have enough funds to this, and most importantly, make sure you want to do it. The Realtor can estimate how much the difference might be and it varies case by case. Make sure your other contingencies protect your deposit. That’s another noteworthy topic worth discussing with your Realtor.

Thanks for reading and I hope you have gained some insight on how to behave in a market with dwindling seller inventory (particularly the one we’re experiencing in the bay area).