Archive for the ‘Home Buying’ Category
August 28, 2009
As many of you know, I used to be a real estate appraiser (and in a way, always will be). Appraisers are paid for their professional opinions, honesty, and expertise. If they are lacking in any of those three areas, well, they’re just not cut out for the job. I’ve heard a few stories about appraisers lately that made me cringe.
The Good: [Honest and expert] Appraisers not only protect banks from lending more than a home’s value, they also protect the buyer. Let’s say that a buyer is in contract on a home for $500K and the appraisal comes back at $400K. As a result, the buyer does not get their loan and they get angry with the appraiser. In actuality, they should be extremely thankful that the appraiser saved their butts from overpaying by 25%, but appraisers are rarely thanked. Instead, the appraiser gets bashed from the real estate agent (thanks for killing my deal), the buyer (hey, thanks, I lost my home), the seller (you imbecile, I was just about to cash in), and the loan officer (thanks pal, I’m not going to get my fee). If the appraiser is truly an expert, there should be nothing stopping them from doing honest work, including pressure from any of the aforementioned parties. Unfortunately, appraisers can be coerced and threatened (we’re not going to use your services anymore if you don’t hit our number!). This is the reason new regulations are in effect that limit who can talk to an appraiser.
The old days: "If you don't hit my number we're never using your services again!"
Let’s face it, if you have three different appraisals on a property, you’ll get three different values. Read the rest of this entry ?
Posted in Appraisal 101, Home Buying, Tips | Tagged appraisal standards, appraisals, appraisers, home buying tips, san francisco real estate | 3 Comments »
August 6, 2009
From the local accounting firm Bertorelli, Gandi, Won & Behti:
Economic and tax considerations make right now a super-favorable time for parents (and grandparents) who are willing and able to help their adult children make first-time home purchases. Home prices are low, interest rates are low, and the tax factors are almost unbelievably beneficial. How long this ultra-good scenario will last is anyone’s guess, but we would bet not too much longer.
Make sure you negotiate a good interest rate. And for God's sake, clean yer room!!
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Posted in Home Buying, News, Tips | Tagged 2009 taxes, family loan, gift tax, san francisco, san francisco real estate, tax deductions, taxable income | Leave a Comment »
July 30, 2009
Just a friendly reminder if you really want the $8,000 first time home-buyer tax credit but have been dragging your feet lately… it might be time to ramp things up again. The deadline for the tax credit is November 30th. That means you’ll need to have closed on your home by then if you want the incentive. With normal escrow periods taking 30-45 days, you’ll need to be “in contract” by mid-October (and that’s going to be cutting it close). Those applying for FHA financing or purchasing a short sale should build in even more time, perhaps a 60-90 day cushion before November 30th.
And don’t be surprised to see log jams at lending institutions and title companies around November 30th, which could add complications for those trying to squeeze in. Good luck!
You snooze, you lose (regardless of how cute you are)
For more buyer tips, click HERE.
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Posted in Home Buying, Tips | Tagged 8000 tax credit, first time homebuyer, home buying tips, san francisco real estate, tax credit expiration | 2 Comments »
July 28, 2009
Closing costs? Yikes. Complicated subject. That is, until now. One of our all-time favorite real estate related websites is www.closing.com and it provides answers to the most detailed of closing cost scenarios. Here’s how it works:
- You tell Closing.com the address of the property you’re looking to buy or sell and the property type (condo, single family, etc).
- Plug in the purchase (or sale) price, down payment, interest rate, and whether you intend to occupy this property or rent it out.
Plug in some basic info...
That’s it. Closing.com will spit back a monthly payment estimate, and it knows the tax rate for the zip you entered. Next, it will lead you to some title insurance and home warranty providers. Select (or shop) policies to arrive at the final screen, your Estimated Closing Costs Report. Handsomely laid out, this report will detail Read the rest of this entry ?
Posted in Home Buying, Home Selling, Neat Stuff & Gadgets, Tips | Tagged closing costs, closing.com, home buying tips, home selling tips, how to calculate closing costs, san francisco real estate | Leave a Comment »
July 26, 2009
Fresh back from a jaunt to Seattle for some much needed R&R, we’re here with our Quarterly Report. A lot of scenes unfolded in Q2. Below is the scoop:
Click HERE for a convenient 1-page PDF document you can print and take with you.
The first half of '09 is over. What wisdom has shone through? (photo courtesy of travel.internetindia.com)
The first half of 2009 is officially history and we have some general observations about the real estate market. Three dramas are currently playing themselves out which can be discerned by dividing the market into three segments; the high end (luxury market), the middle, and the low end.
The luxury market held out longer than any other segment during the downturn, but has now made up for lost time and is experiencing drastic price reductions. It has not yet stabilized, and it could be some time before it hits bottom. The availability of reasonable jumbo loans has played significantly into the fate of the luxury market, making it tough for things to improve. In San Francisco, the luxury market includes homes priced at $2M+.
The low end of the market has shown the most activity in 2009, and it is safe to say that it seems to be stabilizing. It was the first to react to the downturn, and will be the first to stabilize. Homes in San Francisco priced below $750,000 generally fit into this segment.
The middle market is a mixed bag of tricks. There is a gradient of decreasing stabilization as you move from the $750,000 price point up to $2M.
Overall, sales activity in Q2 has picked up quite significantly from a dismal Q1, but is still down year over year. City-wide, prices are down year over year anywhere from 10% to 35%, depending on the neighborhood. Neighborhoods with high foreclosure rates (those south of I-280) have been hit harder than those in the northern parts of the City. Inventory levels also play a major factor in how specific neighborhoods are holding up. Those with a glut of inventory fell harder than those with tight inventory.
Stemming from these observations, we have some of advice that you may find helpful. Read the rest of this entry ?
Posted in Home Buying, Home Selling, Quarterly Reports, Tips | Tagged q2 2009, quarterly report, real estate trends san francisco, san francisco, san francisco real estate | 5 Comments »
July 20, 2009
We’ve been hearing a lot lately about seemingly irresistible prices at some San Francisco (and Bay Area) developments. We won’t call them out by name, but we will offer up a bit of advice to those who are easily lured by ridiculously attractive pricing.
While it’s true that your purchase price is a very important part of acquiring real estate, it isn’t everything. Who cares how cheaply you scooped up a property… if you can’t sell it 5, 10, or 15 years from now because it isn’t appealing to the market, your “investment” serves you no good. Desirability is the name of the game. You’re better off investing in a home that people will find absolutely irresistible when you’re the seller, rather than thinking strictly in terms of price and discounts.
It’s true, even in today’s down market, you may end up competing for those special homes. But you’re buying a little extra insurance that when you one day become the seller, you’ll have a liquid asset that others will be crawling over each other to buy. And as a seller, there’s no better position to find yourself in.
So while you may run across those “builder closeouts”, “slashed prices”, and “everything must go” sales, keep in mind that there is a reason those properties are having to resort to such aggressive sales tactics. It’s because no one wants them! And the only card the seller has left to play is to drastically reduce the price, lure someone in, and sell them an illiquid piece of crap. Beware when you see these words in real estate advertising. If you’re going to be lured by anything, be lured by quality homes in quality locations. Good luck out there.
Watch out for the pricing lure. It looks yummy but it'll kill ya.
For more home-buyer tips, click HERE.
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Posted in Home Buying, Tips | Tagged baiting buyers, builder closeout, home pricing, liquid investment, san francisco, san francisco real estate | Leave a Comment »
July 6, 2009
Google Maps has come a long way since its creation. With recently added functionality such as street views, points of interest layers, and real estate search, Google Maps continues to grow in its ubiquity. We stumbled upon THIS article regarding Google Maps’ real estate search features, and thought some of you may be interested in checking it out. We’ve found the real estate listing results to be fairly decent, and the interface addictive.
Try it out HERE. And if you’re bored and want a few giggles, check out StreetViewFun.
Google maps puts a dot everywhere there is a listing
Click a dot for details
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Posted in Home Buying, Neat Stuff & Gadgets, Public Listings, Tips | Tagged google maps, homes for sale, listing maps, real estate maps, san francisco, san francisco real estate | Leave a Comment »
May 28, 2009
Working with a variety of buyers and personalities, we’ve come to some general conclusions about how the buyer’s mind works. There are many classifications of buyers out there, but here are a few types that stand out along with some tips:
1. The Finished Product Buyer: This buyer wants a turn-key home. They want to move in, unpack, and get busy living. They have no time for fix-it projects. They are conscientious about finishes and materials. Price is not necessarily an issue for them… they just want a home they’re not going to have to do too much to in a location that they’ll enjoy for many years.
Tip: If you are this type of buyer, make sure you plan on holding for the long term. Because you value comfortable living over price, you’ll need the market to carry you upwards. This will happen with time.
2. The Value Buyer: This buyer searches for properties in good locations with good bones that need a little work. They are all about adding equity themselves and don’t want to wait for market to carry them up. This buyer can see past horrible decor, fugly paint (yes, that’s spelled right), and even bad smells. They generally have a good imagination and an eye for potential. Once they find the right place they estimate the costs to cure or bring a contractor by if the property requires more effort. This buyer will need cash above and beyond their down payment and closing costs to add value to the home. However, their entrepreneurial efforts will be rewarded down the line when they sell. This person is not intimidated by market conditions. They know that they can spot a worthwhile equity spread and create value in any market. This buyer may also buy something that is perfectly livable today, but loaded with potential. When more money comes in in the future, they may decide at that point to start making improvements. Many of these buyers invest in a cosmetic fixer, live in it for two to five years while they improve it little by little, sell for a profit, and pocket the tax-free earnings ($250K for single, $500K for married).
Tip: If building wealth in real estate is your top priority (as opposed to comfort), buying value is your ticket.
It's smart to be a "Value Buyer", but don't get too carried away.
Two more buyer types… keep reading –>
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Posted in Home Buying, Tips | Tagged buyer tips, buyers, buying a home, san francisco, san francisco real estate, types of buyers | Leave a Comment »
May 22, 2009
Well lets just find out, shall we?
We ran some reports to answer this question. It’s an important question as there are many people shopping for homes– around 65% of whom are open to TIC ownership.
First, we calculated the number of sales of single family homes, condos, TICs, lofts, and stock cooperatives that have taken place in San Francisco from January 1 through May 1. We cut off the analysis at May 1st because some agents take a couple weeks to update their sales in the MLS, which would skew this year’s number.
Next, we calculated how many sales during that same time period were attributed to TICs. Then we divided the number of TIC sales by the first calculation (which represents total sales) to arrive at our final number… the percentage of total sales attributed to TICs. Plotting the percentages over the past few years gave us a trend and a source from which we could make some comments:
Percentage of total sales attributed to TICs over time (click to enlarge)
To see commentary and conclusions, continue reading –>
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Posted in Home Buying, Macro-Level Info, Nerdy RE Analysis, Tips | Tagged 2009 trends, buyer tips, san francisco, san francisco real estate, tenancy in common, tics, Tips, trends | Leave a Comment »
May 22, 2009
When it comes to real estate, some things never change. One of them is location. Once you choose a spot, well, you have to be happy with that spot. And some spots are so superior to most everything else that they result in the fastest sales.
Case in point, 765 Sanchez, which hit the market on May 1, 2009. Just 11 days later, the home was not only in contract, it had closed escrow (which screams ‘all cash buyer’ when escrow is that short).
The home, a fixer with plans, sits high in Dolores Heights with drop-dead views of the City and nothing slated to block its view in the future. Its potential to shine with the right renovations and decor is huge. It was listed at $3,250,000 and sold for an undisclosed amount. The home boasts 3 bedrooms, 2.75 baths, around 3,271 square feet, and was built in 1959. The list price was about $994/square foot, and if this home sold near asking, represents the highest sale in District 5 so far in 2009.
765 Sanchez Exterior
Why this spot is adored...
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Posted in Dolores Heights, Home Buying, Home Selling, Neighborhood Info, Snatched Up, Taking You Inside, Tips | Tagged 765 sanchez, all cash, district 5, dolores heights, fast sale, liberty hill, location, san francisco, san francisco real estate | 3 Comments »
May 18, 2009
About six weeks ago we wrote about our observations that the high end of the market is hurting while the low end is experiencing a mini-boom. We now have more evidence that this trend is taking place.
Terradatum, a company that crunches and publishes real estate statistics, puts together a list of spreadsheets and sends it out to the SFAR (San Francisco Association of Realtors) each month. We borrowed some data from Terradatum’s most recent email blast and built our own graph. We were interested in seeing how San Francisco’s housing market has changed over the past two years.
How badly is the luxury market hurting?
First, we took the median list price for single family homes in the City and plotted the monthly points over the past two years. Then we took the median sales prices for single family homes in the City and plotted those monthly points over the past two years. The results were pretty nifty. Not only did we find a trend, but we actually identified the cross-over point… the point in time where the luxury market started to recede and the low end of the market began to pack more oomph. Read the rest of this entry ?
Posted in Home Buying, Home Selling, Macro-Level Info, Nerdy RE Analysis, Tips | Tagged luxury market, predictions, real estate trends, san francisco, san francisco housing market, san francisco real estate, terradatum, Tips, trends | 2 Comments »
May 13, 2009
It could happen, and soon. According to an article published at HousingWire.com, the FHA (Federal Housing Administration) may soon allow first-time home buyers who qualify for the quickly-growing-in-popularity government-backed FHA loans, access to their $8,000 tax credit at the closing table so that they can apply it towards a down payment. An official announcement was not to be made until next week, but the information was made public at a NAR summit this morning.
To read the full article, click HERE. For more info on first-time home buyer benefits, click HERE.
More good news for first time buyers...
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Posted in Home Buying, News, Tips | Tagged 8000 tax credit, federal housing administration, fha, first time buyer, san francisco, san francisco real estate, tax incentive | Leave a Comment »
May 9, 2009
There’s no better way to learn about real estate liquidity than by observing a down market. Frustrated sellers all across the nation have had to exercise extreme patience in converting their homes back into dollars. Because real estate is less liquid than other investment types, it pays to understand how you can best protect yourself. The last thing you want to do is rely on a raging hot market to make your home liquid. Ideally, you want it to be liquid no matter the market condition.
What we’ve seen take place during the downturn is stratification of San Francisco homes into three different layers. The first are homes that continue to sell at or near their asking prices no matter what the market is doing. The second layer is comprised of homes that tend to fare well during good times but take hits during bad times. These homes are highly affected by market conditions both in the prices they command and the time it takes to sell them. Most homes fall into this category. The last layer are the homes that do not sell at all during a down market, unless the owner is willing to take a massive loss.
Here are some things to keep in mind to ensure your real estate investment leans toward the liquid side of the spectrum, and some bullets on what NOT to do:
- The best way to have an illiquid real estate investment is to buy something there are hundreds of (or will be hundreds of). There is little to no differentiation in these types of properties and they are an extremely tough sell during down times. The only time these properties sell and do well is when the market is roaring… and counting on that to take place is quite the gamble, particularly if developers are building similar homes nearby (which they will in a roaring market). The smarter approach is to invest in a property that is unique, even one of a kind, but is not too eccentric. There is a big difference between uniqueness (think charm & character) versus eccentric. We’re not referring to decor here, we’re referring to the actual structure. Decor is easily changed if you need to sell. What can’t be changed, however, is the fact that you bought a home that looks like a pirate ship and will appeal to a tiny market segment of equally eccentric people.
Ok, so maybe we're huge fans... but still!
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Posted in Appraisal 101, Home Buying, Tips | Tagged Appraisal 101, buyer tips, illiquid real estate, incurable features, real estate investment, san francisco, san francisco real estate, smart real estate investing, Tips | Leave a Comment »
May 4, 2009
Now, we’re not the typical schmucks who run around saying “It’s a great time to buy!” no matter who we’re talking to and no matter the market condition. Each person has a unique set of circumstances and what makes sense for one person might not make sense for another.
BUT, there are some distinct advantages for being a first time buyer at this point in time. “First time buyer” in most circles (including the IRS) means you have not owned real estate within the past 3 years. We’ve put together a list of reasons why the time could be ripe if you’re looking to get into the market.
Take it from a trustworthy salesman... It's a GREAT time to be a first time buyer!! Call now!!
- Lots to choose from. Today’s market conditions present buyers with more options than they have had in the past. Buyers are able to be pickier and do not have to worry so much about competing offers.
- Speaking of competing offers, Due Diligence is back in vogue! Oh yes, with fewer offers being made and less competition amongst buyers in the marketplace, you can now get by with actually performing your inspections. In the days where every seller got 10 offers, they would choose the one with the least number of contingencies and the best price. That meant if you had inspections written into your offer they could cast it aside into the pile of “loser” offers, unless of course your price was unbeatable. But then, that probably meant you were overpaying!
- Speaking of overpaying, today’s low prices and low sales volume mean that many sellers are backed into a corner and you can scoop up a bargain. This limits your risk of overpaying.
- Speaking of buying low, because you’re a first time home buyer, you can buy low without also having to sell low. This point probably needs no further elaboration.
- All cash buyers won’t knock you out of your dream home as often as they used to. This goes back to less competition in the marketplace. It used to be that an “all cash buyer” had a leg up on anyone else and their offer would get accepted above and beyond plain old regular folks’. Although this tendency remains, there is less competition in the market meaning that the likelihood of an all cash buyer swooping in on your new pad is fairly low. Read the rest of this entry ?
Posted in Countdowns & Rankings, Home Buying, Tips | Tagged 2009 trends, 8000 tax credit, first time buyer, real estate trends, san francisco, san francisco real estate, shamwow, tax credits | Leave a Comment »
April 27, 2009
It’s something we’ve often pondered. If you have a fixed mortgage payment over 30 years, that payment becomes more and more like child’s play as the years progress and inflation rises. What once seemed like a fortune when you first purchased your home is diminished over time with rising salaries, consumer prices, and paying back your loan with less valuable dollars than you initially borrowed.
Inflation Rates of Nations Around the World (click to enlarge)
It’s an interesting theory, and we read an article that talks about inflation-hedging investments. You can click HERE to view the article, which was published by USA Today (John Waggoner). If you don’t have time, here is a snippet from the part that discusses real estate: Read the rest of this entry ?
Posted in Home Buying, Home Selling, News, Tips | Tagged deflation, hedge, inflation, News, preparation for inflation, san francisco, san francisco real estate | Leave a Comment »
