Comparing Year to Year Reveals Positive Changes

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The market nationwide is improving and Bishop is no exception. To be able to tell if the market is improving, we look not just at what happened month to month but year over year. Comparing the first quarter of 2013 with the first quarter last year shows some similarities and differences.  

Both quarters were the same with 26 homes, town-homes and condos sold within 20 miles of Bishop. So how come the market is improving but the sales are the same? In 2012 the sales of distressed properties—short sales or bank-owned—made up 38.5% of the sales, but it dropped in 2013 to 23%, so that was a big improvement. Decreased sales of distressed properties are a great sign the market is turning around. In addition, the days on market—number of days it took to sell a home—was 4.5 months. This year it took about 2.5 months to sell a home, which is a definite improvement. Another good sign is the average price of homes. Last year, the average sales price was $248,000 and the average price this year was $288,000, which is a big increase. While it’s tempting to think it’s due to prices increasing, it’s partly due to fewer distressed property sales.

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Another green shoot in the market is interest rates which are hovering at record-low rates. Buyers certainly have more buying power thanks to the rates.     

If you’d like to know where to be positioned in this market, please call us at (760) 873-4161 or email us at randi@mysierrahomes.com or dawong1@tellis.org so we can build a strategy to get you results.  We’d be happy to assist you. 

Free Services from Your Real Estate Pro

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What do you think of when you think “real estate agent”? You probably imagine a professional that is there to assist you with buying, selling or investing in property. For the most part that is exactly what real estate professionals do. However, in our work within the industry a number of additional services come into play that are often overlooked by most consumers. Here is a list of just a few of the additional services we provide to our clients, colleagues, friends and neighbors.

Home Value Analysis

Regardless of whether you are ready to sell a home, it is a good idea to know where your property falls in terms of fair market value. Property values fluctuate based on market activity and for homeowners that may not have had much exposure to the market for some time, getting a home value analysis done could be eye-opening.

If you are on the fence about buying or selling, a Comparative Market Analysis (or CMA) is a tool used by real estate professionals to gauge what other similar properties in the local marketplace have been selling for in the recent months. This is a carefully considered report that involves researching more than just recently sold homes but also looking at listings that may have expired as well as properties recently under contract.

A CMA will assist in the process of estate planning, property tax appeals, deciding whether to upgrade or downsize a home and determining if an investment is worth it. It’s also just a good idea to remain on top of where your property value is.

Industry Recommendations

Another very valuable service we provide our clients and friends is a complex network of referrals that come from years of working with vendors, suppliers, contractors, and other service providers. Whether looking for a roofer, someone to manage your lawn and garden or a lender – we have a long list of proven successes that stem from quality service providers.

Insight Into Alternatives

Many consumers are faced with situations where they may be limited in their options. When it comes to housing, we pride ourselves in being able to share useful alternatives  to help those that need it. This could be anything from assistance with moving to another state and finding an excellent agent to provide the same level of service as we do, to helping you find a rental home while you work out your long-term plans. Our goal is to help you – and we are in the business of building relationships not just selling homes.

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If you would like to engage us in any of these or other services – we invite you to contact us today. We look forward to helping you!

How to Evaluate an Offer on Your Home

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For most homeowners selling their home the thought of negotiating an incoming offer is a matter of settling in on a price that both sides can agree upon.  But did you know that there is another key aspect of negotiations aside from price that could have even greater impact on the sale?  The terms of your contract hold equal weight and importance as price in the sale of your home and are critical to a successful sale.

Here are five essential things to consider when navigating through the negotiation process after an offer comes in on your home.

Preapproval

After the housing market crashed in 2007 lenders, buyers and sellers have proceeded very cautiously. Lenders are staunchly following stringent requirements, buyers and sellers are savvier than ever before and what seemed like formalities in the process before are now becoming necessities.  Preapprovals are one of the things that did not always need to be done in advance of buyers finding a home. But as you receive your offer on your property, be sure that your buyer has a preapproval from a reputable lender.  The letter should indicate what the buyer can afford and how much the lender is willing to loan them, assuming they meet all requirements at the time of application.

Down Payment

One of the requirements lenders have today is to have an appraisal done on the home to equate its value with the selling price.  Unless the buyer has a significant down payment available, a less than ideal appraisal can stand to affect the sale altogether, even causing the deal to break down.  Check to see how much your buyer is able to put down on the house and add up the down payment with the loan amount to see if they equal your asking price.

Existing Home

Does the buyer have an existing home they need to sell?  This can be a problem for you as a seller if they want to include a contingency in the contract that absolves them from the commitment of buying your home if their home does not sell.  This can wreak havoc on the sale of your property, as it would require you to leave the terms of your sale up to the success of another sale.  It would be best to avoid offers that include existing home contingencies.

Closing Date

When does the buyer want to close on the home?  If the requested closing date extends beyond 90 to 120 days then it might be time to reconsider the offer.  Lenders have timing guidelines that dictate a 45-day policy, within which buyers must apply for a loan before closing.  Anything longer than that would get in the way of the lenders’ policy leaving the seller hanging in limbo during those off weeks.  When a buyer cannot meet the contractual obligation to get a commitment within 45 days, it might be a good idea to forego the offer altogether rather than to risk the sale.

Cash Transaction

Some buyers offer cash rather than opt for financing and though it is an attractive offer at first, you need to make sure that the buyer has the cash.  Asking your Realtor to verify the availability of those funds will become a necessary additional step before you can move on in the offer.  In some cases, buyers opt for alternative financing and when the time comes to verify the funds they are unable to do so.  The risk is too great so unless you can be sure the cash is there, it is a better idea to move on to the next offer.

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Navigating through offers is a tricky process – especially in today’s market. It is no longer just a matter of coming to agreement on a sale price, rather both parties must agree to all aspects of the terms.  For customized guidance on your real estate endeavors, contact us today!

Are Bi-Weekly Mortgage Payments Worth the Time and Effort?

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In most cases, yes! It’s essentially a process by which you make extra payments on your mortgage. That way, you save interest costs and pay off the loan faster.

How Does It Work?

You make a payment to your lender every two weeks instead of once a month. This means that each payment is equal to half of the monthly amount due. The result – you’re paying the equivalent of 13 full payments rather than the usual 12.

It gets even better! The full amount of the extra payment is applied toward the principal. And because the principal balance is the amount on which interest is calculated, paying down principal results in a reduction in accrued interest!

Let’s look a traditional payment monthly schedule vs. a bi-weekly schedule so you can see exactly how it works.

Example 1: Traditional monthly payments

Let’s assume you have a loan balance of $250,000 with a 6 percent interest rate and a 30-year loan term. In this example, your monthly payments are $1,498.88. So, over the life of the loan, you’d pay a total interest of about $289,595.

Example 2: Bi-weekly payments

Using the same loan balance and terms described above, the difference would be the following:

• $749.44 paid every two weeks

• About $225,490 paid in total interest

• This results in a savings of more than $64,000 in interest!

• In addition, the loan is paid off in 24 rather than 30 years

Bi-monthly payments are still a good strategy if you’re an individual who doesn’t plan to keep your house for 24 or 30 years. Why? Because bi-weekly payments still reduce principle, even over a short period of time.

For example, in the first year, the principle is reduced by nearly $1,600. And, at the end of the fifth year, the principle amount has been reduced by about $9,000!

How Do I Arrange Bi-Weekly Payments?

The first task is to contact lenders to find out if they do offer a bi-weekly payment schedule.

If they offer one, ask what the participation requirements are. In typical situations, lenders require you to have payments automatically withdrawn from your bank account since they dislike processing checks every two weeks.

Often, it’s the case that a one-time fee is charged for this service. The fee can be minimal or be in the several-hundred-dollar range, depending on the lender.

So, after all these benefits, how can there possibly be disadvantages to bi-weekly mortgage payments?

Well, the first disadvantage relates to a situation I mentioned above - the lender’s fee is very expensive for the service provided. In such a case, the costs may outweigh or cut down your overall savings.

A second disadvantage occurs when paying bi-weekly is too hard on your budget. Upfront, you need to make sure that you have the money available for the increased payments.

The final potential disadvantage relates to the length of time you plan to stay in your home. That can affect your overall savings on interest.

I recommend that you weigh the pros and cons of bi-weekly mortgage payments by using one of the many online calculators. Just enter your numbers and the calculator will give you a comparison.

If you’d like the assistance of an expert on the subject, contact us immediately!

The Housing Market Finds Its Strength

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2012 was a great year thanks to a very active real estate market.  According to year-end reports, we’re seeing a turnaround.  One sign of strength was the number of houses that sold.   Overall, home sales grew by 16% from 2011 to 2012 with our office seeing a 30% increase.  This definitely indicates consumer confidence.  Top off increased home sales with a step in the right direction—an increase in the average sales price of 1% from 2011 to 2012.  It’s the first time we’ve seen an increase since 2006, so that’s encouraging.  

At the same time the number of homes for sale is very low and yet we have good demand from buyers.  What does this mean for you?  If you want to get top dollar for your property, you should take advantage of the low inventory.  Here’s the thing:  supply and demand affect what you’ll get for your home.  When everyone who has been thinking about selling their home puts their home on the market is not the time to dive in—if you want to get the most out of your home.  If you wait until spring (the typical time people put the For Sale sign up), you’ll have lots of homes to compete with.  And when the supply of homes goes up, the price you’ll get for your home inevitably goes down.  At the end of the day, you have a better chance at success if you decide to sell now, instead of waiting until all the Joneses get into the market.

Keep in mind that the mortgage loan rates are still fantastic, making buying a home more affordable than ever.  A 30-year fixed-rate mortgage hovered at record-low rates during 2012, but the rates won’t last forever, so there’s not a better time to buy than now.

Next time, we’ll talk about short sales and foreclosures and what we see happening in 2013.  All in all, the market looks good.

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If you are interested in buying or selling your home and want to get in on record-setting low interest rates, contact us today at (760) 873-4161 or randi@mysierrahomes.com or dawong1@tellis.org so we can build a strategy to get you the results you want.  We’d be happy to assist you. 

Happy 2012 Holidays and Warm Season’s Greetings!

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To all our cherished friends, neighbors, family and clients – we are so proud to have been able to work with you and be a part of your lives! As we end this year and turn to the exciting time and events that 2013 holds, we just wanted to take a moment to thank you for all that you bring to our lives.

We have some really great plans in the coming year to bring more success to all your real estate endeavors. And with each transaction that makes it to the closing table in the coming months and years ahead – we know that there will continue to be new and exciting things to follow for all of us.

On behalf of the entire group – Happy Holidays, Season’s Greetings, Peace and Joy!

What's a Real Estate 'Short Sale' and Why Should I Buy One?

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The best way to explain a short sale is with an example:

Assume a homeowner has an unpaid loan mortgage balance of $200,000, but the property will sell for only $175,000. The lender holding the mortgage agrees to sell the house for the $175,000 amount, which, of course, leaves it “short” of the full amount of $200,000. Thus, the name “short sale!”

Obviously, lenders don’t like short sales since they’re not in business to lose money. But such situations do occur for various reasons often related to “hardship” situations. Examples include:

• Permanent injuries
• Financial insolvency
• Job layoffs, etc.

This is a sad situation for the homeowner, but it does offer an opportunity for you to pick up a bargain. However, there are several potential downsides you should be aware of before you make an offer.

Pitfall 1: Allow time for the lender’s decision.
Once your offer is accepted by the seller, the contract will be sent to the seller’s lender for approval. This process can take anywhere from 2 to 12 months, and there’s oftentimes no way to know beforehand exactly how long the lender will take.

Pitfall 2: The lender is under no obligation to accept the short sale.
Often times, lenders will come back with a counter of a higher price, or will sometimes reject the offer outright. There is no way to know beforehand exactly what the lender is thinking. This risk can be reduced by pre-qualifying the seller and making sure he or she has a genuine hardship, and by making sure you offer close to market value.

Pitfall 3: The seller must be committed to the process.
A great deal of paperwork and commitment will be required of the seller. There have been cases where the seller does not complete everything that is necessary and causes the lender to reject the deal. Additionally, there have been cases where the seller backs out to declare bankruptcy. Make sure the seller is committed to the process before you begin!

Summary

You can pick up great bargains in the short sale market, but you have to be very knowledgeable and very patient! And, as mentioned earlier, there are risks and often times you will face disappointment. Hiring a professional realtor who has experience with the ins and outs of short sales can help reduce these risks.