Archive for the ‘Home Buyers’ Category

Understanding Home Appraisals

understanding home appraisalsHome appraisals can be confusing. The homeowner may feel that their home is worth a certain dollar amount, only to be disappointed that it appraises at another value. Although the disappointment is understandable, know that appraisals are not a just “opinion,” but rather based on guidelines set by lenders and the law.

A commonly known guideline is one that bases your home value on that of similar home sales in the area. Similar qualities such as the size of the home and size of the lot are considered. Your home will also be bracketed according to the value of certain amenities. For example, while there is no set amount associated with a pool, the value will be based on what the local marketplace can support. In other words, if a homeowner installs a pool that costs $30,000, but the local market supports the value of a pool at only $15,000, then that item is bracketed at [$15,000] on the appraisal.

Another area of confusion for appraisals and upgrades has to do with how they are weighed in new homes versus older homes. In newer homes, the full value of the upgrade will be reflected on the appraisal since it required investing extra money in building the home. On the other hand, the total amount invested in upgrading or remodeling an older home is often not expressed in the final appraisal. The reason for this valuation difference is that older homes already had value in their original condition.

Just remember that the local market must also support the value of the upgrades!

Guidelines state that appraisers must place a value on homes that have already sold. However, this is not a hard rule. The appraiser is permitted to increase the value when they deem that property values are rising that area. For this assumption to be valid, however, the appraiser must provide evidence such as comparable pending sales and active listings.

Although there is no formal standard, many lenders allow for a 5% margin of error. However, if the appraiser is off by 8%, it’s likely that the home value will be reduced by 8%. Although its tempting to encourage the appraiser to push the valuation to the higher end of the market, it’s best that the value is not pushed further than the market can support. If the lender suspects that the appraisal is drastically off, it will be subject to more scrutiny, and the value pushed further down.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

Home Warranties–What You Need To Know

Home Warranty Plans for Buyers and Sellers

You get a warranty when you buy phones, computers, appliances, and more, but what about for your home? Yes, you can get a home warranty! These benefit both buyers and sellers and can be a valuable tool.

A home warranty is different than homeowners insurance. It covers many items not covered under your standard homeowner policy – filling a critical gap home protection. For example, if the dishwasher leaks and water damages the floor, the homeowner’s insurance policy may cover fixing the floor, but not the repair or replacement of the dishwasher. A home warranty will cover the dishwasher. So in many ways, they compliment each other.

Home warranty plans protect home buyers and sellersFor home buyers, a one-year home warranty is normally requested in the purchase contract, and even often paid for by the seller. The cost for a home warranty averages around $400/year. It is good for the first year after you purchase a home – and you have the option to extend it after that. With a home warranty, most major appliances, plumbing, and electrical systems are covered. For a little more money, additional items such as air conditioning and swimming pools can be covered. Buyers simply pay for the service call cost (which averages around $75), but not pay for actual repair or replacement cost for covered items. The contract covers repair and replacement of covered items, regardless of age, make, or model. This limits the risk home buyers have, and brings piece-of-mind.

Home warranties can also be very valuable for sellers. For example, if the new buyers move in the home and go to turn on the air conditioner and it does not work, someone may be blamed for it. Perhaps the buyers think the sellers knew of this problem and will blame them. Maybe they think the buyer’s Realtor, the seller’s Realtor, or the property inspector knew about it, or all the above! With the home warranty policy, the sellers are much more likely to maintain a good standing with the buyers. If any issues do come up, they will get repaired for the nominal cost of the service call. Quite simply, home warranty plans go a long way to prevent lawsuits and help everyone sleep better at night!

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

Price Per Square Foot-An Accurate Way To Value A Home?

A common way people like to compare the value of homes is by using the price per square foot metric. This is by taking data of sold properties, identifying the price per foot, and valuing another property based on that. The problem is that this only accurate if the houses are very similar. Of course, it cannot adjust for condition, lot quality/location, or neighborhood influences. Also, price per square foot tends to go down as house size gets bigger, so using it outside of a narrow range of sizes skews the data. In general, the lower price per square foot is correlated with higher square footage properties.

price per square foot of homeInstead, the recommend method is using the sales comparison approach – finding homes that are similar and making substitutions or corrections; for example, adding $15,000 for a nicely updated kitchen compared to a poor kitchen, or adjusting for small size and bedroom differences.

So, next time you’re analyzing a property for sale, consider minimizing the weight put on price per square foot, and instead look at the bigger picture.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

Should I Sell My Home Or Rent It Out?

should i rent out or sell my san diego propertyA recent study has concluded that nearly half of home buyers (when purchasing their next home) would prefer to rent out their last residence, rather than sell it. The main reason? They have locked in a low mortgage rate, meaning they are able to charge more rent than they pay in their monthly mortgage payment. Of course, a strong rental market just makes it even better. So, should you rent out your home?

This logic makes sense in some cases. Residential real estate is a great investment right now and can be great long-term as well. But if you have no desire to actually become a landlord, you may be headed for more headaches than you think. Are you ready to be a landlord?

Myths of owning rental property

Before renting your home, ask yourself the following questions to make sure this is the right course of action:

10 Questions to ask BEFORE renting your home

  1. How will you react to a tenant that tells you they are unable to pay the rent this month?
  2. There are times when many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
  3. Do you know any experienced eviction attorneys in case a challenge does arise?
  4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
  5. Will you allow pets? Cats? Dogs? How big a dog?
  6. How will you actually collect the rent? By mail? In person?
  7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up? Will you hire a property management company?
  8. Do you have a list of craftspeople readily available to handle these repairs?
  9. How often will you do a physical inspection of the property?
  10. Will you alert your current neighbors that you are renting the house?

If the about seems like too much work, there is another option: let a property management company do all the heavy lifting. For around 8-10% of your total monthly rental income, they will ensure the property is occupied by the best tenants possible. This includes pre-screening tenants, showing the property, doing cleaning, repairs, & maintenance, and collecting rents. Most property management companies will charge an extra fee for finding new tenants, but that is worth it to some owners.

Bottom Line

Historically, renting out residential real estate. However, it is not without its many challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

8 Reasons Why You Should Work With a REALTOR®

Not all real estate agents are REALTORS®. The term REALTOR® is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® (NAR) and subscribes to its strict Code of Ethics. Here are reasons why you should work with a REALTOR®.

1. Navigate a complicated process. Buying or selling a home usually requires disclosure forms, inspection reports, loan documents, insurance policies, deeds, and multipage settlement statements. A knowledgeable professional will help you prepare the best deal, and avoid delays or costly mistakes.

2. Information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and much more. They will also be able to provide objective information about a property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value down the road when I am ready to sell?

3. Help finding the best property out there. Sometimes the property you are seeking is available but not advertised well in the market, and it will take some investigation by your REALTOR® to find all available properties.

Search San Diego Properties for Sale

4. Negotiating skills. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, appliances, or equipment. In addition, the purchase agreement will provide a specific period of time for you to complete appropriate inspections and investigations of the property, before you are bound to complete the purchase. Your agent can guide you as to which investigations and inspections are recommended or required.

5.  Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a why work with a san diego realtorpractitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally pre-screen and accompany qualified prospects through your property.

6. Someone who speaks the language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate lingo.

7. Experience. Most people buy and sell only a few homes in their lifetime, usually with quite a few years in between each purchase. Even if you have done it before, laws and regulations are always changing. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an knowledgeable expert on your side is critical.

8. Objective voice. A home often symbolizes family, rest, and security — it’s not just four walls and a roof. Because of this, home buying and selling can be an emotional task. And for most people, a home is the largest purchase they’ll every make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues in your best interests.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

Interest Rate Vs. APR – What Is The Difference?

Understanding the difference between annual percentage rate (APR) and interest rate could save you thousands of dollars on your mortgage. But if you’re like most homebuyers, you probably don’t know that the interest rate and the APR measure 2 important, but different, costs associated with your home loan.

Your interest rate is the cost you will pay to borrow money. It only includes the interest percentage you will be charged for borrowing the money, and it does not include any other fees you might be required to pay on the loan—like the origination fees, mortgage broker fees, closing fees, documentation fees, etc.  The APR of a loan gives you a more detailed idea of how much you’ll pay when you borrow money for a loan. Basically, it’s the total price of borrowing money expressed in terms of an interest rate. That means it includes the cost of interest plus additional fees. They are always expressed as a percentage.

Video: How To Pick A Lender

Why have both?

The main difference is that the interest rate calculates what your actual monthly payment will be. The APR calculates the total cost of the loan. A consumer can use one or both to make apples-to-apples comparisons when shopping for loans.”

How To Pick The Right Mortgage Loan

For example, a 30-year fixed rate loan with a 4% rate will have a lower monthly payment than a loan with a 5% rate. Likewise, the total cost of a loan with a 5% APR will be less than one with a 5% APR. Separately, the interest rate and the APR have their limits. But together, borrowers should be able to use both figures to determine their monthly payments, as well as their total costs. The trick is to understand the interplay between the 2 figures. If you are only focused on getting the lowest monthly payment, they should focus on the interest rate. If you focused on the total cost of the loan, then they can use the APR is your best comparison tool.

Mortgage intrest rate vs. APR for San Diego homebuyers

CLICK TO ENLARGE

Should I Buy Down The Rate?

Points, also known as “discount points,” are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can, in turn, lower your monthly mortgage payments.

A point is equal to 1% of your mortgage amount (or $1,000 for every $100,000). You’re essentially paying some interest up front in exchange for a lower interest rate over the life of your loan.

The general rule is that the longer you plan to own the home, the more you might benefit from buying points, because you would realize more interest savings over the life of the loan. When you consider whether points will be right for you, it helps to run the numbers. Here’s an example:

discount points in a mortgage loan

CLICK TO ENLARGE – Source: Bank Of America

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

This theme is sponsored by California along with Texas, Radio and corporate office contact address
Sitemap