Home buyer top attributes that make them fall in love with a home. Outdoor Living Spaces are high on priority for both men and women.
There is always lots of hype when the Market is recovering or when it is doing well. The last 18 months has see a definite recovery for Simi Valley Real Estate and we did see many house sell with very competitive multiple offers. That is cooling off now however, there are homes that are still getting multiple offers, but that situation is not dominating the majority of sales now. Buyer frustration is fuel by some myths when multiple offers are dominating the market. Most buyers are lead to believe that All Cash and Quick Closing offers push all other offers aside, but the research says otherwise.
Seller placed importance on:
- The highest offer. (77%)
- The best mortgage qualified buyer (47%)
- Offers without contingencies (39%)
- All Cash offer (23%)
- The Buyers Ability to close quickly (14%)
Highest offer with all the proper documentation up front will rule the day in most circumstances in a multiple offer situation. If the Seller has to wait through a 30 day escrow, they don’t care if the buyer’s money is coming in the form of a loan or All Cash, because at the close escrow the seller still gets the money.
The California Association of Realtors published this info graphic, highlighting issues important to home buyers. Even communities such as Simi Valley should take note of this study as the younger generation replacement buyers look for these neighborhood features when purchasing homes.
Are you thinking of putting a Solar System on your home? Before you do, make sure you consider that it may have no positive impact on the value of your home and may possibly have a negative impact on the value of your home. Currently the Average system for the average home in Simi Valley California costs approximately $36,000.That is a lot of upfront money just to get rid of a bill in the $90-$150 a month range. Below are the three reasons I believe homeowners should think long and hard before committing to any solar solution for their home.
1. Your home is an energy sieve to begin with. Have you insulated? Do you have dual pane windows? How old are your appliances? All of these items should be taken care of long before talking to a solar contractor. Reducing the need of air-conditioning and heating and running more efficient appliances will help reduce the size of the solar system for your home if you decide to go that route in the future.
2. Why pay for your Utilities up front for a long term break even? Costs are already inflated via tax credits. The truth is that Solar contractors charge inflated rates to install Solar. Why? Because of the Tax Credit game. If all the subsidies and credits went away tomorrow, you would see that the installation costs would drop dramatically. All you have to do is look around any neighborhood and see that more and more people are having soared to their homes. If this is the case then how come the cost of solar systems is not decreased?
3. Leased systems are not added value to your property they are a liability. If the potential buyer for your home does not qualify for the lease, then you will have to buy out your lease to sell your home. Not all solar leases are uniform and some are very tricky; tricky in the sense it is very difficult to get anyone qualified to take over your lease leaving the only option, a buyout.
What is the solution?
Convert everything possible in your home to LED and or CFL. Do you have LED TVs? If not, this conversion will be a huge savings in annual electric costs. How old is your Refrigerator, Microwave, Washer-Dryer, Dishwasher? How about outdoor lighting including flood lights and security lighting?
Did you know there is technology that will let you control lighting and your Thermostat from your phone away from you home? Do you have children? You can install timed switches that will turn off lights when the kids forget.
Converting all these items will help reduce your monthly bill significantly. If you could reduce your bill 25% or 30% monthly is there the same desire to invest in a solar system?
The Simi Valley Real Estate Market has lost as much as 50% or more in many tracts since the “bubble burst” Last year the market lost 12% alone when many were trying to proclaim recovery. Those looking to purchase property continually ask the question “Are we at the bottom?”
We know that timing the bottom of any market is impossible and falls more on luck. If we all knew where the bottom was in any given market, then investing would be routine, automatic and easy for anyone to do. I can think of the Movie “Back To The Future II” where Biff grabs the Sports Almanac from the future and gives it to his younger self in the past, thus giving young Biff all the outcome in major sports for many years. I can only pause and think this is what people are desiring for the real estate market, to know how it is all going to turn out before they make a purchase.
So you find a property you are interested in, you want to write an offer and you want to protect yourself from any more declines in the market; you decide that a low offer is in order. However, every time you submit an offer, you get beat out by other buyers and are soon out looking at other properties. How should you proceed?
Here are some of the key point to consider before writing your offer.
- Short term investments in residential Real Estate are extremely difficult. If you are looking at this purchase to hold less than 7-10 years, then your upside is going to be very very limited with most properties that are listed on the open market.
- Understand Market Value. For example, every 3 bedroom, 2 bathroom home in Simi Valley has a given market value, in it’s present condition, even if it is not completely upgraded. Sellers will want market value and are very unlikely to sell their property under market value. Just because it is going to cost you money to carpet, paint and make the house “yours”; does not translate into a dollar for dollar discount in the price of the home.
- Short Sales may offer some under market value, but don’t expect a deep discount. The Lender that is going to approve the sale for less money than what is owed, has investors to answer to. Consider that these corporate employees do not like to deviate from their corporate guidelines and do not like to go to upper management with reasons why they should let the property go for less. Job security for these corporate employees is more important than your purchase.
- Foreclosures – Deep discounts on foreclosure properties take time. If the bank has recently started to market a property, it will need to sit on the market quite a long time before they will start significantly discount the property.
- Deep discounted properties usually come with issues. These properties either have defects, seriously deferred maintenance or Title issues. Even with the deep discounts on these properties, it will take money to rehab these properties.
Looking at the trending market reports for Simi Valley Real Estate, properties have average selling prices of 5%-8% the original list price. Now that the inventory is extremely tight, the ratio between the original list price and selling price is narrowing, money is cheap with low interest rates and home prices are lower than last year, the opportunity for success with low ball offers is going to be very rare.
The National Association of Realtors 2011 Buyer and Seller Profile report has some interesting data, but really not that surprising when I compare that data to what I see in the field every day. The reports stated:
eighty-eight percent of home buyers used the internet as one of the information sources in their home search process…
the second most used information source was the real estate agent. eighty-seven percent of buyers used real estate agents during their home search process…
the internet and real estate agents have remained the two highest-ranking sources by usefulness consistently for several years,
The National Association spends significant time and money on this research and if you have been looking for homes online, you will probably have a few stories to tell about the process.
The State of California is a very pro-consumer protection state. The Department of real estate and the requirement of a sales license is a pro consumer protection device. The licensing requirements in the state of California set the expectation as to how real estate can be transacted. Each individual listing contract is a private employment contract between the home seller and the real estate broker. Real estate brokers created the multiple listing service to pool their private employment contracts together under a universal compensation agreement. Essentially, this means that the various brokers will agree to compensate each other, if they sell each other’s listings.
Prior to the Internet, home buyers were only able to get information about the properties for sale in a given market by directly contacting a real estate agent. Today, during the internet age, home buyers have the ability to go online and search for homes at any time of the day or night.
What is unknown or often misunderstood is that very few websites have a complete inventory of homes are for sale on the market. Sites such as Trulia and Zillow offer information about properties for sale, but because there are not brokers, these have very limited access to the properties for sale in any given market. They rely on brokers supplying information about homes brokers have for sale. Unfortunately for Trulia and Zillow, not all brokers provide their inventories. Additionally as homes are sold or entered escrow, many times the information is not reported to Trulia and Zillow, so the information listed on those sites could overstate or understate the actual available inventory.
So where’s the best place for home buyer to look for property on the Internet? Well if you look at the results of the report I quoted above, the real estate agent plays a very important part in filling in the gaps of what’s available online.
From personal experience, many, many, many times buyers have come to me with a list of homes they have found on the Internet and 90% of those homes are already under contract in escrow. As a member of the multiple listing service, I have access to the real-time data reporting of the current inventory. While the property searches on real estate agent websites are coming from a more direct feed of the listing data, those sites can only provide limited data.
Don’t feel like you are coming up empty handed. If you understand the property search sites are limited in scope and that the pro-consumer protection posture of the state of California wants home buyers and home sellers to interact with licensed real estate agents, you can use the information online conjunction with licensed real estate agent and find a home for you.
Garage Conversions. In Simi Valley Garage Conversions are pretty common; not that every one has one, but I run into them often. It is understandable why people convert Garage space to more living space, but these conversions seldom comply with local building codes. Here are the most common issues involving a garage conversion.
Setback – Local building codes require a set back from the street to the front of the house. Twenty-five or more fee may be required. This setback will make it next to impossible to put covered replacement parking in front of the garage.
Required covered parking – Local codes typically require covered parking. This covered parking may allow only a carport style cover, but this structure needs to comply with setback requirements.
Water Heaters and Laundry Hookups – Many garages are the location for the water heater, laundry hook ups and even the Heating and Air Conditions systems. Because these systems can use natural gas, local building codes will specifically dictate how these systems are properly ventilated when installed in living space areas.
Heat – The converted garage will require heat as per local building codes.
Converted Garages that are not permitted may not receive any value consideration on an Appraisal. So if a seller perceives value with the conversion over surrounding homes, a buyer may not be able to get a loan to cover an increase sales price due to the garage conversion.
While this may not be an exhaustive list of all the issues a buyer or seller should consider, these are the more common issues. The city of Simi Valley Building & Safety Department is very accessible and easy to visit for details about permits on a property and they can answer questions right over the counter about the requirement to convert a garage.
Getting a Loan to purchase a home can seem complex and difficult. Adding that there are a number of mortgage brokers looking for your business, it is import you understand that you can quickly size up who you are considering to handle your loan application by being aware of the 6 things below.
1. Reserves – make sure savings and reserves are well seasoned. If you have cash you need to deposit, do that well ahead of time, months before you plan to buy a home. Have access to these banks statements.
2. Have the last 3 years tax returns available for you and if you are married for your spouse too.
3. Be ready to prove your income. W2′s, pay-stubs, 1099s, investments etc., the lender is going to make you prove your income there is no way around this.
4. Be honest about all your monthly expenses, if you understate your expenses, it will be picked up during the application process and your loan will be refused if your debt ratios are too high.
5. Do not make any large purchases or open any new lines of credit.
6. A pre approval is not worth the paper it is written on. Until a lender can get a look at your actual – provable income and expenses, a pre approval has not gone in-depth enough to give you the assurances to know if you can get a loan. Ask what it will take to get a DU approval.
If the lender you are working with is not asking these questions and not nagging you for documentation then consider looking for a new lender. You don’t need to in the middle on an escrow with money spent on inspections and appraisals only to find out you can’t get a loan because your lender did not to enough front end work.
Beginning July 1, 2011, the Carbon Monoxide Poisoning Prevention Act brought by California Senate Bill – SB 183 now requires all single-family homes with an attached garage or a fossil fuel source to install carbon monoxide alarms by July 1, 2011. In Simi Valley almost every home I have been in, has a natural gas furnace in the house or attic and most homes have gas appliances in the kitchen. These gas appliances and the furnace trigger the installation of the carbon monoxide detectors.
The alarms are required to be installed outside of each sleeping area and at least one per floor of living space. The mounting height according to the National Fire Protection Association (NFPA 720), appears to not effect performance. I have read that density of carbon monoxide is similar to that of air at room temperature, and carbon monoxide generally mixes readily with air. Considering that the CO alarms come in a plug in style, battery operated or hard wire installation mounting height may not be an issue. However, some firemen I have spoke to recommend a lower installation height rather than up on the ceiling. You can buy a combination smoke alarm/carbon monoxide alarm, but plug in CO alarms are readily available and require no mounting hardware. Smoke alarms are still required, this new law does not change the smoke alarm requirements. For those who want to be extra cautious you can place a CO alarm in each bedroom.
The primary reason anyone should have when improving their personal residence should be for their own enjoyment and comfort factor. The side effect or secondary benefit of adding to the comfort factor of your own Simi Valley home, is that those improvements could add value to your home if at some point you decide to sell. These improvements have a much shorter lifespan than most homeowners understand.
As of September 1, 2011 the new Uniform Mortgage Data Program® (UMDP) has gone into affect to provide common set of requirements for appraisal and loan delivery data. This program was established by Fannie Mae and Freddie Mac. I have included some of the definitions and ratings to give you a better idea how the GSEs are trying to create more uniform standards for appraisals.
Not updated - Little or no updating or modernization. This description includes, but is not limited to, new homes. Residential properties 15 years of age or less often reflect the original condition with no updating, if no major components have been replaced or upgraded. Those over 15 years of age are also considered not updated if the appliances, fixtures, and finishes are predominantly dated. An area that is not updated may still be well-maintained and fully functional, and this rating does not necessarily imply deferred maintenance or physical functional deterioration.
Updated - The area of the home has been modified to meet current market expectations. These modifications are limited in terms of both scope and cost. An updated area of the home should have an improved look and feel, or functional utility. Changes that constitute updates include refurbishment and/or replacing components to meet existing market expectations. Updates do not include significant alterations to the existing structure.
Remodeled - Significant finish and or structural changes have been made to increase utility and appeal through complete replacement and/or expansion. The remodeled area reflects fundamental changes that include multiple alterations. These alterations may include some or all of the following: replacement of a major component (cabinet(s), bathtub, or bathroom tile), relocation plumbing/ gas fixtures/ appliances, significant structural alterations (relocating walls, and or the addition of square footage). This would include a complete gutting and rebuild.
Below are a sample of a few of the ratings and definitions to give you an idea what this may mean to the value of your home.
Condition Ratings and Definitions (C1-C6)
C1 – The improvements have been very recently constructed and have not been previously occupied. The entire structure and all components are new and the dwelling features no physical depreciation.
C2 - The improvements No deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently completed or renovated and are in similar condition to new construction.
Quality Ratings and Definitions (Q1-Q6)
Q4 – Dwellings with this quality rating meet or exceed the requirements of applicable building codes. Standards or modified standard building plans are utilized and the design includes adequate fenestration and some exterior ornamentation and interior refinements. Material, workmanship, finish and equipment are of stock or builder grade and may feature some upgrades.
Q5 - Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. The dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.
The above sampling was created by Fannie Mae and Freddie Mac and any loan underwritten with Fannie and Freddie guidelines is going to be appraised with this new system. So if you are planing updating or remodeling, keep this in mind so you can maximize your investment.