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Should I Flip or Rent Homes?

New real estate investors often ask: “Should I flip or rent homes”? Here’s a straightforward answer. Rent instead of flip. Why? View our answer based on facts.

Flipping Homes in San Diego

The Myth of Fixing and Flipping Homes

 

It looks easy! Buy a run-down house cheaply, make a few cosmetic fixes, and list it for a nice profit.

It’s so easy and profitable that for the past forty years dozens of TV shows claimed: “Get Rich Quick by Buying, Fixing, and Flipping Houses”. The “Fix and Flip” hype promotes easy profits by flipping houses. In 2012, CNBC broadcasted 16 house flipping for fast-profit TV shows.

Some investors make a profit by fixing and flipping. Yet, as you will read below it takes good timing and a “dream team” of professionals to help you profit. Only a seasoned fix & flip real estate investor makes money. Otherwise, you can end up in a nightmare rather than a dream.

For example, check out this fix and flip house photos in a recent blog post by WeLease titled: “Tenant From Hell – Left Dead Cats, Feces, Obscene Graffiti” As the title suggests, the tenant vandalized the entire house and left dead cats and feces for the new owner to clean up.

 

How Zillow Offers Home Flipping Program Failed in 2021

 

The nation’s largest house flipping company recently tumbled. Zillow Offers describes itself as: “Zillow Offers buys and sells homes directly in dozens of markets across the country.”

On October 26, 2021, Bloomberg published a news story titled: “Zillow’s Zeal to Outbid for Homes Backfires in Flipping Fumble”.

Bloomberg summed it up with: “After buying more homes in the third quarter than it ever has before, the company is working through a backlog of houses that need fixing and sold.” Yikes!

Lesson to Learn: Don’t get carried away by outbidding other buyers for homes.

Tip: Want to learn about the right way to bid on homes? Our broker, Big Block Realty, recently published a blog post titled: “How To Win A California Home Bidding War”.

On the same day, the California News-Times ran a story describing the Zillow Offers program as a “Flipping Fumble”. Zillow stopped making offers to buy homes in September due to a backlog of unsold fixer homes. “Slowing price appreciation means it will sell many homes at a loss”.

A week before, The Orange County Register ran a similar news story, Zillow house flipping hits snag as the hot housing market cools. It claimed that Zillow listed a record number of houses for sale in September “at the lowest markups since 2018”. As a result, Zillow was forced to cut prices on half of their U.S. listings.

 

Why Zillow Failed in 2021?

 

Zillow’s Atlanta listings took a nosedive in prices. Likewise, 250 of their Phoenix listings cut their prices “at 6% less than what the company paid for the homes”. This became a “sell for less than what we bought” disaster. The OC Register claimed Zillow sold each house at an average $29,000 loss.

Bloomberg provides an example of a typical Zillow Offers buy, renovate, and flip for a loss. A Phoenix suburban three-bedroom/bath home listed for $390,000 and sold to Zillow for $412,000. Zillow made repairs and relisted the house for $387,000. Thus, Zillow lost $25,000 on the flip. That’s bad business.

 

The Problem with Zillow Offers

 

Back in 2019, our broker published a post titled: “Zillow Offers 2019 Review”. It points out a flaw with Zillow Offers based on another review by Bloomberg which stated: Zillow’s “Zestimates” algorithms make home price predictions for buying houses on a massive scale resulting in small profits on every flip.” So, their price predictions are flawed.

ABC News on November 2, 2021, confirmed Zillow’s flawed price prediction with its story titled: “Zillow to stop home-flipping amid pricing ‘unpredictability’.”

CBS News on the same day reported, “Zillow to lay off 25% of its workforce and shutter house-flipping service.”

 

The Risk of Fixing and Flipping Houses

 

The Risk of Fixing and Flipping Houses

You heard of the old business saying: “Buy low and sell high”? This is a big risk in the flipping houses business because:

It takes time to make an offer on a house needing fixing;

  • Get through the closing;
  • Begin renovations;
  • Put the house back on the market;
  • Advertise the house for sale;
  • Negotiate with buyers;
  • Sign a sales contract; and
  • Go through closing.

At any time during this long process, the housing market may shift downwards. When that happens either the house never sells at a profitable price or the buyer uses a contingency (like the appraisal or financing) to back out of the sale.

Note: This is a good time to suggest reading our blog post titled: What are Real Estate Contingencies in California?

 

How Do You Lower the Risk of Fixing and Flipping Homes?

 

In May 2021, Investopedia published an article titled: 5 Mistakes That Can Make House Flipping a Flop. The five mistakes are:

  1. Not enough knowledge about picking the right house in a good location at the right price;
  2. Not enough skills like electrical, plumbing, and house building;
  3. Insufficient funding to pay for the purchases like cash to avoid costly financing fees and interest;
  4. Insufficient time to buy, renovate, and flip in case the housing market dips; and
  5. Not enough patience to wait for the right house at the right price.

 

Create Your Fix-And-Flip Dream Team

 

You need a “Dream Team” of 6 professionals to help you buy, renovate, and sell. Million Acres in a February 2021 article recommends six team members:

  1. A House Inspector experienced enough to eyeball and estimate renovation costs after crawling through the entire house to inspect the foundation, roof, electrical wiring, and plumbing;
  2. A General Contractor experienced and reasonably priced with the time to fix up the house fast before the housing market tips downward;
  3. Mortgage Professional if you don’t have the cash. You must find a mortgage lender (or broker) experienced with fix-and-flip loans;
  4. Insurance Agent because fix-and-flip projects don’t qualify for standard homeowner insurance. This requires an insurance agent experienced with finding the right insurance for your projects;
  5. Real Estate Attorney experienced with fix-and-flip legal issues. You may never need an attorney, but having one available for legal emergencies is important; and
  6. A Realtor who knows the area, market prices, and trends. Buying and selling without using an experienced fix-and-flip Realtor may save you some money, or not. That’s because a good Realtor knows how to find the right house, negotiate a lower price on the best terms, and make your closing easier.

SoCal Lifestyle Realty offers experienced Realtors who know San Diego County’s housing market. Contact us whether you want to fix and flip or buy homes to rent.

 

Advantages of Renting Rather than Flipping Homes

 

In January 2021, Investopedia answered the question Flipping Houses vs. Rental Properties?” The advantages of renting include:

  • Owning homes lets investors accumulate wealth over time (appreciation);
  • Renting homes provides positive monthly income and tax advantages over flipping; and
  • Avoid landlord problems by hiring a property management company.

The WeLease Property Management Company offers experienced managers who can help you own rentals without the landlord hassles. WeLease serves all types of rental properties in San Diego County.

WeLease also publishes informative blog posts to help housing investors like:

Contact WeLease to learn more about their services.

 

Should I Flip or Rent Homes? – Conclusion

 

When we posed the question: “Should I flip or rent homes”? We gave you a straightforward answer. Rent instead of flip.

You can make money flipping homes, but you need the knowledge, skills, money, patience, and time to buy the right house in a good location. Also, you need to get the fixing done fast to sell when it’s a seller’s market. Lacking any of these can result in losing money.

Zillow failed in 2021. Their algorithms underestimated the near future for the housing market. Ending up with a backlog of fixed homes for sale during a price downturn will hurt any fix and flipper. Likewise, inexperienced investors face greater risks of failure than seasoned large fix and flip companies like Zillow.

You need a dream team of six professionals to succeed in the fix and flip business like:

  1. House Inspector;
  2. General Contractor;
  3. Mortgage Professional;
  4. Insurance Agent;
  5. Real Estate Attorney; and a
  6. Realtor.

 

Interested in Buying Homes in San Diego to Fix and Flip or Rent?

 

Our SoCal Lifestyle Realty staff helps real estate investors in many ways. Our Realtors help you to look in the best locations throughout San Diego County. We negotiate the lowest prices with favorable conditions and terms. We help investors wanting to fix and flip or rent homes too.

Contact us so we can show you our unique RealScout program that uses your desired features to seek the best homes in the greater San Diego MLS listings system. This saves you time by focusing on the homes you want.

 

Steven Rich, MBA – Guest Blogger

 

 

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East Village – San Diego Ranked #20 Top Apartment Neighborhoods

Rent Café, a nationwide housing rental platform, on November 2, 2021 ranks East Village – San Diego #20 top apartment neighborhoods in America.

A great honor for the City of San Diego and its popular East Village neighborhood.

Top Apartment Neighborhoods
Free Use Creative Common License by Roman Eugeniusz

What Criteria was Used for Top Apartment Neighborhoods in America?

 

This report looked at the nation’s 50 largest cities to see which neighborhoods realized the biggest increase in apartments between 2017 and 2021.

The criteria included:

  • Neighborhoods with the highest uptick in new apartments where renters claimed they wanted to live created the basis for the report;
  • The report focused on “centrally located hyper-urban areas highly sought by Gen Z and millennial renters.”;
  • This report claims that the collected data over the past 10 years show renters returning to downtown areas more than ever; and
  • These neighborhoods reflect the most popular urban locations with vibrant amenities in the country. In the past five years, around 1.6 million new rentals popped up across the nation.

The methodology analyzed new apartments construction data amongst the 50 largest cities from the U.S. Census Bureau. Only buildings containing at least 50 units built between 2017 and 2021 were included.

Smaller neighborhoods with less than 500 units or less than three buildings built during the past five years were excluded.

East Village -San Diego #20 Apartments Neighborhoods - 1

East Village - San Diego #20 Apartments Neighborhoods - 2

  1. East Village, San Diego, CA

East Village in San Diego

 

 

 

 

 

 

New Apartments: 2,699

New apartment share of San Diego’s total supply in past five years = 22%

 

The Top 6 Apartment Crazed Neighborhoods in San Diego

 

Besides East Village, five other San Diego neighborhoods also experienced an increase in new apartments.

The Yardi Matrix site, a real estate industry asset management, and business development tool, provided more data for this report. Regarding San Diego, it concluded:

san diego top apartments neighborhoods

Click on the links below to learn more about the other five neighborhoods:

 

San Diego’s East Village History and Location

 

East Village is the largest downtown urban neighborhood in San Diego. Located southeast of Cortez Hill and the Core district and east of the Gaslamp Quarter.

East Village takes up 130 blocks between Seventh Avenue east to 18th Street. More than 700 businesses are located here.

After 2005, housing in East Village took off. Before then, it was primarily an artist’s community sprung from its original vacant lots and abandoned warehouses.

 

What East Village Offers

 

East Village landmarks include:

Nearby luxury hotels include four major ones:

  • Andaz Hyatt San Diego, with 159 luxury rooms and a rooftop bar, wine bar, upscale restaurant, and underground nightclub;
  • Bayfront Hilton, a 30-story, 1,190 room bay view hotel next to the San Diego Convention Center with stunning panoramic views of the bay;
  • Omni San Diego Hotel with a pedestrian skywalk connected to Petco Park with 512 luxury rooms many offering stadium views; and
  • Solamar Hotel offers a Kimpton lifestyle with 235 rooms serving as a “gateway” to the historic Gaslamp Quarter from the East Village.

Learn about East Village’s activities, events, restaurants, and shopping by vising their official community association website.

To sum it up, East Village offers a livable urban village culture transformed from an art and industrial neighborhood into a mixed-use area. Residents enjoy the arts, entertainment, culture, and adult education. Its vibe is hip urban with old warehouses converted into residential units. Most residents are apartments.

 

4 Reasons to Live in East Village, San Diego

 

1. It’s Growing

 

Current and anticipated growth in the East Village includes a 613 units complex with three buildings, a 400-foot tower surrounded by seven-story and six-story buildings. Located at the corner of Broadway and Park Boulevard with plenty of green space for the public to enjoy.

The San Diego Business Journal on August 26, 2021, published a news story titled: “East Village Becoming The Downtown of the Future”. Despite the pandemic, developers are planning future housing projects in San Diego’s East Village. For example, the Cisterra Development’s $145 million 22-story called the Radian at 659 Ninth Ave. featuring a 36,000 square-foot Target store and 241 apartments.

The Times of San Diego reported in July 2021 that the Radian project is scheduled for completion in 2023 with its 255,000 square-foot high rise tower. Radian’s apartments will range from studios to three-bedroom units with penthouse units on the top two floors.

CoStar, a large real estate research firm, claims “The market is red hot on the apartment side” in East Village, Over the next year, CoStar expects East Village projects to create 2,100 apartments to market. East Village apartment rents went up 8.5% over the last year with a low 7% vacancy rate.

The Journal also reported that Xpera Group, construction consultants, claims “Big stuff happening in East Village right now”.

 

2. Lots of Live Entertainment

 

Lovers of live music venues will enjoy East Village. These include:

  • SoCal Music Festival offers four stages with live bands playing a variety of music tastes;
  • Moonshine Flats, featuring country music in its bar located at 344 7th Avenue. Also offers a backyard restaurant and bar; and
  • Saville Theater, famous for its jazz concerts.

 

3. Proximity to the Gaslamp Quarter

 

Just a half-mile from the famous Gaslamp Quarter. Only a six-minute drive (10 minutes with heavy traffic). A local and tourists’ hotspot with lots of entertainment and nightlife venues. Its 19th-century architecture reflects the former home of the legendary Wyatt Earp.

 

4. Lots of Educational Institutions

 

East Village boasts two highly ranked early & middle schools and two high schools.

Plenty of adult education with:

 

Learn About Multifamily Housing Investments

 

WeLease Property Management Company publishes informative blog posts about multi-family rental investments. Examples include:

Contact WeLease if you have any questions about investing in San Diego County housing or need professional property management services.

 

East Village, San Diego Ranked #20 Top Apartment Neighborhoods – Conclusion

 

You just read how and why East Village, San Diego is ranked #20 Top Apartment Neighborhoods in America.

Summary: East Village with its central downtown San Diego location offers:

  • Livable urban village-style;
  • Hip urban vibe;
  • Nightlife;
  • Culture;
  • Learning; and a
  • Modern urban life.

 

Thinking of Buying Multiple Housing Units in East Village or another San Diego Neighborhood?

Multiple Housing Units in East Village

 

SoCal Lifestyle Realty can help you locate ideal multiple housing units in East Village and other growing neighborhoods in San Diego County.

Contact us to see what fits your budget while offering you the greatest potential to profit.

 

 

 

Steven Rich, MBA – Guest Blogger

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What is Escrow?

First-time home buyers often ask:” What is escrow? We’ll explain not only what is escrow but how it works.

What is Escrow?

Definition of Escrow

 

Rocket Mortgage defines “escrow” as “a legal arrangement where a third party temporarily holds large sums of money until a real property purchase agreement terms are met”. It protects both the buyer and the seller during the home buying process.

Investopedia describes the escrow process as “occurring between the time a seller accepts an offer to purchase and the buyer takes possession of the home”.

 

How the Escrow Process Works

 

9 steps during the escrow process:

  1. Opening an Escrow Account;
  2. Earnest Money Deposit;
  3. Apply for Financing;
  4. Lender’s Approval;
  5. Home Inspection;
  6. Title Report and Insurance;
  7. Final Walk-Through;
  8. Reviewing the HUD-1 Form; and
  9. Escrow Closes.

 

Opening an Escrow Account

 

After the buyer and seller agree on a purchase price and the conditions for completing the sale, they sign a purchase and sale agreement, a legally binding contract.

For the protection of both parties an outside party (acting as a neutral third party) holds the money in a separate “escrow account” in a bank (or financial institution). The conditions and terms of the agreement tell the escrow officer how the funds are distributed and when the buyer takes title to the property.

The escrow account closes when the title passes from the seller to the buyer and all funds are disbursed.

 

Earnest Money

 

 

Earnest Money

Once the buyer and seller sign a purchase and sale agreement the real estate agent collects the buyer’s earnest money (a good faith deposit). Then, deposits it with a transaction closer (title insurance company, escrow company, or an attorney) as an initial down payment.

The earnest money deposit (EMD) shows the seller that the buyer is serious about buying and the EMD is proof of good faith. If the buyer fails to complete the sale without a legal reason, the seller can keep the EMD and is free to sell the house again.

To protect the buyer, the EMD is not given to the seller who can cash it and later refuse to complete the sale. Instead, the EMD gets deposited with a closing company that holds it in escrow until the title passes to the buyer or the sale cancels.

Tip: Read our blog post explaining “What is the EMD (Earnest Money Deposit Check)?” which explains the EMD in greater detail.

 

Apply for Financing

 

Tip: Before making offers on homes, you should go to a lender to get a “pre-approved“ letter stating how much of a loan (mortgage) you qualify for. This lets sellers know that you can obtain the funds to complete the purchase. Thus, the seller saves time and money by selling to a buyer with a pre-approved letter.

Bonus Tip: Read our blog post Is It Hard To Get Pre-Approved For A Mortgage?” which gives you more information about pre-approved letters.

After you give the lender the property’s address it will prepare a “good faith estimate” statement detailing the loan amount, interest rate, and closing costs to complete your purchase. Remember, this is only an estimate depending on the property appraisal and other costs associated with the “contingencies” in your purchase agreement.

Tip: Read our blog post explaining “What are Real Estate Contingencies in California?” to learn more about how to use them to your advantage.

 

Lender’s Approval

 

Unless the purchase is with “all cash” the buyer needs to get a loan (home mortgage) to come up with the funds beyond the buyer’s “down payment”. Thus, the lender becomes an important party to the transaction.

Tip: View our blog post explaining “What is Important When Selecting a Mortgage Lender” to help you with finding a good mortgage lender.

Lenders need to know the fair market value of the property before committing to the loan amount. Lenders will conduct a property appraisal typically paid by the buyer. The appraisal protects the lender in case the buyer stops paying the loan leading to loan default and foreclosure of the property.

If the appraisal comes lower than the purchase price the lender can require the buyer to come up with the cash for the difference or rejects the loan. If this happens, the purchase agreement usually has a “contingency” canceling the purchase if the buyer fails to get financing.

At this point, the buyer could ask the seller to lower the purchase price to the appraised value. If the seller doesn’t agree, the buyer has these options:

  • Provide the lender with additional information on why the appraisal should be for a higher value;
  • Obtain a second appraisal;
  • Go to another lender hoping for a higher appraisal; or
  • Cancel the purchase due to inability to get financing.

 

Home Inspection

 

Tip: Never buy a house “as is”. Unless you are a seasoned investor or a general contractor, buying “as is” means just that. If you find defects in the home, you can’t back out of the purchase because it’s “as is”. Always get a home inspection and make it a contingency with your purchase.

Buyers pay for their home inspections. It’s worth it. Spending a few hundred dollars to find expensive defects will save you thousands of dollars. Plus, it gives you the right to cancel the purchase if the seller refuses to fix them before the closing. Or, you can ask the seller to lower the price so you can hire professionals to make the repairs.

 

Title Report and Insurance

 

 

Title Report and Insurance

Lenders require a title report and title insurance. Even if you pay “all cash” you should get a title report and insurance to protect yourself from shady sellers or other parties claiming rights to the property. The title search and report verify if the seller is the only owner with the right to sell. Title insurance protects you after you take the title if someone else claims to be the real or a partial owner.

 

 

 

Final Walk-Through

 

Always re-inspect the home just before the closing to make sure the seller left promised items (appliances, furniture, etc.) and no damages occurred after the first home inspection.

 

Reviewing the Final Settlement Statement

 

Carefully review the Final Settlement Statement or (HUD-1 Form) presented by the escrow officer. It contains the purchase price, EMD credit, other down payment credits, and lists all your fees and costs. Make sure they are correct as mistakes and excessive or unexpected fees may pop up.

Tip: Read our blog post about “How To Understand California Escrow Costs 2021” to help you with understanding the Final Settlement Statement.

 

Escrow Closes

 

Escrow Closes

The closing requires you to sign several documents which require careful reading. The seller signs different documents. Once both parties sign all documents the escrow officer prepares a new deed naming you as the new property owner which gets filed with the county recorder.

As for pending costs and fees, you either pay with a bank wire transfer or a bank cashier’s check.

 

Tip: Read our useful blog post titled: How To Lower California Escrow Closing Costs to save money.

Note: This concludes your traditional mortgage escrow closing. However, if you got an FHA mortgage loan, extra procedures exist.

 

FHA Loan Escrow Procedures

 

The Federal Housing Administration (FHA) loans require a separate escrow account for paying homeowner’s insurance, property taxes, and Mortgage Insurance Premiums (MIPs). The MIP is an insurance policy required by the FHA added to your monthly mortgage payments. This insurance offsets the lender’s losses if you default on future loan payments.

 

What is Escrow? – Conclusion

 

Now that you learned what is escrow, we hope you feel more secure about the safety of your funds during the escrow process.

These 9 steps explain the entire escrow process:

  1. Opening an Escrow Account;
  2. Earnest Money Deposit;
  3. Apply for Financing;
  4. Lender’s Approval;
  5. Home Inspection;
  6. Title Report and Insurance;
  7. Final Walk-Through;
  8. Reviewing the HUD-1 Form; and
  9. Escrow Closes.

 

Interested in Buying a Home in San Diego?

 

SoCal Lifestyle Realty provides you with experienced Realtors to find your dream home in beautiful San Diego County.

Contact us to find out about our unique RealScout home finder’s program which saves you time by sorting through the entire local MLS listings to locate your specific desired home features.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

 

 

 

 

 

 

 

 

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Should I Purchase a Condo or a Home?

When it comes to housing, only three options exist: buy a house or a condo, or rent. The question: “Should I purchase a condo or a home?” gets answers with pros and cons.

 

In a nutshell, should you buy a condo or a home comes down to “where you are in life, and what are your preferences?”. What are your needs and preferences?

 

Should I Purchase a Condo or a Home? – Pros and Cons

Should I Purchase a Condo or a Home

Let’s explore the pros and cons between condos and homes.

 

The Benefits of Buying a Condo

 

There are 5 benefits to buying a condo.

 

1. Condos are Less Expensive than Homes

 

The National Association of Realtors (NAR) surveys indicate that in August 2021, single-family home sales prices nationwide averaged $356,700. While at the same time condo sales prices averaged $302,800. That’s a difference of nearly $54,000.

 

Thus, condos cost less than homes.

 

2. Less Exterior Repairs and Maintenance

 

Homeowners must repair and maintain the interior and exterior (roof, sidings, lawns, yards, and fences). Condo owners only need to take care of the interior.

The condo Homeowners Association (HOA) repairs and maintains the interior common areas (entry, elevators, stairs, and hallways). Also, the exterior (parking lot, roofs, siding, pool, clubhouse, etc.). Of course, condo owners pay dues to their HOA for these services, but less than what homeowners normally pay per year.

This saves money and frees up time for condo owners over homeowners.

 

3. More Amenities

 

Large condominium communities are packed with shared amenities. These can include:

  • Swimming pool;
  • Tennis courts;
  • Clubhouse;
  • Gymnasium;
  • Park areas;
  • Golf courses;
  • Jogging trails; and
  • Pet parks.

 

A typical single-family home doesn’t offer all these amenities.

 

4. Convenient Location

 

Downtown condos, while smaller and densely packed, are located closer to amenities. These include being close to:

  • Cultural activities;
  • Entertainment;
  • Shopping;
  • Restaurants;
  • Public transportation;
  • Parks;
  • Job opportunities; and
  • Shorter commutes to schools and work.

 

5. Social Connections

 

Detached single-family homes neighborhoods tend to experience distance between neighbors. Contrary, condos (like apartments) bring neighbors closer together. Especially when they share common amenities.

Density also makes a difference. A home typically may be on a tract of land from 1/4 up to one acre separated from neighboring homes. A condo community of 20 to 30 units may sit on an acre of land.

Intimacy exists in a condo community as opposed to a large subdivision of homes. Condos tend to attract people of similar income, interests, and backgrounds which encourages social co-mingling. Especially when congregating around social areas, gymnasiums, and swimming pools.

 

Cons: The Risks of Buying a Condo

The Risks of Buying a Condo

It’s always good to know the risks of any investment. Condos carry some risks. You need to know them before buying a condo. Here are 3 important cons:

 

1. Financing Condo Purchases More Difficult Than Homes

 

Getting a federal mortgage loan for a condo may be tougher than you think.

The Federal Housing Administration (FHA) requires all condo developments to have at least 50% of the units occupied by their owners before an FHA loan is insured. New condo developments only require 30% owner occupancy. Learn more about the FHA loan requirements for condos.

 

2. Condos Don’t Appreciate as Homes Do

 

The fact is, “condos don’t appreciate in value as the rate of homes”. When you try to sell, depending on the market, you may end up losing money. One reason is you may find yourself in competition with your neighbors trying to sell similar units. Or, the housing market is bad for condos.

Tip: Buy a condo unit in the most “attractive location within the building”. Or, buy a condo with extra bedrooms because they are always easier to sell. This will set you apart from your neighbors competing with your listing.

Bonus Tip: If you can’t sell, renting is an option. If the HOA rules don’t prohibit renting units, rent it subject to a future sale with enough time for your renter to seek another rental.

 

3. The Extra Expense of HOA Fees

 

Condo associations charge HOA association fees which you pay on top of your monthly mortgage. These extra membership fees can run up to $1,000 a month.

Your HOA fees pay for normal repairs and maintenance of the common areas. However, they may increase to pay for extra costs like:

  • Major required renovations like a new roof or new city requirements like larger water storage containers or green energy;
  • If members don’t pay their dues the rest of the members end up subsidizing them; and
  • Lack of reserve funds to pay for emergencies.

Tip: Before buying your condo, look into how much money the HOA keeps as a repair fund or reserve fund for emergencies. A healthy reserve fund of 10% of the yearly revenue budget or 25% for older buildings.

 

The Benefits of Buying a Home

The Benefits of Buying a Home

Now, let’s look at the benefits of owning a home.

 

1. Owning Land

 

Owning a home means owning land. Condo owners don’t own land. This is a big advantage of homeownership over a condo.

You can do whatever you want with your land within zoning restrictions and nuisance laws. You can build a tennis court, a swimming pool, a deck, a BBQ area, and landscape your backyard. A private fenced-in backyard lets your kids and pets play safely.

Your front and side yards give you options for lawns, gardens, and landscaping. Also, a driveway if your garage isn’t big enough for the family vehicles.

 

2. Room to Grow

 

As your family grows, you can grow your house. Depending on zoning and building codes, you can tear down walls and add additions. Build a deck in your backyard.

In suburban areas, you can build a guest house if zoning laws allow.

Condos do not give you these growth opportunities.

 

3. Greater Self-Expression and Self-Determination

 

A disadvantage with a condo is uniformity. Not owning the exterior of your condo means you can’t grow.

On the other hand, you can paint your house in your favorite colors. Put flowerbeds anywhere on your property. Build a playhouse in the back for your kids.

A house can always be customized while a condo’s exterior can’t.

 

4. A Home Accommodates Life Changes

 

Some condo owners complain about HOA rules and governance that control the way you live.

Uniformity restricts freedom of expression. For instance, if pink or yellow is your favorite color the HOA may prevent those colors in your window curtains or venetian blinds.

In-laws & Pets: If your brother and sister-in-law and their two kids need a temporary place to live, you can let them live in your house. However, your condo HOA rules may prohibit that arrangement. The same goes for pets as many HOAs restrict how many and what sized pets are allowed.

 

5. It’s Easier to Sell a House than a Condo

 

Condos are tougher to sell than homes. Maybe the HOA rules are too restrictive scaring off potential buyers? Or, your closest neighbors may be too noisy or like to party too much turning off quieter buyers.

Many buyers look at a condo as a substitute home. It’s an easier transition from apartment living, but many renters prefer a home of their own. Robust housing markets make condos ideal because of affordability.

Detached homes on privately owned lots are more liquid in all markets from bad to “hot”.

Individuality plays a large part in the housing market. Every home is unique, especially after customization by the previous owner. Unique homes appeal to specific buyers.

On the other hand, condos are uniform. One unit doesn’t stand out from the others in a condominium building. It could take a year or more to sell your unit because you must compete with your neighbors trying to sell their units. This is a big reason why condos end up as rentals.

 

Should I Purchase a Condo or a Home? – Conclusion

 

Let’s summarize our post.

The 5 benefits of buying a condo include:

  1. Condos are less expensive than homes;
  2. Less exterior repairs and maintenance;
  3. More amenities;
  4. Convenient location; and
  5. Social connections.

 

Cons – the 3 risks of buying a condo include:

  1. Financing condo purchases are more difficult than homes;
  2. Condos don’t appreciate as homes do; and
  3. The extra expense of HOA fees.

 

Now, let’s summarize the 5 benefits of buying a home which includes:

  1. Owning land;
  2. Capacity to grow;
  3. Greater self-expression and self-determination;
  4. A home accommodates life changes; and
  5. It’s easier to sell a house than a condo.

 

Our Blog Offers Helpful Tips for Buyers and Sellers

Check out these SoCal Lifestyle Realty Blog posts:

How to Lower California Escrow Closing Costs;

San Diego First-Time Homebuyer Programs;

What is Important When Selecting a Mortgage Lender;

Strategy and Tactics for Selling Your Home;

How to Add Value to Your San Diego Home Before Selling; and

What are Real Estate Contingencies in California?

 

Interested in Buying a Home or a Condo in San Diego?

Buying a Home or a Condo in San Diego

 

No matter which you choose to purchase our experienced Realtors at SoCal Lifestyle Realty can help you find your dream home or condo in the greater San Diego area.

Contact us to discover the ideal home or condo for you and your family in San Digo County.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

 

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How To Lower California Escrow Closing Costs

Want to learn how to lower California escrow closing costs? Read about several ways to lower closing costs in California.

How To Lower California Escrow Closing Costs

Homebuyers Don’t Understand Closing Documents

 

In September 2021 the Qualia Homebuyer Sentiment Index issued a report about buyers not understanding closing documents. Real Trends, a real estate news site, claimed: “Despite the requirement of closing disclosures (CDs) to inform homebuyers of their transaction costs, consumers still don’t understand the costs associated with buying a home.”

The Qualia report disclosed:

  • Only 20% of homebuyers nationally claimed to understand the closing documents they signed;
  • This low percentage resulted in the risks home purchasers take by acting too quickly signing closing documents they don’t understand;
  • These include misunderstanding transaction costs and the home buying process; and
  • 23% of homebuyers bought their home “sight unseen” in the current “competitive market”.

 

Too Many Homebuyers Pay More Than Expected

 

Similar to “sticker shock” at a new car dealership, homebuyers are surprised at the high prices nationwide.

The Qualia survey also revealed:

  • The current nationwide low-interest rates and limited housing inventory created a competitive housing market;
  • 30% of buyers paid more than expected for their homes;
  • Of those paying more, 32% paid $50,000 or more than the asking price;
  • 23% bought their home without seeing it in person; and
  • 19% removed home inspections contingencies from their purchase contract to sweeten their offers.

Additionally, 44% of recent homebuyers experienced higher transaction costs at the closing than they expected.

 

Homebuyers Experience Extra Stress

 

In addition, the survey also found:

  • Recent homebuyers experienced “stressful, complicated closings”;
  • The closing documents were too complicated; and
  • The only thing more stressful than the closing was the moving-in process.

 

The Solution for the Stress?

 

This survey also revealed 55% of future homebuyers prefer to receive explanations of the closing costs and process face-to-face before the closing date. While 44% preferred to receive these explanations over a secured web-based portal or a mobile app.

This survey emphasized the need for better education of the home buying and selling process transparency. According to Nate Baker, CEO of Qualia: “Technology needs to simplify the complex process allowing real estate professionals to focus on consumer education during the home buying process.”

 

SoCal Lifestyle Realty Educates Buyers and Sellers About California Closing Costs

California Closing Costs

Recently, our blog published a post titled: How To Understand California Escrow Costs 2021.

Our post explains:

  • The terms used by escrow officers (or title companies);
  • Types of costs related to the closing of escrow;
  • Estimated fees for each item that the seller and buyer pay at the closing; and
  • Examples of California escrow costs.

 

Besides Better Education, Lowering Your Closing Costs Will Help Relief Stress

 

Bigger Pockets reveals some of the ways to lower your closing costs like:

  • Your loan (mortgage) interest rates and monthly payments;
  • Lender fees;
  • Seller’s contributions to closing costs;
  • Adding closing costs to your mortgage payments;
  • Research vendors; and
  • Seek financial aid

Let’s explore these in greater detail.

 

Lender Fees

 

Lenders charge fees for the same services, but not all lenders charge the same fee. One way to get ahead of these fees is to get a “pre-approval loan” letter directly from a lender or a mortgage company. This letter shows sellers that you can buy their home which gives you an edge over offers from other buyers.

To get a pre-approval loan letter, you must contact lenders to see which ones will pre-qualify you for a mortgage loan. Upon approval, ask for a list of estimated fees and costs. Before agreeing to the pre-approval compare the same costs and fees with other lenders. You will see a difference between lenders.

Comparing lender fees and costs may save you lots of money.

 Learn more about a “pre-approval loan” letter in our recent post titled: Is It Hard To Get Pre-Approved For A Mortgage .

 

Seller’s Contributions

 

Before signing a Purchase & Sale Agreement prepared by the seller of the home you want to buy read it carefully. It should include items at the closing the seller agrees to pay.

Buyers typically pay their attorney’s fee, loan-application fee, credit report fee, and others. You should know what items the seller must pay like the real estate broker commissions.

Confer with your experienced Realtor at SoCal Lifestyle Realty about the common items sellers pay at the closing. Are they reasonable and fair? You have the right to negotiate with the seller about what you pay as the buyer and what the seller pays.

 

Add Closing Costs to Your Mortgage Payments

 

Some lenders allow folding closing costs into your mortgage so you avoid or lower the upfront closing costs. If your lender agrees, the closing costs get paid by the lender and you pay them as added to your purchase price. Of course, you will pay the interest rate over the time you pay off the closing costs.

 

Research Vendors

 

Lenders hire outside professionals to perform pre-closing services like an appraisal, home inspection, and termite inspection. Lenders usually maintain a list of different vendors who charge different fees.

If you feel that a proposed inspection fee is too high you can ask your lender who else they have on their list. You contact each one to see which one is cheaper and ask your lender to use that one.

 

Seek Financial Aid

 

The federal government and the State of California have their own financial assistance programs for first-time homebuyers and other buyers who qualify.

Learn all about these money-saving programs at our recent blog post aboutFirst-Time Homebuyer Programs. It explains the federal, State of California, and San Diego financial aid programs for first-time (and other qualified) homebuyers.

 

Lower Closing Costs By Asking Questions

How To Lower California Escrow Closing Costs

Typical closing costs that buyers pay are not always set in stone. Let’s examine them.

Application Fee – Before you apply for a mortgage, ask your lender about the application fee. Some application fees are negotiable. Shopping around to discover different lender’s fees may save you money. Also, it gives you leverage to know what a lender’s competitors charge.

Appraisal Fee – Like other vendors, your lender probably uses different appraisers who may charge differently.

Association Dues – Every condo or homeowner’s association charges membership dues. The annual association dues get paid at closing. Yet, buying during the year means a prorated amount. Your seller already paid the annual dues and will seek reimbursement for the prorated amount. This gives you room to negotiate how much you will reimburse.

Credit Report Fee – Mortgage lenders always get a credit report showing your credit history and credit score. Ask your lender if you must pay this fee as credit bureaus often do not charge the lender.

Discount Points – This is what you pay your lender at closing for getting a lower mortgage rate. One discount point equals 1% of your mortgage amount for lowering your interest rate by .25%. For instance, if you pay your lender $2,000 on a $200,000 mortgage loan, your 4% interest rate lowers to 3.75%.

 

Tip: Talk with your lender about your options regarding discount points. Paying more upfront doesn’t work for buyers planning to refinance or not living in the home long-term.

 

Mortgage Broker Fee – Hiring a mortgage broker to find a suitable mortgage may save you money. Yet, know that your broker charges a commission ranging from 0.5% to 2.75% of the loan amount. If you find a direct lender you could save money.

Origination Fee – Most lenders charge 1% as a loan origination fee to process your mortgage application. However, not all lenders charge this fee so shopping or a lender who doesn’t charge this fee saves you money.

Private Mortgage Insurance (PMI) – If your down payment is less than 20% of the loan amount, lenders require you to carry private mortgage insurance which covers you if you miss mortgage payments. Lenders charge varying PMI percentages ranging from 0.5% to 2.3% of the loan amount. You pay your PMI premiums in four ways:

  1. Lender Paid – Your mortgage lender covers the PMI cost in exchange for raising the interest rate. You save money at the closing but pay more over the years.
  2. Monthly – You don’t pay the PMI at closing, instead, you pay more for it in your monthly payments.
  3. Split – You pay part of the PMI at closing and your lender adds the PMI balance to your monthly payments.
  4. Upfront – You pay the entire amount at closing.

 

 How To Lower California Escrow Closing Costs – Conclusion

 

Our post explains several ways how to lower California escrow closing costs. In a nutshell:

  • Educate yourself about all the California escrow closing costs;
  • Learn how to cut lender’s fee;
  • How to negotiate higher sellers’ closing cost contributions;
  • Adding closing costs to your monthly mortgage payments;
  • Research closing services vendors fees;
  • Seeking government financial aid; and
  • Questioning closing costs to get reduced fees.

 

Thinking of Buying a Home in San Diego?

 

SoCal Lifestyle Realty provides experienced Realtors in the greater San Diego area to help you lower escrow closing costs after we find your ideal new home.

Contact us now to learn about available homes in San Diego County.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

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Why Do Homes Fail To Sell?

Why do homes fail to sell? Some homes in a hot real estate market or a “seller’s market” fails to sell for several reasons. Learn all about them here.

Nationwide, Realtors report many homes unable to sell no matter how hot the sellers’ market. On July 28, 2021, The Ascent (a Motley Fool company) reported that: “89% of Properties Sell in a Month”. Their report focused on the residential housing market.

Using words like: “On Fire”, “Scorching”, and “Red Hot” residential real estate prices are at record highs due to a low housing inventory and attractive 30-year fixed mortgage rates. The Ascent key findings showed:

  • Home prices grew 21% from June 2020 to June 2021;
  • 89% of all residential properties sold under a month in June 2021;
  • An increase of 36% from June 2019;
  • The average time for homes on the market was 17 days, 10 days fewer than June 2019;
  • Sellers averaged four offers, double from 2019; and
  • 55% of offers were made above the listing price in June.

Why Do Homes Fail To Sell?

Why Do Homes Fail To Sell?

 

So, given this “red hot” housing market nationwide, sellers unable to sell their homes ask: “Why isn’t my home selling?”.

The answer during this current “hot market” boils down to three reasons:

  • Price – Overpriced homes do not sell, even in a hot market;
  • Condition – Homes in poor condition never sell as well as a “move-in” home; and
  • Marketing – Bad marketing leads to poor sales for every product.

Let’s explore these three reasons.

 

Your Home Listing Price

 

First of all, you must look at your home like a product. You need to apply product sales business principles.

No matter what product, if it is overpriced it won’t sell. Do you buy the first car you see at a dealership? Hopefully not because you should compare prices on the same model and age of the car you seek. The same principle applies to buying a home.

In a hot real estate market homes listed at a fair price sell fast and sometimes for more. That’s because buyers do their homework by comparing similar homes online and with personal previews. Buyers seek value for their money.

Fairly priced homes attract more buyers who end up competing against each other. In other words, a house attracting many buyers creates the perfect situation to start a bidding war. Thus, you end up selling your home at a higher price than your listing price.

How do you price your home? You need to look at the comparisons (comps) in your immediate neighborhood. The Comparative Market Analysis (CMA) performed by an experienced Realtor compares your home with similar nearby homes recently sold. That’s the best way to know what local buyers pay for a home like yours.  Until the RealScout program refined CMAs which you will learn about below.

 

Condition of Your Home

 

The condition of your home either is a deal maker or a deal-breaker. Homes in poor condition hamper your ability to sell.

Invest the time and energy to make your home presented in the best light to attract buyers. Realtors call this “curb appeal” on the outside and “home staging” for the inside.

Learn more about curb appeal in our broker’s blog post: How to Create Positive Home Buyers First Impressions.

Read our informative post explaining: “Tips for Staging Your San Diego Home When Selling”.

After seeing your home’s Multiple Listing Service (MLS) on the internet, a buyer wants to:

  1. Look at the photos;
  2. To drive by to view your home from the street to see if it has “curb appeal”; and
  3. Finally, passing these steps induces the buyer to want to see the inside.

Once inside, the buyer sees the condition of every room, floor, ceilings, windows, and layout. The buyer next looks at the sides and backyard. You must make sure everything looks clean and livable.

 

The Art of Marketing Your Home

REAL ESTATE MARKETING

Your home is a product for sale. Like any product, it needs good marketing to attract buyers at the highest price. Poor marketing ends up not being sold because buyers never discovered it. Good advertising and promotions bring products to the attention of buyers.

Proper marketing creates a demand for your home. Without marketing, your property may sit unnoticed by buyers for a long time.

Products need a marketing plan. Not just any marketing plan but one specifically designed to sell your unique home. Avoid real estate agents offering a “one size fits all” marketing strategy that relies on luck instead of a careful marketing plan.

Simply putting your home on the local MLS hoping it gets noticed won’t work. When you seek your next home will you just drive around neighborhoods looking at “for sale” signs? Of course not, because it’s a waste of time.

After a long time sitting on the market your home becomes a dreaded “stagnant” listing. Then, your listing agent will suggest lowering your asking price. Lack of good marketing ends up losing you money.  

A Realtor’s primary objective is to create a demand for your home. Creating a lot of demand for homes results in generating more than an offer at your listed price. Great demand results in getting the highest price for your home.

That’s why our Realtors at SoCal Lifestyle Realty use a unique real estate marketing tool called the RealScout. Learn more about how we list and sell homes using RealScout in our post: “Strategy and Tactics for Selling Your Home”.

 

Finding Your Next Home

 

After selling your home you will want to work with an experienced Realtor to find your next one. But real estate agents are not alike.

Do you know the difference between a Realtor and a real estate agent? Read about the difference in a post from our broker: “Is a “Realtor®” Better Than a “Real Estate Agent”?”.  

Also, read our how-to “Use an Experienced California Real Estate Agent”.

Our RealScout program also helps buyers to find the ideal home fitting their desired needs and wants.

 

Why Do Homes Fail To Sell? – Conclusion

 

The answer to a question about “Why do homes fail to sell?” is simple. These three reasons are the main causes for lower prices:

  1. Listing price too high;
  2. The poor condition of the home; and
  3. Bad or no marketing.

 

How do you improve these three problems?

 

Follow these suggestions to come up with the best listing price and sell your home fast:

  • Hire a competent Realtor familiar with your neighborhood to perform a good CMA;
  • Let your Realtor perform a RealScout Buyers’ Preferences analysis of your home;
  • Give your Realtor a full tour to see what upgrades can increase your home value; and
  • Rely on your Realtor who uses RealScout marketing tools to get your listing to the right buyers looking for our home’s features instantly.

 

Do Your Local Realtors Use RealScout?

 

SoCal Lifestyle Realty is proud of our RealScout program in the greater San Diego area. It helps our Realtors to suggest the best listing price and instantly find suitable buyers based on your home’s features.

Contact us so one of our experienced Realtors can perform a CMA and use RealScout to help you list, market, and sell your home at the highest price in San Diego County.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

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San Diego First-Time Homebuyer Programs

San Diego first-time homebuyer programs offer several options. These include government-backed mortgages from federal,  California. the City of San Diego and San Diego County.

But first, you need to understand the difference between conventional and government-backed home loans.

San Diego First-Time Homebuyer Programs

Conventional versus Government Loans

 

A standard conventional loan obtained from a bank or lending institution usually requires a 20% down payment. However, this might get costly.

The California Association of Realtors (C.A.R.) reported in July 2021 that the average statewide single-family home median price was $811,170. Thus, at 20% the average down payment amounted to $162,234. A Condo or townhouse unit averaged a median price of $600,000 statewide resulting in a down payment of $120,000.

In San Diego, the average single-family home median price was $860,000 requiring a down payment of $172,000.

The good news is that government-backed home loans (mortgages) require much lower down payments.

So, if you haven’t saved $120,000 for a statewide condo or townhouse or $172,000 for a San Diego single-family home down payment, don’t worry. Check out these City of San Diego and San Diego County-backed mortgage programs.

 

San Diego First-Time Homebuyer Programs

 

The City of San Diego and San Diego County offer different buyer programs for their first-time homebuyers. Let’s explore both of them.

 

City of San Diego First-Time Homebuyer Programs

 

The San Diego Housing Commission (SDHC) helps low- and moderate-income families to buy their first homes in the City of San Diego. It’s called the SDHC First-Time Homebuyer Program which helps with buying a condominium, townhome, or single-family home. Here’s a summary of the benefits.

 

Homeownership Grant Program

 

Qualifying home buyers receive 4% of the purchase price (up to $10,000) to pay for closing costs as a grant paid at the escrow closing.

Grant eligibility requires:

  • Earns no more than 80% of San Diego’s Area Median Income (AMI) determined by HUD; and
  • Can only apply with the 3% interest Deferred-Payment Loan Program (see below).

 

Deferred-Payment Loan Program at 3% Interest

San Diego First-Time Homebuyer Programs

Qualified applicants get 17% of the total purchase price as a down payment loan at a 3% interest rate. The payout is deferred for 30 years unless the owner stops occupying the home as a primary residence or sells. Then, the principal loan amount and accrued 3% annual interest get repaid.

Qualification requires the buyer to get a:

  • First trust deed fixed-rate loan;
  • Have a good credit rating;
  • Have adequate income;
  • Provide a minimum down payment of 3%; and
  • Attend a homebuyer’s education class.

 

Closing Costs Forgivable Loan Program

 

Similar to the above Homeownership Grant Program, but a loan instead of a grant. The home buyer receives 4% of the purchase price (up to $10,000) to pay for closing costs.

The loan is forgiven after six years on the condition the owner continually occupies the home and no further encumbrances (like a lien) attach to the property.

 

San Diego County CalHome Programs

 

Besides helping first-time homebuyers in the City of San Diego, SDHC helps these buyers in the rest of San Diego County. This program helps first-time buyers with the down payment and closing costs. Here are the details:

 

Low-Interest Loan

 

Qualified applicants receive a loan or up to 17% of the purchase price for the down payment and 4% of the purchase price for closing costs. This applies to a condominium, townhome, or single-family home.

These funds are a loan at 3% simple interest accrued yearly. This can be a second mortgage on the home. No monthly payments as  “deferred-payment” loans are deferred until the home is sold, refinanced (except for an FHA Streamline Refinance), or paid off. The one-time payoff includes the original principal loan amount and the accrued interest.

 

Property Requirements

The CalHome Program requires the home to become your primary residence.

 

San Diego County Eligible Locations

 

In addition, the home is located within the San Diego County Jurisdictional Boundaries which include the cities of:

  • Carlsbad;
  • Coronado;
  • Del Mar;
  • Encinitas;
  • Imperial Beach;
  • La Mesa;
  • Lemon Grove;
  • Poway;
  • San Marcos;
  • Santee;
  • Solana Beach;
  • Vista; and
  • Unincorporated areas of San Diego County.

 

Eligible Property Types

San Diego First-Time Homebuyer Programs

 

The following types of homes are eligible:

  • Condominiums;
  • Manufactured homes on a permanent foundation;
  • Single-family detached homes; and
  • Townhouses.

 

Maximum Purchase Price

Applicants are limited to purchasing homes with a maximum sales price of $517,750 for a condominium, attached townhome, or single-family residence.

 

Free of Defects

A Housing Quality Standards (HQS) inspection is required. Qualifying homes must be free of all health and safety defects including lead-based paint hazards.

In addition, applicants must purchase flood insurance for properties located within a designated flood zone.

 

Applicant’s Eligibility

 

This is a first-time homebuyer program. Applicants’ annual gross household income must fall at or under 80% of San Diego County’s Area Median Income (AMI) determined by HUD.

In addition, applicants must contribute at least 3% of the purchase price from their cash assets. The applicant must receive the maximum first mortgage amount applied for.

Homebuyer Education is mandatory. This is a CalHome/HUD-approved homebuyer’s education class teaching homeownership.

Learn about getting a mortgage by reading our blog post explaining pre-approved mortgages in San Diego.

 

California Administers Federal First-Time Homebuyer Programs

San Diego First-Time Homebuyer Programs

If none of the San Diego first-time homebuyer programs fit you, options exist.

The State of California administers several federal first-time homebuyer programs like:

CalHFA Mortgage Programs – The California Housing Finance Agency sponsors favorable conventional and government loans. First-time homebuyers can take advantage of 30-year fixed-rate and homebuyer assistance;

 

Conventional 97 – Obtained from Fannie Mae or Freddie Mac federal programs offer 3% down with a minimum Credit Score of 620. Read about Credit Scores from our broker, Big Block Realty’s blog “How to Successfully Buy a Home”. In addition, a Mortgage Insurance policy guaranteeing your total payments is required, but ends after a few years;

FHA Loan – The Federal Housing Administration (FHA) offers 3.5% down with a minimum 580 Credit Score. The mortgage insurance remains in place until you either move, pay off the mortgage, or refinance to a different mortgage type;

USDA Loan – People with low-to-moderate income who buy in designated rural areas qualify for a 0% down payment. But, the Credit Score minimum varies upon the lender. Most often the Credit Score minimum is 640. This program offers low mortgage insurance rates;

VA Loan – Veterans and service members get the best deal. Zero down payment with a lower Credit Score which varies with lenders, but often 620. In addition, no mortgage insurance is required after the closing; and

CalVet assistance for veterans and service members is designed to help understand the homeownership process in a stress-free manner. Securing a CalVet home loan is easy. Several VA loan options are offered for home buying in California. Call CalVet loan providers to verify eligibility at (866) 653 – 2510 Monday – Friday from 8 am to 5 pm.

Tip: These programs allow you to use down payment assistance or “gifted money”. So, relatives can gift you the down payment.

 

The State of California First-Time Homebuyer Programs

 

Besides administering federal homebuyer assistance programs, the State of California offers its residents separate first-time homebuyer programs. These include:

 

CalHFA

 

For a California first-time homebuyer, a good place to start looking for assistance is the California Housing Finance Agency (CalHFA). This state agency offers six programs for first-time homebuyers with their special interest rates:

In addition, the CalHFA offers an eight-hour homebuyer education online course for $99. This is a mandatory course to become eligible for the state’s financial help.

Also, one-on-one homebuyer counseling sessions are available either virtual or face-to-face. The fee varies depending on your choice of service.

The state’s financial help depends on income and purchases price limits. Also, your credit score of 660 or higher is required. The CalHFA website provides a wizard to see if you are eligible.

 

CalHFA Details

 Homebuyers who qualify can borrow up to $11,000 for the down payment and closing costs. This program is called the CalHFA MyHome Assistance Program.

Qualifying for the MyHome Assistance Program requires:

  • A first-time homebuyer;
  • Purchasing a single-family home;
  • Living in the home as the primary residence;
  • Completing home buyer’s education counseling; and
  • Meeting income limits.

Note: The following do not qualify for the $11,000 DPA:

  • Fire department employees;
  • School employees; and
  • Those who purchase manufactured or new construction homes, or homes with an Accessory Dwelling Unit (ADU). 

 

First-Time California Homebuyer Grants

 

California offers many Down Payment Assistance Programs (DPAs). The link lists all the city and county DPAs in California.

For example, San Diego County DPA under its San Diego Home Consortium program offers these types of financial assistance with the FHA:

  • CalHome Program providing assistance funds for first-time homebuyers to pay upfront costs getting a mortgage; and the
  •  Homebuyer Down Payment & Closing Cost Assistance (DCCA) program.

 

San Diego First-Time Homebuyer Programs – Conclusion

 

Our San Diego first-time homebuyer programs explanation also includes available State of California loan programs. We explained:

  • Conventional versus government loans;
  • California First-Time Home Buyer Programs;
  • First-Time California Home Buyer Grants;
  • City of San Diego First-Time Home Buyers Programs; and
  • San Diego County CalHome Programs.

 

Are You a San Diego First-Time Homebuyer?

 

San Diego First-Time Homebuyer Programs

As you just read, our blog posts provide you with useful information.

SoCal Lifestyle Realty provides more than educational blog posts. Our Realtors offer many years of experience with the greater San Diego housing market to help you find the ideal home.

Contact us to learn more about our home-finding services in San Diego County along with assistance with first-time home buyer loan programs.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

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What is Important When Selecting a Mortgage Lender

Looking for a new home? Don’t pick a lender without knowing: “What is Important When Selecting a Mortgage Lender”. We’ll teach you what is important.

With so many mortgage lenders to choose from how do you what’s important? First of all, getting a home loan creates the biggest debt for most Americans. Paying back thousands of dollars with interest for many years is a big deal for most homeowners.

Mortgage Lender

What is Important When Selecting a Mortgage Lender?

 

How do you know where to find the right mortgage lender? Consider these nine factors before choosing a home lender.

 

1. Learn the Types of Home Loans (Mortgages) Available

 

Not all mortgages are alike. The types of mortgage loans you can choose from include:

Let’s explore each one.

 

Conventional Loans

 

Conventional home mortgage loans are private loans offered by banks and lending companies. They are not backed by the government. Yet, they are the most common mortgage loan. Nearly 64% of all new home mortgages are conventional.

Most home buyers take out a conventional loan because they don’t charge as many fees as government-backed mortgages. But, conventional loans are harder to qualify for because private lenders worry about the risks if buyers can’t pay off the loan.

 

Government-Backed Mortgages

 

The federal government provides government-insured home loans such as these main three:

  • The Federal Housing Administration (FHA);
  • Veterans Administration (VA); and
  • US Department of Agriculture (USDA).

As mentioned above, because the government insures the homeowner’s loan payments extra fees are charged.

 

2. Where to Get a Mortgage?

 

Here are places you can apply for a mortgage loan:

  • Conventional banks like your local bank where you have a checking or savings account;
  • Credit unions where you must become a member through your relationship with government agencies or companies. According to Forbes, most loans they issue are mortgages;
  • Nonbank mortgage lenders are usually found online who offer faster mortgage approvals than banks; and
  • Mortgage brokers who search multiple lenders and suggest your best loan option.

 

3. What Qualifications does the Mortgage Lender Require?

 

Every mortgage loan requires a review of your credit history and credit score. Whether you apply for a conventional or government-backed mortgage the lender looks at your credit score, down payment, and debt-to-income ratio. Yet, every lender applies its own rules regarding these three factors to apply for your loan.

Learn about credit scores by reading our broker’s blog post: “How To Successfully Buy a Home”. You need to determine if you will meet these qualifying requirements.

home loans in san diego

Tip: Qualifying for the lowest rates and fees requires excellent credit and large down payment.

Problems with getting loan approval often arise when borrowers ask for a lower down payment than normally required. Similarly, if your credit score is low due to unpaid debts or too many late payments you must apply for a “bad-credit home loan”. This requires extra time browsing lenders who will accept your bad credit. Here’s a good explanation of “How to buy a house with bad credit?”.

 

4. How to Prepare for a Mortgage

 

Before applying, help yourself to qualify and get the best rate. You should:

  • Check and improve your credit score. If it’s not within the highest range, work on increasing it. Pay all your bills on time, pay off your credit card balances, don’t take on new loans, and don’t open new credit card accounts;
  • Save for a down payment. Try to afford a 20% or more down payment; and
  • Ensure your income is stable. You must convince lenders you can afford the monthly payments.

Completing these tasks will make it easier to get a pre-approval mortgage letter from a lender or a broker. Basically, this letter tells sellers that your credit score, available down payment, and your stable income qualify you for a mortgage. This letter gives sellers confidence you are ready and able to buy their home.

Tip: Learn about how to get a pre-approval mortgage letter in our post here titled: “Is It Hard To Get Pre-Approved For A Mortgage?

 

5. How does the Mortgage Application Process Work?

Mortgage Application Process

Some lenders require an in-person meeting. Other lenders process loan applications completely online. No matter which option you choose you must submit supporting documents.

Tip: Don’t choose the online loan application process if you have questions or need help understanding the borrowing process.

Instead, visit a bank or a mortgage company’s office. Then, a loan officer can explain the loan process and what specific documents you must submit.

 

6. Compare Mortgage Loan Costs

 

The costs and fees vary between lenders. Here are ways to compare lenders mortgage offers:

  • Fees – Mortgage loans incur different fees like application fees and underwriting costs, Ask about all the fees;
  • Interest rate – While rates change daily try to lock in the lowest rate when you apply. Ask about “points” fees allowing you to lock into a lower rate; and
  • Down payment and mortgage insurance – A larger down payment helps get loan approval. But, save enough for new home expenses like furnishings and repairs. If your down payment is less than 20% expect to pay for Private Mortgage Insurance (PMI) which ensures your mortgage payments.

You need to learn the interest rate on the loan principal, loan origination fees, and other costs the lender charges.

Tip: Your goal is to get the lowest rates and best loan terms from your lender.

Luckily, lenders must provide you with a list of all fees and costs before you commit. That way, you can compare the costs between different lenders.

 

7. Know that Different Types of Mortgage Lenders Exist

 

Two types of lenders exist, direct lenders and mortgage brokers. Direct lenders work for their bank, credit union, or lending institution. If direct lenders won’t approve you or charge too much a mortgage broker may help. That’s because mortgage brokers act like insurance agents seeking better rates and terms from many lenders.

Tip: These options allow you flexibility with seeking a direct lender or a broker who can find a home loan that meets your needs.

Therefore, you need to find a lender that fits your situation.

 

8. Look for the Person and not the Institution

 

Mortgage LenderJust like the TV commercials promoting your friendly banker, dentist, or veterinarian. Your loan officer must help you to get the best mortgage that fits your situation.

Look for an experienced one who knows the local real estate market where you will buy. In addition, one who thrives at fitting mortgages with buyers in similar situations as you.

Ask your Realtor, family, and friends about loan officers or brokers they worked with. People you know and trust can recommend the right person to work with you.

 

9. Questions to Ask a Mortgage Lender

 

After finding a couple of lenders you think might work, ask the following questions to more about what they offer you:

  • What types of mortgage loans do you offer?;
  • Which mortgage is right for me?;
  • What are your mortgage closing costs?;
  • Do you participate in any down payment assistant programs;
  • What documents do you require?
  • Can I lock in a low-interest rate during the application process, do you charge extra for that?;
  • How long will it take to complete the mortgage process?; and
  • How do you communicate with your clients?

 

What is Important When Selecting a Mortgage Lender – Conclusion

 

After learning what is important when selecting a mortgage lender, follow these suggestions to find the right one for you:

  • Understand the types of mortgages available for you;
  • Find out where to get a mortgage near you;
  • Know what your lender requires to qualify for a mortgage;
  • Prepare for a mortgage by checking your credit score and improving it, save for your down payment, and sustain a stable income;
  • Get a pre-approval mortgage letter;
  • Understand how the mortgage application process works;
  • Find out how much your mortgage will cost;
  • Know the difference between direct lenders and mortgage brokers;
  • Seek the person to work with, not the institution. Ask for recommendations from your Realtor, family, and friends who worked with a loan officer or broker they liked; and
  • Ask the right questions before choosing your loan officer or broker.

 

Need Help with Getting a Mortgage in San Diego County?

Getting a Mortgage in San Diego County

 

SoCal Lifestyle Realty offers experienced Realtors to help you find your dream home in San Diego County. Also, we can help you find a loan officer or a mortgage broker to work with.

Contact us today to prepare you for a pre-approval mortgage letter from a lender or a broker that sellers will appreciate when we find your new home.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

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Strategy and Tactics for Selling Your Home

Like any high price product for sale, you need a strategy and tactics for selling your home. Whether your home is worth $100,000 or in the $millions, learn from our tips to create a successful home sale “formula”.

In other words, treat the sale of your home like a business marketing science.

Strategy and Tactics for Selling Your Home

Strategy and Tactics for Selling Your Home

 

Forbes suggests treating your home sale as a business strategy.

Real estate experts agree that the following strategies are most effective for selling your home.

 

Get Your Home Ready to Attract More Buyers Before Listing

 

Real estate experts call this “staging” like a movie set with props. If your home is unoccupied think “fresh” with a clean slate. Paint the rooms with neutral colors and use minimal but trendy decor.

Buyers should walk into your home to envision themselves living there. Removing all distractions from the previous or current homeowner allows buyers to dream about how they can add to it.

If you occupy your home, pay attention to simple details like removing personal clutter (like an old rug or family photos). Before a buyer visits, hide signs of family usage like drying dishes and other items on the kitchen countertops. Your bathrooms need thorough cleaning and hide all personal items like drying towels, toothbrushes, and used soap.

According to another Forbes article, “staged homes sell faster and for more money”.

Further tips for staging your occupied or unoccupied home require an entire article. But, we already wrote one for you. It suggests how to enlighten every room and the outside too. View our helpful blog post titled: Tips for Staging Your San Diego Home When Selling.

 

Clean, Declutter, Depersonalize, and Curb Appeal

 

Investopedia recommends these four tasks to “Sell Your Home Fast”.

Cleaning: Besides staging, your occupied home needs a total cleaning from top to bottom. A dirty home turns off buyers.

Declutter means removing all the trash and clutter. Hide the laundry. Remove all the extra things found on kitchen and bathroom counters. Put all nonessentials in storage and lock the door.

Depersonalize means removing everything personal like family photos, trophies, and diplomas. Hide all pet accessories including food and water dishes, beds, and toys.

Curb appeal means what a buyer sees from the street when looking at your home. This includes your driveway, front lawn, entry doors, siding, roof, and landscaping. They must look neat and trim. Appealing and inviting a buyer to approach your front door. A good first impression is essential.

We published a blog post explaining other ways: “How to Add Value to Your San Diego Home Before Selling”.

 

Find the Right Real Estate Agent for You

SoCal Lifestyle Realty

Not all real estate agents are equal. Finding the right agent to list and sell your home faster and for more money is critical.

For most homeowners, selling the home is the biggest financial transaction in their current lifetime. If you want to experience less stress for more profit finds the best real estate agent that fits you.

Your real estate agent should know all the nuances of your neighborhood and the difference in home sales prices from street to street. Knowing this means the difference in selling your home for thousands of dollars more.

Want to learn more about how an experienced agent helps you find buyers with more money? Read our blog post titled, Use an Experienced California Real Estate Agent.

 

How to Price Your Home to Sell

 

If your sales price is too high it won’t sell. Its basic law of supply and demand. Overpriced homes stay on the market too long and become known as “stale” like bread.

Pricing your home competitively saves you time. It encourages buyers to make an offer even if your price is a little over what they want to pay.

 

Want to Know What Your Home is Worth?

 

The internet is filled with Multiple Listing Services (MLS) data and other home sales data for every city in the U.S. Yet, most home sellers do not know how to interpret and use the data. Ever pour over Google Analytics and demographic charts? Easy for an SEO guru but complicated for the average layperson. Avoid trying to become a mathematician or a data geek.

You can ask a real estate agent to perform a Comparative Market Analysis (CMA). The CMA compares recent sales prices of homes comparable to yours. However, no two homes are alike. Additionally, the CMA doesn’t help if no similar homes in your immediate location sold in the past six months or less.

 

Use RealScout for Strategy and Tactics for Selling Your Home

RealScout

Instead, work with a real estate agent whose brokerage uses the hi-tech RealScout program for home sellers.

Our broker, Big Block Realty, participates in San Diego’s unique RealScout system. They published a blog post explaining how RealScout helps listing and sales agents. RealScout’s Buyer Graph analyses local buyer data about their needs and wants in a home. This data helps our listing agents determine the highest price local buyers are willing to pay for a specific seller’s home.

 

They also published another blog post explaining RealScout to sellers titled: “How RealScout Helps San Diego Home Sellers in 2021”.

Here are the highlights:

RealScout helps home sellers to sell faster by:

  • Helping sellers to decide on a realistic listing price based on local buyers’ preferences;
  • Allows buyers to add to our Local MLS database preferences and features they like and dislike which allows the most suited home listings to appear first;
  • Let’s buyers find their ideal home faster; and
  • The system makes it easy for buyers’ agents to set up preview appointments with the listing agent.

Therefore, our RealScout program helps us to better price seller’s homes. In addition, RealScout helps our Realtors to come up with improved marketing strategies for faster sales at higher prices.

 

Negotiating with Skill

 

Sellers who try to sell their homes themselves are called “For Sale by Owner” (FSBO). They do all the work themselves like:

  • Coming up with a sales price;
  • Preparing the home for visitors (buyers);
  • Advertising online and in newspapers;
  • Showing the home to buyers; and
  • Negotiating with buyers.

Savvy buyers and investors know all the tricks and games to play when negotiating the sales price with sellers. Likewise, they know all about “contingencies” (conditions) written in home purchase and sale contracts allowing the seller and buyer to cancel the sale if a condition is not met. To learn about contingencies read our post “What are Real Estate Contingencies in California?”

In addition, the buyer will make an Earnest Money Deposit (EMD) where state laws determine how to handle them. Read this post explaining EMDs: “What is the EMD (Earnest Money Deposit Check)?

 

Sweeten the Deal

 

Unless your house is selling in a “hot” market where buyers offer more than the listing price, consider ways to “sweeten the deal”.

During slow “down markets” sellers offer a little extra incentive to sell the home faster. An example includes offering a transferable home warranty that covers repairs and replacement for home appliances and systems.

Another example is to offer to pay some of the buyer’s closing costs. Paying less to buy your home appeals to buyers including lower closing costs.

 

Strategy and Tactics for Selling Your Home – Conclusion

 

Once you establish a strategy and tactics for selling your home follow them to sell faster for a higher price. These include:

  • Preparing your home to attract more buyers by staging;
  • Clean, declutter, depersonalize, and curb appeal;
  • Finding the right real estate agent;
  • Pricing your home to sell;
  • Using the RealScout alternative;
  • Negotiate with skill; and
  • Sweeten the deal during a slow market.

Want to Use RealScout to Sell Your Home Faster at a Higher Price?

Sell Your Home Faster at a Higher Price

Only a few real estate brokerages in San Diego County can access the unique hi-tech RealScout program.

SoCal Lifestyle Realty has complete access to RealScout to help you list your home at a better price. Likewise, RealScout makes it easy for buyers to find your listing when it meets their needs and likes. In addition, RealScout allows a buyer to quickly make an appointment to preview your home.

Contact us to learn about the many benefits of RealScout before listing your home for sale in the greater San Diego area.

 

Steven Rich, MBA – Guest Blogger

 

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How to Add Value to Your San Diego Home Before Selling

A San Diego Home

How to Add Value to Your San Diego Home Before Selling

 

According to the statistics, San Diego is a real estate market in which sellers have it easier than buyers. The demand for housing is much greater than the supply, therefore selling a home in San Diego shouldn’t be a problem. However, even though you likely won’t have much trouble finding a suitable buyer, there is no reason not to put in the effort into preparing your home for sale. If you want to gain more profit, that is. Since most people are hesitant to invest in their property prior to selling, it’s important to note that even minor improvements can speed up the process and increase the price. With that said, here’s how to add value to your San Diego home before selling.

 

Amp up the curb appeal

 

In real estate, first impressions are of the utmost importance. The outside of your home is the first thing potential buyers will see, and this is often what helps them decide whether they even want to attend a showing. Because of this, putting in the time and effort to beautify the garden and exterior of your home is essential.

Start by painting the facade or even installing wood, vinyl, or stone veneers. This will make your property look more polished and luxurious. Once that is done, move on to landscaping. Opt for native species and foliage that is easy to sustain as a high-maintenance garden will likely be off-putting to most buyers. If gardening is not your thing, make sure to at least trim and edge your lawn and keep the yard looking tidy and alive. Consider adding a deck or patio, as spending sunny San Diego days indoors probably won’t be appealing to many people. Add proper lighting to accentuate the best features of your house and keep the scary shadows away. Lastly, replace your doormat, pressure wash the driveway and garage door and give a little TLC to the hardware and other details.

 

Paint the walls and refinish the floors

 

Most people are aware that staging a home is essential for ensuring a satisfactory sale. However, cleaning and decorating your home won’t have the same effect if the property’s overall appearance has been neglected. Because of this, you might want to consider giving your house a fresh coat of paint. Painting your walls is a relatively inexpensive and straightforward way to ensure a clean and polished look. Make sure to stick to lighter, neutral colors. They will make the space feel fresher and more open, and most people will be able to picture themselves living in it, which is crucial for finding a buyer.

A fresh coat of paint will do wonders for increasing the value of your San Diego home.

 

And while you are still wearing your paint-stained clothes, take your time to refinish the hardwood floors. This project might be a bit more time and money-consuming. However, buyers prefer homes that require as little work as possible, so you can rest assured knowing the return on investment will be worth the hassle.

 

 

 

Make your home more energy-efficient

 

An energy-efficient home means less money spent on utilities. Considering California’s climate, proper insulation is imperative unless you want to spend all your money on air conditioning. With that said, it is easy to understand why buyers appreciate this feature when deciding on where to invest. According to experts, not only does good insulation lower cooling expenses by approximately $500 a year, but it can also decrease taxes.

Therefore, if you want to add value to your San Diego home before selling, start by replacing your windows and doors with energy-efficient ones. Additionally, consider adding energy-efficient insulation. Detect crucial drafty or cracked spots and tackle them first. Pay special attention to insulating the attic and basement as this will significantly improve temperature regulation.

 

Update the kitchen

 

Kitchens are usually the focal point of a home, and they can make or break a sale as their remodeling requires a lot of work, time, and money. This doesn’t mean you should revamp your kitchen entirely. A few minor changes will be much more effective.

  • Switch old countertops
  • Change or repaint cabinet fronts
  • Replace old faucets, knobs, handles, and fixtures and make sure to match the styles
A clean living room with tasteful details
Details can make your home feel more inviting and luxurious.

Remember that the kitchen shouldn’t stand out from the rest of the property, so don’t go overboard with the changes and upgrades. Investing too much money into a kitchen remodel or opting for an extravagant look can potentially be dangerous as most buyers won’t have the money or willingness to change what they don’t like. Instead, it’s always best to stick to a neutral color palette and a style that most will find attractive.

 

Take care of the details

 

Once you are done with more significant updates, make sure to take care of the details as they make all the difference.

  • Clean your house thoroughly and declutter all surfaces.
  • Replace or fix anything that is broken, damaged, or outdated.
  • Add more lighting and increase the amount of natural light if possible.
  • Hang big mirrors in the bathroom and repair leaky faucets, broken tiles, or squeaky doors.
  • Keep the styles throughout the house cohesive and simple.
  • Decorate tastefully and keep your home looking and smelling fresh.
  • Hire an experienced California real estate agent

Missing out on a good offer because you didn’t do the dishes or vacuum the floors would be a shame. By paying attention to details, you will ensure you are always prepared for sudden visits from buyers.

 

In conclusion

 

You don’t have to spend a lot of money to add value to your San Diego home before selling. However, some time, elbow grease and creativity are required. To avoid overworking yourself and to ensure an overall positive experience, you might want to team up with specialists when it comes to the relocation after the sale of your house. Aside from hiring a reliable real estate agent, having experienced long-distance movers by your side will prove to be a lifesaver. Remember, every step of your real estate adventure will be significantly more pleasant and hassle-free by working with professionals.