REAL ESTATE INFO

 

BENEFITS OF HOMEOWNERSHIP - detail                                               Vacation - House & Baby-sitting Checklist

 

It is sometimes hard to look at the mortgage bill when it comes in and not flinch a little.  But the benefits, especially when you live in Southern California, the greatest commodity market there is, not to grin a little arrogantly.  For our dollars we get:

• Investment return.  And not only on the equity we build with improvements, not only on the appreciation we get to keep as the values continue to go up, but leveraged , meaning that if your home appreciates 10% and you have only 25% in equity and the rest is mortgage, that 10% is still all yours, and your 25% investment is returning to you a total of  40% return on your money! 

• Income tax savings.  Absolutely deductible from your income earned every years is the total of the annual interest on your mortgage (up to $1,000,000 mortgage amount or the original purchase mortgage amount + $100,000 new mortgage, whichever is less) and the total amount of your property taxes.  In the early years of a mortgage this is about 90% of your monthly payment and makes a substantial difference in our net income/tax status. 

• Stability.  It is possible to plan, since you know your housing costs and occupancy.

• Savings for the Future.  Just making the payments on the mortgage builds equity, money that you can depend on should you ever need to.  And yes, we in San Diego may have a little more than the friends and relatives in other parts of the country, whose prices are more sluggish in appreciating. 

• Roots.  One of the reasons our government made tax deductions for homeowners decades ago, is that having a (place of our own) enhances our attachment to, sense of belonging and sense of responsibility for the home, community, town or city, state and even country we live in.  Sociologists find that children are much more confident and happy when they have a sense of their own place. 

• Freedom and _expression of individuality.  When you rent, you are always subject to the judgments of your landlord.  When you own, you can, within zoning and neighborhood restrictions, develop and dress your home to suit your personal tastes and needs.  And the money you put into doing so goes into your pocket, not someone else's. 

• Control.  You decide when, you decide who, you decide how much.  No landlord tells you to move.  No landlord tells you what to do or not do.  And over time, you silently increase your control, so that someday, when the mortgage is paid off, the property can become your retirement nest, all paid for and done the way you wish it to be.

---

CONTINGENCY SALES

 

Contingent offers are a fairly normal part of the residential sales world.  Most buyers are living somewhere when they go to buy a home.  Realtors, escrows, and lenders are all familiar with these transactions and know exactly what and how to do it.  Buyers and sellers are not.  Sellers, predictably, prefer offers without contingencies for sale, because this contingency in effect adds the if's and but's of another entire transaction, which must close in order for the seller's deal to close.  Usually therefore a seller will agree to a contingency sale if he is given a little compensation...usually a little higher price or something else.  Seller's with difficult to sell properties will often accept a contingency.  Many buyers can avert contingency purchases by arranging "interim" or "bridge" financing to carry them for 1-3 months from the close of the new property to the closing of the sale of the old property.  This adds the dollars to their cost that might otherwise go to the seller for allowing a contingency.

       Contingency offers generally carry a "72-hour Clause" as part of the agreement, under which clause the seller has the right to continue to offer the property for sale and, if he receives another acceptable offer, to issue to the Buyer a 72-hour notice to release his sale, financing and other contingencies and prove he can perform or release the contract within 72-hours.  Since a NON-contingent-for-sale contract has a 17-days for inspections and financing and all other investigations period under which the buyer can withdraw with no loss of deposit, I generally try to make the 72-hour clause effectible AFTER the release of all other contingencies, but I don't always get my way.

       The point of a contingency is to protect a buyer's deposit. so as long as any contingency stands the buyer is protected from loss.  Generally, a contingent buyer would be smart to obtain a good deposit from HIS buyer so that if he has to default because his buyer defaults, the deposit  lost is effectively paid by his buyer.  And risks are always more or less in any specific situation, the only sure escrow, we say, is a closed one.

---

Girl Scouts and Boy Scouts are right.  It is always best to be prepared.  If you are a buyer in today's housing market, it only makes sense.  When the good ones are gone in a matter of several days, to take advantage of the BEST opportunities a buyer needs to be prepared, act fast, know where he can be flexible, and understand the process.

 

Preparation means:  1.  Starting with a (Pre-Approval) letter from a reliable lender.  This free, no-obligation, information-full process will tell the seller your offer is worth giving serious consideration because you CAN perform.  It also gives you the power of being armed with confidence and knowledge of the financing options at your choice and how they suit your financial

picture.   2.  Being familiar with the community.  Will the schools suit my children?  Where will we shop? How is the commute?  Does the social, economic, and demographic structure fit my lifestyle?  What are the community concerns and benefits?  Are the worship, health, leisure and other issues in line with my priorities?  3.  Understanding personal and household priorities.  This is a great personal or family experience if you all share and listen to each other's priorities. 

 

Acting Fast may require some critical adjustments.  1)  You can't make a quick decision if you are not versed in the market, confident in your lender, and managed with related issues like the sale or rental of your existing home.  2)  Can you talk with your employer about PRE-arranging permission to run out the door and make up time later when your Realtor calls with (this is it!)

 

Flexibility can be a huge negotiating factor.  We have a client in a home today in spite of multiple offers on the same home, because that client could say to the seller, yes, we will close in 30 or 90 days, whenever you find a home.  We made a sale that was well under asking price because the buyer could offer the seller completely (as is) including accepting all the responsibility for termite, smoke detectors, hot water heater strapping, toilet retrofitting and similar details that just were too (complicated) for this particular seller with an entire life to move across country.  Another area of flexibility might be allowing the seller to close, pocket his money, then rent back until job change is complete, new home is finished, baby is a month old, etc.

 

Understanding the process, all the above and all the after, means having a perspective on what is (typical), what is (next), what is really important right this minute.  People lose chances, because they have to finagle their best nickel right now, because they feel emotionally put out, because they lose sight of their priorities in the rush to (win).  While good counseling is conesquential through-out the process, it is critical at this time.  A buyer's first job is to (Get the Accepted Offer).  His next job is to complete his knowledge of the property (too expensive and involved to do ahead of time on every prospective property) and to refine the purchase contract.  And finally, to close, to fine tune, arrange and manage all the details and created obligations. It is said that making money in real estate is not in the Selling, but in the Buying!

---

WHY BUY A CONDOMINIUM?

• They can be (but not always!) more affordable.  It's better than wasting money on rent, and it's a start on the road to real estate investing.

• Their appreciation is now rivaling and sometimes surpassing that of single family homes.

• It's a shared investment with a pool of talent (you and other condo owners) who also have concerns for their best ownership decisions, AND yes, those co-tenants can be obstacles, so investigating the mood and mien of the population before you buy is critical.

• You can have the freedom and security of your own home without worrying about the management and maintenance issues that are yours alone in a single family homes.

• With the housing unit you also get a population of potential friends, and you immediately have something in common.

• If you are looking to fix and resell, condominiums generally offer greater potential for cosmetic distinction without the risks of structural issues.

---