The Real Folsom Blog

Making an Attractive Offer on a Bank-Owned House

Buying a bank-owned house can be a good deal. I won't argue with that. However, you are not going to get the deal of the century on every REO out there (REO stands for real estate owned--that's how banks describe properties they've taken back). Yesterday, we had one of the top area REO listing agents in our offices and he had some sound advice on how to close an REO deal with a bank. Like a regular seller, a bank wants to get as much money as they can for their REOs. So when you make an offer on a bank repo, remember to craft an offer that will be attractive to the the seller--the bank. Basically there are three aspects to an offer: 1) the price; 2) the terms; and 3) the conditions. As a rule of thumb, figure that if you are low-balling the bank on the price, then you should make sure the terms and conditions are attractive to the bank. If on the other hand you are intent on getting a section 1 pest clearance, then make sure your offer price is good. For the banks, selling an REO is just another business transaction. The bank will want a deal that closes quickly (20-30 days, if possible) and with as few contingencies as possible. Bottom line: aim for a win-win deal when making your offer. A win for you in that you get a home at a good market price and a win for the bank in that you take the house off their hands with little hassle to them.

Buying: How High Tech Is the Home You Are Looking At?

There are a lot of things to look at and look for when you are out shopping for your next home. Is the roof sound? Do the appliances work? Are there cracks in the foundation? Are there drainage issues? It's a long checklist the careful buyer goes through in evaluating house. Now, you can add technology to that list. If the latest technology or entertainment options are important in your new home, you should add the following questions to your buyer’s checklist.

• Are there enough jacks in every room for cable TV and high-speed Internet hookups?
• Are there enough telephone extensions or jacks?
• Is the home prewired for a home theater or multi-room audio and video?
• Does the home have a local area network for linking computers?
• Does the home already have wiring for DSL or other high-speed Internet connection?
• Does the home have multizoning heating and cooling controls with programmable thermostats?
• Does the home have multi-room lighting controls, window-covering controls, or other home automation features?
• Is the home wired with multi-purpose in-wall wiring that allows for reconfigurations to update services as technology changes?

This quick checklist will help ensure you buy the right home for your family's tech needs.

How To Buy the Right House for Your Family

When buying a home it's easy to get caught up in the features of a particular house and forget to take a step back to look at the bigger picture. After you have identified a home you like, you should always give serious consideration to the neighborhood the home located in. After all you'll live in more than your house, you'll live in that neighbhorhood with all its pros and cons. So it is important when you find a property you like to scout the neighborhood in person by driving through the entire area at different times of day and talking to the people who live there. Here are some factors you will want to consider as you evaluate the neighborhood:

• Look at access to major shopping, thoroughfares, and highways and look at the traffic patterns around the area.
• Listen for noise created by roads, public areas, schools, and commerce.
• Check with local police and fire departments to get more information about the area.
• Identify nearby parks, churches, recreation centers, shopping, schools, restaurants, etc.
• Find out if the neighborhood belongs to a homeowners association, and if it does what services (at what cost) are offered by the association.

Doing a check for these kinds of quality of life items before you make an offer on a house will help prevent any nasty surprises after you move into your "dream" home.

Looking Ahead to 2008, Part II

Last week before all the madness of the holidays, I went over some of the prep work that buyers can do now if they are thinking of buying a home in 2008. Part of that prep work includes knowing what to expect during the purchase process. Picking up where I left off... After you decide to make an offer, your agent will forward the offer to the seller's agent and the seller will either accept your offer as is, counter with their own offer, or reject your offer. If the seller counters, your agent will help you evaluate the seller's proposal and you either accept, counter, or just walk away. Once all parties agree to terms of purchase, the agents will open escrow with a title company, which serves as a neutral third party that ensures all the terms of the purchase contract are adhered to. As the buyer, you will at this point be focusing on any inspections you requested as part of the purchase contract and on securing your loan approval. The contract terms stipulate how much time you have to get the inspections done, review the reports, and get your funding. When that time is up you will be required to remove all contingencies to the sale. In other words, it will be full steam ahead on closing the deal, no backing out without potential penalties. While you are busy taking care of securing your loan and getting the inspections, the title company will be ordering a title report to ensure the seller has clear title to sell the house and it will arrange for title insurance to protect you and your lender from potential hidden title problems. Barring any problems with the loan, the inspections, or the title, you will be set to close escrow and take possession of your home. Tomorrow I'll look at what factors to consider when buying a home.

Looking Ahead to 2008 in Folsom

Even as I'm frantically working against the clock to get ready for the holidays, I find my mind occasionally wanders to 2008, as I think of what I want to accomplish next year. If one of your goals in 2008 is buying a new home, it's also not too early for you to do some prep work towards that goal. In the next few blog entries, I'll cover what you can do to start off your search on the right foot. The first step is making sure you understand the whole buying process. If you know what to expect, you'll feel more in control and more comfortable. Here's what you can expect:

• First find a Realtor you can trust and have a good rapport with.
• Take the time to analyze your family needs in a consultation with your Realtor.
• Next (very important step, especially these days), get financial pre-qualification and pre-approval. Lenders are seriously starting to tighten their lending requirements, which means it's getting harder to get a loan. Don't take for granted you can get the loan you want.
• Your Realtor will start the search and together you will select the properties to view, rate them, and make a decision.
• Next comes the offer.

Tomorrow, I'll continue with Part 2 of the home buying process. Enjoy sunny Folsom, finally!

Five Good Reasons Why You Should Get a Home Inspection

Having a home inspection done prior to purchasing a new home is something you should seriously consider. A comprehensive inspection will include a visual examination of the structure, including the heating and air conditioning systems, plumbing and electrical systems, and anything visible such as the roof, walls, basement, etc. Here are my top 5 reasons why you should always get a home inspection before you purchase your next Folsom home.

1. A home inspection by a reputable inspector will give you a chance to determine the condition of the house, its overall soundness, and whether its mechanical systems are working.
2. Having a home inspection will bring problems to your and the sellers' attention and allow you to negotiate a resolution before the sale closes.
3. A home inspection is a good investment. For a few hundred dollars, you may be able to save many times the cost of the inspection by being aware of any defects or upgrade requirements.
4. The inspector's report can serve as a solid starting point for your home maintenance plan once you move in. A well-done report will include information also on recommended repairs and/or maintenance.
5. You'll gain Peace of Mind, knowing what to expect from the home, performance-wise, once you move in.

To Condo or Not To Condo

What a difference a few years make. Not so long ago Folsom was mostly a town of single family homes. Now buyers have a greater selection of condominiums and townhouses, which offer an affordable option to single-family homes. Consider these facts before you buy.

1. Storage. Some condos have storage lockers, but usually there are no attics or basements to store belongings.

2. Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be the perfect option for you.

3. Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.

4. Maintenance. Many condos have on-site maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.

5. Security. Many condos have keyed entries and or even door attendants. Plus, you’ll be closer to other people in case of an emergency.

6. Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity or not.

7. Resale. The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual.

8. Freedom. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.

9. Proximity. You’re much closer to your neighbors in a condo or townhome. If possible, try to meet your closest prospective neighbors before making a decision.

What To Look for in Final Walk-Through

Later today, I have clients who are signing their escrow paperwork on a lovely new home they've purchased in Folsom. It's been a stressful time for them. They just got married, are consolidating their two households, the bride just moved here from SF, and they're trying to move into their new home before returning to work in a few days. It could be tempting for them to forgo the final walk-through to "save" some time, but as responsible buyers they know doing that final walk-through of their new home is the right thing to do. It doesn't take long and it's their opportunity to make sure all repairs have been done and that the home is in the same condition as when they made their offer to purchase. Here's what you should look for during your walk-through:

Be sure that

• Repairs you’ve requested have been made. Obtain copies of paid bills and any related warranties.
• All items that were included in the sale price—draperies, lighting fixtures—are still there.
• Screens and storm windows are in place or stored.
• All appliances are operating.
• Intercom, doorbell, and alarm are operational.
• Hot water heater is working.
• HVAC is working.
• No plants or shrubs have been removed from the yard.
• Garage door opener and other remotes are available.
• Instruction books and warranties on appliances and fixtures are there.
• All personal items of the sellers and all debris have been removed.

The last thing you want to deal with when you move into a new home is stuff you thought was already taken care of. So do yourself a favor when you buy your next home, make sure you do a diligent walk-through!

The American Dream in Folsom

The American Dream of owning a home can be particularly challenging in a sought-after community like Folsom. The very factors that make Folsom so appealing--its great stores, restaurants, recreation venues, nice homes, historic old town, location near Folsom Lake, etc., etc., etc.--are part of what drives up the cost of homes here. Anyone planning to buy a home in Folsom should first devote some time to getting their finances in order to make sure they get the most house they can. Doing so can result in lower mortgage payments and therefore the ability to buy more home. This is especially true for first-time home buyers. The National Association of Realtors offers these eight steps to getting your finances in order:

1. Develop a family budget. Instead of budgeting what you'd like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc.
2. Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt--car loans, student loans, revolving balances on credit cards--down to between 8 percent and 10 percent of your total income.
3. Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You'll probably see some great ways to save.
4. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.
5. Save for your downpayment. Although it's possible to get a mortgage with only 5 percent down--or even less in some cases--you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent downpayment.
6. Create a house fund. Don't just plan on saving whatever's left toward a downpayment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.
7. Keep your job. While you don't need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.
8. Establish a good credit history. Get a credit card and make payments by due date. Do the same for all your other bills. Pay off the entire balance promptly.

Make it a great day!

Scout Before You Buy

There are lots of factors to consider when you buy a home. Most buyers will likely tell you that they figure out what neighborhood they'd like to live in, how much they can spend, then find the best home for the money. They'll then check out the homes with a fine tooth comb but all too often not give the same level of scrutiny to the neighborhood. Just as a home will have a personality and amenities that will best suit certain people and families so do neighbhorhoods. So before you write that purchase offer, don't forget to Scout the Neighborhood! because you will live in more than just your new home and you'll find that a neighborhood like The Preserve feels quite different than say Prairie Oaks. Here are some tips on scouting the neighborhood:

• Talk to the people who live there, especially the next door neighbors--you'll be surprised at how talkative and informative they can be.
• Drive through the area at different times of the day and week.
• Walk the neighborhood and look at how well cared for the homes are.
• Walk around and listen for noise created by sources you may not have identified visually (could be from a nearby school or public area or a road).
• Look at traffic patterns during different times of day and even do a test run driving from the area to your work during rush hour.
• Check with local police, fire and school officials for information about the area.

Bottom line, a little leg work done before you submit that offer could save you big headaches later on. Make it a great Tuesday!