Helping Your Appraiser do the Best Job

By Lew Sichelman | LA TIMES

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Your home is on the market. You found buyers, a nice young couple just starting out, and they're sold on the home. But wait — there's one more person you have to sell: the appraiser.

You can no longer try to influence the professional who's responsible for placing a value on the house — a value that the lender must feel comfortable with if, for some reason, your buyers don't pay back their loan and the bank has to foreclose.

No, the days of MAI — which stands for Member of the Appraisal Institute but was euphemistically known in the trade as "Made as Instructed" — are long gone. But there is still plenty you can do to improve the chance that you will obtain the value you are looking for.

According to builders and realty agents, many a deal has been scuttled when lenders assigned appraisers who lived hundreds of miles away or were not familiar with the area. So after the appraiser calls to set up an appointment, check his or her bona fides.

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FOR THE RECORD:
Appraisal tips: A Housing Scene column in the March 16 Business section on how to get the best appraisal for your house incorrectly identified John Brenan as director of appraisal issues at the Appraisal Institute. Brenan is director of appraisal issues at the Appraisal Foundation. The column also was incorrect in stating that the Appraisal Institute was created byCongress to set appraisal standards and appraiser qualifications. That description applies to the Appraisal Foundation. The Appraisal Institute is a professional organization based in Chicago. —

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"The best way for owners to combat potential problems is to ensure the appraiser is qualified and competent," says Ken Wilson, president of the Appraisal Institute, a trade association based in Chicago. The organization was created by Congress to set appraisal standards and appraiser qualifications. "Consumers have every right to demand the use of someone with field experience in their market and knowledge to handle the assignment properly."

Ask your lender about the appraiser's professional designations. How long has he practiced? What level of experience does she have with your market and your type of property? Is he familiar with the neighborhood?

Of course, you spruced up the house when you put it on the market. You painted, perhaps, and you certainly fixed that broken window in the master bath. And you put away all that clutter in the kitchen.

Now make sure the house is just as dandy when the appraiser finally arrives. Tidy up. Get the dishes out of the sink and into the dishwasher. Clean off the counters. Pick up the dirty clothes from the bathroom floor. Change the furnace filters.

Also, send the kids off to the neighbors' or out to the movies, and lock up your animals.

None of this will add or subtract from the valuation. But human nature being what it is, it will convey the notion that the house is well-maintained, says John Brenan, director of appraisal issues at the Appraisal Institute.

Although you cannot try to directly influence the appraiser — offering a free dinner at his favorite restaurant, maybe, or a little cash under the table — you can speak with him. It's a myth that you can't.

"Conversation is not only allowed, but it is vital," Brenan says. "The appraiser needs to be able to discuss pertinent items about the house or contract."

When the appraiser arrives, present him with a list of everything in and about the house that you believe adds value — new windows, perhaps, or an addition above the garage. You are not trying to influence the deal, per se. Rather, you are "simply documenting," Brenan says. "You are not saying you need an extra $5,000 because you put on a new roof last year. You're just saying that you put on a new roof."

Your list should include a detailed description of any improvements or replacements, the dates they were made, who did the work (backed up by invoices to show they were done by a professional as opposed to a weekend do-it-yourselfer), a brochure to show the quality of the materials and building permits.

Also list any ways your house differs from others on your block: different finishes used, your better view, your larger lot size. "The list goes on and on," Brenan says. "You can't provide enough information about the house, the neighborhood, the schools. It will help give the appraiser a better understanding about the market."

Also give the appraiser a list of comparables, or "comps," which are similar properties in your neighborhood that sold recently. The appraiser may well already have the exact same houses, so at the worst, your list may be redundant. But then again, he may have only one or two.

Either way, Brenan says, "as long as you don't make any demands, a good, competent appraiser should appreciate" the help.

Some appraisers still balk at accepting such information. One recently told Jill Sackler, an agent with Charles Rutenberg Realty in Merrick, N.Y., that he was no longer allowed to do so. But Barbara-Jo Roberts Berberi, a Rutenberg agent in Crystal Beach, Fla., had the opposite experience recently.....

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Copyright © 2014, Los Angeles Times

Manhattan Beach leads rebound of California’s million-dollar housing market

By Gregory J. Wilcox | Daily Breeze

Here are the state’s priciest communities, along with how many $1 million-plus residences sold in 2013.

1. Manhattan Beach, 439

2. Hillsborough, 436

3. La Jolla, 398

4. Newport Beach, 376

5. Laguna Beach, 374

Source: DataQuick

Manhattan Beach led a strong rebound in California’s luxury housing market in 2013, as sales of homes costing $1 million or more soared 45 percent in the Golden State to their highest level in six years, a market tracker said this week.

Last year, wealthy buyers purchased 39,175 homes costing $1 million or more compared to 26,993 in 2012, said La Jolla-based DataQuick. That’s the most since 42,506 in 2007.

A record number of buyers — 10,602 — ponied up cash for their tony digs and, once again, Southern California dominated the luxury market.

Manhattan Beach recorded 439 million-plus sales — the most in the state in 2013 — edging out Hillsborough in Northern California’s San Mateo County by three sales.

Even the dirt in the affluent beach town is expensive (some undeveloped lots sold for $900,000 each last year), and many million-dollar pads don’t even have an ocean view.

One of the nicer neighborhoods is just east of Highland Avenue. It’s family oriented and has sidewalks and big lots, said Adolph Janes of Shorewood Realtors in Manhattan Beach.

“Most lots are 7,500 square feet. Those lots start at $2 million,” he said. “The typical 2,000-square-foot house and below — well, we tear those down, and we build new homes.”

Other Los Angeles-area communities on DataQuick’s compendium of most expensive California cities were Brentwood at sixth, Beverly Hills at seventh and Pacific Palisades at eighth. And seven of the state’s top-10 markets were in Southern California.

The return of big money into expensive real estate reflects an improving economy, stock-market rebound and a 20 percent increase in the state’s median home price.

“There is a lot of wealth out there, and people do need some place to park it. With the increase in California home prices, I think we’ll see more people moving back into residential real estate,” said Kimberly Ritter Martinez, an economist at the Kyser Center for Economic Research in Los Angeles.

Malibu notched the most expensive sale last year — $74.5 million for a 15,355-square-foot, eight-bedroom, 14-bathroom beachfront estate built in 1993, DataQuick said.

The company does not release addresses, but several websites list the estate as 33064 Pacific Coast Highway. It’s on a 4.85-acre lot with a tennis court and infinity pool and sweeping ocean view. Zillow.com estimates the monthly mortgage payment at $289,510.

Forbes.com said in a Dec. 6 posting that Howard Marks, founder of Oaktree Capital Management, sold the estate to an anonymous Russian buyer. It was the most expensive sale in the U.S. at the time and a record for Malibu, the site noted.

In some Southern California communities, including Santa Monica, all the sales last year were $1 million or more deals, DataQuick said.

“The luxury home market is unique, always has been,” John Walsh, DataQuick president, said in a statement. “It responds to its own set of economic factors. Things like job growth, mortgage interest rates and migration patterns do not play the same role as IPOs (and) stock-market performance.”

http://www.dailybreeze.com/business/20140131/manhattan-beach-leads-rebound-of-californias-million-dollar-housing-market

Investors buy parking lot across from Staples Center

The three local buyers plan to build a large-scale residential and retail complex, perhaps including a hotel.

By Roger Vincent| LA TIMES

A parking lot across the street from Staples Center in downtown Los Angeles, above, has been sold to local investors. (Ben Cohen / Bravo/NBCU Photo Bank via Getty Images / May 22, 2013)

A sprawling parking lot across the street from Staples Center in downtown Los Angeles has been sold to local investors who plan to build a large-scale residential and retail complex — perhaps including a hotel.

It was the second sale of a parking lot in the area around Staples and the L.A. Live entertainment complex in recent weeks as real estate development in the neighborhood south of downtown's financial district picks up speed.

The latest sale was a 2.7-acre parcel at 12th and Figueroa streets that has city approval for construction of apartment or condominium towers above stores and restaurants, real estate broker Adam Tischer of Colliers International said.

Tischer is an advisor to the seller, L&R Group, which is the parent company of Joe's Auto Park. The broker declined to name the three buyers, but other downtown property experts not authorized to talk about the deal identified one of the new owners as David Y. Lee.

Lee's Los Angeles company, Jamison Services Inc., is one of the largest office landlords in Southern California.

L&R paid $31 million for the property in 2010 and hadn't planned to sell it, but a trio of local buyers offered to pay substantially more than twice that amount, Tischer said. He declined to reveal the exact price.

The parcel, which was once owned by condominium developer South Group, has preliminary approvals for two high-rise towers of about 35 and 27 stories housing 648 residential units. About 40,000 square feet of space for stores and restaurants would be available for rent at street level.

The new owners may seek a variance from the city that would allow them to use some of the approved 863,000 square feet of development space as a hotel and perhaps accommodate more retail space, Tischer said.

"They are eager to get started and hope to be under construction this year," he said.

The other Staples area parking lot to be sold recently was a 4.6-acre site just to the north at 11th and Figueroa streets. Chinese property developer Oceanwide Real Estate Group acquired the land now used as a parking lot from New York landlord Moinian Group.

Oceanwide said it hopes to develop a five-star hotel, apartments and retail space.

roger.vincent@latimes.com
Twitter: @rogervincent

Copyright © 2014, Los Angeles Times

http://www.latimes.com/business/la-fi-0111-development-site-sale-20140111,0,7644705.story#ixzz2qJwi0QjC

Developer teams with L.A. nightclub owner on Hollywood complex

Camden Property Trust hopes its new apartment and retail complex will attract tenants seeking VIP access to clubs and restaurants operated by Sam Nazarian.

By Roger Vincent|LA TIMES

A $140-million apartment and retail complex in Hollywood will get a shot of glamour from Los Angeles nightclub impresario Sam Nazarian.

Nazarian, who also operates a string of trendy hotels and restaurants known for their playful, over-the-top decor, hopes to make the Camden seem like a cross between a resort and an upscale apartment community. Residents will share stylishly crafted common areas in the building and have special VIP access to other Nazarian-operated properties, such as the Colony nightclub and Katsuya restaurant.
"That's our captive tenant, the person who wants access," said Ben Brosseau of Camden Property Trust, which is building the 287-unit complex at the southeast corner of Vine Street and Selma Avenue. The site between Sunset and Hollywood boulevards is a former parking lot.

The neighborhood near the famed intersection of Hollywood and Vine has seen billions of dollars' worth of splashy real estate improvements over the last decade as apartments, condominiums, hotels and restaurants were built in the once-blighted area. More major developments including offices and residential skyscrapers are planned.

Camden Property Trust of Houston is one of the country's largest publicly traded apartment landlords and owns other complexes in Southern California, but the Camden is its first foray into the city of Los Angeles.
In an effort to attract young entertainment industry professionals as renters, the Camden trust joined forces with Nazarian's company, SBE, and its Los Angeles real estate development partner, the Souferian Group, to create a Hollywood-centric apartment complex.

In that vein, the Camden will house an outdoor "artists' annex" intended for the use of photographers, painters, writers and sculptors, as well as a soundproof musicians' studio and a movie screening room.
The amenities are part of Nazarian's plan to see that shared spaces aren't ignored by residents, he said.
"In many apartments, there is no energy in the common areas" such as theaters, pools and club rooms, he said. "Why spend money on amazing amenities if no one is going to use them? We want to really encourage people to get to know each other."

As designed by TCA Architects, the hub of the Camden will be a large indoor-outdoor recreational space with a fully equipped kitchen, a resort-style pool with cabanas and daybeds, and an outdoor spa.
Another area will house a dog park with a media setup that will allow residents to share their favorite pet photos and videos. There will be outdoor area set aside for yoga and other exercise, and a lushly landscaped garden with lounge areas and hammocks. Some units will be furnished.

"We're bringing a hospitality perspective," said Nazarian, who built an empire on over-the-top decor starting with a series of nightclubs more than a decade ago. His Hollywood haunts such as Hyde Lounge and Shelter lured young celebrities and became prime hunting grounds for the paparazzi.

He moved on to managing restaurants, including Gladstones in Pacific Palisades, and opened his first inn, the SLS Hotel at Beverly Hills, in 2008. His company now has an SLS hotel in the South Beach area of Miami Beach and others planned in New York, Seattle and China. An SLS hotel and casino is set to open in Las Vegas this year, and an SLS hotel and condominium complex is slated to open in Miami in 2015.
Nazarian's knack for pleasing the sensibilities of the Millennial generation with what he has called "a cross between playfulness and sophistication" will now be tested on apartments. Most complexes, according to his development partner Behzad Souferian, tend to follow formulaic conventions.

"They are too predictable. You know what you are going to get before you walk in," Souferian said. "Our mandate is to do this with more of a boutique feeling."

Nazarian, who put 177 styles of chairs in his hotel on La Cienega Boulevard, vowed to rein himself in a bit at the Camden. For the look of an apartment building, "timelessness is important," he said, "unlike in hospitality, which needs to be edgy."

Born in Tehran, the 38-year-old entrepreneur immigrated to the United States after the 1979 Iranian revolution. He founded a telecommunications business in 1998 and started investing in real estate in 1999. He controls more than 80 commercial properties that are open or in development.
The seven-story Camden will have neighborhood-serving retail outlets at the ground floor when it opens in 2016, said Brosseau of Camden Property Trust. It will have two super-graphic outdoor advertising signs, including one on the roof. Rents will range from $2,000 to $4,000 a month.
Camden is also building a large apartment complex in Glendale.

With an improving economy, "the Los Angeles region is one of the best in the country for rental housing going forward for the next three to five years," Chief Executive Richard Campo said. "We think it's one of the best places to put the Camden flag down."

roger.vincent@latimes.com
Twitter: @rogervincent

Copyright © 2014, Los Angeles Times

http://www.latimes.com/business/la-fi-property-report-20140102,0,7534416.story#ixzz2pjmMocsd

14 Predictions We Like for 2014

By Mark Heschmeyer |COSTAR
Real Estate Prognosticators See CRE Recovery Continuing To Accelerate in 2014

Real Estate Prognosticators See CRE Recovery Continuing To Accelerate in 2014

Commercial real estate firms are moving into the New Year with a renewed sense of optimism - a positive outlook not seen for the past seven or eight years.

While many in the industry predicted a recovery in 2013, they did so with a sense of nagging worry over slower than expected job growth and concerns that the political brinkmanship in Washington could threaten the nation's credit rating and pitch the economy into stagnation or, even worse, recession.

Much of those concerns have ebbed as the two parties came to terms in December over next year’s budget. In addition, the Federal Reserve has established a clear path for rolling back the so-called quantitative easing steps taken in years past to bolster the economy. By spelling out its path for reducing debt purchases, the Fed has taken out much of the guesswork for when those financial supports will end.

Given the overhanging sense of dread seems to have disappeared from most forecasts, experts are predicting a better year in 2014.

CoStar News has encapsulated Following 14 outlooks for 2014 from forecasts offered by respected industry participants and observers. We’ve sorted them alphabetically by the firm making the forecast.

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Cassidy Turley: Impact from Rising Rates

If the big economic story of 2013 was policy vs. housing, this year doesn’t promise much in the way of variety. Policy vs. Housing, Part II will see the same threats to economic growth as we continue to struggle with dysfunction in Washington and, most likely, more political brinksmanship that may undermine confidence in the economy. But, while the challenges will be the same, the underlying fundamentals will be slightly stronger. Perhaps the biggest difference is that by the middle of 2014, economic growth should be strong enough for inflation to start to be a possibility once again. This is actually a good thing. The timetable could vary, but we anticipate the Fed raising interest rates by the end of the second quarter-likely in May or June. So long as interest rates don’t move too far too fast, the impact on the overall economy will be minimal. But there will be one. This could slow the housing recovery and it will certainly have an impact on commercial real estate pricing as the price of borrowing becomes more expensive. But that is assuming the underlying economic fundamentals have heated up to the point of warranting such a move-which is ultimately a good thing. A stronger economy may bring higher interest rates, but it will also bring higher earnings, lower unemployment, greater consumer spending and-for landlords-better rental rate growth and NOI. In the meantime, look for the first big political squabble (over the debt ceiling once again) to start up again in late January.

CBRE: Office Market Recovery Poised To Accelerate

The office market recovery is poised to accelerate in 2014, as an improving economy should result in increased office-using employment according to CBRE, the world’s largest commercial real estate services and investment firm. The growth in office-using occupations, particularly in high-tech industries, is expected to increase demand foroffice space. The U.S. office market vacancy rate will continue to decline next year, falling by 80 basis points (bps) to 14.3% by the end of 2014, Steady improvement in the office market is expected to continue in 2015, with the vacancy rate forecasted to dip another 80 bps to 13.5%. CBRE forecasts that office rents will increase by 3%, on average, in 2014, and rise another 4.4% in 2015, as vacancy levels fall steadily toward the “equilibrium” level over the next two years.

Cornell Univ. and Hodes Weill: Big Money Will Continue To Rule

Institutions are significantly under-invested in real estate and are poised to allocate significant capital to new real estate investments. The weight of this capital can be expected to have broad implications for the industry, including transaction volumes, fund raising, lending activity and property valuations. The supply of capital may sustain current valuation and financing metrics (including capitalization rates and the cost of debt capital), according to Cornell University’s Baker Program in Real Estate and Hodes Weill & Associates, which co-sponsor the Institutional Real Estate Capital Allocations Monitor.

Deloitte: Steady Growth but Not Enough To Spur Much New Development

CRE fundamentals continue to improve across all property types, including vacancy, rent, and absorption levels, according to Deloitte's real estate forecast. However, demand is yet to increase enough to drive development activity, except for multifamily and hotel construction, which continues to be robust. These same sectors, which were the first to grow and recover after the recession, may see some tapering off in fundamentals as new supply comes to the market. Overall, it appears that fundamentals will continue to improve at a moderate pace, in line with the macroeconomic situation.

DTZ: Business Tenants Keep Bargaining Clout

The U.S. economy will continue to expand at a moderate rate, which will lead to more job growth and a related increase in demand for occupational space, reports global property services firm DTZ. However, with the expected moderate job growth, vacancy will only trend down slowly. Occupiers will remain in good bargaining positions over the next two years and occupancy costs will increase in line with inflation. They will continue to receive concessions as landlords compete to increase their properties' net operating income. Occupiers will gravitate to the most affordable markets and continue to reduce their costs through more efficient internal space build-outs.

EY: Private Equity Funds Getting Hands Dirty

Having emerged from the global recession and its aftermath, the real estate private equity sector is finally positioned for growth in 2014, according to a global market trends outlook in real estate private equity published by EY (Ernst & Young). Strategies being deployed by different PE firms and even funds to take advantage of this growth opportunity differ, as fund managers seek to differentiate themselves in a hotly competitive fundraising environment. But EY sees fewer opportunities in the future for fund managers to capitalize purely from the financial structuring side of their investments. The funds that come out ahead of the competition in this next phase of growth will have one thing in common: an 'old school' asset management approach that realizes maximum investment value by working closely with service providers to fill buildings and manage real estate.

Freddie Mac: The Emerging Purchase Market

Led by a resurgent housing sector, 2014 should shape up to be better than 2013 with a quickening recovery pace leading to more job creation. Freddie Mac expects single-family home sales and housing starts to be at their highest levels since 2007, and expect multifamily transactions and construction to post gains as well. The big shift ahead will occur as the single-family mortgage market begins transitioning from a rate-and-term refinance-dominated market, to a first purchase-dominated market. The emerging home-buyer purchase market should gather momentum in the coming year.

Grant Thornton: Huge Boost Ahead for Industrial Markets

U.S. companies will bring production, customer service and IT infrastructure back home, reports tax-advisory firm Grant Thornton. The reshoring trend is real and about to dramatically reshape the U.S. economy. More than one-third of U.S. businesses will move goods and services work back to the U.S in the next 12 months, which means that as much as 5% overall U.S. procurement may return home. The Grant Thornton LLP "Realities of Reshoring" survey found that even IT services, one of the first business functions to move offshore, are likely to return within a year. The trend could provide an enormous boost to domestic manufacturers, retailers, wholesalers/distributors and service providers.

Jones Lang LaSalle: Pent Up Retail Demand Will Drive Investment

Total retail investment is expected to increase upwards of 20% in 2014, according to Jones Lang LaSalle, as pent up demand that was not satisfied in 2013 fuels investments and investors look to balance their portfolios. The retail market will continue to turn around despite store closings and consolidation. Vacancy rates are projected to inch downward driven by power center popularity, while rents are expected to increase albeit slightly for the fourth consecutive quarter. JLL also expects the number of retail property portfolios coming to market, which combine a broad spectrum of B and C retail assets, will increase as REITs look to sell assets and recycle capital in the year ahead.

Kroll Bond Ratings: Multifamily Resurgence in Conduit CMBS

The Federal Housing Finance Agency (FHFA) has begun to implement strategies to reduce the multifamily footprints of the two GSEs it oversees. As a result, Kroll Bond Rating Agency expects we will see a gradual decline in Fannie and Freddie’s securitized market share, which could revert to levels not seen since before the run-up to the CMBS market peak. At the peak of market in 2007, the conduit market’s share of the $36 billion securitized multifamily loan market was just over 78%. As the financial markets spiraled, that trend reversed and the GSEs became the primary source of loan production, dominating securitized new issues with more than a 95% market share.

Nomura: Muted CMBS Loan Maturity Risk

Based on the performance of loans maturing in 2012 and 2013, the investment bank Nomura estimates that 84% of loans maturing in 2014 will pay in full, a decline of just 3% from 2013 levels. Similar to 2013, Nomura expects the balance of loans rolling to delinquency to decline over the coming year, influenced by muted maturity risk and fewer term defaults resulting from improving CRE fundamentals. Most of the loans maturing in 2014 have 10-year terms and were underwritten prior to the sharp rise in property values that began in 2005. However, 15% of maturing loans have 7-year terms and were underwritten at the market peak. This set of loans has an increased risk of default at maturity.

PKF: U.S. Hotel Investors Poised To Do Well in 2014/2015

After a slight deceleration in growth during the last half of 2013, PKF Hospitality Research, LLC (PKF-HR) is forecasting very strong gains in revenues and profits for the U.S. lodging industry in 2014 and 2015. PKF projects national revenue per available room (RevPAR) to increase 6.6% in 2014, followed by another 7.5% boost in 2015. Concurrently, hotel profits should enjoy growth of 12.8% and 14.5% respectively over the next two years.

PwC US and ULI: Investor Activity Continues To Expand Beyond Core Markets

The U.S. real estate recovery is set to continue into 2014, with investors increasingly looking beyond some of the traditionally popular markets to secondary markets in search of higher yields, according to the latest Emerging Trends in Real Estate 2014, co-published by PwC US and the Urban Land Institute (ULI). The predicted growth in secondary markets will be driven by investors searching for returns as opportunities in core markets become harder to find and the most sought-after properties become more expensive. The move into secondary markets is underpinned by the anticipated increase in both debt and equity capital during 2014.

Transwestern: More Opportunities in Sale-Leasebacks and Net Lease

The cost of capital for owner occupants is on the rise, thanks to increasing interest rates. To cope with higher costs, owner-occupants are increasingly looking at selling their owned real estate as one strategy to generate funds for operating expenses, company expansion or retiring debt. This scenario presents an excellent sale-leaseback opportunity for investors looking to acquire real estate that comes with a long-term tenant in place. The lending environment is expected to bring more net-lease properties to market, as well. As interest rates increase, a larger number of office, industrial and retail buildings are projected to be marketed for sale.

That's 14 predictions for 2014. We look forward to covering these and many other major trends in commercial real estate in the year ahead. Here is a bonus prediction from CoStar's Property and Portfolio Research group: 

CoStar: 2014 Best Year of Office Occupancy Gains in Recovery Cycle

Heading into New Year, office employment has been growing at the fastest rate since the start of the recovery, with the sole exception of early 2012. But there are two key differences between today's market and that of the past few years. First, the office market now has far less under-utilized "shadow" supply space, which will drive a higher level of net absorption as more office-using tenants expand. Second, with the demand outlook improving and new construction still at bay in most markets, the 2014 occupancy gains in US office markets should be the best of the entire recovery and should tip the scales toward greater rent growth during 2014 than in the past few years. However, developers have already shown their willingness to break ground at the first sign of improvement. This has already happened in Boston, Houston, Silicon Valley and most recently, San Francisco. As developers ramp up new supply, the office occupancy gains are likely to slow in 2015 and certainly by 2016. Investors should enjoy the benefits of occupancy gains in 2014, which are expected to be the best in the current recovery cycle. 

http://www.costar.com/News/Article/14-Predictions-We-Like-for-2014/155801?ref=100&iid=368&cid=966E80DBB06FFD78B8A4600F95FE80B9

Freddie Mac: Mortgage rates level off, 30-year loan averages 4.23%

Home building in Rancho Santa Fe, Calif., above. Mortgage rates leveled off this week amid the government shutdown, with Freddie Mac saying the 30-year fixed loan averaged 4.23%. (Sam Hodgson / Bloomberg)

By E. Scott Reckard

Mortgage interest rates have leveled off at their lowest levels since June, with 30-year fixed-rate loans averaging 4.23%, statistically unchanged from 4.22% last week, according to Freddie Mac's weekly survey.

The home finance giant's widely watched poll of what lenders are offering to solid borrowers showed the average rate for a 15-year fixed mortgage rising from 3.29% to 3.31%, also small enough to make no statistical difference.

Freddie Mac pegged the 30-year average at 3.35% in early May. It shot up to 4.58% in August on widespread belief the Federal Reserve would taper off its efforts to keep interest rates low, then fell again when the Fed decided in September that the economy wasn't strong enough for it to do so. 

Borrowers would have paid lenders an average of 0.7% of the loan amount in fees and discount points to obtain the rate, according to the latest report, issued Thursday morning. Appraisal costs and other third-party charges that borrowers often pay are not figured into the survey. 

Automated loan-processing systems at Freddie Mac, Fannie Mae and the Federal Housing Administration were functioning despite the government shutdown, according to the Mortgage Bankers Assn. and other experts.

That allowed near-normal home lending to continue, with the exception of rural development loans guaranteed by the U.S. Department of Agriculture, where the loan-processing system is shut down.

Laguna Niguel mortgage broker Jeff Lazerson, who supplies borrowers with home loans from 10 lenders, said early this week that “not one loan has been held up yet” as a result of the federal furloughs.

L.A. County is among least affordable housing markets

A median-income household in Los Angeles County can afford only 24% of the homes currently for sale, a Trulia study says.

By Andrew Khouri |LA Times

Looking for the American dream in Los Angeles?

Good luck with that.

A household earning the county's median income — $53,001 annually in 2012— can only afford a home worth about $271,000, a price point better suited to the Midwest than the West Coast. That means a typical buyer can afford only 24% of the homes currently for sale, according to a study released Thursday by Trulia, the real estate information company.

Los Angeles County is the nation's third-most-expensive housing market by this measure — behind only San Francisco and Orange County. The New York City metro region ranked fourth. Last year, a household earning the L.A. County median could afford 39% of homes for sale.

"The housing recovery has benefited some people more than others," said Trulia chief economist Jed Kolko. "A lot of the income gains in recent years have gone to the top percentage of households."

The house-hunting odyssey has gotten much tougher over the last year, as the median home price in the six-county Southland has shot up 24.6%, to $385,000 in August, far outpacing growth in incomes. The Los Angeles County median has risen 28.1% to $429,000.

For many, the search is maddening.

Earlier this year, Chris Benner searched online for a house priced between $275,000 and $375,000, looking from the San Fernando Valley south to San Pedro.

"We came up with less than 10 matches that we would even think of looking at," the 42-year-old freelance associate producer said.

In April, he and his wife purchased a four-bedroom fixer-upper in Athens, an unincorporated area east of Hawthorne, for $297,000. The Benners make far more than the median household income — about $95,000 last year between them, Chris said — but it's still tough.

"We don't save a penny," he said. "For people only on one income — $50,000 or $60,000 — I don't see how they can possibly do it."

Chad Sells agrees. The 31-year-old would like to move out of his two-bedroom Pomona apartment and purchase a house — a steadier environment for his 6-year-old son. But the single parent sees no way into the housing market on his $53,000 income as an information technology specialist.

"It just seems impossible," he said.

The Trulia analysis assumes buyers get a 30-year fixed mortgage at a rate of 4.5% and put down 20%. The analysis also includes property tax and insurance. Housing is deemed affordable if it costs less than 31% of the median household income.

Many middle-class families simply pay more than that, money that could have been spent elsewhere, stimulating the economy.

"A lot of people spend 40% on their housing" in Southern California, said Richard Green, director of USC's Lusk Center for Real Estate.

uying an affordable home can come with wrenching trade-offs — renovations, poor schools, long commutes and sometimes more crime. Benner sends his 7-year-old son to a public school in Culver City, where the district allows transfers for parents who work there.

The definition of an affordable "middle class" home varies across the region, according to the Trulia analysis, which matches median incomes in individual counties or metropolitan areas with home listings on its site in the same area.

In working-class Watts, $280,000 will get you a three-bedroom house on Zamora Avenue. The home — built in 1944 — is 1,469 square feet, according to a Trulia listing. Photos with the advertisement show bars on the windows.

In Lancaster — with its desert climate and long commute to most employment centers — the same price would buy a six-bedroom house on Amethyst Street with vaulted ceilings built in 2004.

Many areas appear almost completely off-limits to median-income buyers.

In the South Bay and Westside, just 16% of homes currently for sale are within reach. In Pasadena and the San Gabriel Valley, just 12% of homes qualify as affordable by Trulia's standards.

The central part of the city of L.A., by comparison, has much more affordable housing — and yet still only 30% of for-sale homes meet the affordability standard.

Kevin Portnall, a 53-year-old grocery store cashier from San Pedro, doesn't see homeownership in his and his wife's future.

"I have pretty much given up," said Portnall, who makes roughly $50,000 a year. "There is just no hope."

In Orange County, the situation is worse. The median income is higher, but affordable housing is even more scarce.

A household earning the median, $71,983, could afford only 23% of the houses on the market this month, according to Trulia. Those looking for an affordable house will have better luck in the northern part of the county.

Home Loans Rates May get a breather

Fed's decision on its stimulus is expected to hold down mortgage rates, but not for long.

Daily Breeze-- By E. Scott Reckard & Andrew Khouri

The Federal reserves decision to stay the course on its stimulus program should provide mortgage borrowers relief from the tend of higher rates-- but not for long. Economists say the announcement only delays the inevitable: a return to 30-year mortgage rates at 5% or higher. Fannie Mae, the largest mortgage finance company, expects the 30 year rate will be at 5.25% by the fourth quarter of 2014, and Moody's Economy.com is projecting it will hit 5.5% by that time.

We're expecting the economy to return to more normal activity said Celia Chen, a senior director of Moody's economic research staff, specializing in housing economics. Fixed mortgage rates were lower this week even before the Fed announced its surprise decision. The average for a 30-year loan fell to 4.5% from 4.57% last week according to Freddie Mac's survey of lenders, conducted through early Wednesday. The 15-year loan declined to 3.54% from 3.59%

Then Wednesday afternoon, Fed chairman Ben S. Bernanke stunned Wall Street by saying the economy is still too sluggish to start tapering off on the stimulus, as many economists had expected the Fed would do. For now, Bernanke said, the central bank will continue buying $85 billion a month in Treasury and mortgage-backed securities, pumping money into the economy and pushing down interest rates. The terms that lenders were offering on 30-year loans eased immediately after Bernanke's announcement, said Jeff Lazerson at loan brokerage Mortgage Grader in Laguna Niguel.

The rate for a 30-year loan with no discount points dropped to 4.375% from 4.5% , Lazerson said. To obtain a 30-year fixed mortgage at 4.125% borrowers were paying on point down from two points Wednesday morning. It remains to be seen whether the threat of higher rates will put a damper on the housing recovery. The median home price has flattened over the last two months in Southern California after a remarkable run of big price increases over the last year. That softening could be related to mortgage rates, which have risen more than 1 percentage point since May.

But home sales remain strong, according to a report Thursday from the National Assn. of Realtors. Sales of previously owned homes reached their highest level in six years. August's annualized rate of 5.48 million  units is 13.2% ahead of the same month last year.

Prices are up nationally as well, the Realtors group reported. The median sale price for resale homes in August rose 14.7% from a year earlier to $212,100, the biggest year-over-year increase since the height of the housing bubble in 2005. In the short term, rising rates are driving more buyers to close on homes, fearing rates will rise even more, said the groups chief economist, Lawrence Yun. But further rate increases may take buyers out of the market.

"Tight inventory is limiting choices in many areas," Yun said in a statement "Higher mortgage interest rates mean affordability inst as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase". Meanwhile, the Federal Reserve on Wednesday clearly expressed reservations about the strength of the broader economic recovery.

Retail sales and industrial production are growing more slowly than economists had expected, and consumer sentiment fell for the second straight month in September to the lowest  level since April, noted Freddie Mac chief economist Frank Nothaft.

This is part was why the Fed chose to keep up its massive bond buying program, Nothaft said.

It also cited the tightening of financial conditions observed in recent months, which in the case of the housing market means the rise in mortgage rates since May.

But Nothaft also said the longer-term trend is for 30-year home loans which in may dropped to as low as 3.35%    on average, to rise back toward more normal levels, meaning mortgages starting with a 5. Freddie Mac projects that the rate will average about 4.5% or less for the rest of this year, "and stimulate further improvement in home sales and home-price appreciation," Nothaft said in an email.

However, he said we are still projecting the 30-year fixed-rate mortgage to be at or above 5% by the end of 2014.

Jumbo Loans getting cheaper

Lenders are now offering rates near & sometimes lower than interest rate for conforming loans.

With mortgage rates rising to levels not seen for two years. Its hard work finding a great deal on a home loan, unless you're rich enough to need a jumbo mortgage. These loans on steroids certainly aren't for everyone: Jumbos are defined as mortgages over $625,500 in much of California and more than $417,000 even in places where homes are cheap.  But if you can qualify Americas banks stand ready to reward you with a rate nearly as good or even better than what you can get for a normal loan. This is an unprecedented situation because jumbos historically have come at a premium price, said Brad Blackwell, executive Vice President of No. 1 mortgage lender Wells Fargo Home Mortgage.

"This is a new phenomenon-- something we've never seen before," Blackwell said in an interview.
Freddie Mac said Thursday that lenders were offering non-jumbo 30 year fixed rate loans to solid borrowers at an average of 4.57%, up from 4.51% last week and a recent low of 3.35% in May. The borrowers would have paid 0.7% of the mortgage amount in upfront lender fees to obtain the rates.

Rates for 15-year fixed mortgages and adjustable loans also rose, a trend attributed to stronger growth in the gross domestic product and positive surveys on manufacturing and home building. Additional encouraging reports Thursday on unemployment and hiring drove the yield on the 10-year Treasury note -- a mortgage-rate benchmark  to nearly 3% its highest level since July 2011. Home lending rates were volatile but continuing to move higher, mortgage professionals said. But that same improving economy also has heated up competition among lenders to make jumbo mortgages, which are too big to be backed by Freddie Mac or Fannie Mae.

They are written mainly for affluent residents of the East and West coasts, where home prices have risen rapidly over the last year.

Jumbos, like all mortgages not backed with a government guarantee, nearly disappeared after the financial system cratered in 2008. Rates jumped nearly two percentage points above those for Fannie and Freddie loans, compared with a usual spread of one-eight to three-eighths of a percentage point higher, said Keith T. Gumbinger, Vice president of financial publisher HSH.com

HSH and fellow data tracker Bankrate.com calculate that lenders are now offering 30-year fixed-rate jumbo loans at the extreme low end of their normal range- an eighth of a percentage point or so above so called conforming rates.

But the Mortgage Bankers Assn. said loans actually made within the last few weeks showed average jumbo rates lower than those for the smaller conforming mortgages that can be sold to or guaranteed by Freddie and Fannie.

The trade group said the average contract rate for a conforming loan with a 20% down payment was 4.73% last week, compared with 4.71% for a similar jumbo loan. The difference was more pronounced in the "hybrid" loans, popular with affluent buyers, that have a fixed rate for five, seven or 10 years before becoming adjustable.

Wells Fargo's Blackwell said his bank was making 30 years fixed jumbos with no upfront costs to borrowers at 4.75% on Thursday, compared with smaller conforming loans at 5%. For a loan with a rate fixed for the first 10 years , Wells was writing mortgages at 4.125% for jumbo borrowers compared with 4.875% for conforming loans, he said.

The reason for the difference is that Wells Fargo has been keeping low-risk jumbo loans on its books rather than selling them as fodder for mortgage-backed securities. That was a good deal for Wells because big banks are flooded to the gills with deposits that are costing them virtually nothing. Wells Fargo, for example, reported that as of the second quarter this year it was paying an average of 0.14% a year interest on its $1 trillion in deposits.

Over the last three years, Wells Fargo has added about $100 billion in home loans to its own portfolio. That's not enough to pose a risk to a bank with $1.4 trillion in total assets, Blackwell said, but plenty to make a big return on the cheap deposits its lending out.

Do You Really Need A Home Inspection?

Buying a home can be a very exciting time, but get one thing wrong and it can turn your life upside down.   Performing a home inspection is one of those things that some buyers think they can forego.  However, the home inspection is a vital part of knowing that you are getting a quality home with as few defects as possible versus getting a money pit.

The only way to know if you are getting a good solid, quality home is through the home inspection report.  The home inspection report will help give you an accurate picture of the maintenance required to preserve the home, as well as, what may need to be repaired before you can move in.  Alternatively, it could give you an "out,"  without forfeiting your earnest money, if the inspector uncovers any major flaws in the home.

Always use a licensed home inspector and not your best friends cousin who is a handyman and thinks he is a home building specialist.  A licensed inspector is required to attend classes and pass a test before he is able to become licensed.

Generally, the home inspection only takes a few hours and will cost between  $200-$400 dollars.  The inspector will start by checking the physical  condition of the exterior by looking for cracks in the walls and any signs of water damage, etc.  He will then inspect the electrical, HVAC, plumbing, appliances, water heater and any other features of the home for damage or potential problems.

The home inspector will then report any visible defects; however, they usually don't notate the condition of things like buried pipes, etc.  Although, they will notate if they see any standing water in the yard  that could indicate an underground leak in one of the underground pipes.

The home inspection report will allow the buyer to request that the seller fix the items found on the inspection report before the sale of the home has been completed.   The seller, however, has the option of refusing the repair request and offering the home on an "as is" basis or lowering the price of the home to compensate for those repairs.   If the repairs discovered through the home inspection process are major, it's generally advisable that you walk away and find another more suitable home for you and your family.  Otherwise, you may be looking at bigger problems later on down the road as the problem grows.

If you don't want to start the entire home search over again from scratch, you could opt for a 203K loan or something similar to have those repairs fixed.   Talk to your realtor about what he recommends.  Your realtor may know of another property that would be perfect for you versus going through the time and hassle of any major repairs that are needed on the current home you are interested in.

Buying A Second Home

Buying a second home - should you or shouldn't you - that is the question.  Well, buying a second home could very well be the absolute best thing you have ever done but you have to do it for the right reasons.  Let's talk about a few of the things you need to consider before making any quick decisions.

First you must ask yourself why you want to purchase a second home.  Is it to invest in your future?  Is it to use for a vacation home?  Are you doing it for an additional income?  The answer to these questions is critical so let's look at all of the facts.

If you are buying a second home as rental property to use as part of your retirement plan then you have made the right decision.  Buying a home forces you to make regular savings in the form of a mortgage payment each month and that is money in the bank when it comes to a retirement fund.

You must make sure,however, that you have enough money to cover the mortgage payments plus any additional expenses such as repairs, yearly taxes and insurance, if they are not a part of your mortgage payment, and anything else that may arise.  The good news is if you buy the right house at the right price, your rental property should always stay rented.

Another reason a second home as part of your retirement plan is a good idea is due to the fact that your investment money is subject to less income tax and the interest and taxes may be deductible.   So planning ahead could pay off in a big way.

Housing, for the most part, appreciates over time.  There are definitely ups and downs in the housing market but buying a home is a long term investment that can ride those tides very well.  A home is an inflation proof investment.

The experts have predicted that both fixed rate and adjustable rate mortgages will probably remain in the single digits for the foreseeable future.  Therefore, financing a home with a nominal down payment should remain achievable for quite some time.

Buying a home is very exciting and can be a very profitable experience but your decision cannot be made lightly.  It is wise to give a lot of thought to why you want a second home, then make a financial plan and stick to it.

If you have some disposable income, then purchasing a vacation home may be just what you need to add a little spice to your life.  Then by all means, go ahead and find the perfect house, buy it and enjoy.

Whatever the reason you want or need a second home, please think about your reasons, make a plan and follow through.  It is also advisable to talk to a real estate agent about all of your options before diving in.  A real estate agent can help you make the best decisions and could potentially save you thousands of dollars in the long run.

The First Things You Should Do When Moving Into A New Home

Moving into your new home is a very exciting time.  There are so many things to do and so much to remember.  Sometimes we don't stop to think about what priorities should be put first.

Here are a few things you need to add to your what to do first list once you move into your new home.

1.  The very first thing you need to do is to change your locks.  All of the locks not just the doors.  You need to remember to change the locks on all other areas such as an exterior storage door or shed.

2.  Change the code to the garage door opener and the garage door keypad if you have one.

3.  Change the alarm code to the house.

4.  Check all of the plumbing for leaks.  Check under the sinks, check for dripping faucets, check for running toilets and check the water heater.   A good way to test your home for leaks is to do the following:  turn all water sources off, then read the water meter, wait for two hours - don't turn any water on during those two hours, then read the water meter again.  If you have different numbers, then you have a leak and will need to call a plumber unless you have to skills to fix it yourself.

5.  Have your carpets cleaned before you move in.  Make sure you allow enough time for them to dry.

6.  Clean your cabinets inside and out.  You never know what has been crawling around in there.

7.  Have a pest control company inspect and treat your home.  You probably had your house checked for termites as part of the home inspection.  But you need to have it inspected and treated for other pests as well.

8.  Find the breaker box and learn what breakers go where.  And if the breakers are not marked, you will need to label them appropriately.  Additionally, teach your entire family how to use it and show them how to turn off the main breaker in case of a fire or any other type of emergency.

9.  Locate your water meter.  Show your entire family where it is and how to turn off the water, not only at the main, but throughout the individual areas of your house as well in case of a plumbing emergency.  In addition, if you are going out of town or if you need to evacuate due to inclement weather, you will need to remember to turn off the water and the electricity to your home before you leave.

Staying One Step Ahead in this Real Estate Market

The following Ask the Experts Q & A features advice from Doug Breaker, the president and CEO of Homefinder.com.

Q: How can agents stay one step ahead in a rapidly evolving industry?

A: With low inventory and low interest rates, the market is heating up, and heating up fast. For agents and brokers, the last few years have meant patience as homes sat for months or even years; now, real estate professionals must learn to turn on a dime, as houses sell in days or even hours. Our 2013 HomeFinder.com Agent Makeover Sweepstakes will focus on that change and help the five winners and thousands of participants understand the changing landscape and adapt to the new normal. Below are a few thoughts on how you can be well positioned to take advantage of the changing landscape:

1. Be the agent you want to work with: As a real estate agent, would you hire yourself? Do you feel like you offer clients experience, knowledge and expertise? Are you establishing a personal rapport and nurturing client relationships before, during and after the sale? If the answer is no, identify your weakest areas and find resources to help you grow as an industry professional.

2. Power of planning: Do you want to improve your marketing strategy, stay in touch with past clients, or increase your commission? Write down how you plan to achieve these goals. If you fall into a rut and think you haven’t made any progress, revisit your plan; you’ll be astonished at how far you've come!

3. Let go of what’s not revenue generating: Hire a full-time, part-time, or even virtual assistant to relieve your task-oriented workload. When you hold on too tightly to parts of your business that someone else can manage, you lose the ability to maximize money- making opportunities.

4. Technology is a necessity, not a convenience: Streamline your workload with apps such as:

Checklist Wrangler: Manages multiple checklists and auto-creates lists; creates templates for tasks you need to do more than once; creates checklists from text copied from emails, websites, etc. 

Brewster: Pulls contact information stored across your email, Facebook, Twitter and LinkedIn databases to create visual, in-depth profiles. Sends updates regarding moves or new jobs, sends reminders when you’re falling out of touch with someone, and has a highlyintuitive search function.

ÜberConference: Minimize your role as the go-between by quicklyscheduling a conference call while on the go. Choose contacts from your address book and UberConference will automatically call, email or text contacts to join, no PIN required.

5. Bring online connections to life: Use social media to connect with clients on a personal level. People like doing business with “real people,” so being genuine on social media enables your clients to see your interests outside of work, helping them see a different side of you.

5 Signs you're Ready for Home Ownership

1.You Stick to a Budget

Financial experts will tell you that creating and sticking to a budget is a sign of financial maturity. With the over 1.5 million foreclosures in the United States, it's easy to understand why this is so important. If you have already created a budget and have stuck to it, you're more ready than the next guy to own your own home. When you follow a budget, you know exactly where your money is going each month. When you know where your money is going, you know whether or not you can afford a home of your own.

2.You Have a Down Payment

The old rule of thumb still stands: Enough money should be saved for a 20 percent down payment on a house. When you put 20 percent down on a home, you immediately have equity built into the property and you negate the necessity of private mortgage insurance. Even with a 20 percent down payment, you should still stay away from home's that are out of your realistic price range. If you've budgeted for a $150,000 house, having 20 percent to put down doesn't mean that you should look for an $180,000 home.

3.Your Income is Stable

Finding a stable job can be tough to do in today's economy, but if you have a stable source of income, you can feel relatively safe making an investment in a home. If you are reliably employed, don't forget to factor in any life-changes that may crop up in the near or distant future. Do you plan to go back to school? Are you going to start a family? Budget for the home you can afford five years from now, not the one you can afford today.

4.Your Credit Score is High

The higher your credit score, the better your interest rate will be. The better your credit score, the more likely you are to be accepted for a loan. If your credit is in excellent shape, you're ready to buy a home. If, on the other hand, your credit needs some work, whip it into shape before you being the home-buying process. Before you buy a house, your debts should be paid off, any collections accounts should be closed satisfactorily, and your credit score should be in the 700's.

5.You Have an Emergency Account

Did you know that you should have enough money in the bank to cover at least three month worth of debt? If you have an emergency account, you can feel safe buying a home. Add your estimated mortgage payment, estimated utilities, and any recurring debts that you have, and multiply that number by three. The resultant number is the amount that you should have stashed away in the case of job loss, illness or other financial emergency.

If you are thinking of buying a home, make sure that you are 100 percent ready. Re-read the tips above and, if they apply to you, the dream of owning your own home is within reach. If one or more doesn't apply to you, you have some work to do. Owning a home isn't a snap decision, it's a process. In the end, you'll be glad that you took your time and did it right.

2013 Keller Williams San Pedro/RPV Sales

Keller Williams LA Harbor unsurprisingly takes the lead again for 2013's Sales in San Pedro & Rancho Palos Verdes.

Beating the #2 spot with over 50 sales!!

The Top 5 Mistakes Sellers Make

There are so many things that need to be done before listing your home for sale.  Unfortunately, many sellers are making the same costly mistakes.  Mistakes that could have saved them thousands if they had only known "what not to do".  Let's talk about the top five mistakes that cost sellers thousands.

1.  Do not put your home on the market before it is ready.  Make sure that the painting is done, the carpet has been replaced and everything is clean and organized.  If you show your home to potential buyers while you are in the middle of renovating, this will lower the perceived value of your home in the minds of your buyers. Presentation is everything- so get the work done before marketing the property.

2.  Do not over improve your home versus the norm for your neighborhood - you will not recoup this money .  Do not spend money on something that you think your buyers will insist on.  Every buyer is different and has different wants and needs.  So you will only be throwing your money into the wind. Don't start adding absurd renovations, not every buyer wants/needs these upgrades, plus it will most likely not increase the value of your home.

3.  Do not over price your home because of what you "need" to get for it - otherwise it will sit and then become an aged listing in the minds of your potential buyers.  Your market should always control the sale price. Never price your home based on what you want to net, this strategy will always end in failure. Although you can control the asking price the market should always control the sales price. The price should be determined by the black and white, matter of fact reality of the market.

4.  This one should probably be number one - don't get emotionally involved in the sale of your home.  Most sellers have lived in their homes for years and have become quite attached.  What you like about the home is not necessarily what your buyers will like about it.  So don't get offended if your buyer wants to change something or says something negative about your home.  Once you sell it - it is not your home anymore.  Think about your new home and all of the potential it has to offer.

5.  Don't try to cover up or hide the homes problems.  Most states have and require a property disclosure form.  You must disclose the homes problems to your potential buyers.  If you don't, that does not mean that you cannot be sued for it later on down the line when that problem surfaces for the new owner.

6. Do not hire just any Realtor, based on non-business factors. Make sure you hire a professional with a proven track record. Check there website, read reviews, have a meeting to see if you and the Realtor are on the same page. Make sure you both have the same ideas and expectations.


Before listing your home, talk to your Realtor about the pitfalls that can occur when selling your home. Take advantage of your Realtors years of knowledge and the next thing you know you will be moved and enjoying your new home!

How To Recognize A Home That Will Hold Its Resale Value

Buyers who are looking for a new home are often very excited.  It is that excitement that can sometimes cloud their judgment when it comes to buying a home that will retain its resale value.  So what can you do to make sure that your excitement does not overcome your good judgment and common sense?

Here are some things to keep in mind when you are trying to buy a home that will retain its resale value.

1.  Location, location, location!  Is this home on a busy street or does it have some other undesirable factor about it?  If so, make sure the price is adjusted accordingly.

2.  Consider all defects that are not correctable.  Things like location, traffic, floor plan etc. Then make sure the selling price reflects these non -correctable items.  Remember, you may have to sell this home with these same defects in the future.  So you don't want to be left holding the bag.

3.  Does this home suit your long term needs.  If so and you plan on living in the house for a very long time, then resale value may not be as big of a determining factor for you.

4.  Don't be bullied.  If you are looking in a hot market, don't overlook the issues that could cause you to lose money if you have to sell in a future market downturn.

5.  Look for a home that has a broad appeal.  A home that is suitable for most people.  One that has a good floor plan and amenities that the majority of people are looking for is important.

6.  Think about the size and the space.  Is this home going to be very expensive to maintain due to its home or yard?  Are there any other factors that could influence someone's decision to buy.

7.  It is best to buy a home that is in good condition -one that someone clearly took the time to maintain over the years.  Routine maintenance is a huge factor when it comes to future repairs.

8.  Convenience - how convenient is this home to schools, banks, day care centers, shopping, gas and restaurants.

9.  Look for an easy commute - is this home located in an area where the major thoroughfares are easily accessible.  Is there a bus line nearby etc.

10.  Find a home that has a good resale value and not one that is just a good deal.

Talk to your realtor about buying a home that has a good resale value and they will be able to help keep you on the right track.  Resale value should be one of the major deciding factors when buying a home.  Remember, most people do not live in the same house their entire lives.  So plan accordingly!

Things To Consider When Designing Your New Construction Home

t is very exciting to have a new home built.  But in all of that excitement there are things you should consider before finalizing your plans.  You will need to look to the future needs of your home and family then plan accordingly; rather than just thinking about your current lifestyle and how you want your home to perform for you now - in the present.

Here are a few things that you may not have thought about when starting the beginning phases of building your new home.

1.  When deciding whether to go with the large open spaces, less walls etc.  Think about your life now and in the future.  Currently you may have a toddler and need those wide open spaces to keep an eye on them.  However, remember that they don't stay toddlers for long.  Before you know it that toddler will be a teenager and you will then need as many separate rooms / spaces as you can get.  Because once you have some teenagers on your hands, you will quickly learn that everyone is going to want their own space.

2.  Don't downsize a room or a closet to make a space for a newborn or toddler.  Once again, they do not stay newborns for long and you will be left with little or no space.  Downsizing a room or eliminating a closet just doesn't make sense in the whole scheme of things.  Remember, your newborn is only going to be a newborn for a little while.  But you will more than likely live in your home much longer than that.

3.  Don't give up kitchen cabinet space for a pass through bar just so you can keep an eye on your kids.  Your small children will grow quicker than you can blink an eye but once your home is built your kitchen will have to stay that way forever.  And before long your children will be grown and you will no longer need that pass through bar but you sure could use that extra cabinet space.

4.  Consider a downstairs den that could be converted into a bedroom in the future as your family grows.

5.  Think about having your attic roughed-in with plumbing and electric for a future bedroom or living space.

6.  Perhaps adding a bathroom and kitchenette to your basement for possible future living quarters.  This will also add value to your home when it comes time to sell.

7.  Think ahead to when your toddler turns 16 and gets a car.  You will need more garage space.  So consider having a three car garage included with your home building plans.

8.  It is always a good idea to have grab bars installed in all of your bathrooms.  These are not just for seniors.  These are great for kids and for adults who have over extended themselves and need a little assistance getting in and out of the bathtub or shower.

It is hard to know exactly what you are going to need in the future.  But try a little forward thinking and build your house according to what you think you will need.

If you have built a house that is no longer suitable for you and your family.  Call your realtor and ask them to help you find a home that fits your new lifestyle.  Your realtor would be more than happy to assist you in any way they can.

The Future of Mortgages

The current trend in real estate has been quite positive. For an extended period of time, we have seen pretty consistent growth in sales and home prices. After years of dealing with poor market conditions, we are all breathing a sigh of relief. Nevertheless, the industry must be vigilant in ensuring that nothing is done to impede or reverse the housing recovery, particularly by Congress and the regulators in Washington. Despite the improved sales numbers, however, mortgage credit remains tight. Nowhere is this more evident than in the consistently high percentage of cash purchasers in the National Association of REALTORS® (NAR) monthly existing home sales numbers. While sales are improving overall, it is those with cash who seem to be driving the numbers higher, even though interest rates remain historically low.

We have seen the tightening of credit through higher effective minimum credit scores for FHA and conventional conforming loans. Lenders are already avoiding risk, begging the question: What will happen when numerous Dodd-Frank rules take effect? What will happen if major changes are made to the FHA program? What will happen if the role Fannie Mae and Freddie Mac play in mortgage financing is fundamentally changed or even eliminated? With so much change and potential change on the horizon, it is at times overwhelming, even to industry experts. In talking to many industry experts, one gets the sense they are simply living for today until truly confronted by tomorrow. That is the wrong strategy because bad outcomes tomorrow can be prevented by action today.

Here are some of those actions:
• Tell your Congressman to support HR 1077, The Consumer Mortgage Choice Act, which
will prevent reduced access to Qualified Mortgages (QM) for many consumers.
• Tell them to oppose major changes to FHA, such as reduced loan limits, increased down
payments, limiting to first-time homebuyers, or people of certain income levels.
• Tell them to oppose efforts to do away with the function the Government Sponsored
Enterprises play in establishing a securities market for mortgages.
• Tell them to oppose Basel III capital rules that discriminate against mortgages as secure
instruments.
• Tell them to oppose a Qualified Residential Mortgage (QRM) that establishes a down
payment standard and extremely tight debt-to-income and credit standards.
• Tell them to support equal treatment for condos under the FHA program.
• Tell them to support opening FHA 203K for investors to help rebuild communities one
home at a time.
These are a few of the actions you can take to keep the housing recovery going. While you
are telling Congress these things, you should also weigh in with the regulators, such as the
Department of Housing and Urban Development (HUD) and the Consumer Financial
Protection Bureau (CFPB). HUD plays a key role in the QRM and FHA rules, while CFPB is
responsible for the QM, RESPA, TILA, Loan Officer Compensation, and a host of other
rules. Congress, the regulators, and the administration can all help to ensure a sustained
housing recovery, but only if they do the right things.
This column is brought to you by the NAR Real Estate Services group.

Homeowners Insurance

Owning a private home in a residential community subjects you to pay the Homeowners Insurance (HOI). For some homeowners, they see it as an added expense on top of the recurring mortgage they have to pay in the next 10 to 20 years. It can be devastating as some communities require all homeowners to pay the HOI. But despite the extra expense, this type of insurance is proven to be beneficial.  Let me explain.

What is Homeowners Insurance?

Homeowners Insurance is a type of insurance that is used to protect the homeowner’s property from various damages. There are also cases that homeowners’ insurance policies offer liability coverage against damages or injuries on the property. Generally, there are different forms of standardized homeowners insurance that can be chosen which will also depend on the needs of the homeowner. The following are types of HOI standardized by the Insurance Service Office

HO1 – Basic Form Homeowner Policy

HO2 – Broad Form Homeowner Policy

HO3 – Special Form Homeowner Policy

HO4 – Renter’s Insurance

HO5 – Premier Homeowner Policy

HO6 – Condominium Policy

HO8 – Older Houses

Read the complete description of each policy here.

Who needs it?

Whether you own or rent a home, condo, or apartment, you will need to have homeowners insurance. Indeed, you are not legally required to have homeowners insurance; however, it is one of the requirements when applying for a mortgage. It satisfies lenders. Almost all lenders are requiring borrowers to secure satisfactory insurance before they consider borrowers from qualifying for a loan.

In an insurance, there are policies that a home owner can choose from aside from the basic ones. The basic policies usually cover damages or accidents caused by fire, hurricane, vandalism, or lighting. Some other policies might cover damages due to theft too. To determine the policies that are applicable to you, an insurance agent or specialist can do the inspection beforehand.

The cost of the insurance will usually depend on:

1. Building costs
2. Crime rate in the neighbourhood
3. Heating, electrical system,  and plumbing condition
4. Materials and style layouts used for the home construction
5. The probability rate of accidents or damages from hurricanes, flood,  and hail storms

One common issue of homeowners is the disaster brought about by flooding. Standard policies for most insurance do not cover damages caused by flood. You have the option to add it from the standard policy. You can get it directly from your insurance agent.

In times of disaster or accidents, an uninsured homeowner may end up losing his or her home. You cannot just risk your largest asset because of the high premium costs of insurances. One common and easiest way to lower your premium costs is by increasing the amount of money you have to spend to cover the damage/loss before the insurance company starts the responsibility to pay the claim which is also known as deductible.

Insurance is not an option for homeowners, rather a necessity. At first, an insurance maybe an intangible product but it is actually one of the best things that you can have