Ah, the white picket fence. Commonly used to encapsulate the American Dream of home ownership. Kids playing in the front yard, parents embracing, you know…the whole big thing.
Lately though I’ve been noticing the fence more as a place to sit on when it comes to real estate decision making. I get it. It has been an incredible run of low interest rates and rising home values and we’ve deserved it after some trying times almost a decade ago. With some things changing in recent months it has made it a little more difficult for people to know what is best for them and up on the fence they go.
Let’s be honest, a fence isn’t a very comfortable place to sit…especially a white picket one. Let’s talk about what’s going on in the market right now and help you get your feet back on the ground and moving in the direction you want to go.
What a start to 2018 eh? The Thomas Fire has effected us deeply in so many ways locally and there have been some global shifts that also have begun to dictate that 2018 will be a year of change.
So, what do we know so far?
Inventory is low
Interest rates are rising
Getting harder to qualify for a loan
Very competitive, multiple offer situations
What should this tell you? The time to strike is here.
Sellers, time to capitalize.
Chances are if you bought your property pre-2008 or post-2008 you are sitting on a decent chunk of equity to cash in on. If you’re happy where you are at and don’t need to upsize or downsize in the next 7-10 years then feel free to stay put. However, if you see your living situation changing in that time period this would be the ideal time to cash in on your investment and leverage that equity on your next property.
Buyers, time to get in while the gettin’ is good.
With interest rates climbing the amount of house you can afford dwindles. Every tick of percent up jacks up your monthly payment and potentially prices you out of the type of home you really want. This is never fun news for me to have to deliver. With prices potentially settling a bit and interest rates still at historic lows, this is a great time to get in and get the house you really want rather than settling for something that doesn’t hit all your wants and needs later on.
Fences are for bordering property, not sitting. I’m always here to help.
I’m not a lender. Repeat. I’m not a lender. However, in order for many of my clients to purchase a home a loan is involved. I thought I’d break things down to basics in the hope that my home buyers out there will have a little more of a foundation when they start thinking about getting a mortgage. Let the fund begin!
Have you been noticing how fast the market has been moving lately? With available homes for sale in low inventory and buyers in large numbers it has created a home buying battlefield. This creates multiple-offer bidding wars as buyers are willing to do anything they can to win the seller’s attention and get their offer accepted. How can you come out victorious without losing leverage or your wallet in the transaction? Let’s discuss.
Once more in to the breech dear friends, once more.
– Henry V, Shakespeare
Here’s the typical situation. The perfect home comes on the market on a Thursday. It is in great condition and has been priced well. The phrase ‘turnkey’ gets said a lot. Even the homeowners association dues are reasonable. The open house over the weekend has 150 people through it in three short hours. Within a few days of being on the market there are over a dozen offers and yours is one of them.
How in the heck are you going to beat out 12 other offers and open escrow victorious?Other than the obvious and attention grabbing ‘over asking’ price there has to be more ways to stand out in the crowd. I’ve got some of those key differentiators right here.
Love is a battlefield.
– Pat Benatar
1. Work with a seasoned pro
One of the best things you can do as a homebuyer is to work with an experienced REALTOR® like me. With many transactions under my belt they can give you an inside edge. First things first there’s a pretty good chance I either know or have worked with the agent who is representing the seller. This can be a crucial ‘in’ to the whole process as agents do like knowing who they are going to be working with. In addition to that having many transactions under my belt I will be able to find the right mix of terms (which will discuss later) that make your offer one the seller can’t refuse.
2. Know your seller
Every seller is different. They have their own reasons and motivations for moving on. As your agent I can carefully extract those game changing factors you can include in your offer to make sure they take notice.
3. Terms of endearment
Yes, sometimes, maybe even most of the time, it is about the money for a seller. However, there are those opportune situations where a seller could be more swayed by the terms of the offer. Terms refer to things like length of escrow, when the seller has to move out, or possibly putting more money in the pot for the earnest money deposit. If your offer is the only one that is sensitive to the seller’s preferences you will definitely stand out from the crowd.
4. That escalated quickly
In a bidding war situation it can be very frustrating to lose out on your offer not being selected by a few thousand dollars and it happens all the time. I can protect you against this by writing in an escalation clause into your offer. Let’s say you offer $500,000 on a home and say you are willing to beat the highest offer by $5,000 up to $525,000. Should another offer come in at $505,000 your offer price jumps to $510,000 putting you in the lead. If things get crazy and offers come in higher than your maximum price so be it, but you definitely keep yourself in the running this way.
5. Don’t be a tease
A multiple-offer bidding war is not a time to play games. This is a time to write strong right out of the gate. The possibility of you getting an opportunity to back and forth with a seller is very slim when there are most likely going to be other buyers out there who are willing to do anything to get noticed. We will send a message that you are serious and financially qualified to close the deal as soon as possible with minimum contingencies.
6. Get personal
Finally, I will help you introduce yourself to the seller. On every offer I write a letter on behalf of my clients that adds a colorful touch to the black and white legalese in the offer. I attach a photo of your entire family, talk about what you do for work, and how you can see yourself enjoying the home when you move in. A majority of sellers want to know that the new buyer will honor their legacy, be a great addition to the neighborhood, and will care and appreciate the home they have loved. I’ve had a few situations where my clients weren’t the strongest offer on price, but the sellers selected them because they had a connection to my client and wanted them to have their home.
The battle lines are drawn
Should you wish to go to war and get those coveted keys in your hand, I’m here to bring peace of mind, creative strategy, and most of all a housewarming victory party that will be one for the history books.
Remember the Magic 8 Ball? Invented in the 1950s, it allowed you to ask a ‘yes or no’ question and receive one of 20 possible answers. You would start with the window side down, take a deep breath, and pose your inquiry. This would be followed by either a shake (frowned upon for the bubbles might interfere with your answer) or flipping the window side up to reveal the highly awaited response. There would be a moment of cautious ambition as the icosahedron twisted in the dark blue liquid, tapping lightly on the window just about to reveal the clarity or direction you sought. Sometimes responses were very clear like, “It is certain”, to much cloudier ones like, “Reply hazy, try again later”. Try again later? Now that’s just cruel.
I’ve felt a bit like a Magic 8 Ball lately. Many of my clients, family and friends have come up to me and tried to give me a shake or two for an answer on what they should do in regards to real estate in 2017. Hey Sam, do you think I should…
Sell my home this year?
Buy a home this year?
Sell my income property this year?
Buy an income property this year?
No one has attempted to flip or shake me yet, and they really shouldn’t as I’m a pretty big guy, but in the spirit of that whimsical black sphere I felt inspired to answer nonetheless. Let’s take it one question at a time.
Should I Sell My Home This Year?
Why ‘Outlook Not So Good’? This all depends on your current situation. If you are looking to exit with maximum equity that moment in time is rapidly running out. For many years coming off of our steady recovery from the 2008 crash we have seen a consistent increase in home values. In some areas of Ventura County they even have reached very close to the values seen just before things came crumbling down. Conversely during the tail end of 2016 there have been signs of leveling off and settling in home vales of closed transactions. Your ‘outlook’ would improve if you choose to price your home correctly. In year’s past agents could look at recent sales and price a home 5-10% over the last closed sale and get a bevy of buyer activity without issue. For the first time since the recovery began I’m seeing overpriced properties sit for months then ride the hellish roller coaster ride of price reductions until finally a buyer surfaces. Sometimes one never does as the Scarlett Letter of Overpricing stigma couldn’t be escaped.
The other challenge to the ‘outlook’ will be if your home isn’t in turnkey or close to turnkey condition. Most buyers are not showing interest in project homes, even with the growing popularity of home makeover shows, and would much rather just bring their toothbrush on moving day. A contributor to this is that many buyers are going ‘all-in’ to qualify for home financing and just don’t have the extra dollars set aside to open that wall up or remodel the master bath. What the 8 ball is trying to tell you home sellers out there is that if you are planning to sell and are wanting the most equity you can muster before the next cycle, get going now! Make the fixes, add some polish, and get a sign in the yard as soon as you can. I feel the outlook will get hazier as the year goes on.
Should I Buy a Home This Year?
Yes, the somewhat ambiguous answer is that ‘You May Rely On It’. It isn’t a 100% foolproof plan at this point and much depends on your personal financial situation, but the honest truth will always be that real estate is a great investment for you and your family’s future. Here are a couple of points to consider before moving forward.
First, prices are going to come down a bit. Great news for those buyers that have been on the fence and feeling a bit priced out of the market lately. As my grandfather always said, “Buy the cheapest house in the best neighborhood and you’ll never be disappointed”. Finally, I feel that this mantra will be possible again in Ventura County. Yes, the market might be a little thinner in inventory which can drive the price up, but if you are willing to be a little more flexible on condition to get the deal on the home in your neighborhood of choice, there will be some of those up for grabs in 2017.
Second, competition is thinning out. Interest rates are most likely going to continue to rise which could make a huge difference in the amount of money you can qualify for on a home loan. An 1/8 of a percent can be tens of thousands of dollars between you and your dream home. For those buyers who are on the borderline of qualifying will get the unfortunate news that they will need to sit on the bench for a while and rent until they can improve their financial standing. If you are one of the lucky ones who can handle an extra point of interest to you goes the spoils of victory. Find the home you like without the feeding frenzy at the price you want to pay. It will be a beautiful thing and you can always refinance down the road should rates come down in the future.
Finally, take note of your timeline. If you are looking for a quicker in-and-out this is not the best time in Ventura County to think this way. For those looking to hold on to the property for 7-10 years, it is still a great time to find your castle. You may rely on that.
Should I Sell My Income Property This Year?
Now this is just cruel I know, but the answer to this question requires deeper thought and consideration. If you are looking for just the right moment to sell your income property for maximum exit value I firmly believe you have found it. A moment that should stretch over the next few years in my opinion. The demand for income property is higher than ever in Ventura County for reasons I don’t need to even mention. Rents are at an all time high, vacancy rates are at an all time low. Not a bad time to put a sign out and watch investor buyers seep up from every crack in the sidewalk willing to outbid one another for a piece of the action. A triplex in Pierpont recently went up on the market and last I checked there were 8 all cash offers almost $20,000 over asking. Makes perfect sense to join that party and I wouldn’t blame you for it.
Where it might require a second ask for me would be the fact that there will be a plethora of new tenants not able to qualify for a home loan hitting the market here willing to up the rent ante. Considering this would make me want to hold on to that precious income property a bit longer to see how far up it might go and cash in for the equity payday when things cycle back around. So with that I ask that you concentrate and ask again.
Should I Buy An Income Property This Year?
A resounding answer to the affirmative! Ventura County boasts some of the most desirable communities to live and has been featured in many national publications in support of this. Men’s Journal put Ventura up there with longtime ‘places-to-be’ like Nashville and New Orleans last year. This equates to many willing customers aka tenants that will be at the doorstep of your income property faster than you can say ‘Craigslist’. A scarcity in available places has created a bustling microcosm of activity that you could be in the forefront of. It gets challenging however as this is not new news and there aren’t a bunch of properties currently up for grabs and when they do come on the market you are forced to battle with some folks that have some very deep, cash filled pockets.
If you have the sand to withstand a little healthy competition and work with an agent who has connections with investors (ahem, like the author) who can get you in on properties before they hit the market, you too could become one of the proud owners of income property and build or expand your empire at a very opportune moment. Don’t expect a deal unless the place has more mice than it does roof shingles, but the long term benefits surely outweigh you buying under market value.
The Answers You Seek
We can all admit that the future is not as clear as it has been in year’s past when it comes to real estate and just like the dark, ominous Magic 8 Ball itself you might get a very different answer to the same question. The important part to remember is that you are at least asking the questions at all. Don’t miss out on the chance to empower your investment portfolio with real estate this upcoming year and be as inquisitive as possible along the way. I’m always a shake or flip away, with the answers.
Tis the season for engagements, almost a 1/4 of them happen over the next two months every year. Something about the brisk air, family gatherings, and the new year approaching that have created this proposal sweet spot.
This got me thinking. Once you get engaged begins this incredible journey to the aisle. So much to do, so little time. I couldn’t help but find immediate parallels to the journey to home ownership. Something that definitely crosses couples’ minds once they say ‘I do’. Here’s a few examples of what I mean.
Choosing Your Vendors :: The Home Search
Nothing kicks wedding planning into gear more than setting your wedding date. This begins the harrowing quest of finding your wedding day team: the insanely creative wedding cake baker, the properly mic’d officiant, and the least cheesy DJ available. Even more the setting your team will assemble, the very important wedding venue. This search is not unlike the searching process for the home of your dreams.
You start off naturally by asking friends and family members for advice and referrals. It’s natural to do this as these people will understand your vision and the vibe you are trying to create for your wedding day. The home search is no different, what better way is there to help find the right wedding planner AKA REALTOR® and what venues AKA neighborhoods you’d want to celebrate AKA live in. Your loved ones will point you in the right direction to insure a successful outcome and most importantly helping you avoid any severe pitfalls. Most wedding industry professionals and real estate agents will tell you that they depend greatly on the referrals of their past clients. I can’t tell you how much of an honor it is to have a past client connect me with a friend or family member to help them, there is no greater compliment.
Just like the search for your wedding team of professionals, it will take ‘kissing a few frogs’ to find the perfect home. The housing market is just as competitive as the wedding professional market. The other engaged couples out there are just as hungry for the perfect wedding and move quickly to secure their nuptials dream team. Brides and grooms sometimes change their wedding date to get their dream venue or entertainment at the reception. The housing market now is no less forgiving as you must compete against other buyers looking to find their dream home with the same fiery passion. This requires good planning, just like your special day, to make sure you are ready and armed with a pre-approval letter from a lender, deposit money ready to go.
The Groom’s First Look at the Bride :: Finding the Perfect Home
The best moment of a wedding, hands down? Not to take anything away from the beautiful brides on their wedding day but I always direct my attention to the groom as they watch their bride slowly approach them down the aisle. There is nothing better than to see their face go from nervous smiling to sheer awe. You can almost hear their thoughts as they say to themselves, ‘how did I get so lucky?’ and even ‘geez, I better not screw this up’.
Some grooms get overcome with emotion, others I’ve seen get strangely calm. Some have to to put their hands on their knees and gather themselves, others have to literally pick their jaws up off the floor. However they show it, the groom’s reaction sets the tone for the entire marriage. Our body language says so much more than words can ever say.
This is no different than when I take those newly married couples home shopping. In this case, however, the groom is the couple and the home, is the bride. That special moment happens when we first walk up to the home together. Their eyes widen, spontaneous clapping occurs, and sometimes an enthusiastic touchdown-like celebration on the front lawn.
Just like I know that groom is going to be devoted to his bride making her approach to him down the aisle based on his gleeful reaction, the home’s first impact gives me complete confidence that they will do whatever it takes to make it their own. It’s time to write the offer.
The Vows :: Signing Loan Documents
This one was almost too easy. Just like the lifelong promise you are making to your partner, so goes the same promise you must make to your lender when purchase a home.
Your partner has given you everything. Love, happiness, and hope. Your mortgage banker is giving you a place to have that happen, a roof over many special memories you will make as couple. Since most of us don’t have 100s of thousands of dollars laying around we seek the help of a lender to make home ownership possible.
To make this financial vow possible, just like the dating process, the lender will be looking into your background. What skeletons might they find? A picture with an old boyfriend/girlfriend? A bankruptcy? Should the skeletons be minimal and far enough in your past this process of approval can continue.
Your loan documents are lengthy and have many conditions in them. Your wedding vows might not carry the same amount of detail, but the similarities are there. In good times and in bad, you better pay your mortgage. In sickness and in health, you better pay your mortgage. For richer or poorer, you better pay your mortgage. Maybe not the most romantic thought, but many pages you are signing carry the same level of commitment as a marriage as the bank, just like your partner, is taking a risk on you sticking it out every month regardless of the circumstances of your life.
Will you love and cherish your partner and send in your home loan payment all the days of your life? When you think about all the amazing things that will happen and how your life will be enriched by your partner and your new home the correct answer should be, I do.
You & Home Ownership :: A Marriage Made in Heaven
With the planning of your fabulous day already underway (congratulations by the way) maybe it is time to start planning on buying your first home together. I’m definitely here for you and will make it very easy so you can spend less time stressing and more time planning your ‘soon-to-go-viral’ wedding party flash mob.
On Election Day, I’m reminded of one key feature that makes our country what it is. The American Dream. Life should be better for everyone, because of the opportunity our country gives us, not our social status.
There is no clearer realization of the American Dream than home ownership. If you work hard, are good to your community, and are responsible with your money you can achieve it. As a REALTOR® I can’t think of a more rewarding experience than helping my clients achieve this for the first time.
Even better? Helping longtime friends.
Think about every great moment in your life. The really special memories that you flash back to on occasion. Usually they are triggered by a song, a location, or seeing your children about to embark on that same moment in time.
Now really think about it. Was one of your friends there with you? Dollars to doughnuts, I bet they were. I’ve been very fortunate to have great friends by my side at some of the best moments of our lives. I’m honored they chose me to be by their side when buying their first home.
Is it easy to bite off your piece of the American Dream? Absolutely not. Is it possible? Without a single doubt if you believe and fight for it like these two amazing couples did.
The Duffys: The Believers
A few years ago I’m in the lobby of the Morgan Stanley Tower in Oxnard waiting for the elevator to take me up to the top floor. Awaiting me are a few dozen wedding guests and two of my best friends in the world, Peter Duffy and Karen Cortes. A few months prior, knowing my love of public speaking and love of them, they had asked me to officiate their wedding. I was honored and then immediately filled with doubt that I could do their love justice. Coincidentally, a few years later, Peter and Karen would have their own doubts about being able to qualify for their first home. They were quick to comfort me about my officiating skills, just like I would for them about buying a home. Fortunately enough, both big days worked out perfectly.
I met Peter completely by chance. At the time both of us had just started our own companies and did what most budding entrepreneurs do – we joined the Ventura Chamber of Commerce. Then Chamber CEO Sandra Burkhart saw the two of us at good candidates to help form a new young professionals group called YPG. The first meeting was a little free flowing and both Peter and I were ping ponging grandiose ideas back and forth like crazy. I had to get to know this guy.
Before I knew it we were launching events for the Chamber (some with fire, some without), built a marketing seminar series from scratch (complete with tented parking lot afterparty, of course), and we somehow navigated through tens of 1000s of people to get to our favorite artists performing on the Empire Polo Fields at Coachella.
Karen is truly an inspiration. She is the embodiment of the American Dream. Her family came to America seeking greater opportunity for Karen and her siblings. She seized that opportunity with both hands and has not let go. It has been an honor seeing her grow in all aspects of her life, not taking anything for granted along the way.
Earlier this year I get a call from Peter and he tells me, “Sam, I think we are ready.” Knowing how hard he and Karen had worked over the last couple of years to make this a reality I quickly replied, “You ARE ready!”.
Both of them with stacks of papers in hand, sat across from their lender and plead their case. Pay stubs? Sure. Tax returns? Got ’em. Down payment saved? You know this. Student loans? Duh!
Like many first time homebuyers both were quick to assume that their eyes were bigger than their stomachs and they wouldn’t be able to qualify for a home in the price range they wanted. Guess what? Because they had worked so hard to save money, keep detailed records, and service debts they were pre-approved and in the amount they wanted. It was time to admit to themselves that they were worthy of home ownership, just like I had to accept I was worthy of marrying these two lovebirds. They believed in themselves.
We wrote offers on a couple properties, losing out on both to other buyers. It’s hard to get committed to a property, put all your eggs in that basket, only to hear that someone else got it. They were discouraged, but didn’t lose their drive. Soon thereafter we found a fantastic home in a great neighborhood with great schools for their two beautiful children.
45 days later the escrow closed and we enjoyed pizza, music, and watching their kids play in their new, grassy backyard.
American Dream, believed in. American Dream, realized.
The Quillans: The Fighters
Danielle Quillan pulled me aside at a social gathering a year ago and said, “Sam, we are saving for a house and we want to work with you”. Nothing warms my heart more than hearing those words, but it was a culmination of a shared past coming to fruition. Her husband Jason, Danielle, and I all entered the community sector around the same time. We sought refuge from growing pains and challenges together, usually as Sans Souci Cocktail Lounge. It was there that we encouraged each other, shared some much needed laughter, and found the courage to ‘get back out there’. Little did we know then that scrappy, character building time would be called upon again during their home buying experience.
After months of saving, Jason and Danielle reached out to me and said they were ready to purchase a home. Being the incredible planners they are, they came to me well-informed, prepared, and with a very specific vision of what they wanted their first home to be. This should be a smooth one right? Wrong.
The property they chose was a short sale. In other words, the seller had decided to work with the bank to sell their home and get out of financial trouble. As you might imagine adding a financial institution (in this case two, but we will get to that later) as party to a transaction you are asking for things to get a bit more complicated. Jason and Danielle jumped in head first.
Everything went well, right up until closing day. Come to find out that there was another lender who was on title to the home and that lender and the bank had to battle it out for how much each would be paid as a result of the sale. We aren’t talking about two friends arguing over the dinner check, this was two large financial institutions who wanted their money. This was going to take a while.
This would have been the perfect and understandable opportunity for Jason and Danielle to call it quits. How could someone make such a mistake? How can they extend our living situation indefinitely not knowing for sure that the two parties will come to an agreement? Facing the unknown they stayed in the deal and a few weeks later I gave them the keys to their first home together. Yeah, we had to help the seller pack her belongings and help her find her feral cats, but nothing could dampen the Quillans spirits at that point, they were homeowners.
Rocky Balboa said it best. “It ain’t about how about hard you hit. It’s about how hard you can get hit and keep moving forward.”
American Dream, fought for. American Dream, realized.
Living the Dream
Regardless of how the election turns out, regardless of your party affiliation I firmly believe the American Dream is in tact and will continue for generations to come as long as there are families like the Duffys and the Quillans willing to make it come true. If you have similar aspirations I would be happy to help make it as sweet as possible. Contact me today.
I’m not a lender. Repeat. I’m not a lender. However, in order for many of my clients to purchase a home a loan is involved. I thought I’d break things down to basics in the hope that my home buyers out there will have a little more of a foundation when they start thinking about getting a mortgage. And away we go!
The one thing to remember with loans is that it is a calculated (get it?) process to get one. You need to achieve synergy between your credit score, income, and money in the bank. The better that these 3 things meet up at, the better your interest rate will be which plays a large part in how much your mortgage payment will be each month.
I tend to recommend fixed rate mortgages for most of my clients as that provides some security when the market becomes more volatile, but variable rate mortgages can be advantageous if you don’t plan on staying in the property long and you are able to place yourself in a home with some embedded equity.
Most important thing to remember before we dissect the loan types available is to work with a trusted and experienced local lender. I unfortunately have had clients go through horrific experiences with lenders who are not based in Ventura County, who promise the lowest interest rates, and magically disappear when the going gets rough. You know the ones that use pop-up banners on websites featuring dancing aliens and bright pink, flashing lettering? Don’t use them. If you’re not sure who to use I have some great ones that I can recommend, just ask.
Loan Types
Without getting too technical there are four main types, FHA, VA, Conventional and Jumbo. Most transactions fall under these categories. Each of them have pros and cons, eligibility requirements, and varying features that make them work or not work for you. At the end of the day one of them should work and provide you with the entry you need to the American Dream of home ownership. Here’s a breakdown:
FHA
The first, FHA (Federal Housing Authority), is a government insured loan. It is usually issued to low to moderate income buyers and those with lower credit scores. It has a maximum loan amount that peaks at $603,750 in Ventura County. The best part is low interest rates and down payments are only 3.5%. The goal is to make home ownership possible for those not swimming in money bins. Many first time homebuyers fall into this category, but it certainly isn’t limited to first time homebuyers only. There is mortgage insurance on the life of these loans which can up your payment a bit versus using a conventional loan (discussed below in Conventional section).
One challenge that FHA buyers experience is that the home you are buying must be FHA eligible. When dealing with condominiums, townhomes, and planned urban developments (PUD) it can be tough finding communities that have maintained their eligibility. Many developments sign up when they are first built and after 2 years they don’t renew.
One workaround to this challenge is using the Fannie Mae HomeReady program. The down payment is low like an FHA, 3%, but instead of having to only buy FHA eligible properties you have a much greater selection of homes to choose from. There are income restrictions in some communities that you have to be careful to adhere to. For example, many areas of East Ventura have an income limit of around $85,300/year and RiverPark in Oxnard has no income limit at all. There is a handy website you can use to look up a property address to find out what income restrictions there are.
FHA properties can’t have any major structural issues. No cracked foundations, no homes hanging off a cliff. Also, FHA loans can’t be used for income properties, they must be the owner’s primary residence.
VA
Before even delving in to this I must express my sincere gratitude for the people who serve our country. Some of the most rewarding transactions I’ve been able to be a part of have involved working with veteran buyers and sellers. Thank you for your service.
VA (Veterans Affairs) loans are for the benefit of those who serve our country in the armed forces. Rates are in line with FHA rates, definitely on the lower side as it should be. Down payments are not required, again as it should be. In the past and in some transactions today the seller would contribute the veteran buyers’ closing costs as well.
Like FHA, VA loans must be used for the owner’s primary residence and the property is required to pass an inspection that verifies the property is free of any major structural issues and in the case of VA loans, the home must be cleared of any active termite infestations. Again, as it should be.
I highly encourage anyone who has served to check on their VA eligiblity and whenever possible take advantage of it to purchase their home.
Conventional
This Swiss Army Knife of home loans right here. That does come, however, at a cost. Down payments are usually at 20%, but there are programs out there that offer 10%, 5%, and even 3% (see Fannie Mae HomeReady program above), so that does keep your options open. The lower down payment options are restricted to single family homes and can’t be used for duplexes, triplexes, etc. 20% down, again, you have free reign.
The main advantage of conventional loans is that there isn’t any mortgage insurance added to your monthly payment. Over time you can really save some money this way. Also, you can use this type of loan for investment properties, distressed fixers, and land.
Conventional loans require higher credit scores, usually around 700 and up, and that scale usually slides by the amount of money you are willing to put down. Interest rates are slightly higher than FHA/VA, but with more money down in this scenario monthly payments remain very manageable in comparison.
Like FHA/VA conventional home loans are backed by federal agencies and allow lenders to be a little more flexible when it comes to qualifying.
Jumbo
As the name states this is for the home buyers that are looking to purchase something outside of the limits of the first three we’ve discussed. These loans are typically reserved for higher end properties which are mainly more expensive and require more money to purchase. These tend to fall in the sweet spot for buyers that are extremely qualified, but don’t have the ability to throw down all cash to purchase a home at that price point.
Since these loans aren’t backed by federal agencies the bank is little more exposed and as you might imagine, they are more strict with giving these out. Higher credit scores, income, and lower debt-to-income ratios come into play here. For most borrowers looking at these loans though these factors are not an issue.
Interest rates can be a bit higher, again because the bank is more at risk, but this can certainly depend more on the buyer’s financial situation. The banks love these types of clients as they tend to purchase more products than a mortgage like wealth management services and will do what it takes to earn their business.
Fund the Fun
I hope you found this remedial breakdown helpful, but as I said in the beginning I am in no way an expert in all things home loans. There are some amazing products out there that I didn’t cover including down payment assistance and special loan programs for teachers, police officers, and fire fighters. The best thing to do is to reach out to me and allow me the opportunity to connect you with some of the best lenders in Ventura County that offer the best programs that fit your situation. As you can see home loans is not a one-size-fits-all kind of thing. They all, however, offer an incredible thing – providing your family a home that will become the backdrop for your life and when they fund the fun can begin.
Before Google Maps, and it is hard to imagine a time without it, we would have to have a map with us in the car. Thomas Guides graced the glove compartments of every vehicle on the road and spinning map displays greeted you at the checkout stand of every gas station. The gas station clerk was expected to know how to get you back to the Interstate and yes, us men were supposed to be hesitant to ask him for directions. So here I am a gas station clerk/REALTOR® at your service, ready to tell you to just take a left at Pre-Approval Street and a right Dream Home Drive. All you need to do is summon the courage to suppress your manhood (fellas) or leave hubby in the car and handle business yourself (ladies). I picture the conversation going a little something like this:
Hey Mister, you mind pointing us in the right direction to buy our first home?
Sure can Mr. & Mrs. First Time Homebuyer and better yet, in the time it would take to fill your tank l’ll give you a roadmap which will have a series of steps that will get you there safely and most importantly, successfully.
Alright, here we go. Turn by turn.
Turn 1: Pick Your Road Dog
A road dog, also commonly known as wing man, is your trusted companion and guide on a journey. In a real estate transaction that is what your real estate agent should be. Road dogs don’t disappear when things get hard or just tell you things you want to hear. They stick with you from the start of the journey to the end and look out for you. Make sure you start things out right and pick an agent who has those types of principles. Are you going to be handed off to an assistant? Do they have time to answer your questions and really guide you through the process? These are a few of many questions you should ask before making a decision on who you choose to hit the road with.
Many buyers make the mistake of taking to the internet first and get lost in the sea of real estate portals which tend to mislead and misinform their visitors. Zillow, Trulia, and the like have good intentions but when you don’t know what you are looking for or understand the communities you are considering you are better off working with an agent who can provide you with accurate insight and direction as we have our feet on the ground and really know what is going on in the market.
Turn 2: Get the Moola
First, let me tell you why I said ‘local’. I’ve seen enough dancing alien pop-up banner ads on websites from lenders pushing low rates and promising out-of-this world loan programs than I’d like to in this lifetime. Many of these companies aren’t in the area and don’t get what it takes to loan on a property in a local market. They will feed your mind with unrealistic information and say anything to get you on the hook. I’ve had a recent experience with a client who’s also a close friend that worked with a company like this and just a few weeks from closing told us they couldn’t make the loan work and forced my client to lose her deposit. I’m still haunted by this experience to this day and don’t want to see it happen to anyone else.
Before you set foot in a home that’s for sale you need to know what your budget is. You don’t want to experience the disappointment that comes with finding a home you love and finding out you can’t afford it. On the flip side you might be able to afford more home than what you’ve been looking at. No matter what, knowing what your price range should be is better that not knowing. As your agent it helps me narrow down the communities you can choose from and only show you homes that are in that comfort zone. You too will be able to focus more on the homes that work for you, and just like those crazy couples on HGTV’s House Hunters, start working on your ‘wish list’.
At this meeting with the lender they will review your credit scores, talk about different programs available, and after reviewing this information, will be able to give you a pre-approval letter that shows how much home you can buy. This is important to have at the ready because when homes come on the market that are priced well, they move fast. If you try to meet with a lender after you’ve seen the home of dreams you’ll likely lose it to another buyer who has completed this step already that was able to make an offer immediately.
If you are thinking about taking this turn, please make sure you reach out to Dawn Peck from Guild Mortgage and say Sam Benner sent ‘cha. She is especially great with first time homebuyers.
Turn 3: Find ‘The One’
Now that I have your ‘wish list’ it is time to find your dream home. What I do is put your criteria into the MLS (Multiple Listing Service) where homes are put up for sale and I’ll comb through it to find any possible suitors. Most of the time we have a few promising ones to choose from, but if we don’t I save your criteria in the database and anytime something new comes on the market that matches you get an email instantly.
Let’s say we find a few that work? Now it is time to test your sense of smell…
The ‘Smell Test’ refers to the very important step of seeing a house in person, of course then is the only moment you have a chance to smell it. This is your chance to really get a feel of the home, very different than experiencing it online. There have been many occasions where buyers I’m working with will dismiss a home based on how it looks online and have been quick to regret that choice once they are able to see it in person. It doesn’t hurt to take a chance on a home that might need some cosmetic work, but has the location and floor plan you are really after. Also, some agents don’t take the time to have professional pictures taken which might not present a home in its best light.
How many homes should you ‘smell’? It is hard to average out how many homes you should see before deciding the right one, but given too many to choose from a buying decision will not likely be made. It helps to be very specific with your agent as to the key features the home needs to have for you which can shorten the buying circle considerably. Once I have that in mind and start searching for potential candidates, I tend to focus in on 3 to 4 homes to take a whiff of. From there it is easy to compare them against each other and a clear front-runner presents itself.
A passionate love affair has begun and the process to making it all yours has begun.
Turn 4: Make ‘Em An Offer
Once you’ve selected the home of your dreams and it smells oh so perfect it is time to write an offer. This also tends to be your first interaction with the seller. After studying recent sales in the neighborhood the home is in I will make a recommendation on what a fair price to offer will be. This is one of the more tense moments of the transaction as the number being offered and what the seller thinks his home should sell for might be a bit off from one another. Also, we might have other buyers we are competing against that will influence how aggressive of a price you’d like to offer as you wouldn’t want to miss out on the home over a small difference in offer price. I usually recommend to write the offer in a way that shows that you really want the home which sends a message to the seller that you are serious and will make the process of closing the deal as painless as possible.
The offer itself is made on a purchase contract frequently referred to as the RPA (Residential Purchase Agreement). This lays out in great detail every step of the transaction and what each party will be responsible for. Timelines are also set here which are very important to adhere to. A key section is the allocation of costs which stipulates who is going to pay for what during the escrow. For buyers I recommend asking the seller to pay for a home warranty which covers anything inside the home breaking down after the sale closes. These can usually cost around $450 for the average single family home and can be upgraded to cover air-conditioning and pools and spas as well. It is a great way to make sure you are covered from anything going wonky right after you buy the home and covers you for a year from the close of escrow.
Once the RPA has been signed it is packaged with your pre-approval letter (see Turn 2) from the lender and I like to add something a little extra. I write a cover letter and enclose a photo so the seller can really see who they are going to be working with and get to know you a little bit. I’ve had many instances where I was working with a buyer who didn’t write the strongest offer, but chose us because of what was said in the letter.
The package is sent to the seller’s agent who sets a time to present it to his client. The standard waiting period to get a response is 3 days but that can be shortened or extended depending on the situation. At this point all that can be done is sit, wait, and cross your fingers. Picture yourself in the backseat of your parents’ car on a road trip trying to fight the urge to say, “Are we there yet?”. That 72-hour period sure feels like that.
Turn 5: Escrow Puts It in Neutral
In the car world neutral is one of the more underutilized gears available to the driver. The N on your gearshift doesn’t exactly make you think about things moving in the right direction, but in the real estate world the neutral third party, also known as escrow, is all about keeping the parties involved in the purchase of your home on the road to close.
Best way to understand escrow is to think Switzerland. They have no dog in this fight and are the ideal intermediary to make this process work. It handles all the money, documents, and the like in a secure place until at just the right moment they turn the property over to the buyer and the money to the seller. As you might imagine there is a lot of opportunity for people to do some pretty evil things during the course of a real estate transaction so it is great to have the escrow officer on your side making sure all of the proper steps to transfer the property from the seller to you are done correctly and ethically. Many of the future turns to be discussed here happens during the escrow process, so keep your hands and 10 and 2 and keep your eyes on the road.
My favorite escrow officer is Dora Vasquez at WVC Escrow. If you’d like to meet her, check her out here.
Turn 6: Look Under the Hood
Ever seen the movie Money Pit? Tom Hanks & Shelley Long’s characters purchase a home that on the surface appears to be the perfect home and over the course of the film turns into a complete disaster. Tom Hanks’ character reaches the peak of his madness when he watches his bathtub drop through the floor and crash into his living room.
You don’t want to go through a situation like this. It is so important that you have a licensed professional inspect your home thoroughly. These guys know their stuff. They look the home over from roof to crawlspace, attic to garage and noting all potential issues that the home presents. A report is generated which covers all of these problems in great detail and ranks them so you can see which issues present the greatest concern. There are times when a professional from a particular field might need to be brought in to give a more detailed opinion on an issue like an electrician or a plumber.
With a clear picture of the condition of the home in front of you we sit down and decide what we should ask the seller to fix for you. Where you have the best success here is asking the seller to repair any items that provide a potential health or safety concern in the home. Sellers tend to accept the responsibility for faulty electrical work or missing smoke detectors much more so than you asking for a new big screen television as you might imagine. This can be one of the more challenging steps to the transaction and where many deals cancel as buyer and seller can’t come to terms with who is responsible to handle that particular repair. As long as you make reasonable requests and don’t have a long line of buyers behind you waiting for you to get out of their way to buy the home, most sellers will bend just enough to keep the deal together.
You can elect to have the seller do the repairs in advance of the close of escrow or the seller can credit the cost of what the repairs will be and you can do them on your own time.
Repeat, do not purchase a home waiving your right to a home inspection. Peace of mind usually costs around $450 for an average single family home.
Turn 7: The Appraisal – A Number’s Game
When a loan is involved with a purchase of a home and let’s face it, most first time homebuyers are not buying a property in all cash, the lender requires an appraisal of the home to determine its value. The bank does not want to loan on a property for more than its worth. Seems fair right? Here’s where it gets tricky.
Let’s say you are buying a home and have offered a price of $500,000. Then, the appraiser comes in and based on his research of recent sales in the neighborhood and condition of the home that it is really worth $475,000. We now have an issue of value and it must be resolved in order for this deal to close.
There are 4 possible outcomes here. One, the seller reduces the price to the appraised value. Two, the buyer puts an extra $25,000 in cash into the deal to make up the difference (most first time buyers have and extra $25,000 laying around right?). Three, the buyer and seller split the difference or four, both parties cancel and move on.
Which outcome happens most? This totally depends on the situation. Again, if there is other buyers out there willing to put in the extra dough then the seller might not be that inspired to take the price reduction, however if you are the only buyer on the hook the seller might be more amenable to taking the hit so that the deal stays together.
Turn 8: Sign Your Life Away
The onus now moves to your lender who is working feverishly to get all the conditions of your loan covered so that your loan documents can be drawn. When the loan documents are ready you will most likely go the escrow officer’s office and sign them with a notary present. Once you sign your name, many times I might add, you have made a binding contract with your lender and once processed by the lender they fund your loan and the money goes into escrow.
Turn 9: The Home Stretch
You must, must, must do a final walk-through of the home before it closes. This is done 3 days before your escrow is set to close. This is your opportunity to make sure the house is in the same or better condition since your home inspection. The final walk through is especially important if you asked for repairs to be completed prior to the close of the sale or if the seller had a tenant living in the property.
I had one instance, my first ever transaction actually, where tenants were not very happy about their home being sold. They begrudgingly cooperated with every step of the sale and when it came time for them to move out, they did without a peep. The next day we do the final walk through and our jaws hit the floor. The tenants had spray painted profane wording and drawings all over the walls. Fortunately there was still time for the seller to have a painter come in and restore the walls back to their original, non-offensive color.
All graffiti aside the final walk-through is mostly a fun and exciting moment. You measure for furniture, decide where the TV is going to go, and start planning the soon-to-be epic housewarming party (I bring the taco guy…seriously).
Turn 10: You’ve Reached Your Destination
Ladies and gentlemen it is closing time! You now have a home and you can stay there. See what I did there? A little last call levity. But seriously, your documents have been recorded at the County Recorder’s office that say you are now the owner, your first mortgage payment is due, and I have the amazing pleasure of handing you your keys for the first time.
My recommendation on moving day? Hire movers! It will keep your back pointing in the same direction is now. Save precious friendships and quite possibly your relationship with your significant other from falling victim to moving day mania. It’s a thing. Look it up.
My go to in this arena is Coast Transfer & Storage. They are based in Ventura, CA and can move you across the street or across the country. Family business too which is extra cool.
I Call Shotgun!
There are few experiences more rewarding as a real estate agent than working with a first time homebuyer. To embark on a journey with someone who has never purchased a home before and see them through the eventual ups and downs to a successful close? Now, that’s why I chose this profession. The unfortunate truth is that many first time homebuyers feel lost, confused, and uncertain about how to purchase a home. I hope this roadmap has been helpful and if I can be of any help to you on your journey be sure to reach out to me, I’ll even chip in for gas.
Parents Now Can Choose Their Child’s Curricular Path
The Ventura Unified School District has introduced a magnet school program at the elementary school level. This gives parents the opportunity to choose their child’s curricular path based on their child’s passions and interests. Pretty landmark opportunity if you ask me, for 2 reasons. First, it turns my attention to my children and giving each of them the opportunity to go to a school that fits their individual wants and needs instead of both them attending the school that our home is within the boundaries of. Second, speaking of homes, imagine being able to purchase a home and not have to have that decision be made solely on what boundary school your child would be assigned to. One could call this a game-changer in the worlds of education and real estate.
One thing I love about my career in real estate is that it allows me to be a part of community projects that I’m passionate about. Nothing gets me going more than the education of our young people. As the child of a lifetime educator and now principal, I had the value of education instilled in me on a daily basis, a trait that I’m hoping to pass along to my own children. So when the director of the magnet school program approached me to assist with the marketing outreach of this program I said yes without hesitation.
We first branded the schools and the program itself, created a website, and shot a video covering the ins and outs of the program. The response has been very positive as a majority of the schools saw substantial increases in school of choice elections. Trailblazing parents saw the value of their child being involved in these great programs, all the while receiving the high level education they’ve come to expect within the Ventura Unified School District.
– The best way to learn about this exciting new program is to watch this video
Here is a small breakdown of each of the 6 magnet school academies and their unique features:
Have a future leader on your hands? Your child been immersing him or herself in technology tools? ATLAS is a great fit for you. From day one your child will get an opportunity to see themselves as a community dignitary, chief executive officer, and more all the while learning those lessons through data driven instruction using today’s hottest technology.
The scientists and engineers of tomorrow start here. STEM curriculum challenges your child to look at the world differently, studying its very makeup, in a collaborative success bound environment and yes, they do have the most adorable lab coats for the children to wear.
Using art as a tool to learn is not a new concept, but the way it is being applied to students at Montalvo could not be more cutting edge. Creativity is encouraged, critical thinking is fostered, and an appreciation of the different perspectives of the world around them allow students to express themselves through visual art, drama, music, dance and technology for the 21st century.
Imagine a student body fueled by scientific exploration and a sensitivity to the challenges in the world around them. What amazing things could they accomplish? Mound has seized this opportunity through hands-on science projects, volunteering, Spanish language classes and more allowing students to learn from diverse perspectives.
Yes, our world might be getting smaller but the importance of being able to effectively communicate in today’s global marketplace could not be greater. Students at Sheridan Way learn the traditional elementary school curriculum in three languages, English, Spanish, and Mandarin. Graduates move on middle school empowered with the skills to interact and gain the respect of the many cultures that make up the world around them.
We all know that the future of the world depends greatly on the next generation that will be challenged with its conservation. Will Rogers students are taking this challenge head on using their state of the art science lab and schoolyard habitat, all the while receiving instruction in both English and Spanish. This rigorous instruction breeds inquisitive, well rounded protectors of the Earth.
The school of choice window goes from January 8-22, 2016. You must select the school you’d like your child to attend during this window. You can apply for the school online via the VUSD (Ventura Unified School District) website at:
Will This Change Your Thoughts on Where You Want to Live?
I’m curious to see if knowing that you could choose your child’s elementary school would open you up to consider other communities during your home search. Please let me know in the comments.
The hidden jewel of Ventura is still close to the beach, but far enough removed to provide an incredible allure to families and retirees. It is an ideal blend of quiet and convenience with a healthy dash of affordability. In honor of its sunnier days than most corners of town, I will shed some light on this hidden jewel so you can effectively consider the East End of Ventura as your slice of the American Dream.
East End Geography Lesson
There are differing opinions on this but most would say that the East End begins at Victoria Avenue, up to Foothill Road, then spreading east to Wells Road and slightly beyond to Ventura’s border with Santa Paula. The 126 Freeway slices right through the middle providing added convenience for commuters. East End veterans also utilize ‘the back way’ out to the 118 freeway to work around some of the traffic congestion on the 101 in Oxnard.
East End Communities
As with any community there are many sub-communities that have their own identity, history, and lifestyle. Choosing from these is an ideal way to start your home search as each provides a completely different look and feel.
Montalvo
Framed by the 101 Freeway, Moon Drive, and Johnson Drive this is one of the more historic communities of the East End. It has had a tenuous and strained relationship with the City of Ventura, Most recently in 2012 where annexation was presented to residents and met with a polarizing response in opinion. As some of the areas are still considered unicorporated there is still some services that are maintained independently. Homes in this area typically are classically built, vintage construction methods and unique features that building of the era of 40s and 50s produces. I recently listed and sold a property at 6061 Moon Drive for Kids & Families Together, Inc. It was a duplex that was unlike any other property I worked. It was not a home that suited most buyers, but for those that saw the unique benefit found the home to be an affordable and well located opportunity.
Saticoy
Steeped in its agricultural roots, Saticoy provides an interesting mix of population. Some have been here from the beginning that staked their claim quickly as a convenient hometown, adjacent to the farmlands that make up so much of eastern part of our county. The area is made up of everything east of Saticoy Avenue, down to the Santa Clara River and up to Telegraph and Foothill Roads. Its main attractions are easy access to the 126 Freeway, affordable homes, and the nearby Saticoy Country Club. Saticoy Elementary School, is one of the City’s oldest institutions and has been transformed recently to a magnet school academy called ATLAS embedding modern technology and leadership into its curriculum.
The Northwest of the East End
The communities that make up the northwestern areas of the East End are the most sought after and for good reason. The Ventura Community Park, often called Kimball Park is considered by many to be the heartbeat of the End End. Complete with pool, bmx track, softball fields, and massive soccer fields, its development provided the connective tissue the East End needed to secure home values and the East End’s place in Ventura lore. In this community you will see homes for Ventura’s more affluent population. As you move up from the 126 Freeway to Foothill Road you have a healthy mix of spacious tract homes to custom homes featuring amazing views of the town below. This area is about as family-centric as Ventura gets which explains why its makeup is just that, families. Landmarks like Simone’s Coffee and Surf’n Yogurt are the easiest places to run into your neighbors.
Will You Surrender to the East End Effect?
One thing I experience with prospective buyers who have never lived or been exposed to the East End of town is some unfounded hesitation to embrace it as a viable option to make it their home. Often seen as no man’s land, so far removed from the Downtown district and beaches, it is a interesting moment when buyers see how much home they can afford in comparison to other Ventura communities and how quickly they can be at the sand when they want to be. Once enveloped by the peace, convenience, sunshine and community feel the East End offers, most residents never go back. Will you fall victim to the East End effect? Only time will tell.
