You Do Not Need 20% Down To Buy NOW!

A survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today. 

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO Scores

The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in March had a credit score of 753, while FHA mortgages closed with a 685 score. The average across all loans closed in March was 722. The graph below shows how the average FICO Score required has come down over the last 12 months and has stayed around 722 for the last six months.

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, sit down with a professional who can help you understand your true options.

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Want to see all the homes currently listed for sale? Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You can always call us for a FREE home buying or selling consultation at (951) 990-9492 to answer any of your real estate questions.​

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Selling Your Home? Make Sure the Price Is Right!

In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.

There is no “later.”

Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

John Knight, recipient of the University Distinguished Faculty Award from theEberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered their price. His article, Listing Price, Time on Market and Ultimate Selling Price, published in Real Estate Economics revealed:

“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”

Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think,“Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.”Pricing it right from the start eliminates these challenges.

Don’t build “negotiation room” into the price.

Many sellers say that they want to price their home high in order to have“negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.

Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!

One great way to see this is with the chart below. The higher you price your home over its market value, the less potential buyers will actually see your home when searching.

A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the“right” to purchase your house.

Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

The Price is Right

Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Let's get together to discuss what is happening in the housing market and how it applies to your home.

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Want to see all the homes currently listed for sale? Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You can always call us for a FREE home buying or selling consultation at (951) 990-9492 to answer any of your real estate questions.​

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Home Prices Are Up…but there is a Challenge

Home values continue to climb and are projected to increase by about 5% over the next twelve months. That is great news for anyone who owns a home. However, it could present a challenge for a family trying to sell their house.

If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the sales price when performing the appraisal for the bank.

The National Association of Realtors (NAR) recently released informationrevealing just how prominent the challenge is in today’s market.

And the challenge is deepening…
Bottom Line

Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months.

As we can see the difference has increased each of the last two months.

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let's meet up so I can guide you through this, and any other obstacle that may arise.

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Want to see all the homes currently listed for sale? Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You can always call us for a FREE home buying or selling consultation at (951) 990-9492 to answer any of your real estate questions.​

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Buying a Home is 21% Less Expensive Than Renting!

In the latest Rent vs. Buy Report from Trulia, they explained that home ownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers actually show that the range is an average of 5% less expensive in Orange County (CA) all the way up to 46% in Houston (TX), and 36% Nationwide. Here in Riverside and San Bernardino Counties, buying is 21% less expensive than renting!

Other interesting findings in the report include:

• Interest rates have remained low and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.

• Some markets may tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.

• Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989. 

Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.

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Want to see all the homes currently listed for sale? Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You can always call us for a FREE home buying or selling consultation at (951) 990-9492 to answer any of your real estate questions.​

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Inland Empire Real Estate: Can You Trust the Zillow, Trulia and Realtor.com Home Evaluations?

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Want to see all the homes currently listed for sale? Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You can always call us for a FREE home buying or selling consultation at (951) 990-9492 to answer any of your real estate questions.​

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What is the 90-day Anti-Flip Rule?

What is the FHA's 90 Day Anti-Flip Rule?

In the 1990s, unscrupulous investors were buying run-down houses, slapping a little paint on the outside and reselling them a few days later (often using fraudulent appraisals) for inflated prices and profits. Their buyers, who had obtained FHA-backed mortgages, often couldn't afford the payments and defaulted.

To combat this, the FHA has enforced a 90-day "no-flip" rule for a number of years now (also called a "seasoning" rule) which prevents a buyer using FHA financing from purchasing a home from an investor unless the investor has owned the property for at least 90 days. The FHA decided not to extend the anti-flipping waiver last year, and it effectively disappeared again on January 1st of 2015. 

So, what's the lesson to be learned for real estate investors and buyers?

If you are an investor and want to sell a property before 90 days, you may want to take extra care to review all of the financing terms of any offers you receive. Though an offer might be higher in purchase price, if it's an FHA offer that requires you to wait an extra 30-60 days before you can sell, you may end up netting LESS money because of the increased holding costs while waiting.

For FHA buyers it means you and your agent need to consider when a home was last purchased in your search criteria. The 90-day no flip rule definitely limits the pool of qualified buyers for investor properties, so they may be willing to wait out the 90 days But if an offer similar to yours comes in from any other finance source it will carry quite a bit more weight than yours. And in a seller's market, with multiple offers, this can put you in a very tough bidding situation.

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I hope this video has been helpful If you have any other questions ... shoot us an email, click a link, or give us a call. As always, we're here to serve .. with expert advice and guaranteed results! 

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Want to see all the homes currently listed for sale? Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You can always call us for a FREE home buying or selling consultation at (951) 990-9492 to answer any of your real estate questions.​

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