Category: Uncategorized

THE COST OF BUYING A HOME

The “Spring or Pre-Spring Market” which is typically the most active time of year will be kicked off after the Super Bowl. Therefore, every day, new listings will be “springing” up, posting onto the MLS (Multiple Listing Service) and then populating to your favorite search engines. It’s also the time of year when new Buyers come out from the winter lull ready to get in contract before the next school year.

When I work with first time Buyers, I often noticed that while they seem well-informed searching the Internet for that perfect home, AND are surprisingly knowledgeable about the list-to-sales price of past properties, they’re often far less well-informed about the costs of buying a home; closing costs, or the ongoing costs of ownership; annual property taxes and maintenance.

Buyers pay the full cost of title and escrow insurance which your lender will require in order to ensure clean title on the property, meaning that all liens have been paid off and most importantly, that the Sellers are actually the owners of the property and have the authority to sell it. Itimp is therefore important to read that Preliminary Title Report in the Disclosure Packet!

At the closing of your house, title/escrow will collect pro-rated property taxes, the first year of homeowners’ insurance (also required by the lender), loan origination fees and other expenses such as notary and recording fees. Altogether, you may be looking at close to 3% of purchase price. On a $1 million house, your closing fees could be as much as $30,000 and this is not money the lender folds into the loan, so budget accordingly.

“Point-of-sale ordinances” are items like sidewalk inspections (required in Piedmont and Oakland but not Berkeley), energy conservation ordinances (required in Berkeley only, known as BESO), and sewer lateral certification (required by EBMUD). Sewer lateral replacements MUST be completed within 180 days of the transfer of ownership (unless already compliant) and average between $5,000 – $8,000. These costs are typically passed along to the Buyers when there are multiple offers.

What does the Seller pay? BOTH sides of the commission as well as getting the house ready for the market such as painting, and staging which can add $15,000 – $30,000 to their out-of-pocket expenses.
So yes, buying or selling a home can be expensive, daunting and a bit overwhelming, but it’s also the best way for average Americans to accumulate wealth over time. I’m here to help you navigate the process from beginning to end and I will let you know these costs in detail before you begin your search – not after – which is what you’d expect from your trusted Real Estate advisor.

People often talk to me about their desire to renovate their home after they saw what their neighbors did, or went to an open house down the street where they were impressed by somebody’s awesome remodeling.

Sometimes it’s worth undertaking projects with a low return on investment, such as adding a new bathroom, if it improves your comfort and your home’s livability. But many cosmetic changes (say, swapping out a perfectly good set of kitchen cabinetry for another) likely won’t have a high return on investment if you sell the home. I’ve been on so many broker tours where I am amazed at the choice of quirky personal tastes. This house in Oakland below was in a great location with a view of the Bay, ideal layout and open concept living. However, even though the updates were extremely high quality, the personal choices such as the kitchen hood, sink and other finishes throughout dissuaded many buyers. This home end it up staying on the market 2 weeks more than our usual 14 days. I can bet that the sold price was less than what the sellers were hoping for with all the expensive upgrades.

Renovations often cost more than originally planned, so you should wait until you have 15 to 20 percent more than the in the bank before taking the plunge. Once the project gets underway, there’s no telling what money-draining horrors may be lurking behind the walls, from unforeseen pest damage to building code violations.

Resale value is less important in your “forever” home, but if you’re in a starter home or somewhere in the middle, it’s a good idea to consider what future buyers will want. Quirky or excessive customization—adding brightly colored tiles or vintage appliances, for example—may decrease the value of your home.

In my pursuit of yummy Asian cuisine, I was  disappointed when Osmanthus on College Ave in Rockridge closed although I can’t say I was surprised. Osmanthus never created a presence in the Rockridge food scene. The Asian fusion menu was limited, the food mediocre and the outside patio under utilized.

Therefore, I was pleasantly surprised by the new Thai restaurant in place of Osmanthus. It claims to be Thai home cooking which includes fried egg with rice (often my favorite dinner), Yeh Tai Fo (seafoood noodles with red sauce) and Lord’s Noodle (steamed glass noodles). What’s great about Yimm is the absence of MSG in their food, even the soup. This is very significant since there’s an overwhelming amount of soup stocks which are  served in restaurants have MSG.

I’ve been there now 4 times and each time the food have been satisfying. I’ve taken my co-workers there and now they’re hooked too.Yimm menu

I am often asked, “Why should I use your lender referral rather than a big bank (Wells Fargo, BofA, Chase, Citi), my mortgage broker, or a credit union? Won’t I get a better deal through one of these channels?”

I have a lot to say on this topic. Here are a some reasons why you’ll be more successful (ESPECIALLY in a seller’s market against multiple offers, such as we are now experiencing) & be more likely to get your offer accepted, your loan actually funded, & your deal closed more quickly & at lower cost using my lenders who are local, direct lending mortgage bankers & do nothing other than residential mortgage lending:

More Control:
Mortgage brokers send your loan file to a big bank or institutional investor. In so doing, they completely lose control over the process & become an intermediary, slowing down communications & abdicating to that lender’s underwriting & appraisal procedures. My direct lenders are in control of the entire process & work closely with their in-house underwriters & appraisal management company. You will have a direct line of communication.

More Choices:
Big banks & CU’s can only offer their own proprietary products, so the bank’s loan officer has no other choices or options. Mortgage bankers & direct lenders have multiple banking relationships ranging from small local lenders all the way up to large multi-national corporations. Therefore, the lenders I use have access to the largest selection of mortgage programs out there & will be much more likely to find one that fits you & your unique situation, often at lower cost to you.

Greater Incentive
Mortgage brokers you or your family have used in the past, especially if located outside your purchase area, are not incentivized to work hard for a Realtor® they don’t know & from whom they will never get referral business. On the other hand, when you work with a Realtor®/Lender team both professionals are strongly motivated to get the job done quickly & efficiently.

Smoother Process: If a big bank’s back room underwriters say, “no” to you (& that usually won’t happen until you are weeks into the process & often does happen even though you were pre-approved), you have to start over from square one with someone else, resubmitting ALL your documentation & applying for a loan all over again. This will put your deposit at risk. You could lose tens of thousands of dollars. With a mortgage banker, your information & documentation is submitted only once and if there is a problem with your file, we will know about it much sooner.

Faster Process: A good loan officer often makes the difference between a deal that closes on time vs. one that falls apart. My lenders can close in as little 14 days! The big banks & especially the credit unions can & will take much longer (30-45 days), even though they’ll promise otherwise. This is a very important difference. When I write an offer for you on a property you want to purchase, we’ll be much more likely to have our offer accepted by the seller who is always interested in a quick close.

Personal Service:
A mortgage banker is in greater control of the process from application to funding than is a mortgage broker or a loan officer from a big bank or CU. A mortgage banker personally knows & works hand-in-hand with his or her processors & underwriters, often working from desks in the same room. The file does not get handed off from department to department. Also, a mortgage banker often knows the funders personally & maintains a friendly, trusting, professional relationship with them.

Direct Service: You will always communicate directly with the individual to whom I am referring you. You will not be working with a huge, segmented, bureaucratic company that will hand you off from one person to the next so you’ll never become a faceless file or an impersonal number. My preferred lender will be there for you from start to finish.

Consistent Service: My lenders are required by law to pass financial & personal background checks as well as licensing examinations. They are required to complete annual professional development education courses. Employees of large banks work under no such requirements & in fact are often transferred out of your transaction mid-stream, leaving your file in the hands of someone unfamiliar with all that has transpired to-date. This often results in requests for documentation you have already provided but which has now become “stale.” Very frustrating!

Expert Service: Experience matters! My lenders have been originating mortgages for over 15 years & their companies have been in business for over 25 years. So while they might be small compared to the big banks, they are established, stable, & focused on servicing their customers, not “selling” them.

Better Appraisals: My lenders use only hyper-local appraisers who are much more likely to rely on appropriate comparable sales data & issue appraisals that support your offer. Big banks & CU’s (whether you go to them directly or via a mortgage broker) hire underpaid, over-worked, high-volume, less experienced appraisers who are not as familiar with our unique East Bay micro-neighborhoods & often pull inappropriate comps, thus scuttling many a deal. This is one of the most important distinctions & if nothing else convinces you, this one point certainly should.

Appropriate Loan Locking: My lenders will not automatically lock your loan rate upon receipt of your ratified purchase contract as will other lenders, but will watch the bond market & corporate bulletins to advise you on the best time to lock. This can save you thousands & thousands of dollars.

Timely Pre-approval Letters: My lending partners will provide me with a customized pre-approval letter for the particular property of interest & at the specific offer price we’ve chosen & will do so right away at practically any time. Loan Officers from the big banks & credit unions work banker’s hours, of course, & may not be available when we need them. This could easily cost you the house you want to buy. My lenders will place a call & a follow-up email to the listing agent “selling” you as a highly qualified borrower who has selected a lender that can & will close on time.