Make the Buyer pay the Seller’s Closing Costs

sebfreyCommentary

Make the Buyer Pay the Seller's Closing Costs

One of the major drawbacks to real estate as an investment is that it’s not a liquid asset. You can’t turn a house into a pile of cash with the click of a mouse, and when you do sell, it is generally pretty expensive to do so. So wouldn’t it be great if there were a way to make the buyer pay all the seller’s closing costs? Including about the biggest closing cost of all: the commission? When you go to sell your home, you’d be well advised to put some money into it before it hits the market, preparing it for sale. You don’t necessarily need to spend a lot of money – just doing the basics like de-cluttering, cleaning, painting, landscaping, and some easy staging will go a long way towards getting the highest price for your home. Now, you could put your home on the market after spending this money, and the possibility exists that it might not sell – but regardless, this is money you’ve spent up-front and will never recover it (unless the home is sold). Typically though, the cost of preparing your home for sale is considerably less than the closing costs: title fees, escrow fee, transfer tax, and of course, the commission. These costs can easily run 5-7% of the total sale price. Now, wouldn’t it be great if there were a way to make the buyer pay the seller’s closing costs? It sure would be! Now, I’m going to let you in on another dirty little secret: actually, … Read More

Incentives Offered to Buyers in 2013, Western Region

sebfreyCharts and Statistics

Incentives Offered to buyers in 2013, Western Region

What does it take to get a buyer to sign on the bottom line and agree to buy your home? In some parts of the country, it’s common to bribe buyers with a lot of incentives. But the data show that Incentives Offered to Buyers in 2013, Western Region USA were actually fairly modest: Source: National Association of Realtors 2013 Profile of Home Buyers and Sellers Despite what you may have heard, a full 74% of home sellers in the Western Region of the USA in 2013 offered no incentives to buyers whatsoever. When incentives were offered, the most common incentive – with 12% of sellers offering this – was a home warranty. The average home warranty price is around $400, but costs can vary anywhere from $350 to $650 (or more, for a large house with lots of expensive amenities like hot tubs, pools, etc.). A $400 concession on a $400,000 sale price is one tenth of one percent – that’s some concession! Some sellers did have to make more significant concessions: 11% offered closing cost credits, which rarely exceed 5% of the purchase price due to lending restrictions. Another 7% offered repair credits, which could run in to thousands of dollars, easily. 4% of sellers threw in some personal property – things like televisions and furnishings. The market was hot in 2013, but even in an off year, sellers do not typically offer heavy incentives to buyers in California. It’s the Golden State, and real estate continues to be in strong demand in most … Read More

Caveat Emptor for Watsonville Investors

Seb FreySanta Cruz Real Estate

They are not looking to speculate on real estate – that’s how so many people ended up getting foreclosed on in Watsonville, and in California, and in many other places throughout our glorious but fading homeland . green_eyeshades.jpg A Speculator is someone who is placing a bet – they put some money down, and there bet is that the value of whatever they buy will go up. … These clients of mine are probably not what you would call professional real estate investors – but they want to buy real estate as if they were – and after they do buy a few properties, and if they keep with it, hey, before you know it – they will be professional investors, after all, every professional has to start somewhere. … What this means for my clients is that the amount of money they can afford to pay for a property, given their higher interest rate and lower rental rates means that they can offer less for a property than they had first thought – in order to make that 10% (or near 10%, anyway) return on their investment. … And, of course, the unemployment rate in Watsonville is reported to be at 25% – that’s huge, and I think it means a lot of people are going to be sharing housing, families living with families, rather than each family having their own individual place as I’m sure they’d prefer in many cases but owing to the weak economy cannot afford to do so at the moment.

Billions, Trillions and a House in Santa Cruz

Seb FreySanta Cruz Real Estate

Flushing Money

I should have just sat there and watched as my hard-earned dollars evaporated, sucked it up, been a man, and lost all that cash, the price to pay for participating in our capitalist system. … So let me assure you – if you want to buy a house in Santa Cruz, and you have decent credit (at least a 580 FICO Score to qualify for an FHA loan, I believe) and you have the debt-to-income ratios required by the guidelines. … Mind you, the median price these days in the county is $585,000 (as of August), so it’s getting to the point where you can actually buy a habitable structure in a somewhat central location for that kind of bread. … That would leave you with a whopping loan of $482,500 and payments (all-in, including principal, interest, property tax, and insurance) of about $3,500 a month (roughly, approximately – and that’s before your considerable mortgage interest tax deduction ).

Pre-Qualification, Pre-Approval – what’s the difference?

Seb FreySanta Cruz Real Estate

There’s a big difference, and if you are looking to scoop up some real estate in today’s rocky credit market , it’s important to know the two apart. traffic_light.jpg This is something I hear all the time: “Getting a loan won’t be a problem for me.” … Pre-Qualification is basically what happens when your buddy the mortgage broker asks you how much money you make, and how much your expenses are, maybe he runs a credit report,and then issues you a spiffy letter saying “Based on So-and-So’s income, credit score, and blah blah, I have pre-qualified So-and-So for a purchase price not to exceed $XXX,XXX.” … Here’s where it gets a little rough: sometimes, even though a mortgage broker will pre-qualify you, he will write on the letter, “So-and-so is pre-approved to buy…” when in fact, they are not pre-approved to buy anything. … Here’s how to tell if you are pre-approved: 1) It took at least several days of work to get pre-approved 2) Your mortgage broker kept asking you for lots and lots of documentation 3) You have an actual loan number from an actual lender (e.g.