Friday, January 30, 2009

When should you walk away from an escrow?

I talk to many buyers who show some hesitation when writing an offer. I think they are worried that they will be stuck with this home, and are trying to make a decision about such an important purchase in the 15 minutes they were in the home. How can anyone be expected to do that?

Buyers need to understand that writing the offer is only the first step to determining if this is a good purchase. I like to tell my buyers that purchasing a home is a series of "yes" answers as we move through the process. As soon as we hit a "no" we close escrow and move on. My buyers and I are on the same side....we are both hoping this is the right home, but if it's not, let's go find the right one!! The fear is that the agent is so invested in making the sale that they will push you into a bad deal....if you think that about your agent, then find a new agent!! A great agent should be concerned about the well-being of their client and thus earn their business for life.

So as we enter the escrow, there are important discovery elements, any one of which could be a deal breaker. The two most important are the home inspection and the loan. In this market, you might add a third to tha,t which is the appraisal. The last thing we want to do is purchase a home for more than it's worth, and the appraiser will give us that information. If it comes back low, we can go back and renegotiate the price.

There seems to be a misunderstanding about the contingency period. With so many homes listed "as-is," many buyers are under the impression that they have to accept the condition of the home once they make the offer. This is not true. Regardless of whether this is a seller with equity, a foreclosure, or a even short sale...we can always ask for concessions based on what we find in the home inspection. What if the home inspection uncovers toxic mold? or a slab leak? or dangerous electrical wiring? Are we going to buy this home only to have major repairs when we walk in the door? Maybe, maybe not. The home inspection is to find out the condition of the home so we can determine if it's a project we want to tackle. Or not....if not, let's walk away. Most major problems can be addressed in escrow and we can get money or repairs done. If not...then let's move on.

The other major misunderstanding buyers have is concerning the loan. You are not obligated to ANY loan you can get. California purchase offers include loan conditions right on the front page. We tell the seller up front what kind of loan we want to get. They accept or reject these terms. While sub-prime loans are gone, loans do vary in interest rates and terms. You will work with your lender to find a program that fits your budget. If you can't find a loan you are comfortable with, we move on. Interest rates and loan programs change constantly, and interest rate available in the morning could be gone by afternoon. Until you have final loan approval on a loan you like...we don't remove the loan contingency.

Lastly....I would like to stress are trying to decide if this is the perfect home for you and your family often with a 10-15 minute visit to the house, often after seeing 5-8 other homes the same day. A home you thought was perfect at 5pm on Saturday afternoon, might be wrong on Monday morning when the rush hour traffic races past the backyard fence. During the contingency period, we need to visit the home often. Find out if the afternoon sun is too hot in the kitchen, is the master bedroom dark in the morning, traffic noise? school noise? All situations that might cause you to reconsider the home. And there is always the panic attack....yep, it happens :).

There is alot to do after you have an accepted offer! There will be times when things just don't fit! I would suggest that you walk away when you realize you are forcing a deal! There is a lot of inventory right now and you don't need to settle.

Wednesday, January 28, 2009

In Trouble? Upside Down in Equity? Don't be Afraid to call an Agent!

This is a scary time for many homeowners...and there are so many advertisements offering help....for a price. There is one free avenue for information, your real estate agent. Don't be afraid to call one!

Real estate agents are professionals in this industry and believe me, they are informed about the latest news. We are watching for new programs, new loan options, new modification options, trends in Short Sales and even Foreclosure statistics. And they will talk to you for free. We are not attorneys, we don't charge you a fee. If you trusted your agent to help you buy your home, call that person for help now.

During the lastest real estate boom there was an influx of new real estate agents, but many of them are gone. The ones who are here and thriving are the experienced agents who have built a reputation and have referrals. They understand that the relationship between client and agent is primary. This often means that they will not make any instant money by offering advice....but by servicing the client who needs help now, they are building their business. It's critical that we offer the best advice we have and build on the trust you have in us.

We can help you navigate through the loan modification process, help you find a legitimate company to help you, or perhaps advise you how to do it yourself. We can show you how to get a reduction in property taxes based on lower home values. We can give you information on the current prices in your neighborhood. We can recommend a loan officer for a good refinance. We can help you sell your house either with equity, or if necessary, as a short sale.

Real estate agents are a great resource for us! We were there when you needed us before, and we are there now.

Monday, January 26, 2009

What does the term "as-is" mean?

One of the most common questions we get when working with buyers is about the listing statement "as-is." This is one of the most frequently misunderstood comments in the listing description. Most people assume that when an offer is given on a property advertised "as-is," that you have to have done all inspections necessary prior to the offer. This is NOT true. A good buyer's agent will make sure that the home inspection contingency is preserved.

So what does "as-is" really mean? First, in a bank-owned property it's quite common to see "as-is" language. They will also include clauses to clarify that they have not occupied the home and have no first hand knowledge of its condition. They will also outline what, if any, seller disclosures they will provide for the buyer. Seller disclosures are required in sales transactions in California and if a bank does have knowledge of an existing problem, perhaps from a previous inspection, they are still obligated to disclose this to the buyer. The main purpose of the "as-is" clause is to pre-warn the buyer that the bank will not make repairs nor concessions based on the results of a home inspection.

During the home inspection contingency period (normally 17 days) we will do as many different inspections as needed. We will start with a comprehensive home inspection by a licensed professional. This might lead to other suggested inspections or estimates. These can include electrical, furnace, roof and even mold inspections. More and more banks are also refusing to pay for termite and other wood destroying pest inspections and repairs. If this is the case, we would want to get a termite company out there as well.

Once the inspections are all done and we find there are some problems, is the buyer forced to choose between the problems or walking away because of the "as-is" language in the contract. Maybe!!! It really depends on the problem. Everything in real estate is negotiable, so we negotiate. As mentioned above, if the seller (in this case the bank) is aware of existing problems with the property, they must disclose it to all buyers. If we find a mold problem for instance, often a bank will provide a credit or even remediate the problem, because if we walk away they will have disclose our report to all future buyers. They often decide it's better to just keep the buyer they have. The same might be true of a major electrical problem, slab leak, termite infestation...if it makes financial sense they will still negotiate with us.

What if we see "as-is" on a short sale? How does that affect the buyer? This is trickier! Remember that in a short sale, the bank doesn't own the property yet and in accepting a settlement, they have to deduct all the real estate expenses from their profit. The sellers are getting no money out of the sale, so they have no incentive to pay for any repairs out of their pocket. This is the toughest situation to get some concessions for repairs, but the bank is trying to mitigate their loss, so they will look at reasonable requests for concessions. Again, mold is a common issue where the bank will include some reduction in proceeds to repair the problem and complete the transaction.

Finally, in this market we are seeing more sellers with equity using the phrase "as-is." This is an effort to set the expectation with the buyers not to ask. But, we will anyway! As mentioned before, everything in real estate is negotiable. In better markets, buyers were used to expecting the seller to replace screens with tears, replace loose tiles and other small items of wear and tear. This could lead to 100s of dollars of cost for the sellers. With so many sellers having big drops in their equity, they often will place "as-is" in the listing to prevent such requests. In case where there are handyman issues, as just mentioned, we often ask for a $500-1000 credit in escrow. This is usually easier for the sellers to agree to than a itemized list which can seem nit-picking. It's all in the presentation. Larger problems again are usually something sellers understand and will normally address.

Obviously we need to pay attention to all information in the home listing and we are not trying to minimize the importance of an "as-is" clause. But it doesn't mean you are buying a problem, sight unseen.

Friday, January 23, 2009

What can your buyer's agent do for you!

I know that this market is unusual, confusing and frustrating. The good news, many "agent" who were really just order-takers have had to leave the industry. This should leave a group of experience, committed agents left to help you. This is a positive step for our market...more experience means better service and smoother escrows. But, if you haven't found the perfect agent yet, and are wondering what they can do for you, I'm hoping to give you an understanding of what to expect from your agent.

Obviously an agent will work with you to put together a list of possible homes to go see. Great Western Realty Group specializes in using the latest technology for Internet searches. Many buyers do a lot of the "leg work" on the Internet before they begin the physical search. Once you contact us with your specific criteria, your agent will create a personalized website for you to begin using at your leisure. This site will be linked to the Southern California MLS and you will receive all new and current listings directly on this site.

You will have the capability to sort home into favorites and possibilities. You can also make notes directly on the listings, email them to your agent for further questions and map them if you would like to drive by them yourself. We like to use this tool to develop a working list of homes you might like to see in person. It allows your agent to know in advance what interests you, we can offer suggestions and do back ground research prior to meeting with you. This system allows you to go at your own pace, with no pressure, often we will work with clients for over a year while they watch the market. Especially in this market, the ability to keep an eye on prices and inventory will lead to an educated purchase.

Once we have identified interesting homes, we will go see them. At this point you might write an offer on one, or more of the homes you see. The Southern California Market has seen drastic drops in price, but there has also been a flurry of offers, no reason not to explore all homes you have interest in. Remember that listing prices are simply the sellers' wish price, not the one they might actually take. The next step would be counter offers or acceptance of our offer. For the purposes of this article, let's assume you found a home at a good price and are ready to open escrow.

Escrow is the term for the closing process in California, other states use attorneys. An escrow officer and number will be assigned to you. The escrow officer acts as an impartial third party whose job it is to make sure that the terms we have all agreed to are carried out. They work with buyer and seller agents to get the full contract and deposit. They will order a title report and title insurance to make sure the seller has the legal right to sell the property. They will also check for liens on the property and make sure they are released. They talk to the current and future lenders, order payoffs and gather information necessary for the new loan documents. They also order Home Owner Association documents to verify that the association is not being sued nor incurring unforeseen expenses which might cause your dues to increase. All monies also go through escrow.

While escrow is handling all this, your agent will work with you to do all home inspections necessary for you to find out the quality of the home you are buying. This should always include a home inspection by a licensed home inspector. You might also need a mold inspection, if there is evidence of moisture problems. If the home is on a hill and/or if you notice cracking in the walls or concrete, you might be advised to get a geological survey. Other inspections could include termite, electrical or plumbing. The home inspection time is also an opportunity to get estimates for improvements or repairs.

The other important activity during this time is finding a loan. You have probably already begun this process by pre-qualifying with a loan officer, but now is the time to get final loan approval. Once you find loan program that fits your budget, your lender will order an appraisal. The lender will want to make sure that the home is worth what you are willing to pay for it. This is especially critical in our market. The last thing we want to do is over pay.

When all these items are done, and meet your approval, we will remove the contingencies and we "coast to the close." Your Great Western Realty agent will be available for you at all times during this process. I know you've heard stories about agents that disappear as soon as you sign an offer, but the great agents will always be there to help you through any hiccups that come along. We want you to find the home buying experience an easy, stress free one. And once you close escrow and have moved into your new home, we want that stress free feeling to every buyer who buys a home through a Great Western Realty Group Agent will have a complimentary home warranty on the home.

A home warranty will cover you for all your major systems in the house for one year....and you can renew it if you like. Electrical, Air Conditioning, Furnace, Plumbing, Pool/Spa Systems and many other major items. This is just one more way your agent makes sure you are a satisfied home owner.

Please visit the search page of our site to get started, search for active listings.....and if you like, register your criteria for your free website.

We look forward to working with you!


Wednesday, January 21, 2009

Why Buy a Home in Mission Viejo, California

Beautiful Mission Viejo has been one of the most desirable family oriented cities since it was first built in the mid 1960s. As one of the very first master planned communities, Mission Viejo set the example for the surrounding cities with every park, school and shopping center designed well before they came into reality.

There are many reasons why families in particular love living in Mission Viejo. The first, and most important, is that it's a very safe city. In fact in 2007 it was named the safest city in the United States. Parents can feel comfortable allowing their children to play out front or walk to the park. During the summer months, you will find children running unsupervised in the parks and the lake, this has become obsolete in most cities of America.

Another big draw is the school districts and the extras they are able to offer the students. There are two school districts that service Mission Viejo, The Saddleback School District and Capistrano Valley School District. Both have excellent schools and many that have been awarded the title of California Distinguished School. Mission Viejo High School is well known for it's athletic programs, especially the football team, the Diablos. Many college and professional players received their start in Mission Viejo.

Capistrano Valley School District also offers wonderful opportunities for students. One such opportunity is the ability to participate in their music program. All elementary schools in the district offer bands and orchestras as early as 4th grade. By the time the students are in middle school there are even more classes available. In fact, Newhart Middle School employs two full time music teacher and have 6 different music classes. There is also a Jazz Band that meets as an extra curricular class after school.

Any discussion of Mission Viejo must include extra curricular sports. Most families participate in at least one after school sports club. There are basketball leagues, Pop Warner Football and of course, AYSO soccer. In addition the world reknown Mission Viejo Nadadores Swim Team has produced Olympic Gold Medalists and any child interested in competitive swimming would find the facilities exceptional. The swim center also offers many swimming instruction classes and beginning swim teams through the Swim America clubs.

Finally, perhaps the most beautiful feature of Mission Viejo is the Lake. Lake Mission Viejo is a private lake open only to residents and their guests. There are two beach areas, one that is open all year. There are free concerts and movies in the summer, white sand beaches with lifeguards, and boats to rent. The association stocks the lake throughout the year with trout and bass and hosts fishing contests. There are also quite areas where you can fish year round.

During the summer and school holidays, the Mission Viejo Lake Association offers day programs including Junior Life Guards, sports programs and basic "hanging at the lake." They also organize special day trips to Disneyland, Knott's Berry Farm, and other Southern California places of fun. The lake also offers enrichment classes year round, such as Mommy and Me, Adult Yoga, Intro to Basketball for Elementary Students...etc. And the best part? The Mission Viejo Lake Association dues are only $222/year, not a month, a YEAR.

We hope this has given you some understanding of the quality of life you and your family can find in Mission Viejo. Please contact a Great Western Realty agent to help you begin your home search in this special family city.

Monday, January 19, 2009

Buyers!! Are you waiting? Sellers!! Are you scared?

We all know the answer to these questions is "YES." At least to some degree. Which is understandable! It also follows that many agents are seeing their leads slow down because the news is constantly telling the public how "desperate" agents are. Wow...a sales industry who's DESPERATE, that's going to get us lots of contact. :)

Well, all of the above might be true, but it leaves many potential....future...clients out in the dark. We at Great Western Realty Group are looking to the future, as well as the present. We are not just servicing the active, immediate buyer or seller. Our philosophy is that if we provide the future buyer or seller reliable information now, without pressure, they will come to us when they are ready to move. This takes an investment, and yes, some of those potential clients will use someone else. But perhaps they will remember us when they talk to friends, referrals are critical to real estate.

How are we providing this service? First our website!
Our website is full of the latest real estate information. We have a state-of-the-art search feature and many pages of information on such subjects as Down Payment Assistance, Loan Programs and low-down FHA loans, School information, Home Inspection tips. There is an easy submission form as well if you don't see the answer to your question.

Then, if you would like a powerful tool for watching the market directly from the MLS, we will set up a custom website for you linked to the MLS. You can give us your specific criteria and see new listings in real time as they hit the MLS. From this site, you can email us directly to ask questions, sort listings into favorites and possibilities, make your own notes and even reject homes that are wrong.

If you are a seller.....let's put a search on this site that best reflects your home. This can be the exact tract, or similar homes in your city. This allows you to watch the home prices and gives you valuable information about how the market is trending. Once we do list your home, you can continue to use this tool to keep abreast of new listings that are competing with your home.
Another way to service our future clients, we have agents available who can do some previewing with you. "Window Shopping" if you will. Why not go see some homes that are in your price range. See what is available now! You might be surprised as to what you can get! You might also find that the neighborhoods look different in person than they do on the internet, and then we can change your criteria.

Doing the right things all the time, providing excellent service without pressure....this is why our Great Western Realty Group members are continuing to thrive, even in this market. And by helping buyers and sellers prepare for the future, we are making sure we have educated clients for the upcoming markets.

Please contact us at for more information about our free websites!


Saturday, January 17, 2009

Urgent!!! HR 600 Will Restore Down Payment Assistance

Up until the Housing and Economic Recovery Act of 2008 was passed, there existed a little known program called Nehemiah Down Payment Assistance. Nehemiah is a charity organization which gives the down payment for FHA loans to the borrowers. This is not a loan, but a gift. The money was donated to the Nehemiah Foundation by the seller, in escrow and then the Nehemiah Group gifted it to the buyer. This worked in a similair way to seller paid closing costs in that it was often "financed" by raising the offer price to compensate. This allowed true 100% financing. Because it was a gift, this met the qualifications for the FHA down payment requirement which was just raised to 3.5%.
The Housing and Economic Recovery Act eliminated this and other Down Payment Assistance (DPA) programs. Today Representative Al Green introduced a new bill H.R. 600 which is a 2009 version of H.R. 6694 which reinstates the down payment assistance by Nehemiah and other DPA groups. They are proposing some reforms, such as a minimum FICO score, but this would dramatically help our markets.
What is often misunderstood in discussing low/no money down loans, is that FHA loan are for people who qualify, they are NOT sub-prime loans. They have to have a job, bank account statements, tax returns....all the old documentation we used to require. They also have PMI (Private Mortgage Insurance). Now with the loan limits much higher in some markets, this has the potential to bring in a whole new group of qualified buyers to the table.
Here is the link to the site DPA Ground Swell 2 I urge all professionals and consumers to support this worthwhile Bill. H.R. 600. If we can get even another 10% into the buyer pool, we can really make some headway toward the recovery of our housing market.
Thank you!!!

Friday, January 16, 2009

Buyers!!! Are you really getting a great Home Inspection?

It's rare that a purcahse offer is accepted without allowing for a home inspection contingency. Just because they are advertising "As-is" does NOT mean that you are not entitled to investigate the condition of the home. If the home is a bank-owned, this investigation is especially important because they do not give you disclosures, they do not have any first hand knowledge of problems and you will have to discover them completely on your own.

This brings us to the next problem. There are many people out there who advertise as home inspectors. And it's sad to say that you may not get the best direction from your agent. Many agents, especially in this market, are afraid to offer a truly GREAT inspector for fear that you might find something out that will scare you out of the home. I understand, but at the same time we agents should be motivated to serve our buyers and their interests. I think we earn loyalty from a buyer who receives a great inspection from an agent and does decide to leave an escrow.
Beware of "visual inspections." Frankly, we can all do that! "Hum, that looks like water once leaked through the ceiling." Is that really the level of inspection you need when purchasing the biggest investment you have, and your HOME? I have an inspector I have used for years and trust completely. He is also one of the few certified mold experts in Southern California. While a routine inspection will not include mold, because of this training, he will alert you to possible mold situations and can recommend further mold investigations if he feels the situation warrants it.

A thorough inspection should include the following:

1) Turn on all appliances and check temperatures.
2) Check the furnace, air conditioning systems and check temperatures.
3) Check the water heater for pressure.
4) Run sprinklers, outside lighting.
5) Turn on all lights and fixtures.
6) Inspect all plumbing and search for evidence of water damage.
7) Check smoke detectors and notice safety issue.
8) Notice cracks in patios, walls, floor and ceilings and make recommendations if further inspection should be done.
9) Climb onto the roof, crawl through the attic, and check storage areas in garage.

In short...this is just the beginning of a good inspection. Then you should get a complete report of what was done and the results so you can make an intelligent decision. And remember, just because a listing claims to be "As-is" doesn't mean you can't negotiate for repairs. Many banks will make concessions for large issues, such as mold or geological problems. Once the bank is made aware of a problem like this, they will have to disclose it to future buyers, so they do have incentive to work with you. FHA will not finance a home with a mold problem, so that again is leverage to use with the bank.

A great buyer's agent knows that the worst phone call to get is the one after the close of escrow with an unhappy buyer due to a foreseeable problem. The best way to avoid that call is to provide the best possible professionals to advise the buyer in advance. A thorough home inspection is just one of those steps and perhaps the most important.

Thursday, January 15, 2009

Staging your home to sell, with a small budget

Realtors have employed professional stagers as part of their service to sell homes for years. In this market, price is king. Buyers expect homes to be in bad shape; they are becoming savvy to the fact that a bank is not going to upgrade a home, that a short sale is likely to have deferred maintenance, and sellers with equity do not want to spend any of their equity making repairs. We are seeing "as-is" on listings routinely. Your Great Western Realty agent will guide you when they do the initial walk-through.

But with the largest inventory in recent years, sellers still want to stand out. Professional staging can cost several thousand dollars and realtors are no longer willing to front that cost when they are unsure about a sale. Let's discuss some ideas that are budget conscious.

First thing to remember is that the stagers themselves are feeling the pinch. It can't hurt to ask one to come over and give you an estimate. They have inventory that is not being used and they might be willing to lower their prices considerably. If they supply you with the staging items for a reasonable cost, then listen to their advice, ideas. As they walk around your home, take mental notes of what they would put/subtract to make the home more interesting. Then see if you can find those items in your home, or a friend's home. Borrow what you can!

Always unclutter.....this is not a new suggestion and costs you nothing. If you must, pile things in your garage. If you do this though, try and still allow potential buyers the ability to see special aspects to your garage, such as extra storage or work area. Take all unessential knick-knacks off of tables and shelves.

Look through magazines or even catalogs for ideas. Take the ideas from these high end stores and look for similar items in discount stores. Don't feel like you need to overdo, just a few nice touches. Some ideas might be a clear bowl filled with lemons or apples. Treat your family to a fruit bowl and keep filled. Find inexpensive throw pillows to tie in a color pattern, take extras off the counters in the kitchen.

Hire an interior designer for an hour. Most designers have an hourly rate for advice. Use them! They are expert at using what you already have, they might also have floor items they could lend you in exchange for some minor advertising, such as business cards or a small sign. Offer to list them on fliers, your agent will be happy to accommodate this as they want the home to sell too.

These are just a few ideas! Check out the Seller's Tips at

Wednesday, January 14, 2009

Buying a House

Are you thinking of buying a new home in this market? Unsure about where to start? Start by visiting for great resouces. At this site you can search, save and research homes directly from the MLS. These listings are collected from all the real estate brokers....Century 21, Keller-Williams, Coldwell Banker, Tarbell, RE/MAX, First Team, etc. Search for listings, mortgage information and other resources. Check out the new Foreclosure Search too!
Most people think that buying a home is ONE BIG decision when really it's a series of smaller decisions. First you make a decision to write an offer, and at what price. Then if they counter, you decide whether to accept the counter offer or not. Once we open escrow, there are many other small decisions. We get seller decide if you want to continue based on the information. We have a home decide if the condition of the house is accetable. You apply for a home loan...and then decide if the terms will fit your budget and lifestyle. Are you getting the idea? There are many other small decisions to make along the way too. The first "no" to any questions...and we move on.
We know that it feels like a BIG DECISION just to talk to a realtor, which is why we created this blog. But be comfortable contacting us directly as well. We know that home buying (and selling) is a huge step and sometimes it takes a long time to find the right situation. Our expert agents will work with you at your speed! We look forward to helping you find the perfect home, investment property or vacation spot.

Tuesday, January 13, 2009

New Restrictions on Rental Income in Qualifying

The decrease in California home prices has created the opportunity for buyers to purchase homes they couldn't formerly afford. However, since this is not a market that is beneficial to sellers, they also would like to keep their current home and rent it out. In the past, these homeowners were able to offset the cost of the old home with the rental income and still qualify for the new homes. New guidelines are going to make this harder to do going forward.
With home prices dropping, many people are seeing homes in their neighborhoods selling for significantly less than they owe. A trend of "Buy and Bail" has emerged. People would buy a new home, show a rental income on the old home, then once they have the new home financed, they allow it to foreclose. In order to prohibit this practice, Fannie Mae and Freddie Mac have new guidelines for qualifying if you are planning to rent out your existing home.
Both agencies are requiring homeowners to show a 30% equity in the property they are going to rent. If they cannot, they will have to qualify for both homes and have 6 months in reserves for both mortgages. Even if they equity requirement is met, they will still have to have a valid lease for 12 months and be able to show that the deposit has been cashed. At that point, 75% of the rent can be used in qualifying. FHA has similar guidelines. They are requiring a 25% equity stake. But there is no reserve requirement.
This is will impact relocation financing, investment financing and those who would like to move, but are upside down in their home value.