Author: Igor Nastaskin
The Ins and Outs of Home Buyer & Seller Contingencies
If you’re thinking about buying a home, then you’ve likely heard of contingencies—the clauses in a real estate contract that stipulate conditions for the buyer and seller to agree upon for a sale to be completed. While contingencies help protect buyers if they’re unable to complete the sale, some people may be tempted to go without them in a hot market to make their offer look more appealing. However, understanding and including contingencies in your contract is key to safeguarding yourself. Here, Trulia explains how a home’s status changes once a contingent offer is accepted and recommends a few important contingencies to consider as part of your offer. Active contingent A home’s status changes to active contingent when a home seller has received an offer from a buyer, but the buyer needs to meet certain conditions before the sale can be finalized. These conditions may include a home inspection or being approved for a mortgage loan. Types of contingencies for buyers to consider: A mortgage financing contingency gives the buyer a way to back out of the contract if an application for financing is denied, or if financing is granted for a lesser amount (for example, if the home appraises for less than expected). The general inspection clause allows buyers to bring in a professional home inspector to check out the property—and to cancel or renegotiate the deal. If the inspection turns up a less than satisfactory result, such as significant structural flaws or major costly repairs, buyers have the right to ask the seller to lower the sale price, offer buyer credits or ask for necessary fixes to be completed before the close of sale. If the initial inspection turns up issues, contingencies for additional specialists and tests may be required. This contingency allows buyers to have the home checked for mold and other toxic substances, as well as wood-destroying pests such as termites. It also allows for other specialists like chimney inspectors and foundation experts to look at the property before the sale is completed. If any problems are found, the buyer should have the opportunity to renegotiate the deal or cancel it completely. The attorney review contingency can give the buyer and the seller a specific amount of time, as specified in the contract, to have their legal team inspect the signed contract. The lawyer will review the legality of the contract and check for important safeguards for their client before the deal is done. The buyer’s home sale contingency allows the buyer to cancel the contract without penalty if they’re unable to sell their current home in a specified amount of time. If the buyer is under contract to sell their residence and the deal falls through, they won’t be obligated to purchase the new property. An appraisal contingency permits the buyer to have the home appraised—a must for many buyers financing their purchase—and to only follow through with the sale if the appraisal matches or exceeds the home’s price. If you’re using a lender, it’s smart to check and see if they require this contingency as part of your purchase contract.
Ready to Stop Renting and Start Owning a Home?
If you’ve been renting for a while and now think you’re ready to take the big step and move into a home you can call your own, you’ll want to make sure you’re prepared. Bottom line: Owning a home is a big commitment. So before you jump into it, you should have confidence that it works for your circumstances. Here are 4 questions to ask that will help you transition into the home-buying mode, and stop renting. 1. Can you afford to buy a home? A house likely will be the largest purchase you’ll ever make. You’ll need a down payment (typically 20 percent of the home’s purchase price) and steady income to pay your mortgage. Other fees associated with homeownership include closing costs (usually 2 percent to 5 percent of the home’s purchase price); home insurance (cost varies by state); maintenance; utilities; and budget for unforeseen repairs and emergencies. Although renting may seem more economical than owning at first glance, that’s not always the case. Use Realtor.com’s rent vs. buy calculator to help compare the costs, and you could be surprised by the results. Another good first step to figuring out whether you can afford a house is to enter your salary and town of residence into a home affordability calculator, which will show you how much you’d pay for a mortgage on a typical house in that area. Or talk with a loan officer about whether you would qualify for a mortgage, and how much you can comfortably spend. Such consultations are free and will give you a concrete idea of where you stand. 2. Are you settled in your job? Your job situation is important in terms of having an income to buy a home, but also it will dictate if you’re likely to stay put or move. Once you own a home, your career prospects tend to narrow somewhat, mostly because a home anchors you to one area. A renter can be flexible and easily accept a job in another city or state, a homeowner might decline a job offer rather than go through the cost, time and expense of selling a home. Ultimately, it may be better to wait to purchase a house until after you’re firmly established in your employment situation. 3. Do you know where you want to live? Moving once you own a home is not as simple as packing your bags. You should make sure that you’re choosing a home in an area where you’ll be happy. Scope out the neighborhood in advance, or even try renting for a few months to make sure you like the area before you begin shopping for a home. There is wisdom in trying before buying; which will eventually allow you to stop renting, and start on the path to ownership. 4. How much home maintenance are you willing to tackle? If you love the challenge of fixing a leaky faucet and deciding which shrubs will flourish in your yard, then ditch renting and lean into homeownership. However, if the idea of mowing a lawn or fiddling with the HVAC depresses you, then you may want to stick with renting, which gives you a roof over your head without too much work. There’s no landlord to call if anything goes wrong; it’s all up to you. So, you have to be either adept as a handyman, or willing to find and pay someone else to do such tasks. Or else consider buying a condo, where the lawns and public areas around your home are maintained by hired help.
What’s the Best Day to Put Your Home on the Market?
When it comes to listing a home, sellers don’t want to leave anything to chance, including what day they put their home on the market. Toward that end, Redfin analyzed a sample of 100,000 homes that sold in 2017 and found that homeowners should put their property up for sale on a Wednesday to gain the most money; a Thursday for the quickest sale; and to avoid Sunday altogether. Here, more about the findings: Wednesday’s Price Advantage Homes listed on Wednesday had an advantage of $2,023 in sale price over homes listed on a Sunday, a sale-to-list premium of 0.53 percent. For a $500,000 house, that means you could make $2,650 more just by listing on a Wednesday instead of a Sunday. Thursday’s Speed and Certainty Advantage For speed, Thursday had a clear advantage, with Thursday-listed homes finding buyers five days faster than the baseline. Homes listed on Thursday also had the edge as far as being more likely to be sold within 90 and 180 days. There isn’t one clear reason why Wednesday outperforms on price, while Thursday wins on speed and certainty. Possible explanations include that agents who list on Wednesdays tend to be better at pricing strategically to command the best price, or that in this fast-paced, low-inventory market, there’s simply a sweet spot for garnering the maximum sense of urgency and competition among eager home buyers. Another theory is that the advantage of Wednesday and Thursday simply correlates to buyers’ house hunting schedules. Don’t Forget Regional Customs Keep in mind, in some markets such as San Francisco, weekday broker’s opens are common. A broker’s open is an open house for agents. In some markets, agents may visit a series of broker’s opens on Tuesday, for example, to preview all the new homes that are on the market for their buyers. Plan the Perfect Debut Homes get five times more online views the day they hit the market than they do a week later, so making a positive online debut is critical. Besides pricing right, professional photography is another way to optimize your home sale. Homes with images taken by professional photographers tend to get more money and sell faster. Sellers who used a high-quality camera for their listing photos got an average of $3,400 more for their homes.
Hollywood Riviera Sportsman’s Club a Local Tradition
Calling all male residents of the Riviera looking for a chance to give back to the community and have a great time doing it: join the Hollywood Riviera Sportsman’s Club. Established in 1949 by a handful of civic-minded residents, the club was organized to promote community improvement. The Club is non-sectarian and non-political, and is devoted exclusively to promoting fellowship among the families of the Riviera and sponsoring positive community projects. Its members raise money to support our children and schools, and volunteer their time to support community activities. The Sportsman’s Club has raised over $250,000 over the past decade through fun events such as golf tournaments, pancake breakfasts, wine tastings, steak dinners, chili-cook offs, Relay for Life events, holiday parties, Hometown Fairs, beer tastings and more. No other philanthropic organization in the South Bay makes as big of an impact — and has as much fun doing it. “I never imagined that getting involved and supporting our community could be such a personally rewarding experience,” says Brian Rickey, a seven year member and current Sportsman’s Club president. The Club’s annual Easter Egg Hunt, held the Saturday before Easter, has been a Riviera neighborhood tradition for decades. This event for kids has been a sellout every year, even in the rain. The Sportsman’s Club also raises funds for the American Cancer Society by participating each year in the Torrance Relay For Life held at South High School. Igor has been the club’s Relay For Life captain for 13 years. Through the leadership of the Hollywood Riviera Sportsman’s Club, the first Community Building was erected at El Retiro Park. Senior Citizens’ shuffleboard courts were constructed and equipped at Walteria Park with the Club’s support and guidance. The Club also provided the funds to build the snack shack at the South High School football field and provided much-needed computer equipment to Riviera Elementary and Richardson Middle Schools. El Retiro and Walteria libraries have received magazine racks and other equipment over the years through Club donations. In addition, the Club recognizes scholastic achievements by awarding annual scholarships to selected graduating seniors at South High. The Club also recognizes outstanding efforts by South High teachers with its highly regarded Socrates Award. Members of the Hollywood Riviera Sportsman’s Club meet at 7:00pm the second and fourth Wednesday of the month (September through June) at the Clubhouse, located at 24004 Neece Avenue in Torrance. To learn more, please contact the Membership Chairman, Mr. Brian Dean, via email at brian@deancreative.com.
Do’s and Don’ts of Selling Your Home in 2017
Plan to sell your home in 2017? According to Realtor.com, certain blunders can hurt a homeowner’s odds of selling their residence. Here, some tips to follow when placing your property on the market. Don’t over-improve your home. Homeowners often assume that any upgrades they make will pay them back in full once they sell. That’s rarely the case. On average, you will recoup only about 64 percent of the money spent on renovations once your home sells — and certain improvements actually can work against you if they’re unusual or undesirable in your market. For example, you might consider a new swimming pool a plus, but many homeowners don’t want the hassle of maintaining it. Do check out a remodeling magazine’s cost versus value report to determine which upgrades provide the best return.You also can ask a Realtor for advice on which amenities are desirable (or nor) in your area Don’t renovate without permits. Failing to apply for permits before you knock down a wall or add a deck can come back to haunt you when you decide to sell. Without proper permits, buyers may worry whether the work done on your place is up to code, and as a result, refrain from making an offer. Do pull necessary permits. Building permits usually are required for any renovation that involves opening/building walls, electrical and plumbing changes. Don’t limit showing hours. Buyers are busy juggling work, family and looking for a new home. If you limit showings to a few hours on weekends, you might miss a potential sale. Do stay flexible. Cooperate with buyer’s agents who want to show your house, even if it’s inconvenient. Limiting showing times gives buyers the impression that the sellers will be difficult. Don’t overlook curb appeal. Although you lavish tons of attention on preparing the inside of your home for buyers, it’s easy to overlook the outside. Keep in mind that curb appeal is the first impression buyers have of your home, so it also pays to put some elbow grease into beautifying the exterior. Do make sure your paint job is pristine and your lawn is tidy and mowed. Be sure to replace any dead shrubs, prune trees, put out some potted plants, mulch garden beds and freshen your mailbox. Don’t rely heavily on open houses. While open houses once were a great way to sell a house, the vast majority of houses today are sold via the Internet. Do hold open houses, but don’t depend on them too much. Try to seek out agents who mine for buyers by using the Internet and social media. Don’t neglect to follow your agent’s advice. You might know more about your home than anyone else, but your real estate agent knows more about how to sell it. Your agent might make some suggestions you won’t like to hear — such as you need a new paint job or that the asking price you had in mind needs to be lowered a bit — but if you ignore your agent’s advice, you could risk seeing your house sit on the market and grow stale. Do listen to your agent. When it comes to pricing, consider the comps your agent presents. Agents buy and sell hundreds of houses in their career. You’re paying for their experience, so follow their advice.
Housing Value at Record-High
Housing’s collective value grew to $29.6 trillion in 2016 — a record high reflecting 5.7 percent appreciation (an additional $1.6 trillion), according to a recently released analysis by Zillow. The most valuable housing markets in the nation are in Los Angeles, New York and San Francisco, Calif., at 8.6 percent, 8 percent and 4.2 percent, respectively. The continuing growth in prices, however, has the potential to push more prospective homebuyers to the sidelines, says Zillow Chief Economist Dr. Svenja Gudell. “Housing is incredibly important to us personally and to the economy as a whole,” says Gudell. “The U.S. housing stock is worth more than ever, which is a sign of the ongoing housing recovery. As buying a home gets more expensive, affordability remains a concern for many, and these numbers highlight just how much people are spending on housing. The total value of the housing stock grew nearly 6 percent this year, a pace that will likely mean some American families are priced out of homeownership.” Despite this year’s appreciation, about 60 percent of housing markets remain below values reached during the bubble years, according to the analysis. Renters, to compare — with about 635,000 new renter households formed this year — paid $478.5 billion in 2016, up $17.7 billion from 2015. Apartment renters paid $50 billion more than single-family home renters, and the most rent was paid in New York and Northern New Jersey, at $55 billion.
Five Big Real Estate Trends to Watch in 2017
The election of real estate magnate Donald Trump as president likely will bring some dramatic changes in 2017 for the housing industry, which saw healthy increases in values this year thanks to low interest rates, lower gas prices, stronger wage growth and millennials entering the market. According to MarketWatch, here are five things to watch for in real estate in 2017. Drones Commercial use of unmanned aerial vehicles (UAVs), or drones, in 2017 has been cleared for takeoff by the Federal Aviation Administration, and the use of drones by the real estate industry likely will expand dramatically next year. While the use of drones to create flyovers of properties for real estate agents began to rise this year, home buyers and sellers will be able to use them as well by next year, as operators will no longer need a commercial pilot’s license to fly. However, some flights will need the FAA’s or local tower permission, along with a flight plan filed online. Prices for high-quality drones also are expected to drop to as little as $500, although drones with higher-end features — such as gyro-stabilized platforms that help steady the video images — still will still run $1,000 to $1,200. Not ‘mixed-use’ but ‘surban’ There’s been plenty written about the move from suburban-style sprawl to denser communities of different housing arrangements, such as town houses, apartments and single-family homes, together in the same neighborhoods. In 2017, look for a new name for it: “surban” — a blend of urban and suburban living. More existing suburban neighborhoods are adding urban amenities so people can live, work and play right outside of the core part of the city. Nearly 80 percent of residential growth is expected to occur in suburban communities during the next 10 years — up from 71 percent from 2010 to 2015 — compared with just 15 percent for “urban” areas through 2025. Forget the starter home, millennials want the move-up property More millennials — roughly, those born between the early 1980s and the late ’90s — are expected to buy a first home in 2017, according to the National Association of Realtors (NAR). Many of those buyers have saved enough to go with something more than a condo unit or a starter home, says Jessica Lautz, managing director for research at NAR. And with the markets doing so well, and interest rates as low as they are, millennials who have paid down their student debt and built up their cash may be in a position to buy more house than real-estate agents might think, she adds. Indeed, the NAR notes that in 2016, 17 percent of buyers under 35 were able to save enough for a down payment for a home within a year, compared with 14 percent of all age groups. And though it was lower than all other age groups, 37 percent of buyers ages 35 and younger said they were able to save enough for a down payment within six months, compared with 46 percent of all other buyers. How Trump’s win could change real estate Fears of recession could grow with a likelihood that Trump would cut government spending dramatically in his first year, and stock-market uncertainty increasing over just how his presidency will begin. As such, another year of low interest rates could be in the cards. Many experts see a Trump presidency being good for the housing and mortgage markets in the long term. Commitments to bringing regulatory relief — and regulatory certainty — to the financial-services industry should make more credit more available to average home buyers who have been locked out of the market by today’s tight credit standards. As a result, home buying should remain strong in 2017, which is good news for a market with low inventory. Start thinking about Generation Z It won’t be long before Gen Z reaches the market. They’re teenagers now, but this demographic is almost on the cusp of being able to buy homes, with the first Gen Z–ers reaching their 18th birthdays in 2017. According to the NAR, Gen Z will come of age with low interest rates, better job prospects and higher wages to help cushion the high costs of college education.
Number of Older Adults in the U.S. Expected to Surge, Highlighting the Need for Accessible Housing
By 2035, more than one in five people in the U.S. will be 65 and older and one in three households will be headed by someone in that age group, according to Projections and Implications for Housing a Growing Population: Older Adults 2015-2035, a new report conducted by the Harvard Joint Center for Housing Studies. This growth, the report says, will increase the demand for affordable, accessible housing that is well connected to services beyond what current supply can meet. According to the report, as the baby boomer generation ages, the U.S. population age 65 and older is expected to grow from 48 million to 79 million, and the number of households headed by someone 65 and older will increase by 66 percent, to nearly 50 million. This growth will increase the demand for housing units with universal design elements such as zero-step entrances, single-floor living, and wide halls and doorways. However, only 3.5 percent of homes offer all three of these features. “The housing implications of this surge in the older adult population are many and call for innovative approaches to respond to growing need for housing that is affordable, accessible and linked to supportive services that will grow exponentially over the next two decades,” says Chris Herbert, managing director of the Harvard Joint Center for Housing Studies. In the coming years, many older adults will have the financial means to pay for appropriate housing and supportive services that allow them to live longer in their own homes. However, many others will face financial hardships, particularly because their incomes will decline in retirement. Low-income renters are particularly vulnerable, notes the report, which projects that nearly 6.4 million low-income renters will be paying more than 30 percent of their income for housing by 2035. The report adds that 11 million homeowners also will be in this position by that time. In total, the report estimates, 8.6 million people will be paying more than half of their income for housing by 2035. The report also projects that 7.6 million older adults will have incomes that would qualify them for federal rental subsidies by 2035, an increase of 90 percent from 2013. “Today, however, we only serve one-third of those who qualify for assistance,” says Jennifer Molinsky, a senior research associate at the Joint Center and lead author of the report. “Just continuing at this rate — which would be a stretch — would leave 4.9 million people to find affordable housing in the private market.” In many surveys, older adults express a strong desire to live at home for as long as possible. Achieving that goal will require public and private action to support modifications to existing homes; steps to address the affordability challenges facing both owners and renters; and adapting the health-care system to enhance service delivery in the home. There also is a need to expand the range of housing options available to better meet the needs of an aging population and to improve options for older adults to remain in their community when their current home is no longer suitable. “Right now, more than 19 million older adults live in unaffordable or inadequate housing, and that problem will only grow worse in the next two decades as our population ages,” says Lisa Marsh Ryerson, president of AARP Foundation, which provided funding for the report. “This important follow-up study to Harvard’s ground- breaking 2014 report on housing America’s older adults not only calls attention to important trends but also helps point to the kind of solutions — requiring cross-sector collaboration between the housing industry, policymakers, and public, private and philanthropic organizations — that will fulfill older adults’ ardent desire to continue living independently at home with security and dignity.”