Interested in Investing in Real Estate? Great article link from the WSJ

Great article for Investors from the Wall Street Journal:

http://online.wsj.com/article/SB10001424053111904103404576558484074477822.html?mod=WSJ_RealEstate_LeftTopNews

 

 

Got Questions? РThe Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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What Costs of Home Ownership is Tax Deductible?

I just came across this great article that I thought I’d forward along. ¬†It talks about what is and is not tax¬†deductible¬†in home¬†ownership.

http://lowes.inman.com/newsletter/2011/09/13/news/152084

 

 

Got Questions? РThe Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

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How Much Insurance Do I Really Need?

How Much Insurance Do I Really Need? ¬†It’s a great question that I get often. ¬†Found this great article and thought I would pass it along:

http://www.washingtonpost.com/realestate/if-you-arent-sure-what-your-homeowners-insurance-covers-ask

 

Got Questions? РThe Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

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A Cinderella Story… Jake and Sophia

It was 2008. ¬†Jake and Sophia had been working hard and saving their money to buy their first place. ¬†The market had fallen enough to make a home a reasonable dream. ¬†Armed with their pre-approval from Melanie Flynn, we took a look at homes in San Carlos and Redwood City. ¬†It didn’t take long for us to find a darling place in Redwood City. ¬†It was a short sale. ¬†Two loans on the property with two different banks. ¬†We knew it would be a tricky deal, but the home was well worth the work.

We wrote an offer and the sellers accepted right away. ¬†The offer was sent to both banks and together we waited on pins and needles to hear back. Weeks passed. ¬†Each Wednesday I’d call the Listing Agent to get the scoop. ¬†And each week she told me she hadn’t heard back. ¬†Months passed. ¬†Six – I think – could have been more. ¬†Finally I get some answers. ¬†The two banks were at a stand still. ¬†Neither would budge.

Now during these six months when everyone was in the dark – Jake wanted to propose to Sophia and wanted to do so in their future home. ¬†At the time – The Caton Team didn’t know the shenanigans going on with the bank – so we arranged to show them the home again and hang out in the car so Jake could properly propose. ¬†It was super cute and of course, Sophia said yes. ¬†(They are high-school sweethearts.)

We all went home with hearts and stars in our eyes – that lasted until I got the phone call. ¬†You see, ¬†a short sale with one home loan is easy compared to a home with two loans. ¬†One loan, means one bank decides their bottom line. ¬†Two loan, and now we have a fight. ¬†Technically, the 1st loan has precedence over the 2nd loan, so much so, the 1st loan could foreclose on the home and own it – wiping the 2nd loan off the face of the earth – the 2nd loan would have no recourse and just take the loss. ¬†But since the 1st loan was trying to work with the sellers to avoid foreclosures – the fight is over how much the 2nd loan would accept in the short sale and walk away. ¬†Typically, the 1st loan gives about $1000 – $3000 to the 2nd loan as a courtesy since the 1st loan is not foreclosing. ¬†Generally the 2nd loan is happy to get anything – and accepts what the 1st loan gives them. ¬†Well not this time. ¬†The 2nd loan was demanding more money – the 1st loan wasn’t going to give it to them. ¬†Both Realtors tried every which way to put the deal together, but in the end, nobody had enough money to satisfy this 2nd loan.

After a long talk with Jake and Sophia we knew it was time to walk away.

Thankfully, since we saw the writing on the wall Рwe started looking for other homes.  Seems like everything that would work was already pending or sold.  Except for one.

The trick to being a great Realtor is also being a great detective.  Combing through the pending listings, Susan saw a cute home which was pending but in the agent comment section Рit was begging for a back-up offer Рit appears the current buyer was threatening to walk away since they were tired of waiting for the short sale bank to respond.  The Listing Agent knew she was so close to a short sale approval Рbut the buyer had enough.

We called right away and showed the home that night. ¬†Jake and Sophia loved it. ¬†Sadly, the home was priced about $50,000 over their budget. ¬†That didn’t stop the Caton Team. ¬†We knew the buyer was going to walk, the bank was ready to sell and we knew to strike when the iron was hot. ¬†We wrote the offer right away. ¬†The seller accepted the offer and sent it to the bank. ¬†In the mean time, the other buyer¬†rescinded¬†their offer and suddenly we were the only offer on the table. ¬†It was the banks call – wait another 356569546 days or sell it now…

With bated breath we waited.  Two offers on two short sales Рit was like roulette.

Before we knew it, the bank accepted our $50,000 below price offer and we were in the home stretch. ¬†We¬†rescinded¬†our offer on the 1st house and about 25 days later handed the keys to Sophia & Jake. ¬†They couldn’t be happier.

Just so you know – the original house – the two banks fought for over 1 year and in the end the 1st foreclosed on the 2nd. ¬†It wasn’t the best solution for the seller, but thankfully they were finally able to move forward.

In the end – Jake & Sophia got a home that was far better than the first place. ¬†It’s why I tell each buyer upfront – we’re going to see a lot of homes, we’re going to write a bunch of offers, some will be accepted or rejected, some homes will move faster than other – but in the end – what’s meant to be is meant to be.

Got Questions? РThe Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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WHAT YOU NEED TO KNOW ABOUT UPCOMING CHANGES TO FHA LOANS

WHAT YOU NEED TO KNOW ABOUT UPCOMING CHANGES TO FHA LOANS

As you may know, unless Congress extends the expiration deadline, Federal Housing Administration (FHA) loan limits set in 2008 will drop significantly beginning October 1. Congress raised the loan limit amount in response to the housing crisis to help spur the homebuying market. FHA loans offer borrowers very competitive rates and terms, and they only require a 3.5% down payment. Allowable debt ratios are higher than the typical debt-ratio limits imposed for conventional loans, and there are no income limit qualifications, so more people can qualify for them.

If the loan limit drops on October 1, many California homebuyers will face higher down payments, higher mortgage rates and stricter loan qualification requirements. Borrowers seeking larger mortgages will have to apply for conventional loans or jumbo loans, which may be subject to higher interest rates and down payments. Here are four things you should know to help your clients now.

1. LOWER LOAN LIMITS. The conforming loan limit determines the maximum mortgage amount that FHA, Fannie Mae and Freddie Mac can buy or guarantee. If your client wants to stay under the current loan limits, then encourage them to purchase now and close by September 30th.

2. DROPS BY COUNTY. Under the new FHA loan limits, some counties will see significant drops in their loan limits. San Diego County will experience a $151,250 drop, Sonoma County a $141,550 reduction, while Orange and Los Angeles Counties will drop by $104,250. To see a full, county-by-county list of changes, click here.

3. JUMBO LOANS. The current FHA loan limit is $729,750. After October 1, that limit may drop to $625,500. Mortgage loans higher than that amount will be considered non-conforming jumbo loans, which typically have rates that are 0.875% to 1.5% higher than conforming rates, depending on the loan product, and require higher down payments.

4. MORE STRINGENT REQUIREMENTS. FHA loan requirements may allow for lower credit scores. So an applicant with a lower FICO score can still qualify for an FHA loan, even if they can’t for a conventional loan. Your clients may be able to obtain an FHA loan three years after defaulting or having a loan foreclosed.

Got Questions? РThe Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

What does Bank Owned or REO property mean?

A REO stands for Real Estate Owned which really means the home is Bank Owned.  A Bank Owned home is a home post-foreclosure.  Meaning the bank has already foreclosed on the seller and now the bank owns the home.

The Pro’s

Buying a bank owned home is as close to a normal sale as a buyer can get when working with distressed properties. ¬†The pro – quick response time. ¬†When submitting an offer on a bank owned property the buyer can expect to get a response within a week – and once the offer is accepted the escrow period is like any normal transaction. ¬†A buyer is granted their contingency periods that start the day after the offer is accepted. ¬†It’s a breath of fresh air for a buyer since short sales are slow and painful. ¬†Because bank owned homes are smooth transactions for the most part – we do see them move off the market much quicker than the dreaded short sale.

The Con’s

Buying a bank owned home means one thing Рno real disclosures.  Sometimes it even means the home is in various forms of neglect.  The bank, having never lived in the home, does not provide the buyer with the disclosures a normal seller would provide.  The two most interesting reads not provided by the bank, aside from inspection reports, are the Transfer Disclosure Statement (TDS) and the Seller Supplemental Checklist (SSC).  These two standardized forms ask the seller a myriad of questions covering neighborhood nuisances and issues with the home.   The bank does however need to provide the buyer with the California State Mandatory Disclosures, one of which is the Natural Hazards Report which covers natural hazards around that particular property.

How This Affects the Buyer

Banks require an¬†As-Is¬†sale. ¬†This is typical of many sales. ¬†As-Is¬†means as disclosed. ¬†However, since the bank has no personal knowledge of the home – it is hard to disclose the potential issues. ¬†Since the disclosures are weak, the burden is placed on the buyer to investigate. ¬†As Realtors we cannot¬†attest¬†to the¬†condition of the¬†property or neighborhood¬†– but we do encourage the buyer to seek professional opinions. ¬†Some buyers visit the local police department and ask candid questions, I’ve even had buyers door knock the surrounding homes to speak to their potential neighbors.

As for the condition of the home – that’s the easy part. ¬†As in any buying transaction, the buyer will have contingency periods to do all their inspections at which point we’ll get the home, pest and roof inspector out to check out the home and provide the buyer with a written report. ¬†The buyer can do any inspections they want, from lead to asbestos, to truly anything that is of concern to them and for¬†their plans for the property¬†– pretty much just like any other buying transaction. ¬†The only downfall – if issues arise – often times the bank does no repairs.

How We Go About All This

Since these transaction are so cut and dry, before we sit down to write the offer with our buyers, all parties take a good hard look at the property to determine the buyers offer price.  A buyer does not perform their inspections prior to writing the offer because a home, pest and roof inspection costs upwards of $500.  After the offer is accepted, the buyer will pay for their inspections and we proceed from there.

Generally, the buyer knows what they are getting into.  Often times these homes are in states of neglect and may be missing key fixtures or appliances.  In the end, both the buyer and their Realtor take all of this into account and write their best offer.

For more tips on writing an offer on a bank owned home – stay tuned!

Got Questions?  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

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Writing a Great Offer

I’d like to share some tips on writing an offer. ¬†It’s the bread and butter of what we Realtors do.

Before I begin, these scenarios are for real life, breathing sellers WITH equity in their home.  Stay tuned for strategies on writing an offer on a short sale property or a bank owned property.

Searching for the right home is fun – getting the home you want – now that’s my job. ¬†But it takes the buyer and Realtor working together to be successful.

Writing an offer can be very difficult for some buyers. ¬†The pressure and stress of signing their name to the line can cause a buyer to get cold feet, sweaty palms and break out in hives. ¬†It doesn’t need to be that stressful. ¬†The biggest hurdle I notice for buyers is choosing their offer price.

Please note, as professional Realtors we cannot tell the buyer the amount they should offer.  Realtors, such as The Caton Team will provide the buyer with a comparative market analysis to show the buyer the value of homes in the area compared to their chosen home Рthis information will help the buyer decided their offer price.  A buyer must come up with their price on their own and feel comfortable with their price.

To be frank Рprice is almost always the most important aspect of any offer.  If the price is right for both parties Рit can be smooth sailing.  However, there are several other aspects of an offer that also weighs in Рthe terms of a contract.  For instance, what is the time frame to close escrow? Generally close of escrow is a 30 day window.  Can the buyer close sooner?  Sometimes a seller likes that.  Sometimes a seller may need more time in the home after close of escrow Рso a buyer could rent back the property to the seller either at fair market rent or perhaps even free.  How long are the buyer’s loan and property condition contingencies?  A very competitive offer will have a short window for contingencies.

Writing an offer is serious business.  So serious in fact that for the offer to be considered legitimate Рit needs consideration.  Consideration is a fancy word for money.  The money comes as a buyers good faith deposit (which is part of their down-payment), generally 3% of their offer price which is put in our office safe until the offer is accepted.   In fact the purchase contract is also a receipt for the good faith deposit.

When a buyer sits down to write an offer Рthey must be serious about buying the home and committed to seeing the sale through and closing the escrow.  To be frank Рif  a buyer is just fishing for a price and does not care whether or not they get the home РPLEASE be upfront and honest with the Realtor.  There are offer strategies for each buyer’s scenario.  Upfront, honest communication is the essence of a healthy Buyer/Seller and Realtor relationship and the only way to attain the client’s personal goals.

On that note, getting the home a buyer wants is truly a meeting of the minds between both buyer and seller.  Very very very rarely have I seen the strong arm approach succeed in OUR local market.  The offer and subsequent counter offers are a method to find that happy middle where both the seller wants and can sell their home and the buyer wants and can purchase the home.

First, a buyer needs to consider what they are up¬†against. ¬†Are they the only offer? ¬†Are there multiple offers? ¬†Has the seller chosen an offer date – where all offers are due and reviewed in one shot? ¬†Don’t worry – this is where The Caton Team shines.

Let’s cover each situation since it warrants its own game plan. ¬†What does it take to write a good offer?

THE ONLY OFFER

This is a buyer and Realtors dream.  Being the only offer Рthe buyer has the opportunity to write an offer in their favor (within reason).  Being the only offer, takes the edge off the buyer to come in with their highest price and best terms offer.  It can possibly result in a few counter offers back and forth to find that happy medium between buyer and seller.  During the boom Рbeing the only offer was a pipe dream.  Surprisingly, as our local San Francisco Peninsula market recovers Рbeing the only offer is still rare on choice homes.  Given the opportunity remember that buying a home is finding a happy medium between all parties Рso come in with a fair market price offer to reflect the homes location and condition is always a good starting point.  Coming in too low Рand well Рyou just might anger the sellers and get just about nowhere.

MULTIPLE OFFERS

A multiple offer situation is when there are several offers coming in on one house and generally the Listing Agent (Realtor to the Seller) will have an offer due date, where all offers must be submitted at that time and then presented to the seller all in one shot.

Here comes the tricky part. ¬†As professional Realtors the Caton Team is proactive and like any good Realtor – will call the Listing Agent to get the scoop. ¬†I introduce myself to the Listing Agent the second I get wind my buyers are¬†interested. ¬†This helps me¬†gauge¬†the¬†activity¬†around the home so I can advise my¬†clients best. ¬†As Listing Agents, we rarely know exactly how many offers are coming in. ¬†We generally gauge the interest by how many disclosure packages are out. ¬†As you may recall from previous blogs – whenever possible the Buyers Agent will get any and all upfront disclosures from the Listing Agent. ¬†The Listing Agent keeps tabs on how many disclosure packages are out and informs the Buyers Agents. ¬†It’s not an exact science, but we make it work.

Another key factor to consider is the sellers motivation for the sale.  We take the time to find out why they are selling and as Buyers Agents we call the Listing Agent to ask some questions.  Some of out top questions are:  Does the seller have to sell?  Or is the seller looking for the right price in order to sell?  Is the property their personal residence or was it an investment property?  Is the property upside down Рin other words Рis the property a potential short sale where the lenders cooperation is necessary to actually close escrow?  Is their a family crisis or sadly a divorce that is forcing the sale?  Each bit of information we can get upfront helps our buyers with their decisions.    And understanding both involved parties can bridge the gap.

So the offer due date is set – now we hit the table and write the offer. ¬†Suddenly the buyer is feeling some pressure. ¬†Several people like “their” house and in order to get the house the buyer truly must put their best foot forward. ¬†Now, what does that mean? ¬†That means writing, literally, your best offer – the offer you can stand behind and say – “This is my best offer – and if I do not get this house for my price…. then the other buyer paid too much!” ¬† If a buyer cannot say that about their offer – than they are not putting their best foot forward and the buyer may not get the house – or even a chance to be considered.

The flip side.  A buyer writes a low offer Рhoping for a counter offer Рor just praying the other buyers move on.  Then they find out the home sold for way more and the buyers offer was left in the dust.

As Listing Agents in a multiple offer situation with 10 offers in hand, the seller cannot and generally will not counter each offer.  The lowest offers are often set aside and if there are a couple similar offers, the seller may opt to counter those Рbut if one offer shines better than the rest Рnow a days Рthe seller will take the best offer and not bother countering anyone else.  Like I said, to be truly part of the negotiations, a buyer must come in with their best foot forward Рotherwise Рsadly Рthey are left in the dust.

No matter the situation the buyer faces, The Caton Team is poised to work through the maze. ¬†With over 20 years combined Real Estate¬†experience there isn’t a hurdle we cannot tackle. ¬†With so many variables, each offer¬†truly¬†becomes a world in itself. ¬†Each home is unique for their location, condition and¬†amenities. ¬†The task of weighing all the options can be daunting but we are here to help.

Got Questions?  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

Follow my personal journey through homeownership at http://ajourneythroughhomeownership.wordpress.com/