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Questions to Ask When Considering a Condo

June 30, 2016

condoforsalesandiego

 

From: National Association of Realtors 

Questions to Ask When Considering a Condo
Condominiums, townhomes, and properties located within a homeowner association offer certain perks, but it’s important to consider them in your decision process.

How much storage is available?
Some properties include storage lockers, but there may not be attics or basements to hold extra belongings.

How’s the outdoor space?
Your yard may be smaller than you’d find in a traditional single-family home, so if you like to garden or entertain outdoors, this may not be a good fit. But if you dread yard work, it may be the perfect option.

Are amenities important?
Many properties offer swimming pools, fitness centers, and other facilities that would cost much more in a single-family setting.

Who handles maintenance and security?
Property managers often hire professionals to care for common areas and perform in-unit repairs. Keyed entries and doormen may regulate access to your home when you’re not there (good news if you travel).

Are there required reserve funds and association fees? How much are they?
Although fees generally help pay for amenities and provide savings for future repairs, the HOA or condo board determines these fees, and you’ll have to pay them even if you’re not in favor of the improvements.

What are the association rules?
Although you have a vote on future changes, association rules can dictate how you use your property. Some condos prohibit home-based businesses; others prohibit pets or don’t allow owners to rent out their units. Read the covenants, restrictions, and bylaws carefully before you make an offer.

What’s the average vacancy rate?
It’s never too early to be thinking about resale. The ease of selling your unit may depend on what else is for sale in your building, since units are similar.

How many units are owned by investors?
Some lenders require a certain percentage of the building to be owner-occupied and may not be able to offer you financing if the ratio is too low.

Can I meet other residents before making an offer?
You will share space and decision-making duties with your neighbors when part of a homeowner association, so it’s important to make sure you can work together. If possible, try to meet your closest prospective neighbors before you decide on a place.

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What Sells?

June 23, 2016

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WhatSells

 

5 Tips for Deciphering Your Home Loan’s Good-Faith Estimate

June 16, 2016

 

loan-estimate-form

 

From ClientDirect

When you’re shopping for a mortgage loan, it’s sometimes hard to understand the jargon lenders use in the good-faith estimate explaining the costs and fees you’ll pay when taking out a mortgage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

1. Know which fees can increase and by how much
In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can’t change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.

The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.

Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.

2. Look for answers to basic loan questions
In the summary section, lenders explain your loan’s terms in simple language. Can your interest rate rise? If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time? If it can, a lender must show you the potential increase.

3. Evaluate the “tradeoffs” on a loan
In the new “tradeoff table,” you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you’d like the same loan with lower settlement charges, how will the interest rate change? If you’d like a lower interest rate, how much will your settlement charges increase?

4. Compare apples to apples with the shopping chart
Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.

5. Know what’s missing from the good-faith estimate
The new form lacks some key information, such as how much you’ll reimburse the sellers for property taxes they’ve already paid on the home. It also doesn’t tell you the amount of money you’ll have to bring to the closing table. Some lenders have created supplemental forms providing that information. If yours hasn’t, ask for it.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117. 

 

The Truth About How Sellers Choose Their Buyers

June 9, 2016

selecting buyer

 

By: Lisa Kahn, ClientDirect

Touring prospective houses can feel like wandering through an infinite, imaginary desert: You’re tired, you’re cranky, and you’re not sure if the experience is EVER. GOING. TO. END. So when you’ve finally found “The One,” it’s an amazing feeling. You can already see your family celebrating holidays by your dream home’s stately fireplace and savoring countless brunches in its adorable breakfast nook.

But wait. Before you summon the moving truck, your dream home’s seller has to pick you, too. Luckily, the key to locking down your ideal abode doesn’t always mean offering the most cash. Here are five ways to tip the odds in your favor.

1. Negotiate with a Smile
Unlike most commercial real estate transactions, the buying and selling of a home is complicated by all kinds of emotions, explains Sara Benson of Benson Stanley Realty in Chicago. Often, how the seller feels about you can be more important than your money.

“People tend to do business with those they like and trust,” she says.

One of Benson’s favorite examples of this phenomenon occurred when one of her clients was second in line for a home. While the first-place bidders were negotiating their contract, they whipped out a long list of unreasonable demands for the seller.

“This infuriated the homeowner, who finally told them, ‘My property isn’t for sale to you at any price!’” Benson recalls. The seller ended up offering Benson’s clients the house, even though their bid was $10,000 below that of the first buyers.

Lesson learned? “Don’t nitpick over items that are insubstantial, like a torn window screen or a $50 valve on a hot water heater,” says Benson. “This will anger a seller more than anything.” And that, she says, could be a deal breaker.

2. Get Personal
Bruce Ailion, an agent with RE/MAX in Woodstock, Ga., agrees that profit isn’t always the seller’s primary motivation. He recalls a recent deal in which he was representing an older couple selling their long-time family home.

“We had two offers: one from an investor paying cash, the second from financed first-time buyers.”

Despite Ailion’s recommendations, the sellers chose the first-time buyers, even though the cash offer was higher and would have been a much simpler transaction. Ultimately, what mattered most for Ailion’s clients was to pass their beloved home on to a deserving young family.

3. Figure Out the Seller’s Unique Motivation
Understanding why the sellers have put their home on the market is yet another powerful tool a buyer can bring to the negotiating table, says Ailion.

“Some sellers want a quick sale; others need time to find a home. Some are focused on price, others on certainty,” he says. “There are so many intangibles. It takes a deep understanding to make a good deal for everyone.”

See what information you can glean about the seller — from your agent or even from the seller’s neighbors — to arm yourself with as much information as possible.

“The more flexible a buyer can be on closing and possession, the more likely they’ll be able to negotiate a lower price,” agrees Benson. “They’re giving the seller peace of mind and the comfort of not having to rush out.”

4. Write a Love Letter
Sometimes, a heartfelt note from a potential buyer can make all the difference, even when the chances seem pretty slim.

Darcey Regan, a Chicago-based HR executive, had already bid on another home when she and her husband stumbled upon a gorgeous old Victorian. Instantly, they were smitten. “I grew up in an old house, and the sellers had done a really great job of maintaining and renovating this one,” she says.

Unfortunately, multiple people had already placed offers on the house, including several developers who were planning to demolish the property. Regan felt her only hope was to write the sellers a letter. In it, she talked about growing up in a similar house, and how much she respected the owners’ efforts to preserve their home.

Within 24 hours, the sellers told her the house was hers. “It turns out they really wanted someone who would keep the house rather than tear it down,” she says.

Though it felt like a long shot, Regan believes her note was successful because it was genuine. Her advice? “Write a letter only if you’re really in love with the house, not because someone told you to.”

5. Work With a Pro
It also helps to have a knowledgeable, well-respected pro on your side — someone who understands market realities and who will work well with the seller’s agent.

How do you find that seasoned pro with the sterling reputation? “Ask for referrals from your personal and professional network, and interview at least three different [agents] before you choose the one you feel most comfortable working with,” advises Benson.

Residential real estate is a game of both head and heart. Smart buyers who employ both are the ones most likely to win the home of their dreams.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117. 

 

What The Remodel Reveals

June 2, 2016

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WhattheRemodelReveals

Zillow CEO Spencer Rascoff sold home for much less than Zestimate

May 26, 2016

 

Courtesy: Zillow -Screen shot showing historically revised February Zestimate of Rascoff’s former property

 

Clients putting Zestimates on a pedestal? Point them toward this sale.

Key Takeaways

  • Agents can demonstrate the Zestimate’s shortcomings by showing the discrepancy between the sales price of a home formerly owned by Zilow CEO Spencer Rascoff and its Zestimates.
  • Luxury home Zestimates are more likely to be off than others due to ‘non-quantifiable facts.’
  • Irregular lot sizes or proximity to ‘arterial’ roads can sometimes throw off Zestimates.

Zillow CEO Spencer Rascoff may have recently given real estate agents a gift they won’t soon forget: a sure-fire way to show that Zestimates can miss by a mile.

How? By selling a property for much less than its Zestimate.

On February 29, Rascoff sold a Seattle home for $1.05 million, 40 percent less than the Zestimate of $1.75 million shown on its property page a day later.

The gap between the Zestimate of Rascoff’s former property and its sales price has decreased only modestly since then.

Zillow readily acknowledges that Zestimates can be inaccurate, but some consumers can still take them at face value, causing headaches for agents.
Citing the chasm between the sales price of Rascoff’s former home and the property’s Zestimate may be one way for real estate professionals to show clients that Zestimates are, as Zillow says, only a conversation starter for pricing a home, not the final word on its value.

Zillow CEO sold his home for way less than Zestimate.

Philip Gray, a San Leandro, California-based appraiser, is taking this approach. Bringing up the Zestimate of the property Rascoff recently offloaded will help him deal with the frequent pushback he receives from homeowners “who think Zillow is the magic 8-ball,” he said.

‘We missed’

Zestimates on Rascoff’s former home have certainly been overstating the property’s value, said Zillow Chief Analytics Officer Stan Humphries.

“The fact that we missed and there are empirical reasons we missed — that’s a great conversation that real estate agents should have” with consumers, he said, citing the property’s irregular lot and location on a busy road as partly responsible for its Zestimate’s inaccuracy.

But he expressed hope that, in the same discussion, agents also won’t instill “data nihilism” in consumers, and that they acknowledge that humans also can miss the mark.

Smaller gap at start

In July, the Zestimate of Rascoff’s former property wouldn’t have raised the eyebrows of anyone who’s familiar with automated valuation models (AVMs). At $1.388 million, the property’s Zestimate was 7.3 percent higher than its listing price of $1.295 million at the time.

Since Zillow only shows revised historical Zestimate data on property pages, the home’s property page currently indicates that the property’s Zestimate was around $1.6 million in July 2015, somewhere in the neighborhood of $200,000 more than the Zestimate that actually appeared on its property page on July 17, 2015.

For all anyone knew in July 2015, the property might have eventually sold at a price closer to its Zestimate than its listing price.

But that didn’t happen. The home later sold for $1.05 million, 19 percent below its July listing price. Undergoing a number of price cuts, the property was listed and de-listed several times between when it was originally listed on July 7, 2015 and when it sold on February 29, 2016.

If Rascoff thought his home was worth its July listing price, the outcome of the sale might have come as a disappointment. But if the success of the transaction were judged by the property’s Zestimate, it was a failure.

The home’s Zestimate was $1,750,405 on March 1, the day after the property sold for $1,050,000.

If that Zestimate were accurate, it would mean the chief of the biggest name in real estate and the recent co-author of a book about “the new rules of real estate” would have sold his home for 40 percent less than it was worth.

Automated valuations vary

In addition to highlighting the shortcomings of Zestimates, the Zestimate of Rascoff’s home also brings into focus the potential for some automated valuations to be more accurate than others.

Unlike Zillow’s property page on the home the day after it sold, Redfin’s page on the home showed that the sale had occurred. At the time, it displayed a valuation of $1.1 million — much closer to the property’s sales price of $1.05 million.
On Thursday, May 5, Redfin’s estimate of the home’s value was $1.3 million.

So while Zillow’s estimate had come down by around $140,000 since the home sold, Redfin’s had increased by about $200,000. Both differed from the price the home sold for a little over two months ago by hundreds of thousands of dollars.

Zillow has since added the sales price of Rascoff’s former home to its property page.

The property’s Zestimate had slipped from $1,750,405 the day after it sold to $1,608,670 on May 5, but its Zestimate on May 5 still only represented 65 percent of what the home sold for a little over two months before.

To judge the Zestimate’s accuracy based solely on the gap between the sales price of Rascoff’s former home and its Zestimate would probably be unfair. The discrepancy is unusually wide, according to what Zillow says is the Zestimate’s median error rate.

Zillow puts the Zestimate’s national median error rate at 7.9 percent, meaning half of Zestimates nationwide are within 7.9 percent of a home’s sales price and half are off by more than 7.9 percent. The listing portal claims an even higher level of accuracy in Seattle, where Rascoff’s former home is located.

There, Zestimates for half of homes are supposed to be within 6.1 percent of their sales price, while half are supposed to be off by more than 6.1 percent. This suggests that the Zestimate of Rascoff’s home missed by much more than normal in Seattle.

Why was that?

One reason is that the home’s Zestimate was comparing Rascoff’s former home, which is located on a triangular lot, to recently sold homes located on rectangular lots, according to Humphries.

Since rectangular lots provide more utility than triangular lots, he said, that meant the Zestimate was overvaluing the plot of Rascoff’s home.

Another reason was that Rascoff’s home was located on an “arterial” road while nearby recently sold homes sat on quieter streets.

Zillow continues to research how to program Zestimates to account for such factors, but “we haven’t fully cracked the nut on that one” yet, Humphries said.

‘The classic luxury homes problem’

Zillow Senior Economist Skylar Olsen added that the Zestimate of Rascoff’s home represents “the classic luxury homes problem.”

Zestimates can’t take into account “non-quantifiable facts,” such as layout design or lighting, and these facts can have much more of an effect on the values of luxury homes than less expensive properties, she said.

Real estate agents can see how special features impact a property’s value, but the “Zestimate algorithm can’t know” and “at this point in time, it’s not designed to know,” she said.

The reason why the Zestimate of Rascoff’s former property hasn’t dropped dramatically since selling at a much lower price than Zestimates leading up to the sale is that the Zestimates have a “smoothing function” designed to keep them from overreacting to recent property sales.

The Zestimate on the Rascoff’s former property will gradually come down to more closely resemble its sales price. And upcoming updates to the Zestimate’s algorithms will adjust the smoothing function so that the Zestimate of a home that sells will come to more closely mirror its sales price much faster.

Also worth noting is that Zillow does not have access to sold listing data from the Northwest Multiple Listing Service, the MLS that covers Seattle. Automated valuation models (AVMs) that crunch sold MLS data can have an advantage over AVMs that only use public sales records — which are the only sales records used by Zestimates covering Seattle.

While Zillow says on its website that most consumers understand that Zestimates truly are only estimates, the listing portal concedes that, sometimes, “someone will come along that insists on setting the price they are willing to buy or sell for based solely on the Zestimate.”

Zillow goes on to say that “education is the key” and that, armed with knowledge of how Zestimates are calculated along with their local median error rate, agents can explain “why the Zestimate is a good starting point as well as a historical reference, but it should not be used for pricing a home.”

While Zestimates can create hassles for agents, some agents would certainly agree with Zillow’s assertion that understanding how a Zestimate is calculated, along with its strengths and weaknesses, “can provide the real estate pro with an opportunity to demonstrate their expertise.”

The gap between the Zestimate of Rascoff’s former property and its sales price may have made it easier for agents to seize that opportunity.

Zillow’s Humphries’ hopes that, when putting Zestimates in perspective for consumers, agents will also acknowledge that Zestimates do have a scientific basis, and that nobody’s perfect — even trained professionals.

He noted that a study released by Zillow in 2012 showed that the typical gap between a home’s Zestimate and its sales price wasn’t that much larger than the typical gap between a home’s initial list price — which is often set based on a real estate agent’s recommendation — and its sales price.

“We acknowledge humans are great at this, and we’re great too — but they’re greater,” Humphries said.

Read FULL ARTICLE with graphics here.

Editor’s note: A previous version of this story incorrectly stated that realtor.com has access to the Seattle MLS, and that realtor.com showed status changes to a property that weren’t displayed on Zillow.  Inman © 2016 All Rights Reserved

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117. 

 

The Evolution of Home

May 19, 2016

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117. 

 

EvolutionofHome

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