First Time Home Buyer Tips - Daily Properties Real Estate Mortgage Advice & News

How to Find the Market Value of a Home

June 18, 2020 By George Sudol, San Francisco Bay Area Realtor Leave a Comment

I’ve been a Realtor in the California Bay Area for 20 Yrs and the most common question I get from all sides is “How much is this home worth?” Home Owners want to know much equity they have or how much they can get for their home if they sell it. Prospective Buyers want to make sure they’re paying the right price for whatever home they’re considering purchasing.

Can We Calculate a Fair Market Value of a Home?

And while the Home Owner and the Prospective Buyer have diametrically opposed biases regarding the value, a price needs to be agreed upon by both sides for a sale to ultimately happen.

A common perception is that a neutral 3^rd party, the “appraiser”, is the perfect arbiter to establish an objective value that’s unbiased. But the reality is that in a “Sale” appraisal, all the appraiser is doing is looking at what the Buyer agreed to pay for the property and trying to see if they can come up with a “good argument for that price”, based on the most recent Sale comps and reasonable adjustments for differences. And an appraiser will often stretch the appraisal adjustment guidelines as far as they can in order to find that reasonable argument to give it the value (the price that the Buyer has agreed to pay). Failing to find it, they will at least get the appraisal price to be as close to the purchase price as they possibly can.

While this may seem like an ugly truth about appraisals, it speaks to the fact that appraisers recognize the ultimate truth about what “really” is the value of any given property. Each given property is unique in itself, even in the case where differences (between it and other nearby properties that have recently sold) are seemingly “minor”. And in most cases, the differences are many and some of those differences are “major”.
Thus, ultimately, the value of any given property “right now” is the most than any given Buyer is “willing” AND “able” to pay for that property “right now”. And in parts of the country like the Bay Area, where demand perpetually exceeds supply and a plethora of Buyers have high salaries and large down payments saved up, that reality plays out in spades. While it’s great to understand a “range” of “appraisable” value of any given property prior to making an offer, that won’t matter much in multiple offer situations where you have no way to know how badly the other bidders want that house and/or how strong they are financially.

Thus, in the end, until any given house is ultimately sold, we all need to be comfortable with the fact that we don’t really know what our house/property is worth. The best we can do in the mean time is to gain a vague understanding of a “likely range of value” from an analysis of the most recent nearby Sale comparables and the differences between those Sale comps and our own house/property.

Your Plan for a Successful First Time Homebuying Experience

April 12, 2015 By Martha Floyd Leave a Comment

Purchasing your first home can be an exciting and nerve-racking experience. From narrowing down the location you want to live to going through the home loan process, emotions are on a roller coaster. However, following a few simple tips will ease the anxiety and allow for a rewarding experience. The key to a successful homebuying experience begins by selecting a reputable REALTOR®. Ignore the hype released through advertisements and the internet. Instead, choose a REALTOR® recommended through a family member or friend that represents the buyer. Please confirm with the agent this is how they work. It’s imperative to have an agent working for the buyer when the stakes are so high.

Consumer advocates in the early 1990’s pushed for buyer representation. Historically, agents working with buyers were sub agents of the sellers, and they worked in the best interest of the seller instead of the buyer. A buyer agent has a fiduciary obligation to represent the buyer’s best interest. They advise the buyer on how to make a good offer, advocate and negotiate the best terms and price on the buyer’s behalf. It does not cost the buyer any more to work with a buyer agent. Traditionally, in the Washington D.C. area, the seller pays for the buyer agent’s compensation.

A great REALTOR® can refer other professionals integral to the homebuying process. Because the REALTOR® (already trusted by a friend or family member) referred these individuals, it’s easier to place confidence in them. Ask for the names of two or three recommended loan officers. A good agent will know good lenders, the kind that go the extra mile and provide top notch customer service. Feeling comfortable with a lender is essential. The loan officer reviews income, assets, liabilities and runs credit checks. They match the loan program specific to a buyer’s needs, most likely a loan that is made especially for the first time homebuyer.

Starting the loan process early is essential because any errors found on the credit report can take a considerable amount of time to correct. When comparing rates, be sure to ask for a zero point rate quote so that the comparison is truly apples to apples. The market fluctuates daily; when comparing rates, it is important to make comparisons on the same day. Once selected, it is important to obtain a preapproval letter. The seller wants to see a good preapproval letter to assure that the buyer can obtain a loan. Nothing is more frustrating and disappointing than falling in love with a home and not being able to purchase it.

Finally, ask for a title or settlement company recommendation. They are the ones who review past property sales, deeds and ensure that the title is clear of any liens. They also issue title insurance to protect the buyer’s interest down the road.

We all dream of place to call our own, and it’s exciting to find the right one. A home is where memories are made and love is shared so it’s important to assemble the right team to turn that dream into reality.

Bringing together a team of successful professionals, including the real estate agent, loan officer and title company are the keys to successfully purchasing your first home. This is an exciting adventure with a huge payoff for years to come.

The Important Factors In Buying a House

March 20, 2015 By Michelle Shurtleff 1 Comment

Looking to buy a house? If this is your first time, it can be arduous, scary and time consuming. Well, I’ll tell you something. It doesn’t have to be frightening, and it can be a lot easier. It’s all about making a decision based upon the best information provided. Where do we begin?

Location

I’ll say it three more times: Location, Location, Location Do you know where you want to live? Is the area great for you and a loved one? Are you looking for a home to start a family? Would this home be just for you? Ask yourself those questions. Take your time in creating an answer. If it’s something that’s worth doing, it would be wise to do it right. Imagine this: Moving in with your significant other and your lovely child and it turns out that you’re right next to a frat house. Or better yet, a young single entrepreneur moving into a block filled with families wouldn’t be the best idea. Waking up at 2am due to a baby crying may cause some issue. Hence why there is a need to find a proper location for you. Once you have a location in mind, do your research. Take a look around. Make trips, ask around and get a feel for the area. Understand that the area could be your home for the rest of your life.

Design

Do you have an idea of what your future home should look like? Not everyone wants a house with blue shudders with a white picket fence. Some people just want three bedrooms and two baths. Others just want two bedrooms and two baths. Then there are those who are looking for a house with a very big yard, or a very big pool. Think about it. Be thorough. Be specific. Now your exact match may not be found, but take a look at those closely resemble your vision. After that, head inside and tour. Make sure that everything works properly. Walk around and ask how it feels. Do you have a good feeling? Does this feel like home? Don’t get too attached with the appearance. Someone once said, “Never judge a book by its cover.” Keep that in mind.

Finance

This may be sound a bit obvious, but seriously make sure that everything is looking good. Banks will conduct an extensive financial background check. Make sure that you are in good standing. Confirm that payments have been received, but most importantly, check to see if they are on time. Your credit rating needs to be GREAT. The bank doesn’t take too kindly to average to low credit ratings, missed or late payments. Furthermore, it looks bad to be rejected by a bank when applying for a loan. If you are responsible with your finances, and something on your record appears to be questionable then have it checked out. Think of your finances as your personal health. If you’re feeling under the weather then take the proper precautions.

Realtor

Do you need a realtor? That is the question. Most importantly, understand that this is just a suggestion. You are not required, but it does help. In the event that you are having trouble finding your dream house then a realtor can help. Realtors have contacts plenty of listings. To find the best realtor for you, do your research. Ask around; ask friends, coworkers, and associates. Nothing beats a personal reference. Another way to find a realtor is to simply utilize the Internet. Look for reviews and make sure that that person is licensed to practice.

Debating Between Buying a Home or a Condo

November 23, 2014 By Mike Otranto Leave a Comment

When most of us think of buying a home we think of the nice detached house with a picket fence and a nice backyard. Most of us have come across the idea of buying a condo at one point in time. Buying a home or buying a condo will depend on your individual needs and lifestyle. Below are some quick tips that will empower you to make a better decision.

What is a condo?

“Condo” is short for condominium and describes a type of real estate ownership. You are essentially buying an apartment. Both look identical in appearance and you cannot tell an apartment complex from a condominium development simply by looking at them. The differences are legal and reflect a different level of interest in real property. From a technical point of view you are the owner of the airspace within the boundaries of the condo unit only. All other property in the development is considered to be common and an individual condo owner will only have a fractional interest in this.

Advantages of Buying a Condo

Affordability

The advantage of buying a condo lies in its affordability. This means that a buyer will have to come up with a smaller down payment. This can be enticing to first time home buyers who are short on cash.

Less maintenance

Generally condos are easier to maintain because you only have ownership of the apartment space itself. Large items like the roof, gutters, siding, and landscaping will be maintained by the home owners association (HOA). For this reason many retirees buy condos because they can no longer maintain a single family home.

Locations in urban areas

Many high end condo units are being built in the urban areas of cities within walking distance of entertainment, dining, nightlife, and high paying jobs. This is especially attractive to buyers who like fast paced environments but do not own a car.

Disadvantages of condo ownership

Minimal appreciation

Generally speaking condos do not appreciate as fast when compared to similar detached homes.

HOA dues and assessments

HOA dues and fees can be very expensive relative to the mortgage payment. They can also “assess” large one time fees to fund new roofs or siding. Keep in mind that HOA’s have the authority to foreclose on your property so paying dues is mandatory.

Rules & restrictive covenants

There are many rules and restrictive covenants regarding condos. It is imperative that you get a copy of all the rules and restrictive covenants from the home owners association and read every word of it!

How does a condo differ from a single family detached house?

With the single family home you are also buying a parcel of land and hence have ownership of a larger amount of real property. With ownership comes more freedom and responsibility. All landscaping, yard work, roof and gutter work is the responsibility of the home owner.

Advantages of owning a detached home:

Maximum appreciation

Single family homes will almost always appreciate much faster than condos in similar areas and are thus more economically viable. This allows home owners to create a larger amount of equity and get a larger check at the closing table.

Easier to sell

Detached are in more demand because of their versatility. There is usually more square footage and room for larger closets and amenities. A house with a fenced in yard are attractive to owner with pets or ones with a family. This makes them makes them easier to sell because they appeal to a larger pool of buyers.

Absence of an HOA

The absence of an HOA will give the homeowner greater freedom in designing and modifying their home. Also, money that is not given to an HOA can be used in other areas such as upgrades, or paying down the principle on the loan. Also, having the option to grill out with your friends in the back yard is a nice feature that allows a greater sense of freedom. Keep in mind that many homes in new construction subdivisions will have some form of a home owners association so never assume there is not one in place just because it is a detached home.

Quiet enjoyment

Having more distance between yourself and your neighbors affords a great opportunity for quiet enjoyment of your property. Urban environments and having neighbors in close proximity gives rise to nuisances such as hearing load footsteps above you or overhearing a neighbor fight with a spouse etc.

Ultimately you have to decide what’s most important to you. Condos can be great to a retirees who cannot maintain single family homes but do not want to rent. Single family homes are the ideal place to build equity for those in it for the long term.

Choose a Property that Matches Your Lifestyle

May 14, 2014 By Bill Golden Leave a Comment

There remains a lot of confusion in the marketplace regarding the differences between buying a single family home versus a condo or townhome. Ultimately, the most important question is what type of property best fits your lifestyle?

If you want a private yard and no close neighbors, you’re probably best suited to a house. If low maintenance and less responsibility are among your goals, a condo or townhome is for you. There are many factors to consider, and when you look at all your wants and needs, you may be surprised at what suits you best.

To start, it is crucial to understand what house, condo and townhome ownership mean. Some of the definitions vary and can be confusing and the lines are often blurred, or seem to be.

A single-family house is one in which you own the home and the land it sits on. You are generally responsible for all maintenance and other obligations of both. This can be different if the home is in a subdivision that has a homeowners’ association; such an organization might take care of some maintenance, and may have covenants and restrictions as to what modifications you can make to your home and yard. Give any such amenities and restrictions serious consideration before buying into a community, taking a long look into the future as to whether they will be more of a burden or relief to you.

With a condominium, you own the unit you live in, and also own a portion of the common areas of the complex. There is normally a mandatory association fee, which varies in terms of what items that fee covers. There will be covenants and restrictions, outlining ownership and use of all aspects of the condo and common areas. Generally, you are only responsible for the interior of your unit.

“Townhome” can be confusing, and is often misused. Many condos offer two-story units, which are generally called townhomes. That should not be confused with the type of ownership, most often called Fee-Simple Townhomes, or Planned Unit Developments (PUDS). A truly fee-simple townhome means that you not only own the inside of your unit, but that you own the outside and the land it sits on as well. Most townhome developments have homeowner associations with monthly dues, though they are generally less than condominium dues, depending on what your fees cover, and what amenities they have.

When considering a condo or townhome, be sure to consider the monthly fees as part of the equation. For instance, a condo may seem like a bargain, but when you tack on the monthly fees, the picture changes. On the other hand, consider what those fees include, which you may be currently paying in another category. For example, if the fees include some of your utilities and outdoor maintenance, the fee may not be as high as it seems.

Do your due diligence on any particular community in which you are interested. A great and relatively universal indicator: How is the resale value? Single-family homes tend to have a stronger resale value, though there are many variables. Have the fees gone up recently, frequently or never? Does the condo or homeowner’s association have money in reserves, and how is the group managed? Are the majority of the homeowners current on their dues, and is that the “norm”? How many units are rented, and what are rental restrictions? These are important questions to ask when considering a purchase.

Surround yourself with pros who are prepared to help you make the right choice. Your Realtor and mortgage representative can help you know the questions to ask, and should help get the answers you need to make an informed decision.

How to Find the Market Value of a Home

Can We Calculate a Fair Market Value of a Home?

Your Plan for a Successful First Time Homebuying Experience