As the New Year Approaches, We Take a Look Ahead at Expected Trends in Real Estate

There has been a lot of skepticism in the media and market in general about real estate and whether the current recession has hit us so hard that we might take a whole lot longer to recover than we thought. But the truth is that even though there has been a general hesitance for a lot of folks, the actual long term trend has been an upward one. With an increase of sales for the current year, many real estate agents are reporting the same expectation for 2011. A few other trends are also expected in the coming year that will contribute to a continued, albeit gradual, upward trend.

Low-Interest Rate Lock-In

Most people are misinformed about the real estate industry – and in their lack of knowledge will be too quick to just say “the real estate market is at its worst low”. However, when you look at the actual situation, you’ll quickly realize that contrary to that sometimes popular belief, the trends in residential and commercial property sales have been slowly and steadily improving. The great advantage we have going at the time is the fact that the government wants us to get into our own homes, stay in them and maybe even upgrade if it’s the right time for the right family. This means, among other concessions, a continued solid low-interest rate lock-in that will serve you for years, even well after the recession has hit the road.

Smaller, More Serious Buyer Pool

Buyer pools are at a near all-time low, with the situation in the American workplace as it is. Layoffs, downsizing and cost-cutting has changed the mind set of current homeowners once thinking of selling their existing home and upgrading to the next level. So now, when people are putting their homes on the market, especially properties worth $2 million and under, those homes are being picked up like hotcakes in a hot second by the relatively few buyers out there. Making it a somewhat ideal situation for sellers of this group, the current trend is about a 30% increase in sales from the previous year and moving on to the next year the same is expected to continue. While analysts don’t believe it will increase too much more, projected sales definitely mimic this trend.

Predictable Prices Here to Stay

With the economy on a see-saw and some analysts saying we’re in a double-dip recession while other still saying we’re not, one thing is for certain – the prices that we are seeing are here to stay at least for the next 12 to 24 months. That’s not to say that they won’t fluctuate a little, but the general trends have been of stability in prices and we don’t anticipate any major change there for at least a little while. What this means to you is that you can plan reasonably and if buying or selling a home is in your cards, you have the advantage of knowing what to expect. No one in this sort of economy can stand to go into the dark on real estate deals these days and every bit of predictability is paramount.

Things are changing and slowly, but surely, they’re changing for the better! We are shouting out a resounding ‘Hang in there!’ to our clients. Our confidence in the market isn’t going anywhere. Lock in the lowest interest rates we’ve seen in a long time. Seize the opportunity to buy as one of the few that can buy, or sell to those who are holding a pen in hand waiting to sign that check. Know that the future looks up!

By availing the several opportunities that do lie in the current situation, you can come out a winner and own the property of your dreams! Better yet, you can own the property that will allow you and your family to live comfortably, safely and with stability – for a long time to come!

I Want to Price My House Right for the Market. Should I Rely on Zillow.com?

Should you rely on Zillow.com to price your home for the market? To be upfront about it, the answer to your question is, “Yes” and No.” Here’s why I say “Yes:”

Zillow.com is a wonderful and useful site. To paraphrase the information on their site, it’s one of the “leading online real estate marketplace dedicated to helping home buyers and sellers find and share vital information about homes, real estate, and mortgages…Our goal is to help people make intelligent decisions about their homes - whether it's buying a home, selling, renting, leasing, remodeling or financing - it's all about empowering people with data and information.”

Now, here’s why I say, “No.” The Zillow site doesn’t really know the details of what’s happening in your specific neighborhood because it operates on a mathematical algorithm, not on the real information that you’ll get from a realtor or an appraiser.

So, frankly, on the Zillow web site, your property’s selling price may be too high – or too low! And the wrong price can prevent you from selling your home quickly in a tough market.

From my perspective, you should use Zillow as a starting point to get a general idea of your home’s potential selling price. But, don’t rely on it alone! Definitely talk to someone who knows your town, your neighborhood, and your street. You’ll be a much happier seller if you do!

If you’d like to talk more about Zillow and other online sites, please give me a call today! I’d love to help you out in any way I can.

What is a Real Estate Short Sale? Here are My Frequently Asked Questions...

Who Qualifies for a Short Sale?

In order to qualify for a short sale, the seller must prove to the bank one or more of the following conditions:

- Loss of job, and difficulty in finding new suitable job
- Job Relocation, when equity is deficient
- High medical expenses due to disability, injury or illness in family
- Divorce
- Unable to afford the loan from the beginning
- House needs unexpected major repairs
- Overextended Credit
- Changing Economy
- Adjustment in mortgage payment due to interest rate or an unforeseen increase in living expenses
- Incidentally, these are also the most common reasons for a foreclosure.

Why Would a Lender Accept a Short Sale?

Why would a lender accept less than they are owed? Simply stated, the alternative is a foreclosure. Just as with the borrower, there are significant consequences to the lender if they foreclose.

- The legal costs of eviction and repossession,
- The loss of loan payments during the foreclosure process until it is re-sold
- A foreclosed house will need work before it can be resold
- After the foreclosure, the bank has two options: Sell it at the courthouse steps, or try to resell in the market.

If they resell in the market, they are penalized by the government by freezing 3-10 times the loan amount so that the lender cannot lend those funds to another borrower.

Will my lender consider a Short Sale if the mortgage is current?

Sometimes, some lenders will accept a Short Sale file for approval on loans that are not delinquent. Other lenders will not accept the file until the loan is delinquent.

What if a property needs work, can I still apply for a Short Sale?

Yes. In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn’t. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work. 

What is a Short Sale Packet and What Needs to be in it?

A short sale package it used to determine whether a homeowner can afford the property. Our team will work with you and your realtor to gather the information needed to meet the bank guidelines and streamline the process as efficiently as possible. Below are some of the standard items needed to complete a short sale proposal:

- The Listing Agreement
- Authorization to Release form (to allow agent to discuss with bank)
- Hardship Letter (see “How to Qualify” above)
- Financial Statement
- Seller Net Sheet (a copy of the HUD form with offer)
- Contract (when offer is accepted)
- Buyer’s Proof of Funds (with offer)

I have more than one mortgage on my property . Is that a problem?

No. Subordinate lenders are more flexible than 1st mortgage holders.

What if I have 2 mortgages held by different Lenders?

When you have 2 loans with the same lender, it is more beneficial to them, as there is no need to negotiate
with another lender. When the two loans are with different lenders, the process is a little longer, but the second lender is the one who has more to lose if they don’t reach a settlement. This is because if the property goes to foreclosure, the first loan is the first one to be paid and the second usually nets nothing.

Do I have to be past due on my mortgage to be able to get the benefit of a short sale?

No, but it is likely that the lenders’ guidelines will prevent them from formalizing a short sale if the loan is not past due. This means, for them, that the borrower has the means and can continue to pay on the loan each month. Please understand, however, I AM NOT RECOMMENDING THAT ANYONE STOP PAYING THEIR LOANS. In the current market conditions, it is possible that a bank would accept a short sale, even when the borrower is current.

What is a hardship letter?

This is a letter that explains the borrower’s current financial circumstances. Which circumstances have changed from when the house was purchased, and why the mortgage payments can no longer be made. These circumstances are what led to a borrower’s inability to make payments and to pay off the loan in full. This letter must be written by the borrower, and be sincere in demonstrating (with documentation) that it is the truth.

How long does it take to complete a short sale?

The time frame for the lender to receive and evaluate the short sale proposal is about 8 weeks from the time the offer and Short Sale Package are received. Buyers need to realize that this is a lengthy process. This is why it is very important to work with a Short Sale Specialist who knows how to manage the transaction. The other agent and the buyer may get cold feet at the end, and the transaction may fall through.

Why does the bank accept less than they are due?

They lose less on a short sale. On average, lenders lose tens of thousands of dollars less on a short sale versus a full foreclosure. It is simply in their best interest.

Can staging your home increase the value when selling?

Home staging is one of those subjects that people often feel a little bit intimidated by. There are a number of factors that are involved in good home staging but it does not need to be a complicated issue.

We caught up with Karen of Staging Pros in Santa Clara county. She is an expert in home staging and has a wealth of experience that can turn your home selling experience into a quick and lucrative home sale experience.

Whether you plan to do your own home staging or hire a professional to do it for you, here are a few commonly asked questions about this process with surprisingly easy answers:

What Exactly is “Home Staging?”

The process of staging is taking what you have (or, in some cases, bringing in new items) and presenting them in a way that shows off what you have as well as you possibly can.

In a way, home staging is about illusions. It's beyond decorating and cleaning. It's about perfecting the art of creating moods. Staging makes your house look bigger, brighter, cleaner, warmer, more loving and, most of all, it makes home buyers want to buy it.

Does My Entire Life Have to Be Disrupted for Home Staging?

No! Many people think home staging requires a lot of new furniture and artwork to be brought in and put in your home. In fact, most people already have what they need for a great home staging already in their home. They just need a little expertise to help guide them on how to position their assets.

It is also possible to easily live in the home while the staging process is in full swing. In fact, this is frequently part of the home staging challenge: making your home both staged appropriately and livable. The great news is that it can be done. Particularly when you hire a professional to help you with this process, you will find that the two really can coincide easily.

Is It a Good Investment to Invest Money in Staging a Home?

Absolutely! Many times staging is done after a home is generating little interest on the housing market. Some strategic staging is performed and it sells quickly thereafter. The fact of the matter is if you want to sell your home…and sell it quickly…staging makes all the difference.

Homes that are staged sell faster in a slow market and sell for more money in a hot market. There is simply no reason not to stage. The investment comes back to you in a sold house.

How Can I Find Someone to Stage My Home?

Karen Dayton of Staging Pros is one of Santa Clara County's leading home staging companies. She can be reached at 408-595-7879.

Home staging is often overlooked in the home selling process. In fact, it can be one of the most important factors if you want to sell quickly and for top dollar. If you are in the market for selling your home, I suggest speaking with a professional home stager and see what they suggest. In the end, it may be the best move you could make.

Rock Bottom Interest Rates Open New Doors

Early July 2010 ushered in the lowest interest rates since the 1960’s. In fact, interest rates are currently so low they will probably not go much lower. If you have even considered taking out a new home loan or refinancing an existing one, now is the time to do it.

Record Breaking Lows are a Great Opportunity

Experts agree that interest rates probably have gone as low as they will go. In other words, homes today as are as low right now as they may ever be again in history.

That is certainly something of which to take note.

The rate you ultimately end up paying on a new or current home loan is determined by more than just the current interest rate. Loan officers will also take into consideration your credit score and the amount you wish to borrow. However, even if your credit score is lower than you would like, low interest rates are still a very real and likely possibility.

Advantages of Buying a Home Now

Buying a new home now locks in the incredible interest rates that will save you money for years to come. If you have been waiting for the market to bottom out, now is the time to take the leap of faith to financing a home.

Purchasing a home with record low interest rates allow you to make an investment and build equity in that investment even quicker. Whether you choose to stay in your new home long term or sell it in a few years when the real estate tide turns in the favor of sellers, you will certainly make a wise investment in buying now. Rates are actually so low that you can save $100 to $200 per month on your monthly mortgage payments.

Build a Home Now for a Firm Financial Foundation Later

Building a new home does not need to be out of your equation of owning a new home either. Not only are you receiving incredible interest rates, there are a few other things to consider that makes building a new home a great choice.

Few will argue that the housing economy has struggled for the last few years. As a result, builders have taken a hit and are now drastically slashing prices. This can be used to your advantage as you seek out someone to build your dream home for a fraction of the price it was just a couple of short years ago.

If you decide to build a bigger and better house or just pocket the money you save, the choice is yours. The point is, however, you have a choice get exactly what you need and want if you choose to build a new house.

Refinancing a Current Home Loan

If buying a new home is not in your immediate future plans but having some extra money in your pocket is, consider refinancing your current home loan might be an ideal solution. Refinancing a loan is a great way to draw on extra funds from your loan.

When you refinance with the current rock bottom interest rates, your payments on the new loan naturally go down since the lower interest requires a smaller amount you ultimately borrow.

The historical low interest rates that we are witnessing today create an excellent opportunity for anyone who wants to buy a home or build a home. It also is a great time to refinance your current home loan. The current interest rates are not expected to stay this low for long. Now is the time to make your home owner dreams a reality.

9 Steps You Must Take Before You Sell Your Home

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The home selling process differs from state to state, but there are some important steps that you should take before you put your house on the market--all steps that protect your interests and help you get the most return from your investment.

1. Get Pre-Approved for a Home Loan
I've known sellers who signed a contract to sell their house before they knew if they were qualified to buy another. Either their financial circumstances had changed since their last purchase, and they could no longer qualify for a loan, or they weren't able to sell at a price that allowed them to buy the type of replacement house they wanted. They ended up renting or buying something that was far from ideal.

Before you decide to sell the house, get pre-approved by a lender you trust and research the housing market in the area where you wish to live so that you have a good idea how much it will take to buy a replacement.

2. Check Your Mortgage Payoff

Call your lender to check the payoff for your current home mortgage. You'll need the figure to complete Step 6.

3. Determine How Much the House Is Worth

Determine your home's fair market value. Real estate agents will usually help you determine value as a courtesy, but you might take it a step further and order an appraisal.

4. Estimate Your Costs to Sell

• Real estate commission if you use an agency to sell.
• Advertising costs, signs, other fees if you plan to sell by owner.
• Attorney, closing agent and other professional fees.
• Excise tax for the sale.
• Prorated costs for your share of annual expenses, such as property taxes, home owner association fees, and fuel tank rentals.
• Any other fees typically paid by the seller in your area (surveys, inspections, etc.).
• Real estate agents deal with transactions every day and can give you a very close estimate of seller closing costs.

5. Determine Your Costs to Acquire a New Home

• Total your costs to acquire a new home: moving expenses, loan costs, down payment, home inspections, title work and policy, paying for a new hazard insurance policy--all expenses related to buying a home. Your lender should give you a disclosure of estimated costs when you apply for pre-approval.

6. Calculate Your Estimated Proceeds

1. Deduct your mortgage payoff from your home's fair market value.
2. Deduct your costs to sell from the remainder to get an estimate of the proceeds you will be paid at closing.
Will your closing proceeds cover your costs to acquire a new home? If not, do you have cash or other funding to make up the difference?

7. Make Necessary Repairs

Make all needed repairs unless you want the house to be regarded as a fixer-upper. I'm not referring to cosmetic updates, but to items in need of repair. Anything that's obviously broken gives potential buyers a reason to submit a lower offer.

For a preview of several repair hot spots that worry buyers the most, read Passing Your Home Inspection.

8. Get the House Ready to Show

Most houses need at least a little spiffing up before they are shown to potential buyers. Great curb appeal, fresh paint indoors (and sometimes out), organized closets and cabinets, sparkling clean windows and appliances, and a clutter-free atmosphere are essential if you want the house to appeal to buyers.

Read: The Importance of Curb Appeal and Getting the House Ready for Showings for more prep advice.

9. Get Psyched Up to Let People In

If you're listing with a real estate agent, she'll no doubt ask you to leave when the house is shown. Why? Because lurking sellers make buyers nervous--they don't feel comfortable inspecting the house when they feel they are intruding.

Unless there's a real reason for it, don't ask your agent to be present for all showings. That's the kiss of death for showing activity. Other agents want privacy with their buyers and they don't usually have time to work around your agent's schedule.

Los Altos Market Stats April 2010

The real estate market, in general, is bipolar. Ups and downs keep home buyers and sellers guessing. Sometimes, all people can rely on are statistics and trends that can lead them in the correct direction.

While sales and prices may be on the rise -- a good indication of recovery -- the same can be said for repossessions and interest rates, which is not a good sign. Furthermore, other factors such as unemployment, underemployment and a rise in foreclosures seriously impact the health of real estate. 

It’s important to know all the market facts before buying or selling a home if you want to have a successful and profitable experience. More particularly, there are ten market numbers that everyone should know even before listing your house. These include:

Property Taxes – Though sometimes overlooked, property taxes can really cost you. So if it’s higher than normal in your neighborhood, simply emphasize all the incredible perks like school, parks and other features that make the area more valuable.

Interest Rate – This number is vital when it comes to knowing when to sell, and the tiniest increase can alter your mortgage more than you would think.

Average Sale Price – In real estate, conformity is wise when it comes to matching the price of other houses in your area, or even on your street. So keep tabs on the average sales price of homes within the last couple months.

Average Listing Price – Again, be sure to keep your house within 5% of other listings in your area, otherwise you home is sure to be pushed aside when buyers recognize it as overpriced!

Average Days on Market - Often times, buyers have other factors like work, the kids’ school schedule or move-out deadlines that impact the speed at which they must purchase. This useful statistic comes in handy in such situations, and provides the average number of days houses have been on the market.

Marketing Fee – You might be dying to get that house sold, but it’s important to be aware of how much it will cost you to get it the attention it deserves. Whether you’re selling it yourself or with the aid of a professional, extra marketing efforts could affect your final profit deeply if you don’t pay close attention.

Absorption Rate - This rate is the number of weeks it takes to sell the current inventory at the present rate of sales. It is not an exact science; it is based on real estate market trends in your area. You need two figures: the number of listings and the number sold last month. The absorption rate will give you a better idea of how much time will need to be invested in the selling of your home.

Sell Price to List Price Ratio – After figuring the average selling and listing prices, comparing them side-by-side will help you to better expect what to list the house for and what offers to expect.

Inventory – Knowing exactly how many properties are for sale in your area will give you a better grasp on your competition.

Seller’s Net – You obviously want to know how much you’ll be walking away with after everything is said and done. Incorporating all the selling and buying factors into a functional equation of your net profit is of the utmost importance to you and can be done with the assistance of a professional.

We Are Here to Help!

Obviously there are many elements that play into the market equation, and many facts that are more important to know than others. Don’t you wish someone else could sort it all out for you in one, convenient database so you can better utilize these patterns in the buying or selling of your home?

At DominicNicoli.com, we provide accurate and up-to-date real estate market trends that you can rely on. Targeting the Los Altos area, those looking in the Silicon Valley region will find this information especially useful. 

For access to these trends and for any other questions or assistance, don’t hesitate to visit DominicNicoli.com right now or call us at 650.947.4787!