Last time I wrote about my refinance plans, I failed to follow up on what happened, partially because I was so dissappointed in the results.  To make a long story short, at the end of last year, our appraisal came in far too low for us to afford to proceed with the transaction.  We threw the towel in and decided that we would try again when the market looked better for us, despite the fact that we had already paid for a pricey appraisal.

Fast forward 6 months, and we have just locked in our rate at 4.75% for a 30 year fixed loan.  We are thrilled!  Our house appraised for $45k higher than it did just 6 months ago.   This is due to a couple factors: the market has improved, but also, we have had more similar sales in our neighborhood.  I remember when our first appraisal came in I thought it was rediculous!  I knew that if I put our house on the market to sell that we would do far better than what this appraiser was telling us.  However an appraiser doesn’t look at what COULD be.  They look for hard facts - closed sales within the last 3 months within one mile of the subject property.

Lesson learned: before you spend money on an expensive appraisal, take a good look at your possible value and see if you can afford to do it.  Talk to your mortgage broker and ask, “If my house appraised at X dollars, how much cash would I need to close the transaction?”  Be very conservative in your estimate so that you aren’t dissappointed later.

This post is aimed at owners of the very common 40-50 year old ranch home found all over San Jose.  Let’s narrow that even further by saying Cambrian, West San Jose, and the less expensive areas of Almaden Valley.  These are great family homes, but they definitely very average in terms of price – let’s say $550,000-$850,000.  That’s an important consideration when you are fixing up a home, because you don’t want to over-improve the home and decrease your ROI.  This would be a much different post if I was talking about a more expensive or less expensive neighborhood.

Let’s get started.  The homes I see that get the most attention and the highest prices in their neighborhood have the following:  

• Energy efficient air conditioning, dual-pane windows, ceiling fans, new insulation in attic and walls
• Refinished hardwood floors (carpet is not as desirable to many)
• An updated kitchen with new cabinets – not just refaced – and new appliances ($20,000-$30,000)
• Bathrooms that are tidy and look new (don’t need to be expensive, but must be immaculate and attractive)
• New interior doors and plantation shutters
• Fresh paint inside and out with dual-tone paint inside
• upgraded baseboards (get rid of the 1-2 inch trim they put in when they built these places)
• Fresh landscaping front and back including a lawn in the back yard
• Newish front door with fresh hardware (doorknob, doorbell plate, porch light)
• A roof that is in good shape and won’t need replacing in the next 10 years
• A clean bill of health from the pest inspector
• Any major issues in home inspection fixed
• Style wise, avoid shiny gold fixtures, oak, and anything else that looks too dated

Now, you may not be able to do all of these things before selling your home, but it’s good to know what buyers in our area are looking for, ESPECIALLY in this market.  Buyers tend to be very picky and are looking for any excuse to lower their bid or renegotiate price and terms during escrow. So, it’s always a good idea to invest in a pest inspection and home inspection prior to listing your home.  It will put you in more control of the negotiations.

Hope this helps!

As interest rates have continued to tick down, down, down, scraping the bottom and hitting 1950′s era lows,  I have been encouraging all my clients to take advantage of this golden opportunity to lock in rates either with refinancing or making new real estate investments.

The other night my husband and I looked at each other and said, “Ok, what about us?  Why all this talk – why not take some of our own medicine and do what it takes to refinance our home?”  We are currently in an interest-only 10 year ARM at 6%.  Plus a HELOC second.  Our goal is to get that down to ONE 4.85% 30 year fixed loan.  We want to hold on to this house and eventually rent it out.

Here’s what we had to do:

1) Assess the approximate value of the home.  I told my husband that I could certainly sell the house for more than a refinance appraiser would give us, but there just weren’t enough good comparable sales from the last 3 months.  So we had to come up with a realistic number, which happened to be about $30-40k less than I would have liked.

2) Talk to my mortgage broker.  I told her about our plans and what our house would appraise for, and she told me how much money we’d have to throw at our current loans to qualify.  (You must have 20% equity in the house.)  Then she told us what our payments would be if we did this.  Turns out, we will have to pay off our entire 2nd loan, plus pay the closing costs involved with the transaction.  But, as a result, we will have our 30 year fixed loan at a great price per month – similar to what we pay now, except that we’ll be putting money toward principle each month, and our loan won’t get reset in 5 years.  We decided it was worth it to spend this much money, based on our optimism of the real estate market now and the fact that we want to hold on to the house.  It will be a good investment.

3) Come up with all the paperwork.  W-2s, 1099s, tax returns, investment accounts, pay stubs, bank accounts, etc.  WAAAYYY more paperwork than it took us to buy the house!!  (I think we just had to give a social security number and a handshake to get it done before. Yikes!)

4) Wait for our loan to get processed.  Our turn-around time will be about 30 days now.  Toward the end of escrow, the bank will give us the exact amount to pay off on the house to meet the 20% equity rule.  So, we’ll just pay that through escrow at the time of closing.

Ok guys, you heard it here – I am officially walking the walk.  So if you want to join me in making some possibly hard but SMART moves, let me know and I can point you in the right direction. 

Here’s to wealth building in 2010!!

We have an interesting tactic going on right now in certain areas that are experiencing multiple offers on homes.  I’ve had a feeling that this tactic was actually taking place for some time, but I just heard a talk from RPM Appraisal Service’s Director of Appraisals, Gary Voyavich, which confirmed it:

Gary says that in multiple offer situations, buyers are bidding far higher than they believe the house will appraise, just to beat out the competition and lock the seller into escrow.  Then, when the appraisal comes in low, the buyer demands that the price be renegotiated down to market value.  Did this buyer ever have any intention of paying the price he wrote on his purchase contract?  Not a chance.  He was betting on the appraisal coming in low, and he knew that in order to put himself ahead of the 18 other offers, all he could do was to put in a high puchase price and hope the seller and the listing agent would bite out of greed or ignorance.

Besides being shady and dishonest, this method can be risky and a waste of time for everyone.  According to our company attorney, Mark Strombotne, “the contract is designed to give an automatic cancellation right to the seller if the house doesn’t appraise for the purchase price.”  Should the Seller or their agent catch a hint that this buyer was being dishonest and offering a bogus offer, they may just kick them out of contract and move on to another buyer who was more realistic in their approach.  In the mean time, all the high bidder has done is to waste everyone’s time.

We are seeing wonderful interest rates as we head into Christmas 2009.  Can they go lower?  Many say this is it and next year we will see rises.  So you know you want to take advantage of it, but will you qualify for the lowest rates out there?  The answer is probably yes if:

1) you have a credit score of 720 or higher

2) you can put 20% down

3) you have 3 months reserves of your calculated PITI in the bank or your 401k.

[Note:  People who are self-employeed are still having issues getting financing, because many of us make good income, but have great CPAs who hide our income with write-offs.]

Finally!  It seems Realtors have stopped moping around complaining about the market.  I keep running into people who are genuinely excited about what next year holds.  Sheesh – we need it!  It’s been tough to be a Realtor these past couple years.  All the stats are lining up and pointing toward a strong 2010 housing market in the Bay Area.  Inventory is getting steadily lower, buyers are still out in big numbers, and we’re seeing the median price continue to increase, which means that more expensive homes are starting to sell in greater numbers.  When the stats look like this going into the holidays, it usually means a strong Spring market.  (Quick! Knock on some wood!)  For awhile, it seemed that the only homes selling were the super-cheap REOs and short sales, so this trend is exciting to watch.

We have a market brief with october stats on the company blog I manage and write:  www.serenogroupblog.com

Cheers!  Definitely a reason to be thankful this Thanksgiving.

He offered to do a steam cleaning.  We demanded that they give us a credit for all new carpet.  They agreed.

Immediately after closing escrow, my clients started ripping out the carpets.   As you can see below, the problem was much worse than the seller disclosed to us.  In fact, the only place that wasn’t pee stained was under the furniture, where the dogs couldn’t reach.  So, when you are buying a house, use your nose!  If something smells off, it probably is!!

It happened with my first pregnancy and it’s happening now: when I am expecting, I get more business than I know what to do with! I have a wonderful pipeline right now, filled with great clients who are fun to work with, super eager, and very appreciative.

I wonder what the secret is… I have a few theories:

1) My “mommy glow” is attracting new clients in a similar way that a moths are drawn to a flame.
2) Clients are super nice and appreciate because you can’t be mean to a pregnant lady. Bad Karma.
3) Current clients realize they must get their act together and buy something or sell their house because there is a 9 month deadline (now more like 6 months!)
4) My superior negotiating skills are now razor sharp because no one can say “No” to a girl that might go into early labor.

What do you think – do you agree with my theories?? Whatever the reason for this apparent phenomenon, it works for me. The plan was to stop after 2 kids, but if we hit another round of the housing crisis, you never know!  You may just be able to map out the history of bay area housing slumps by looking at the age of my children.

First of all, I happened to get an email from a stager I had met at a networking event asking if I had any properties that I needed to have staged for free.  Yes, for FREE!  She teaches a class and was looking for a subject property to include in her course.  So immediately I had her come over to this couple’s home and do her magic.  It came out beautifully.  Of course, I should mention that my clients also worked tirelessly to tidy up, move furniture around, and paint the home up until the very minute buyers were walking through the door.

Secondly, in talking to a fellow agent who is the “short sale expert” in our office, it turns out that my cient’s bank had just agreed to start a brand new “fast track” program in which they’d approve our top offer on the listing within 5-7 days.  In case you’re not familiar with the housing market right now, short sales are typically HORRIBLE.  You submit your offer and then wait, wait, wait, for months, to get a response from the bank.  By then your buyer is no longer interested.  Failed short sales have lead thousands of homes into foreclosure.  It’s sickening.

So free staging and this miricle fast track program – what are the chances??  So, after a whirlwind weekend of showings, we ended up with 12 offers, 4 counter offers, and 1 winning bid at he end of today that is very strong both in price and terms (and buyer motivation).  I am exhausted! 

Now, let’s see how fast this Fast Track program really is!

With work getting busier by the day, spending a good hour per day exercising, and taking on new responsibilities (creating my corporate blog) I am going to have to as hard core about my schedule as a: 

Go Grasshopper, GO! (ok, I just wanted an excuse to post this wacky ninja photo.)