Did you know that if you are purchasing a house and plan on having someone rent a room from you, that rental income can be counted as your income and help you qualify?
Rental income for a room can be any where from $300 to $800 a month, depending on your location and amenities. Adding that amount to your income can make a difference between being able to qualify or not qualify for the mortgage loan.
Check with your lender about the specific requirements.
Almost every buyer I come across will ask me, “What do you think of foreclosures? Can I save money by buying a foreclosure?”
There certainly was a time when you could get a house at a reduced price by buying a foreclosed property. You have no doubt heard of or even attended seminars that taught how to find and buy REOs, or Real Estate Owned property from banks and lenders. I believe below market prices can be had in the right market conditions.
In my area in Southern California, I am still seeing a seller’s market. There is still a demand for homes where if a house is decently priced, there will be multiple offers on it. This means if a seller is delinquent in his mortgage payments, his best option is to put it on the market, and it will sell. So why should he allow it to go into foreclosure and lose everything? By selling it, he can at least salvage his credit. While we are certainly not seeing 20% gain in value of homes, there is still some rise in property value. So there may even be some equity left for him to get some cash out of it.
So, the answer is, there isn’t much of a chance of getting a deal from foreclosures now. Perhaps the market conditions will change.
Have you tried using Zillow?
I tested it out to see how close they are to market value.
Trial #1 A property I sold for $375,000 Zillow gave it a value of $401,000. While I think we did get a pretty good price for that home, I think $401K was too high.
Trial #2 A property that recently sold for $478,000 Zillow valued it at $412,000. They were pretty far off there.
Trial #3 I found the value of my own house on Zillow. The value they gave was within $20,000 to $30,000 of what I would list it for if I were to sell my own home. They were low by about 4% according to my estimate. I give them credit for coming pretty close on this one.
I do not like their wording on their home page: “Buyers: Compare home values to avoid overpaying”. If you are paying more than the value given by Zillow, you are not necessarily overpaying. No matter how sophisticated their algorithm, Zillow cannot account for condition of the property and subjective nature of a home purchase. The value of a property is what the market will bear. If someone is willing to pay a certain sum, that is what the property is worth. Zillow does explain how to use their “zestimate” appropriately. However, that wording to grab people’s attention is somewhat misleading.
When I do comps for a buyer or seller, I have firsthand information personally to make the appropriate adjustments of many different factors and with understanding of the market conditions. I don’t think Zillow can replace what a good real estate can do for you. Still, I admit it is a fun site to check.
As a seller, when you list your home with an agent, you have to determine how long of a listing period you want on the listing contract. This is how long you are hiring the agent to sell your house.
Most agents will want a listing term of 60, 90, or 120 days. When the market was moving fast and properties were selling within a couple of weeks, The length of the listing did not matter because the house will almost certainly sell well before the listing period was over. But now that the market is slowing, it does not make sense as a seller or as an agent to list for less than 60 days.
The reason is it takes time to expose the house on the market and to find the right buyer. You may have many showing appointments as soon as the house is on the market, but remember the right buyer has to be READY, WILLING, and ABLE to buy the house. Not everyone who sees the house is a good buyer in that sense. The house may need to be marketed long enough to make sure as many potential buyers as possible have a chance to see it and consider it for purchase.
Some sellers are afraid to sign a long listing because they fear the agent will just sit on the listing and not work to get it sold. Then they are stuck with the agent. But remember, the agent does not get paid for listing a house. He/she only gets paid when it sells and closes. You can bet that he/she will make sure it sells as quickly as possible, even if the listing period is long. But sometimes no matter how good your agent is, the market condition is such that it just takes time to get the right buyer to make the offer.
If you are worried that you will be unhappy with the agent’s service and will get stuck with him/her for a long listing period, it is best to interview and choose another agent. You must choose an agent who you trust and like. It doesn’t make sense to go into a business relationship at the same time thinking that you will want to end that relationship as soon as possible. You should choose an agent with the confidence that he/she will do the best job possible.
It is customary for the seller to provide the buyer with a termite report and clearance as part of the purchase agreement. (This, however, is negotiable.) The buyer has a right to approve the termite report. If there was an extraordinary damage to the house due to termite, the buyer can elect not to purchase the house.
It is usually the seller’s choice of which termite company he wants to use. However, if he decides to change to another termite company to do the work after the buyer has already approved the report, the seller needs to inform all parties so the buyer can be given the chance to approve the second termite report. Different termite companies can come up with different findings. Whichever company that will be doing the repair work and issuing the warranty is the one the buyer needs to approve. Obviously it is no use for the buyer to approve a termite report when the work is not even going to be done based on that report.
If you are a seller, it is better to have your house inspected for termites before you open escrow. Get as many estimates as you want. Then when you have a buyer for the house, you show him the one that you will be using to do the work. Then there is no confusion.
When you are buying a house, expect to pay approximately 1 1/2 to 2 percent of your loan amount for closing costs.
What do people mean when they refer to recurring closing costs and non-recurring closing costs?
Non-recurring costs are those associated with the purchase of your home, such as title fees, escrow fees, loan fees, transfer taxes, etc. Recurring costs are costs of living in the house that you will expect to pay again. These may include mortgage payment, homeowner’s insurance, property taxes, etc. The recurring costs that you pay at the time of purchase covers you for a period of time until it it time for renewal. For example, you pay homeowner’s insurance as a closing cost covers your insurance for one year. Next year when the insurance expires you will have to pay to renew the insurance. Your first month mortgage payment may be paid at closing as part of your closing costs, but of course you will have to continue to make monthly payments.