Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

What are contingencies for a home purchase and home buyer inspection?

Michael Roberts — Wed, 25 Aug 2010 20:34:17 +0000

In the purchase contract your contingencies are those items that determine if you still like the home, accept the value and choose to proceed with the purchase. I listed the three types below. Their purpose is to provide a set time period for you, the home buyer, to investigate the property condition, title history and to secure financing.

The common contingency periods are 10- 17 days. The clock starts at the ratification date of the contract or when your purchase offer is signed and acknowledged by all parties.

Property Condition

Financing

Title Conditions

These are the most common contingencies found in your purchase contract. They are not required , however your contract should have one or more of these the contingencies. Which contingencies, is dependent upon the structure of your particular home purchase offer. The following details their significance to help you avoid the most serious consequences.

Property Condition: This is usually based on reports like the home buyer property inspection, the termite report, roof report and, when applicable, the fireplace or masonry report.

You may order any number of inspections you deem necessary. Inspections for rural property would be far more extensive than those necessary for a home in the suburbs or condominium. Raw land (dirt) properties require the most intensive inspection process. This would include septic or perk, utility soil, geological etc.

Loan Contingency: The loan approval or financing contingency is used to give you time to gain your loan approval. There is an additional element, the appraisal. These should be tied together. If the home you want to buy appraises at a value equal or in excess of your offer you won’t have any problem.

The appraisal contingency can cause a problem if it is incorrectly used in the contract. What if the home does not appraise for the amount you offered and you removed your loan contingency? For example, you received your loan approval subject to the appraisal and you removed your loan contingency. What if the home appraisal did not meet the offer price you and the seller agreed on?

You would likely find yourself in a pickle. It would be up to you to find a way to cover the difference in price. Not a fun place to be. You could negotiate with the seller and ask for help, pull money out of your pocket or hope you have another contingency to use to cancel the contract. I suggest you take measures to prevent that from happening. Make sure the contract uses language that ties the loan approval and home appraisal together.

appraisal note: The new loan disclosure process, that began last July, requires the lender to disclose your costs and allow you 72 hours to review them (commonly called the GFE [good faith estimate]). Often by email (except Wells Fargo). When that is sent to you by email or if your lender sends by regular mail you simply respond to it and that initiates the appraisal order.

The appraisal then occurs. The appraised value simply needs to meet the value that you offered for the home. We then remove appraisal and loan contingency.

Title: The title search is performed by the title company hired to hold escrow and perform it’s duties as a neutral third party. The title report is necessary to identify any clouds on title. Clouds on title are issues that affect ownership. This would include liens (encumbrances) and ownership rights of others attached to the property.

In addition, it clarifies lot lines, easements and the ownership title chain. The title company will provide a preliminary title report during the contingency period set forth in your home purchase contract and a final report, an updated version of the preliminary report, is available prior to the transfer of ownership.

Condominium buyers have a few other items to consider and should have these built into any contract. The most common of these is the Home Owners Association documentation. This package can be quite extensive. It covers the contingencies mentioned earlier and other important items: HOA budget, HOA reserves, HOA meeting minutes covering the past 12 months, articles of incorporation and by laws.

Not as common, yet becoming very important in today’s atmosphere, is to determine if the HOA project, sometimes called a PD or PUD, is FHA approved for FHA lending or VA approved if you are considering a VA loan (veteran’s administration).

Michael Roberts is a licensed California Realtor and real estate investor providing agent representation to home buyers and sellers in the San Fransisco Bay area.

He can be contacted at mroberts at rwnetwork.com or his Website Sad but True (true story) You might find the ending a happy one.

Terry (not her real name) called our office in tears. Her home was going on the county steps, the following day, to be sold to the highest bidder in a trustee sale.

She did have a little cash in the house in the form of equity. Not Fair!

Not a fun call by any measure.    After living there for 25 years and raising her family, the lender was foreclosing.   Not a rare story…I know.

This put the whole office in a buzz to solve Terry’s problem. I called my cash investors, others called attorneys.    My ‘ace in the hole’ investor was in Europe the other was unable to put it all together in such a short time.

It was looking dire by the end of the day.

The only solution turned out to be bankruptcy…according to legal council! That’s not what this story is about though. This was the only way to halt the foreclosure and allow Terry some time to get a grip. After all, she raised her kids in this home, had no job prospects and was on the verge of a serious breakdown.

She needed to hit pause.

Terry was not devoid of responsibility and I won’t defend her position.   She just needed help.

So, the only alternative was bankruptcy. The search began for an attorney to embrace Terry and get the ball rolling.   This was done in an attempt stop the snowballing effect! One found, we began to focus on solutions.

Move ahead a few days….

Terry hired us to meet the required ‘sale of the home‘ that the Trustee ordered.   This is where it went haywire AGAIN! The Trustee said he had the legal authority to choose and hire a Realtor. Well, his Realtor was preparing to sell the home for a ridiculously low price (about $100K low).   Leaving Terry with nothing! The Trustee’s agent claimed his price was based on his ‘expert opinion‘, the current market and the home’s condition.

Not so fast mister! We appealed to the Judge that this agent was out of his gourd. Providing some strong fact based data, we were granted the job to sell Terry’s home. Sorry Mr. Trustee‘s agent (and Mr. Trustee)!

The home was in bad shape, for sure. The kitchen cabinet doors were falling off, the Master Bath was in need of a Hazardous Materials Team and the yard more resembled a Jungle than a forest meadow with curb appeal.

We jumped in with both feet. Providing labor, guidance, advice and, in some cases, a late night shoulder for Terry to cry on.

The home sold in 10 days. The offer was great and provided Terry with $90,000.00 dollars after expenses.

We make money doing this, right? In this case there was little money left over after all the hours and effort.   It wasn’t what I earned that was rewarding, it’s what I learned…..

I work with the best group of ‘people’ in the world! They’re not your typical, robotic, scripted salespeople who only look out for themselves…they’re real people – that care!

I almost forgot the best part.    Once Terry began to see the light at the end of the tunnel she gained enough confidence and piece of mind to secure a great job!

Terry has a bright future on the horizon!

note: this solution is not for everyone there are short sale and other options to consider

The Art of The Open House…

Michael Roberts — Tue, 15 Jun 2010 00:41:37 +0000

Image via Wikipedia

I don’t know how many hours I have spent preparing Los Gatos buyer packages, uploading internet marketing and providing guidance to the Seller in anticipation of the “magic” Open House. Only to show up and find the Seller forgot to do everything that they so eagerly agreed to do after reading “the 26 sellers mistakes”

I should have learned that a plan only lasts until the first detail slips.   When that happens the magic is gone. Sort of.

It usually starts at the front door, or more accurately, when I drive up and see they have an alfalfa field instead of a manicured lawn. At the front door, trying to decide what to do with the lawn, with only minutes before the buyers start to arrive, I realize I am done.

The porch is not swept and “Spongebob” decorations from the previous weekend birthday party are still up. Hmm…Wonder if they had a magician at the party too? I could sure use one at that moment. The need for a magician becomes most evident when I open the front door.

The smell that comes rushing at me says “Sorry, we forgot to take out the Kitchen trash after the birthday party.   It was a great party! Spongebob and Friends”    Friends?

Oh No! The adults had Crabby Patties? Or crab cakes, or a crab feed. Whew.    THIS pigeon is not going to disappear in a red silk rag.

I am no magician, but I better become one fast, right?! So, I reach into my little bag of tricks and get the scented candle burning…ya. Like that’s going to solve it. This is when your “magic” Open House plan is doomed.

One of the most common comments from my Home Buyer clients is…Why didn’t they, at least, clean up a little?…Sheez!

Squidweeeerd!

The only way your Realtor can make your open house magic is with your help! Follow their guidance….it comes from too many experiences like the one I have described.   Making your Open House a success is going to take a little effort. It’s not that difficult, really.

The simple is the easy and that is the way selling your home should be. Simple and easy.

You can read more Seller ideas by searching for “seller” using the search box above.

First Time Buyer Credit in California Recently Updated

Michael Roberts — Sat, 12 Jun 2010 00:38:42 +0000

Image via Wikipedia

Just released, the First Time Home Buyer Tax Credit has changed. Yes, already! The fund, at only $200 million dollars, will not last very long and you had better know the new rules to take full advantage of it.

The $200 million dollar fund still allows a credit amount of 5% or a maximum credit of $10,000, whichever is the lesser amount, based on the final sales price. A very substantial credit!

Previously, the first time buyer was required to have the seller of record sign the tax credit form 3549a prior to submitting the application for the credit. However, on June 1st , changes were made for First Time Buyers of previously owned homes.

According to an email I received from Colleen Graves of Lawyers Title in Southern California, a popular Escrow and Title company, chosen by financial institutions selling their bank owned (REO, Foreclosures) properties throughout California,…

….“if you are buying a previously owned home, resale not new construction, then you simply need to provide the basic sale information including the final HUD1 and the seller signature is not required as previously understood.”   For my client, who just closed on an REO property, this was great news. Motivating the all too robotic foreclosure minion to get that seller of record signature in time, was not an appealing thought.

The seller required signature rule remains in place for First Time Buyers purchasing new construction properties though.

Taking advantage of the First Time Home Buyers tax credit is the only path for many potential First Time Home Buyers to purchase homes in the Golden State.

Does your home purchase qualify for a first time home buyer tax credit? If you have not owned a home in the previous three years and you plan to live in it as your primary residence…yes! it qualifies.
Another important rule regarding the tax credit form 3549a is that it must be submitted no more than 2 weeks following the close of escrow.   This can become difficult considering the form cannot be submitted prior to the close of escrow due to the HUD1 requirement.

The HUD1 (final closing statement) must be submitted with the form 3549a causing the buyer and buyers agent to be ‘on their game’. If your agent is not aware of the new requirements you could lose your chance to take advantage of this tax credit by submitting the application too late or incomplete.

When you are interviewing agents, to help you buy your new home, ask them if they are current on the ever changing laws, regulations and opportunities in the real estate market place.   Some of the recent changes are: multiple agency disclosures, purchase contract change, short sale addenda and tax credit availability.

Related articles by Zemanta

Realtors Want Congress to Tweak Tax Credit Timeline blogs.wsj.com)

Will loss of tax credit discourage home buyers? sfgate.com)

New Home-Buyer Credits Aim to Replace Expired Fed Plan time.com)

Make Money When You Buy That San Jose Home For Sale Part 1

Michael Roberts — Mon, 01 Mar 2010 20:10:50 +0000

Buying a Home with Resale Value – Part One

Without doubt, the best time to think of selling your San Jose area house is before you buy it. In fact, there’s a saying in professional real estate circles that, “You make your money when you buy.” Unlike prior generations, today’s home owners will typically sell their house within five to seven years. That may seem like a long time in your own personal life, but it is just minutes in the world of San Jose homes for sale.

Wouldn’t it be nice to go into your purchase with a plan in mind? Here are a few tips on how to choose a San Jose house for resale value, while also finding a home that you absolutely love.

Purchase Price. Perhaps the biggest lesson learned from the housing crisis is to not overpay for a house. This can be tough when you absolutely fall head over heels for a home. But paying a fair price today means you’ll be able to accept a fair price tomorrow. So check your emotions at the door, and proceed with your head. It’s worth taking time to research pricing trends in San Jose area neighborhoods before committing to a purchase you may regret when it’s time to sell. We have the resources, years of market insight, community knowledge and negotiation skills to ensure all our buyers pay only what they need to for any San Jose home for sale.

Location, location, location! Location can either be your best friend or your worst enemy when buying a home, and in essence, can make or break a home’s resale value. San Jose area communities provide the life force for home price. High ranking school districts, recreation facilities, and shopping are just a few amenities that you can bet will capture the eye of future home buyers. Researching future development and zoning regulations will also help ensure your new home will be an asset when it comes time to sell.

Noting the details of the location is important too. Does the lot back onto a busy street? How about a shopping center or hospital? Traffic noise, parking lot lighting and trash receptacles bordering your backyard will definitely have an impact on resale. Noting the condition of neighboring houses will also play a key role in determining resale value. Most neighborhoods will have similar lot sizes, with smaller and larger lots to fill in awkward spaces such as cul-de-sacs and road curves. And while larger lots are usually more desirable, you may end up paying a premium that you won’t recoup when it’s time to sell your San Jose home or real estate investment property.

Repairs, Remodeling, and Fixer-uppers. When deciding on a San Jose home for sale, know the difference between acceptable and unacceptable repairs and upgrades. Cosmetic changes such as ugly wallpaper, paint, and door hardware are easy fixes and worth the time and money. Foundation cracks, water damage, and roof damage are not as kind to resale value. These are repairs that are necessary to maintain the current value of your home and, unless the home is priced below market, won’t add a penny to resale value when it’s time to sell.

And most importantly, you’re not alone in purchasing a home!

Our Buyers have the peace of mind to focus on finding the perfect San Jose home while we look with a critical eye at every home’s potential resale value.

Continue: read part 2 for buying a San Jose house for sale

Make Money When You Buy That San Jose Home For Sale Part 2

Michael Roberts — Mon, 01 Mar 2010 19:55:17 +0000

Buying a Home with Resale Value – Part Two

Buying a home in the San Jose real estate market can be a daunting task. So many questions – How do I get a mortgage? How much can I afford? Will I find a home that fits my needs? What exactly is PMI? It can be easy to lose sight of the home’s salability in the future. The good news is we can help answer all these questions and guide you toward a San Jose home with solid potential resale value. The following bullets describe some key features to look for when shopping for San Jose homes for sale that will bring the most bang for your buck when it comes time to sell.

Landscaping: Landscaping can have a drastic effect on resale value. It’s 50% of Curb Appeal. Too little or too much, and you’ll find yourself wondering what you could have done differently. You want the landscaping to look maintained and inviting, but not cumbersome. Too much landscaping could come off as being too much work for potential San Jose buyers, thus limiting your buyer pool and lowering the value of the house.

House Size: Home sizes vary throughout the San Jose area. Once again, buyers looking for strong resale value should play the conservative hand and search for a home that is of average size for the neighborhood. The selling price of the largest house in the neighborhood will often be dragged down by the smaller, surrounding homes. And likewise, the smaller home values will often be helped by the larger homes. We provide our neighborhood insight and San Jose market data to all our buyers to help them find the best deal on square footage while they shop.

Bedrooms and Bathrooms: Most home buyers are looking for three to four bedroom houses plus a space for office activities. Staying in this range, automatically gives you an advantage in the market. Too few rooms will limit your buyer pool, and too many may turn off potential buyers due to higher heating and cooling bills. And a home should always have at least two bathrooms, preferably two and a half. Master bathrooms attached to the master bedroom are also a big plus and will bring a greater potential for higher resale value.

Kitchens: If there is one area where buyers should not compromise, it lies in the kitchen. After all, it’s where everyone in the house congregates. An amazing, eye-popping kitchen will sell a house almost by itself.   Buyers looking for a San Jose house that will sell easily in the future should look for a kitchen that is open, has a great layout for socializing, and also has easy access to a back patio or deck for barbequing. Double ovens, granite countertops and updated cabinetry are also plusses that will bring in worthy offers.

Storage: As we all know, there is never enough storage. You can be sure that buyers searching for Los Gatos homes for sale will have their eyes out for homes with multiple walk-in closets and linen closets. Kitchens, secondary bedrooms and bathrooms should also have ample storage space. Basements, garages, and attics are great places to find hidden opportunities for storage space. And while our buyers are experiencing potential homes, we keep an eye out for creative storage opportunities that will not only make your life easier, but will also mean a lot to future resale value of your San Jose home.

Finishes: Once you’ve taken care of the top four resale points, it’s time to look at finishes. While finishes do not necessarily raise the value of a home by themselves, they will certainly seal the deal for anyone who is riding the fence between your house and the one next door. Tastefully painted walls, upgraded countertops and cabinets, and updated hardware can have a big impact on the resale value when it comes time to sell. The important tip to remember is that conservative is always better. You may have fallen in love with your cobalt blue granite countertop, but chances are the next buyer won’t feel the same way.

And most importantly, you’re not alone in finding a great San Jose home with resale value. If you want to make sure you make a financially responsible decision in your San Jose home purchase, Contact Us and we will ensure that you not only love your home today, but also love its resale value tomorrow!

Borrowers Harmed From Numerous Sources

Michael Roberts — Wed, 24 Feb 2010 20:08:36 +0000

This Video (below) is proof many homeowners in all areas are at risk of scammers, including San Jose homeowners. When you ask for help selling your San Jose House, remember, if it sounds too good to be true..Then it probably is!

There are no ‘Magic Wand’ solutions if you find yourself against the wall with your mortgage. Using common sense and a applying pragmatic approach is still the best and most effective way to determine whether you should sell your Los Gatos home or buy a smaller more affordable house in San Jose.

A good rule of thumb is to obtain 3 professional opinions and weigh them one against the other.   The first solution may not be the only solution and… Watch This Video!

Prop 60 and Prop 90 Transfer Tax Reminder

Michael Roberts — Mon, 22 Feb 2010 18:58:06 +0000

You may be thinking of selling your home by downsizing or moving closer to family, well Proposition 60 and Proposition 90 have to be considered too. Ask your CPA.

California property owners who are over 55 years of age may qualify to transfer the assessed value of their principal residence home sold in one County to their new principal residence they buy in another County.

A copy of the tax bill from the other county and a copy of the applicant’s birth certificate will be required by the County Assessor to be included in the application.

This website provides property tax answers for property owners who are selling and plan to move.

A Copy of the grant deed for the new purchase along with a copy of the closing statement of both the sale and purchase are also required.

Here is a short summary of the eligibility requirements…

Either the seller, or a spouse residing with the seller, must be at least 55 years of age when the original property is transferred.

The replacement home must be of equal or lesser “current market value” than the original property.

The replacement property must be purchased or built (newly constructed) within two years (before or after) the sale of the original property.

An application must be filed by the owner within the three years following the purchase date, or completion date of new construction, of the sale of the original property.

The filing is a one-time-only opportunity. Prop 60/90 cannot be granted if the claimant, or spouse of the claimant has already been granted this relief in the past.

Prop 60/90 relief includes, but is not limited to: single family residences, condos, units in planned unit developments, cooperative housing, corporation units or lots, community apartment units, mobile homes subject to local real property tax, and owners’ living premises which are a portion of a larger structure.

You, the taxpayer, are not eligible for this relief until you actually own AND occupy the replacement property as your principle residence

Proposition 90

Proposition 90 allows a homeowner to transfer the base year value of their principal residence in one county to a newly purchased residence in another county providing that certain requirements are met. Only a limited number of counties are participating in Proposition 90.

Proposition 90 Requirements (Santa Clara County):

The requirements for Proposition 90 in Santa Clara County are the same as for Proposition 60 except for the following:

1. Effective date: November 9, 1988.
2. A non-refundable processing fee of $78 is required.

The effective dates and filing fees vary from county to county. Those property owners interested in transferring the base year value from their principal residence located in Santa Clara County to a newly purchased residence in another county should call that county to make sure that the other county is participating in Proposition 90.

Applications must be filed in the county where the newly purchased residence is located.

The following is a list of those counties which have approved Proposition 90 and will currently accept base year value transfers from other counties.

It is essential for you to call the co-operating County to which you wish to relocate. You will want to verify that they are currently accepting the value transfer under Prop 90 and what their particular requirements are. For any further questions, the property tax office in Sacramento for all counties in California can be reached by calling (916) 445-4982.

Counties can and should be verified by calling the appropriate number…

Alameda – (415) 272-3755

Orange – (714) 834-2746

San Diego – (619) 531-5507

San Mateo - (415) 363-4500

Los Angeles – (213) 974-3101

Santa Clara – (408) 299-4347

Ventura – (805) 654-2181

I am not a Tax Advisor – For More Information Please Contact:

Assessor Real Property – General Questions, Property valuations and Propositions 3, 8, 60, 90
70 West Hedding St., East Wing
5th Floor
San Jose, CA 95110
Phone: 408-299-5300
Email: RP@asr.sccgov.org

Get More Drive Byes with 5 Curb Appeal Killers

Michael Roberts — Sat, 20 Feb 2010 06:50:16 +0000

You won’t sell your home in Los Gatos, San Jose or Phoenix for that matter, if you can’t get the potential home buyer to the front door. Homes for sale, regardless if they are short sales, must look neat and tidy!

When they drive up to your for sale sign will they still want to come in?

Those potential buyers will become drive bye byes if….

Lawn is overgrown and there is cheezy yard art everywhere

Weeds are growing in the flower beds and around the walkways

When the door is being opened it squeaks and the paint is old

The paint is peeling and cobwebs have taken over

The Doorbell is hanging off the wall or doesn’t ring

It is so very simple to overcome these curb appeal Killers if you want to sell your home!

Here are a few suggestions of how you can take care of these 5 deal breakers for little or no money. Get those home buyers in the door!

An overgrown lawn should be mowed and edged properly.

Remove any lawn art, Holiday decorations, Beware of Dog and I love Cats signs.   Pets can be a deal breaker for some home buyers and your Realtor can help you address this in a better way.

Pull weeds along walkways and flower beds and dispose of them.

Leaving the dead weeds in a pile somewhere after you pull them is actually worse than pulling them at all. It leaves the impression that you don’t follow through. So get rid of them!

Repair a sticky or squeaky door and paint it.

WD 40 will usually fix a squeaky door. Spray hinges lightly while you swing the door back and forth to help it get deep into the hinge mechanism.

A sticky door can be a bit more technical, but a little common sense and some time is all it takes. Look carefully where the door contacts the frame to find any rub marks. Usually, a good scraping off of old built up paint will do the trick.    Check the latch to see if the strike plate is out of alignment. The strike plate is the small plate on the frame where the bolt enters. Adjust it if necessary. Are the hinges tightly screwed in? No? Choose the right screwdriver and tighten them. Now Paint!

Painting is easy!   A light sanding and a patiently applied coat of white or an accent color will bring a bang to the entry! Caution: Paint won’t stick to WD40 so you should wash areas where you sprayed it with a little alcohol swab.

Broom away cobwebs followed by a good washing of the front and touch up peeling paint.

Washing the front with a power nozzle attached to your garden hose, before removing cobwebs, will only make it worse so, brush them away first. Peeling paint is an easy fix! Scrape away loose paint and simply apply a light coat of fresh paint.   If matching the color is difficult paint larger areas from a corner to the nearest opposite corner or trim board to trim board.

Does the doorbell work? Is it attached to the wall?

When a doorbell doesn’t work it can be for a number of reasons. Doorbells are powered by low voltage, so there is no reason to fear electrical shock.   Remove cover plate and look to see if the wire is connected.   Reconnect wire if necessary and reattach it.   Here is a simple ‘one move fix’ to cover all the reasons it may not work. Go to your local Lowes or Home Depot and ask for a wireless doorbell. These are easily attached and there are no wires to fiddle with.

Want to take it all up a notch? Add color. In most every gardening center or department you will find what is called a color bowl.   These are filled with bright flowers and soft green fillers. Strategically placed along boring walkways or a bland porch can really add some attractive flavor. Tip: Always work with odd numbers 3s, 5s and 7s.   Using odd numbers of plantings always appears more natural.

A large new welcome mat, placed at the entry to your home for sale, will make home buyers feel more welcome and it also gives a sense of ‘new’. What can buyers expect when they enter?

15175 El Gato Ln and 17250 Pine St Los Gatos and 228 Calle Marguerita

Michael Roberts — Fri, 19 Feb 2010 16:52:08 +0000

Wow! These are my 3 picks of the weekend for Los Gatos Homes for sale. New Home Buyers will find they have all the best things to offer.

Some lucky folks are going to be new homeowners in Los Gatos!

Great prices and locations are just the beginning.   17250 Pine St.Los Gatos is a short sale, I know, Yuk. Not really! Look what the fundamentals look like…

Schools: Great! Location: Great! Price: Amazing!

Use ‘the proper strategy and be prepared for a few bumps’ is the bargain hunters code. One may be a foreclosure one a short sale, however what would expect a bargain to look like?

Los Gatos is a tough area to find affordable homes and these 3 are a step in the right direction. Preparing for an opportunity equates to good luck, right?

The 2nd homes for sale in Los Gatos is 15175 El Gato and the 3rd house for sale in Los Gatos that I see as a great first time buy er pick is 228 Calle Marquerita.