Location, Location, Location

It is a phase you will inevitably hear if you are searching for a home to purchase;  “there are three things that matter most in choosing a house; Location, Location & location.”

The phrase has been around a while and it’s a cliché for sure, but there is truth to it that is worth taking a moment to delve into.

The phase points to the most important criteria for selecting a home; it’s value.  Value is what the home is worth, both to you as a buyer and what it might be worth in the future when it comes time to sell.

The value of a home is determined by what a buyer is willing to pay for it.  And despite how much a seller might love the home and its many benefits, the house is on the market with other homes that may or may not have similar attributes and it’s the choice between houses available to buy that drives value.

Location involves two major consideration; the neighborhood or area of town, and the specific physical location of the house in relation to others nearby.

A   3 bedroom, 2 bath home in Beverly Hills will sell for considerably more than a house of the same size in Boyle Heights.   When I work with buyers in the $650,000 range, there are very few choices in Silver Lake or Echo Park but many more in Altadena or Glassell Park.  Price will steer you towards some neighborhoods over others because you can get more house for less.

Value is also defined by where a home is in the neighborhood.  For instance, a house on the corner may sell for less than one in mid-block because there is more exposure to traffic on a corner lot.

Your daily commute tends to drive the neighborhood or area of Los Angeles people consider living.  If your job is in Santa Monica, you are probably not going to be looking in Monrovia for your new home, even though you can get a restored craftsman there for under $700,000.  But some buyers are more focused on the style of the home than the specific neighborhood it’s in and may look in a wide range of areas to find the perfect house.

The bottom line is that once you know how much house you can afford, check various neighborhoods for what houses are going for and focus on a specific area, your home search will go faster and be less stressful.  If you are looking at houses in Highland Park & Monrovia, you probably are going to have too many options to consider and you will find too many excuses to pass on houses as they hit the market.

Once you have an area to search, the location within the neighborhood becomes pretty easy to factor.  If the house is adjacent to the freeway or next to an apartment building, you will see the price reflect that. That’s not to say that it is a bad choice.  If the house is perfect in every way and in a great neighborhood but across from a High School, you may want to make an offer on it because it offers the best value in a higher priced area.  Buying the worst house in the best neighborhood is another often repeated phrase that reflects an underlying reality of real estate.

So if your agent is often repeating the phrase “location, Location, Location”, don’t assume she relies on hackneyed sayings, she is guiding you to focus on getting the best value for your purchase.

contact me at www.LAandymay.com

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Can’t Afford a House in LA? Consider A Condo

I work with a lot of first-time buyers searching in Northeast LA. In discussing options and criteria for their first home; they almost universally want a single family house.  This makes sense considering the LA lifestyle you can enjoy in your own home.

But the costs of buying a single family home in LA are keeping a lot of potential buyers from even talking to me.  If you think you cannot afford to buy a home in LA you may be right.  The median sales price as of March 2017 for a single-family home in the City of Los Angeles is $750,000. But here is some good news if you consider other types of property ownership. The median price for a condominium is over $100,000 less.

Right now, if you do a search for property for sale under $350,000 in LA from Hollywood, east to Lincoln Heights,  you come up with 11 Condo listings but only 3 single family houses. As of today (April 19, 2017) there is a small but nice condo for sale in El Sereno for $215,000.

If you are currently renting an apartment in a multi-family building, a Condo will make sense to you.  A condominium is a lot like renting, but you own the apartment, and you are paying yourself rather than a landlord, building equity and starting your climb on the property ladder.

There are pros and cons to buying a Condo.  In addition to affordability, Condos often have amenities like gyms & pools. Many come with balconies, patios, or other outdoor space where you can still get a taste of the LA lifestyle.  If security is a concern of yours, condos can offer more controlled access if not on site security guards in the larger complexes.  Another benefit to buying a Condo in Los Angeles is you will not have to do any landscape maintenance and you will likely spend less overall on the maintenance  & care of your unit.

On the downside, be prepared to pay monthly Home Owner Association (HOA) fees.  If you love to party or are a musician, keep in mind you are still likely to have neighbors above, below or next to you.  Although most condos provide covered parking, inevitably you will be schlepping groceries (and the rest of your stuff) quite a distance from your car to your unit.

As with all real estate transactions, you need to do your due diligence before you proceed with the purchase;  including reviewing the HOA documents for which there may be charges incurred and hire an inspector for a full inspection of the unit.   Buying a home is not as easy as renting, for sure, but if you have a good agent on your side helping you navigate the purchase, buying your first condo can be easier than  you might think,

Rather than putting off making a purchase of property, it may be better to jump into what you can afford now.  As your equity grows (and hopefully your income as well),  your opportunity to purchase that single family home you are dreaming of will likely become a reality sooner if you buy what you can afford now.

 

Contact me at http://www.LAandymay.com

The Best Apps for House Hunting

There used to be a time when looking for a home to purchase, you had to scour real estate magazines, the newspaper, and ask real estate agents to provide you with listings.  Today you can search for homes for sale anytime with your iPhone or Android device.

Most real estate buyers prefer to manage their own searches.  As a real estate agent, I can set up a search in the Multiple Listing Service (MLS) that will send you listings that meet your criteria as soon as they hit the market.  But all of the clients I have worked with have used one of the apps below in addition to getting the search results I provide.

These house hunting apps are rated the best and all are decent and provide you with the basic search criteria you need to find the home of your dreams. Keep in mind the source of the listing data for all of these apps is the same; the MLS.

Zillow:  By far the most popular app, with the highest rating is the Zillow app.  It’s pretty easy to use and has complete information.  Like all of the apps, you can search by filters, but this app allows you to draw the area you want to search on the map.  One thing I like is that the bottom banner makes it easy to save, share or hide a listing.  Another benefit is that Zillow makes it easy to see comparable nearby properties and includes the number of views and saves for each listing, giving you a good indication of how hot a property is. Zillow also offers its Zestimate; an algorithm based estimate of what the house is worth.  But this feature can end up causing you more pain than providing any actionable information.

Trulia:  This app is owned by Zillow and has similar functions and advantages.  One thing Trulia offers is a link to the street view which is indispensable when looking at property.  A quick look at the street view will help you see the street as it really is.  The discovery feature will show you houses with similar features but that can simply lead you down a rabbit hole and waste your time.  But Trulia has no comparables and no indication how many people have viewed the listings so there seems no advantage over Zillow in terms of its overall functionality.  The business model for both Zillow and Trulia is to sell ads to real estate agents.  This means that the apps constantly try to get you to contact an agent for more information.  Most of the agents appearing in the apps have “paid for the position” so they offer no specific information that any other agent couldn’t provide.

Redfin:  Redfin is a real estate brokerage business based on its app.  Like Zillow, it offers an estimate of the home’s value, but compare it to the Zestimate and in many cases, you will see why these instant valuations are worthless.  Redfin also as a street view link and its best feature is the ability to be notified when the price or status changes.  Also like Zillow, Redfin provides property history so you can see when the house last sold and for how much.

HomeSnap;  I use the Pro version of this app to view properties on my phone.  It is designed to work in collaboration with your agent and includes most of the better features in the apps previously mentioned. One benefit it offers is a quick and easy way to search for homes for sale served by a specific school.  It also allows you to snap a picture of a home and get info on that house regardless of whether it is for sale or not.  One downside to HomeSnap is you cannot draw on the map in order to search a specific area.  But their map function can show houses in different colors based upon the status.  This function is especially good for open houses which show in purple on the map.

There are other apps out there; Realtor.com, Homes.com, etc.  Most of the large brokerages offer an app as well.  Coldwell Banker has an app and it has some of the features mentioned above.

You probably will not be buying the first home you see, so you should try out these apps just like viewing a few homes.  When you become serious about house hunting, pick one and stick with it.

Once you are in full house hunting mode and have a decent agent working for you, share your saves with your agent so they can see what you like and what you don’t, this will be the best way to ensure you do not get lost sorting through all of the properties out in the market place.

Contact me at www.LAandymay.com

How to Get Your Parents Help When Buying Your First Home

You probably thought you were done asking for your parent’s help.  But as you begin to get a feel for the housing market in Los Angeles you may realize that you are going to need some help to get the place you really want. I bought my house 18 years ago and without my dad’s help, I could not have done it.  Owning my home changed my life in a profound way and I continue to thank him to this day.

You may be lucky and your parents have offered to help without you having to ask.  But even under those circumstances, it’s best to understand the dynamics of asking for help in order to ensure you get what you need, not just what they are offering to do.

Keep in mind that there are tax implications for the gift.  Your parents can give up to $14,000 ($28,000 if the gift is for you and your spouse) without tax penalty.  You will want your parents to speak with a tax advisor before executing any plan.

The first thing you need to do is decide what exactly you are going to be asking for.  There are a number of ways parents can help their millennials purchase a home.

  • If the parents are financially well off, they can simply buy the house and gift it to you. There are ways to avoid paying the gift tax in this scenarios and having their cash can be a huge benefit to you when you make an offer on a property.
  • The parents can offer a loan
  • They can co-sign the mortgage
  • They can help with the down payment.

Having your parents contribute to your down payment is the most common and probably the easiest way to get your parents help.

Once you have decided on what you are going to ask your parents for, you need to prepare a plan of action. Be clear as to whether you are asking for a gift or a loan.

Understand why your parents would want to help you purchase a home.  They love you and probably want to see you settled and in a safe environment.  They may be motivated by the satisfaction of being able to help their adult children.  Or they may see the purchase of a home as a necessary step towards getting the grandchildren they so desperately want.

Your parents may be more inclined to help if it is presented as an investment that benefits them.  No matter what their motivations may be, approach them with their interests in mind.  Also keep in mind how this might impact your family dynamics, especially in regards to siblings.  Tread carefully and keep in mind you do not have to share any of this with other members of your family, though be prepared for your parents doing so.

Next, get prepared.  Treat this as though they are the loan officer at the bank. You should get prequalified for a loan by a lender.  Be honest with your folks about your financial situation,   share your income, debts and FICO scores; these are things you will need to do anyway and it will go a long way towards showing them you are serious

You should be knowledgeable about the real estate market in the areas you want to buy in.  Solicit help from your agent.  It’s a good idea to have an agent on your side before you approach your parents.  Depending on their level of involvement you will be in a better position to control the process if you have hired an agent. Your agent can prepare a market analysis showing what houses are selling for and how fast.

Finally, ask for their help in person.   Drop hints first, tell them you are looking at buying a house, but sit down with them to review what you are asking for.  Bring some listings, your prequalification letter, and market data to ensure they see that not only this is doable, but engage them in the process, they may enjoy the house hunting as much as you.

Contact me at www.LAandymay.com

I am looking for a home to purchase, when should I hire a real estate agent?

You have been searching online, going to a few open houses and you are feeling pretty good about your increasing knowledge of the local real estate market.    The last thing you want at this point is an annoying salesperson breathing down your neck, and tagging along with you as you pursue your dreams and search out the stage upon which your life will play out. But you know enough at this point to realize you will eventually have to work with an agent to represent you in the deal and you are wondering when you should hire one.

You can and should search online on your own for a while.  Go to open houses and talk with the agents you meet there.

Wait long enough to hire an agent until you have met a few and know what you like and don’t like.

You do not pay the agent; their fee is paid by the seller through a commission split with the seller’s agent. But you are hiring them and you should treat the process like any hire; interview the candidate.

Ask questions to ask to determine their level of enthusiasm, integrity, and local knowledge.  Let your intuitions drive you to where you can feel if there is any chemistry.

You should think of the agent as your coach.  She should be able to help you focus and narrow down the number of properties you want to see.   Most importantly he can help ensure you truly are ready to purchase a home.  Have you been pre-approved by a lender? If so you are probably ready to work with an agent.   An agent should assist you in getting ready to make a purchase offer and gently pressure you to get what you need to do, done.

House hunting is a time-consuming endeavor and as you get closer to actually making a purchase you will find it is increasingly difficult to manage your job and family life while every weekend is taken up with house hunting.  An agent can arrange to show you houses at your convenience, around your schedule.

A good agent will also help in the home search by alerting you to homes as they hit the market, instantly sharing relevant listings through the MLS & other sources.  They can also share information with you that is available only to agents; such as offer terms, property details, etc

And no matter what you think of your pricing skills, an agent will be immensely helpful in determining the fair market price of the homes you are interested in.  By showing you what similar properties sell for, they can guide you towards making a reasonable offer that you will feel good about.

So do not wait until you are ready to make an offer to hire an agent.  You will be rushed and likely end up with someone who does not have your best interests in mind.

Best of all, once you hire an agent you can blow off all those pesky real estate agents at open houses who are trying to get you to choose them to represent you.

Contact me at: www.LAandymay.com

Timing the Market: Should I list my home over the holidays or wait until spring?

Ask any almost real estate agent if you should list your home for sale during the holidays or wait until some better time, you will get an empathic response; sell now!   The answer is easy for the agent, it’s a slow time of year for Real Estate agents and they need the commission checks.

Aside from agent need, there are a few valid reasons to list over the holidays; a lot of homes come off the market during December and there is much less competition.  Buyers are still out there; some have to move, others may need to buy before the end of the year for tax purposes, are among the most common reasons buyers are active during the holidays.

But timing when to list your home for sale is a decision to be made only by sellers who do not really have to sell.  If you have a new job that requires you to move to another city, or you are about to get foreclosed, then you are not really able to time the market. For this seller, there are few reasons to put off to January what you really need to do now.  And as an upside, you will have the benefits of selling over the holiday. Buyers out there around the holidays can be more serious about their decisions and may be less likely to drag their feet or suffer decision anxiety.  If you do decide to list during the holidays, don’t leave the decorations in the attic; you can enhance the appearance of your home with tasteful holiday decorating.

But the larger question about how to time the market is a serious issue with a lot at stake.  There is seasonality to real estate sales.  In Los Angeles, over the past three years, the number of homes for sale has peaked each year between July and September.  The lowest number of homes for sale has traditionally been December.  Things pick up after the first of the year, and slowly climb to their peak and then fade.  The graph looks like this;

graph

Those  who are thinking of selling for other reasons; moving to a larger home, downsizing, taking profits etc,  you need to examine your reasoning, map out your plan of action, then move forward according to what makes the most sense.  There is data that supports early May as the best time to list your home for sale, but the increased competition can offset whatever statistical gains that the data identifies.

Just keep in mind, if you are thinking of selling, and then buying another property in the Los Angeles real estate market, the most important element of the timing decision is to avoid getting caught as a buyer in the heated summer market.  Whether you are moving up or downsizing you will face stiffer competition from other buyers and sellers in the market over the summer.

If you want to discuss timing with a real estate agent who will listen and offer pros & cons without pressure, contact LAandymay.

 

www.LAandymay.com

Will Solar Panels Kill the Deal? How to Get Through Escrow with a Solar Lease

I recently helped a young couple buy their first home.  As with all real estate transactions, there was one thing that came up during escrow that stands out as the “big deal”…  This home had solar panels on the roof.

The house met all of the buyers must have’s; good neighborhood, nice yard, and it had a pool.  It also had leased solar panels.  Since it was a trust sale and the trustee had not lived in the home recently, the seller only had a vague knowledge of the costs of the solar and what would be involved with taking over the lease.   I dug into it, did my homework, and worked with the buyer and seller to hash out the deal and get to closing.  Along the way, I learned a few things that I wanted to share.

If you own a home and are considering installing Solar panels, do your homework prior to deciding to lease or buy. The choice will have a significant impact when you decide to sell your home.  There are pros & cons to both leasing and purchasing a solar system so there is not one right answer for every situation.

On the good side, leasing usually requires no money down; with the Leasing Company retaining the tax credits and billing you a monthly fee over the life of the lease contract.  They cover maintenance and guarantee you a specific amount of energy production.  On the bad side, your lease is attached to the property and goes with the house when you sell it.  If you do decide to lease, you will have a few things to deal with when it comes time to sell your home.

When you sell your home with leased solar panels there are only two options; either the seller or the buyer buys out the lease, or the buyer must assume the lease.  Neither the buyer nor seller wants to spend in the neighborhood of $15,000 or $20,000 or more to buy out the lease.  The second option requires the buyer to qualify with the leasing company for the assumption of the lease.  If the Buyers’ debt to income ratio is near the top of what lenders allow, this could be a problem for the buyers and put the loan in jeopardy.

Did I mention the lender?  Well even if the buyer qualifies for the lease, the lenders have a say in this as well.  First, the lenders will view the lease as a lien against the property, even if it is technically not.  So for my deal go through, the buyers had to apply for the assumption of the lease, and then when they were approved, the leasing company had to work with escrow to get the “lien” removed from the title report so that escrow would close.  The lender held up the loan in order to get the assumption contract amended to include language that further protected the lender.  All of this involved working with a solar leasing company who would not assign a dedicated customer service rep and was not responsive or helpful.

At one point, after being on the phone with the solar company for over an hour, the buyer was ready to walk.  She felt it was a bad deal and hated the leasing company.    I reviewed the lease agreement, all of the lease bills as well as the Southern California Edison bills for the prior 2 years (including a period before the panels were installed) and crunched the numbers… It was not a bad deal; the buyer would definitely save money over not having the solar panels in place.

Lessons learned?  If you plan to install solar panels under a lease agreement, be aware this will make selling your home a little more difficult.  If you are buying a home with solar panels, you will need to do some due diligence; get copies of lease bills, electric bills & lease agreement and begin getting the lease assignment process started ASAP.  Also, find out if the solar panels were financed through the HERO program if so you will have even more problems on your hands.  It helps to work with a real estate agent who either knows about these issues or, one who will dig into the details with you and learn everything he or she can about the solar panels.  If your agent throws this in your lap, you chose the wrong one.

http://www.LAandymay.com