We hope that our first time home buyer information and tips are helpful in making the home buying process easier. While it’s important for any buyer to work with a good, and helpful realtor, it’s even more critical for first time home buyers. Keep in mind that as realtors we do this all of the time and a good realtor will make sure not to forget that you don’t do this all of the time. Information is everything!
Over 90% of homebuyers beginning their search online….so where are they looking? Most homebuyers begin their search by searching for area specific listings on search engines such as Google and Yahoo. Many begin actually looking for homes on the large national type sites such as Redfin, Zillow, Trulia and Homes.com, while many other seek the more personal local knowledge of realtor specific sites with more intimate knowledge of the areas they serve and the communities in which they live.
My goal is to go beyond those sites and provide every possible option during your home search as every home buyer and every search is different.
For those looking for the most independent ability to search feel free to visit our MLS search page in which you can search for your dream home using the specific criteria that is important to you. There is no obligation or signup for this service and listings are continually updated. We hope you find it helpful.
Search by price range
You can also search current Hollywood Riviera homes for sale by price or price range
For home buyers looking for the simplest way of searching for homes, I offer daily listing updates via email. Once you provide the details of your home search that are important to you, I’ll send you a daily listing update with new homes and homes with price changes that meet your exact search.
If you’re a first time home buyer and you’re considering buying a home in the South Bay….you’ve come to the right place. We have helped many first time homebuyers not only find a home, but feel comfortable and confident throughout the process. Buying a home is a major decision, both emotionally and financially, and we can help you navigate the entire process from starting your search to closing escrow and beyond. As the market has shifted, it’s more important than ever to feel comfortable and confident in your decision to work with a local realtor.
To help start you on your way, here are some articles designed to help you with your search:
- Why Buy a home instead of renting
- Where to search and how to find current listings
- Considering a move? Steps to take
- How to Look for Foreclosures?
- The home search. Choosing your home
- Homebuyer tips
- The home search. Finding out how much you can afford
- The pre-qualification process
- The difference between getting pre-qualified and pre-approved
- Down payments
- What does your mortgage pay for: PITI
- The loan process
- Understanding Closing Costs
- Homeowners Insurance
- How Interest Rates Will Impact You
We’ve put together a helpful chart to see what most escrow and closing cost terms mean and a little about each of them. Find out who pays
for each fee (customarily) and what the fee is for. See also who pays for what during escrow.
Get a better understanding for everything in escrow from lender terms to title terms to inspections.
Buying a Home? Know Your Borrowing Power
When shopping for a home in the South Bay you can save yourself a lot of time, energy, and disappointments by taking time to find out how much borrowing power you have. With that knowledge you can focus your search on homes you can afford. In addition, if you get lender confirmation of your purchase power you can negotiate with increased leverage and confidence. Thus, a smart move on your part is to determine your financial qualifications for a loan before you even begin to look at homes. How can you do that? Get pre-qualified and/or
This process will give you a general idea of what you can afford. It is an estimate based on a surface review of your income and debt. You can pre-qualify yourself or you can have either a real estate agent or mortgage lender handle this for you. If you choose to pre-qualify yourself, you can use one of the many online mortgage calculators designed for this purpose.
Most mortgage lenders have these calculators available on their web site.
When lenders pre-qualify you they ask questions about your income, total debt, monthly payment obligations, current employment, payment history, and any negative factors such as bankruptcies. Generally, they do not perform an analysis of your credit report. They rely on you to provide accurate financial information. There is typically no cost for a pre-qualification analysis nor is there a commitment by either you or the lender with respect to a future loan.
The pre-approval process is more detailed and thorough than pre-qualification. You will be asked to complete a mortgage application, and some lenders charge an application fee. The lender verifies all of the information on your application and reviews your credit report. If you qualify, you will receive a written commitment – a pre-approval letter – for a loan up to a specified amount subject to certain terms and conditions. This commitment is still not a guarantee that your loan will be approved when you do settle on a home to purchase. Your loan commitment is finalized after information about the property, including an appraisal, is submitted and approved.
Even though pre-approval is not a loan commitment, it offers a number of advantages during the home buying process. You know the maximum amount you can spend so you don’t waste time looking at homes that are beyond your price range. You are also more attractive to sellers because you already have financing squared away. This is really to your benefit in a sellers’ market in which the home of your dreams might have multiple competing offers. In any market, pre-approval strengthens your negotiating position because you come to the table with the money to back your offer.
Pre-approval can be particularly helpful for first-time buyers as well as self- employedpersons or those paid on commission. If you are a first-time buyer in competitionwith similar buyers who have already demonstrated their ability to meet a monthly mortgage payment, you may find your offer in a weaker position in the eyes of a seller. Sellers may also have doubts about your ability to get financing. Self-employed buyers or those working on commission sometimes do not have the financial documentation or “paper trail” of salaried persons. Some sellers see this as a red flag. A pre-approval letter in either of these circumstances helps because it demonstrates that a lender has already considered your financial situation and is ready to proceed with the loan.
Regardless of the approach you take, ask your mortgage lender to clearly explain what is involved in each process and any fees, commitments, terms, and conditions that apply. Then let the search for your ideal home begin.
To find out the value of your home in today’s real estate market simply tell us a bit about your home and we’ll put together a full market report (CMA) based on the very latest sales data.
Why South Bay Buyers and Sellers should use a REALTOR
All real estate licensees are not the same. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the REALTOR “®” logo on the business card or other marketing and sales literature. REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reports that 84% of home buyers would use the same REALTOR® again.
Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be foolish to consider a deal in real estate without the professional assistance of a REALTOR®.
But if you’re still not convinced of the value of a REALTOR®, here are a dozen more reasons to use one:
1. Your REALTOR® can help you determine your buying power — that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices.
2. Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some
investigation by your agent to find all available properties.
3. Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS®have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
4. Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
5. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written.
reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.
6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.
7. Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly.
8. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
9. Your REALTOR® markets your property to other real estate agents and the public. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. The
REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients.
10. Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.
11. Your REALTOR® can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing — a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
12. Your REALTOR® can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).
When the market favors buyers, it is important to do everything possible to avoid the common mistakes which often lead to homes sitting on the market. Without question price is the most important aspect of getting your home sold, and the most common mistake that sellers make.
Here is a list of common mistakes and how best to avoid them.
1. Pricing Your Home Too High
Solution: Price is almost everything! We are area experts and can research comparable sales in your area and advise you of the appropriate price range of your property. Every homeowner feels that their home is special, but it is critical to know what the competition is, and what they are priced at. Overpricing a home is the most common, and often the most costly, mistake home sellers make. After sitting on the market for a while, often price reductions don’t draw great interest and the home often sells for much less than it would have if appropriately or aggressively priced from the beginning.
2. Not Using Up to Date Information
Solution: Many home sellers base the “value” of their home on what a neighbor’s home sold for 6 months ago and figure that the market has gone up in that time, and their home is nicer than their neighbors. What happened 6 months or a year ago may be irrelevant and lead to unrealistic expectations. In the current market, with prices either going down or softening, it’s important to know the prices of the homes currently on the market similar to yours, and more important to know the prices of the homes that are in escrow or recently sold.
3. Not Utilizing Current Marketing Technology
Solution: We are always up on the latest technology and market heavily on the internet. With 80% of home buyers starting their search online, it is critical to get your home exposed to as many of these potential buyers as possible. See “How We Market Your Home” for more information. We are e-Pro certified and are up to date with all of the facets of online real estate.
4. Ignoring the Importance of First Impressions
Solution: Sales have been not happened for minor reasons such as messy yards, cluttered closets, unpainted front doors, locks that didn’t work, bad colors, stains, lack of light and bad smells. Spend some time onthe little, and simple, things. Double up on your gardening, keep things cleaner than usual, tidy up the clutter and make sure your pets are under control.
5. Not Providing Easy Access for Showings
Solution: There are many ways to show a home. Appointment Only is the most restrictive and lock boxes are the most accessible. If you r home is easy for agents to show, more prospective buyers will see it, improving your odds of getting the deal you want. However, your lifestyle or situation may not be compatible with frequent showing. We can help you determina a solution that best fits the situation.
6. Not “Staging” Your Home to Show it’s Best
Solution: Staging can mean lots of things for various homes and situations, but in general it means presenting your home to appeal to the greatest number of potential homebuyers. In some situations (vacant home) it may mean consulting a professional “Home Stager” and renting furntiture to give your home a warm and comfortable feeling. Often times it makes financial sense to have carpets cleaned, walls painted, and the home professionally cleand. In other situations it may mean removing clutter and adding small touches to make things look cleaner and larger.
Some simple solutions would be to put some items into storage, create more light, play music, set out candles and improve the overall ambiance. We can help create a great first impression.
7. Not Knowing the Competition
Solution: We strive to give our clients the best information as to what’s out there that a potential buyer might also be looking at. When possible we like to take our clients to look at the other homes and look at them from a buyers perspective. If you were viewing both homes, which would you buy?….and why?
8. Believing Your Agent is Not Doing the Job When There Aren’t Any Offers
Solution: Most sellers are unaware of all of the activity that goes on behind the scenes. Any agent can do the basics, but we strive to update our clients on all of the networking, advertising and marketing that continually goes into how we try sell homes. In general if the home is in good showing condition, is easily accesible and hasn’t generated any offers or interested buyers, it may be time to re-evaluate the price.
9. Not Re-Evaluating the Marketing Plan
Solution: We sit down and re-evaluate the marketing plan several times a month. We look at who is showing the house, the feedback we get, where we are targeting the marketing and advertising and are we reaching the right buyers. Every home is different and appeals to different type buyers.
10. Errors in Market Timing
Solution: We can help you determine whether the market cycle is poised to net you the most money. Many homesellers do not have the luxury of waiting, but for those that do, it may be best to list right away, wait a while, or even rent the home until the market is right.
11. Not Giving the Sales Effort Enough Time
Solution: You should never give too little time to what is inherently a long process. Homes may take 3-6 months to sell in any market. Estimate how much time you have before you “need” to sell and then plan ahead to allow extra time. You don’t want to be forced to accept a disappointing offer.
12. Taking an Inflexible Position on Financing
Solution: We can explain what financing options are available. Being flexible on financing terms may secure a better selling price, with other advantages as well. In markets that favor the buyer, certain financing offerings (such as seller financing) may be what makes your home sell while others don’t.
13. Not Making the Right Kind of Repairs
Solution: Don’t be tempted to make improvement’s or upgrades prior to listing your youme without consulting a real estate professional. Some upgrades will not yield any real increase in value which others may increase property value substantially.
14. Believing That Selling Property is Seasonal
Solution: Don’t base selling decisions on the seasons or time of year. Homes that are ready to show and priced well will see year round.
15. Not Screening Prospects Adequately
Solution: One of the best reasons for hiring a Realtor® is their ability to pre-qualify a prospect financially before valuable
negotiation time is lost. More importantly, your agent may discover when a prospect may just be shopping or “looking
for a deal”.
16. Believing That You are Not Part of the Marketing Plan
Solution: According to some statictics the sellers themselves are responsible for at least one out of every ten sales. You can network your home to your business and personal friends, neighbors, and keep the house in move-in condition. We can help let you know just how you can help.
How to Avoid Capital Gains Tax When You Sell Your South Bay Home…..**
This article was originally written in 2012. Please verify any/all changes to the tax code.
There are a lot of reasons to buy real estate. You can buy with a minimal cash investment. Real estate tends to appreciate in value over time. If you occupy the property, the federal government subsidizes your housing expense with tax write-offs for mortgage interest and property taxes. If that’s not enough incentive, consider the tax benefits you receive when you sell.
Homeowners who have owned their homes for at least two years are entitled to a capital gains tax exemption when they sell. For married couples that file jointly, the first $500,000 of gain is taxfree. For single individuals, the exemption is $250,000. In either case, the property must be a primary residence that you occupied for 2 of the 5 years before selling.
The current capital gains exclusion for primary residences can be taken every two years. So conceivably you could buy ahome, experience two years of appreciation, sell the property, receive tax-free gain, buy another property and repea the sequence again and again.
The Taxpayer Relief Act of 1997 significantly changed the federal tax laws regarding the sale of a principal residence. Under the current law, you don’t need to invest in another home in order to defer capital gain liability, as was the case previously. Even if you sell your home and rent indefinitely, you’re entitled to take the $250,000 (individual) or $500,000 (married couples) capital gain tax exemption.
Contractors and renovation specialists are making good use of the current tax law. Some builders are choosing to occupy a home they’ve recently built rather than sell it new. After establishing the 2-year minimum residency requirement, they sell the property and are eligible for the $250,000 (individual) or $500,000 (married couples) capital gain tax exemption. Home buyers with fix-up expertise can use this strategy to help build wealth. First, buy a fixer and move into it. Fix it up and live there for at least two years. Then sell, take your tax-free gain and buy another fixer. But don’t even consider this approach unless you like moving a lot and you can live comfortably in a construction zone. You’re only entitled to cash in on tax-free capital gain on the sale of your primary residence. If you own income-producing property, you must pay tax on the gain when you sell unless you complete a 1031 tax-deferred exchange. A 1031 exchangeallows you to roll gain from one income-producing property into another income-producing property. You ultimately have to paytax on the gain, but a 1031 exchange permits you to defer capital gain tax payment in the future.
HOME SELLER TIP: Some homeowners are incorporating current tax law into their retirement planning. Recently, an Oakland,Calif., couple sold an apartment building using a 1031 Exchange. With the proceeds, they purchased, or traded into, a home they’ll ultimately occupy when they retire. Until they retire, the property will be rented. So, they traded one rental property for another and deferred paying tax on the gain. At retirement, they will sell their current residence and collect $500,000 of tax-free gain. Then they’ll move into the rental property they acquired in exchange for the apartment building they sold years before. For tax purposes, they’ll convert the rental property to their primary residence and will avoid paying tax on the gain of the investment properties.
THE CLOSING: Federal tax laws are in a continuous state of flux, so be sure to consult a knowledgeable tax advisor before you buy or sell, particularly if income property is involved. State tax laws vary, so consult with an expert in your area.
**Information above is for general knowledge. We are neither CPAs nor attorneys and cannot give legal or tax advice.