Blog with MAE Capital

I usually write on specific topics but this time I am going to have some fun with Real Estate and Real Estate Services.  I am asked almost daily the same question “how’s the market doing”.  I personally hate this question as it is not specific to all the things I do.  I have to ask if they are referring to the Interest Rates, as I have been doing mortgages the better part of my 30-year career, or are they talking about the Real Estate market.  Not a hot question, but since we are there I might as well elaborate.  Interest Rates are hot right now.  Interest rates are as low as I have seen them this year.  What is not hot is the demand for the money.  Ironically, the Federal Reserve (Not Hot) has kept the Fed Funds Rate or the Inter-Bank lending rate to right around 0 for the last seven years (Hot you would think) but during the same time lending laws have tightened, so tight that it makes it very tough for the average person to get a loan to purchase a home.  So with hot interest rates we have a lackluster demand for the cheap money (Not Hot).  As far as The Real Estate Market it is hot for price ranges up to $350,000 in the Greater Sacramento, Placer and Eldorado Counties.  As for the San Francisco Bay Area that market is hot, in the Los Angeles Area that market is hot and not depending where you are at. 

Not hot is the new Truth in lending RSPA Integrated Disclosures, or TRID rules that just went into effect October 3 2015.  This is the Federal Government’s (Not Hot) way to help consumers to make the right decision on their home loan by giving them more time to think about what they are getting themselves into.  That’s right the Government is telling the consumer that they are uneducated, ignorant, and that they should probably pay for an attorney to look over their loan documents before they sign (Not Hot unless you are an attorney, oh the law was written by attorneys for attorneys, double not hot).  Although, the new TRID procedure is ominous at best, the “Good Faith Estimate” of fees and costs and the Truth in Lending statements have been combined into one form (Hot) that is more user friendly for consumers called the Loan Estimate Form.  The Government actually consulted private industry (Hot) before imposing a form that had no relevance like the old Good Faith Estimate.   With the onset of the new TRID procedures the consumer will have to wait longer at the end of the transaction (not hot).  The new procedure will make lenders, after the loan has gone through underwriting, issue a new form called a Closing Disclosure before the lender can issue the closing documents for settlement (Not Hot).    What this intended to do is give the consumer an additional “cooling off” period of 3-8 days depending on when the consumer receives the form.   The way this works on a new purchase loan is that after the consumer has found a house, applied for a loan, received their initial disclosures, the appraisal has been completed, and the lender’s underwriter has reviewed and received all the conditions needed for an approval, the Closing Disclosure will be issued to the consumer.  The Consumer will have to acknowledge that they have received the document or the wait time will be an automatic 8 days, once they acknowledge receipt of the form they will have 3 business days from midnight the day they receive the form to reject the loan or make any changes.  If any changes are made there will be a new form issued and the same wait periods begin all over again (not hot).  This has the potential to add up to 2 weeks to a purchase transaction (not hot).  In a refinance transaction the procedure will be the same but there has always been a mandatory 3 day rescission period after the legal paperwork has been signed, making a refinance transaction take even longer on owner occupied loans (Not Hot).

What’s Hot is Real Estate Sales in the Greater Sacramento Area (where I write this from) for homes that comes on the market $350,000 or less.  This seems to be the sweat spot for Real Estate sales in the area.  Hottest markets seem to be Roseville, Elk Grove, Rocklin, Folsom, Eldorado Hills, Loomis, Penryn, Antelope.  Average Prices are hot right around $314,000 for Sacramento County, $445,000 in Placer County, $435,000 for Eldorado County, and San Joaquin County comes in as the most affordable at $312,000.  I don’t have the data for other parts of California at my fingertips, but with the average income for the State of California hovering right around $65,000 per household that would indicate that if you have an average household income with average bills you could afford a mortgage of about $318,000 (hot for northern California areas except the SF Bay Area).  With California’s unemployment rate, as of April 2015, at 6.3% it is higher than the national average unemployment rate of 5.1% this could be an issue for housing in the future (Not Hot).  From an economic point of view California is becoming a State that only the very richest companies can exist in due to the high corporate taxes, personal property taxes, excise taxes, and general higher costs of living.  This could lead to a population of only highly skilled workers working for the high tech companies leaving manufacturing companies and labor intensive companies out of the loop in California thus leaving no room for the uneducated worker (Not Hot).  California has long been a State with laws and taxes that have favored the lower class workers, now those very laws are actually hurting those workers that are predominantly unskilled labor as the State has forced the manufacturing, and unskilled labor employers out of the State by higher taxation and unhealthy laws and regulations (not hot).   

Hot in lending and investing is private money notes.  Hot for investors in Real Estate in that their qualification requirements fall basically into the equity in their property being financed.  If you are an investor in Real Estate and buy and hold or buy and flip you can obtain money to leverage your activities fairly quickly and easily (Hot).  If you are an investor in notes and Deeds of Trusts the market is hot in that you can receive yields from 6% to upwards of 13% with no hassles of being a landlord (Hot).  Unfortunately, the laws have changed to be way to ominous for private investors to invest in Notes and Deed of Trusts on owner-occupied primary residences due to the Dodd-Frank act and California’s own set of laws  (not hot).  The stock market has been very volatile over the last several months so the increase in demand for investors to invest in these notes have increased significantly (Hot).  However, with the increase in Real Estate prices investors that buy hold or flip have slowed down, so there is more money out there than there are investors to lend it to (not hot). 

Finally, MAE Capital Real Estate and loan is hot as we follow the markets closely and we can offer all types of products for our clients.  We can finance all kinds of properties from single family owner occupied properties (California only) to Commercial projects all over the country.    MAE Capital Real Estate and Loan can list and sell your home in our local markets of Placer County, Sacramento County, Eldorado and Nevada Counties.  We value our customers and work deals with our clients when we represent them in multiple transactions such as listing and selling their home qualifying them for their next home and finding them their next home.  With our ability to represent clients from both the Real Estate and the Loan sides we can save our clients thousands of dollars in commissions that they would have otherwise had to pay (Hot).  We look forward to working with you now and in the future (Hot).

 

Posted by Gregg Mower on October 13th, 2015 5:20 PM

So you are about to make an offer on a home and you are not sure if you should pay the $300-500 for a home inspections.  Your Relator tells you that you should have one, but is it really necessary for you, or is it just to protect your Realtor?  My answer is a little bit of both and we will explore why.  First, we need to define the differences between a Home Inspection and an appraisal.  An appraisal will be done mainly to establish a value of the property.  An appraiser may note work items that should be done prior to the close of escrow, however, this is only for health and safety items and known code violations.  A home inspector does not take value into consideration when doing the inspection.  The home inspection is to identify problem areas with the construction of the home itself.

The home inspector is extremely thorough in inspecting the home and the systems within the home.  A home inspector has a list of all the systems a home could have and he or she will inspect all the systems and make sure they are either working or if they need repairs or upgrades.  As a home buyer, this is important to know as the home inspection can bring up faults to the house where the potential buyer may not want to buy the home without the items fixed.  It is also important to know that if the sales contract is contingent upon the home inspection the buyer’s lender may request a copy of the report.   Lenders can ask for certain items in the report to be repaired as a condition of getting the loan.  So if you know there might be problems with the house and you don’t want the lender to have a say in the repairs you should get the home inspection on your own and not make it a condition to close.  Remember in most Real Estate contracts there is what is called an "inspection period" for the buyer, usually 17 days, and during that inspection period you can, as a buyer, request any kind of inspections including a Home inspection.

So what does the inspector look for in a home?  They look at the entire construction of the home.   The inspector will note the age of the home and what the construction standards were when the house was built, in addition, they will note the new building codes that they believe the house should be upgraded to, if necessary.  The inspector will go under the house, if there is a crawl space, and they will note the condition of the floor joists, foundation, plumbing, electrical and any deficiencies and they will recommend fixes.  They will go room to room in the interior of the house checking floors, walls, ceilings, electrical, doors, floor coverings etc.  and recommend fixes.  In the bathrooms, they will inspect the plumbing, the fixtures, water flow, and floors, ceiling, and walls.  In the Kitchen they will make sure the appliances are working, the garbage disposal (if installed) works, lighting, flooring, cabinets, and doors, they will note cracks in the counters if there are any.  Then they will go into the attic space and check the roof from underneath, the electrical, plumbing, and any systems that might be in there such as the Heating and Air conditioning system.   The inspector will walk around the outside of the house and note any leaking faucets, or pipes.  They will inspect the paint and the siding of the house as to the useful life left.  They will go on the roof and check the roof and make any recommendations as to the useful life of the roof and any other notations that they might find.

Once the inspector has completed the physical inspection they will take their notes and compile a written report which they will deliver to the person who ordered the report, usually the buyer.  Within the report, the inspector will give his or her opinions on the status of the systems in the home.  Home Inspectors don’t have to be contractors so they don’t offer a price to fix any of the problems they find.  The reports themselves can be 50- 100 pages so the detail is there.  They note everything they see from normal wear and tear to major issues they find.  Most of the time, they will point out the major problems of the house in the beginning of the report and point you to the pages to see the detailed write-up of the problems and suggested fixes. 

When you are reviewing a Home Inspection my advice would be to look at the whole report and look for major work that might end up costing a lot money to repair first.  Also, you might want another professional opinion on a system that the inspector notes as in need of repair.  For example, the inspector may note that the air conditioning is not blowing cold air.  The inspector is not an air conditioning system repair person so they would only make a notation that the system is not working properly.  So in cases like this you should seek a professional heating and air person to inspect the unit, as the problem might just be a $5.00 fuse.   They may also make a notation that there is a crack in the concrete in the garage.  The notation might read that there is a possible foundation issue when in reality there are cracks in most all concrete garage floors.  So be careful of what is noted in the report and use common sense.  Remember, the inspector is also covering their own liability issues so they will note everything and every possible problem that it might be.  Don’t let these notations scare you away from purchasing a house as the inspector will note everything they see.  They will note cracks in tiles, which doesn’t mean the entire counter top needs to be replaced.  So when you are reviewing a Home inspection know that they are noting everything and every possible conclusion to cover their own liability. 

Sometimes, getting a Home Inspection is not necessary, like I said in the beginning.  If you are contractor and understand construction your Realtor will still suggest a home inspection as it is their duty to do so, but if you inspect the home yourself there would be no need to pay the additional money.  If you have built a home in the past and understand construction you may be just as qualified to inspect the home yourself.  My advice still would be to download the MAE Capital Home Inspection quick checklist and go through the house as thoroughly as a home inspector would.  Note any problems you find that you would want the seller to fix prior to you purchasing the home so you were not burdened with the expense.  The sale might be an “as is sale” and you would have to make the determination if you still wanted to buy the home for the price you negotiated previously.  You might be able to make the fixes yourself after you own the house and are willing to take the home in the “as is condition.   

Inspecting a home should be done no matter if you do it or if you contract with a licensed Home Inspector to.  You never know what might be hiding behind that wall or fireplace.  I would also highly recommend that you get a termite inspection as well as a home inspection as termites, beetles, and dry rot can be major future expenses as well.   A termite company will guarantee their report for a period of time, so if you do move in and find there is termite damage that the inspector failed to find then the company will repair your home at their costs.  You should be prudent with your inspections of any home you are purchasing even if your intent is to fix and flip the property as you never can know fully what is going on until you move in, which could be too late.  Something we do for our buyers, that is not a requirement, we buy them a Home Warranty with every sale we do.  The Home Warranty warrants the major systems in the house like the heating and air, plumbing, electrical, and some will have extended options for septic systems and wells.  At MAE Capital Real Estate and Loan we do this for our customers as we want to ensure a good buying experience and repeat customers.  If you have any questions please don’t hesitate to leave them here on our blog and feel free to wander around our site there is ample information for any home buyer.  We would love to earn your business.

 

Posted by Gregg Mower on June 10th, 2015 5:37 PM

This time of year folks are preparing for Thanksgiving feasts and Holiday Shopping.  So who out there thinks of buying or selling a home during the holidays is a good idea?  More people than you might you think,  like all good shoppers, savvy home buyers know that traditionally these next 4 months (November-February) are traditionally slow home buying months so deals are out there.  Yes, deals are out there.  You see, although less people list their homes for sale this time of year there are still a good inventory of homes that have been for sale.  Some of these homes that have been listed for several months or more might just be the deal you have been looking for.

If you are a buyer and have been looking for just the right deal on a home, either for investment or to live in, now could be the time to catch a seller in the “Holiday Blues”.  I know this might sound like taking advantage of people when they are down, but it truly is just an economic factor that everyone should take into consideration.  Traditionally, shoppers for real estate slow down this time of year and the frequency of which homes are being shown slow down as well. This puts a seller of a home in the mindset that that they should take an offer that might be on the low side because they believe the market has slowed and they need to take what they can get to sell their home.  Home sellers, this time of year, may also be looking for tax advantages of selling before the years end which could also bode well for potential home buyers.  As a buyer you should know your options as well as the phycology of the Real Estate market this time of year to get the best deal possible.

Here at MAE Capital Real Estate and Loan we understand the phycology of the market this time of year and want all our buyers we represent to know that we truly want to get the best deal possible for them any time of the year.  We also understand that home buyers may need to close their transaction before years end for their tax situation.  As a home buyer you can write off the some fees and costs of a real estate transaction in the year you purchase. I always advise my clients to seek the advice from their CPA or account as to what they can write off and what the ongoing tax advantages are of owning a home either a primary residence or rental property.  There are distinct differences in the tax code between a primary residence and a rental property and the buyer should know the differences before the buy.  Once you determine that owning real estate by the end of the year is in your best interests we need to get you qualified to buy with a loan, if needed.  Then we need to get the parameters of the type of home you are looking for and the location you are looking in.  We will need to act fast as there are the holidays that take away from business days that can be used to work on your transaction.  I would advise, if you need a loan to close your transaction and you are using traditional financing, to be in contract to buy no later than the first of December.  If you are a cash buyer you could probably wait till the 15th of December at the latest. 

If you are a home seller this time of year there are several things to consider.  The first of which is the urgency that you need to sell your home.  Are you looking at a traditional sale or a short sale?  If you are looking at a traditional sale where you will be getting money from the equity in your home to purchase another home, you may want to take your home off the market if you don’t need to sell right away or if you wish to stay in your home over the Christmas –New Years’ time. If you are doing a traditional sale, but have already bought another home contingent on the sale of this home,  you need to keep the home active and look at all offers.  If you are short selling your home, chances are, if you are not in contract by now there is no real way it would or could close by the end of the year so keep it active.  The downside of keeping your home on the market over the holidays is that you have to be ready to show your home at a moment’s notice and that could be problematic if you are going out of town or having company over for the holidays.     

In conclusion, if you need to buy a house before year’s end you had better get going as there are not that many business days left till the end of the year with all the holidays.  If you are a seller think of what is best for your situation.  If you need help with anything please call us we can help you through this time of year and all year around.  Happy Holidays!

Posted by Gregg Mower on November 17th, 2014 5:16 PM

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