By Gabriel Knight

People, who plan to sell house often aim to make profit from the equity in property. In the world of real estate, home equity is considered to be the value of home in comparison to what’s owed on it. If you get to sell your house for more than the amount you owe, then it’s called the positive equity. On the other hand when you sell your house for less than what you owe, it’s negative equity. Positive equity is what sellers generally look for.

It’s essential to sell at the right time

You must make the move only when the time is right. You should wait for your house to be in the positive equity state. By selling a positive equity house you can make considerable amount of profit. However, it’s not that easy either to sell an underwater or negative equity house. Through short sale you can sell your underwater house. For that you’ll have to convince your lender first. This will hardly help you to make any profit. So, before you decide to sell your house, make sure the time is right.

How can you make the most of equity and sell house to make profit?

Equity is an extremely essential thing that every homeowner should take care of. This will not only help you to make the most of homeownership but your chances of making profit will increase also. There are numerous ways through which you can increase the equity in your property. Some of the ways have been described below:

1. Take care of your monthly mortgage payments: Maintaining regular mortgage payments help to increase equity in property. So, you must make it a point not to miss your monthly mortgage payments. The more you’ll pay the better it’ll be for you. If you’re facing troubles in continuing the monthly payments, then try to accumulate more resources. Do, some part-time job to earn more. Follow a shoestring budget to simplify the monthly payments.

2. Improve your house: This may also help a lot to improve the equity. You should start with improving the indoor systems, for example take care of the plumbing and wiring. If possible try to paint your house. These small yet significant changes will make your house more attractive for the prospective buyers. As a consequence, you’ll be able to get the right price of your house. So, this will increase your profit considerably.

3. Control the future equity increases: It’s essential to take care of the future equity increases as well. Till the last quarter of 2007, homeowners could count on comparatively huge annual equity increases. By 2020, there are chances of 1% or 2% equity improvement in the housing market. This is definitely a vital factor that people should consider. This will help a lot to take the right step at the right time.

By following these 3 easy ways you can stay safe with the equity in your house. Once you get to control the equity, you can easily make profit by selling your property. So, just follow these ways and be a bit responsible with your mortgage to make the most of homeownership.

Source: https://www.mortgagecases.com/mortgage/basics-of-home-equity.html

By Marty Green

So you have just signed up with a real estate broker as a new Real Estate Agent, so now what?  How do you make the phone ring?  How do you find clients to work with?  What should you be doing first?  These are questions asked over and over again by new Aspiring Real Estate Agents.

The first few weeks are very important to most real estate agents.  They usually have limited funds to hold them while they try to get some deals under their belts.  With some hard work and a little luck, within 3-5 weeks you should have a decent amount of people you can call upon.

Here are 10 things you should do straight away to help build you business quickly and ensure that you have a successful start to your real estate career

1. Get your sphere of influence list together, complete with names, addresses, phone numbers and email addresses.  These are friends and family and business acquaintances you may have had from you last career.  Don’t leave anyone out.  You may want to sit down with a friend or your spouse to get some help.  It’s important to add people you may already doing business with, your accountant, hair stylist, mechanic etc.  These people all have a book of business as well that you may be able to tap into.

This will become your Database which is crucial for tracking leads and incoming referrals.  This is the life blood of your business and needs to be reviewed weekly if not daily.

2. Draft a letter or mail out that will go out to your sphere of influence letting them know you are now in the business.  Just like a website, you need to let everyone know where you are and where you can be found.  This introduction letter will have your name and company and how they can get in touch with you for all their real estate needs.  At the end of your letter you can ask your sphere how they would like to be contacted in the future.  Most people want to be kept in touch by email.  Some prefer snail mail and a lot of people now are communicating through facebook!  Make sure you cover all the bases.

3. Work from a plan.  If you are working from a plan, then you know what you are working toward.  You have created a goal and are working at reaching it.  Just working day to day is not a good way to stay focused and to know if you are getting closer to what you are after.  Get a plan and work at it each and every day.

If your goal is to list and sell 20 homes a year and you know you have to have 3 appointments to get a listing, then you need 60 appointments.  If you know it takes 10 calls to get an appointment, then you know you need to make 600 calls to get 60 appointments.  600 calls divided by 50 weeks of work is 12 calls, divided by 5 days a week is 2.4 calls per day.  Can you commit to 2.4 calls per day?  Honestly, anyone can.  Just get a plan and block the time to do your calls.

4. Open houses.  One of the most effective lead generation tools for a new agent are open houses.  Holding an effective open house for an experienced agent is a very good way of generating clients now.  A lot of home buyers visit homes in the area that they want to live to get an idea of pricing and house styles.  New agents will often find buyers that they can work with at open houses.  With some good training, a new agent can pickup quite a few clients from open houses.  The key is being prepared with homes for sale in your area and knowing the products.

5. Use Facebook.  Social media networking is quickly becoming a very good way of finding friends and family who are thinking of buying or selling.  Facebook now has over 350 million people using it and have of them are on it daily.  With some good marketing you can quickly establish yourself as a specialist in your market place.  You become the “goto” person for your niche.  Examples would be first time buyer specialist or an agent that works primarily with investment properties.  Facebook Fan pages and groups can go viral very quickly and grow your reach to new clients and customers.

6. Start writing personal notes.  No other activity has built trust quicker and deepened relationships then writing personal notes.  Just the fact that this takes your most valuable resource, your time, really means something to your clients.  If you can write as little as 2 notes per day to someone you have just met or a past client that you have had a relationship with for awhile.  You will be way further along in building a very strong real estate database.  It only takes 30 seconds to write one but can make the difference in people remember who the Realtor was that reallycared about them!

7. Start phoning through your database.  Begin with the people you know the best.  This is for two reasons, one they already know and like you and are more likely to refer you.  Two, they won’t get annoyed that you called and this will build some great habits for you throughout you real estate career.  Agents that can easily just pick up the phone and make calls to their database will far outsell other agents because they know how to keep in touch with their clients and know how to ask for business through referrals.  Keeping in touch regularly is key, by phone at least 4 times a year is recommended per client.  Attacking your database!

8. Visit Agent open houses.  You need to learn the product in your area and one great way is to visit Agent open houses.  Searching through the MLS is a great way to learn house prices but it’s also a great idea when you are new to visit many homes so you can get a better idea of style and size.  Knowing the product well in your local area will make you a more knowledgeable agent in your clients eyes.  Keeping apprised of home sales and current listings will also show your competence.

9. Sign up for sales training.  If you are a new Realtor, it’s unlikely that you have had much sales training.  Sales is an art form and is not learned over night.  Sales training to an effective level can take years to hone.  Sign up for training as soon as you can.  This is an investment in your future and should not be over looked.

With proper sales training, you will learn what to say and when to say it.  You will learn how to effectively listen for a problem and be able to resolve it.  Real estate Pro’s are always looking to learn something new, make sure you are keeping up with them.

10. Do something that moves your business forward every day.  It can be as little as calling a few people on the phone or writing some personal notes.  Maybe you hand deliver a few flyers or do some door knocking.  Something that moves you to say my business is better today then it was yesterday.  Cleaning your office or re-organizing your computer bag doesn’t move your business forward.  Yes having a clean office is important, but it doesn’t generate you business.  Even if you just made one call to a client you just met or a past client and had a conversation, you have deepened the relationship and your business is better for it.

10b. Exercise often.  This is a Bonus, but I feel it is worthy of mention in this list.  Exercise is so very important in Sales for energy and outward appearance.  The way you present yourself out in public is important and you want to look your best at all times.  Unfortunately for most, when starting in Real Estate, people tend to gain weight much faster than they have in the past at other jobs.

Spending just 15 minutes a day working out will make sure you are up to the task of what the Real Estate Industry can throw at you.

Source: https://realestatecareermentor.com

Do you find heartbreaking to think people would be on the streets while others celebrate Christmas at home? It’s very upsetting to see people in shop doorways or in the back street while we’re shopping gifts for our family. The pain and loneliness of being homeless hits them hardest at Christmas. That’s why, Pacificwide & friends had a quick trip distributing food for homeless people today, giving them a little love. It’s really touching to see how happy they are when receiving a small bag of instant noodle, sausage, sock and old clothes. Seeing their smile back really made our day! Let’s spread the Christmas spirit around

You may think the world of the homeless is very far from us… but in some ways it is very near. The route to their total despair could be caused by anything: job loss, death of a spouse/ kid or a severe physical disability. They have lost their homes, their relatives & been deserted by the families & friends. What can you do to help them? Sometimes the smallest can go a long way. Yesterday, PACIFICWIDE team & our friends already had a very meaningful trip to distribute Sleeping Bags for homeless people in San Jose, CA. It’s deeply moved to see how happy they are when receiving our sleeping bags. Hope it will help them get over the freezing weather and feel warm a little bit during this Christmas! It’s a good feeling to have – Sharing is caring!

For photos of our trip, please click here

Thank you so much for attending our PACIFICWIDE Christmas Party 2013 last Saturday. It’s our pleasure to see all of you! Without your presence, it would not have been such fun as we had that night. A hearty thanks again. Hope to see you soon in the next party!

For our photos, please click here

By: Michele Lerner

As 2013 comes to a close and real estate experts predict where the housing market is headed in 2014, a look back reveals several trends.

“In 2012 we saw the housing market recover and, going into 2013, we expected continuing recovery,” said Lawrence Yun, chief economist of the National Association of REALTORS®. “Instead, the recovery accelerated a lot faster than we anticipated, which was great for sellers and for the 75 million homeowners who saw their home values appreciate.”

1. Housing Prices Rose Faster Than Expected

The national median listing price was $179,900 in January 2012 and rose to $180,000 by December 2012, according to realtor.com® research. The pace of price appreciation accelerated quickly over the year to reach a median list price of $199,500 by September 2013.

2. Mortgage Rates Rose but Remained Low

“We expected mortgage rates to rise in 2013, and they started to increase in the late spring, but they’re still very affordable when you look at rates on a historical basis,” Yun said. “They just aren’t at the super-low point we saw earlier.” According to Freddie Mac, 30-year fixed-rate loans were as low as 3.45 percent in December 2012 and rose to 4.49 in September 2013. Barry Habib, co-owner and chief market strategist for Residential Finance Corp., said mortgage rates are likely to stay low and perhaps even drop between now and March 2014.

3. Bidding Wars Returned

The combination of rising prices, low mortgage rates and low inventory led to a sense of urgency among buyers and the return of bidding wars, said Don Frommeyer, president of the National Association of Mortgage Brokers. According to realtor.com® research, inventory in 2012 reached a high of 2,083,710 homes on the market, then steadily declined to a low of 1,583,497 homes in February 2013. At the end of September 2013, 2,210,000 homes were for sale, approximately a five-month supply.

4. Housing Affordability Remained High

“Housing affordability has come down a little this year because of double-digit home value appreciation and the fact that income isn’t rising in comparable amounts,” Yun said. “Rising mortgage rates, even though they’re still low, also have an impact. While affordability right now is at a five-year low, it’s still the fifth highest for the past 30 years.”

5. All-Cash Buyers Continued to Be a Strong Market Segment

Yun said a continuing surprise is that about one-third of all home purchases were made with cash, a market share that has been consistent for the past three years. While some of these cash buyers are from overseas and some are institutional investors, others are “mom and pop” investors who have had trouble getting financing. “Even some owner-occupant buyers are cash buyers because of the excessively tight underwriting standards for loans,” Yun said. “Some people are getting help from relatives to buy, and then they plan to take out a home equity loan later to repay them.”

6. Mobile Apps Accelerated Connections Between Buyers, Sellers and REALTORS®

Nearly every REALTOR® and brokerage in the country introduced a mobile app this year to make it easier for buyers and sellers to access information from their smartphones and tablets, including realtor.com®. “Everyone realizes that it’s inconvenient to be tied to a desktop when you’re looking for housing-market information and homes,” Yun said. A recent study by Google and the National Association of REALTORS® found that 68 percent of homebuyers used a mobile app during their home search and 89 percent used a mobile search engine at the onset of the home-buying process and throughout their research

7. Rising Rents and Pent-Up Demand Pulled More First-Time Buyers Into the Market

“Right now we’re seeing replenishment of renters who want to buy homes,” Habib said. “At the peak in 2002, nearly 70 percent of people owned homes and 30 percent were renters; now 65 percent of people are homeowners and 35 percent rent. Not only are rents rising faster than home prices in many markets, but there’s pent-up demand from people who don’t want to live at home with their parents and who want to buy a home.”

Source: https://www.realtor.com/news/7-housing-trends-for-2013/?iid=mktng_2013-YIR_home_housingtrends

The lower cap on FHA mortgages will hit city dwellers hardest

By AnnaMaria Andriotis

In just a few weeks, home buyers are going to have a harder time signing up for large mortgages.

The Department of Housing and Urban Development announced on Friday that it will lower the loan limits for its Federal Housing Administration mortgage — a loan used by many first-time and lower-income home buyers — from $729,750 to $625,500. The FHA insures mortgages that banks give to borrowers who make small down payments. Congress raised FHA mortgage caps six years ago in the wake of the downturn.

Home buyers who are impacted will have to turn to the private jumbo market, which has stricter lending standards than the government, including higher down payment and credit score requirements as well as higher interest rates. Each lender decides the terms of these loans, which are held mostly on their books rather than sold to the government, and they vary widely by borrower, typically rewarding home buyers with stellar credit and more cash while penalizing buyers with poor credit and less cash.

Buyers in roughly 650 counties will be impacted by the change, according to HUD. Those who sign up for FHA mortgages of up to $729,750 typically live in expensive cities where even relatively basic single-family homes often run into the millions of dollars. These cities include Los Angeles, New York, San Francisco and Washington, D.C.

To be sure, loans of $650,000 and above make up just a small percentage of the mortgages insured by the FHA. Such loans accounted for just 0.53% of all the mortgages the FHA insured during the third quarter, according to HUD. While small, their share is roughly double what it was in 2009.

The change comes as the federal government begins its exit from the mortgage market. Limits on loans backed by Fannie Mae and Freddie Mac, the quasi-government agencies that purchase most mortgages originated by banks, fell to $625,500 in late 2011.

Since then, a growing number of banks have returned to the private jumbo mortgage market, lending beyond those limits. Originations of these loans has gained steam in the past two years and they are now on pace to hit the highest level since 2007, before the housing meltdown. Lenders gave out $216 billion worth of private jumbos during the first three quarters of this year, up 34% from the same period a year ago, according to Inside Mortgage Finance, a trade publication.

But even though the private mortgage market is opening up, most lenders are very selective. So far, they have been focusing on very affluent buyers with sizable assets (both liquid and in other real estate) who are buying multimillion-dollar homes.

These lenders say they are open to working with less-affluent buyers in expensive housing markets, though such buyers will still have to pass hurdles that are set much higher than the FHA’s rules. The FHA, for instance, will accept borrowers with credit scores as low as 500. But private lenders typically require at least 720. They say they’ll accept a lower score only if there’s something exceptional about the applicant — like if he or she is sitting on a lot of cash or has other assets.

Private jumbos are also more expensive. The average rate on a 30-year fixed private jumbo mortgage stood at 4.49% for the week ending Dec. 6 compared with 4.17% for a 30-year fixed-rate FHA mortgage, according to mortgage-info website HSH.com. On a $729,750 mortgage, that’s roughly $137 more per month and around $49,300 in extra interest over the life of the loan.

There’s another hurdle as well: Borrowers will need to put significantly more cash down with a private mortgage. In most cases, they’ll need a at least a 15% to 20% down payment compared with the 3.5% down payment that the FHA requires — which could shut them out of the housing market. Many buyers turn to FHA because they don’t have the cash that other mortgages require to buy a home.

Going forward, however, experts say it’s possible that some of these borrowers will see cost savings. Lenders will likely begin to lower down payment requirements below the 15% threshold as more buyers are forced to turn to the private market.

Those buyers will then need to sign up for “private mortgage insurance,” which can be cheaper than what the FHA charges. Private jumbo mortgage borrowers can get rid of mortgage insurance after they reach 20% to 22% equity in their home. In contrast, borrowers with FHA mortgages who make a down payment of 10% or less are always paying this insurance—unless they refinance out of the program.

Borrowers who sign up for a 30-year FHA mortgage have an upfront fee of 1.75% of the total loan amount plus recurring annual costs of 1.3% to 1.55% of the loan amount (depending on the size of their down payment), which is paid over a monthly basis as part of their mortgage payment. On a $729,750 mortgage, that’s about $12,770 upfront plus $790 to $943 per month.

Private insurers currently require one type of payment—either an upfront fee or one that’s paid annually over a monthly basis. Depending on the borrower’s credit score and down payment size, the upfront fee can range anywhere from 1.2% to 5.7% of the total loan amount. On a $729,750 mortgage, that’s an upfront payment of anywhere from $8,757 to $41,596. Or if they choose to pay a fee monthly, it ranges from 0.46% to 2.13% or $280 to $1,295.

The large price range underscores the different set of standards in the private market: While the FHA program treats most borrowers the same way, in the private market, borrowers with stronger credit profiles and more cash to put down are rewarded with savings. Meanwhile, those in the opposite situation will be forced to pay more

Source: https://www.marketwatch.com/story/getting-a-mortgage-gets-tougher-for-city-dwellers-2013-12-10?link=sfmw

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By Cara Ameer

QUESTIONS, QUESTIONS, QUESTIONS.  Every buyer and seller has them – in fact A LOT of them.  Curiosity is at an all time high during the home search as buyers and sellers try to size up each other and their motivations.  What are some of the most popular questions buyers and sellers ask during the home buying and selling process and WHY do they ask them?  Read on so you can be prepared no matter what side of the “For Sale” sign you may be on.

BUYER QUESTIONS:

How long has the property been on the market?

This question is used to assess the seller’s motivation or to try to find out if something is “wrong” as to why the property is still on the market.   The longer the marketing time usually means it lags as a result of price in relation to its condition and competition.

Why is the seller selling?

Every buyer wants to know this and is another question used to try to determine motivation.   However, as a buyer you can’t assume that the seller’s reason for selling is going to make them any more motivated to sell the home for less than market value.

How long have they owned it?  How much did they pay for it?  What do they owe?

Buyers always want to figure out how much equity sellers have in the property and how much room there may be on the price or asking for concessions like closing costs or repairs.

Is someone living here now?

Buyers are always curious – especially on furnished homes that may not look lived in. They love trying to figure out if the property is just sitting, potentially costing the seller money every month or if it is actually being used.

An array of maintenance, home improvement  and cost questions: – how old is the roof, the air conditioning system , can a pool be added, how much is insurance on the home, how much are utility bills, etc.

Answers to these questions may affect how much a buyer is willing to pay for the property or whether they will make an offer at all.  They are trying to figure out if they are going to be taking on the money pit and can they do what they want to as far as possible future expansion to the property, even if they have no intention of doing so in the future.

SELLER QUESTIONS:

What type of financing are they doing – want to know so they can anticipate with handling an offer and how that could affect their obligations in the transaction with respect to any required repairs, appraisal, asking for closing costs, etc.

How much of a down payment will they be putting?   – Sellers want to assess the buyer’s financial viability  i.e., how much skin in the game will they have with this?

What other properties are they considering?  Want to know what their competition is and perhaps where they stand in relation to it.

Are they local or from out of the area?  This may give an idea as to their timeframe  – relocation buyers typically make decisions in a shorter timeframe

What is their timeframe – when will they be deciding?  Sellers get nervous once a buyer returns multiple times for a showing and are anticipating a decision.

Do they have a house to sell first -  the proverbial question – sellers always want to know the answer to this one.  That may be less of an issue today than a few years ago when the market had experienced a slow down.

By Elizabeth Weintraub

Every state requires slightly different steps to buying a home although they are basically very similar. Since I am most familiar with the way California does it, here is the path to home ownership in California, broken down into simple steps:

1) Hire a Buyer’s Agent

• A buyer’s agent will represent only you and have a fiduciary responsibility to look out for your best interests.
• Buyer’s agents may ask you to sign a buyer’s broker agreement, but it is the seller who pays the commission.
• Interview agents until you find an agent you trust and with whom you feel comfortable.
• Once you have settled on an area, try to hire a neighborhood specialist.

2) Get PreQualified / Preapproved

• Order a free credit report online and fix mistakes, if any.
• Ask your agent for a referral to a mortgage broker, but also compare rates offered by your own bank and / or credit union.
• Ask the lender to give you a loan approval letter, which means it will verify your income and pull a credit report.
• Determine your maximum loan amount, but choose only a mortgage type that you understand and a payment level with which you feel comfortable, which may very well be less than the maximum for which you are approved.

3) Look at Homes for Sale

• Ask your agent to look at homes for you before showing them to you.
• Narrow your search to those homes that fit your exact parameters to find that perfect home.
• Ask your agent to give you MLS print-outs of comparable sales in your targeted neighborhood.
• Consider all homes on the market, including fixer-uppers, REOs, foreclosures, short sales and those overpriced homes with longer DOM.
• Observe open house etiquette.
• Tell your agent which online home listings you are interested in previewing and ask for additional input.

4) Write a Purchase Offer

• Consider writing seller’s market offers in sellers markets and buyer’s market offers in buyer’s markets.
• Select a home offer price based on the amount you feel a seller will accept or counter.
• If you are considering a lowball offer, ask your agent to substantiate this price for you.
• Prepare for multiple offers if the home is considered desirable in a hot location.
• If your offer is rejected, ask your agent to explain why and don’t repeat that mistake with your next offer.

5) Negotiate and Write Counter Offers

• Expect the seller to issue a counter offer.
• If the seller counters at full price, continue to negotiate.
• During offer negotiation, share personal information about your family to give the seller a reason to care about you.

6) Make an Earnest Money Deposit

• When your offer is accepted, deposit your earnest money check with the appropriate party.
• Do not ever make your check payable to the seller.
• Your offer should contain contingencies that will return your earnest money deposit to you if you cancel the contract.

7) Open Escrow / Order Title

• Your agent or transaction coordinator will open escrow and title, if the listing agent hasn’t already done so.
• Ask for the escrow officer’s name, phone and escrow file number.
• Give this information to your lender and your insurance agent.

8) Order Appraisal

• Your lender will require an advance payment for the appraisal.
• If you receive a low appraisal, discuss options with your agent.
• Ask for a copy of the appraisal.

9) Comply With Lender Requirements

• Lenders may ask for additional information.
• Do not make home buying mistakes such as altering your financial situation while in escrow.
• When the file is complete, the lender will submit it for final underwriter approval.

10) Approve Seller Disclosures

• Read and question items you do not understand on the TDS, Seller Property Questionnaire, natural hazard report, pest inspection / completion and other documents such as a preliminary title policy.
• Realize you have 10 days to cancel if lead paint is a health hazard.
• Read every document in its entirety; ask questions about all seller disclosures.

11) Order Homeowner’s Insurance Policy

• Order your homeowner’s insurance early.
• Sometimes previous claims by a home owner can make it difficult to get insurance.
• Get replacement coverage.

12) Conduct Home Inspection

• Hire a reputable home inspector.
• Bring a home inspection checklist with you.
• Attend the home inspection.

13) Issue Request for Repair

• If the home inspection turns up health and safety issues, issue a request for repair by asking the seller to address those issues or give you a credit for them.
• Realize no home is perfect, and the inspector will find faults.
• Be reasonable.

14) Remove Contingencies

• By default, California C.A.R. contracts give you 17 days to remove contingencies.
• Make sure your loan is firm and the appraisal is acceptable before removing your loan contingency.
• If you do not remove contingencies, the seller can issue a request to perform and then cancel the contract, on top of demanding your deposit.

15) Do Final Walk-Through

• Do not pass up doing a final walk-through.
• Inspect the property to make sure it’s in the same condition as when you agreed to buy it.
• If you find a serious issue, address it now before you close.

16) Sign Loan / Escrow Documents

• In southern California, you will sign escrow documents shortly after opening escrow.
• In northern California, you will sign escrow documents along with your loan documents near closing.
• Bring a valid picture ID.

17) Deposit Funds

• Bring a certified check payable to escrow.
• Expect escrow to pad the amount, so you will receive a refund after closing.
• Consider asking your bank to wire the funds to escrow, saving you the hassle of waiting in line at the bank.

18) Close Escrow

• Your property deed, seller’s reconveyance and deed of trust will record in the public records.
• Title will notify you and your agent when it records.
• After recordation, unless your contract specifies otherwise, the property is yours — change the locks immediately.

Source: https://homebuying.about.com/od/buyingahome/qt/121907_buy-path.htm

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Buying a home is complicated enough without feeling like your real estate agent is speaking a foreign language. Learning the real estate lingo is an important part of feeling in the loop while you’re purchasing your home. These 10 definitions of commonly misunderstood real estate terms will help you be on your way to being an informed home buyer.

1) Appraisal

An appraisal is an assessment done by a certified appraiser justifying the purchase price for a property. The appraisal is usually based on an analysis of comparable sales of similar homes nearby.

2) Commission

Commission refers to the money that is paid to real estate agents after the closing of the transaction. They are a percentage of the purchase price (usually 3% or 6%). This is how real estate agents make their money.

3) CMA (Comparative Market Analysis)

A CMA is a professional report that real estate agents give to their clients. The report is an analysis done on the values of similar homes in the neighborhood or area that have sold or that are for sale at the same time. This report helps give a realistic listing and selling price.

4) Earnest Money

Earnest money is a deposit made by the potential home buyer to show that he or she is serious about buying the home. When the transaction is finalized, the funds are put towards the buyer’s down payment.

5) Escrow

To place something in escrow means to place it in the hands of a third party until certain conditions are met. For example, earnest money deposits are often put into escrow until they are delivered to the seller when the transaction is closed.

6) Equity

Equity refers to a homeowner’s financial interest in a property. Equity is the difference between the fair market value of the home or property and the amount still owned on it’s mortgage and other liens.

7) Lien

A lien is a legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed are both considered liens.

8) REPC (Real Estate Purchase Contract)

The Real Estate Purchase Contract is a contract between parties for the purchase and sale of real estate. They are legally binding and are written down and signed by both parties.

9) Short Sale vs. Bank Owned Home

When a homeowner defaults on his mortgage, the lender may allow the home to be sold in a short sale. This means that the bank has agreed to let the home be sold for less than what the current owner owes on the property. A bank owned home is simply a home that has been foreclosed but the lender has not agreed to sell the home for less than what is owed on it.

10) Under Contract

If a property is “under contract” it means that the seller has accepted the buyers offer to purchase the property. Generally, the buyer is given a time period in which the sale can be finalized. During this time period, the seller cannot accept or entertain any other offers from other buyers.

Source: https://cornerstonerep.blogspot.com/2013/10/10-commonly-misunderstood-real-estate.html?m=1

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By: Michele Lerner

As 2013 comes to a close and real estate experts predict where the housing market is headed in 2014, a look back reveals several trends.

“In 2012 we saw the housing market recover and, going into 2013, we expected continuing recovery,” said Lawrence Yun, chief economist of the National Association of REALTORS®. “Instead, the recovery accelerated a lot faster than we anticipated, which was great for sellers and for the 75 million homeowners who saw their home values appreciate.”

1. Housing Prices Rose Faster Than Expected

The national median listing price was $179,900 in January 2012 and rose to $180,000 by December 2012, according to realtor.com® research. The pace of price appreciation accelerated quickly over the year to reach a median list price of $199,500 by September 2013.

2. Mortgage Rates Rose but Remained Low

“We expected mortgage rates to rise in 2013, and they started to increase in the late spring, but they’re still very affordable when you look at rates on a historical basis,” Yun said. “They just aren’t at the super-low point we saw earlier.” According to Freddie Mac, 30-year fixed-rate loans were as low as 3.45 percent in December 2012 and rose to 4.49 in September 2013. Barry Habib, co-owner and chief market strategist for Residential Finance Corp., said mortgage rates are likely to stay low and perhaps even drop between now and March 2014.

3. Bidding Wars Returned

The combination of rising prices, low mortgage rates and low inventory led to a sense of urgency among buyers and the return of bidding wars, said Don Frommeyer, president of the National Association of Mortgage Brokers. According to realtor.com® research, inventory in 2012 reached a high of 2,083,710 homes on the market, then steadily declined to a low of 1,583,497 homes in February 2013. At the end of September 2013, 2,210,000 homes were for sale, approximately a five-month supply.

4. Housing Affordability Remained High

“Housing affordability has come down a little this year because of double-digit home value appreciation and the fact that income isn’t rising in comparable amounts,” Yun said. “Rising mortgage rates, even though they’re still low, also have an impact. While affordability right now is at a five-year low, it’s still the fifth highest for the past 30 years.”

5. All-Cash Buyers Continued to Be a Strong Market Segment

Yun said a continuing surprise is that about one-third of all home purchases were made with cash, a market share that has been consistent for the past three years. While some of these cash buyers are from overseas and some are institutional investors, others are “mom and pop” investors who have had trouble getting financing. “Even some owner-occupant buyers are cash buyers because of the excessively tight underwriting standards for loans,” Yun said. “Some people are getting help from relatives to buy, and then they plan to take out a home equity loan later to repay them.”

6. Mobile Apps Accelerated Connections Between Buyers, Sellers and REALTORS®

Nearly every REALTOR® and brokerage in the country introduced a mobile app this year to make it easier for buyers and sellers to access information from their smartphones and tablets, including realtor.com®. “Everyone realizes that it’s inconvenient to be tied to a desktop when you’re looking for housing-market information and homes,” Yun said. A recent study by Google and the National Association of REALTORS® found that 68 percent of homebuyers used a mobile app during their home search and 89 percent used a mobile search engine at the onset of the home-buying process and throughout their research

7. Rising Rents and Pent-Up Demand Pulled More First-Time Buyers Into the Market

“Right now we’re seeing replenishment of renters who want to buy homes,” Habib said. “At the peak in 2002, nearly 70 percent of people owned homes and 30 percent were renters; now 65 percent of people are homeowners and 35 percent rent. Not only are rents rising faster than home prices in many markets, but there’s pent-up demand from people who don’t want to live at home with their parents and who want to buy a home.”

Source: https://www.realtor.com/news/7-housing-trends-for-2013/?iid=mktng_2013-YIR_home_housingtrends

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The lower cap on FHA mortgages will hit city dwellers hardest

By AnnaMaria Andriotis

In just a few weeks, home buyers are going to have a harder time signing up for large mortgages.

The Department of Housing and Urban Development announced on Friday that it will lower the loan limits for its Federal Housing Administration mortgage — a loan used by many first-time and lower-income home buyers — from $729,750 to $625,500. The FHA insures mortgages that banks give to borrowers who make small down payments. Congress raised FHA mortgage caps six years ago in the wake of the downturn.

Home buyers who are impacted will have to turn to the private jumbo market, which has stricter lending standards than the government, including higher down payment and credit score requirements as well as higher interest rates. Each lender decides the terms of these loans, which are held mostly on their books rather than sold to the government, and they vary widely by borrower, typically rewarding home buyers with stellar credit and more cash while penalizing buyers with poor credit and less cash.

Buyers in roughly 650 counties will be impacted by the change, according to HUD. Those who sign up for FHA mortgages of up to $729,750 typically live in expensive cities where even relatively basic single-family homes often run into the millions of dollars. These cities include Los Angeles, New York, San Francisco and Washington, D.C.

To be sure, loans of $650,000 and above make up just a small percentage of the mortgages insured by the FHA. Such loans accounted for just 0.53% of all the mortgages the FHA insured during the third quarter, according to HUD. While small, their share is roughly double what it was in 2009.

The change comes as the federal government begins its exit from the mortgage market. Limits on loans backed by Fannie Mae and Freddie Mac, the quasi-government agencies that purchase most mortgages originated by banks, fell to $625,500 in late 2011.

Since then, a growing number of banks have returned to the private jumbo mortgage market, lending beyond those limits. Originations of these loans has gained steam in the past two years and they are now on pace to hit the highest level since 2007, before the housing meltdown. Lenders gave out $216 billion worth of private jumbos during the first three quarters of this year, up 34% from the same period a year ago, according to Inside Mortgage Finance, a trade publication.

But even though the private mortgage market is opening up, most lenders are very selective. So far, they have been focusing on very affluent buyers with sizable assets (both liquid and in other real estate) who are buying multimillion-dollar homes.

These lenders say they are open to working with less-affluent buyers in expensive housing markets, though such buyers will still have to pass hurdles that are set much higher than the FHA’s rules. The FHA, for instance, will accept borrowers with credit scores as low as 500. But private lenders typically require at least 720. They say they’ll accept a lower score only if there’s something exceptional about the applicant — like if he or she is sitting on a lot of cash or has other assets.

Private jumbos are also more expensive. The average rate on a 30-year fixed private jumbo mortgage stood at 4.49% for the week ending Dec. 6 compared with 4.17% for a 30-year fixed-rate FHA mortgage, according to mortgage-info website HSH.com. On a $729,750 mortgage, that’s roughly $137 more per month and around $49,300 in extra interest over the life of the loan.

There’s another hurdle as well: Borrowers will need to put significantly more cash down with a private mortgage. In most cases, they’ll need a at least a 15% to 20% down payment compared with the 3.5% down payment that the FHA requires — which could shut them out of the housing market. Many buyers turn to FHA because they don’t have the cash that other mortgages require to buy a home.

Going forward, however, experts say it’s possible that some of these borrowers will see cost savings. Lenders will likely begin to lower down payment requirements below the 15% threshold as more buyers are forced to turn to the private market.

Those buyers will then need to sign up for “private mortgage insurance,” which can be cheaper than what the FHA charges. Private jumbo mortgage borrowers can get rid of mortgage insurance after they reach 20% to 22% equity in their home. In contrast, borrowers with FHA mortgages who make a down payment of 10% or less are always paying this insurance—unless they refinance out of the program.

Borrowers who sign up for a 30-year FHA mortgage have an upfront fee of 1.75% of the total loan amount plus recurring annual costs of 1.3% to 1.55% of the loan amount (depending on the size of their down payment), which is paid over a monthly basis as part of their mortgage payment. On a $729,750 mortgage, that’s about $12,770 upfront plus $790 to $943 per month.

Private insurers currently require one type of payment—either an upfront fee or one that’s paid annually over a monthly basis. Depending on the borrower’s credit score and down payment size, the upfront fee can range anywhere from 1.2% to 5.7% of the total loan amount. On a $729,750 mortgage, that’s an upfront payment of anywhere from $8,757 to $41,596. Or if they choose to pay a fee monthly, it ranges from 0.46% to 2.13% or $280 to $1,295.

The large price range underscores the different set of standards in the private market: While the FHA program treats most borrowers the same way, in the private market, borrowers with stronger credit profiles and more cash to put down are rewarded with savings. Meanwhile, those in the opposite situation will be forced to pay more

Source: https://www.marketwatch.com/story/getting-a-mortgage-gets-tougher-for-city-dwellers-2013-12-10?link=sfmw