Music To Our Ears

The words every real estate agent wants to hear:

The Housing Crisis is over.

These words were printed on May 6, 2008, in the Wall Street Journal. Music to the ears of Team Patereau, I can tell you.

The main points for Team Patereau included:

• The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
• ...So what's going to stop the housing decline? Very simply, the same thing that caused the bust.
• The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
• Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Read the full article!

5 NEW Rules for Home Buyers

A recent article written by Amanda Gengler, Money Magazine, is circulating. The gist of it is that there are NEW rules for home buyers. Here's what she has to say:

There's no telling how long the housing crisis will drag on. Here's what you need to know before you start shopping in a rocky market.

Rule 1: You can't time the bottom of the market
Face it: The house you buy today will more than likely be worth less next year. That could get you thinking about trying to time the bottom. Resist. It's harder to do than you think, and this is the best buyers have had it in two decades, with inventories up and mortgage rates low. Pace yourself, find the perfect place and drive a hard bargain: Ignore the seller's asking price and bid 10% below what comparable homes are selling for. If the seller balks, move on. Remember that if you're trading up, your home could sit. So sell before you buy.

Rule 2: One reason to buy now - mortgage rates
Homes are plentiful and will remain so, but financing will be getting more expensive. True, the Federal Reserve has slashed interest rates, but fixed mortgages don't directly follow the Fed. They reflect the bond market's expectations about inflation, which remains a concern. The 30-year, now at 6.1%, will likely reach mid-6% by December and 7% in 2009, says Celia Chen of Moody's Economy.com. That means there could be a penalty for waiting to buy even if prices fall more. Today a $250,000 loan would set you back $1,500 a month. At 7%, a $1,500 payment gets you only a $225,000 mortgage. As for variable-rate loans, the spread between conforming ARMs and fixed loans is too narrow to do you much good.

Rule 3: Another reason to buy - rates on big mortgages
Mortgages in amounts greater than $417,000 - the limit for buying by federally sponsored mortgage agencies - usually run a fifth of a percentage point above conventional products. But investors are shunning jumbos, which now average 7.2% and are unlikely to drop much this year, according to HSH Associates. Certain jumbo borrowers could get relief, however. A new law allows Freddie Mac and Fannie Mae to buy loans as large as $729,750 in 71 high-priced areas. So far "jumbo conforming" loans average 6.6%. The program has gotten off to a slow start; you'll need to shop around. And unless Congress acts, this bargain will disappear at year-end.

Rule 4: Don't buy cheap; buy good schools
By now you've heard from somebody who knows somebody who got a great deal on a foreclosed property. But when you buy a house, you're also buying into a neighborhood. And foreclosures tend to be bunched in areas where residents and speculators alike took out exotic mortgages to get into homes they subsequently found they couldn't afford. That's not a recipe for stability. Prices and quality of life could both decline further. Similarly, avoid developments that popped up in the past few years. They too likely have a lot of owners with risky loans and little equity, says Mike Larson of Weiss Research. Instead, go for areas with highly rated schools. They generally fare better during downturns, and that pattern is holding today, according to a recent study by real estate site Trulia.com.

Rule 5: Choose an agent that has your best interest at heart
Do you understand dual agency? Basically, it means that the listing agent's primary fiduciary (monetary) responsibility is to the seller. Make sure you and your agent are clear about expectations communication, pre-qualifying for financing, showing property, writing offers, and overall assistance through the process. Does he/she focus on your priorities? A good
buyer's agent will save you time, money and peace of mind.

Team Patereau is ready to guide you through your buying tansaction in these volatile times. Give us a call!

5 THINGS EVERY HOME BUYER SHOULD KNOW

Most buyers know the basics of a real estate transaction; the information directly affecting their situation such as mortgage payments, closing costs, commission and so on. Most feel confident in their choice of houses and may have put some time into researching the area and schools, but there are a few things that catch many people off guard. These details often appear at the last minute and the buyer is aware then details usually cannot be changed and the results can often cause delays and or loss of funds. Here's 5 of them:

1. Your Initial Deposit: When you made an offer to purchase, this included a good faith deposit. This deposit is also called "earnest money." This deposit is held in escrow until the close and is credited to the buyers closing costs. But, if escrow gets cancelled what happens to the deposit? Most people are unclear about the disposition of their deposit; sellers assume the deposit is automatically theirs if the buyer cancels but this may not be the case. It's best to find out how this process works and what is needed in order for the buyer to recoup their deposit or what details constitute the forfeiture of the buyers’ deposit. This is often spelled out in the initial offer, so ask Team Patereau to explain the process.



2. Taxes: Most people are aware of their tax rate, but have never calculated what the actual yearly amount will be. Something else to consider, if you purchase a new home from a builder you're going to receive a supplemental bill shortly after the close of escrow. This supplemental bill will be equivalent to one year's worth of property tax. This is a shock to many people, since most people never know its coming. Another little detail that often slips through the cracks are assessments. Newer communities likely have assessments in addition to your basic property tax rate. Many people don't know that often assessments can change and be added yearly, which equates to higher property taxes every year.



3. Homeowners Association: When considering a home within a homeowner's association, it's always prudent to thoroughly read all the Covenants, Conditions and Restrictions (CC&R). Yes, this is often a huge document, but it's given to you before you close escrow for a reason; these CC&Rs directly affect you. If you don't know and understand all the rules, this can lead to a less than ideal situation if you unwittingly break a few. Little things like permission to paint your garage door or installation of a backyard patio can lead to huge problems including legal action. Know the rules!



4. Home Warranty: Understanding how your home warranty works will save you a tremendous amount of frustration and hassle. Research before you close escrow, find a plan you understand and feel comfortable with, then request any extra coverage you think you need. Most home warranty companies offer basic coverage for appliances and air conditioning but, did you know they also offer coverage, for an additional fee, for such items as roof, well, and septic tanks?



5. Homeowner's Insurance: Of course everyone knows they need homeowner's insurance before closing escrow. Unfortunately most people wait till the last minute, run into snags, and then closing is delayed. If you approach this task as soon as you enter escrow this allows time to compare rates and if a snag does arise you have time to handle it, avoiding a hasty decision. If the previous homeowner has had a recent claim this can affect you the new purchaser. Better to know this early rather than the last minute.
   
   

Ask your Team Patereau to help you understand the details that are a part of every real estate transaction and you'll enjoy smooth sailing every step of the way!