Archives for 2011

Buyer Beware! Getting That Loan Has Gotten Harder.


I recently closed two escrows that almost “killed” the buyers and want to prepare those who are taking advantage of today’s low prices and will be purchasing their dream homes.  Before even starting to look, contact your lender and obtain a real loan pre-approval, not just a pre-qualification based upon your income and credit.  Things have changed so much recently that I was taken by surprise.   I recommended a lender to buyer number one who had successfully closed loans for me in the  past and he talked to the buyer and sent me a pre-approval letter to submit with the offer.   After requiring all sorts of documentation, the lender then said, because the buyer owned another property that is worth less than its mortgage, they would not be able to do the loan.  So, I had him send the paperwork over to another lender I thought I could trust.  He said “No problem.  The buyer can get his loan for $729,000; I’m submitting the package to underwriting.”  I reminded him that the loan had to be $829,000, per contract.  After wasting three weeks of a 45-day escrow, we were without the financing and I was being pressured by the listing agent to have the buyer sign off on the contingency.  Luckily, the buyer was discussing this situation with a fellow parent at a soccer game.  The parent is a vice-president for an institutional lender and recommended what the first two lenders should have, “Get an adjustable loan and treat it like an interim loan until you sell the other property.”  We were able to close the loan and the buyer has moved into his new home, but the process was gruelling.  This buyer has a good income and good credit.

Buyer number two also had good credit and a good income.  He selected his own lender who was competent, but the buyer had borrowed money from a friend to pay off a debt.  He was asked for a copy of the cancelled check that he had not gotten back yet showing he had paid the friend back and also he was asked to show the entire transaction…a copy of the check from his friend, the deposit of the money into the bank, a copy of the check he wrote paying back the friend and a copy of the friend’s bank statement showing he was paid back.   “Why?” I asked the lender. ” Homeland security.”, he replied, “They need to know the money was not laundered.”  This buyer almost backed out right at the last moment because he was so worn down.  He is also happy in his new home and is in the process of doing improvements to it.

My advice is to be prepared for the pitfalls of obtaining the financing for your home.  You will be asked for, among other things, a schedule of real estate owned, a valid California driver’s license, W-2′s for the last two years, most recent pay stubs, Federal tax returns for the last two years, rental agreements (if the rents are not shown on the Schedule E of Form 1040).  If you are self-employed, you will need a current year-to-date Profit and Loss Statement and Balance Sheet.  You may also be required to provide copies of property tax bills and if you own a condominium a copy of the HOA bill.

I  recommend requiring that the pre-approval REALLY IS a pre-approval.  Also, ask the lender to propose alternative loans, just in case.  The good news from all of this is the end result, owning your new home, is worth the means to obtain it.

How to Know You’ve Priced Your Home to Sell

Experience has shown me that when a home is being shown regularly by cooperating agents, it is probably priced right.   If it’s being shown often and still not selling, though, there is probably something wrong with the house.  Getting feedback from agents who have shown your house (obtained by the listing agent) is critical.  I always follow up with agents who show my listings to prospective buyers.  One listing I had had a musty smell on the lower level  (When you live a smell everyday you may not notice it.) and the seller found that there were some shoes and leather jackets that were covered with mildew.  By removing them  and hanging  desiccants in the closets, he was able to eliminate the smell.  Shortly thereafter, not one but four offers came in and the house was sold.

Tips for Buying a Condo/Townhouse

March 7, 2011

If you are a first-time homebuyer or an empty nester, a condominium can be a good choice. Some units are marketed as condos but are not legally condos, such as stock co-ops and own-your-own apartments. Condos are the easiest to finance, so be sure to check. A townhouse is a style of condominium that has its own entrance,  is often two-stories, and usually there is no unit above or below.

Before you start looking, decide which neighborhood in which you would like to live. Also, do you want to live in a smaller complex with few, if any, common amenities or would you prefer a larger development with tennis courts, swimming pool, club house…?

There are some characteristics of the unit and the development that are sometimes overlooked by a buyer who falls in love with a condo’s appearance inside. One of the things that a buyer should look closely at is the overall appearance of the development. Are the grounds clean? Does the building need new paint? Do the gates operate correctly? Is the landscaping well kept? When you buy a condo, you are buying the interior of the unit, “paint to paint,” and an equal, undivided interest of the real estate. The appearance of the entire development will affect the value of each individual unit.

Be sure to obtain a copy of the Homeowners Association bylaws and CCR’s(covenants, conditions and restrictions) a current budget, as well as minutes of at least the last 12 months homeowners’ meetings. Are there any assessments on the horizon? Be sure to look at parking restrictions and pet restrictions in the CCR’s. Are there any age restrictions? If the units have a swimming pool, what are the guest policies? Who is responsible for maintenance of any decks, roofs, etc.? Is it the Homeowners Association or the individual owner? If the unit is on an upper floor, what are the rules for the type of flooring an owner can install? What is covered by the Homeowner’s fee? Check to see how many of the units are rented out, as lenders may not provide the loan if there is over a certain percentage of non-owner occupied units in the development (check with your lender to find out what that percentage is).

It’s probably a good idea to visit the complex during the day and also at night or on the weekend, to be able to see how quiet it is and possibly talk to some of the other owners.

If you are downsizing from a larger home, be sure to check the drawer, cabinet and closet spaces. If the parking is subterranean, is there additional storage in the garage? Be sure to read the Preliminary Title Report to be sure that legally assigned parking spaces are included with the unit. Is it secure? Is it well maintained? Is there a common laundry room? Is it clean? How much does it cost to wash and dry your clothes?

What is the cost for a new owner moving in? What are the rules for moving in?

Be sure to have the unit inspected for termites and other infestations. If the unit is attached to others, it may share a common attic with others and if there are termites in the attic it might require that the entire building be tented to remove them. Tenting of the building would be an expense that the homeowners association cannot or is not willing to afford. Sellers will often write in the contract that they will have the condo inspected “inside only.” It is up to you to decide if you still want to purchase such a property.

Another thing to check is, are there any pending lawsuits against the development that might affect the amount of the homeowners association dues?

All in all, a condo can be a very good choice for many homeowners. A couple of reasons are: It is easier to go out of town because the complexes are often gated and there are other owners around. Condos can make nice rental properties, as they do not require maintenance of the exterior. Some complexes have rules regarding how long an owner must own a condo before it can be rented out, so be sure find out. Call me; I can help you find just the right place here in PV or throughout the South Bay.

Real Estate News from Katie Muck

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Katie Muck REALTOR® (DRE License Number 00624729)
RE/MAX Palos Verdes
450 Silver Spur Road
Palos Verdes Peninsula,  CA  90274
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Katie Muck
RE/MAX Palos Verdes
450 Silver Spur Road
Palos Verdes Peninsula,  CA  90274
Contact Me
Visit My Web Site
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