Orangecrest Riverside California Real Estate Blog
Orangecrest Riverside California Real Estate Blog

Scott Chappell and Brian Bean
Wednesday, May 31, 2006

No-cost mortgage may be unwise in today's market

Here's an interesting article about the wisdom of some loan programs ...

Points and fees add to overall loan payment

Tuesday, May 30, 2006

By Dian Hymer
Inman News

No-cost mortgages are popular with home buyers who are trying to scrape together enough cash to buy a home. Now that the cost of mortgage money is rising, it makes sense to re-evaluate this financing strategy.

To say that a mortgage has no costs is a bit of a misnomer. The borrower pays few if any upfront fees to originate a no-cost mortgage. But the upfront fees, like points, are added to the cost of the mortgage. The cost is reflected in a higher interest rate.

"Points" is a term lenders use for the mortgage origination fee. One point is equal to 1 percent of the mortgage amount. So, if you pay one point to originate a mortgage for $500,000, you will pay $5,000 cash to the lender at closing.

There is an inverse relationship between points and the mortgage interest rate. The more points you pay, the lower the interest rate. One point is roughly equal to a quarter percent on the interest rate. If you were to pay one point, you'd buy the interest rate down 0.25 percent in relationship to a borrower who chooses to pay no points. For a no-point loan, your interest rate will be approximately 0.25 percent higher.

A no-cost mortgage was an attractive option when interest rates on fixed-rate financing were under 6 percent. Now that rates are moving higher, paying points may make more sense, particularly if you're buying for the long-term.

For example, let's say you're trading up to a home that you plan to own 20 years or so until your children are in college. You're financing the purchase with a $500,000 mortgage.

For one point, the interest rate will be 6.25 percent with a monthly payment of $3,078.60. The zero-point option will cost 6.5 percent with a monthly payment of $3,160.35 -- a difference of $81.75 per month, or $918 per year. If you opt to pay one point, you will need to keep paying on the mortgage for approximately five years and two months to break even when compared with the cost of the no-point mortgage.

HOUSE-HUNTING TIP: To arrive at the break-even point when comparing a no-point loan to one with points, divide the points, or $5,000 in this example, by the annual difference in monthly payment, or $918. The result is the length of time in years that you need to keep the loan to make it worthwhile to pay points.

In the above example, there is an advantage to paying points for a lower interest rate if you keep the loan for longer than five years. The longer you keep the loan, the bigger the savings. In today's market, buying for the long term is a good strategy.

Paying upfront points also can be advantageous to home buyers who will benefit from a tax deduction. Points paid on a purchase mortgage are tax-deductible in the year of purchase by homeowners who itemize deductions on their federal tax return. Talk to your tax advisor for advice on whether you'll benefit tax-wise by paying points.

Keep in mind that paying points can be an unnecessary expense for buyers who purchase for the short term. You would also come out ahead with a no-point loan if interest rates were to decline over the next few years. In this case, you could refinance into a lower interest rate mortgage.

THE CLOSING: If you're short of cash and there are a lot of homes for sale that aren't moving quickly, you might ask the seller to pay points for you. This strategy will have less chance of success in a market where listings are selling quickly.

Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

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# posted by Scott Chappell and Brian Bean @ 9:58 AM

Monday, May 22, 2006

70% of all home buyers use Internet

Here's an article about the importance of the Internet in real estate ...

Report: 'Internet' buyer now 'typical'

Friday, May 19, 2006

Inman News

Home buyers using the Internet are younger, wealthier, better educated and more likely to be married than traditional buyers, according to an industry survey released recently. Internet buyers also reported greater satisfaction with the home-buying process compared with traditional buyers.

However, these two types of buyers have started to converge over the last few years, according to the California Association of Realtors' "2006 Internet Versus Traditional Buyer Survey," which examines their characteristics.

The Internet buyer has become the "typical" home buyer, CAR said, though important distinctions between Internet and traditional buyers remain. Since 2001, the share of home buyers using the Internet as an integral part of the home-buying process has nearly doubled to 70 percent.

"The Internet is changing the dynamics between buyers and their agents, as well as the way business is conducted throughout the real estate industry. However, while the Internet has become an important research tool for home buyers, it has only enhanced the Realtor's role in the transaction," CAR President Vince Malta said. "Buyers continue to rely on their Realtor for help with interpreting the information gathered from the Internet and to guide them through the home-buying process."

According to the survey, more than nine out of 10 Internet buyers indicated that the Internet helped them better understand the process of buying a home. Additionally, Internet buyers are accustomed to receiving more frequent communication and faster response times from their Realtors.

"More and more consumers have high-speed Internet access at home, enabling them to gather information on all types of products and services both quickly and easily," Malta said. "This trend has carried over to the process of buying a home. As a result, home buyers are more informed, have a greater sense of control over the process, and hold high expectations concerning how quickly they receive information."

Internet buyers and traditional buyers expressed significant differences in how they conducted their home-buying research. Internet buyers conducted more research at the onset of the home-buying process, while traditional buyers relied more on their agent as their source of information.

Other key findings from CAR's survey include:

-- The median age of Internet buyers was 39 years compared with a median of 42 years for traditional buyers.

-- More than nine out of 10 Internet buyers were married, while nearly eight of 10 traditional buyers were married.

-- Seventy-three percent of Internet buyers had at least a four-year college degree and 11 percent completed post-graduate work. By comparison, 72 percent of traditional buyers held a college degree and 5 percent completed post-graduate work.

-- Internet buyers had an annual income of $184,900, compared with $148,910 for traditional buyers.

-- Internet buyers spent an average of 5.8 weeks considering buying a home before contacting a Realtor, nearly three times more than traditional buyers, who spent two weeks in this stage of the home-buying process.

-- Internet buyers spent 2.2 weeks looking for the home they ultimately purchased, compared with 7.1 weeks for traditional buyers.

-- Fifty-four percent of Internet buyers said the information that they gathered from the Internet was less useful than that provided by their Realtors; none considered the information gathered from the Internet to be more useful than that obtained from their Realtors.

-- All first-time buyers typically spent 5.3 weeks considering buying a home and 4.3 weeks investigating homes for sale before contacting a Realtor. They then spent 3.2 weeks previewing eight homes with their Realtor.

-- All repeat buyers spent 3.3 weeks considering buying a home and nearly three weeks investigating homes for sale on their own. They spent 5.4 weeks previewing 13 homes with their Realtor.

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# posted by Scott Chappell and Brian Bean @ 9:29 AM

Friday, May 19, 2006

Tips to avoid buying a problem house

Here's a column you may find handy ...

Purchase contingency, written defect disclosure are vital

Friday, May 19, 2006

By Robert J. Bruss
Inman News

Have you ever bought a bad "lemon car"? I have. Several, in fact. Fortunately, I was able to either get my money refunded or trade for a better car.

But getting out of the purchase of a "bad house" isn't so easy. In fact, it might be impossible. That's why home buyers need to know how to avoid purchasing a bad house.

No House is Perfect. As even home builders will admit, no house is perfect. Hopefully, the imperfections are minimal. What one person considers a defect is often not important to another person.

For example, I own a second-home residence about a half-block from a spur railroad track, which is used two times each weekday with a slow freight train in each direction. The first train of the day comes through about 8:15 a.m. Its mellow whistle is a nice wake-up call, which I don't mind. The return train comes by about 5 p.m.

While not a home defect, that quiet railroad track would be considered a serious detriment affecting nearby residence market values if many noisy high-speed trains came through every day.

However, most house defects or problems are not so obvious.

What is a "Bad House"? There is no legal definition of a bad house. But most states now have laws requiring house and condo sellers to disclose in writing all known defects that have a material effect on the home's market value.

The majority of these printed disclosure forms require the seller to disclose defects "to the best of your knowledge."

Smart home sellers, and their real estate agents, are usually quite honest about revealing obvious known defects. The reason is they don't want to get involved in a lawsuit with the buyer after the sale closes. Full disclosure prevents such lawsuits.

The best realty agents now suggest their home sellers obtain a "pre-sale professional home inspection." Then the seller will know what defects the buyer's inspector is likely to discover.

As a home seller, I've found a pre-sale inspection gives me the opportunity to repair any problems or at least fully disclose them to the buyer. Another advantage is home buyers will often accept the seller's professional inspection report (but as I buyer, I always insist on hiring my own professional home inspector).

Many Home Sellers Don't Know About Their Home's Defects. If the home seller has not lived in the house recently, he or she might not know about its defects. For this reason, most states exempt probate and foreclosure sales from the disclosure rules. Or the seller might honestly not know about the home's problems.

To illustrate, in the 28 years I've owned my current home, I have never visited its "crawlspace" beneath the house. And I have no plans to inspect that cold, dark area where, when I bought the house, the termite inspector reported there are the bones of several dead animals down there. Also, I haven't visited my attic since the new "lifetime" roof was installed about 15 years ago. The roofer didn't say if it was his or my lifetime.

Why Home Buyers Should Insist on a Professional Inspection Contingency Clause. Just in case you decide to buy a house where the seller has not had a pre-sale professional inspection, and/or the seller is dishonest and "forgot" to disclose a serious home defect, all home buyers should insist on a contingency clause in their purchase offer for a professional home inspection.

Depending on the size of the house, such inspections cost around $350, sometimes more. After the seller accepts the buyer's purchase offer, buyers and their realty agents should accompany their inspectors on the two- to three-hour inspection to discuss any unexpected problems discovered. My experience has been professional inspectors are very talkative and will reveal if a problem is serious or superficial.

If the professional inspection reveals a previously undisclosed serious problem, the buyer can then either:
a) Cancel the purchase and obtain refund of the good faith deposit.
b) Reopen negotiations with the seller for a repair credit.

Whether I am a home buyer or seller, I prefer to hire a professional inspector who belongs to the American Society of Home Inspectors (ASHI). Their membership and experience requirements are the toughest of the home inspection groups. To find a local ASHI inspector, go to www.ashi.org or call 1-800-743-ASHI.

What is an "As is" Home Sale? Many sellers of older homes decide to sell "as is." That means the seller must disclose known defects in the property but will not pay for any repairs.

For example, if a house's roof is 20 years old but isn't leaking, it is nearing the end of its useful life. An "as is" home seller can refuse to contribute to the cost of a new roof and leave it up to the buyer to decide to purchase or not.

Another reason for selling a home "as is" occurs when the residence obviously needs renovation but the seller either doesn't have the funds or doesn't want the inconvenience. Also, it is often better to let the buyer remodel to the buyer's standards rather than the seller wasting money on upgrades, which might not add to the home's market value.

Summary: The best way to avoid buying a "bad house" is to insist the seller provide a full written disclosure of known defects in the property. In addition, the buyer should insist the purchase offer contain a contingency clause making the purchase contingent on the buyer's approval of a professional inspection report. More details are in my special report, "How to Avoid Buying a Bad House," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

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# posted by Scott Chappell and Brian Bean @ 9:36 AM

First impressions are everything in real estate

Here's an interesting article on the importance of staging your home ...

Curb appeal is among the most important factors in selling a home

Friday, May 19, 2006

By Paul Bianchina
Inman News

If you're a homeowner, you've no doubt heard the term "curb appeal"--that somewhat subjective first impression that your home makes to a visitor seeing it for the first time. If you're thinking of selling your home this spring or even if you just want to spruce things up so the neighbors will love you again, here are some tips to consider:

Take an overview: You've probably stepped over that cracked walkway a hundred times, and you don't even notice the faded paint job anymore. But someone approaching your home for the first time certainly will, and it can be the difference between someone coming in for a closer look or just driving on by. So, step back and take a good look at your home through the eyes of prospective buyers. Put yourself in their shoes, and make a written list of those things that might raise some concerns for you if you were thinking of buying the house. If you don't think you can be objective enough, then ask your real estate agent or even a friend or neighbor to do it for you. And while the front of the house is the primary focal point, don't overlook the sides and rear of the house as well.
How's that roof look? A bad roof can indicate a home that has suffered from a general lack of maintenance, and may point a finger at potential structural and even mold problems resulting from leaks. Roofs are expensive to replace, but depending on your market and your desire to reap top dollar from the sale, you may want to take a hard look at the economics of re-roofing. And if you've been considering just crediting the cost of new roof to the buyer in escrow, bear in mind that you'll probably get more potential buyers and a higher sales price if you take care of the roof yourself before even putting the home on the market.

Paint is your new best friend: Few things help your home show better than a fresh coat of paint. If you're handy with a brush and an airless sprayer, you just might want to undertake the project yourself. A long weekend and a few hundred dollars in paint can make a world of difference in how well the home shows and how quickly it sells. If you don't want to paint the entire house -- or if it doesn't really need it -- just painting the trim, exterior doors, garage door, or window shutters can make a big difference as well.

Make necessary repairs: They may seem like little things, but making sure that everything is in proper working order can make a huge difference in how people perceive your house and the care you have taken with it as a homeowner. Fix cracked concrete walkways, and reset loose bricks. Make sure exterior knobs and locks all work properly. Replace cracked or splintered trim boards and deck boards. Make sure fences are sturdy, and gates work as they should. Repair broken window screens. Put up some bright new house numbers. And don't forget to squirt a little oil on those squeaky hinges.

A little landscaping goes a long way: You don't need a complete makeover to make a big difference in how your yard looks, and once again, landscaping and yard maintenance say a lot about how you've cared for the house over the years. If you have a lawn, fertilize and water it regularly to green it up, and run an edger along sidewalks and driveway edges. Rake up leaves and pine needles. Repair sprinkler systems. Prune back those wild shrubs, and trim overhanging tree branches. Head down to the local nursery and pick up some bright flowers to create borders and accent areas that will add both color and a feeling of hominess to the yard.

Don't forget the night view: A home that shows well at night really creates an impression. Replace any burned out light bulbs, and consider adding a timer or two to keep the lights on a little longer into the evening. Consider some low-voltage or solar lights to accent front walkways, and maybe provide up lighting to accent trees and larger shrubbery. Keep a light or two on in the front windows as well, to add to the feeling of coziness and comfort.

Clean up your act: Finally, spend some quality time with a broom, a pressure washer, and a bucket, and give every part of your home a good thorough cleaning. If you're not going to paint, wash down the siding to remove dirt and stains and get it looking fresh and clean. Wash driveways, walkways, and patios. If you have a wood deck, consider a complete cleaning to restore the wood to a fresher look. Wash all the windows, inside and out, and wash the screens as well. Polish doorknobs and light fixtures. Stow all of your garden tools and kids' toys away to remove clutter and potential tripping hazards. And take a trip -- or five -- to the local landfill and dump all that stuff that's accumulated in and around the yard.

Remodeling and repair questions? E-mail Paul at paul2887@direcway.com.

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# posted by Scott Chappell and Brian Bean @ 9:30 AM

Thursday, May 18, 2006

Housing Market Taking A Breather But Staying Strong

Here is an article about the current real estate market ...

National Realty News

WASHINGTON, D.C. – The housing market is settling but should experience its third-best year in 2006, with job creation and a growing economy offsetting some of the effects of rising interest rates, according to the National Association of Realtors.

David Lereah, NAR’s chief economist, said the market is adjusting to higher mortgage interest rates.

“Coming off a prolonged period of record sales, housing is taking something of a breather this year,” he said. “Even so, interest rates remain historically low, we’ve added about 2 million jobs over the last 12 months and the economy continues to grow – that will sustain healthy levels of home sales in 2006, but they’ll stay below the peaks experienced during the last two years.”

Lereah forecasts the 30-year fixed-rate mortgage to rise to 7 percent this summer and hold at that level during the second half of the year. The unemployment rate is expected to average 4.7 percent, compared with 5.1 percent in 2005, while growth in the U.S. gross domestic product is seen at 3.5 percent in 2006, the same as last year.

Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year’s record of 1.28 million. Housing starts should decline 3.7 percent to 1.99 million this year compared with 2.07 million in 2005.

NAR President Thomas M. Stevens from Vienna, Va., said home prices are returning to normal patterns.

“Since the supply of homes on the market has improved to roughly balanced levels, overall home price appreciation has cooled to single-digit rates,” said Stevens, senior vice president of NRT Inc. “Most of the country is now entering a period of equilibrium in the housing market, which is good for the long-term health of the sector. Owners in most areas can now expect steadier and more normal rates of return on their housing investment.”

The national median existing-home price for all housing types is expected to rise 5.7 percent this year to $232,200, while the median new-home price is forecast to increase 2.2 percent to $242,500.

Inflation as measured by the Consumer Price Index is projected at 3.4 percent in 2006. Inflation-adjusted disposable personal income is likely to grow 3.4 percent this year.

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# posted by Scott Chappell and Brian Bean @ 3:30 PM

Monday, May 15, 2006

Things to consider when selling home in balanced market

Here's an interesting article about selling and buying in the current marketplace ...

Wisest move is to sell current residence before buying another

Monday, May 15, 2006

By Dian Hymer
Inman News

For the first time in many years, experts believe we're heading toward a balanced market. A balanced market is one that favors neither buyers nor sellers.

In a seller's market, buyers usually face a lot of competition. They often need to bid over the asking price and waive contingencies to get an offer accepted. In a buyer's market, there are more sellers than buyers. Listings take longer to sell; buyers can afford to be choosy.

A balanced market is somewhere in between a seller's and a buyer's market. However, even in a balanced market, you'll find pockets of variability depending on supply and demand.

For example, in desirable neighborhoods where inventory is low, a balanced market might exhibit characteristics of a seller's market. However, this will only be the case for well-priced listings that are in prime condition, or priced-to-sell fixer-uppers that have a lot of upside potential.

In a hot seller's market, virtually everything sells. This is not the case in a more balanced market. Keep this in mind if you're thinking about selling your current home and buying a new one.

HOUSE HUNTING TIP: It's a great time to make this kind of move because interest rates are relatively low. However, if you intend to buy before selling, be aware that this is a riskier strategy for some homeowners than it was a year ago.

In a strong seller's market, the challenge is finding your next home. But, selling your existing home is often relatively easy. In a balanced market you will have an easier time finding a home, but it could take longer to sell. The other factor to consider is that it may be more difficult to predict ultimate sale price.

The real estate market is not static. Particularly in a transitional market, it can be stronger one month than it is the next. Unless you have ample funds at your disposal, you should factor this in to your home buying strategy.

One homeowner learned this lesson the hard way when they bought a new home in San Francisco before selling their existing Oakland, Calif., home. They made the move in 1994 when the real estate market was in transition. They bought their new San Francisco home when market activity was brisk.

Two months later when their Oakland home went on the market, the market softened enough to delay the sale a few months. The sellers reduced the asking price in order to hasten the sale. They ended up selling for less than they had budgeted for and had to sell stock in order to complete the transaction.

If your funds are limited, a safer strategy is to put your home on the market before you buy your new home. You should be actively looking for your new home while you're waiting for your home to sell.

In markets where there are a lot of houses on the market, an offer that is made contingent on the sale of your existing home may be a workable. However, if you're trying to buy into a pocket of the market that is in high demand and where there aren't a lot of homes for sale, like the Upper Rockridge neighborhood in Oakland, a contingent sale offer may stand little chance of being successful even in a more balanced market.

Keep an open mind about your options. If you sell your current home before buying the new one, you'll know exactly how much money you have to work with. You don't have risk of coming up short of the funds you will need to make a financially prudent move.

THE CLOSING: You may have to make a move to an interim rental. But, that's better than racing to buy a home that may not work for you in a couple of years.

Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

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# posted by Scott Chappell and Brian Bean @ 12:33 PM

Friday, May 12, 2006

JUST LISTED!
20848 Watkins Glen Road, Orangecrest


Welcome to Orangecrest, one of the most sought-after neighborhoods in Riverside! This Moonlight Ridge home is perfect for entertaining, with a large family room open to a spacious kitchen. And it’s functional, with a bedroom and full bath downstairs and a bonus room that could be a fifth bedroom. The covered patio and manicured grounds make this wonderful home a perfect place for your escape from the hustle and bustle of work and life.


Bedrooms: 4. Baths: 3. Home size: 2,621 sf. Lot size: 0.16 acre. Year built: 2001. Swimming Pool: No. Garage: 3-car. List Price: $539,900


For 24-hour recorded information about this home, call 1-800-941-1900, ext. 3599

Your home could be next. To get a free market analysis, or for other local real estate information, call Scott Chappell & Brian Bean’s 24-hour hotline at (800) 941-1900. It’s a community service offered by one of Orangecrest’s leading real estate teams.

Ask about Scott & Brian’s 100% Satisfaction Guarantee program. If you aren’t satisfied, they’ll refund their commission.

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# posted by Scott Chappell and Brian Bean @ 5:50 PM

Wednesday, May 10, 2006

50-year mortgage hits the market

Here's an interesting article about new loans to combat rising interest rates ...

Lenders have begun offering a half-century home loan as incentive in face of record-high home prices, rising interest rates, report says

Wednesday, May 10, 2006

CNNMoney.com

NEW YORK - As home prices and interest rates keep rising, lenders have figured out a way to keep the dream alive for millions of people who want to own their own home. It's called the 50-year mortgage.

According to a report Wednesday in USA Today, a handful of small lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the current economic environment.

Most banks already offer 40-year mortgages, which account for about 5 percent of all home loans, the report said.

"One of the biggest things in California is the high costs of homes. With rates going up, there's demand from customers (for) longer loans," Alex Diaz Jr., with Statewide Bancorp in Rancho Cucamonga, was quoted in the report as saying.

Statewide, which introduced its 50-year loan in March, has already received about 220 applications, Diaz said, according to the report.

The 50-year mortgage also signals that the cooling real estate market is heating up competition among lenders, the newspaper said.

"Mortgage lenders are getting craftier to get the attention of consumers," Anthony Hsieh, CEO of LendingTree, told the newspaper.

But he added that consumers first need to understand the product.

Two issues to keep in mind: A borrower with the 50-year mortgage builds equity very slowly. And because rates on the loans are adjustable, a borrower's monthly payments could rise, the report said.

Mortgage experts caution that the 50-year mortgage is best-suited for those who plan to stay in their home for about five years, while the loan's interest rate remains fixed, the report said.

"If you're going to be there for more than five years, you're gambling," Marc Savitt of the consumer protection committee for the National Association of Mortgage Brokers told the newspaper. "You don't know what interest rates are going to be. I wouldn't do it."

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# posted by Scott Chappell and Brian Bean @ 10:07 AM

Thursday, May 04, 2006

Sellers Earn 16% More by Using an Agent

Here's an article about the financial benefits of hiring a Realtor to sell your home ...

Vast majority of buyers use the Internet to find a home

Thursday, May 04, 2006

WASHINGTON, D.C. – Technology is transforming how Americans buy and sell homes in unexpected ways, including how they work with real estate agents and brokers, according to one of the largest surveys of real estate consumers ever conducted. The study was released by the National Association of Realtors®.

Nine out of 10 home buyers use a real estate agent in the search process, but use of the Internet to search for a home has risen dramatically over time, increasing from only 2 percent of buyers in 1995 to 77 percent in 2005; it was 74 percent in 2004. The next largest source of information for buyers is a yard sign, mentioned by 71 percent of buyers.

When asked where they first learned about the home purchased, 24 percent of buyers identified the Internet, up strongly from 15 percent in 2004 and only 2 percent in 1997. Although most buyers use an agent to complete the transaction, 36 first learn about the home they buy from a real estate agent and 15 percent from yard signs; five other categories were 7 percent or less.

The 2005 National Association of Realtors® Profile of Home Buyers and Sellers, based on more than 7,800 responses to a questionnaire mailed to a large national sample of consumers located through county deed records, is the latest in a series of surveys evaluating demographics, marketing and other characteristics of home buyers and sellers.

NAR President Thomas M. Stevens from Vienna, Va., said the findings underscore the complexity of the home-buying process. “Buyers who use the Internet in searching for a home are more likely to use a real estate agent than non-Internet users, and consumers rely on professionals to provide context, negotiate the transaction and help with the paperwork,” said Stevens, senior vice president of NRT Inc.

“The real estate industry today bears little resemblance to the way we did business 10 years ago. It is hard to find another industry that has adopted technology so readily to its customers,” Stevens said. “Realtors® have invested a lot of time and money in building information technology, and because of these efforts, more consumers than ever are using the Internet in their home search.”

The survey shows 81 percent of buyers who use the Internet to search for a home purchase through a real estate agent, while 63 percent of non-Internet users buy through an agent; non-Internet users are more likely to purchase directly from a builder or an owner they knew in advance of the transaction.

“We find that the level of for-sale-by-owners is on a sustained decline and is now at a record low. In addition, a growing share of FSBO properties are not placed on the open market – they’re private transactions,” Stevens said.

A clear downtrend in FSBOs has been seen since that market share experienced a cyclical peak of 18 percent in 1997. Only 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39 percent of those FSBO transactions were “closely held” between parties who knew each other in advance, up from 32 percent in 2004. The FSBO market share was at 14 percent in both 2003 and 2004. NAR began tracking the FSBO market in 1981; the record was 20 percent in 1987.

“In reality, the term ‘FSBO’ is a misnomer when used to broadly describe homes sold directly by owners. Since two out of five of these transactions are between related parties, and those properties are not placed on the open market, we believe that ‘unrepresented sellers’ would be a much more accurate term to describe this segment,” Stevens said.

The median home price for sellers who use an agent is 16 percent higher than a home sold directly by an owner; $230,000 vs. $198,200; there were no significant differences between the types of homes sold. “While many unrepresented sellers are motivated to save on paying a commission, we think the price difference speaks for itself,” Stevens said. “Owners without professional assistance also have problems in understanding and completing paperwork, prepping the home for sale, getting the right price and selling within the time planned.”

Survey data don’t explain the price difference, but Stevens offered some context. “Agents know best how to prepare a home and maximize value, agents provide broader exposure to the market and are more likely to generate multiple bids, and the portion of sales that are between private parties are likely to be at a lower price than those on the open market.”

“The housing market today contrasts sharply with predictions a decade ago that the Internet would ‘disintermediate’ real estate agents, including speculation that NAR membership would fall in half. In reality, it’s grown dramatically – selling real estate is not like selling a book or buying an airline ticket,” he said.

Realtor.com was the most popular Internet resource, used by 54 percent of buyers, followed by multiple listing service (MLS) Web sites, 50 percent, real estate company sites, 38 percent, real estate agent Web sites, 31 percent, and local newspaper sites, 15 percent; other categories were smaller.

Married couples make up the largest share of the housing market, accounting for 61 percent of transactions. Single women purchase 21 percent of homes while single men account for 9 percent. Unmarried couples were 7 percent of the market, and 2 percent were listed as other. In 2004, single women were 18 percent of buyers and single men were 8 percent.The typical buyer walked through nine properties, searched eight weeks to buy a home and moved 12 miles from their previous residence.

The typical seller placed their home on the market for four weeks, had lived in it for six years, moved 15 miles to their new residence and previously owned three homes, including the one just sold.

NAR’s senior economist Paul Bishop said both buyers and sellers use traditional methods to choose a real estate agent. “Word-of-mouth recommendation is the most common way to learn about real estate professionals,” Bishop said. “The most important criteria, whether you’re buying or selling, are the individual agent’s reputation and their knowledge of the local market.”

In finding a real estate professional, 44 percent of buyers were referred by a friend, neighbor or relative, 11 percent used an agent from a previous transaction, 7 percent found an agent on the Internet, 7 percent met at an open house and 6 percent saw contact information on a “for sale” sign. Six other categories accounted for smaller shares each.

The most important factor in choosing an agent was reputation, according to 41 percent of home buyers, followed by an agent’s knowledge of the neighborhood, 24 percent. In terms of desired qualities in an agent, three categories were rated as very important by more than nine out of 10 buyers: knowledge of the purchase process, responsiveness and knowledge of the market. Of buyers who use an agent, 63 percent choose a buyer representative. Satisfaction with real estate agents is very high, with 85 percent of buyers saying they were likely to use the agent again.

Seller responses are comparable: 43 percent chose agents based on a referral by a friend, neighbor or relative, and 28 percent used their agent previously; 10 other categories were 5 percent or less. Fifty-seven percent of sellers said reputation was the most important factor in selecting an agent, followed by their knowledge of the neighborhood, 17 percent. Eighty-two percent said they were likely to use the same agent again or recommend to others.

Four out of ten respondents are first-time buyers, a finding that is consistent for more than a decade. The median age of entry-level buyers is 32 years, also typical over time, and the household income was $57,200. They made a downpayment of 2 percent on a home costing $150,000, but 43 percent purchased with no money down. Of first-time buyers who made a downpayment, 23 percent received a gift from a friend or relative.

The typical repeat buyer is 46 years old and had a household income of $83,200. They placed a downpayment of 21 percent on a home costing $235,000, but 11 percent of repeat buyers paid cash for their home. In all, 94 percent of buyers and sellers believe their home purchase is a good financial investment.

“To underscore the value of housing as an investment, all you have to do is look at the difference in how repeat buyers purchase their next home – the wealth effect of homeownership provides the greatest source for their downpayment, which is significantly larger,” Bishop said. Aside from sellers who pay cash for their new home, 66 use the equity from their previous home for a downpayment.

The most important factors in choosing a location to purchase a home are neighborhood quality, cited by 68 percent, close to a job or school, 43 percent, close to family or friends, 36 percent, and the school district itself, 23 percent; seven other categories were under 20 percent.

NAR mailed an eight-page questionnaire to a national sample of 145,000 home buyers and sellers, based on county records, who purchased their homes between August 2004 and July 2005. It generated 7,813 usable responses; the response rate was 5.4 percent.

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# posted by Scott Chappell and Brian Bean @ 3:15 PM

What's Behind That Garage Door?

Here's a column about how what's in your garage can have an impact on your home sale ...

More than just a storage area for cars and junk, a showcase garage can help you sell your listing faster and for a higher price

BY DINAH ENG
The Space Ace

For many home owners, the garage is the place where you store all the stuff you don't know what to do with, and if you're lucky, the car may fit in there, too.

But as the price of real estate has risen, the room that's often the most neglected and underutilized in the house also has grown in value. Savvy real estate professionals and sellers are now staging the garage along with the rest of the house, and getting higher returns for the effort.

In some cases, a home owner's special interest may drive the use of the garage. Gardeners may have special bins built for soil and fertilizer. Golfers may install customized cabinets for their golf clubs. Exercise enthusiasts may outfit the space with workout equipment.

Regardless of what the space is primarily used for, practitioners say spectacular garages make listings stand out and sell faster.

A Selling Advantage

Beth M. Gage, a sales associate with ERA Arrow Real Estate in Oak Forest, Ill., says she listed a house in Midlothian, Ill., with an amazing garage that sold $2,000 over the asking price within two days of being listed.”

It was a house where the wife had wanted a new kitchen, but the husband had won out and built a three-and-a-half-car garage instead,” says Gage, who notes that the garage was heated and had cable TV/VCR, a phone, track lighting, a refrigerator (for beer when friends came over), a loft area for extra storage, and organizational shelving for tools.”

At the closing, the buyer husband was talking to the seller husband and said he'd been looking for some place to tinker with his car,” Gage says. “He also had a boat and wanted to be able to have ‘the guys’ over. So what sold the house was the garage.”

Men, however, are not the only ones who are attracted to great-looking garages.

“We thought it would be a male-intensive market, but we were wrong,” says Marc Shuman, president of GarageTek, a Long Island, N.Y.-based franchise business that sells garage-furnishing systems in 48 domestic markets, Canada, and the United Kingdom. Shuman and partner Skip Barrett launched the company in 2001.

“Our systems create a clean, safe, and functional environment in the garage,” Shuman says. “Once the garage becomes clean, it becomes a family room and appeals to women in particular.”

Bill West, CRS®, broker-associate and owner of The Group Inc. Real Estate in Fort Collins, Colo., and author of Your Garagenous Zone: Innovative Ideas for the Garage, recently listed a development called Storybook Patio Homes, which offers a finished garage.

“The garages have epoxy-coated floors, a wall organizer, pantry-style cabinets, a workbench, track lighting, and they’re fairly insulated,” West says. “[The finished garages] added $4,300 to the list price, and home buyers can incorporate that into their mortgage. The garage is becoming a multi-purpose room, and the trend is becoming more real.”

Spectacular Garages

West says one of the most spectacular garages he's seen was owned by an avid fly fisherman in Fort Collins, Colo., who put in wall organizers and a custom-made holder for his fly fishing rods. The owner put in a workbench counter top and installed a plasma-screen TV as well.

Shuman says one of GarageTek's most elaborately outfitted garages was a five-car garage that was designed for a car collector in Orange County, Calif. The floor was done with a checkerboard racing motif, and shelving was installed to show off car memorabilia.

Doug Arndt, president of The Complete Garage LLC, a showroom-based retailer of garage enhancement products in Minnetonka, Minn., says his company did a garage in Sioux Falls, S.D., that had epoxy flooring, laminate cabinets, travertine marble on the walls, skylights, recessed lighting, cable TV, and a home theater system.

“We had one customer who was a master gardener,” Arndt says. “We installed two 8-foot workbenches for her and Gladiator (steel) cabinets from Whirlpool. Another garage had a gray epoxy floor with laminate cabinets and a built-in Corian countertop and sink. The owner uses it as a work space for a variety of things.”

Basic Fix-Ups

Even if your new listing doesn’t have one of these showcase garages, there are some basic things the sellers can do to make the space more appealing to potential buyers. Arndt offers these tips to increase the appeal of the garage:

  • De-clutter the garage just as you would the rest of the house, clearing out whatever the sellers don't need.
  • Get everything off the floor with overhead storage racks that can hang from the ceiling.
  • Use a wall system on which sellers can hang items.

Barry Izsak, author of Organize Your Garage in No Time and president of the National Association of Professional Organizers, offers these organizing suggestions:

  • Take an inventory. Decide what you want to or need to put in the garage, such as sporting goods, tools, or craft supplies.
  • Sort like things together. You shouldn’t have piles of tools, collectibles, or childhood memorabilia in a number of places around the garage. Keeping similar items in one place makes the space look much more organized.
  • Reuse instead of buying. If you don't want to purchase an expensive garage organizing system, you can use an old chest of drawers, book cases, desks, or shelving units from the house for a new purpose in the garage.

Staging Tips

Jay Behm, a designer of custom homes and garages in Williamsburg, Va., says garages have gotten larger as vehicles have become bigger in recent years. Buyers now want garages with 9-foot-wide doors and 9-foot ceilings inside to accommodate racks placed atop sport utility vehicles. Behm says the following will add to the value of any garage:

  • Garage door openers. Many potential buyers consider this a priority and a necessity.
  • Lighting and electrical systems. More and more garages are being wired for heating and air conditioning to make the room accessible year-round.
  • Second stories. Many people are adding second stories to their garages for extra storage space or use as a rental apartment or in-law unit.
  • A good fit. Most home owners have plain garage doors that don't match their Colonial- or Victorian-style homes, says Behm. Simply giving the garage roof a slope that's similar to the house's roof will make a big difference.

Learn More:

National Association of Professional Organizers
Lists information on how to find a professional organizer in your area.

GarageTek
Lists products and services from GarageTek.

The Complete Garage
Lists products and services for The Complete Garage LLC.

GarageZ.com
Gives virtual tours of remodeled garages and information from Your Garagenous Zone: Innovative Ideas for the Garage.

Behm Design
Shows garage plans by Behm Design.

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# posted by Scott Chappell and Brian Bean @ 11:12 AM

Wednesday, May 03, 2006

Record Number of Borrowers Cashing Out

Here is an article about homeowners pulling cash out of their homes ...

Wednesday, May 3, 2006

Steve Kerch
Dow Jones Business News

Cash-out financing is at its highest level in 15 years, Freddie Mac reported this week.

The mortgage agency said that 88 percent of loans it owns that were refinanced in the first quarter resulted in new mortgages with loan amounts that were at least 5 percent greater than the original mortgage balance.

More than 50 percent of the new loan rates were higher than the rate on the loan they replaced. One reason homeowners might be doing that is the increase in home-equity loan rates, says Frank Nothaft, Freddie Mac’s chief economist.

Home-equity loans are typically a point or two higher than the prime rate, which currently stands at 7.75 percent.

Overall, Freddie Mac expects overall cash-refinancing to pump $170 billion into the economy this year, down substantially from the $244 billion in 2005.

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# posted by Scott Chappell and Brian Bean @ 4:23 PM


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