Tag Archives: real estate

Buy or Build?

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I hear it from buyers all the time, “For that price, I should just build my own dream house!” Maybe you should. But building a house comes with its own set of woes that may not be suitable for your current situation. Let’s take a look at some of the pros and cons of building a house.

Pros

  • The number one reason for building a house is so that you get exactly what you want from a house: floorplan, number of bedrooms, architectural style and design… right down to each and every last finish.
  • Because the house is new, it will have met all the latest building and safety codes so as an owner, you can be less concerned about the foundation, pipes, wiring, etc. Plus, you will get brand new appliances and not be so concerned with having to make repairs to an older home.
  • In certain markets and scenarios, building a house can be cost effective but it requires the owner to be fastidious with the budgeting and accounting.

Cons

  • There are a number of additional costs that need to be factored in, i.e. the carrying cost of the land during the construction, the construction loan, rent for the current abode, and more.
  • Very few construction projects are completed within the proposed timeline. Plus, there are issues that come up that are beyond your control, such as delays in city inspections or permitting. When the project is delayed, it costs you money and, most likely, stress.
  • Can you wait 18 months or 2 years for your dream house? Will your needs and wants have changed in that timeframe?
  • Chances are, you work and have a family. Building a house is an enormous strain on your time. Do you have the time or the patience to select all the finishes? Even if you hire a designer to help with those decisions, the designer will still need to meet with you to obtain your approval. What if you and your spouse don’t agree on fixtures and details? Can your family bear the anxiety and stress that comes with managing a construction project?

Now, buying a house is a relative cake walk to building especially if you’ve put together a good team of people to help with the purchase, i.e. your Realtor, your mortgage broker, lender, etc. The issue is that you are stuck selecting in current inventory and generally, every house has flaws that you can’t quite reconcile. And truth be told, a pre-existing house will never be 100% your taste or vision, so you are likely to embark on a construction project of some type even if you buy. Then there’s the frequent issue of not being able to remodel to your liking because of HOA regulations and restrictions or dilemmas presented by the home’s original structural engineering. All these scenarios are likely when it comes to buying an existing house.

So should you buy or build? It just depends on… you.

 

Reasons Homes Don’t Sell

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As a homeowner with a house on the market, your dream scenario is to have the house sell within days and with multiple offers. If you are selling during a housing boom, that can very well be the case.  But under current market conditions, the buying-frenzy scenario isn’t as likely, especially if you are inadvertently making any key selling mistakes.

If you’ve had your home on the market for several months and haven’t seen much activity or any offers, you might want to step back and identify the reasons why the house isn’t selling.

Price is too high

The most common reason for a home not selling is that the list price is too high.  Enthusiastic real estate agents who are eager to win your business may suggest a too high asking price.  Or often times, you as the seller have high expectations given your history with the house.  Whatever the reason, if a house is priced too high, it will limit traffic to the house and hinder buyers from making an offer.  Make sure when selecting an agent to work with, that you don’t necessarily go with the agent that suggests the highest price. Agents wishing to win your trust should have a lengthy comp list of recent sales to justify their suggested price.  The fact is, your home is in competition with other homes in the neighborhood, and what buyers are willing to pay will determine the final sales price.

The condition of your home

If there’s healthy inventory on the market, your home could be in a decent amount of competition.  What sets your home apart from the competition is its condition.  The more you can do to make your house appealing to a broader audience, the better your chances are for a quick sale.  That means de-cluttering the house, de-personalizing the space, and neutralizing the rooms.  If you make upgrades to the house prior to listing, don’t get too personal with finish selections.  Other easy and cost-effective fixes that make a huge impact would be paint, flooring/carpeting and curb appeal enhancements.

Location, location, location

So cliché to say, but so true… location is king.  Buyers want homes zoned for good schools, in a safe neighborhood and have great community amenities.  If your house is in a less than ideal location, your real estate agent might offer up some improvements to minimize the home’s shortcomings.  But the only reliable way to overcome a difficult location is with a lower price that adjusts for the less-than-ideal location.

Soft marketing campaign

With 90% of buyers starting their home search online, you need to make sure that the pictures of your house are appealing.  Online first impressions are very important in this day of age of real estate.  Beautiful pictures lead to appointments with interested buyers.  Flat, lackluster photos will leave your home with few showings.  Additionally, an aggressive listing agent should be touting your home to the greater agent community and running ads in numerous publications.  As the seller, make sure you understand the extent of the marketing campaign and ask for marketing updates from your realtor periodically.

Limited Home Accessibility

To get your home sold quickly, it’s important that the home is widely exposed to other agents and potential buyers.  That means the house needs to be easily and frequently accessible for broker’s open, showings and open houses.  While highly inconvenient for you as the seller, being flexible and making the house accessible for potential buyers can help reduce your days on market.

If your house is languishing on the market, make sure you take a step back and survey your home from a buyer’s perspective.  Ask yourself if your home is priced appropriately amongst the competition.  Verify that your real estate agent has a comprehensive and strategic marketing campaign in place.  And make your home available for as many showings as possible.  If what your home needs is a quality rehab, take it off the market and make some updates to give it a fresh facelift.  A break from the market is often necessary to give a new lease to the listing.

DIY Staging Tips

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In last week’s blog post, we covered a few tips on how to prep your house prior to listing it for sale.  We discussed improving curb appeal and light remodeling to make the home more universally appealing.  To that effort, we also mentioned the importance of de-cluttering, de-personalizing and cleanliness.  So now that the house is neutral and clean, how does one dress each space to additionally enhance a buyer’s impression of the house?  This is where the art of staging comes into play.  Should you want to take a crack at staging your house, here are some few helpful tips to consider.

Furniture Grouping

Roll up your sleeves and start moving furniture. There’s a common belief that rooms feel larger if the furniture is pushed up against the walls, but it actually isn’t true.  Reconfigure your sitting areas by floating furniture away from the walls.  Reposition sofas and chairs into groupings that look conducive to conversations. Not only will this make the room feel more inviting, but it will open up the space and the area will appear larger.  Give yourself permission to remove furniture items entirely if the room requires more breathing room for better traffic flow.

Accessorize

Style your dining room table as if you’re expecting a dinner party.  Bring some greenery indoors as flowers and plants instantly add vibrancy and life into any room.  Place pleasant, non-controversial artwork or photography that befit the style of your home on walls that seem too bare.  Dress each bed with complementary linens and pillows for a comfortable, lived-in look.  For the master bedroom, remember to tow a gender neutral line when selecting bedding and accessories.

Home Lighting

Do not forget to consider lighting.  The first thing a real estate agent does when showing a home is to turn on all the lights, regardless of the time of day.  So at some point, mimic a showing and turn on all the lights in the house to give yourself the buyer’s perspective.  What you want is to make sure that your home looks warm, inviting and well-lit.  As it turns out, most homes are improperly lighted. To remedy the problem, increase the wattage in your lamps and fixtures. Aim for a total of 100 watts for each 50 square feet.  Make sure you have all three types of lighting in the house: ambient (general or overhead), task (pendant, under-cabinet or reading) and accent (table, floor or wall lamps).

Make Awkward Spaces Functional

One way to really add value to a house via staging is by creating a purpose for an otherwise awkward space.  The area under the staircase can sometimes fit a small desk for a quaint office nook.  Transforming a blank space into a practical area gives the house a feature that is memorable to the buyer.  It also gives the impression that the house is bigger and thoughtfully functional.  If you have an awkward space, check out interior design websites like Houzz for inspiration on how to give it a quick transformation.

Make Every Room Count

Most of us have a room in the house that is a “hobby room” which is a euphemism for “dumping ground.”  As part of the decluttering process, make sure the room is thoroughly cleansed and all unnecessary items are removed.  Then, give the room a purpose.  Would potential buyers want to see a guest bedroom?  Or an additional kid’s room?  Making a real room out of what was your junk room will have a big payoff on buyer impression.

The goal of staging is to breathe new life into the house, giving it universal appeal.  Chances are, while living in the house, you’ve made it work very specifically for yourself over the years.  Staging removes some of the specificity and quirkiness.  When well done, it gives buyers an idea of how to use every space well and maximizes the home’s potential for positive impressions.  Staging is immensely valuable tool in selling a house.

Prepping a House For Sale

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If you are getting ready to put your house on the market, consider a few of these tips to help maximize appeal and improve how well your house shows to prospective buyers.

1)   Enhance curb appeal.

When a house goes on the market, generally the owners have expended some thought and energy towards making the interior of the home look immaculate.  But, you only get one opportunity to make a positive first impression, so do not let the exterior of your home go untouched:

  • Power wash the house!  A quick power wash takes years of dirt off of the house, making a huge immediate difference.  Get the siding back to a vibrant state and have the windows sparkle.
  • Make sure your house number is clean and easy to read.  Visitors dislike not being able to identify the house quickly as it makes the house not feel welcoming.
  • Consider a handful of new landscaping to impress upon visitors.  Fresh greenery really enhances the appeal of the home and gives the impression that the home is well attended to.  And don’t forget to prune back overgrowth.
  • Create a welcoming front door and porch area.  This can be a simply a new door mat, a coat of vibrant paint on the front door, or a casual patio set that creates an inviting seating area.

Many of these exterior improvements can set the tone for the rest of the showing, impressing upon buyers the feeling of a cared-for home, one of steady maintenance and quality upkeep.

2)   Make obvious repairs.

Now is a good time to attend to the small repairs that have accumulated over the years of living comfortably.  Broken window pane, cracked deck tiles, non-functioning light fixtures – addressing the visually-obvious issues beforehand helps touring buyers stay focused on the big picture of whether the house is a good fit for their needs.  Removing these detracting items paves the way for a smooth and favorable showing.

3)   De-clutter and depersonalize.

Buyers want to envision their belongings in the home they are touring. Help them see that vision by removing personal effects such as framed photos, tchotchkes, extra items of furniture, and toys.  The idea is to have the house look generic and spacious.  The old adage “less is more” is sage advice to heed.  Hire a cleaning crew to deep clean the house and have every surface return to near-original glory.  Keep in mind that people during showings may check out the closets and cluttered closets imply lack of storage, so definitely make a pass at organizing and filtering through your closet spaces.

4)   Neutralize.

The teal accent wall highlighting the dining room might be too bold for some buyers.  If you are going to make some light redecorating changes, consider going neutral in the choices you make.  A neutral palette is generally received as welcoming and will appeal to the majority of the people walking through the house.  Complementing color can be added through linens and bedding and décor items.

Once the house has been prepped, then the discussion can progress to furniture staging.  Stay tuned next week and we will provide some staging advice.

The Pre-Buying Don’ts

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In our last blog installment, we discussed some pre-buying do’s.  Equally important to your home buying preparatory work are several pre-buying don’ts:

1)   Don’t Go Credit-Crazy

As previously mentioned in the “do’s” post, it’s smart to monitor your credit in the months leading up to a home purchase.  With every new line of credit opening, your credit score gets dinged.  So if a creditor solicits you for another amazing credit card with major perks, don’t bite during this crucial time.  Avoid any financial transactions that require inquiry into your credit health.

2)   Don’t Get Behind on Bills

Having a late payment hit your credit report before closing can impact your ability to get the loan you need.  Payment history comprise about a third of your credit health.  Many banks require 12 consecutive months of on-time payments to qualify for a loan in the first place.  A 30-day late blemish could cause lenders to rethink your loan application all together.

3)   Don’t Switch Jobs

Any change in employment is a significant risk from a lender’s perspective.  Lenders desire clients with stable, reliable income and generally will ask you to provide a picture of income stability during the underwriting process, as stability equates to the less likelihood of default in the their eyes.  During this crucial time of financial scrutiny, don’t switch jobs, don’t go entrepreneurial and become self-employed, and certainly don’t quit your job.

4)   Don’t Buy Anything Major

Don’t buy a car or truck or any other form of transportation that you have to finance.  Buying one increases your debt-to-income ratio and that’s something loan officers don’t want to see.  Additionally, don’t buy furniture or major appliances before buying your new house.  Like financing a car, charging big-ticket items negatively impacts your financial standing.  Keep yourself in good graces with your lending institution by minimizing your large expenditures.

The process of purchasing a home can be long and complicated.  From the moment you decide to become a homeowner until you close on your dream house, you want to provide a clean bill of credit so that your home gets financed favorably. Even if you have good credit at the beginning of the journey, there are ways to blemish your qualifications and make lenders think twice.  Being fiscally absentminded or slightly irresponsible with your credit health could cost you down the line.

 

Getting Ready to Buy? A Few Do’s.

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You’ve been flirting with the market for months, touring open houses on the weekend and logging in late night hours on Redfin or Zillow.  You’ve pinpointed the ideal neighborhood that suits you best and have toured the schools in the district.  You are ready to take the plunge and buy.  What next?  A few do’s:

1)   Get a Realtor

A seasoned real estate agent can provide you with valuable insights on homes and neighborhoods during the search portion of your house hunt.  And even with the proliferation of online real estate search engines, when the time comes to write an offer, you will need an experienced real estate professional on your side to navigate the negotiations, escrow and closing process with you.  Over the years, the laws for home buying have become increasingly complex and the process is filled with many moving parts.  Ask your trusted friends for quality agent referrals and find yourself a good teammate.

2)   Get Preapproved for a Loan

Consulting a mortgage lender will help you get a clear picture of your purchasing power so make this step at the top of your list of to do’s.   Understanding what you can afford from a lending perspective helps define your house search so you don’t waste time looking at homes you cannot afford.  Plus, often the market moves fast on well-priced homes, so having a pre-approval letter in hand lines you up at the front of starting block.

3)   Make A Checklist of “Must Haves” in a House

No two houses are the same and no house is ever 100% perfect, but having a checklist for your ideal home is useful so you are efficient in your house hunt.  A house can always be redecorated to perfection but it’s a bigger headache if your new house is missing that home office you had hoped to have.

4)   Check Your Credit

Your credit score helps lending institutions determine the rate and terms they can offer you on the loan.  If your credit is high, meaning that your credit history indicates that you are fiscally responsible, lenders will see you as a low-risk investment and offer you a lower rate on your loan with good conditions.  If your score is low, lenders will think you are a riskier investment and charge you with higher interest rates to take on the perceived risk.  Get your credit scores from Equifax, Experian and TransUnion, the three major credit agencies, so you can see how you stack up in terms of investment risk and see if you have time to improve your credit health.

Stay tuned next week for a list of pre-buying don’ts.

Neighborhood Due Diligence

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The iconic adage in real estate has been and always will be “location, location, location.”  A house can always be remodeled and redecorated to suit your personal taste.  But, the neighborhood within which your home resides, will profoundly impact your lifestyle and how you enjoy your home in the years to come.

Within Newport Beach and other similar markets across the country, each neighborhood has its own unique personality and vibe.  If you are like most buyers, your home search frequently starts with neighborhood selection above all else.  So what makes a neighborhood appealing?  And what due diligence should one perform to identify the neighborhood of choice?  Here are a couple of ways you can be proactive in the hunt for the ideal neighborhood:

1)   Check on the schools.

Even if you don’t have children, buying a home in a good school district can pay off at the time of resale.  If you are looking for a home for your school-aged family, go to the school district’s website for more information.  Also, check out www.GreatSchools.org for ratings and see how neighborhood schools’ rank in comparison to each other.

2)   Test your commute & visit the neighborhood at different times of the day.

If living close to work is important, then make sure you drive around potential neighborhoods at different times of day to get a sense of traffic patterns and potential commute delays.  Similarly, visit the area on a weekday, weeknight, and weekends to see how quiet or active the community will be.

3)   Check crime reports.

Local police stations can generally provide statistics on crime within a certain zip code.  Or find this info online at www.crimereports.com.  For further peace of mind, check the Family Watchdog website at www.familywatchdog.us for registered sex offenders in the area.

4)   Talk to neighbors.

No one can give you a more accurate idea of how vibrant and thriving a community can be than someone who already lives there.  Make a list of things that are important to you and when you get a chance to talk to someone, ask them if the community has a swim team, neighborhood events and gatherings, and security measures.  Other important topics to vet with current neighborhood residents could be HOA dues and board involvement, potential community improvements on the horizon, and more.

5)   Discover neighborhood amenities.

Some people desire a neighborhood that is walkable to restaurants and stores.  Others really value the proximity to public parks and recreation spaces.  Walk and drive around different neighborhoods and identify where you’ll be doing your grocery shopping or picking up dinner.  These little amenities really impact how you will function day to day within your household.

Once you’ve honed in on the neighborhood you want to live in, then the fun part begins… looking for the perfect house.  Happy house hunting!

Preparing for a Home Inspection

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During the complex process of selling a house, one of the bigger hurdles to a successful close of escrow comes at the point of inspection.  Varying statistics pinpoint the percentage of contracts that fall out of escrow at somewhere between 20% to 30%.  While a small percentage of buyers cancel contracts simply due to a change of heart or the inability to secure financing, a handful of contracts blow up over the home inspection.

No matter how meticulous you’ve been in maintaining your home over the years, the home inspector will likely find issues with the house that your buyers will want to have addressed.  And while it’s not feasibly possible for anyone to “ace” their home inspection, there are a few steps you can take to make the inspection go as smoothly as possible and thereby presenting the buyers with the peace of mind that they are purchasing a home that’s been well cared for over the years.  Here are a few tips in preparation for the home inspection:

1)    Consider a Pre-Inspection

One of the smartest things a home seller can do before putting their house on the market is to complete a home inspection on the property, especially if the property is older.  If your home is relatively new and you aren’t aware of any issues, you can probably skip this step.  But, for the price of a home inspection, which runs somewhere between $350 to $450 in the Newport Beach market, you will receive a report of potential problems and decide on your own timeline which items to address.  One reason buyers get cold feet at this juncture is the length of the home inspection report that inevitably equates into mounting costs and stress in their minds.  A seller with an inspection report could head off this potential roadblock by cherry picking several cost-effective fixes and thereby mitigating the report for the buyer down the line.  Plus, if you know all the potential issues ahead of time, you can plan for how you might respond when a buyer asks for repairs or a credit.

2)    Scour the Home for “Quick Fixes”

  • Make sure all the lightbulbs and light fixtures are functioning.
  • Make sure all the smoke detectors are working.
  • Change out furnace filters and vacuum the registers.
  • Ensure all windows and doors open and close properly.
  • Provide easy and unobstructed access to the attic, crawlspaces, furnace, water heater, and electrical panel.
  • Clean out gutters and clear the roofline of debris.
  • Check that bath vents and dryer vents are venting effectively.
  • Remove unnecessary and potentially hazardous materials such as rotting firewood, paints and solvents from the premise.
  • Remove excess clutter and clean the house.

3)    Leave the house

Letting the home inspector freely roam your house unencumbered is a good idea.  Most home inspectors prefer to do their work without the scrutiny of the homeowner’s presence.  And remember to take your children and pets with you so they feel at ease during their time in the house.

4)    Prepare Documentation for Work Performed

If you are a meticulous and thoughtful homeowner and have a backlog of receipts for maintenance work done to the house, collect those items and make them available after the inspection.  Paperwork will come in handy to prove that work was already performed to fix certain problems and to what extent.

In general, the easier you make it for the home inspector, the more favorable the experience will be for all parties involved.  Home inspectors and buyers are more partial to homes that have the semblance of constant care and thoughtful maintenance.  If as the seller you elect to perform a pre-inspection, the transparency provided by the report will avoid surprises during escrow and prepare you with the knowledge and a plan to circumvent a potential round of re-negotiations.  At the end of the day, a good home inspector will never overlook a serious problem, but if you prepare in advance to provide an easy inspection experience, your efforts could impact and minimize the report by a small but significant margin.

Orange County’s Demographic Challenge

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Orange County, by most standards, is a great place to live and raise a family.  We have beautiful neighborhoods, great public spaces, award-winning schools and the weather is consistently the envy of the country.  But as we learned last week, household formation is unfortunately on the decline in the United States.  And here in Orange County, we have another problem that isn’t helping the overall economic landscape: young professionals aren’t choosing to settle in Orange County.

Orange County has been gradually losing the number of its young professional workforce for several decades now.  The number of 18-44 year olds residing in Orange County has been dipping steadily which presents a problem for housing growth.  Typically, young professionals are the ones that purchase larger homes while the Baby Boomers are looking to downsize.  With less young professionals in the housing market, Baby Boomers are staying put in their homes, and the market experiences a less productive exchange of homes.  The overall problem is that Orange County isn’t widely perceived to have a bustling job market or an affordable housing market for the younger professional demographic.

In 2007, California state demographers estimated that California would hit 50 million residents by 2032.  Factoring in recent data and trends, it’s unlikely the state will hit that landmark until 2049.  With the state experiencing a slowed influx of new residents, Orange County is further impacted by our aging population.  In fact, Orange County is aging faster than California and the US.

Two additional factors having significant influence on our region: 1) Californians are having fewer children per household and 2) Immigrants are also on the decline in search of higher-paying jobs and more affordable housing.

This isn’t bad news.  It just means that Orange County’s demographic challenges will produce a much slower growth year over year than what we experienced in the past.  So the next time you see a sweeping headline declaring an upturn for the economy and housing, just be mindful that these statements are generally created from aggregated data that doesn’t necessarily represent regional specificity.  On the whole, rapid rate of growth and recovery is unrealistic, and here in our beloved Orange County, one can only expect modest growth on the foreseeable horizon.  But at least, our foreseeable horizon of endless sand and ocean is breathtakingly beautiful and unique to our residents!