Archive for August, 2009
Three Tips for Finding a Good Realtor
August 27th, 2009 categories: Folsom Lake Homes, Home buying, Real Estate, Sacramento
How to avoid the used car salesman
High school was a great learning experience for me because I learned how to trust my gut. High school is the first time you get to choose which teachers you have for each class. I soon found those that I enjoyed I learned a lot from, and those I endured didn’t learn much from. By my senior year walking out of a class after the first day and heading to the counseling center to re-schedule wasn’t a big deal. I wasn’t intimidated and didn’t make excuses…if I didn’t like a teacher on the first day, it wasn’t going to get any better.
Searching for a real estate agent is similar to finding a good teacher. You want to find someone who will teach you the ropes and who you can trust to give you good information. After all, a home purchase is statistically the biggest purchase you will ever make. This video makes a humorous point about intimidation when it comes to real estate agents but unfortunately some agents still use these tactics…
Professionals Teach -
My attitude has always been to get the information to my clients in order for them to make an intelligent decision. The Realtors Code of Ethics requires that I offer my clients the utmost in service, and intimidation shouldn’t be part of the package. If you feel uneasy or that your requests are not being heard, find another agent who will take the time necessary to help you find your home. Referrals are a good start but don’t stop there. Interview at least three agents and get an idea of their approach. Some agents don’t work weekends, and others only work business hours, so if you want to go shopping after work, or need to list your house after dinner, you’re out of luck.
One of my clients purchased a house from me a few years ago, sight unseen. He worked for the government and had only one week to find a home. The market was hot and my client put in three offers before he left to go back to his job but none of them panned out. He had used up all his vacation time and decided to trust me to find him a home. He said he felt he could trust me because while we were previewing homes he heard me comment on everything he was concerned about. If the house was located on a busy street, I commented on that. If the house had a smaller than average master bedroom, then I commented on that. I didn’t ignore the obvious, nor did I pressure him into making a decision…I simply gave him the information and let him decide. He found he could trust my information and that enabled him to find a home that he eventually re-sold at a tidy profit.
So to bring it all together trust your gut. If the agent seems to be something other than what they appear, you’ll probably find proof to support your intuition once you get to know them, so don’t waste your time. Secondly, make sure they listen to you. If you say you only want to see single story homes and they show you two stories, then realize they are not looking out for your best interests. And finally, if you feel pressured into a purchase and don’t feel you have enough information don’t be afraid to ask for more. If the agent counters with more pressure then you know he is only looking to make a sale. Remember this is a decision that you only make about once every seven years, so enjoy the process. A good agent removes the pressure and intimidation from the process…they don’t create it.
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Cycling event in Folsom CA Sept. 11-13
August 25th, 2009 categories: Folsom CA, Outdoor Activities, Special Events
Northern California’s Best Family Bicycling Event
This will be the 2nd year that Cyclebration will happen in Folsom CA and is widely anticipated! Last year’s event was a great success and featured timed trials, circuit racing, mountain biking, opportunities for families to ride across Natomas Crossing and a variety of vendors willing to teach you some new tricks. To participate in the events just go to the website and register beforehand or call 916-355-7366 for more info…you do get a break for family registration.
You can count on plenty of fun things to do and if you don’t have a bike go see Travis at Bicycles Plus where you can rent a bike and helmet for about $40 a day. There’s even a Treasure Hunt ride sponsored by REI where you follow the treasure map course to find the prize. Friday night at Cummings Park is the FAM JAM which features daredevil BMX at it’s best. This is a weekend event so check out the site and mark your calendar!
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Home Shopping Goes Back to the Future
August 24th, 2009 categories: Finances, Home buying, Real Estate
How Much House Can You Afford?
In this last market it wasn’t unusual for buyers to tell me they were qualified for a home that was well beyond what they could comfortably afford. My next question was geared towards getting them to think realistically about those monthly payments and was something along the line of, “So you can afford to eat every other day?” We all know how that shook out and are now facing unprecedented challenges in our economy.
This brings up the idea of housing affordability and reminded me of the movie Back to the Future. Word on the street is the banking industry is starting to revert to the old 28/36 rule when qualifying consumers for home loans. This tried and true method allows up to 28% of your income to be spent towards housing and caps all debt at 36% to include the PITI, insurance, car payments, credit card debt, etc. Given some statistics showing that up to 12% of all Americans spend up to half their gross income on housing costs it’s no wonder the banks are tightening their belts.
Financial advisers all agree that you need to outline your life style and figure out your living expenses prior to shopping for a home. The magical thinking of re-financing out of a too high housing loan into a more affordable traditional 30 year fixed has back-fired and caused a lot of pain. So do the hard work of sitting down and itemizing every necessary expense vs. those that vary from month to month. Should finances get cut you can eliminate that expense and apply the funds towards your mortgage.
Down payments, taxes and reserves are the main elements lenders look at when determining how much house you can afford to purchase. Traditionally 20% down showed the banks you had skin in the game and they rewarded consumers with preferred rates and no additional mortgage insurance. FHA and VA offers buyers the ability to get into home ownership without the big down payment but with the added expense of mortgage insurance. These costs are fixed and most new homeowners set up an impound account to collect these funds on a monthly basis. When the tax bill or homeowner insurance bill comes due the funds are ready to be dispersed from the impound account making the process painless.
Home ownership is the American dream and after we get through the nightmare created by the creative financing of the past six year perhaps we will embrace the fundamentals we were taught with higher regard. Being house poor isn’t much fun but living beyond your means creates stress so don’t disrespect the numbers. If you would like to know the difference between your rent vs what you could purchase let me know. Now is a perfect time to buy with interest rates AND prices down so let me know if it’s time to go shopping.
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Kids Safety Day in Folsom CA Sept.23
August 19th, 2009 categories: Folsom CA, Special Events
FREE event for families at California Family Fitness
Time again to teach the basics to our children and California Family Fitness is hosting a Safety Fair for that very reason. This is an opportunity to have your children finger-printed by the Folsom Police Dept. and meet the men in blue who ride on horseback and work with the canine unit. The Folsom Fire Dept. will also show up with one of their units and teach your children about how to protect themselves and others. Flu shots will be available from Med 7 which is welcome news especially with the advent of the bird and swine flu.
Even though Folsom is a great town it still has big city problems evidenced by the crime reports available on the police news city website. You can also check for registered offenders in Folsom at the same site. Another great site I found to help make parents more aware features Joe Rosner, Director of Best Defense of Illinois 
and author of “Street Smarts & Self Defense for Children.” His basic maneuvers list is simple to follow and helps keep you focused on the goal of staying safe.
Cybercrime is rampant and another standard in parenting procedures. Social media has opened up new avenues where predators can stalk children without their ever being aware of it happening. Watch this video put on by the Social Media Club of Sacramento to help you identify areas of vulnerability. This is a great reminder to check your children’s MySpace and FaceBook accounts because you never know who is posing as a friend. One last resource to check is the Netsmart Workshop which offers a variety of websites and free safely publications. This event should help parents remind their children to be leery of people who seem a bit too friendly and prevent tragedies.
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FICO 08- What’s your score?
August 13th, 2009 categories: Finances
New Scoring Model Introduced Aug 2009
Everyone knows the FICO score is what determines your ability to get credit for a home or car but did you know that every few years the program used is updated? The newest version FICO O8 which is set to roll out this month. The end result could mean a better score for people with relatively good credit and impact those with less than perfect credit much harder.
First a history lesson. The original objective when developing the scoring system was to determine how likely a customer was to default and be 90 days late paying their mortgage within a 24 month period. The three top credit scoring agencies: Equifax, TransUnion and Experian deliver to FICO (formerly Fair Issac) two million consumers data files and they run their algorithms and note the spending trends. They run those same accounts 24months later and note the patterns. The results are used to determine the likelihood of default and are scored within the 300-850 point range that is known as your FICO score. One other interesting fact about the actual scores: The actual scoring range for the first FICO score developed for Trans Union is 397-871, for Experian is 368-839, and for Equifax is 407-829.
The current model used by the top three agencies tends to be more forgiving when it comes to the amount of credit balance you carry in relation to your total credit net worth. Apparently the new version impacts those with high credit balances on the total amount of credit available more negatively. The result is a lower score for the consumer so keeping your percentage of debt on your credit cards to a max of 30% will help improve your score.
The previous version has also provided a means for people with low credit scores to piggyback on another person’s credit and thereby raise their own score. With the new version there has been some method included to detect if you have added “authorized” users to your account. Those users will not see their scores improved and it could adversely impact the primary user and disqualify them from getting loans altogether. There have been examples of people who have been denied loans regardless of large down payments and high incomes due to having additional “authorized” users on credit cards. Apparently the banks don’t trust those additional users and are fearful of fraud so deny the principle card holder regardless of their good standing.
Another benefit to consumers will be the more forgiving attitude of FICO O8 towards outstanding collections under the $100 amount. So long as the original bank isn’t holding that account, and it has been sent to collections, you could see a boost in your score. We will begin to see a clearer dividing line between those who have a lot of derogatory accounts vs those with fewer derogatory accounts. Those with fewer accounts will see their score increase and those with a higher number of accounts will be penalized. I can see how this might impact a small business owner who is leveraging his accounts to stay in business. The logic has changed and by spreading out your credit between many accounts with high limits you will effectively lower your score.
According to a press release issued by FICO on July 22nd “FICO 08 Credit Score Available at All Three National Credit Reporting Agencies” by the end of July. Additionally, “five of the seven largest U.S. banks and four of the five largest credit card issuers” have begun testing or using the new score. It will probably take about 12 months to see the new scores impact on consumers so pay attention to which banks are using the new model. It could be the difference between getting a loan or being denied.
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Buyers: Who’s Got Your Back?
August 5th, 2009 categories: Finances, Home buying, Real Estate, Tax Incentives
As usual, I was holding an open house this past Sunday afternoon hoping to find some buyer’s who had not found an agent to work with yet. A young couple came in and we started to chat about their dream home and I asked them if they had contacted a lender yet?
They looked a little uncomfortable and then said rather sheepishly yes, “and you know what he advised us to do?” “You see,” the wife said, “we just got married and we haven’t finished up the paperwork yet so I still have my maiden name. I already own a house that I bought while in college…my parents helped me. The lender suggested that my husband buy a house in his name, even though we’re married, but not tell the bank so he could take advantage of the $8000 tax credit.”
Did I see red lights flashing or what? Loan fraud by any other name is still loan fraud!
First time buyers are vulnerable to whatever the lender tells them and the temptation to commit loan fraud is apparently alive and well. Just remember that if the lender finds out that you have committed fraud they WILL foreclose and take back your home so when shopping for a lender or real estate agent make sure you check their integrity credential.
Another scenario to be wary of is when a property is being flipped by a seller without every recording the sale. Here’s how it works. Seller A is in dire straits and needs to sell his home. Mr.Realtor lists the home for sale and conveniently has a buyer who is also an investor. He encourages the seller to sell the property to his investor but continues to advertise your home for sale.
Buyer Bob comes along and and writes an offer higher than what Seller A is selling the home to the investor for. That difference is not disclosed to him and the lender isn’t aware of it either. So who benefits here? Does the seller…no…because he doesn’t get a dime from a short sale. Does buyer Bob…no…because he is paying top dollar. The investor and the realtor make bank because the spread covers the double commission for the agent and give the investor a great return for tying his money up for a couple of months. Non-disclosure is risky business and not worth the trouble it causes.
Real estate agents can offer referrals but if they are working with lenders like this one their advice is just as toxic. They might lose their license to sell real estate but YOU will lose your HOME if loan fraud is committed. Working with ethical people will never hurt you. You won’t have to deceive anyone and can be assured they have your back.
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