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2 Game Changing Compass Programs

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BRIDGE LOANS

 

Thinking of Buying Your First Home?

What are Your Home Buying Goals?  |   Should You Wait to Buy a Home?
Why Buyers need their Own Real Estate Agent

How to Decide Which Home to Buy?  |  How Long Do You Plan to Stay?

Lower Price or Lower Interest Rate? |  Your Down Payment

Making an Offer | The Home Buying Process

Get a Home Inspection

 

Life is full of exciting firsts. Your first steps. Your first day of school. Your first love. Your first job. Your first house.

Whether you want to move out of your parents’ home for the first time, own a home after renting for years or buy a place with a spouse or partner, purchasing your first property is a big step. It takes a lot of preparation when you’re in this exciting stage of your life.

               WHAT ARE YOUR HOMEBUYING GOALS?

With the dramatic rise and fall of housing prices over the last decade, consumers have new respect for homes as investments. But the flip side, is that your investment is still a home, one you’re likely to occupy for several years or more.

 

According to the annual Profile of Home Buyers and Sellers, compiled by the National Association of REALTORS®, the primary reason buyers cite for purchasing a home is simply the desire to own, followed closely by the desire for more space, and a change in the family situation.

             SHOULD YOU WAIT TO BUY A HOME?

What makes people want to buy a home? Space, privacy, proximity to family and friends, and a sense of community all contribute to the emotions of buying a home. Tax breaks, transportation, amenities, and the opportunity to build equity are also factors. But the biggest reason cited by home buyers year after year is simply the desire to own.

 

According to the National Association of REALTORS®, 75% of first-time buyers are former renters. They prefer to build equity for themselves than for someone else. There’s always a risk that home prices will fall further, but prices and mortgage interest rates have bounced along the bottom long enough that sooner or later one or both will start rising again.

WHY BUYERS NEED THEIR  OWN REAL ESTATE AGENT

Buying a first home is a complex process. An experienced real estate broker or agent will assist you all through the search, comparable homes sold, making an offer, inspection, repair, and appraisal processes, as well as help you find the best value, neighborhood, and quality for your budget and requirements.

 

 

 

HOW TO DECIDE WHICH HOME TO BUY

Buying a home is a long-term commitment. The home you buy should be affordable, yet offer the size, features and amenities you and your family want.

HOW LONG DO YOU PLAN TO STAY?

Home transactions are expensive, totaling as much as 14 percent of the purchase price, by the time you buy and sell your home.

 

That means the period you live there has a lot to do with how you can sell or lease your home at break-even or a profit, and buy another home. Adjustable rate loans are ideal for short occupancy, because they are often a point or two lower than fixed-rate loans, but make sure the reset period is far enough away that you can sell the home before your payments get larger. If you’re planning to occupy the home for years to come, or turn it into a rental after a few years, a fixed-rate loan is much better. It costs more but your payments will always stay the same (hazard insurance and property taxes can change.)

LOWER PRICE OR LOWER INTEREST RATE?

Which is better?  In a buyer’s market, buyers wait for signs that prices are going lower. In a seller’s market, buyers don’t wait because they’re afraid prices will go higher. Both markets move on the fear of paying too much. Right now, buyers have the best of both worlds – home prices have rolled back to nearly a decade ago, and mortgage interest rates are at record lows. Yet, many buyers are still waiting for a sign that it’s the right time to buy.

 

Should you wait for lower prices or lower interest rates before you jump in? Consider the following: The price of a home is fixed. Buyers have figured out that interest rates can change, so they wait for prices to go lower, but what they don’t realize is that prices have to drop significantly to equal a minor fluctuation in mortgage interest rates.

YOUR DOWN PAYMENT

Good News!  Lately, it’s been in the news that credit is tight, but if you believe that you need 20% down and perfect credit to buy a home, you may have good news coming. Loans are available with as little as zero down through the Veterans Administration, for veterans and active-duty military. FHA has programs as low as 3.5 percent down for qualifying borrowers who buy within maximum loan limits, up to $625,000.

 

Borrowers with less than perfect credit can get loans as well. Higher credit scores help qualify borrowers for better rates. For example, if you have a credit score of 620 or better, you can buy a home through FHA with 10% down.

 

MAKING AN OFFER

Before you submit an offer, have your agent pull up the most recent sold comparables (CMA) within a reasonable radius of the home, so you can compare the home fairly in terms of location, size, features, and amenities. Next, ask your agent about market conditions, so you can choose a strategy.

 

Strategy

 

In a buyer’s market, discounts are common because there are fewer buyers, more properties for sale, and home prices are soft or falling.

 

In a seller’s market, homes sell quickly for full price or higher because there are plenty of buyers and few homes for sale. Whether you are in a buyer’s market or a seller’s market, your goal is to buy the home at a fair price. If you were the seller, what is the lowest possible price you’d accept?

 

Risk

 

Low-balling the seller is risky. If the seller feels insulted by your offer, you’ve lost the opportunity to negotiate. On the other hand, some sellers are simply unrealistic about their home’s value. Maybe your offer will be their wake-up call. If the seller’s home is offered at a reasonable price, pay asking price or close to it. A home priced to sell will sell quickly.

 

Is there a way to sweeten your offer with a quick closing or an all-cash sale?

 

To show the seller you’re serious, include a copy of your lender’s pre-approval letter, along with a cover letter summarizing your strengths as a buyer in terms of creditworthiness, flexibility in closing, and why you love this home.

 

Include a copy of your comparables to show why you feel your offer is a fair price for the property. If your offer is conditional, such as your need to sell another home before closing on the seller’s, you’ll have to find a way to sweeten the deal, such as a full-price offer. Few sellers would accept a discount and a contingency at the same time.

 

Reward

 

Your real estate professional will help you draft the offer with a price, estimated closing date, and terms, including earnest money (a guarantee that you’ll perform as a buyer in good faith), final approval by your lender, and your right to have an inspection. Once your offer is negotiated and accepted, your earnest money will be sent to the escrow agent's office. Now the inspections occur, and this is where the contract negotiations can break down.

 

During the inspection process, the inspector will tell you about the condition of appliances, heat and cooling systems, roofs, electrical and plumbing systems, etc, and if your future home is up to current city codes. You should only renegotiate a repair when it wasn’t obvious before, or when a system is unsafe or not functioning.

 

Once the seller has agreed, your offer is now a binding contract, and you’ll proceed to closing.

HOW LONG DO YOU PLAN TO STAY?

Before you submit an offer, have your agent pull up the most recent sold comparables (CMA) within a reasonable radius of the home, so you can compare the home fairly in terms of location, size, features, and amenities. Next, ask your agent about market conditions, so you can choose a strategy.

 

In a buyer’s market, discounts are common because there are fewer buyers, more properties for sale, and home prices are soft or falling. In a seller’s market, homes sell quickly for full price or higher because there are plenty of buyers and few homes for sale. Whether you are in a buyer’s market or a seller’s market, your goal is to buy the home at a fair price. If you were the seller, what is the lowest possible price you’d accept?

THE HOMEBUYING PROCESS

Follow these Steps:

 

Get prequalified - Your lender will look at your income, credit scores, revolving debts, obligations such as child support as well as the type of loan you choose. Other factors that impact how much home you can buy is the down payment; smaller down payments mean higher monthly payments. Last, the interest rate and terms (30-year, fixed or adjustable rate) will determine what you can afford in monthly payments.

 

Make your wish list - Decide where you want to live and how many bedrooms and baths you’ll need. Consider lifestyle - condominiums offer shared amenities, with little responsibility. Single-family homes offer more space and privacy, but much more exterior and yard maintenance.

 

Hire a real estate professional - Your real estate professional should be expert in the area where you want to live and familiar with the type of home you want to buy. Your agent has house-by-house experience in your neighborhood and can offer the best advice on homes in your range.

GET A HOME INSPECTION

A home inspection is designed to give buyers a better understanding of the systems and overall condition of the home they’re buying. Otherwise, you’d have to rely on your own knowledge and experience.

 

When you hire a home inspector, there are a few things you need to know.

 

No house is perfect.

 

A home inspection should point out questionable conditions and/or potential safety-related concerns in the home you want to buy.  A home inspection should cover:

 

• Exterior, porch and deck (contiguous)

• Foundation and walls

• Chimneys and roofs

• Windows, doors and attics

• Electrical components and plumbing

• Central heating and air conditioning

• Basement/crawlspaces and garage

 

 

Mimi and Jon Torp

COMPASS

11601 Wilshire Blvd Suite, Suite 101

Los Angeles, CA 90025

 

Tel: 310 622 7496

Email: MimiandJon@thetorps.com

 

Specializing in homes and condominiums in Beverly Hills, Bel Air, Beverlywood, Brentwood, Cheviot Hills, Holmby HIlls, Little Holmby, West Los Angeles, Sawtelle, Malibu, Pacific Palisades, Santa Monica, Westwood, West Hollywood.

 

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