Wednesday, October 31, 2012

Will National Real Estate Recovery Be Affected by Sandy?

As if there wasn't enough devastation brought by Hurricane Sandy, now analysts are saying we have to worry about the recently recovering real estate market. Just when all the real estate news was looking up, Hurricane Sandy came along and threatened approximately $88 billion worth of homes and additional commercial space. So what does this mean for us here on the West Coast? Hopefully not much. While the news may continue to spin negative real estate stories, and real estate statistics in the near future may appear less positive (which we'll discuss below), California's real estate market should remain relatively unaffected.

Here are some of the ways Hurricane Sandy will impact real estate sales across the north east.

Mark C. Olsen/Reuters
Property Damage

Damaged real estate can't be sold. Whether homes were currently on the market or are in the middle of foreclosure deals, the damage done by Sandy has to be addressed before any real estate deals can proceed. This will entail homes being pulled off the market and buyers backing out of contracts with homes that have since been damaged. According to Core Logic, Inc., a mortgage software and date firm in Irvine, here is a state-by-state breakdown of the potential property values that were in the path of the storm:
  • New York - $35.1 billion
  • New Jersey - $22.6 billion
  • Virginia - $11.3 billion
  • Massachusetts - $7.8 billion
  • Maryland, Delaware, and Pennsylvania: $11 billion
Only time will tell how much of this "potential" storm damage was actualized. In the meantime, damaged properties have to be inspected, evaluated, and decisions have to be made regarding how owners will move forward. It will be months before the final statistics are in.

The World According to Fannie and Freddie

In the meantime, many of the damaged homes have mortgages which need to be paid. Freddie Mac issued a statement yesterday which authorized loan servicers to suspend foreclosure procedures for as many as 12-months for states/properties which suffered storm damage. Freddie also stated that upon review, it will allow some on-time borrowers to defer their mortgage payments for up to a year - this will include waiving their late fees - while owners recover and address storm-related property damages.

Fannie was also generous, urging servicers to issue extensions, deferments, and other helpful allowances for home owners whose properties were affected. Fannie Mae's borrower guidelines include disaster-relief allowances which include a 90-day window for deferred and/or reduced payments, depending on the situation.


This is where it gets especially ugly. Hurricane Sandy took an already dismal foreclosure situation and made it worse. In fact, using the current pace of foreclosures in New York and New Jersey, combining current foreclosure lists and prospected storm-related foreclosures, it will take as long as 425 months - or a whopping 41 years - for the foreclosure situation to be ironed out. Hopefully this situation will create solutions to make the process of buying and selling foreclosed properties more efficient.

And in California?

Just a week before Hurricane Sandy, California was helping to lead the nation out of the real estate crisis. Hopefully, that real estate trend will continue.

Monday, October 29, 2012

5 Easy DIY Upgrades

The standard amenities and options at Pacific Place will help you personalize your new home, but there's always little things you can do here and there all on your own to make your home special, and don't forget that feeling of accomplishment once you've finished a task.

There are several advantages to do-it-yourself (DIY) projects. Not only are they more cost effective than hiring someone else, there is an amazing satisfaction that comes from a job well done. Sometimes, the only thing holding people back from DIY projects is a fear of not knowing how to do things. Well - we say phooey on that excuse! Not only are there a ton of easy and affordable DIY upgrades you can make to your very own home, the internet provides a wealth of information and step-by-step instructions.

5 Easy DIY Upgrades

Not all DIY projects require a construction background to be successful. Most first-time DIYers find the projects get easier as you go along because you learn (and build your tool collection!) as you go.

  1. Painting. Painting has to be one of the easiest ways to transform your interior space all by yourself. While it is time consuming (if you are doing anything larger than a bathroom) it is affordable and the results of your labors appear right before your very eyes. A fresh coat of paint literally makes a room look like new. Here is a great link with simple instructions on painting a room using best painting practices. DIY painting jobs can save you thousands on labor costs.
  2. Bathrooms. Plumbing can be one of the scariest places for newbie DIYers but once you turn off the water supply, there's (almost) nothing to worry about. Changing bathroom fixtures updates a bathroom instantly. Here are instructions to replace a bathroom vanity, but toilets are just as easy. Then you just need a fresh coat of paint (see #1) and you're set!
  3. Kitchens. Don't have the money for a full kitchen remodel but want something different? A DIY backsplash project can be as easy or complex as you want and will change your kitchen's look - especially when paired with a new paint job (see why it's #1?). You can use wall paper, recycled wine corks, prefabricated tile sheets, etc. and get a new kitchen look without having to replace your countertops. Of course replacing your countertops is another DIY idea...
  4. Add a Window Insert to an Entry Door. An old entry door might work well enough but not really provide much aesthetic value. However, there are a plethora of window inserts available that will upgrade the door's look and add natural light into your adjoining interior space. It's actually a fairly easy DIY project for a nice weather day. Here's one set of instructions for how you can add a window to an existing entry door. Voila - your house just got a face lift.
  5. Landscaping. Speaking of face lifts for your home, landscaping has to be one of the most enjoyable and simple ways to change the exterior look of your house. From hanging plants and container gardens, to rock gardens and water features, landscaping on your own is immensely satisfying.
These 5 DIY projects can all be done in the span of a weekend or less and the results will be just what the home doctor ordered.

A Beginners Guide to Home Theater Displays

There are two main focuses in establishing an ideal home theater: the sounds and the views. Things have gotten complicated in the world of TV watching. Not long ago, you had three choices when it came to televisions - small, medium, or large. Now, you not only have a plethora of size options, you also have the choice between LCD/LED or Plasma, HDTV or regular, 3-D or 2-D, etc. So here is a guide to choosing the right theater display for your home.

If you haven't already done so, you may want to check out our Beginner's Guide to Home Theater Audio to get started.

A Beginner's Guide to Home Theater Displays

First off, we are going to assume you want an HDTV and as for 3-D or not, you can choose that down the road. First, there are a few questions you should ask yourself about your TV-watching habits before you hit the stores. The more details you have narrowed down before you get there, the quicker the salesperson will be able to find the perfect TV for your home.

What size is the room?

Depending on the proportions of your room, and the location of your furniture, there are "ideal viewing distances" according to the size of your screen. Yep - it gets that technical. Here is a Recommended TV Viewing Distance Chart, compliments of the kind folks at Toshiba, which can help you decide. You may want to work backwards - meaning, measure the approximate distance from the couch/chairs to where the new screen will be - in order to determine the best size screen. It's easier to purchase the right screen size than to knock out a wall to expand the room...

What kind of TV do you ultimately want?

In order to answer this question, you need to know the basics about TVs.
  • Liquid Crystal Display or Light Emitting Diode - (LCD & LED)
    • come in a wider range of sizes
    • thinner, lighter, and more energy efficient than their counterparts
    • the picture is "brighter," which can be advantageous if you are more of a daytime viewer
  • Plasma Screens
    • these have the smoothest action (although technology in LCD screens is catching up) so plasma screens are often recommended for big time sports enthusiasts
    • they will make a difference in your utility bill if you're switching from an LCD screen
    • provide a wider "viewing angle" than LCDs so the so-called "sweet spot" is larger
When You're at the Store

You want to make sure you are happy with your final purchase so other things to consider:
  • Choose a store that demos TVs in a low-lit room
  • Bring your own DVD with a dark action scene. When this is shown on different TVs you will be shocked at the variance in clarity. It can be the "make or break" moment for you.
  • Sit or stand at the same difference you'll be at home - and then move off-center to see how/if the picture changes.
  • Play with the viewing modes: Standard, Vivid, Dynamic, Movie, etc. for comparison
Never let a salesperson pressure you into a purchase you're not confident about. Only you know the best TV for your home theater needs.

Friday, October 26, 2012

5 Tips for Setting up a Spooky Home for Trick-or-Treaters

Trick-or-Treating is fun no matter what, but the best homes are the ones that go the extra mile to create a spooky Halloween atmosphere. It's easy to create your own outdoor-version of a Haunted Yard. If you have kids, they'll love to be in on the fun. All it takes is one trip to a hardware store - and thinking "outside the Jack-o-Lantern" - in order to create a spooky trick-or-treat experience.

5 Tips for Setting up a Spooky Home for Trick-or-Treaters
  1. A Startling Ghost. One of the simplest ways to scare someone is to startle them. You can create your own flying ghost (or mummy, vampire, zombie, etc.) from materials you already have. The ghost idea is the simplest because you only need a white sheet and a ball for the "head," tied off at the neck with a rope. Rig it in a tree or rafter near the front door via a rope long enough to stretch inside. You need a volunteer to sit inside the front door with a view of the front walk-way. Whenever a trick-or-treater is about to approach the ghost's path, simply ease up on the rope and let it swing down towards them. Even adults get pretty shocked by this one. Once the ghost has worked its magic, pull the rope tight sending it out of sight again, in wait for it's next victim.
  2. Disgusting Witch Cauldrons. You can buy black plastic cauldrons at a dollar store or a local Halloween outlet. Buy some spray-foam insulation and fill the cauldrons with it. Make sure some of them are on their side so you can have the "disgusting brew" spilling out of them. Once the insulation has dried, you can spray paint it any color - or a glow-in-the-dark motif is good too - and affix all kinds of nasty ingredients: bloody eyeballs, snakes, spiders, brains, rats, and whatever else you can find to repulse viewers.
  3. Silhouetted Lawn Figures. There are a plethora of online patterns you can find to create silhouetted lawn figures of all types, witches stirring brew, cats, skeletons, you name it. You can use cardboard but you risk it falling apart if it's not properly supported. Once you've cut them out, paint them solidly black and stake them in your yard. You can add extra special effects like masks, blood, gore, or whatever helps to promote your theme.
  4. Dry Ice. A little dry ice can go a long way. By setting up some dry ice areas around your yard, you will enhance the spooky theme and also mask any imperfections in your decor. Make sure to observe dry ice handling precautions to avoid burns.
  5. Scary Sound Tracks. From haunted house sound tracks to the screams of a torture chamber, you can find all types of scary Halloween sound effects online to help creep out your neighborhood trick-or-treaters. Any haunted scene is scarier with an appropriate soundtrack.
Have fun creating a spooky home for your trick-or-treaters. With the right attention to detail, your house will be favorite Halloween Haunt on the block.

Wednesday, October 24, 2012

A Beginners Guide to Home Theater Audio

For those making the jump from apartment life or a townhouse, a detached single family home can mean the freedom to do something that you might not have before... cranking up the volume on your favorite tunes and movies! Pacific Place offers a lot of fantastic features many other builders would charge extra for, but here's another upgrade to your new home you might want to consider.  After our last post about soundproofing a room, we thought we'd touch on getting yourself set up with a home theater system.

There are two options for designing your home theater's audio system: hire someone or do it yourself. If you're reading this blog, you have probably opted for the latter option. Home theater systems can be extremely expensive, or ridiculously affordable, depending on what type of system you're interested in, your home theater needs, and your budget. Keep in mind that a good audio system can last for decades so taking the time to assess your needs - and maxing your audio system budget on quality equipment - can save a good deal of money in the long run.

Here are some questions to ask yourself before you go out and commit to a home theater system:
  1. What do you spend most of your time listening to?
    • Music: If you are primarily a passive listener, primarily enjoying music with an occasional TV or movie here and there, you only need a couple of good quality speakers. Even some smaller book shelf speakers might be just the ticket.
    • Mostly TV: If you mostly watch TV and occasionally throw in some music to clean the house or eat dinner by, you may only need a soundbar or a soundbar/subwoofer combo to enhance the sound coming from your TV.
    • TV/Movies: If sound is your thing and you want to get all of the effects from movies and TV shows, as well as mind blowing music from time to time, you're probably interested in investing in some high quality speakers (perhaps floor standing models?), a subwoofer to maximize the dramatic bass effects, and the words "surround sound system" should increase your heart rate.
  2. What's your space like?
    After the speakers, the next most important aspect of sound quality is acoustics - and those depend on the type of room you are in. Is it large or small? Open or walled off? Do you have carpet and cushy furniture - which absorb sound - or hardwood floors with a minimalist furniture approach - where a little sound goes a long way? If the speakers are going to be placed in a cabinet, consider the vibration possibilities. If they are going to be visible, consider blending them with decor. A good home audio sales rep won't just try to sell you the biggest speakers but rather the ones that will do justice to the best sound for your space.
  3. What speaker placement makes the best sense?

    You may want to draw a fairly-to-scale model of your room with the furniture and write in distances. This can help a sales person determine the best speakers for your set up. There are online resources for speaker systems in which you can type in the distance information and the guide will help you determine the best system size (2.1, 5.1, 7.1) for your entertainment room's dimensions. Or, this Audioholics link provides recommendations for speaker placement based on layout options and various systems.
Once you have invested the time and resources to design the ideal home theater audio components, the difference in sound quality will make you wonder why on earth you waited so long.

Monday, October 22, 2012

Soundproofing a Room

Soundproofing isn't something most home owners think about until they move in: "Hmph! That living room TV sure is loud way down here in the master bedroom...". Perhaps, your home seemed perfectly soundproof until you ripped out the 70s high-shag carpet to install your beautiful hardwood flooring. Or maybe you bought an older piece of real estate, in which case insulation and window specs aren't up to current standards. Whatever the reason, there are several ways you can go about soundproofing your home to provide the peaceful sanctuary you envisioned before you moved in.

5 Steps to Soundproof a Room

The techniques you use to soundproof your interior space will depend on your needs. Are you interested in providing sound proofing in the room making the noise, e.g. the living room with the loud TV? Or are you interested in sound proofing your bedroom or home office for sleeping and working times? Perhaps you are fine with interior sound but are bothered by the loud diesel engines that you can hear rumbling past your bedroom windows in the wee hours? How long do you plan on being in the home? This can determine whether it's worth using permanent or temporary methods.
  1. Interior walls. You can add insulation to your interior walls fairly easily by renting a machine, boring holes in the room's walls - towards the ceiling and between studs - and blowing extra insulation into the interior wall space. Then you just patch the holes and repaint. Of course, you can also hire a contractor to do this for you. Either way, this option has a two-fold bonus because your room will be more soundproof and more energy efficient!
  2. Install a sound wall. A more expensive but effective soundproofing trick is to add a second wall which sits in front of (but doesn't touch) the existing wall. Using sound isolation clips provides airspace while providing a means to attach the drywall. The airspace in between the layers keeps sound from penetrating.
  3. Wall coverings. You can purchase specialized wall coverings for sound proofing or you can look at your local hardware store for latex paint designed specifically for soundproofing. You can also use thick drapes and/or window shutters to help absorb sound waves from penetrating the room.
  4. Replace your windows. If you live in an older home, you may have single-pane or old double-pane windows which are hardly soundproof at all. If exterior noise is the problem, consider replacing your windows. Not only can this go a long way towards soundproofing, it can also provide energy savings. Also, consider adding weather stripping to interior doors to plug the gaps. Switching hollow doors for solid-core doors makes a difference as well.
  5. Carpet. These days, hard surface flooring increases real estate values. However, they are also terrible for soundproofing. You may want to consider at least an area rug to help absorb sound, or carpet certain room spaces for more permanent sound absorption.
Sound proofing existing real estate just takes a little time and ingenuity but the peace it provides is priceless!

Thursday, October 18, 2012

Are Home Warranties Worth It?

One of the most shocking revelations for new home buyers occurs when something goes wrong, and there's no landlord to call. Ouch! Once you are a proud owner of real estate, the onus of repairs and maintenance is on you. Whether you've purchased brand new home boasting home warranties galore, or a post-war fixer-upper with no developer in sight, it's important that you understand the different types of home warranties available to you. Spending a little money now can save you thousands of dollars in the long run.

A Simple Real Estate Guide to Home Warranties

New Construction Warranties

If you bought a home which was just built, and you are the first owner, you probably signed several boilerplate documents regarding the developer's warranties. In addition, every appliance, faucet, and technological gadget will have its own manufacturer's warranty. In most cases, your developer will handle any customer service related to these devices for the first year. After that, you are usually responsible for dealing with vendors and/or manufacturer's. You will want to read any accompanying paperwork that comes with the home to decide if you want to spend extra for potential extended warranty options.

Most new construction real estate comes with a one-year warranty that covers basic plumbing and electrical malfunctions, as well as any initial issues with your options and upgrades. When the year's up, repairs become your responsibility. Keep in mind that major structural defects, such as water seepage, most window leaks, structural failures, faulty wiring or plumbing, improper grading defects, etc. are the responsibility of your contractor if your home was built on or after January 1 2003 (Civil Code Section 895 et seq.). If you feel the issue is a design/workmanship or earth settlement problem, hire an independent contractor to assess the situation.

After Market Home Warranties

There are a plethora of home warranty companies which you can pay to provide a certain level of home warranty. In most cases, these companies will cover normal wear-and-tear issues for appliances, plumbing, and electrical systems. They will usually pay for any resulting damages and will replace the faulty culprit if necessary. The terms of these types of warranties vary greatly. You may pay a little every month for minimal coverage, or a more substantial amount for more comprehensive coverage. Do your homework before choosing a home warranty company.

Too many people choose a warranty company based solely on rates. This won't do you much good if the company has poor customer service and/or goes out of business in the near future. Make sure to weigh things like:
  • length of time they have been in business
  • online ratings/reviews
  • local reputation/ratings and reviews
  • customer service
  • rates in comparison with services available
  • their representatives ability to answer your questions
This is one situation where you want to make sure you've read all of the fine print and understand exactly what coverage they do and don't offer in your budget margin.

As long as you shop around and perform due diligence ahead of time, the money you spend for a home warranty will be well worth it.

Tuesday, October 16, 2012

Homes With The Best Resale Value

According to data collected by the National Association of Home Builders, roughly 30% of home buyers sell their home within the first five years, and almost 50% sell before they make it to year ten. What does this mean for the average American? It means that you need to have two pairs of eyes engaged when you are on the real estate prowl: one pair should be looking for your dream home and the other pair of eyes needs to be analyzing real estate from the perspective of future home buyers.

There is a 1-in-2 chance that you will sell your new home within the next 10-years so you need to make sure that the house you purchase now will be equally or more appealing to those future real estate hunters. There are three things to keep in mind when you are buying a home with potential resale value.

5 Things to Consider When Buying a Home with Resale Value

  1. Location. Location matters. Just as you don't want to be living at the crux of a busy intersection, next door to a fire station, or directly across from the noisy interstate, either do potential home buyers. While these types of locations may save you a few thousand dollars when you are purchasing your home, they are going to cost you those same thousand when its time to sell. It is worth it to find a home in a location that is desirable, with neighbors that keep up their homes, and with a little home improvement over the next 5-10 years, you'll (hopefully) be able to gain a return on your investment down the road.
  2. Neighborhood. This is related to number one but takes it one step further. Sometimes a house you love is located in a quiet cul-de-sac, which seems desirable, but the houses around it are going down hill. If you get the sense that the neighborhood is taking a downturn, rather than riding on an upswing, you may want to pass on it. Home values are partially based on "comps" so if comparable neighborhood home values are coming in below what you feel your house is worth, your future home buyers will have a hard time getting the financing to meet your asking price.
  3. Size and Layout. Are you happy with the size and layout of your home? If not, are you planning on remodeling in the very near future? Unless your future home buyers are in the real estate market for a fixer-upper, they are going to want to love what they see the minute they walk in the door. Families are looking for move-in-ready homes, and open-floor plans are the most popular request so keep that in mind as well. If the fixtures are unattractive or outdated, plan on replacing them yourself because even cheaper, but attractive, finishes can help stage a more attractive home for sale.
Your home is a real estate investment so the more you keep future investors' needs in mind, the better your return will be.

Saturday, October 13, 2012

House Hunting Tips

House hunting sounds thrilling in theory but it can be time consuming, frustrating, and sometimes - even heartbreaking.  Before you're ready to hire a moving company, you'll be on the hunt for months and find you just aren't finding what you want. You may find the perfect house, but it's out of your price range or that the owners accepted an offer five minutes before your real estate agent submitted yours. While there is the element of the romantic in the house hunt, i.e. finding the house of your dreams, there's also a major dose of business-business-business.

House Hunting Tips
  1. Get Pre-Approved. Any real estate agent worth their salt should ask you about pre-approval from the get go. You might think you are looking for home in the 400K range, only to find via a mortgage broker, that you are really looking for homes in the 250K-300K range. That's a big difference and can save everyone a great deal of time, energy, and heartache.
  2. Stick to Your Budget. Once you get your pre-approval, you might think, "Yahoo! We qualify for more than we thought!" But perhaps the pre-approval didn't take into consideration the $10,000 personal loan you're paying back to your favorite aunt who helped you through college (and doesn't show up on a credit report). Does the figure leave you enough money to pay all of your other bills and save money? Don't forget that once you own a home, there is no landlord to call when things go wrong because you're the landlord. Make sure you have enough to save for house repairs as well as for your own future financial health. Stick to that figure and don't let yourself be tempted by the, "what's another 50K?" mentality. "Just-Another-50K" can be the difference between being able to pay your mortgage or not later on.
  3. Be Realistic. Everyone is entitled to have a dream home in mind, but if you are a first-time home buyer looking for real estate, this might not be the time to have it all. A jacuzzi tub, his/her sinks, and a sitting area in the master bedroom are lovely, but perhaps not for this time around. Find a few things you treasure in a home and then be ecstatic when you find a sweet house (in your price range) that has them.

  4. Potential. Sometimes it's important to see the potential in a home because you can create your vision over time. If you have a hard time visualizing, consider bringing a contractor- or design-savvy friend along who can help you imagine simple changes to transform the space into your ideal home.
  5. Take Photos. You might look at dozens of houses before you find "the one." Take lots of exterior/interior pictures so you can keep the houses straight later on. Upload them into address organized files on your computer for future viewing.
The best house hunting is done with a clear and solid plan of action. Stick to that plan and eventually, cosmos will align and you will find yourself signing papers for a house that's perfect for you and your family.

Friday, October 12, 2012

Making An Offer: The Basics

The process of making an offer on real estate can vary according to market trends. Until recently, home buyers could bid a little low and still hope to get the home they wanted because of the deflated market. However, now that the real estate market is picking up, and median home prices are beginning to increase, making an offer might be a little more complex. When it comes down to it, there are four basic scenarios you may encounter when you're ready to make an offer on your new home: low offers, high offers, full-price offers, and full out bidding wars. 

The 4 Basic Real Estate Offer Scenarios

  1. Making a Low Offer. This occurs when the real estate market is flooded with houses and there's a buyer drought. There are also cases where "For-Sale-By-Owner" homes, or clients who don't heed their agent's advice, ask more than a house is worth on the current market. Either way, if you come across a home you like, have a feeling the sellers haven't had many bites, feel the house is overpriced, or sense the sellers are just plain desperate, making a low offer can be a great way to save some money.
  2. Full Price Offers. If you aren't the bartering type, really love a home, and feel that the asking price is worth it, then it's usually best to make a full price offer. Here's the thing; just because people are selling their home, doesn't mean they don't love it. Sometimes, buyers' efforts to "save a buck" can be insulting to the sellers. Why make a low offer when you feel you have found what you are look for and can afford to honor the sellers legitimate price?
  3. Making a High Offer. This one is trickier to navigate. Sometimes, buyers make a higher offer because they do not want to go back and forth with the sellers, they really like the property, and they sense others are making full price offers. It can also occur when sellers get antsy and request a buyer's "best offer." Either way, as a buyer you need to be 100% positive that this is the home you want and that the price you offer is a price you are willing - and qualified - to pay.
  4. Bidding Wars. Ugh. This describes the real estate market in the early-2000s. You have to really want a home, and be willing to take the risk of paying an inflated price, to engage in a bidding war. It can be ugly, stressful, and you might end up with an upside-down-mortgage in the future if you aren't careful. Sometimes, the wisest course of action is to wait out the war and see what happens. The seller might come calling when the other bidders all throw their hands up in frustration.
To save yourself the risk of over offering, have a very clear commitment of what you are willing to pay, and the offer scenarios you are willing to get into, before you start looking for that dream home. When you think you're ready, make sure you give us a chance to help either at Pacific Place or with a real estate agent from Sequoia Realty Services.

Wednesday, October 10, 2012

How to Calculate Your Debt to Income Ratio

Debt. At one time it was a dirty word. In fact, for much of American history, it wasn't that easy to get into debt. Real estate mortgages, car loans, and student loans weren't invented. If you wanted something, you paid cash. In recent decades this has all changed. Remember when you were greeted by friendly people on your college campus who offered you all those fun credit cards? Or how about the first time you bought a car because you qualified for "first time buyer" interest rates? At the time, these things seemed so manageable but now that you are looking to buy a house, you might find your debt-to-income ratio is higher than lenders would like.

One of the first mistakes first-time home buyers make is thinking, "We can pay the rent - and our mortgage is going to be even less than that - so of course they'll approve our loan! Right?!?" Hm. You might be wrong. Unfortunately, real estate lenders don't pay much attention to whether or not you have paid your rent on time for 15 years. They are much more concerned with two factors: your credit score/history and your debt versus income ratio. If either or both of these is undesirable you will either be denied, forced to find a co-signer, and/or offered an insanely high interest rate. So what exactly is a debt-to-income ratio? And how can you fix yours if it isn't so hot?

Calculating your Debt versus Income Ratio

At the end of the day, debt versus income ratio is a basic math equation; you add up every debt payment you make each month and divide that by your total average monthly income. You will end up with a percentage. In the world of Credit Scores 700 is a magic number. Based on this number a person's credit score falls into "Strong" "Decent" "Weak" and "No Way" categories. debt-to-income ratios are judged by percentages. In general, 36% is the magic number. Most lenders want to see that your debt payments each month are 36% or less of your gross monthly income.

If you take the amount of your gross income every month, and multiply it by .36, the number you get is the maximum number of dollars a bank/lender wants to see. Another way to figure out your debt-to-income ratio is to use this debt versus income ratio calculator. If you see a number that's higher than you like, it's time to start eliminating some debt.

Where to start? Increase your income and lower your expenses. For many, increasing income isn't an option. If you want to qualify for a real estate loan, you must create a realistic budget, cut expenses, and put those savings into debt reduction. Just one year of diligent effort on your part can significantly alter that debt-to-income ratio, which can help you qualify for the home of your dreams. So get your debt-to-income ratio where it should be and start shopping for real estate.

Monday, October 8, 2012

5 Tips for Choosing a Real Estate Agent

When you're ready to buy a home, choosing the right real estate agent is a crucial part of the equation. Depending on how long it takes you to find a home matching your expectations and price-point, you could have a relationship with the realtor for weeks, months, or longer. There are several factors to consider, ranging from your own feelings about the person, to their reputation, business acumen, etc.

5 Tips For Choosing a Successful Real Estate Agent
  1. Active License. Check the status of a realtor's license before you go any further. If their license is inactive, do NOT proceed. You want to work with a currently licensed agent who carries an active Errors & Omissions (E&O) insurance policy (like a malpractice policy for a doctor) so that you are legally and financially protected from start to finish.
  2. Recommendations. Ask family, friends, neighbors and co-workers for recommendations. The fact that your cubicle mate's cousin is a realtor might not be the best referral. But if your neighbor has used the same agent multiple times because they love him/her so much, that might be worth paying attention to. You can also use online referrals and ratings, via websites like Yelp and Angie's List, but always take online ratings with a grain of salt. We like to believe people are honest, but a positive rating might not be from a real client. Face-to-face referrals are always best.
  3. Conduct Interviews. Take the time to interview at least a handful of realtors to find the right match. Sometimes, people choose the most prominent agent in the ads, or the one that a friend or family member recommends. While these are great starting points for your search, it is worthwhile to get a feel for different agents. Consider things like:
    • Response time - How long did it take for them to return your call?
    • Timeliness - Did they honor the agreed meeting time? Were they on time?
    • Attention - Do you feel like you have their undivided attention or are they distracted or constantly focused on other clients' phone calls, texts, emails etc?

    These seemingly small things can end up making the difference in finding the realtor who is the most professional, ethical, and focused on his/her clients' needs.
  4. Do They Have Time? The real estate market is picking up and many agents are finding their appointment book is overflowing. You should ask potential agents flat out if they have the time to really give you focused attention. Listen for hesitations or forced cheer and honor your instincts. Hopefully s/he will be open and give you an honest yes or no answer.
  5. Are they a Buyer's Agent? Make sure the agent is willing to work with in-house sales as well as anything else on the market that meets your qualifications. They should be eager and patient in demystifying the home buying process 100% of the time.
At the end of the day, you need to feel good about the real estate agent you choose so above all else, honor your instincts. Trusting your agent is invaluable. Happy house hunting!

Wall Street Journal Launches "Mansion"

We are all familiar with the long-standing mantra of the American Dream: get married, buy a house, raise a family and retire comfortably. However, with the advent of reality TV and the public's uber-voyeuristic fixation with Hollywood celebrity lifestyles - including their top dollar real estate investments, the American Dream has been upgraded. Now, ask any young adult what his/her version of the American Dream is and it's something a little closer to: get rich, become famous, live in a mansion, and have my own TV show.

Well, while Lifestyles of the Rich and Famous may now only air reruns, the Wall Street Journal has just launched its own paper and online version titled, "Mansion". Mansion will begin running in the WSJ every Friday and will focus on some of the most high-end luxury real estate, both at home and abroad. Additional features will be accessible via, and using their universal apps for the iPhone and iPad.

Step into WSJ's Mansion

Ever wanted to own your own island? No problem. Luxury homes await your purchase on Belden Island and/or Jepson Island off the coast of Connecticut. This week's "Mansion" viewings will take you to Puerto Rico, Gramercy Park and Silicon Valley. You can visit New Jersey, New York, and even a luxury-coop in London which was formerly a 19th century lunatic asylum. And if that isn't enough, "Mansion" will also focus on celebrity properties, or properties of the rich and well-known. This week, interested viewers can take a peek into the home of celebrated writer, poet, feminist, and wise-woman-extraordinaire, Maya Angelou.

It's addicting. You can read about the homes, their architects and/or history and all of the juicy financial details. You can also take video tours and view extensive slideshows.
The WSJ intends for Mansion to be a well-rounded, aesthetically attractive, one-stop-site where viewers are not only treated to real estate eye candy from around the globe, but can also receive intelligent and factual information regarding:
  • Current luxury real estate trends
  • Luxury property investor hot spots
  • Profiles of real renovation projects
  • In-depth looks at notable, historical, or unusual properties - who lives there, the building's history, and how it became the property it is today
  • Sneak peaks at real live real estate portfolios of well-known people
  • Tips on how to finance your next luxury home purchase
  • Insights into luxury market trends, business tips on buying and selling properties, as well as marketing trends
  • And of course, lots and lots of in-depth looks at properties that will make you drool, or inspire you to call your real estate broker, depending on the state of your own financial portfolio.
So next Friday, make a lunch date with your fellow workmates and take a trip around the world, courtesy of the Wall Street Journal. Stroll through some of the most beautiful properties on the market and imagine what it's like to own one. It's always good to keep dreaming.

Friday, October 5, 2012

Gaps in Big Online Listings Revealed

Shopping for residential real estate doesn't necessarily require dressing up in your Sunday best and retaining the perfect real estate agent anymore. While many home buyers still seek out a professional real estate agency for a more personalized experience, many house hunters scour well-known real estate sites to search for their dream home. In the past five years, websites such as Zillow and Trulia have taken the internet by storm. Whether people are shopping for new homes, rentals, or foreclosure listings, big real estate websites are often the first place people look. There's just one problem with this; what you see is not necessarily what you get.

Listing Gaps - AKA Listing Inaccuracies

A smaller brokerage-run real estate website,, noticed that the Big Guys - meaning Zillow and Trulia - didn't have the number of listings that Redfin did. Not only that, Redfin also noticed that many of the listings weren't valid. Executives finally decided to do something about it. What did they do? They hired a real estate consulting firm called WAV to look into the number of listing gaps - or listing discrepancies - on real estate websites to compare them.

WAV evaluated Redfin, Trulia, and Zillow and added Windmere and Long & Foster,  which are two regional brokerage-run real estate web sites. They took a sampling of more than 6,400 residential real estate listings in over 33 zip codes across the United States. This is what they found:
  • Redfin, Windmere and Long & Foster had 100% of the Multiple Listings Services (MLS) listings on their sites
  • Trulia had only 81%
  • Zillow had 79%

They also discovered that:
  • 36% of agent-listed houses showing as "active" on Zillow were no longer for sale as per MLS
  • 37% of Trulia's (supposedly) active agent-listed homes were no longer available on MLS
  • Less than 2% of the listings were mis-labeled in Redfin and Windmere listings
  • 0% of the listings on Long & Foster's site were inaccurate
Why all the discrepancies? Well, unlike brokerage-run websites, which have in-house representatives culling their listings from MLS, these larger sites are funded guess it...advertisers. So while a certain level of accuracy is important to keep web visitors coming back, at the end of the day accuracy isn't as important as it is for companies who make their profits by being great at what they do - selling legitimate real estate properties.

So what does this mean for you as a buyer?
It doesn't mean that you should never use sites like Zillow or Trulia, but it does mean that you should use them with caution. Make sure to also check in with more reputable sites, such as Redfin - or those of a local brokerage firm. If you do find a property you like on one of the bigger sites, don't get your hopes too fast. Remember - you have close to a 40% chance that the property is misrepresented and/or is no longer on the market.

By using a regional brokerage-run website, or a local real estate company, to assist you on your house hunt, you can count on accurate listings to find your dream home.