“Going It Alone” Home Buying for
Singles
2:00 to 2:45 PM on Saturday April 2, 2005 - the Real Estate Roundtable
RichardCalhoun@CreeksideRealty.com 408-926-0365
http://www.creeksiderealty.com/housingfair
1) Organized by the http://www.SCCAOR.com
2) There
is a difference between a REALTOR and an agent, see code of ethics
http://www.realtor.org/mempolweb.nsf/pages/code
3) An estimated 10% of the people that are "acting" as an agent don't have their state issued licensee. http://www2.dre.ca.gov/publicasp/pplinfo.asp
Don’t worry
be happy
1)
Process is really similar
regardless if single or not. I'll concentrate on the aspects impacting the
singles
2)
One of the most stressful
things we do to ourselves is buying real estate similar to marriage, divorce and
death. Apparently the benefits outweigh the stress in the long run as 2/3 of the
population owns.
3) It is your purchase and impacts your life. Therefore, you should be making the decisions supported by your team of professionals who should advise you, give you different options, discuss the pros and cons etc. but let you decide.
4)
If having a co-owner,
co-signer, get an agreement in writing regardless if it is friend, relative, and
stranger. At the very least document intent but a form co-ownership is better,
legal review is best. Pre-nuptial, sole & separate not enough
5)
Plenty of company singles
make up 1/3 of the transaction and growing.
Always
single Single again Single with family Single by choice Single by
default
6)
Discrimination still
exists but fortunately it's getting rarer and difficult to detect. It’s wrong
but stay focused on your goal.
On your mark - Do your homework
1)
Be extra prepared. It's
important to understand the overall concept. Roll with the punches. Don’t stress
out.
2) Do your homework. Get familiar with what your options are with - loans and real estate - contract and disclosures.
3)
Be flexible and as your
identified needs change let your team know. What loan, features, area, distance
to work, lifestyle, size, neighbors, roommate, near-term changes etc. It is an
interactive process.
4) Find out all cost insurance, property tax, PMI repairs etc.
Get Set -
Trial Run - Do a
complete dry run in order to understand the details realizing that the stack of
papers is not overwhelming. Things may happen quickly. While you're walking out
of house, agents may be walking in to present offer. Position yourself to be
able to say "let's write an offer and fell comfortable enough doing so on the
spot.
1)
Look at property before
you are ready and just pick one
2)
Review a CMA; pick a price
3)
Review a disclosure
package which can be an inch thick. What is important and what isn't.
4)
Fill out a contract
actually sign it
5) Over disclose your situation when beneficial, high fico scores, large down payment etc even if none of seller’s business. Keep focused on the goal. Eliminate obstacles seller only has one house to sell. Get to know the seller. Write a letter.
6)
Discuss some of the
numerous things that happen at an offer presentation. Understand the multiple
offer process so that you don’t lose a house because you were caught off guard.
7) Escrow process, contingencies, and inspections. Do you accept seller's reports?
8)
If you understand the
process when you are not emotionally involved makes it so much easier.
9) Review a recent closing
Go For It Jump in with both feet and enjoy the benefits of home ownership
1)
2/3 own
2)
Few are sorry
3) Nothing ventured; nothing gained.
Advantages
1)
More individual control,
no other person to compromise with; still not complete. Realize most transaction
TFT because an emotional decision is made opposed to business decisions.
2)
Lower notary cost. You
save $10 per notarized signature.
3)
More likely to qualify for
assistance:
Mortgage Credit Certificate (MCC)
Federal Home Loan Bank WISH program
4)
Get in sooner vs. later to
capture appreciation allows you to keep up with the increasing cost of real
estate which is typically greater than inflation are some exceptions 3/2000
through 1/2004 and 7/89 through 7/94.
5)
Flexibility – consider a
roommate who leaves if and when you have a partner. OR convert to rental.
6)
Market timing - More
available at the holidays, which is typically a great time to buy.
7)
Less likely to lose job as
only one but more difficult to make it if you are unlucky one.
Disadvantages There are
none
1)
No
one to discuss/hold hand more important to pick a good supportive team of
professionals. Find a mentor
2)
Parents
might be inclined to influence you. I had a couple tell me that they wish they
hadn’t been influenced so much by their parents on their first purchase so this
time, they were going with my advise. Stretch, decrease the number of
transactions. My dad indicated, I was a fool & crazy for buying for twice the
price $116K vs. $61K, buying half the house 986 SF vs. 2,400, buying in a worse
area Campbell vs. Saratoga, with a monthly payment 4 times greater $1,275 vs.
$314. Yet it is the best thing I ever did. Parents fail to remember they bought
in 1971 and it was 1981. Now it is 2005. The real estate market is dynamic and
always changing.
3)
Don’t get overly attached
and let your “home” prevent a relationship.
4)
No-right of survivorship
consider using a trust.
No right answer. Truly 6 of one; half a dozen of another
1)
Conflict between financial
and social needs
2)
Fixed vs. adjustable;
interest only / lender thinks they will get the same yield
3)
Condo/townhouse/SFH
/ more a matter of individual lifestyle I purchased SFH back in 1981 with 75%
debt ratio using a fixed specified amount of $16.5K for down and closing $22.43
left 13 days until next payday. The roommate purchased a duplex and lived in the
studio renting out the main unit firefighter used appreciation to make down
payment on family home. Most purchase condo/townhouses
4)
Don’t know the future so
plan for now. Will there be a spouse, where will they work/want to live?
5)
It doesn’t matter same
things happened to couples it is called life.
Over coming
the obstacles
one by one
1)
100% financing
2)
Closing cost loan
3)
Endless financing options
start with your budget, tax advantages, find loan program that allows you to
maximize your purchase. Although max price increase commission typically
decreases number of lifetime transactions and that is important because of the
stress and cost.
4)
401K, gifts, stocks etc.
5)
Can only afford 2-3 time
income many go for 5-6 times annual income. This is myth and budget is far more
important because loan and other obligation have huge impact.
6)
Home warranty/maintenance
7)
Appearance 100 yards of
debris out of a 2/1 800 SF home 2 big one 1 small
8)
Must be married to afford
in the Bay Area
9)
True cost of commuting
Safety 2-way
street
1) Agents are taught to protect themselves from the public. Take a friend, tell a friend have a cell phone with 7-digit emergency numbers stored in memory.
2)
The reverse is equally
true for the consumer protecting themselves from the person representing
themselves as an agent and/or REALTOR.
3)
What protects you as you
wait for the REALTOR to show for an after work appointment from an opportunistic
criminal.
4)
Although unlikely, what
prevents a criminal from making a professional looking for sale sign, you find
the sign, call and get set up. Being on the MLS is not a fail-safe method as
there are agents that will list anything, do the agreement by mail and never see
the property and/or seller.
5) Think I’m crazy? Last year a SJ agent and buyer fled a condo in Blossom Valley being chased by an irate seller shooting at them per news reports. Many years ago, I personally went to a house in Milpitas with clients after ring the bell and knocking I noticed the homeowner in the kitchen window spinning a revolver on her finger. To this day I remember saying “Obviously, this is not a good time.”
Security
Issues continue after
you own
1)
An alarm good investment
regardless of neighborhood because
a.
Medical emergency panic
buttons
d.
Deadbolts no doubles your
life is more valuable than your belongings
e.
Secondary window locking
devices
f.
Secure that water heater
yes it is supposed to be done but often isn’t obstacle.
Statistics (Graphic)
It doesn’t matter where you buy. GRAPH1 shows that all areas in Santa Clara County appreciate at the same rate
It doesn’t matter what you buy. GRAPH2 shows that condos/townhouse, single family homes and/or investment property all appreciate over time.
It just matters when you buy GRAPH3 shows market conditions relative to Buyer/Seller market based on Days of Inventory