Buyer Closing Costs Explained

One of the biggest questions I get from people buying their first home is "What are closing costs and how much will we have to pay?"  Closing costs are the costs that are associated with buying a home.  They are paid at the close of escrow.  The most common closing costs are the fees related to obtaining the loan, appraisal fees, title fees, escrow fees, and prepaid items such as taxes and insurance.  Many times the exact amount of the closing costs is not know until right before the day of closing because they are prorated through the day escrow closes.  You will however have a good idea of what they will be by taking a look at the settlement statement provided by escrow.  The settlement statement or HUD1 lists all the financial details of the transaction.  It is important to review this document and understand the charges.

Closing costs are negotiable between the buyer and the seller at the time you are submitting the offer.  You can ask the seller to cover all or part of the closing costs you will need to pay.  This is why it is a good idea to have an estimate of what your closing costs will be before you submit an offer so you know how much to ask for.  Make sure you are prequalified with a lender in advance and have an idea of how much your closing costs will be.  If you are fortunate enough to get the seller to agree to pay some or all of your closing costs you may need to only bring in your down payment and pay for the out of pocket costs such as the home inspections.

The majority of closing costs are associated with the loan.  These costs will vary from lender to lender.  The loan origination fee is the lender's commission.  It is how much the originator receives for getting you qualified for your loan.  It is typically about 3%.  The appraisal fee is about $450+ and usually needs to be paid prior to closing (out of pocket).  Courier fees cover the costs of send paperwork back and forth between escrow, title and the lender.  Notary fees are charged for notarizing the loan docs/deeds.  Escrow fees pay for the escrow services.  Title fees cover the costs to check on and insure a clear title.

Pre-paid items could include insurance and taxes.  Buyers usually have to have a valid insurance policy/binder showing they have paid the insurance for the first year, hence the term pre-paid.  Property taxes are prorated to the day escrow closes.  The seller pays for the amount of time they owned the property so a charge or credit will be applied depending on what has been paid.  The lender may require the buyer pay a number of months of taxes and insurance into an "escrow" or "impound" account.  Taxes and insurance charges are then added and included in the monthly mortgage payment and a portion is deposited into this account.  The mortgage company will then pay the taxes and insurance out of this account. 

And finally you should make sure you have the money to do any and all home inspections that you want.  These will not show up on the HUD and will need to be paid out of pocket at the time of the inspection.  They typically run between $300-$500 for a general inspection depending on size and type of home.  If there is septic or well on the property those can run about $400 a piece.  These are just a few of the inspections you may want to have done.  The costs of doing inspections can add up but knowing what you are buying and having the home checked by a qualified professional is priceless.

Rental Scam

There are tons of scams on the web and one in particular that I want you to be aware of.  I have a listing for a home that is for sale.  This listing has shown up on Craigslist as being for rent.  The scammers have poached the listing pictures and written up an ad on Craigslist.  When you email them for more information you recieve the following response...

"Thanks for your interest and inquiries about my house. Yes the house is still available for rent and we are looking for a responsible person/family to occupy and maintain the house now that we are not around. Myself and husband just traveled to West Africa on an evangelical mission involving in several projects like TEACHING AND  EDUCATING CHILDREN ABOUT CHRIST, ORPHANAGE HOMES and so on..,Here is the site (http://www.missionfinder.org/educators.html) for more details, the program is taking place in three major countries in Europe, Africa, UK . We will be away for 2 to 3 years or more that is why we have made up my mind to put up my house for rent to whom ever that will take good care of it.  However, our initial plan was to sell the house  but it was not successful because the Realtor raised the price which made it difficult for me to sell before leaving the States so never mind if you see the for sale sign in front of the house, It has already been taken off the market as for sale so there is no need to contact any Realtor. The house is available for both long term and short term so long as you are ready to maintain the house...  How soon do you intend to move in?

Note: I would like you to drive-by the house to view the  exterior and neighborhood  of the house . Get back to me asap so i can forward you the rent questionnaire i will want you to fill

Regards."

The email is then signed with the property owners name so if you checked the tax records it would appear you are dealing with the real owner.  Unfortunately you are not.  They have even tried to explain away why there is a for sale sign in the front yard!  If you fill out the rental questionaire, you have just given away your identity!  If you send them money, it is gone.  I have recieved at least 6 calls from interested renters who drove by and were suspicious enough to call the number on my sign and get more information.  Lucky for them they did, they avoided falling prey to a scam.  I have no way of knowing who else may seen the ad and sent their information and/or money.  Please be careful out there and do your research before sending anyone money or your personal information.  It is sad that we all have to be on our guard but unfortunately we do.

El Cajon Real Estate Market Report - February 2012

It is time once again to take a look at the El Cajon Real Estate Market. I have included information about the homes currently on the market, the pending listings and the homes that sold. These numbers are for single family detached homes.  The information is broken down by the three El Cajon zip codes.

92019
There are currently 62 Active real estate listings in El Cajon (92019) . They range from $199,900 for 2 bedroom, 1 bathroom, 1011 square feet to $1,799,000 for a 3 bedroom, 4 bathroom, 4702 square feet.

40 properties are pending, (currently in escrow).

15 properties sold (closed escrow) in February. They ranged from $170,000 for a 3 bedroom, 1 bathroom, 1084 square feet to $610,000 for 3 bedrooms, 3 bathrooms, 2802 square feet. The average time on the market was 104 days.

92020
There are currently 65 Active real estate listings in El Cajon (92020) . They range from $139,000 for 2 bedroom, 1 bathroom, 720 square feet to $890,000 for a 4 bedroom, 6 bathroom, 4241 square feet.

37 properties are pending, (currently in escrow).

19 properties sold (closed escrow) in February. They ranged from $160,000 for a 3 bedroom, 2 bathroom, 1218 square feet to $590,000 for 4 bedrooms, 3 bathrooms, 2827 square feet. The average time on the market was 54 days.

92021
There are currently 72 Active real estate listings in El Cajon (92021) . They range from $157,900 for 2 bedroom, 1 bathroom, 664 square feet to $1,550,000 for a 3 bedroom, 3 bathroom, 5500 square feet.

56 properties are pending, (currently in escrow).

34 properties sold (closed escrow) in February. They ranged from $159,000 for a 2 bedroom, 1 bathroom, 748 square feet to $625,000 for 5 bedrooms, 4 bathrooms, 3369 square feet. The average time on the market was 67 days.

Alpine Real Estate Market Report - February 2012

It is time once again to look at what happened in the Alpine Real Estate Market. I have included information about the homes currently on the market, the pending listings and the homes that sold. These numbers are for single family detached homes.
There are currently 69 Active real estate listings in Alpine . They range from $169,900 for 2 bedroom, 2 bathroom, 740 square feet to $2,595,000 for a 6 bedroom, 7 bathroom, 6444 square feet.

25 properties are pending, (currently in escrow).

17 properties sold (closed escrow) in February. They ranged from $299,900 for a 3 bedroom, 2 bathroom, 1472 square feet to $575,000 for 5 bedrooms, 4 bathrooms, 3600 square feet. The average time on the market was 62 days.

Jamul Real Estate Market Report - February 2012

Even though Febrary was 1 day longer than it usually is, it sure did go quickly! It is time once again to look at what happened in the Jamul Real Estate Market. I have included information about the homes currently on the market, the pending listings and the homes that sold. These numbers are for single family detached homes.

There are currently only 31 Active listings in Jamul. They range from $199,000 for 1 bedroom, 1 bathroom, 640 square feet to $1,250,000 for a 2 bedroom, 3 bathroom, 4360 square feet, (yes the number of bedrooms is correct with 2).

14 properties are pending, (currently in escrow).

9 properties sold (closed escrow) in February. They ranged from $165,000 for a 2 bedroom, 2 bathroom, 1440 square feet to $800,000 for 4 bedrooms, 5 bathrooms, 5256 square feet. The average time on the market was 92 days.

4 Bedroom Fletcher Hills Home for Sale

Fletcher Hills Home for sale. Call me for all the details and to arrange a time to view.

The Perfect Real Estate Storm

There is a perfect storm brewing in real estate.  There have been hints of it's existence in the news and I can definitely feel it's rumbling.  Just as you can sense when it is about to rain I can sense this real estate storm churning just beneath the surface.  When this storm comes to fruition it will not bring destruction however, it is bringing opportunity.  What has started is the opportunity of a life time for those who are willing to seize it.

There are numerous factors contributing to this perfect real estate storm.  We are seeing historically low interest rates of under 4%.  This is historic!  We have never seen rates this low before and it is projected that the rates will stay low through 2013.  The second factor in the storm is that prices of homes have dropped by nearly half from the peak.  This means that home affordability is at a high.  Here in San Diego home affordability is at 62%.  These means that 62% of San Diegans can afford to buy a home.  In 2007 the home affordability level was a mere 10%.  This is a huge increase in the number of people who can afford to buy a home.

The economy appears to to be improving.  One of the biggest indicators is the unemployment rate.  The unemployment rate here is 8.2%, it has been decreasing for the last 2 years.  In 2011 25,000 new jobs were added.  This is a great indication that our economy is improving and will only add to the storm.

The next huge factor contributing to the perfect real estate storm is the inventory of homes for sale.  For the last few years the "shadow inventory" has been described as a black cloud hanging over real estate, preventing it's recovery and threatening a double dip.  It is not looking like all the doom and gloom was warranted.  Yes, the banks have a lot of inventory but they are not going to flood the market with new listings.  They are considering many options such as bulk sales to investors, principle write downs, shared equity programs, and renting the properties.  It is unlikely that all of the bank shadow inventory will hit the real estate market causing a flood.  The other factor effecting inventory is the lack of new homes that were recently built.  When the economy crashed the builders stopped building.  Last year in San Diego there were only 879 new homes built.  This does not nearly cover the new housing needed to compensate for the rise in our population.  It is estimated that 10,000 new homes are needed each year.  The biggest complaint I hear from fellow agents and buyers alike is that there are not enough houses on the market!

Another factor is the pent up demand of buyers.  For the last five years or so, buyers have been sitting on the fence.  Those that otherwise may have purchased were frozen with fear of the economy and the real estate market.  We basically have 5 years of buyers stored up and ready to buy.  Rents are going up.  In many cases now it is cheaper to own a home than to rent one!  The divorce rate goes down in a poor economy since people can not afford to divorce.  This is another group of pent up buyers.  They are not going to stay married for long once they can afford to get a divorce.  All these pent up buyers are beginning to come off the fence realizing now is the time to buy.  This trend is going to become stronger.

When we look at all the factors contributing to the perfect real estate storm, it is no wonder that the buyers are beginning to move.  I am currently working with investors who are already taking advantage of this.  They are buying multiple properties.  They are setting themselves up to be in a perfect position once the storm ends.  Remember at the height of the market when little track homes were selling at over $400,000 and you thought to yourself "I should have bought early" or maybe I "should have picked up a rental property"?  You were kicking yourself because you were thinking of the profit that you could have made or the money you could have saved.  Well, the forward thinking people have started buying again.  Ask yourself, do you want to be kicking yourself again in the future or do you want to take advantage of the opportunity created by this perfect real estate storm?

What Does "Contingent Status" Mean?

One of the most commonly asked questions I get from people just starting the home buying process is "What does contingent in the status of a listing mean?"  What buyers need to understand is that there is a difference between the active and contingent statuses.  When a listing is active the seller is actively looking for offers.  There are no accepted offers on the property and the property is still available. 

The contingent status is a relatively new status that was created in response to the increase in the number of short sales.  Short sales have an additional step in the negotiation process.  They require the short sale lender to approve the sale and the offer in order to move forward.  There is a period of time when the buyer and seller have agreed to terms and the file is sent to the short sale lender for their approval.  During this time the property moves into contingent status.  When you see contingent it means the seller has accepted an offer on the property and they are waiting for the bank to approve, counter or reject the offer.

The contingent status is meant to alert agents and buyers that there are offers on the property and one offer has been has been accepted by the seller and submitted to the short sale lender for review.  Before there was a contingent status, buyers and their agents were viewing and submitting offers on these short sales not knowing that there was already an accepted offer.  This was very frustrating. The property will stay in the contingent status until the short sale lender makes a decision.  If the lender accepts the offer, the property will then move into a pending status (in escrow).  If the short sale lender does not accept the offer or through negotiations an agreement can not be reached, the property will move back into the active status. 

I hope this helps.  Do you have any other questions?  Feel free to let me know if you do.  I am here to help.

Are You Ready For Your Super Bowl Party?

See us in the Big Game For the first time in the 40-year history of our brand, we will air a commercial during the most watched television event of the year. The Super Bowl has a unique place in American television: when the commercials air, viewers actually start paying more attention to the broadcast. Did you know that over 111 million people are expected to watch this year's Super Bowl, and I hope you will be watching and see CENTURY 21 Agents right in the middle of it! On February 5th, tune in to your local NBC station to watch as CENTURY 21 Real Estate takes a new place in history! We are sponsoring a full half-hour segment in pre-game, and we air 11 pre-game commercials during that day. And of course, as our finale, our special :30 Super Bowl commercial will air in the 3rd quarter of the game itself. Don't forget to watch and vote for us! You'll see exactly how to cast your vote for your favorite commercial on Super Bowl Sunday at century21.com. Sideline Starters (click link to find recipes) Every great party needs great food. Here are just a few highly rated recipes that would make a great addition to your Big Game Bash. Seven Layer Taco Dip Super Nachos Super Bread Bowls Super Sliders Hot Wings Recipes provided by foodnetwork.com and allrecipes.com. Bring The Games Home Here are a few games ideas from purpletrail.com. Pass the Lucky Cup Super Bowl Game: This is yet another classic game for a perfect Super Bowl party. It is simple and a great way to make some cash for both you and your guests. In this game the person who holds the cup makes the rules for the game. The owner of the cup says a word like “touch down”, “first Down” or “50-yard line”. Then the cup is passed and each guest is supposed to add a dollar to the cup. The next time there is a touch down in the Super Bowl game, the person holding the cup collects the money inside. Then the game starts all over again. The money collected through the game can also be donated to the local food bank or charity, of course with your guests consent. Drinking game – Take a Shot: This game for adults is a fun activity to a certain point. Being the host, you will need to be careful with this game though if you want you and your guests to see the end of the game. To be on the safe side, try picking light drinks for this game. For this game, you line up fans of each team and force them to drink for every turnover, sack, fumble or dropped pass. As a variation you can also try picking a favorite play or call and every time your team is called on, you have to take a drink. Another variation is that each time the commentator says, “Did you see that” everyone has to drink. Rate the Super Bowl Commercial Game: Each year the Super Bowl commercials get more wild and crazy. A terrific game is to pass out “commercial score cards,” and have your guests rate each of the big commercials on a 1-5 star scale. After the game, tally up the winners. Pop The Balloon Game: This is an easy to play game that would be great after the Super Bowl is over. You pick team colors for balloons, and in each balloon you put a slip of paper. On the slips you can write something like “penalty”, “Personal Foul” etc. and on one of the slips write the score of the winning team. Then ask your guests to pop the balloons and the guest who gets the “score slip” turns out to be the winner of the game. For prizes you can hand out silly gifts like a toy football or pom pom. your guests are sure to have a hearty laugh playing this kiddie game. Keep the Kids engaged: If kids are going to be a part of your celebration then it would be a good idea to make some arrangements for them as well. A good way would be to allot them their own “Kids zone”, away from the grown up crowd. You can arrange for some nice movies, maybe a foosball table, easy crafts or even puzzles. Here are some game ideas for the kids at your party. You can take help of an adult family member who is not interested in the Super Bowl game and can help your keep the kids engaged with the games listed below: Monkey in the Middle Game: This is the old time favorite Super Bowl party game for young party-goers and will keep them entertained during the game. Ask the kids to make a circle. Have one child stand in the middle of the circle and hand out a football to one of the kids making up the circle. The child standing in the middle of the circle is the designated “monkey”. Players in the circle toss the football around and across the circle, trying to keep it out of the hands of the “monkey in the middle”. If the “monkey” catches the ball, they swap places with the person who threw the ball. Super Bowl Laugh Game: This is a fun game that all your little guests will love. While sending out the invitations, you can mention a line stating that all kids are supposed to come with a football joke. Have 2 to 3 judges who can rate the football or Super bowl jokes. The one who gets the best rating is the winner and gets a football for a prize. Video game: The most easy to setup game for a Super Bowl party for little guests would be arranging for a video game station on a separate television. You can set up games like “Madden” or “NFL Blitz” for guests to play during the big game. A Super Bowl party is one of the most fun, laid back parties one can ever attend. But the most important game on Super Bowl Sunday is “Hide the Keys Game”. In this game you need to hide the keys from your drunk friends so they don’t get out on the road. This is very important if drinks are going to be a part of your Super Bowl celebration. Have a Great Super Bowl party!

Alpine Real Estate Market Report - January 2012

Here are the real estate statistics for Alpine for the month of January 2012.  I have included the active, pending and sold single family homes.  If you would like more information about condos or a different area, please feel free to give me a call. 

There are currently 65 active real estate listings in Alpine ranging fro $111,900 for 2 bedrooms, 1 bathroom, 768 square feet to $2,595,000 for 6 bedrooms, 7 bathrooms, 6444 square feet.

26 properties are pending (currently in escrow).

10 properties sold (closed escrow) in January, ranging from $260,000 for 3 bedroom, 2 bathroom, 1818 square feet to $659,000 for 4 bedroom, 3 bathroom, 3562 square feet.  The average time on the market was 64 days.

Want to see how this compared to last month?  Alpine Real Estate Monthly Comparison

El Cajon Real Estate Market Report - January 2012

Here are the real estate stats for El Cajon. I have included the active, pending and sold numbers for all 3 of the El Cajon zip codes.  This is for single family detached homes only.  If you would like information about condos or a different area, please feel free to give me a call.  These are good to know if you are considering buying or selling a home in El Cajon.

92019
There are currently 66 active listings in El Cajon zip 92019 ranging from $189,900 for 3 bedrooms, 1 bathrooms, 1084 square feet to $1,799,000 for 3 bedrooms, 4 bathrooms, 4702 square feet.

37 properties are pending (currently in escrow).

20 properties sold (closed escrow) in January. Ranging from $130,000 for 2 bedroom, 1 bathroom, 1096 square feet to $635,000 for 4 bedroom, 4 bathroom, 3706 square feet. The average time on the market was 93 days.

92020
There are currently 65 active listings in El Cajon zip code 92020 ranging from $165,000 for 2 bedrooms, 1 bathrooms, 792 square feet to $820,000 for 6 bedrooms, 4 bathrooms, 4966 square feet.

44 properties are pending (currently in escrow).

19 properties sold (closed escrow) in January. Ranging from $125,000 for 2 bedroom, 1 bathroom, 1051 square feet to $570,000 for 4 bedroom, 3 bathroom, 2800 square feet. The average time on the market was 75 days.

92021
There are currently 75 active listings in El Cajon zip code 92021 ranging from $128,500 for 2 bedrooms, 1 bathrooms, 728 square feet to $1,550,000 for 3 bedrooms, 3 bathrooms, 5500 square feet.

63 properties are pending (currently in escrow).

23 properties sold (closed escrow) in January. Ranging from $130,000 for 2 bedroom, 1 bathroom, 520 square feet to $500,000 for 4 bedroom, 4 bathroom, 3048 square feet. The average time on the market was 122 days.

Want to see how this compared to last month? El Cajon Real Estate Monthy Comparison

Jamul Real Estate Market Report - January 2012

Today is the first of February so you know what that means... it is time for the monthly real estate reoprts.  Here are the stats for Jamul.  I have included the active, pending and sold numbers.  These are good to know if you are considering buying or selling a home in Jamul.

There are currentlyonly 35 active active listings in Jamul ranging from $195,000 for 2 bedrooms, 2 bathrooms, 792 square feet to $1,250,000 for 2 bedrooms, 3 bathrooms, 4360 square feet.

15 properties are pending (currently in escrow).

5 properties sold (closed escrow) in January.  Ranging from $300,000 for 5 bedroom, 5 bathroom, 4052 square feet to $710,000 for 4 bedroom, 3 bathroom, 3362 square feet.  The average time on the market was 197 days.

Want to see how this compared to last month? Jamul Real Estate Monthly Comparison