If you have been waiting to refinance your current home today is the day.

Neither these rates nor the sale prices will remain down here much longer.  Some day soon the bills for “CHANGE” will come due and we’ll see the rates begin to rise.

Look at this AP article for more details.

Gilroy home values have already bounced off the bottom.  Likewise, Morgan Hill and Hollister homes have seen a balance in demand and supply.

Time for your co-workers, friends and family to make their move.

What do you think?

It happened again.  A seller in Morgan Hill had their home on the market.  One cold morning they went to turn up the heat and found their furnace had gone out.  The cost of the installed new furnace: $1,800!  While they were warm again their net proceeds from the sale just dropped by a cold, $1,800.

Water heaters, microwave ovens, compactors, ovens, disposals…they all have a functional life and then give up the ghost – without warning.  Those repair bills are aggravating and, unnecessary.

A Cool Solution: Home warranty policies are available for sellers as well as buyers.  For roughly $.73 a day you can cover all of your major appliances during your listing period.  Should something go out you only have to pay a set fee, usually around $55, and the warranty company will repair or replace your appliance for no additional cost.  Click here for more information.

The payment for this warranty can be from your net proceeds in escrow.  Additionally, if your home doesn’t sell some of the warranty companies won’t charge you anything.  So you just can’t lose.

Selling your home can be an anxious time but this little tip will keep your equity in your pocket and provide some peace of mind.

We all know home values have dropped over the last 3 years.  Will that slide continue?

Single family home values in Hollister dropped by 41.6% from 2007 to 2008.  In 2009 they fell another 17.4% . Townhomes values have likewise dropped: 54.3% from 2007 to 2008 and 25.5% from 2008 to 2009. 

The average sales price of Hollister homes in 2007 was $548,562.  In 2008 it was $320,419, and $264,601 the average sales price for 2009.

Townhome sales show a similar pattern: their average sales price was $339,780 in 2007, $155,354 in 2008, and $115,725 in 2009.

However, it appears that the value slide has hit bottom.  A closer look at 2009 average values suggests that we may have bottomed out in 9/09 and are beginning to see a rebound in both single family residence and townhome values.

Morgan Hill & Gilroy home and townhomes reflect a similar trend in values although the downward adjustments in value are more dramatic as you go south to Hollister.

(Data: MLSListings)

After looking at several Hollister homes I heard the frustrated buyer sigh:  ”I think we’re just going to wait to buy a home“.  I tried to reason with him regarding rising prices and the likely increase in home loan rates.  He was just too disappointed to hear anything right then.  So, this post is my therapy for today’s weary home buyers. 

Home loan rates WILL go up.  It’s only a matter of when will they start.  All of the attempts to stave off a sick economy cost money and will begin to push rates higher.  As they rise, ‘purchasing power’ drops:                      

Let’s say my buyer waits 6 months and the rates then are up .5%.  His $300,000 loan will cost $92 MORE each month than he could get today.  To qualify then he will have to earn $225 MORE per month for the same loan he could get now.  If his income hasn’t changed his purchasing power will drop by $17,150!

If the rates go up by 1.0% the payment will jump up by $192 per month for the same $300,000 loan he could have gotten today.  $192 PER MONTH!  Yikes!   His income will need to be $460 more per month to qualify for the same loan he could have gotten today.  With no change in income, his  purchasing power will drop by $32,800!

Postponing the purchase of your home doesn’t make cents.  Get a good night’s sleep and go back at it tomorrow.  Afterall, somebody is buying these homes.  Why not you?

Ah man! I’m getting

That was the approach some agents were taking earlier this year.  Many are still.  Finally, however, the banks have gotten wise to this ‘blue sky’ approach. 

I made an offer for a prospective buyer on a nice Ridgemark home in Hollister.  The listing agent informed me there were 4 other offers and 2 were considerably higher offers than ours.  Reluctantly the buyers did not want to try again on this home. 

What was fascinating however, was the bank countered that the offerees had to agree to pay for the amount over and above the appraised value when it came in.  I like that!  Finally, some intelligent approaches to this frenzy we’re seeing in the starter-priced homes.  If the accepted offer was, say, $350,000, but the appraisal came in at $325,000 the buyer would have to pay $25,000 over and above the appraisal.  Of course their loan amount is computed from the appraised value or sales price, whichever is lower. They would pay their down payment PLUS the amount over value.

Hopefully, more banks will begin handling the question of value up front in this manner rather than 3 weeks later when the other prospective buyers have moved on and the appraisal comes in low.

So, what do you think?  Will this smooth out the ‘offering’ process some?

I sat them down and shared what many homeowners have learned over the years.  Your accountant can tell you what your new tax liability will be if you buy that tempting home.  In most cases the amount  you will be required to pay in income tax will DROP because of the larger amount paid toward interest and taxes.  Some of us have figured that it is better to reduce our income tax withholding from our paychecks each payday rather than get our refund in a lump sum (with no earned interest) at the end of the year. 

Here is their example:  Sales Price: $650,000; New VA Loan: $591,800; Total Principal, Interest, Taxes and Insurance: $4,210; Income Tax Deduction at a 26% tax bracket: $898/mth; Net “House Payment” after income tax deduction: $3,312. 

Same home, same terms but a house payment that feels like $3,312.  That made the difference.  They will simply need to take a new W4 form to their employers and have them reduce their withholdings by $898 so they will have that much more to take-home each month.  While they still make the actual payment of $4,210 the additional take-home pay makes the leap in house payment more palitable. 

They will break even at the end of the year: they won’t owe much income tax nor will they get much of a refund.  HOWEVER, they will have received their refund during the year to help offset their new, higher payment. 

Everybody was happy and moved forward with what they really wanted to do. 

I love solving problems for people!  Have you done this yet?

This is what I deal with often – not in cars but Veteran’s Benefits.  Many so-called VA Lenders fail to ask one simple question of every Veteran. “Do you receive any disability pay from the VA?”  The failure to ask that question costs disabled Vets thousands of dollars unnecessarily.  

Let’s say a Vet buys a $300,000 home and uses their Eligibility for a no-down VA.  If that Vet  receives disability pay, he/she does NOT have to pay the “VA Funding Fee”.  A first time user of their VA Home Loan benefit has a Funding Fee of 2.15% of the VA Loan amount.  So, our $300,000 sales price and VA Loan amount would have a $6,450 Funding Fee as part of the Veteran’s costs.  HOWEVER, if the Lender asks that question and does the proper paperwork for the disabled Vet, the Veteran’s Administration will waive that $6,450 VA Funding Fee.  Good news for the 267,318 disabled CA vets (3,268,045 nationally).

“It’s who you know that makes all the difference in the world”.  That is true. But even if your Uncle Bob is an auto dealer, if he doesn’t know that your situation has benefits we have to tweak the slogan: “It’s not just who you know but what they know that counts”.  

Do you know of any such situations?  I’d love to hear from you.

‘Houston…the Eagle has landed’

Home values in San Jose, Morgan Hill, Gilroy, Hollister and San Juan Bautista “have landed” at the bottom of their value slide and are beginning to “lift off” that bottom.  We are not going to see these prices again for a very, very long time, if ever again. 

Here’s the affect of waiting to buy a home: A home listed today for $350,000 and goes up 5.0% in value will then be worth $367,500.  A buyer who waited and then buys this home will need $985 MORE CASH and $268/mth MORE INCOME to qualify for this same home. 

If the  interest rate is at 6.0% (vs. the 5.0% used above) when the buyer decides to purchase this increased-value-home, their income will need to be $843/mth. HIGHER to qualify!

Some prospective home buyers may be calling out: “Houston, we’ve got a problem“.  The erosion of their purchasing power may make them permanent renters. 

My crystal ball recommends that those who want to buy a home climb on board NOW while they can.  What does yours forcast?

     The question: “How much of a commission do you charge”? 

     The answer: “If your competing homes for sale are offering 2.5 or 3.0% to the selling office you should offer at least 3.0%.  The first sale you need to make is the Selling Agent’s interest in showing your home.  You want to do everything possible to encourage those agents to enthusiastically promote your home.  If you instruct me to collect a lower commission, half of which goes to the Selling Agent, they will see that lower commission when searching for homes to show their buyers.  We want to ENCOURAGE them to show your home.  A lower commission being offered by you while competing homes are offering more will be discouraging to them.

     “The home will sell itself – once the agent and their prospective buyers actually tour your home.  We just need to do all we can to make your home appealing to the prospective buyers AND their agent”.

This answer seems to resonate as a new thought with most sellers and typically the issue is settled.  Now!  If we could just find a buyer for this nice, upper-end home!  Anyone want a producing vineyard and nice home in the Spring Grove Area of Hollister?