Davies Top 5 Tips

Davies Top 5 Tips

Top 5 Tips for Ways to Finance a Real Estate Purchase

Conventional lenders: Banks, credit unions, mortgage companies, insurance companies, government agencies including Farmers Home Administration and Cal Vet are conventional lenders. Shop for the assortment of loans available that meet your needs.
Existing loans: Always read the note and trust deed documents to see if you can assume the existing loan, take property subject to the loan, or wrap around it.
Seller Financing: Many sellers like the potential interest they can get by carrying the financing for the buyer. They can take a blanket loan on several properties, take a first lien, second lien or other combinations of financing structured to meet both parties needs.
Private Loan: Individuals lenders with available cash to invest or pension plans looking to diversify are good sources of funds to purchase property. Some companies specialize in private loans to developers using their development land or other property as security.
Syndication: If the property is too big for one person, form a group of investors who have the resources to pay cash for the property or can borrow against other assets. The group could be the property owner or the lender or some combination of both. The syndicator could ask for an option to purchase the property in the future after the investors had achieved their goals.

Top 5 Tips for What to Know Before You Start House Shopping:

Get prequalified for a loan. This is for two reasons: a. You will get your finances in order and records current. b. You’ll learn what you can spend. It is critical that this is done before house hunting. In today’s tentative lending climate, you have a high risk of being turned down for a loan, especially with non-salaried or self-employed situations.
Confirm source of downpayment, and get control of it. You may need 20% or more of the price of the property, depending on the property type, loan, and your circumstances. You will also need to budget about 2% of the price of the property as a reserve for closing costs. If you plan to make improvements to the property like paint, landscaping, carpet or flooring, have an additional 2-10% or higher of the price of the property available. Having control of the funds means that you can personally control the release of the money to escrow, to the sellers, etc. If your downpayment source is a gift, discuss the method of the gift with your lender to determine how long you should hold it in your account and/or how you will need to document the gift.
Determine the price you are willing to pay for a property, both at time of purchase, and monthly expense. While this may seem obvious, with financially prudent buyers, the amount you are willing to part with every month is often less than you can actually qualify for with a lender.
Determine if you need to have additional income from the property to afford the ownership. Do you need tenants for the whole property? A paying roommate?
Watch the property market inventory. This can be an overwhelming experience. There may be over 2000 homes for sale at any given time in San Luis Obispo County. To focus your search, and stay grounded, get quite specific on your needs. Your REALTOR® can target the search and screen the listing inventory for you.

Top 5 Tips for Real Estate Shopping During the Holidays:

Present purchase offers rolled-up in stockings, hung on the front door, with a candy cane peeking out.
Leave a note from Santa and a ½-eaten cookie on the hearth at each house you view.
Ask your REALTOR® to get matching elf outfits for all of you for each property viewing outing.
Cheerfully sing carols while your REALTOR® opens the lockbox, even at vacant houses.
Ask the fireplace inspector if the chimney flue will fit a full-grown bearded man.

Top 5 Tips for Relieving Home Buyers' Anxiety

Work with your agent, in advance, to create a plan for your purchase, including financing, saving for downpayment, and timing. Start looking seriously at online real estate sites, only after you have a plan. Please note: these sites are seductive and encourage impulse.
Learn about the local real estate market. The real estate market is not national. There are some areas of our county that have maintained value better than others. The market also cycles, even locally.
Distress properties, like foreclosures and short sales, are not always identified in public marketing materials, and need more in-depth investigation by your agent. Even if you find a property that you like, you may be competing with many other buyers, some with all cash to entice the bank.
Determine now if you want to fix up a house or not. Many buyers are willing to make light cosmetic changes like painting, but if repairs are left to the buyer in a transaction and they are not prepared or skilled, the joy of a good deal can dissolve quickly.
Decide what is most important: a great deal or a great house. Remember that the right house will always be there when you are ready. And if faced with the opportunity, you might even be willing to pay more than asking price to get a great home.

Top 5 Ways to Make Your Move Easier to Your New Home

Don’t assume that the cleaning products that the past owner left behind at the house are actually what the bottle says.
Find out which Chinese food and pizza places are the best, and if they actually deliver to your new address.
Put a combination hanging lockbox on the house to make access easier for trusted cleaning and repair people, so you don’t have to leave your work to let them in or leave a key out. Then change the locks before you move in. Bonus tip for less drama: Make all locks be keyed to the same key.
Check your address on various on-line maps and search engines to see how it will look to your guests to your home, or if it is even findable online.
Find out where the closest hardware store is, before your moving day, and if they sell toilet plungers, sand bags, and a healthy variety of emergency sprinkler parts. Even better if they are open late.

Top 5 Tips for How to Be a Good Tenant in Any Market (Lessons From Our Real Estate Experience):

If you suspect termites, please call your landlord. Do not taste termite droppings on your kitchen counter, even if they look like poppy seeds.
It is best to not bring your parents to a meeting with the property manager when you have been served a notice about the noise level of your intimate activities.
If you have a large container of expired Metamucil, or any other laxative, do not pour it down your kitchen drain. What it does for humans, is exactly the opposite for plumbing and the plumber may laugh at you.
Please check inside oven before pre-heating it or broiling. If you smell a burning rodent, it might be your Ugg boots, baking.
Resist the temptation to sublet for a whole summer to a friend with three 5-ft Komodo dragons.

Top 5 Tips for Longevity in Business

Love what you do and believe in it.
Live intentionally. Set goals annually, both personally and professionally.
Invest in your market with resources. To advise clients in real estate, practice what you’re advocating by participating in the marketplace with your time and money.
Be organized. Take a fresh look at your systems periodically, tune up if needed with advice from experts.
Expect success and failure. Have a plan for each.

…Bonus Tip

6. Be thoughtful instead of “busy” and over-deliver anyway.

Top 5 Tips for How to Buy Real Estate in a Declining Market:

Determine when and if it will be best for your tax situation for you to buy real estate. Talk with your CPA about your tax liability and how it can be changed with owning real estate. In our experience, only about 40% or less of potential property buyers do this before buying property.
If this is will be your home, visualize your upcoming move, and determine when the timing is best for your personal circumstances. Consider factors like your health and upcoming plans for the year.
Shop for your loan in advance. You will be more credible as a buyer if you have the means to buy in place before shopping.
Watch “sold” real estate activity in the community. This is important for buyers to do because it can give an indication of the expectation that sellers (and their agent) will have when reviewing your offer.
Resist the temptation to grieve yesterday’s lost deal. You can only buy the property that is available today, not yesterday's and not tomorrow’s. If it seems like a good deal, it probably will look like an opportunity to many other buyers. Trust yourself and your agent, and act on it! Better to be the buyer in 1^stposition with back-up offers behind you, than competing in a pool of desperate multiple offers (yes, multiple offers happen in all market conditions).

Top 5 Tips for How to Enjoy the Holidays When Your Home is For Sale:

This is the one time of the year that you can put twinkling lights around your For Sale sign and your neighbors will not complain.
Ask your REALTOR® to dress up as Santa.
Have an Open House every day!
Ask to have offers presented in wrapped gifts and left under your tree.
When you go caroling, cleverly insert your customized property address website into the lyrics.

Top 5 Tips for Real Estate Owners in Financial Trouble:

Gather all documents that you have in your possession relating to the purchase and financing of the home. This will include your loan documents, deeds, purchase contract documents, disclosures. Get a box; put all of these in one place. This is a hassle, but well worth the effort. (You might be surprised how many lenders don’t even have all of the paperwork.)
Meet with your knowledgeable real estate advisor. Get a realistic market perspective on the value of your property as an opportunistic buyer would see it, whether you are considering selling or not. Also learn from your advisor about what to expect from the process of selling a home, as a distressed property or conventional sale and develop a strategy for resolution. This will vary, depending on your property location, market conditions, actual lender, number of loans on your property, whether you and your property can qualify for federal or lender modification programs, etc.
Make a detailed current financial statement of your assets and liabilities, income and expense.
Meet with tax and legal counsel regarding consequences of any action you might be considering, bring your documents listed above. This is very important, laws and precedents change frequently.
Finally, make a well-informed decision about your financial and real estate future given all of the information you have gathered. Questions to consider are: Under what conditions could you keep the home? Do emotional ties to your home outweigh cost to keep it? Who is affected by a short sale of your home? Are there moral or ethical issues you have with walking away from a debt or having one forgiven? Do your immediate financial needs take precedent over consequences of a short sale?

Top 5 Reasons College Students Should Buy Instead of Rent:

It’s a Better Education Than Any College Class- Owning real estate, based on our experience, prepares you for life and business better than anything else! There are wonderful social implications, economic implications, and risk evaluations that affect your future and the future of others. If you do not have a downpayment, you have the opportunity to learn about partnerships and give others the opportunity to assist you in your financial success. In addition, your chance to affect the composite of a neighborhood can lead to increases in value to others homes, as well as your real estate.
You Have Time- At 20 years old, you would have a 30-year mortgage paid off at 50 years old. And still have more living to do! In addition to equity buildup, you are also hedging yourself with likely long-term wealth building with increases in value. Over the past 30 years in California, property values have multiplied 5 times.
Interest Rates are Unbelievable: Seriously…4.5% for Owner Occupied financing? There was a day when rates were 16% and if they dropped below 12% everyone was going to borrow all they could! At your stage in life, having cash flow is important. With low interest expense, you have more cash available in general.
You Control Your Housing- No rental applications to complete, no landlord to call and wait for on a plumbing repair, no threat of a lease expiring and nowhere to go. Shall we mention the cost of moving every year of a 6 year average college career? What about your childhood dog or pet chinchilla that you want to bring from home.
No One else is doing it!- We know, you have friends and family members that got caught in the market slump. Fear of or actual financial ruin is keeping many would-be buyers away from opportunities today, leaving them for your picking. Learn from their failures, get a great real estate advisor with personal real estate experience, use a combination of your gut and good analysis, and start looking!

Top 5 Questions to Ask Your Real Estate Lender Before Filling Out a Loan Application:

How fast can you close a loan, if started today? – This time period directly relates to how fast you can close an escrow, thereby giving you a realistic perspective on your competitive edge over other buyers. Closing time is often as important as the price.
What type of loan, fixed-rate, adjustable, and FHA loans (among other types) would be best for my general situation? – The lender should take time to understand your income situation and what loan products are best tailored to you. For example, if you receive large bonuses annually, you may want the lowest monthly payment with opportunity to pay back a portion of the principal each year without penalty.
Help me understand the relationship of credit score to loan terms– The benefits of a good credit score vary depending on the type of asset that you are financing (car, house, etc.) and may change with the company you use as a lender.
What is keeping interest rates the lowest in 40 years? Will it continue? – Good lenders can answer this question with their experience and/or sound research. They should be able to offer you enough information to help you make a decision about your new loan with confidence.
Where do you get your money for lending? What are their conditions to you and I? The mortgage market has many levels. The actual source of the funds is the one that most directly affects consumers. Often this is an investor other than your lender representative. There are specific conditions that the investor will want met before they will authorize the release of funds to you. These may include specific conditions about the types of property in which they will invest loans, concerns about certain developments in the local area, specific methods of documenting the borrower’s financial situation, credit score limits, among others. Best to know these conditions up front, well before you have an accepted offer.

Top 5 Tips for Information a Home Seller Should Tell Their Real Estate Agent:

Everything you know about your property and neighborhood- Buyers want to trust sellers. When they are confident that they are getting full information about a property, they often have more confidence in (and place more value on) the property they are buying. Suspicion eats equity.
Property loan and financing details-Today’s loans are difficult and expensive to get for most buyers, even very qualified buyers or buyers with large down payments. In some cases you may be able to offer the buyer a chance to save thousands in the purchase of your property (giving your property added value) by having them assume your existing financing or by carrying the financing for a qualified buyer.
How property was acquired- (i.e. gift, exchange, 2^nd home, investment plan, etc.) This helps your broker address your investment goals, and determine a strategy for selling. Depending on circumstances, it may be best to not sell, but to look at other alternatives for keeping the property until you can sell.
Have you talked to financial and/or legal advisors about the consequences of the sale? Many sellers are not aware of the variety of large costs of selling a property, both in the short term and the long term. Getting a large tax bill from the IRS 6 months after a sale where you made no profit, is a rude surprise. In addition, if the property is part of your estate planning, there may be legal ramifications of disposing of the property.
Outside influences on your decision to sell- Most transactions have little to nothing to do with the actual property. Transactions happen because owner’s needs change. Knowing the human story behind the need to sell helps your broker market the property while achieving your personal objectives.