Top Ten Legal Mistakes Buyers Make

1. Not realizing that if you don't make a strong offer the seller may reject or not respond at all

2. Not realizing that if you don't make a strong offer, you may lose to a more highly motivated buyer

3. Not realizing that the seller has no obligation to keep your offer confidential

4. Not understanding when a contract becomes legally binding

5. Entering into an agreement without checking title, liens etc. to make sure that seller can close the escrow as scheduled

6. Not understanding the legal implications of loan and inspection contingencies, and other contractual provisions

7. Not obtaining a seller's disclosures

8. Not conducting your own inspections and investigations as the buyer

9. Not fully understanding the legal, tax, credit and other ramifications of homeownership, especially co-ownership

10. Not properly handling a claim for property defects discovered after close of escrow

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 Your calls are always welcome!

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Embracing the New Normal in Real Estate

As we are cautiously engaging the new reality of our housing economy, we need to pause and ponder some of the lessons we have learned over the past ten years so that we do not repeat the same mistakes.    Following are 10 lessons to keep in mind.

1.  The economy cannot recover without housing.

2.  Everyone needs shelter, but not everyone needs to own their shelter.

3.  High homeownership rates are important but they must be sustainable.

4.  Home prices go up and go DOWN.

5.  The process of purchasing /financing a home is now more complicated.

6.  Sound underwriting of mortgages is critical.

7.  Home equity should not be used for ordinary living expenses.

8.  Financial reserves for family, companies, and countries are necessary.

9.  Homeowners confidence in the economy is directly related to the value of their own homes.

10. The economy is global.

What is important is that we remember what happened as we prepare to write the future.  Most importantly, we should also have a sense of accomplishment that we endured these life lessons.

There are seasons in the weather: spring, summer, fall and winter.  So there are in economic cycles.  It is great to be at the thaw of winter and the budding of spring.

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 Your calls are always welcome!

Finally, It's Time to Buy a House!

Warren Buffett once said: "Be fearful when others are greedy, be greedy when others are fearful."  If you're not instinctively scared of the housing market, then you probably aren't afraid of tidal waves, global warming and other "might be's".

The fact that everyone is scared to dabble in housing makes it a close-to-perfect investment based on Mr. Buffett's principle. But buying real estate is a good long-term investment for many more reasons, some of which have only become apparent in recent weeks.

The most striking: Housing prices rose sharply from April to May. The S&P/Case-Shiller Index rose 2.2% in 20 of the nation's big cities. Prices shot up more than 3% in Chicago, Atlanta, San Francisco and Minneapolis. Even Detroit's housing market scored a gain, inching up by 0.4%.

It is now officially cheaper to buy in 100 metropolitan cities than it is to rent! In other words, if you can buy a home today, you can save the difference it would cost you to rent even if you stay in the home just five years. If you can buy a property and rent it, it is almost certain that the rent will cover the cost of the financing—and the property will appreciate.

Here's where the fear comes in. From 30% to 50% of existing mortgages in the U.S. market are underwater, depending on the estimate. That means many borrowers are trapped in their homes and loans. They either can keep paying and hope prices will improve or walk away, putting downward pressure on home prices.  But if you aren't planning to move out anytime soon and have job security, what's the problem?  Even if prices fall again or don't rise significantly, you will still own your own home and eventually it will be paid off.  You get to pay less taxes and no one can tell you what you can do to your own home or ask you to leave!

While there is plenty to be afraid of when it comes to home buying,  in the current investing climate, housing presents an attractive long-term investment that should hold steady or even have upside surprise in the short term.

Mr. Buffett would remind us that investments of any kind are not without risk. Each should be considered with the investor's time horizon and appetites. But he also has acknowledged that real estate is especially attractive when financing is cheap, there is pent-up demand and prices have been driven down by a spooked market. Put another way, it's time to be greedy.

Selling in Today's Market

As with many businesses, the world of real estate is often driven and operated quite differently than the general public views it.  For example,  a misconception that many  sellers have is that once they attract and secure a buyer with a signed contract,  the hard part is over.

The truth is that the real work and required skills emerge after the initial negotiations and the escrow is started.   Even with a cash buyer, there are steps that need to be handled properly and skillfully to bring the escrow to a successful close.  If the buyer is obtaining financing, the amount of steps that need to be navigated through increase significantly.

One mistake that a seller should avoid is accepting the highest offer without any consideration to the contractual terms of the agreement.  Another mistake  is not handling a multiple offer situation correctly.  This is when more than one buyer, sometimes several buyers, make an offer on the property at the same time.  While this can be an exciting process, it needs to be handled correctly so that the best offer is secured and  the seller does not leave themselves in a legally liable situation with the competing buyers.

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 Your calls are always welcome! 

Why Do I Need to Get PreQualified?

The answer to this question is simple.  No seller is going to consider your offer  without a pre-qualification or pre-approval letter unless your plan is to pay cash for the property.  If your plan is to pay all cash, the seller will require documentation that you have the funds available in your account.  A common response from a potential buyer when asked if they have been pre-qualified  is "I will get the pre-qualification letter if I find something I  like".

The problem with this attitude is that if the perfect house comes up, you probably won't get it.   Most listings that are priced right and show well in a desirable neighborhood are not only selling quickly but are also receiving multiple offers.  No rational seller is going to make an already pre-qualified buyer wait while you go out and get your loan approval. 

Most good Realtors will actually require that a buyer get pre-qualified before taking them out and showing them houses.  That is only fair since Realtors only get paid if they sell something.  Why should a Realtor spend countless hours with a buyer unless they are willing to show that they are able to perform? If you do manage to convince a good Realtor to take you out anyway, they probably won't call you first about the best deals that come up.  They will naturally call the other buyers they are working with who have taken this important first step.

With loans as complicated as they are these days, I see the most problems with the high income earners who think they are just fine.  Trust me, an hour spent with a lender, will save you countless hours of hassle and sometimes thousands of dollars as you move forward toward a purchase!

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 Your calls are always welcome!

Time to Buy or Rent?

With interest rates and prices at their lowest levels in years, deciding whether to buy now or continue to rent is a popular discussion.  While today's scenario is attractive,  potential buyers should be cautious about getting in over their heads by asking themselves the following questions:

1. How much can I afford to put down? Can I afford the monthly payment?

A mortgage down payment of 5 to 20 percent of the selling price is typical, but can vary depending on the situation. The size of the down payment will impact the monthly cost. Assess your financial health, determine how large of a down payment you can afford and consider if you can then afford the monthly cost.

2. What other debt do I have? Consider all of your current and expected financial obligations and ensure you are able to make all the payments. Aim to keep total rent or mortgage payments plus other credit obligations fewer than 35 to 40 percent of your monthly income. If you can’t keep payments below that, you may be better off renting for a while or searching for a more affordable home.

3. What is my credit score? Can I qualify for a good interest rate?

If your credit score is low, you may want to delay buying a home and take steps to raise your score.

4. How much will taxes, monthly maintenance or other fees cost? Owning a home means you will have to pay real estate taxes and other costs like insurance and maintenance. However, owning a home can bring tax savings at the end of the year. Remember to factor in these costs and incentives.

5. How many years will I stay here? Generally, the longer you plan to live in the home, the more it makes sense to buy. Over time, you can build equity and eventually even  pay off the mortgage and own it outright!

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 Your calls are always welcome!

Sellers Pay Buyers Closing Costs

Why should the seller pay a buyer's closing costs?  Sellers who already feel they have sacrificed enough equity due to current market conditions, are sometimes indignant that the buyer would also ask for help getting their loan.

The fact is that these days, the most popular loans are either USDA or VA with 100% financing or FHA requiring only a 3.5% down payment.  Many of these buyers simply do not have the additional funds necessary to pay the loan costs.

I suppose one could argue that Grandpa never paid anyone's closing costs and he had to put 20% down.  Perhaps one could also argue that the buyers of today need to have more skin in the game if we are ever going to have a robust housing economy again.  One may be correct in his opinion , but the current reality is that there may still be a "for sale"  sign on the front lawn a few months from now if you refuse to work with the buyer.

Something else to consider is that when  a seller agrees to pay the buyer's closing costs,  they are probably helping to turn a buyer who "wants" to buy a home into a buyer who is then "able" to buy a home.  Buyer closing costs are just one more item on a seller net sheet.  My advice is to examine the buyer's entire offer.  If the number at the bottom is attractive, ask your agent to mark your listing sold!

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415