Bonnie Jessee’s Blog

Buying a Home with Resale Value

Home with Views ~ Homes with a panoramic of the mountains and lakes always sell at a premium above similar homes without the view here in the Sierras. However, if a view is important to you buy it mostly for your own pleasure and not as an investment. You may place a considerable dollar value on the view and future buyers will also.

Lot and Landscaping ~ Even though most real estate value is usually concentrated in the building, the lot is important as well. It should be as level as possible, considering the winter weather we endure. Assuming the property is in a typical neighborhood, such as Tahoe Donner the lot should be easy to access both in winter and summer.

Do not purchase an extensively landscaped property unless that is exactly what you desire. You would normally pay a premium for that maybe which you ought to be able to recover when you sell.  You can always improve the landscaping during your ownership by improving the grass and adding native plants.

House Size ~ In each residential neighborhood in the Sierras, houses will vary in size and rooms, as many of the homes are custom. If resale value is an important consideration you might consider not buying the largest in the neighborhood. When determining market value, the homes nearest to yours are most important. If most of the nearby houses are smaller than your house, they can act as a pull on appreciation.

On the other hand if you buy a medium house for the area the larger homes can help push up your value. Buying what you require in a more prestigious neighborhood may provide more financial reward than getting what you desire in a less desirable neighborhood.

Bedrooms and Bathrooms ~ Three and four bedroom houses are the most popular among homebuyers and if you can stay in that array you will have more potential buyers when it comes time to resell.

There should always be at least two bathrooms in a house, preferably at least two and a half. One bathroom with a place to wash up for day-to-day visitors, one for the master bedroom, and at least one to be shared by the other bedrooms.

The Kitchen ~ Family activity centers on the kitchen so this can be the most important room of the house. Open concept living is especially important to most buyers in our area – everyone wants to be ‘together’. The dining area should be located adjacent to the kitchen.

There should be easy access to the back yard and deck areas as there will be occasions for barbecues and outdoor entertaining. Also consider that it should be a short walk between the garages to the kitchen so hauling groceries in from the car does not become a horrendous chore.

Fireplaces ~ The only room where you absolutely have to have a fireplace is the family room. A fireplace in the other rooms may be nice and you pay extra for it and this is a good investment in this area.

Considering a Foreclosure Purchase?.The way it used to be:  Meet a new buyer client and when I asked them what they wanted in a home, they would say something like, “3 bedrooms, 2 baths, and a 2 car garage”. Things have assuredly changed. Most times these days my homebuyers say something like, “I want to buy a foreclosure.”   These comments mean I need go the extra mile to determine the reasoning – and help them thru the process with as little aggravation as possible.The New Client ~ when a new client recently insisted that he absolutely only wanted to see bank-owned homes because he didn’t want to pay what the current market was demanding in ‘standard sales’  I was anxious to expand his sphere of properties by dealing directly into this issue. While discussing the desire to buy a foreclosure or bank owned property, it was readily determined my buyer wanted the best bang for this money.  We should all note that primarily there is nothing intrinsic about a foreclosure that means that it’s a great deal or otherwise more desirable than a standard sale. Banks are just as likely to price their properties unrealistically as individual sellers, and individuals can be easier to negotiate with. Some of the homes on the market in his price range are bank-owned homes, so we do need to be prepared for what those transactions will look like and for you to be well qualified and ‘show’ well to a bank-seller. The Getting Started Phase ~ I started briefing my client on what to expect if he went the foreclosure route, which about 50 percent of my current clients do, looking for that great deal. I informed him not be outraged if he encountered multiple offers, long delays in responses from the bank, and a somewhat sketchy escrow due to the fact the bank insisted on using their own escrow company, rather than one as a local I am familiar with. His thoughts are that the banks can’t wait to unload these ‘toxic assets’.Next Step ~ A most important aspect of buying a home from the bank is to immediately understand that this is not a logical individual you are dealing with. This is an institution and each decision runs through an inefficient administration and involves people whose motivations are not as logical or obvious as with an individual seller. So consider that there are five houses for sale in one neighborhood – three are bank owned and two are private sellers.  Due to the fact the bank owned homes are in the same area and for sale, the private sellers are going to price their properties accordingly.  When the time comes for potential repairs to be done and requests the repairs, do you really expect the bank to do as much as the private seller?And in order to keep things clear, out in the open, we again discussed the potential to purchase a bank owned or a private sale property.  After my coaching and his new understanding, the market became much more attractive to my buyers as he now would consider ALL homes for sale ~ not just foreclosures/bank owned properties..

Bank Owned Property Purchases  There can be a major difference between purchasing a home in a typical situation or home seller and a lender (REO=real estate owned). When dealing with a home seller your agent typically meets with the listing agent – face to face. Your negotiations are with a seller who has emotions and capable of making decisions. When attempting to purchase a bank owned property you are dealing with a group of people that have been designated to mitigate a lenders debt.

The entire process of purchasing a bank owned property will probably take about two months – a typical closing period even on a ‘regular’ purchase.

 Truckee Real EstateSimple Facts to Consider When Contemplating a Home Purchase Historically Home Ownership Builds EquitySome folks might not have the self discipline to set aside money each month to save and invest. In this case, a home is more than a shelter; it acts as an automatic savings account. Savings can occur in two ways thru home ownership – Primary and Secondary: First, each month a portion of your payment goes toward the principal to build equity in your home. In the early years of the mortgage, most of your payment goes toward interest. Over time, however, that turns around and your equity growth begins to accelerate. Second, U.S. home prices have always appreciated over the long term. Average appreciation on a home is, 5-6 percent annually, according to the National Association of Home Builders. Over time, history has shown that owning a home is a solid financial investment despite periodic market downturns.  Market Timing is Never PerfectNo one wants to purchase a home only to see its value decline. But should you wait to buy a home until prices bottom out? A quick web search will yield a number of articles and opinions for and against timing the real estate market, but beware of those in favor of market timing who also want to sell you how-to books – they don’t work! Many people who have tried to time the market miss out on the chance to build equity by waiting to buy until prices rise again. Market cycles only become clear in retrospect. In the midst of a market slowdown, it’s very difficult to predict when housing prices hit their low points. In addition, this trend line represents home prices at the national level, which may be very different than housing prices in the area in which you are searching. Extensive national indicators may be behind the market by weeks or month, meaning the actual price floor would not show up in reports until weeks or months later. The longer you own your home, the better chance you have of building wealth and protecting yourself from the market traditional ups and downs.  What does the Media Mean when they say THE REAL ESTATE MARKET?Most media reports about the housing market focus on national statistics such as sales volume and median home prices. The statement that all real estate is local is often repeated because of the fact it is true. I find it interesting to hear about the changes of the U.S. real estate market, but those reports really are only useful in the context of local real estate markets.  Financing is Favorable at the MomentBuyers are rightfully concerned about buying a home that will drop in value in the coming months. But buying a home is a long-term investment, and there is more to consider than the just the purchase price. Depending on the rate and the amount financed, the price of financing can easily exceed the price of the home. What’s more, the total cost of buying a home raises more than $70,000 when interest rates rise a single percentage point. When you’re looking for a bargain, don’t lose sight of the big picture. If you try to time the market to save a few thousand on the price of a home, you could end up with a higher monthly payment and total overall cost of home ownership. At the end of the day, your personal and family circumstances will determine when it’s the right time to buy a home.  At the same time, your local real estate professional can help you research and understand your local market and the types of homes available.

Since Truckee is experiencing short sales here and there I thought you might like to know more about exactly what a short sale is!With parts of our nation in a mortgage crisis and many homes heading for foreclosures, the so-called short sale has gained attractiveness. One might gain from a short sale purchase by getting a cut-rate price on a home. The tricks include minimizing your risk during a purchase of a short sale property.

The “short sale” is making a comeback after years of insignificance, due to a restoration of foreclosures that has reached notable scope. Short sales are transactions that occur to prevent outright foreclosure of property. Before the home goes on the auction block, the owner may be able to negotiate with the lender to sell the house, and the lender may forgive any remaining debt. Just as foreclosures offer rare buying opportunities, short sales can be a short path to a valuable property at a below market price.  Here are a few tips to help in that purchase:1. Hire a professional real estate agent who can assist you thru the process.  This is truly not a time for on the job learning.  Make certain your real estate agent has been involved in the buying or selling end of a short sale.  This is going to provide you with a strong negotiator who is not emotionally involved, however is working diligently on your behalf.

2. Be patient because it will take time to get answers from sellers, since every decision requires lender approval, and questions must go through numerous avenues of various departments and supervisors. Your patience may be rewarded in the end, so exercise it, and don’t try to put pressure on contacts within the banks that have the power to relocate your offer to the bottom of the file drawer.

3. Buyers must beware as buying a short sale property means that you may not have the opportunity to inspect and evaluate potential problems with the property. No matter what, get an inspection – do not necessarily wait to see if your offer is approved.  Most likely no concessions will be made; however, you may discover a problem that is a justifiable reason to remove your offer.  

4. Buy title insurance in conjunction with your escrow period. When you buy title insurance, the insurance company should do a comprehensive background check on the property. This will uncover any “clouds” on the title, such as liens, debts, or back taxes.

5. Not all short sales properties are good deals. A home is only a good “buy” if you get it for a price below local current values. Even if you get it at a discount from the original price, it still may be well above current market values.

If you’re a novice buyer, or are simply shopping for a home for yourself and your family, let your real estate agent know that you’re interested in short sales.   Most MLS systems now have a new category for either lender owned or short sale listings.

Mortgage Rates Fall to Lowest Level on RecordBonnie Jessee, ABR 530 412 3984 Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.  Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week. It was the lowest in the history of Freddie Mac’s survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago. Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans. Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day. The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac. Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent. The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac’s survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.  

Key Tactics for BuyersBonnie Jessee, Realtor530 412 3984 How Does One Determine Offer Pricing?   Work closely with your Realtor to learn as much about local market values as you can. Check out comparable properties; both asking prices and sales prices. Ask your Realtor to prepare a comparative market evaluation of the property. When market values are rising, there is a bit of guesswork involved in preparing an offer and offer pricing. You may consider offering a price close to asking (with the assistance and expertise of your Realtor) if the property is priced well.  It can be devastating to make a low ball offer only to be rejected rather than countered.Are Sellers Required to Inform Buyer of Other Offers?  Sellers are not legally obligated to disclose the terms of other offers to prospective buyers or the buyers Realtor.How Do I Confirm Facts?  Home inspections, seller disclosure requirements and the Realtors knowledge and experience will help. Disclosure laws vary by state, but in some states, the law requires the seller to complete a real estate transfer disclosure statement (California has such a document).A brief summary of the things you should expect to see in a disclosure form:In the kitchen — a range, oven, microwave, dishwasher, garbage disposal, trash compactor. Safety features such as burglar and fire alarms, smoke detectors, sprinklers, security gate, window screens and intercom. The presence of a TV antenna or satellite dish, carport or garage, automatic garage door opener, rain gutters, sump pump. Amenities such as a pool or spa, patio or deck, built-in barbeque and fireplaces. Type of heating, condition of electrical wiring, gas supply and presence of any external power source, such as solar panels. The type of water heater, water supply, sewer system or septic tank also should be disclosed. Sellers also are required to indicate any significant defects or malfunctions existing in the home’s major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, foundation, as well as the electrical and plumbing systems. The form also asks sellers to note the presence of environmental hazards (an NHD or Natural Hazards Disclosure should be part of your documents), walls or fences shared with adjoining landowners, any encroachments or easements, room additions or repairs made without or with the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property. People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions, as is applicable for any HOA. It is important to note that the simple idea of disclosing defects has broadened significantly in recent years. Also, the home inspection and home warranty industries have grown significantly to accommodate increased demand from buyers. Work with your Realtor about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.Are Contingencies Standard and What Are They?  Most purchase offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers’ ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. As a buyer, you could forfeit your deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase contract must include the seller’s responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.Do You Understand Negotiating?  There are several fundamental rules to negotiating successfully. One is do your research, in conjunction with your Real Estate Agent. Do not allow yourself get hurried into any decisions without the thought and consultation of your Real Estate Agent. The more you and your Real Estate Agent understand a seller’s motivation, the stronger a negotiating position you are in. For example, a seller who must move quickly due to a job transfer may be amenable to a lower price with a quick escrow. Other so-called “motivated sellers” include people going through a divorce or who have already purchased another home. Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Some real estate experts discourage making deliberate low offers. While such an offer can be presented, it can create an unpleasant situation regarding the sale and discourage the seller from negotiating at all thereby a rejection rather than a potentially workable counter offer.Happy Home Hunting!

Truckee Real Estate News MarchBeat The Spring RushBonnie Jessee 530 412 3984In a down market or an up market, it doesn’t matter because spring showers typically bring spring buyers, especially to resort areas such as Truckee and Lake Tahoe.If you wait for the seasonal melt you could join what could be a swarm of market knowledgeable buyers who have already educated themselves on local market and putting in for position. In many communities, an over-supply of homes for sale with reduced prices, foreclosures, auction sales and sellers shopping for short sale buyers, all make it an opportune time not to procrastinate. That is not the case in our area however.  While there are many great deals to be had, inventory hasn’t changed much since last season at this time. With interest rates at a record low and the affordability index nears a 5-year high; the first-time buyer, especially with the first time buyers tax credit in place for the next several months, this is a super time to buy!If you wait for prices to fall any more you could miss out on the current great local pricing. No one knows when the market will hit bottom until it begins a sustained upward turn and you can look back and actually see bottom. January saw a slight increase in this area, while less than 1% and increase it was!Buy a home because, for you, it’s the right thing to do for you and your family. Buy because it’s more affordable than renting or leasing, because you plan on staying put until it pays off, buy because it is a good fit for your lifestyle and your personal goals. In the more stable markets such as Truckee and Lake Tahoe, the upper end might continue to chill, however with record-low interest rates demand should stay relatively strong for well positioned and well priced properties. Call me today 530 412 3984!

Lake Tahoe Truckee Real Estate NewsBonnie Jessee 530 412 3984  THE HAZARDS OF TIMING THE MARKET Buyers who choose to wait until prices come down are also gambling that interest rates will hold steady or drop.  What is not readily understood in the impact interest rates can have on the real monthly home ownership costs.  Even with a 10 percent price drop is cancelled out by a 1 percent point increase in interest rates on a 30 year mortgage! CURRENT LENDING INFORMATION Today, loans under $417,000 are currently around 4.75% - with origination fees around .625%, depending on your down payment and credit profile. Loans for second homes and investment properties are seeing current interest rates of around 5.75% (under $417,000). These are incredible rates such as these have only occurred twice in the past 53 years – NOW and in 2003.  Interestingly enough these extreme lows both occurring within a five year period. BEST BUY OF THE WEEK  Enjoy all the amenities of Tahoe Donner in a secure, brand new property with three bedrooms, two and a half baths, full two car garage and tons of storage for $499,000! Fabulous location across from local market, swimming and golfing!    Have a great day!  Bonnie

Welcome to Bonnie Jessee’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Truckee.