Additionally, the recent announcements made by the Obama administration regarding the proposed changes to Fannie Mae and Freddie Mac will certainly have an effect on interest rates as underwriting standards become even tighter, down payment requirements go higher and interest rates go up. In the short term, expect that before the end of the year, the highest conforming loan limit is lowered from its current $729,750 loan amount down to $625,000. This will create downward pressure on pricing as sellers scramble to compete with price reductions, foreclosures, and short sales. To learn more about the coming changes visit www.socalistings.com or www.socalupdates.com.
Curiously, list prices may be higher than a year ago though properties only sell when either the list price is lowered or the seller accepts an offer at or below the market price.
This doesn't mean that you should hold off if you want to buy or sell a home in Redondo Beach but does mean that you have to be more careful than ever on either side of the transaction. Here's some tips to buy or sell Real Estate in Redondo Beach.
If you've been reading this blog, you know that whether you want to buy or sell a home in Redondo Beach, we are going to advise you to sign up for our FREE MARKET SNAPSHOT and then call 310 975 5139 for a customized Comparative Market Analysis (CMA).
If you want to sell a home in Redondo Beach, here's some things to consider:
Lenders put condos (including townhouses, either attached or detached) under considerably more scrutiny than ever before. It is common for the lender to require a HOA certification. This is a questionnaire that needs to be filled out by the condo association management company that will ask questions such as how many units are rented, are there special assessments or litigation, does more than one entity own more than a certain amount, how many owners are delinquent in their payments, etc. What has become more challenging is that lenders also want to see budgets and reserves. This has placed many of the self managed and inactive associations at a disadvantage.
Further compounding the problem is that FHA "spot approvals" for condos and townhouses are not possible anymore. The spot approvals allowed for one unit to be approved. That is no longer an option and now the entire project has to be approved by FHA. This can be a complicated process and no one wants to take their home off the market waiting to see if FHA will grant approval. As a result, most condos and townhouses have had to attract 20% down buyers. The 20% down buyers in the market have pushed prices down because they have the leverage. The only bright spot in this standoff is that some of the credit unions are offering portfolio products that will allow for non FHA no PMI loans with as little as 5% down for loan amounts under $417,000 and 10% down for loans above $417,000.
Condo Seller Tip: either you or your agent should research the strength of your HOA and make sure everything is in line. Also, your agent should arrange for some sort of special financing for the non 20% down conventional buyers. Remember, that when we refer to "condos", this includes attached and detached townhouses and townhomes as well.
If you want to sell a single family home, we highly recommend that you follow the real estate practice which is more common in Northern California: get a home inspection and termite report done before you open escrow. Find out what the buyer will first and do the repairs. Then share the report with the buyers before they make an offer. With the number of first time buyers in the market, leaks, roof repairs, and termites can kill a deal. For some reason, those are the big three that scare everyone off.
For all sellers, we strongly advise that you stage your home so it shows its best and price it to sell from the first day on the market. We have seen a direct correlation between list price, final selling and price and days on the market. Buyers have more data at their disposal than ever before and I can absolutely assure you that no one will pay one cent more than current fair market value no matter how special that home is to the seller (sorry). The good news is that there are far more buyers in the market than the national news media may lead you to believe. Desirable homes that are priced right are selling and often with multiple offers. For additional seller tips and to learn more about our special offers for sellers CLICK HERE.
The most important first step is to get a pre-approval letter from a direct lender. By direct lender we are referring to Banks, Credit Unions, and Mortgage Bankers. Avoid the mortgage broker who can not fund your loan and has to go to a third party to obtain loan approval. The mortgage broker will undoubtedly have additional fees which you may not be fully cognizant of until you get your final closing statement (although they are supposed to disclose these fees to you). No seller who is represented by a good agent will consider your offer unless it is accompanied by a strong pre-approval letter (not pre-qual), and "proof of funds" to close. Additionally, no experienced buyer's agent will work with you until they see that you are financially able to perform. Remember - agents only get paid when a transaction closes escrow.
The best second step you can take is to sign up for our FREE MARKET SNAPSHOT. This interactive online report goes beyond standard CMAs and provides comprehensive data regarding recent sales, price reductions, days on market, neighborhood statistics and more.
Then comes the fun part - actually going out and looking at homes for sale. While internet search and the proliferation of IDX on agents websites has made the process somewhat easier, and yes a picture is worth a thousand words, you still have to get out and look at homes for sale. There is no substitute for actually walking the property.
Buyer Tip: Look for "damaged goods" and "battered histories". This means properties that have fallen out of escrow - even multiple times, homes on the market longer than 90 days or more, and numerous price reductions. There are very motivated sellers in this group. A common mistake that buyers make is thinking the best deals are the houses on the market the shortest period of time. Wrong. Sellers are less likely to drop the price when the home has been on the market for fewer days. Days on Market, DOM, is not like fine wine. The longer the home is wilting on the market does not add to the value.
Here's why it's a great time to buy right now. Inventory is high, sellers are motivated, interest rates are going up, and loan underwriting is going to become stricter. Remember, no one rings a bell when the market hits the bottom and yes its always possible that a better property comes on the market. But, if you are planning on being in the home for 5 years or longer, you will be very happy with our purchase when you look back.
For more home buying tips and to read about our closing cost credits for buyers CLICK HERE.
To Buy or Sell Redondo Beach Real Estate - make the right call. Ellis Posner 310 975 5139
www.socalistings.com and www.socalupdates.com. You can follow socalistings on Twitter or become a fan of socalistings on Facebook. Experience counts. Call Ellis Posner for "straight talk" on Real Estate and to buy or sell a home in Redondo Beach.