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FAQsy Real Estate – Your Real Estate Partner

Making your dream home come true

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We often receive questions that buyers and sellers ask us for additional information. We update this FAQ site often with new questions and answers. If the answer to your question is not found here, there’s a short form at the bottom where you can ask a question and we will respond as soon as possible.

Q. What about the Real Estate Bubble Bursting?

A. According to economic indicators, it appears the housing market is in for a leveling off – at best. Interest rates keep going up – they’re unstoppable. People in the know are getting ready. Real estate investors such as Toll Bros. sold $441 million of their stock, Hovnanian sold $40 million of their stock. Even one the largest homebuilders in the U.S., Lennar Homes, is dumping their stock.

It will take months to reach the busting point – and that’s GOOD for you. It will give you time to re-orient your plans and prepare for the future. At one point, 1990’s, there was a similar situation …

Sellers can’t sell, can’t find qualified buyers, can’t get their price, and must come out of pocket to close – and most sellers can’t afford to do this. Also, sellers are faced with high commissions and no signs of coming down any time soon.

Buyers can’t get loans, can’t qualify, and money is tight. Lenders want big down payments and are contemplating doing away with the NO or 0 down payment, or the 100% financing. One reason is that foreclosures are on the rise and that means more homes on their books and that doesn’t make them look good.

A recent study by analysts at the Bear Stearns & Co. Inc. investment bank in New York says most bubbles share the same characteristics: A strong economy and a sense of prosperity leads to speculation which leads to price pressures and a rise in interest rates which can lead to the bubble bursting.

The analysts – Francois Trahan, Kurt D. Walters and Caroline S. Portny – believe that at least eight of the 10 characteristics of a bubble environment currently exist in America. But they are not surprised that few see it: “The idea that a financial disaster could occur at any moment is too far-fetched for individuals to imagine during times of such heightened exuberance.”

In today’s market:

When the bubble does burst, there is going to be a “vacuum” for at least 6 – 8 months … the sellers won’t be selling, and the buyers won’t be buying. How much of a correction is needed, 2, 5 or 10%, no one knows for sure.

Why? The sellers won’t be able to get their price and will have to go out of pocket in order to close. The buyers won’t be able to qualify because money will be tight. And nobody will like the appraisals.

Further, the sellers will hope that, by some miracle, everything will go back the way it was. It won’t.

Appraisers don’t know what to do. They can’t make the sellers and the lenders happy.

This time we have the most unique situation in history. In some areas HOME PRICES increased 600%, while SALARIES only increased 10%. And 70% of the existing mortgages are 100% financing, nothing down loans.

The advice on the street is that homeowners who do not have to sell, sit tight and wait it out or think about lowering the asking price or offer buyers incentives. For homebuyers look for lower priced homes in the outlined areas. That is, look for resale value, look for newer homes 3 – 4 bedrooms, 3 baths, 2200 – 2500 sq. ft. and large lots, homes around the $400,000 range and within a 50 mile radius of employment. It is much easier on the budget to manage to pay for an affordable home than a home that will cramp your life style and the possibilities of foreclosure. Commuting may be a problem, however that’s what car pools, van pools and mass transit is all about. Even in the worst scenario, in a period of 2, 3 or even 5 years new roads and alternatives will be developed.

Q. As a First Time Home Buyer, where do I start?

A. Get your credit report.
Clean up outstanding debts, check the last page of your credit report for any discrepancies, resolve them before you go any further.

Once your finances are in order, check for Home Buyer Assistance programs to help with the down payment and closing cost. These are offered by the state, county and city, some have requirements and restrictions.

Research and understand the loan process, the rates and terms. Check with a lender to determine how much the lender will loan you. Calculate monthly mortgage payment plus estimated monthly taxes plus monthly insurance and if any, monthly home owners association fees.

Make a list (wish list) of amenities that you want and prepare a scorecard of homes to be viewed.

View homes on this site or the MLS.

Check with a local Realtor for properties that you want to view. Once you have viewed a few homes, you’ll have a better understanding of the home buying process. (How much money = How much home)

Q. I am interested in selling my home, why should I pick you as my listing agent?

A. We offer the same options and services as any Realtor except we charge a low commission fee of 3.95%. This includes the buyers agent commission as well.

We are a full service agency, licensed Real Estate Professionals and have an exclusive marketing plan that attracts approved home buyers.

We advertise in local newspapers, San Ramon Valley Review magazine and we advertise on the internet on several websites that will be seen by thousands.

We do all the paperwork and follow through on every detail and we assist you in how to stage your home for best results.

We supply all the tools, for sale and open house signs, lock box, put your home on the MLS and colorful flyers.

You will save thousands without having to pay a 5-6% commission.

Q. How do I get the real scoop on homes I am looking at?

A. Home inspections, seller disclosure requirements and the agent’s 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. Here is a summary of the things you could 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, walls or fences shared with adjoining landowners, any encroachments or easements, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property.

Also look for, or ask about, settling, sliding or soil problems, flooding or drainage problems and any major damage resulting from earthquakes, floods or landslides.

People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions.

It’s important to note that the simple idea of disclosing defects has broadened significantly in recent years. Many jurisdictions have their own mandated disclosure forms as do many brokers and agents. Also, the home inspection and home warranty industries have grown significantly to accommodate increased demand from cautious buyers. Be sure to ask questions about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.

Q. What’s the difference between market value and appraised value?

A. Appraised value is a certified appraiser’s opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 to $300.

Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker.

Q. What are the standard ways of finding out what a house is valued at?

A. A comparative market analysis and an appraisal are the standard ways consumers, lenders and realty agents determined what a home is worth.

Your real estate agent will be happy to provide a comparative market analysis, an informal estimate of value based on comparable sales in the neighborhood. You also can research “the comps” yourself by checking on recent sales in public records. Be sure that you are researching properties that are similar in size, construction and location.

This information is not only available at your local recorder’s or assessor’s office but also through private companies and on the Internet.

An appraisal, which generally cost $300 to $400 to perform, is a certified appraiser’s opinion of the value of a home at any given time. Appraisers review numerous factors including recent comparable sales, location, square footage and construction quality.

Q. Is it important to have a home inspected?

A. We always recommend home inspections. Each home has characteristics of its own, some may be considered to be problems to one buyer and not to another. Sellers are required to provide property disclosures for the buyer of their home, but there may be issues developing that they know nothing about. Inspections usually take about 2-3 hours of time, and are valuable not only from the aspect of diagnosing defects but also from the educational value you gain from learning about the home you wish to buy. It is also good to learn what maintenance needs to be done to keep problems from developing in the home. Inspections which are most frequently done include (but are certainly not limited to): general building inspection (covers structure, electrical, plumbing, and basic heating systems), septic systems, wells, radon (both air quality and water levels), pest, lead, water quality. A developing area of concern pertains to mold. There are inspections available for this, and you should consult your home inspector with questions and concern about mold.

Q. How do I determine the type of home I should be looking for?

A. Types Of Homes You Want To Buy

The least expensive house in an upscale neighborhood.
On a golf course. The views are great. Some people love it, some don’t.
A house at the end of the block or a cul-de-sac. You’ll get less traffic.
Backed up to land that is zoned residential, or a forest, or water.
In a neighborhood that puts your kid in the best school.
Reasonably close to fire departments and hospitals.
Reasonably close to the grocery store or work.
No traffic or logistics problems getting in and out of your street.
High ceilings, large kitchen, walk in closets, office (higher resale value.)
At least a 2 car garage, 3 is preferable if you can afford it.
Has a paved brick driveway. Much nicer than standard blacktop.
Newer home, upgraded appliances, higher efficiency A/C, good insulation.
Has a nice pool in good condition. Make sure it’s fenced in.
Energy efficient home with the highest A/C SEER rating, insulation, etc.

Homes To Avoid

Backed up to a shopping center or land that is zoned for business.
Backed up to a street with lots of traffic. You’ll hear it at night.
Houses that have any kind of flat roof, for example on a room addition.
The biggest, most expensive house on the block.
Next door to a renter. Renters treat the house and yard like crap.
A house with chipped paint, or a damaged roof.
Avoid any house that you did not have a home inspection firm review.
In an area that puts your kid in a bad school, or far from their school.
In a noisy area like an airport or other industrial area.
In a high crime area, that you drive through would have to get home.
In a neighborhood with high homeowners association maintenance fees.
In an area prone to flooding when it rains. Visit the house when it’s raining.
A house with only one bathroom. It’s very difficult to resell.
Neighborhoods with no code enforcement: boats, commercial vans, etc.
A house with no central air conditioning, or central heating.
A house without a fireplace.
On a steep hill. This can be a problem in icy winters in northern states.
Overpriced “premium view” lots. If you can’t get a decent price, don’t buy.
Only has a one car garage or a carport. These will be hard to sell.
In a neighborhood where property values have not increased much.
2 bedroom, 2 bath homes are a lot harder to resell than 3 bedroom, 2 bath.
You don’t want a house with a tiny master bedroom or tiny closets.
A weird architectural design that you’ll have a hard time selling later.
Anywhere within 2 miles of a landfill, or near a water treatment plant.
Close to the beginning of the block. You’ll get all the traffic.
The house that gets headlights of all the cars turning onto the street at night.
Corner lot near the entrance to your street. You’ll get tracks in your lawn.
On a street that’s hard to get in and out of, i.e., long traffic light, or busy intersection, or a street that you have to drive past and make a U-turn.
On a golf course. Expect broken windows. Some people love it, some don’t.

Q. What is a Seller’s or Listing Agent?

A. A seller’s agent works solely on behalf of the seller and owes duties to the seller which include the utmost good faith, loyalty and fidelity. The agent will negotiate on behalf of and act as an advocate for the seller. The seller is legally responsible for the actions of the agent when that agent is acting within the scope of the agency. The agent must disclose to potential buyers or tenants all adverse material facts about the property actually known by the broker. A separate written listing agreement is required which sets forth the duties and obligations of the parties.

Q. What is a Buyer’s Agent?

A. A buyer’s agent works solely on behalf of the buyer and owes duties to the buyer which include the utmost good faith, loyalty and fidelity. The agent will negotiate on behalf of and act as an advocate for the buyer. The buyer is legally responsible for the actions of the agent when the agent is acting within the scope of the agency. The agent must disclose to potential sellers all adverse material facts concerning the buyer’s financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property. A separate written buyer listing agreement is required which set forth the duties and obligations of the parties.

Q. What is a Dual Agent?

A. A Dual agency or agent occurs when a real estate professional represents both the seller and the buyer. It can also occur when the Listing or Seller’s Agent works for the same real estate firm as the Buyer’s Agent. In most states, the buyer, the seller, and the Agent must agree in writing for the creation of dual agency. The Dual Agent is required to treat the buyer and seller honestly and impartially. In dual agency, the professional’s duties are more limited and there is potential for conflict of interest. You may hear the terms “transaction broker” and “intermediary” in association with dual agency. Buyers beware!

Q. What is Title Insurance?

A. An insurance policy that agrees to indemnify the owner for defects in title caused by specific risks.

We don’t know all the answers, but we can find them.