Vital News for FHA Buyers - 3/5/10

We knew this was coming but it's becoming a reality in the very near future. Buyers need to seriously consider these new changes and how they could make delaying a home purchase in 2010 even more expensive.

On the 5th of April, mortgage insurance for FHA loans will increase by half a percent.

Mortgage insurance is financed in the loan so it isn't a huge increase but it will be felt at closing and during the 30 years worth of payments. If you do not want to have to pay for this increase in mortgage insurance, you will need to be under contract before the 5th of April 2010.

We think the change with even bigger implications will happen in a few months when maximum seller credits will be reduced from 6% of the purchase price down to only 3%. For a buyer purchasing a $400,000 house that could be a potential credit reduction from $24,000 down to $12,000. While our area isn't seeing many if any, buyer credits in the 6% range, some of the harder hit areas of the country will find this to be drastic.

Overall our current market for entry level homes is still very strong. Buyers have yet to see the increased inventory that many have hoped for and interest rates have remained low. FHA buyers can expect that the purchasing of homes in the nicer areas of Orange County will be difficult since sellers are still showing a strong favoritism for conventional or all cash buyers. However, FHA buyers who don't have to have the very best deal in the very best neighborhood or the very worst fixer in the very best neighborhood are finding that these low downpayment loans to be a true reality. Bottomline, if your going FHA you probably will have to compromise. If you can't compromise, save more money for a conventional downpayment.

The New 2010 Home Purchase Contract

They are at it AGAIN! Those California Assoc. of Realtors (CAR) Lawyers are tireless!

The contract to make an offer to purchase a home just went through another round of modifications. We can't believe it but they managed to add stuff without actually making the contract any longer....HURRAY!

Actually, we kind of like some of these changes and feel that they really help to clarify some of the terms of the contract and will better keep unethical folks from being able to offer on a property under the false pretenses of one type of financing and then dubiously switch to a less desirable (from sellers point of view) type later.

We think this may have a profound effect on some earnest money deposits in the future. Hopefully it is a deterrent but only time will tell. To read the new RPA in its entirety click on the picture-------->>>


or go here:

North Orange County CA Short Sales - Market Update 2/15/10

There is a ton of talk these days about short sales, some good information and lots of misinformation. Consumers seem to be split into two groups, those that think that foreclosure home buying is easy (usually haven't done it) and those that think its impossible (usally have tried but unsuccessful).

The truth is somewhere in the middle. There are good deals out there that can be bought but they aren't giving them away and they will require patience. Here's a quick general lay of the land...

In North Orange County there are:

203 single family short sale homes on the market
350 under contract
104 have actually closed in last 2 months

We think these stats just about sum up the market we are seeing in North Orange County CA. That is, we're seeing about 50 short sale closings each month for the 500 or so listed as active or under contract. In other words, we're going through about 10% of the short sale inventory each month.

The thing with short sales is that the success of their closing depends on numerous factors, not just a willing buyer and seller. These factors include but are not limited to borrower financials, borrow history, borrowers situation, buyers financing, property location, # of lending institutions, lending institution policy, and competence of the listing and selling agents. Much of our inventory will never close under short sale due to one or more of these things and trustee sale will be inevitable.

Here's the city breakdown for closed sales:

Buena Park (22)
Brea (10)
Fullerton (28)
La Habra (14)
Placentia (13)
Yorba Linda (17)

Now these numbers aren't mind blowing but if you'd asked us 2 years ago if we'd take 10% as a local industry average we would've. Most short competent short sale agents, ourselves included, will do much better than this because we can eliminate at least one of the above variables.

If you'd like to see if your situation is likely to work as a short sale, just shoot us an email. If you're interested in purchasing one, you can view current short sale inventory on our North Orange County home for sale page.

Closing Escrow - The Home is Yours!

The final step of the CA buying process is called closing. Closing is actually short for "closing escrow"and is the time that the escrow company will make sure all the paperwork has been signed, all the money has been collected, and we are ready to transfer ownership of the property.

Assuming your loan has been funded, all parties will be notified we move to recording of the deed and mortage paperwork. If this happens early in the day, some counties will let you record same day. Usually though, the deed and mortgage documents will be recorded next business day.

Escrow is officially closed when escrow recieves confirmation that the deed has recorded and the seller has recieved all proceeds from sale. At this point, the house is yours!

Depending on how your purchase agreement is structured, it is possible to move in on the day escrow is closed, however, it is more common to move in 2-3 days after. The reason is to give the seller time to completely remove everything from the residence. This can be frustrating to some buyers who are anxious to move into their new home. They just need to understand that the many sellers have moved out of a house prior to closing only to have the buyer cancel the contract. This can cause way more problems than having the buyer wait an extra day or three to move in.

Either way, if one is extremely worried about a seller who might not move out, they can always ask for the sale proceeds to be witheld in escrow until the seller has vacated the residence.

Once you get the go ahead that the property is ready for you, it is time to move into your new home, Congratulations!

Buyer's Final Walk Through

One of the last steps in buying a home in CA is what is known as the final walk through. This happens several days before you receive the keys to the property and it is intended to give you a chance to make sure the home is in the same condition as when you last saw it.

This is not a “discovery process” where we will investigate the house for problems, but instead will a time to confirm that the property is in the same condition as before. Major things we look for during a final walkthrough are missing light fixtures, damaged walls or doors, and missing appliances that were supposed to come with the house etc.

If damages are found during the final walk through, your real estate agent will take note, and contact escrow and tell them to stop until the problem has been remedied. The final walk through is not a point of renegotiation, it is really too late in the process for that. We just want to make sure you are not rushed into the purchase of a home where the seller has not performed their contractual obligations.

The final walk through is not mandatory, but for your safety, we recommend it. At the completion, you will be asked to sign a form stating that the entire property is in relatively the same condition as it was before.

Insurance For Your New CA Home

In addition to the other details in escrow, you will also need to check into homeowners insurance (also known as fire insurance). Many lenders will require an insurance policy to be in place prior to funding your loan so the first thing you need to do is ask your lender if you need it. Homeowners insurance is not always necessary, but your lender might require it, so it is important to be asking these questions early. We'd say no later than the first week or two of escrow. If your lender does not require it, we recommend getting a policy anyway after escrow is closed.

It is a good idea to talk to your current insurance providers (car, life, etc.) to discuss insurance policies for your home. If your current provider does not carry homeowners insurance there are many insurance providers that have a policy right for you. Good places to start are State Farm, Allstate, Farmers, etc. Some providers need to send a representative out to the property to determine whether it will qualify. If sending a rep is required, have them contact your real estate agent to schedule an appointment to see the property.

Now that you have got insurance covered, you are redy to move on.

Fullerton Homes For Sale - Luxury Home Update January 2010

Like most areas of the country, 2009 was a rough year for the upscale real estate market. However, 2010 seems to have a little more momentum and some solid home sales.

Whats going on in Fullerton CA?

Over the past 3 months, the city of Fullerton CA has seen the following statistics for home sales over the million dollar price point.

24 active listings.
5 homes under contract in escrow
8 homes sold

Of those 8 home sales, 3 have sold in the last 30 days
90 day average to sell

What is selling in Fullerton?

Things are definitely starting to sell in the last 3 months but the absolute highest sale is just under $1.5 million. Homes over this price point have taken an extra long time to sell in the current market. The lower part of the million dollar range has been the most active with the average upscale sale around $1.2 million. Not suprisingly, only one of the homes sold had 4 bedrooms, the majority of homes sold have had either 5 or 6 bedrooms and averaged approximately 4,000 sqft.


What this all means?

Buyers - If your looking to purchase a large home in Fullerton, there are plenty of good options available even if you desire 5 bedrooms and 4,000 square feet. We have seen some of these homes sell in under 5 days so buyers need to be prepared that premium homes on premium lots that are priced competitively will require quick attention.


Sellers - Homeowners looking to sell their luxury homes in Fullerton need to understand that it may take 90 days or longer to sell if they want a premium price. They should also understand that houses with only 4 bedrooms and under the 3500 square foot will have a difficult time competing in the million dollar range. Of course there will be some exceptions to this with highly desired lots, neighborhoods, or views, but overall this is the current market trend. If you'd like to check out more details about the lisitings available, please see our Fullerton CA Homes For Sale page.