According to the National Association of Realtors’ latest Realtors Confidence Index, 61% of first-time homebuyers purchased their homes with down payments below 6% from October 2016 through November 2017.
Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying. The median down payment for all buyers in 2017 was just 10% and that percentage drops to 6% for first-time buyers.
Zillow Senior Economist Aaron Terrazas’ recent comments shed light on why buyer demand has remained strong,
“Looking into 2018, rent is expected to continue gaining. More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.”
It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.
If you are one of the many first-time buyers who is not sure if you would qualify for a low-down payment mortgage, consult a local real estate professional who can set you on your path to homeownership!
Problem – There’s a lot of buyers in San Diego right now and there is very little inventory. We’re at record lows as far as homes for sale which means “it’s hard out here for a buyer” (I took that line from Hustle & Flow)! What can you as a buyer do to increase your odds of getting your offer accepted over and above all other buyers?
Well lucky for you, I figured this answer out years ago after much experience in losing the perfect deal…I buckled down and got serious about figuring out the formula which would allow a buyer get the home, every single time! Remember, each one of these items is powerful alone but if you combine them, you will have a huge advantage over your competition! Enjoy!
1. Love Letter – Write a letter to the seller introducing who you are and why they should sell to you! This should have a nice photo of you and/or your family or whatever is important to you. This also emotionally involves the seller!
2. Put a high EMD! – Don’t go cheap on your deposit, put it at whatever you can stomach or afford. This tells the owner that you are one serious buyer! Use some Caution here, as you or your agent should know the contract like the back of your hand in order to avoid any situations where you would lose your deposit!
3. Shorten Your Time Frames – This includes shortening the time you need to conduct your home inspection, appraisal, figuring out your loan and of course closing (if preferred by seller). This is where you can win over the seller without paying top dollar.
4. Who Your Lender is Matters! – This is crucial! Make sure that your lender can fund quickly and that they completely “Underwrite” You! This will allow you to close quickly, accommodate the seller, remove contingencies early (#3) and give the seller the peace of mind that you are the right buyer for their place!
5. Guarantee! – What type of penalty or Guarantee are you attaching to your offer? Are you putting your money where your mouth is? If not, you should rethink this strategy! The more you can convince the seller that you won’t lolligag, the better off you’ll be!
6. How to present your offer? Online VS in Person – Let’s be real, 99.9% of all offers are either emailed or faxed to the seller. If you show up in person, rather then email your offer like everyone else, you have a HUGE advantage!!!
7. Sell Yourself! – When ever the chance presents itself, SELL, SELL, and SELL some more! Let them know you are the perfect buyer for this home and that you will perform! This goes a long way and some sellers chose re-assurance over price!
A real estate agent asks me “what’s an easement?” I thought to myself, that if someone that’s been in real estate for 1 year and doesn’t know, what’s the chance of a home owner or home buyer knowing? Well let’s discuss it…Simply put, an easement is the right someone has to someone else’s real property.
Picture 9 tiny squares inside of one big square…if you’re picturing it correctly, picture the lonely square in the middle. Let’s pretend each of those 9 squares has a home on it except for the middle square, let’s also pretend that the middle square is just a vacant piece of land. Now, stay with me because I’m going somewhere with this.
One day I got a call from an owner that owned a piece of land that was “landlocked” because like our example, there were 8 homes around his land. Why was he landlocked? Well because he didn’t have an “easement” to his property. When he asked me what I thought about his lands worth, I told him “I don’t think much”. Basically his land was worthless due to the fact that he could never build on it because he couldn’t access it.
So do all homeowners have easements? The blanket answer is yes, most properties have easements recorded on the title of the property. For example, a popular one is one favoring the utility companies. SDGE for example, they need a right to enter your property to check their meters and run their lines, that’s an easement.
Going back to my example with Bob the owner, what could he have done? He could have gone to one of his neighbors and begged to grant him an easement, if that failed then Bob should have tried negotiating with his neighbors by offering them some money in exchange for an easement.
BE AWARE!!! You can non-intentionally give someone an easement without wanting to. There’s something called an easement by prescription. This is when someone uses a piece of your land for a period of 5 years or more time and time again. If you allow your neighbor to walk through a piece of your yard to get to the alley, then by you not putting a stop to it over a 5 year period of time, your actually giving them whether you know it or not, an easement! Be careful out there and best of luck!
So this is the deal, I’ve received calls throughout the years from potential home buyers that want to buy a home because they heard of a juicy home buying and wealth building secret… A Seller Carry-Back AKA Seller Financing. The concept is simple… Most home buyers borrow money from their bank (loan) in order to buy a home, with that loan the seller is paid off and the bank becomes the “note holder” and places a lien against the property to secure their position. With a seller carry-back, the seller becomes the note holder and places a lien against the property. So the reason I’m writing this is because a few days ago, my client that is selling his condo called me and said, “Voltaire, I want to carry paper!”. This was music to my ears! Why? Well because there are many benefits to a seller carry back:
No Qualifying – no credit check, no job, nothing!
No Loan Fee’s – the sellers typically don’t charge the buyer like a bank would!
Quick Closing – The seller most times can close quickly since there is no waiting on 3rd parties!
Earn Interest on Your Equity – instead of cashing out now, you leave your money as a lien against the home and you earn interest!
Monthly Income – you have the income coming in monthly
Taxes – if you owe capital gains, you owe it over time and not all at once
Protection – You have a lien against the property and can foreclose if payments are missed
Seller finds a buyer
Buyer and seller agree to purchase price, length of term, interest rate, down payment.
Buyer and seller open escrow and fill out documents
Buyer conducts their inspections
Buyer brings in down payment and closes on deal
Buyer begins making monthly payments to seller.
Condo Price: $180,000
Down Payment: 20% = $36,000
Term: 30 Years
Checkout the YouTube Video I created that explains it in detail! Good Home Shopping!