Back Up offers

I came across this article regarding Back Up offers and we thought it would answers some of the recent questions that we have received from Sellers and Buyers in San Diego.

Every seller’s dream is to receive offers from more than one buyer. Although multiple offers were scarce last year, in some markets and price ranges listings that are priced right are receiving multiple offers, particularly in the low-end foreclosure markets.

Most sellers are inclined to accept the highest-priced offer, but this isn’t always the best offer. For example, a seller of a hot property in the hills above Oakland, Calif., received six offers. The two highest offers were close in price, but the seller decided to accept the higher of the two. Fortunately, the seller’s agent suggested countering the next best offer for backup position.

The buyer in primary position had 10 percent cash for a downpayment. Some issues came up during inspections that were going to be costly to repair. The buyer didn’t have more cash to pay for the repairs, so he asked the seller to lower the price. The seller said no and the backup offer became the primary offer.

The backup buyer made a large cash downpayment; he wasn’t cash-strapped like the first buyer. He had enough cash to pay for the repairs. In this case, the backup offer, which wasn’t originally the highest offer, turned out to be the best offer both in terms of price and financing.

Before making a decision about which offer to accept, it’s important to review all of the terms and conditions of the contracts, not just the price. In another case, a seller received two offers. One was quite a bit higher than the other. After reviewing the highest-priced offer, it turned out that the price wasn’t as high as it seemed.

The agent representing the buyers was from out of the area and didn’t know how fees associated with a home sale were customarily shared between the buyer and seller. In terms of net proceeds to the seller, the offer price was $10,000 less than it would have been if the offer included an allocation of fees that was according to local custom.

HOUSE HUNTINTG TIP: Sellers who receive multiple offers often are tempted to counter for a higher price, even when the offer prices are for more than the list price. This is risky. In one case, a seller received two offers. The highest-priced offer was for more than the list price. The seller countered this offer at an even higher price. The buyer thought the seller was unreasonable and withdrew his offer. The seller ended up selling for much less. Don’t let greed rule your decision-making.

The financing proposed in the offers should be scrutinized carefully. In general, the more cash a buyer puts down, the better. Recently a seller reviewed two offers on her house. One of the buyers offered to make a 40 percent cash downpayment. The other was putting five percent down. It’s far easier for a buyer to get loan approval in the current market place if the downpayment is 20 percent or more of the purchase price.

Close of escrow can be an important factor for some sellers. It can be beneficial for a seller to accept a lower price if the buyer can close quickly. This is particularly so, if the sellers have already purchased and closed on another home.

An offer made contingent on the buyers’ home selling is riskier than an offer from a buyer who doesn’t need to sell in order to buy. Depending on the seller’s situation, it might be wise to consider a lower-priced offer that is not contingent on a sale.

THE CLOSING: It’s a good idea to counter the next-best offer for backup position in case the first deal falls apart.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author.

How to Make Your San Diego Real Estate Move Easy On the Kids

 

How to Make Your San Diego Real Estate  Move Easy On the Kids

Most often, a move represents an important step forward for the adults in the family because of a new job, promotion, transfer to a different office, or financial success has allowed them to buy a more comfortable house in a different neighborhood.

Moving from one house to another is seldom easy and enjoyable for adults (who chose to move), and can be especially troubling for children (who prefer to stay where they are).  But if parents are mindful of their children’s concerns and needs, they can minimize distress and discomfort.

 A Move Affects Children and Adults Differently

People typically live in a house for about five years and then move on as their jobs and incomes allow.  Five years is a small percentage of an adult’s life, but it’s half the lifetime of a 10-year old:  It includes almost all the years he or she can remember.  It may be the only home the child’s ever known, and the place s/he feels most safe and comfortable.

A house is much more than a place to live to children.  It’s the center of their world, associated with familiar activities, sights, and sounds.  A move threatens a child’s security and leaves something unknown in its place.  Their friends, and the familiar streets, schools, shops, trees and parks are gone.  The new neighborhood is someone else’s world. 

The impact of a move on a child starts about the time he or she first hears about it, and often continues until the new house becomes home.  It’s not necessary to tell young children about this big change immediately, although they must hear about it from their parents before someone else tells them.  

Expect that your children may be even more distressed after the move.  The new house will not be comfortable or beautiful the night the moving van leaves, or for months after.  The furniture won’t fit the rooms, and the floor will be covered with half-unpacked boxes.  The children won’t know anyone at school and, if you move during the summer, they may have little opportunity to meet others their age.  They’ll need your help:  Plan ahead to support and comfort them and ease the stress of the move.

Easing the Stress of the Move

Young Children Have Special Needs

Describe the move in a truthful, positive way.  Tell upbeat stories about the benefits of the new house and location.  Plan together to make the new setting feel like home:

  • Ask about their favorite activities (e.g., soccer), and plan to investigate youth programs in the new community.
  • Ask what they like best about the present house (e.g., the swimming pool) and assure them that you’ll find a place for them to swim in the new town.
  • Ask what they like best about the neighborhood (e.g., their friends), and make plans to invite the children on the block to a Welcome To the Neighborhood Party once you’ve settled in.
  • Ask what they like the most about their school (e.g., their teacher), and let them know that you’ll request a tour of their new school and a chance to meet their teacher beforehand.
  • Ask what they like most about their community (e.g., the video game parlor), and assure them that those activities will be available in the new location.
  • Use children’s literature.  Books can help children prepare for and understand difficult situations.  Story characters who model successful coping strategies are an excellent resource for children.
  • If the new home is too far away for the entire family to visit, show the children pictures of the house, yard, and neighborhood.  Videotape it if you can.  Include pictures of each child’s new room.  
  • Ask the children to name the house with an inviting description, like “Oak Hill,” for the big trees and sloping lawn.  

Young children need protection from fear of the unknown.  Listen carefully to their concerns and respond quickly to relieve their apprehensions.  It’s normal, for instance, for a young child to worry that his or her toy box and shelf of stuffed animals might be left behind.  Uncover those anxieties by actively involving your children in the process.  

  • Don’t just promise to let them decorate their own rooms – take them to the paint store and let them bring home color swatches.  Shop together for bedspreads and towels and carpets.  
  • They must leave old friends behind.  Plan a going-away party and let them invite their own guests to bring closure to that parting.  
  • Take pictures of everyone and make a photo album.  If a child is old enough, send him or her out with a roll of film in the camera and the assignment to photograph the scenes he’ll want to remember.
  • Give each of them a long-distance telephone call allowance so they can keep in touch with people who are important to them.  
  • Buy a stack of picture postcards that show positive views of your new community and encourage them to write messages to the friends and relatives they left behind.  
  • Try to pack children’s things last and include them in the packing process.
  • Keep security objects such as a favorite teddy bear or blanket close by.  Keep your routine as normal as possible.  Regular eating and nap times are important.

Encourage children to get outside and get to know the people and the neighborhood.   Encourage older children to distribute fliers for babysitting, lawn care, or car washing.  Encourage them to participate in school activities that appeal to them.  Get them on sports teams and into clubs. Throw a housewarming party for yourselves and invite all the adults and children on the block.

Teenagers

Most teenagers see themselves as adult members of the family, and may feel disrespected if they don’t hear about the move early in the process.  Also, they’ll need time to work through the ordeal of leaving their friends.  Ending relationships and saying goodbyes takes time, and is best done before the move.  Some relationships will be extremely difficult to bring to an end, and these will require thoughtful, personalized planning.  How, for instance, do you move a 17-year-old a thousand miles from her steady boyfriend?  

Even though teens seem more advanced in their social skills, they may worry a lot about making friends and fitting in.  Visit their new school and check out local activities and employment opportunities for young people.

 Communities have their own culture and way of doing things, and this is often reflected in the way teens dress.  How they look is really important to teens.  Before spending money on a new school wardrobe, your teen may want to observe what’s “in.”  Purchasing a few new outfits can often help a teen feel more comfortable.

 It’s particularly important to let teens known that you want to hear about, and respect, their concerns.  Blanket assurances may seem to your teen like you’re dismissing his or her feelings.  It may help to explain that the move is a type of rehearsal for future changes, like college or a new job.

At any age, get help if emotional problems arise.  Ask a teacher for assistance.  Consider professional counseling.  Don’t let a serious problem slide.  

Eventually, the strangeness and temporary discomforts should diminish.  New friends will become good friends.  The new house may become the family gathering place that your grandchildren will visit on holidays.  In the long run, everything will work out fine.

Cash for Clunker Appliances Available for San Diego Home Owners

Cash for Appliances Rebate Program

By the end of 2009, San Diego Home owners  and consumers nationwide will be able to take advantage of a federal “cash for appliances” program offering rebates on purchases of a wide array of home appliances certified as energy-efficient by the EPA’s Energy Star program.

Backed by an initial $300 million in funding from the American Recovery and Reinvestment Act, the state-run rebate program is intended to help make American homes more energy-efficient while further stimulating the economy.

“Appliances consume a huge amount of our electricity, so there’s enormous potential to both save energy and save families money every month,” said Department of Energy Secretary Steven Chu in a press release. “These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy and create jobs.”

States will Run the Rebate Program
Each state will administer its own cash for appliances program. The states will be free to select which residential Energy Star qualified appliances to include in their programs and the individual rebate amount offered for each appliance.

What Can You Buy?
The Department of Energy (DOE) has recommended that the states focus their cash for appliances rebate efforts on heating and cooling equipment, appliances, and water heaters as these products offer the greatest energy savings potential. Energy Star qualified appliance categories eligible for rebates include: central air conditioners, heat pumps (air source and geothermal), boilers, furnaces (oil and gas), room air conditioners, clothes washers, dishwashers, freezers, refrigerators, and water heaters.

How Big Will the Rebates Be?
While the states will be free to set actual rebate amounts based on their share of the $300 million, the Department of Energy expects the rebates to range from $50 to $200 per appliance. But wait, there’s more. Any rebates offered by state and local utility districts for purchases of energy-efficient appliances will be added to the federal cash for appliances rebate.

How do You Qualify?
All consumers will need to do to get the rebate is simply buy any qualifying Energy Star appliance. Unlike the “cash for clunkers” fuel-efficient vehicle rebate program, you don’t even need an old trade-in appliance. In addition, consumers will not be required to haul their bulky old appliances to the dealer in exchange for a new one.

When Does it Start?
The states will have until October 15, 2009 to submit their applications for funding and plans for recycling old appliances to the Department of Energy (DOE). The DOE plans to have distributed funding to the states by November 30. As a result, the cash for appliances rebates could be available in stores just in time for Christmas shopping.

New Proposals to help San Diego Homeowners.

New Proposals To Deal With Foreclosures- How It May Help All Owners.

 

On Capitol Hill, a new framework of legislation called The Preserving Homes And Communities Act  (http://www.thomas.gov/cgi-bin/query/z?c111:S.1731:)  is making progress. The bill’s intent is to assist homeowners who are facing foreclosure. Not by delaying an eventual foreclosure, but by forcing the mortgage note holder into a loan modification analysis. The end result may be a smaller mortgage payment that the homeowner can hopefully handle. Recent government reports show an unwillingness of the loan companies to get really engaged in workouts.

The legislation crafted  by Sen. Jack Reed, D-R.I., would require servicers to offer loan modifications to “qualified homeowners” if the net present value (the real value of the loan) of modifying a loan is greater than that of foreclosing. The bill would additionally establish a new mortgage payment assistance program and incentivize states and local governments to create foreclosure mediation programs.

“Voluntary efforts to keep families in their homes have failed,” says Sen. Dick Durbin, who earlier failed in his efforts to legislate court-ordered loan modifications.
A loan modification is a work-out designed to alter the terms of an existing mortgage to make it more affordable. But the catch has been that lenders are not required to approve homeowners for loan modifications nor are they required to even offer it. The Preserving Homes And Communities Act will change that.

The bill will prohibit mortgage holders from foreclosing on homeowners until they have had a discussion with them concerning their loan modification options and running some option scenarios. If a lender doesn’t comply with the Act then it could be hit with stiff fines and penalties. Many who are supporting the bill hope it facilitates modifications for those who are having tough times through no fault of their own, such as the recently unemployed.

But I am current with my mortgage, why should I care?

Even if you are current with your mortgage, or may not even have a mortgage, less foreclosures are better for the value of your home. As foreclosures rise, the pressure on lower values for ALL homes in the area rises. This is because the average sales prices of homes in your area is lowered, thus impacting your home’s value. Foreclosed homes sometimes add to blight and crime in the neighborhoods. A foreclosed home usually sits vacant for months while the resale process is in play, adding to an increased inventory.

San Diego Real Estate Market will be boosted by President's Proposal

President Proposes Extension Of Homebuyer Tax Credit

 

In light of the worsening  unemployment numbers that just came out The White House has begun talks with Congressional Democratic leadership on moves to extend health insurance subsidies, the $8,000 first-time home buyer tax credit and jobless benefits.

These moves were recently designed by White House economic advisers as an act of economic  triage aimed at millions of those out of work and a stagnant economy.

President Obama also said that here would be major announcements at a press conference this Friday at the White House.

“I’m working closely with my economic advisers to explore any and all additional options and measures that we might take to promote job creation,” Obama said after the Labor Department reported that 263,000 Americans lost jobs in September and the unemployment rate rose to 9.8 percent.

The Housing Angle. Groups have been calling for the extension of the $8000 First Time Tax Credit which is due to expire November 30th. In recent Home Actions articles we covered this provision and how it impacts all homeowners. It is becoming quite clear that housing is a major factor in any economic expansion.

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