So you have spent some time looking at houses online, have visited some open houses and maybe have seen a few houses with your agent if you have one - you have a pretty good idea of what you are looking for. But when you find the house that you love, will you be ready to make an offer? What exactly will you need? To make the process a little clearer for first time home buyers, below are some of the main items that you should have
1. Speak to a mortgage agent or lender to get pre-approved for a loan, and obtain a loan pre-approval letter. This is really something you should do before you even START looking for a property. A mortgage broker or lender will be able to tell you exactly the type and amount of loan you would qualify for, based on your credit, income, etc., which will tell you the exact price range you should be looking. They will also be able to provide you with a written confirmation of your loan approval (called a pre-approval letter), which will be required by just about all sellers to be submitted with your offer.
2. Have a good buyers agent representing you. A good agent will be able to not only help you locate all of the available properties within a given area and price range, and tailor the search to fit the exact features you like and dislike in a property, but their true value is proven once you have found the home you would like to buy. A good agent will research all of the comparable sales in the area to help determine the fair market value of the property, and help you acquire the property at the best possible price through negotiations on your behalf with the listing agent and seller. Your agent will also prepare and explain to you all of the intricacies of the paperwork compromising the offer, and well as make sure the myriad of additional forms and disclosures are completed as required by law in each transaction. The agent will also coordinate and guide you through the additional steps in the closing process, such as the inspections, appraisal, possibly negotiating a credit from the seller, etc.. Agents who represent buyers in the purchase of property are customarily paid by the SELLER, so having a good agent on your side is not only essential to a buyer, it is also FREE!
3. Be prepared to provide proof of funds for the cash down payment amount, and a copy of the deposit check with your offer. These days more than ever, it is customary for sellers to require that potential buyers submit a "proof of funds" with their offer, demonstrating that they have enough available liquid cash on hand sufficient to cover the amount of the purchase price that is not being financed. Generally, a copy of the bank statement reflecting a sufficient balance would be acceptable. Most sellers will also want to see a photocopy of the check from the buyer for the opening deposit with the offer, which is customarily equal to 3% of the total purchase price. Only when the offer is accepted by the seller will the deposit be required to be actually submitted to escrow, so you will not have to put forward any money until you have an accepted offer in place.
4. Be ready to schedule your inspection immediately upon acceptance of your offer. The time periods on each transaction are negotiable, but the standard time frame for the inspection contingency is 17 days in a California Association of Realtors Residential Purchase Agreement. The contingency period means that during this time, the buyer has a right to back out of the transaction and cancel escrow for any reason relating to the physical inspection of the property, and have the right to request the opening deposit returned to them and not be at risk of losing that deposit to the seller. It is strongly recommended that all buyers obtain a physical inspection, which generally runs approximately $300-$400, and is paid for out of pocket by the buyer. The inspection report will show you the detailed condition of the property and any potential problems, and could be a basis for asking for a price reduction or credit from the seller for problems diagnosed in the report. In order to stay within the time contingency periods and protect the buyers deposit, the inspection, review of the report, and negotiations with the seller should be done all within the time contingency period. Therefore it is critical to have your inspection scheduled and performed as soon as possible upon having your offer accepted.
Hopefully by this time you will be well on your way to becoming a homeowner!
 A "sold" sign outside a house in Pasadena last month. The Southern California median price remains at 2002 levels and is 46% below its peak level of $505,000 set in 2007. (David McNew / Getty Images / September 24, 2009) |
The median price paid for all homes in six Southland counties in September -- $275,000 -- was unchanged from August and 11% below the same month last year, according to San Diego-based MDA DataQuick.
But in Orange County, the median price rose modestly to $429,000 from $425,000 in the same month last year -- the first year-over-year gain since 2007, DataQuick said. If condominium sales are excluded, last month's median home sales prices in San Diego and Ventura counties also beat their September 2008 levels.
Christopher Thornberg, a Los Angeles economist who was an early predictor of the housing bubble, said several factors converged last month to give home sales a boost.
"Tax breaks, low interest rates and pent-up demand added up to create a surge in sales that's surely gone some way in stabilizing prices," he said.
But Thornberg cautioned that prices could fall again.
"The question continues to be, 'How is this going to stand up when the next wave of foreclosures hits the market?' " he said.
Even if the housing market takes another hit in the coming months, the bulk of the market correction is past, Thornberg said.
"If prices do fall again, it'll be another 10% to 15% max," he said.
The Southern California median price remains at 2002 levels, even without considering inflation, and is 46% below its peak level of $505,000 set in 2007. The median is the point at which half the homes sold for more and half for less.
Those relatively low prices and an $8,000 federal home-buyer tax credit set to expire at the end of November pushed the number of homes sold in September up by 5% over the same month last year and 0.2% above August.
Home sales in the last year picked up first in the lowest-priced inland areas, where a massive number of foreclosures pulled prices down. Last month's sales, with rising median prices in some areas, show that the mix of homes sold is normalizing.
Sales of homes priced at or above $500,000 constituted 21% of the total, up from 13% in January, DataQuick said.
Previously foreclosed homes are accounting for a smaller share of sales. In September, 40% of homes sold had been foreclosed within the last 12 months, down from a high of 57% in February.
Various studies show that the number of Southern Californians who are substantially behind on their mortgage payments is growing, suggesting more foreclosures are on the way.
But foreclosures in the region have been declining as banks backed off from repossessing homes either voluntarily or to comply with state or federal foreclosure freezes.
Statewide data released Tuesday by ForeclosureRadar, an online seller of default data, show bank repossessions in September were down 42% from the same month a year earlier. The slowing of bank repossessions has cut the supply of homes for sale in the upper-middle range of the market.
That has frustrated many buyers like Daisy Lee, who recently had an offer accepted on a Monterey Park house -- after losing to other bidders six previous times. Lee and her husband tried for a year to purchase houses priced from about $500,000 to $700,000 in various San Gabriel Valley cities.
"There's a lot of competition in the areas we've been looking," said Lee, an accountant. Lee said she and her husband offered slightly above the list price to get the house they hope to move into, with an offer of about $600,000.
"We were desperate. I didn't know how much longer we wanted to wait," she said.
Their frustration aside, buyers like Lee are raising the median by purchasing higher-priced homes.
"I think prices are fundamentally at a bottom," said Richard Green, director of USC's Lusk Center for Real Estate.
"There could be some weakness in the next year that brings things back down a little bit," he said, adding, "I wouldn't be jumping for joy yet, but these numbers are not bad."
The full text of the article can be found HERE...
