Patty's "All Things Real Estate" Blog.

There has been much publicity in the media, and no doubt from your local real estate agent, that the time has come that house payments may be less expensive than rent payments.

While this is certainly true in some geographic areas, like right here in the Pleasanton & Tri-Valley areas, there is more to maintaining a household than the actual house payment itself.  Once you make the leap from renter to homeowner, many maintenance issues and expenses that a landlord has taken care of now become the responsibility of the homeowner.  These additional expenses could wipe out any monthly savings you were expecting to gain in your reduced payment.

For example:

• Utilities – as a homeowner these are now solely your responsibility (water, garbage, gas/electric, cable, phone, internet) .
• Property Taxes – in Alameda County, taxes are approximately 1.25% of the purchase price of the home.  ($500,000 home = $6250 year in property taxes, or $520.84 per month).
• HOA Fees – if you buy in a homeowners association, be prepared to pay monthly.  The cost depends on amenities at the complex (pool, common areas, maintenance, etc.)  Do your homework on this!
• Yard maintenance – you now have to buy a lawn mower, edger, blower, tree/shrub trimmer OR hire a gardener
• Pool maintenance – you must consult with an expert at your local pool store on how to maintain your pool, then purchase chlorine, a brush, net, and other chemicals and cleaning supplies OR hire a pool service to maintain your pool.
• General Home Repairs and Appliances – the home you buy might be in great shape when you buy it, but over time, you will need to maintain many things that may have been taken care of by a landlord while you were renting.  New water heater = $1000; New heater = $3000; new air conditioner = $5000 +; new refrigerator = $2500; washer/dryer=$1500, New Roof – $10,000+; along with various other repairs like, leaky faucets, plumbing leaks, plumbing stoppages, electrical issues, painting, flooring, garage doors/openers, leaky windows, roof leaks, chimney cracks, fences & gates,  the list goes on.
• Insurance – if you have a mortgage, you will be required to carry homeowners insurance on your property. The cost of the insurance is based on the replacement value of your home.  For example on my 1800 sf home in Pleasanton, my annual insurance is approximately $700.  If you are in a flood zone, add another $500+ per year.  If you want Earthquake Insurance, add some more $$.

So, when you are planning to make the leap from renting to homeownership, make sure you consider ALL the expenses you will incur, not just the amount of your house payment. Some of the expenses can be tax deductible, but many are not.

As always, it is a good idea to consult with a real estate professional, professional lender, and CPA to help you gather information to assist you in your home buying decision.

The Pleasanton Weekly, Pleasanton Chamber of Commerce, and Bay East Association of Realtors have teamed up to host the annual real estate town hall meeting to inform the community on the status of the local market.  The meeting will be held tonight at the Veterans Hall on Main Street @ 7:00pm.

Click the link below for details from The Pleasanton Weekly.

http://www.pleasantonweekly.com/news/show_story.php?id=6726&e=y

I have worked with many home buyers and I completely understand the notion of a client wanting to buy the ‘perfect’ house, however, if you are buying a house that someone else has owned, it will never be perfect.  I hear comments like, do you think the seller will change the carpet, I dont like the color;  Do you think the seller will repaint becuase I dont like the color; do you think the seller will replace that missing knob on the bathroom cabinet?; fix the scratches on the baseboards, chip in the tile, scratch in the floor, ugly light switch covers, remove the wallpaper, etc…. you get the idea. 

When you are buying a house, make a list of the major things that are important to you and make that your priority, like square footage, bedrooms, baths, features, architecture, neighborhood, schools.  Sellers have decorated their homes to their taste, not yours, so there will always be something that has to be fixed, repainted, or moved to adapt to your taste and lifestyle.  Keep an open mind. 

In this market of short sales and REO’s (foreclosure sales) we are seeing more and more homes being sold AS-IS, meaning the property owners and the banks will not be doing any repairs on the property prior to close.  If you are in contract to purchase a home you have the right to perform inspections on the home, be sure you get the home thoroughly inspected by qualified, licensed inspectors so you know the property condition and any defects BEFORE you remove your contingencies. 

And as always, consult your local real estate professional for advise & guidance.

I was excited when Mike Holmes, from HGTV‘s Holmes on Homes, announced he was formulating a new show called Holmes Inspections.   Unlike his current show where he goes in after a previous contractor has done shoddy work and rescues the family and home by bringing in his crew, stripping the floors, walls, electrical, and plumbing, and remodeling the entire project (or as they say in Canada; PRO-ject), this show would be about going into existing homes, performing inspections, and pointing out things that need to be repaired or upgraded. 

Great for my business, I thought, since I am real estate.  I recommend all of my clients get home inspections prior to a purchase, or even listing their homes.  Bringing a show to television about home inspections would certainly educate main-stream America about the importance of not only having an inspection, but see first hand how the process works and the benefits of knowing why something as simple as a 2″ hole in a garage wall could be a major fire hazard. 

I sat down to watch the first episode and watched the lovely homeowners explain how they had purchased the home a few years ago.  After moving into the home, they started noticing things like leaking deck roofs, frozen pipes, cold zones in the home, etc.  They were considering a remodel of the kitchen in the future as well and wanted to address potential problems before they started that process.

In comes Holmes & crew to inspect the home.  What I did not expect, and what DOES NOT happen at any regular home inspections, is the lengths to which they go to perform the inspection, which is why I dub this show Home Inspection on Steroids.  

At any regular home inspection here in California, the inspector breaks out his checklist and starts checking off things (upwards of 400 items in all) that can be visually or mechanically inspected.  Turning on/off oven, microwave, dishwasher, checking power receptacles for power, light switches, garbage disposal, air conditioning, heating, etc.  If one or more of these items is missing or fails to operate, the item is noted on the inspection report and a recommendation is made on how to rectify or repair the defect.  If something more major is noted that would require a contractor, the recommendation is made for the property owner to consult a qualified professional to investigate.  There are no tests done for asbestos, radon, or presence of any other toxic or harmful materials, and no holes are cut into walls, floors, or ceilings.

Mike Holmes’ crew on the other hand is going the extra step to investigate.  When the inspection revealed evidence of a leaking pipe, the crew removed the kitchen cabinets and adjoining wall to find an offending waste pipe in the wall.  Another item was a pipe that had frozen in winter and caused an overflow in the laundry room, of course Holmes immediately jackhammered the floor to expose the pipe.  A test was done on a heating duct to reveal the presence of asbestos which requires removal by a professional remediation company.  Every suspect item lead to the ripping out of walls, ceilings, floors, ducting and concrete.   Of course by the end of the show Mike Holmes and crew had remodeled most of the kitchen area, rewired the entire house, and corrected duct and plumbing work, and added a new deck as well. 

As much as I’d like to beleive that Mike Holmes is doing this out of the goodness of his heart and educating America on the importance of proper workmanship (and this is very important), I must remember he is a TV show host selling commercial advertising time to major tool & home improvement companies!  I can honestly say I am a bit disappointed that this show is so much like the original Holmes on Homes.  A $400 property inspection turned into a $40,000+ repair project.  It is not what I had expected.  I must also remember that most TV shows are meant to be entertainment and I doubt there is much entertainment value in having a regular, by-the-book, property inspection.  A few episodes of going down the checklist at a regular inspection and I am sure people would be snoozing! 

I hope that consumers don’t look at this show as a guide book on how property inspections are performed in the real estate world.  I would be interested to know what the inspection industry thinks of this new show.  Is it setting consumer expectations at an unrealistic level, or is there enough actual inspection represented to be educational?  Is it opening the door for change in the industry to allow a more intrusive inspection?

What are your thoughts?

It has been reported that we are in the worst housing market since the Great Depression and that 7.4 million families are in trouble with their mortgages.  Here’s  a breakdown of some shocking facts:

• 6.3 million US homeowners are behind on their mortgage payments as of June 2010
• In addition, there are 1.1 million REO (Foreclosed) properties
• 3.2 million HAMP (Home Affordable Modification Program) 60+ day delinquent loans
• Of that 3.2 million, 1.7 million Borrowers are likely to be eligible for HAMP modifications but have not applied
• As of June 2010, there are 389,000 active permanent loan modification in process
• the total US delinquency rate was 9.55% in June 2010
• The foreclosure inventory rate remained stable from the month prior at 3.18% so in total the national delinquent mortgage rate, which reflects both foreclosures and delinquencies, is 12.38%.
• It is estimated that over the last several years the US has sustained a 7 trillion dollar loss in home values nationwide. 
• It is also estimated in our local housing market (California) it may be 2018-2020 until we get back to 2003 home value pricing. 

(Source:  Lender Processing Services, Mortgage Monitor, DS News, Making Home Affordable June Scorecard)

This seems to be dismal news at best, however, the recent development of the Home Affordable Foreclosure Alternative (HAFA) program is a positive step in the right direction.  The HAFA  program offers solutions that are an alternative to foreclosure.  The HAFA program complements the HAMP program by making the transition into a short sale easier for the borrower if they do not qualify for a loan modification.  The ultimate goal is home retention, however, if a loan modification effort fails, HAFA is required to be considered and offered by the participating servicer.

HAFA falls under two categories, Government driven (Standard) and Servicer Specific (Non-Standard) .  Under each category, the HAFA guidelines are similar but they do have some profound differences.  Depending on who your lender is determines which HAFA program applies to you.  The best way to find out is to visit the Making Home Affordable website, click on the Loan Lookup tab and enter your lender information.  

As always, it is best to consult with a real estate professional who specializes in this area of the market.

A "Making Home Affordable" Initiative