Choosing a real estate agent you might actually have success with.
Signs you should be looking for when interviewing an agent that will guarantee you success.
1. Cut through the sales hype. Ask about their values, approach to business, and see if they take the time to really inquire about what is most important to you. Boastful agents don't generally care about you, they care about getting another listing under their belt how it makes them look.
2. Seek out an agent that is respected in the industry and has a good relationship with the offices they have worked for and their past clients. Ask to speak to their past clients!
3. Find out who you will actually be working with. Big flashy teams and agents with the most sales don't generally have one-on-one time for a personal white glove service experience. Often times you're passed off to an assistant or newbie team member, which doesn't necessarily guarantee a top level experience.
4. Ask if they will reduce their commission (but don't work with any agent who does reduce it!). They should say no, or at the very least put up a fight. If an agent won't fight for their own money, why would they fight for yours?
5. Choose an agent with a large real estate network. An agent with an International presence and network of offices and agents have more resources to make your home sale happen.
Ready to schedule a consultation?
Now is the time. Feel free to contact me direct by phone 951-207-5454 or email ls@laurenshepherd.com
The New Age of Marketing Your Home for Sale
According to the National Association of Realtors, in 2020, 91% of home buyers found the home they purchased through one of the following: a real estate agent, a yard or open house sign, or online. This means 3 very important things.
Agents are still incredibly important during the home search process. Your agent should be direct to buyers whether it’s online, or in person or through open houses.
Your online presence matters. You’ll need high quality copywriting, photography and other digital assets to attract attention as well as an agent with a large online presence with many outlets for property advertising.
Your agent should additionally be able to spread your property through their networking channels such as word of mouth, in-person and online networking groups, large offices and global presence! Your listing agent should be marketing not just to potential buyers, but also to agents.
A comprehensive marketing plan should focus around these items, agents who offers mailings, and magazine features are taking an antiquated approach to selling and in turn, losing you potential buyers.
Three reasons you should not wait to buy a home.
Home prices are expected to rise and there is no reason to believe that properties will become any more affordable in the near future. Here’s why:
Inflation. There is a direct correlation between inflation and home prices. When the money supply in the US increases, home prices also increase. We already know the fed has printed more money than ever before in the history of the US during the pandemic, and in fact, inflation was at 2.6% in April of 2020 and it has risen to 4.6% in April of 2021. Home prices will increase this year more than normal.
Interest rates. Due to inflation, interest rates will rise as well. If the value of money is decreasing due to inflation, lenders will require a higher return on their money to hedge the inflation. You will see an increase in mortgage interest rates. The difference between a 2.5% interest rate and a 3.5% interest rate can change your personal purchasing power as much as 10% since your loan amount qualification is based on your payment.
Side bar: If you qualify for a 10,000 per month loan payment (this does not include taxes and insurance to simplify this example) based on your income and debts, at a 2.9% interest rate, that means you can qualify for a $2,400,000 loan amount. The same payment with an interest rate of 3.9% qualifies you for a $2,100,00 loan amount. How much more house can you get with an additional $300,000 of purchasing power?There’s no bubble! Property values are based on supply and demand. Here are a few things that are deriving home prices increase.
Lack of new housing inventory. Due to rising costs of homebuilding, new housing starts are at the lowest they have been in decades. If new homes are not being built to meet demands for homes, then strained supplies become more strained.
Low interest rates. Low interest rates make high prices more affordable and more buyers enter the market place, increasing demand for homes.
High prices stifling moves. Home buyers who would normally be moving up to a larger home for their growing family or who would be downsizing to something more affordable, are unable to because home prices have increased so much. When homeowners don’t put their homes on the market, it further exacerbates a lack of inventory.
Banks restricting lending. Lending standards are also tighter than they have ever been before. Banks are not dolling out risky loans the way they were in 2008 and therefore the property owners that are leveraged are very qualified for the home they own.
If you’re looking to purchase property. Now is the time. For additional questions or information on the markets, contact me direct by phone or email. lauren@californianestates.com
The Worried Home Buyer: Why you should be buying a home even if prices are spiking.
The worried home buyer:
Why you should be buying while interest rates are low even if prices are spiking.
I see it time and time again. Interest rates drop, and suddenly a buying frenzy happens in the marketplace. Multiple offers on every property and accepted offers happening at 5 to 10% over asking price and 5 to 10% higher than the similar property sold 6 months ago. It’s scary. The sudden shift makes you worried that you’re overpaying for a property and you will end up in a negative equity situation.
There’s two main reasons why I tell my clients, IT’S OKAY TO BUY. And perhaps, it’s an even better time to buy while prices are spiking. More likely than not, YOU SHOULD BE PARTICIPATING IN THE BUYING FRENZY!
First reason and the main reason - from a purely cost analysis standpoint - your payment will likely be LESS if you buy during the spike. Let me show you how:
Let’s say in 2019, you decided to buy while the market was a little more fair. Meaning, you didn’t have to compete against multiple offers and you had more negotiating power with the seller. Let’s assume you locked in a low price of $1,500,000 with an interest rate of 3.94%. These terms generate a monthly principal and interest payment of $7,109.44 and you’re happy because you got a good price on the home.
Even if you have to pay a 10% premium because of the current market frenzy, if you’re paying less in interest, you have a lower, more comfortable monthly payment.
Now let’s assume, you, the same buyer, decided to buy the same house in 2020. However, this time, there is a huge demand for homes because interest rates have dropped. Because there is a huge demand, you are now competing against multiple offers and can only lock in the price on that house at 10% higher than the 2019 price. (Side note - this is actually an extreme increase given that in July of 2020 homes price nationally were only 5.5% (according to CNBC) over the average in July of 2019) In other words, the loan amount is now $1,650,000, but based on current rates in October of 2020 at 2.89%, your monthly principal and interest payment is only $6,858.96. Slow down.. what? Your payment is actually $250.48 LESS per month which is around $3,000 extra per year you are not spending on a mortgage!
What would you do with the additional $250 per month or $3,000 per year?
Here is my second reason. And this one is a humble reminder of why we buy homes rather than continue to rent. This is NOT an investment, unless you plan on selling again next year, stop stressing about the price. If you want to make money in real estate, buy INVESTMENTS. Buying for yourself? This is HOME OWNERSHIP! It’s the memories made, it’s creating it your own space for yourself with the security of never worrying about a lease ending. It’s stability to have a family in a place you love with the comfort that you’re not throwing rent out the door every month.
Home buyers today are being overly concerned to see if they are making a “smart investment”. Newsflash! If you’re buying this to create a home for your family in a place and community you love, it IS a smart investment! No one buys the house they live in based on the numbers - they buy it time and time again because it’s shelter, it’s love, it’s HOME. There is pure value in simply being a homeowner. Don’t forget that when buying a home.
Forbearance or deferment? How to cope during COVID19
About 7% of mortgage loans in the US have entered forbearance. Many homeowners are feeling the effects on their income of COVID-19 and naturally, want to ensure that their home, which is often times there biggest asset, stays protected.
Many have heard that banks are working with mortgagees who have been affected by COVID-19. It’s important that if you do need help from your lender, you know what you’re asking for and how it will affect you in the future. Learn the difference before forbearance and deferment and which is right for you.
About 7% of mortgage loans in the US have entered forbearance. Many homeowners are feeling the effects on their income of COVID-19 and naturally, want to ensure that their home, which is often times there biggest asset, stays protected.
Many have heard that banks are working with mortgagees who have been affected by COVID-19. It’s important that if you do need help from your lender, you know what you’re asking for and how it will affect you in the future.
The difference between forbearance and deferment.
Let’s say Jon calls his mortgage lender after a reduction in income due to COVID-19. He asks the lender what they can do to help him with his monthly mortgage payments as he cannot pay them right now. The lender says “No problem! We can forbear your mortgage payments for 3 months!” Jon thinks this is fantastic and chooses this option and goes about life.
Three months later, Jon receives a mortgage statement for the next months payment PLUS the 3 months he skipped. Jon calls his mortgage lender and says “I can’t afford this!” So the lender offers to forbear another 3 months of payments and Jon agrees.
The 3 months goes by, Jon receives a statement for his next monthly mortgage payment PLUS the 6 months he skipped. He calls his mortgage lender and says “I can’t pay this!” So the mortgage lender says “Sorry, there is nothing we can do. Please pay or we will have to start the foreclosure process”. Jon says “Can I refinance?” The bank says no, because he is in forbearance, Jon is forced to sell his home, but while the home is on the market he must sell at a discount to sell quickly and is behind on payments while waiting for the transaction to close therefore receiving negative marks on his credit.
If Jon had asked for deferment, Jon would not pay his payment for 3 months, and the payments would be added on to the end of his loan. Virtually taking a pause in his mortgage loan payment.
Ideally, deferment is better for Jon than forbearance.
However, there are caveats to both.
When you obtain a mortgage loan, you create a promise to pay the bank monthly. The bank expects you to uphold this promise regardless of the circumstances. Banks are under no obligation to work with you should you not be able to make your payment.
There is still no certainty about how a lender will observe these options in the future. Let’s say Jon receives a 3 months forbearance and is lucky that after 3 months, his income returns to normal and now he can not only begin to pay his mortgage payment again, but is also able to repay the 3 months he missed. His loan is back in good standing with the bank. One year down the road, Jon decides he wants to sell his home and purchase a new home with financing. There is no certainty that a lender will allow a new loan after seeing that Jon missed 3 months of payments, and if so, he may have to obtain alternative financing or very expensive financing because banks may identify this forbearance process as an essential default of debt and a breach of their initial promise to pay and therefore, a higher risk.
Forbearance or deferment should be a very last option if possible. If you have no other options, aim for deferment. However, whether you must go through deferment or forbearance be sure to ask your lender the following questions:
How will these missed payments report on my credit?
What is the re-payment plan? When do I have to repay these payments?
What if I am unable to make these payments per the new payment plan?
Will you allow a refinance while in or after forbearance?
Are there any other options?
If you are already past these options and are struggling to make your payments, there are additional options before entering the foreclosure process. If you would like to know more, please reach out for a private and discreet consultation. lauren@californianestates.com or 424-250-0046
Lauren has been a licensed Realtor in the state of California for nearly a decade. She began her career helping distressed homeowners during the Recession and is now a top luxury agent in Los Angeles.
Where is the real estate market now?
There have been numerous headlines about the current status of the economy and various questions about what it means for the future of residential real estate. Even with the inflow of information, many buyers and sellers are facing confusion about the state of the market and what’s to come.
Although we can’t predict what is to come, we do know how the market is NOW. As a generality, the market is hot! Know the facts…
Understanding the new COVID19 real estate Marketplace in Los Angeles.
There have been numerous headlines about the current status of the economy and various questions about what it means for the future of residential real estate. Even with the inflow of information, many buyers and sellers are facing confusion about the state of the market and what’s to come.
Although we can’t predict what is to come, we do know how the market is NOW. As a generality, the market is hot! Although the market activity has shrunk in size while buyers and sellers wait on the sideline, the activity that is happening, is fast and furious. Total active listings for the month of April 2020 in the Greater Los Angeles area was approximately 1/3 of what they were in April 2019. Additionally, closed sales was about 1/2 of what they were in April 2019. The pie overall has decreased but the ratios have remained comparable to 2019.
April 2019 Listings and Sales
April 2020 Listings and Sales
The average days spent on the market for homes sold in the Month of April this year in the Greater Los Angeles area is 35 days. Whereas, homes that sold in April of 2019, spent an average of 54 days on the market.
I would attribute the shortened time on the market to a decreased amount of inventory and the active inventory being composed of the most motivated sellers. Overall, we are still seeing a shortage of inventory as demand for homes is still greater than the supply. This means prices are pushing up or remaining stable at this time, and will continue to do so until we see an increase of inventory.
Sellers
Sellers are facing multiple offers in some situations due to the low supply of inventory. Lending restrictions have also slightly increased and funding is in low supply for the type of jumbo loans that most Angeleno residents obtain for purchasing and therefore, the buyers who are qualified for financing are highly qualified and can generally close quickly which is good news for sellers.
Buyers
As a buyer in the market, you may find that interest rates are low however, financing is currently in short supply and stricter on requirements. Many loan programs that Angelenos use such as stated income or interest only loans have dried up. However, it does not mean financing is not available. Buyers should shop around between multiple lenders as some lenders are charging a premium in the form of points and rates because supply of financing has shrunk. As market conditions change rapidly, interest rates can also jump up and down day to day and week to week. Therefore, stay in close contact with your lender so that when see rates drop in your favor, you can lock in the best rate.
Right now it’s important to know that inventory is incredibly low and pickings will be slim. While there may be panic sellers in the market, overall, don’t expect to be getting major discounts as there are enough demand to keep prices stable.
I can imagine the biggest question is where will we be in the next few months?
Many buyers and sellers are waiting on the sideline for businesses to open and the market to stabilize more before placing their home on the market or before writing offers. Many of my own clients are choosing this path as well. Most agents, as well as myself, expect that this will create pent up demand that will hit the market in a few months from now and we will see a huge influx of activity in sales and new listings. To what size the influx will come in, it is hard to estimate.
Another factor that may affect inventory in the coming months are the properties that are now in forbearance. About 7% of mortgage loans nationwide are in forbearance. In other words, about 7% of mortgage payers are not paying at this moment but will likely be facing a large ballon payment a few months from now. If for whatever reason these payers are unable to make right their amount owed when it comes due in 3 to 6 months, then you can expect these homes will come on the market and increase the amount of inventory. This will be great for buyers as they will have more options and more leverage to negotiate great pricing. However, for sellers, this means they will be fighting more competition and will likely need to take price reductions or credits for repairs etc to close. Again, to what extent this will affect the market is yet to be seen. We’ve been experiencing a shortage of inventory for so long that this increase could have little effect on pricing or it could be large enough to create a drop in home prices. For comparison, loans in default during the great recession hit 21% at it’s peak. I do expect that even if inventory increases drastically, interest rates will remain low to create demand and a feeding frenzy of investors will be abound to absorb the inventory.
Take-away
Right now - at this moment - it is still a fantastic time to sell or buy a home. Prices are remaining steady and transactions ARE closing. You will likely receive a great value as a seller and avoid any concerns about dealing with flaky buyers or potential future uncertainty. Buyers are still obtaining record low interest rates. Ultimately, I always feel strongly if you are purchasing a primary residence, you should not look at it as an investment product, this is your HOME! Trying to wait and time the market is less important than home ownership itself. Ultimately, as many stock market gurus and financiers will say, you lose when you try to time the market. It is the same in real estate. Buy when you feel ready and take advantage of interest rates that may not exist again over the next 30 years.
For specific advice about your goals, reach out to me direct. 424-250-0046 or lauren@californianestates.com
Initial thoughts of the new COVID-19 Real Estate Marketplace in Los Angeles
Right now, COVID-19 has halted the majority of business around the travel, service and retail industry. In effect, the economy and stock markets have taken a beating. Why isn't this affecting the housing industry so drastically? What should you expect in the coming months for home prices and interest rates if we do experience a long term recession? These answers hinge on a number of factors. To better understand, we take a look at what the government is doing, how banks are responding how consumers are viewing this time of turmoil in the housing sector.