Real Estate 101

[00:00:00] : owning a home is still the american dream, but it comes with plenty of emotional and financial challenges join real estate broker Ron Evans each week as he shares the latest industry and local real estate market news through interviews with other agents and industry professionals. If you're confused about today's real estate market or just want to understand the home buying and selling process. This show is for you, here's your host, Ron Evans, Hey, welcome back everybody. This is Ron Evans and you've reached my real estate 101 show. It's available on YouTube as you can see as well as anywhere that you can listen to a podcast, you can get it in multiple formats going to get started right now. But before I do, I just want to remind you, if you could please subscribe, ring that bell. So you don't miss any new episodes, I would really appreciate it. And if you want to catch up on previous episodes or just wanna re educate yourself and kind of listen to trends of what's been going on, Check out this playlist up here. It's got all the new market information that goes back through 2021 up to now. You can get caught up and you can kind of follow along with what's been going on. But let's go ahead and dig in tonight. Tonight, I'm going to be talking about an article that came out in fortune and this came out just the other day. It's titled Homebuyers buckle up for another brutal spring housing market and the reason I want to talk about it is because, well we're at the end of january things have already been brutal and we're about to head into spring, you know, by the end of february, that's going to be when our spring market kind of kicks off or should kick off. Um and then by March we are full on into spring. So you need to be prepared if you're looking to buy a home or maybe even looking to sell a home, you want to kind of listen to see what the home buyers are gonna be going through right now so that you can be prepared on what to deal with with them. So let's get started as you know, when I bring up an article, I typically go through and I read it with you and I kind of digest interject my own information and then um if I get any comments or questions left after the episode, I will hit them up later again. It's Homebuyers buckle up for another brutal spring housing market and this comes from fortune. It's usually around this time of year, with the holiday season firmly in the rear view mirror that home buyers and sellers alike begin to make their way back into the market. That is totally true. Everyone usually takes a break in december into the first of the year and then we hit it, that will continue to pick up each week until March arrives at that point. The industry is busy season, known as the spring real estate market will be off to the races. But this year there is more unease than excitement coming from the home shopper side of the equation. For one thing last year's spring housing market, which was arguably the fear assistant history is still seared into the collective memories of unsuccessful 2021 home shoppers. If you've been paying attention on all my other market updates, you will know that this is true. We've been comparing trends from the three years, pre pandemic two, When the, we had the lockouts or lockdowns, excuse me. And then kind of came out of them and had a delayed selling season and then firing off into 2021 and how crazy all of last year was. That's what they're talking about here. So to understand how far the deck was stacked against the buyers last year, let's just look at the data, the number of homes for sale last spring hit the lowest level in more than 40 years. You've heard me talk about this, this should not be new Bidding wars hit an all time high with 72% of homes That were bought in 2021 having multiple offers. That's crazy. And the frenzy saw home appreciation climbed to the highest level in tabulated history. Now here in Orange County 2021, we realized, uh, anywhere between 18 and 20% gain in appreciation for one year. Typically like clockwork. If you look at the history of Orange County, we run at about a 5% gain, which still outpaces the rest of the country. It's usually around 3 3.5% nationwide. We went from the five two, We're expecting another 8-10% this year in 2022. This is part of the problem. No problem for the buyer, not necessarily for the seller because you like that appreciation. But all this goes into that equation of what makes this a row bottleneck. Let's continue. That raises a question. Should home buyers expect to find a spring housing market in 2022? That is friendlier when compared with 2021. After all, the rate of home price growth over the past year Up 19.1% between October 2020 and October 2021, that's a national number. Just can't be sustained forever. Or can it might some people ask housing supply Yet an indication of what the housing market will look like during the early months of 2021, we looked at the one metric housing economist repeatedly told Fortune last year to watch heading into the spring market housing inventory At the height of the spring 2021 bidding War Bonanza, the number of homes for sale was 43% below pre pandemic levels. Given that demand side of the market is unlikely to back off much, there's simply too many millennials aging into their first home. Excuse me. There are simply too many millennials aging into their first home buying years. The supply side Ak inventory will dictate with the spring 20 two 20 2022 housing market will look like I am tongue twisted tonight. Mm hmm. Kind of decipher that and give you some real numbers. We've talked about it before Going into 2021 in the middle of pandemic. There We had in Orange County we had about 3500 homes for sale. If you go back to the three years prior to the pandemic, we kind of eliminate 2020 because it's skewed all the numbers. But if you take the three year aggregate Prior to the pandemic, we were at about 6800 homes for sale at the beginning of the year. We were about half of that starting in 2021. And we read about a third of that starting this year, we had less than 1000 homes available to sell or to purchase or sell in Orange County. Uh January one of this year. Yeah, that's the inventory crisis that they're alluding to here. They just didn't give any raw data on that. So to be blunt the latest reading of housing inventory levels doesn't look good for would be homebuyers as of december, there were just one million homes listed for sale on Zillow down 17.5% from december 2020 and down 37.8% from december 2019. So they're going back to pre pandemic and comparing it to know When there were nearly 1.7 million homes for sale across the country. This means the housing market is tighter right now than it was heading into the hyper competitive 2021 Spring housing market, there's a great graph, check this out. You can kind of see this goes back uh 2018, 2019, 2020, 2021. You can see the rollercoaster nationally of what the housing market typically looks like and it coincides with what I talked about for us locally here in Orange County. As the 2021 Spring market came to a conclusion last year. Industry insiders helped inventory levels would begin to rise through the summer and fall inventory did finally begin to tick up a bit. That's in that chart. The theory was that as vaccines rolled out more elderly homeowners who were cautious about moving during the pandemic would finally put their homes up for sale. But we didn't see that here, Economists also predicted 20 September 2021, winding down of the forbearance program for homeowners negatively impacted by the pandemic would see more homes come on the market. That was a fallacy. That should have never been pushed by the media. I've talked about it before. People in forbearance today or in this last program have something that people who were struggling In 2005, 2006, 2007 when we had the housing market crash. They have something that those folks didn't have and that's a lot of equity in their home because the prices have gone up, They purchased their homes with more of a down payment, not a lot of 100% financing or negative amortization financing. So it was easy for a lot of these people in forbearance if they did it for the right reasons or the wrong reasons or whatever, or they got, you know, boost into it. Um, a lot of them were able to just refinance their homes, pay off that forbearance debt and get on with their lives and stay in their homes. It didn't create more inventory with it's uh foreclosures, short sales, nothing like that. That was a really big crappy thing that the media tried to do and that and that some economists tried to push was that forbearance was going to help our inventory problem because people screwed up, They screwed up while the number of homes listed for sale did rise, it wasn't due to forbearance, it hasn't been enough to make the market friendly for home buyers. This lack of inventory isn't just clustered into a handful of housing markets either Among the 327 housing markets tracked by Zillow, 254 heavy inventory levels that are down by more than 30% from December 2019, let me repeat that 254 of the 327 housing markets tracked by Zillow Are down 30% in inventory From December 2019 To December 2021. In 54 housing markets, including places like Miami and Fort Collins Colorado-based eight. Housing inventory is still down by over 50 from pre pandemic levels And I told you for us just year over year were down 60%. That's not specifically mentioned in this article, but I'm giving you the data, see this chart, there's all this red, that's where it's down the peach or flesh color and the gray is where it's pretty flat or it's just down a little bit or up a little bit blue. This one little place right here in the whole country and one little place there in texas is blue, that's where there is actually inventory and things were happening in the, in the market there. I don't know what's going on in those two locations but maybe for the next episode, I will try to pinpoint it and we'll talk about it and see if it's something that can be replicated or is it just one off craziness going on in those two little markets. Actually let's talk about interest rates, There is one big wild card right now. It may not be a wild card as much as they're thinking The inflation concerned federal reserve is expected to increase rates several times in 2022. We've talked about this before, they've actually already started. That is already pushing mortgage rates higher As of Thursday, the average 30 year fixed mortgage rate has hit 3.45%, that's up from 3.1% last month and a hefty bounce from the 2.65% rate in January 2021. It's it's already ticked back down. This is a week ago Thursday real time here in January that this 3.45 hit a few days later throughout the end of last week. It did tick back down just a little bit, but we've talked about it before that ah In order for things to really change inventory wise with interest rates, they're going to have to hit 4% or maybe even a little higher than 4% to have any significant meaningful change. And we're not expected to see that Most economists are expecting to be between 3.65 and 3.8% by the end of 2022. Will it help a little bit because it will slow demand a little bit. Um but will it help to the standpoint of really fixing our inventory problem and starting to balance out sellers and buyers? Probably not not not unless it hits for and a quarter maybe. And I don't think anybody's predicting that right now, rising mortgage rates would lock some homebuyers out of the market and could put a downward pressure on home price growth, that's what it's expected to do. But again, it's it's probably going to go up higher than what they're expecting it to go up to really have a meaningful effect. But in the short term, rising mortgage rates could actually make the housing market even more competitive. Ali Wolf, who is the chief economist at Zonda Housing Market Research firm tells fortune that home shoppers who could see this as their last chance to snag pandemic spurred low mortgage rates might begin to pour into the housing market. In the coming weeks, of course, the rush of home buyers in the market was already depleted, levels of inventory would be a perfect storm for another spike and getting worse. Okay, that's the end of the article. Let's talk a little bit. I don't know how many where buyers can actually come flooding into the market. Um This Unless they're just talking about the home buyers that went on hiatus for like 4th quarter Them all coming back at one time on top of who's still in the game right now um, in my area, I don't know how many more homebuyers we can actually handle. All right. Any agent, I talked to all my colleagues, we all have lists of home buyers a mile long that are approved for their loans or their cash or what have you um Again, I don't know how many more can there are out there, but they're saying they're they're thinking that this could be more um in this article, but they would be correct that if it did happen where we had another flood of homebuyers on top of what we've already got in our inventory of homebuyers that would Maybe take the 8-10% appreciation they're expecting this year back up to that 18-20% like we had last year. It's quite possible that it could and it's quite possible that at that point, the Fed would seriously have to look at Going above and beyond 4% with the interest rate to get things to settle down. I don't know, I don't know what's considered a good thing or a bad thing at this point. This has been the craziest part of my career. Um I would love to hear some questions though or some feedback that you have that I can address either in another episode or write to you or have a conversation with you. If you have questions, you can always drop a comment uh in Youtube or whatever platform you're listening, You can send me an email direct. It's real simple. It's real estate one oh one at Ron Evans realty dot com. And you can even text me, I'll take a text message 949, - 9 - 270. I try to get back to people within 24-48 hours, unless it's like a dire thing. Just like, let me know and I'll get back to you sooner immediately. I appreciate you staying staying with me. I appreciate you coming back and listening week after week, episode after episode and I will see you again real soon folks. I appreciate your continued support if you haven't already done. So please don't forget to subscribe and share this podcast with your friends, leave your comments and questions below and I'll get back to you when I can have a great day. See you soon. 

[00:00:00] : owning a home is still the american dream, but it comes with plenty of emotional and financial challenges join real estate broker Ron Evans each week as he shares the latest industry and local real estate market news through interviews with other agents and industry professionals. If you're confused about today's real estate market or just want to understand the home buying and selling process. This show is for you. Here's your host, Ron Evans. Hey everybody welcome to this week's episode of market updates here in Orange County. I am Ron Evans your host as you've already heard before we get started. If you could, please, don't forget to subscribe and ring the bell over here and if you want to go back and always keep up on all the market updates right here, That's your link. You can go back and listen or watch previous ones and kind of see what the market has been doing over the last several weeks and months compared to what's going on now and have a good education on buying or selling a home here in Orange County. So let's get started. As always. Everything comes from Stephen thomas, a local economist here in Orange County, he's got his business reports on housing. He releases our Orange County Housing report every two weeks or once a fortnight. Mhm. And we're going to go over this current one that just came out last night. This is hot off the presses this week's title is rising rates versus no inventory. That is what we're dealing with today. There are two opposing economic forces impacting the housing market right now, rising mortgage rates and a record low supply of homes available to purchase. Almost sounds like a broken record if you've been paying attention over the last weeks and months and actually a few years it's kind of been heading this way. There simply are not enough homes available for buyers and rising rates have not yet had an impact on an insanely hot housing market. Thought process behind it is we were told A few weeks ago that the Fed was going to incrementally raise rates this year in 2022 as a way to ease demand and allow inventory to catch up flip side of that. It would also um possibly slow the growth in prices and housing costs and rising rents by doing all of this because the supply and the demand is what's fueling everything we've got going on right now in housing housing feels like it is suffering from supply chain was seemingly nothing available to purchase. This is exactly what we had going on last year. The inventory in Orange County started With an all time low of 2633 available homes that's last year, that's 2021, The beginning of 2021, It got down 20-14 on June 10. So halfway through the year, it had actually dipped, it rose And peaked in June and then continued to plunge until only 954 homes were on the market January one of this year. So less than half of the amount of homes we had in 2021 is what we started 2022 with. Today, it's gone up just a tad, we've got 1000 and 80 homes, so we've added 100 and 26 homes over the last couple of weeks. Um The difference between this year and last year's record low is striking. He writes There are 1547 fewer homes today. So 59% less every price range has been similarly impacted. Check out this graph Comparing today to the three year average between 2017 and 2019. Prior to the pandemic is mind blowing. There are 30 667 fewer homes available and impressive 77% less. That means there were over four times as many homes available prior to the pandemic at any given time to start out a year than there are today. Today there are fewer homes at every price range, especially in the below $750,000 category. This is like our uh first time home buyer or maybe first time move up buyer depending on what you started with price range for homes, less than 500,000. There are 150 today, 150 homes under $500,000 in Orange County. This time last year there were 817 and that's still low Between 500,000 and 750,000. There was 153 homes today, compared to 1,147 homes this time last year, 87% fewer. So if you're a first time Homebuyer or you're buying on a very limited budget you are getting your head bashed in right now on the market. 100%. It is tough and it is toughest on you. It's tough across everything, but it is toughest on you. Since ringing in the new year, mortgage rates have been steadily climbing, eroding home affordability. According to Freddie Mac's primary mortgage market survey Rates have risen from 3.05% on December 23 2, 3.5, 6% as of January 20 Up 0.5% in just four weeks. Now. I think in the last couple of days it kicked back down just a tad but you get an idea of where we're at. It has many speculating that even higher rates are coming. I believe we have said previously that by the end of 2022 we expect rates to be somewhere between 3.65 and maybe 3.85. I don't know that they'll hit 4%, but you never throw in a volatile stock market and many are beginning to wonder if these changes are just the beginning of the end to the pandemic run on the housing market. Could it be we'll see investors in Wall Street had already digested the fact that the Federal Reserve was tapering their purchases of mortgage backed securities and we're going to be raising the short term, Excuse me, short term federal funds rate, which is tied to automobile loans and credit card debt, not to the 30 year mortgages starting this march. And at the end of this, I'll share another thing. Just got an alert. This is a little side piece. Just got an alert today right before beginning to air this, that yes, the Fed has come out today and confirmed that coming this March rates are going up and they're doing it specifically to try to ease further demand on housing and lower inflation because they've got to get the supply chain figured out. Additionally, they announced that they were going to be draining their balance sheets, which was unexpected. The Federal Reserve went from calling inflation transistor transitory or temporary and doing nothing just a few months ago to acknowledging that it was an issue like I just said on the, on this current news break and that they were going to do everything in their power to slow inflation's grip on the economy. It was as if the Fed acknowledged that they made a mistake and that they were behind the eight ball and now they are engaging in a hurry up offense still to try and make up for lost time. The markets reacted and rates rose by 0.5% in the last four weeks. See this chart, Why has the rising rates not yet affected the housing market? The answer is, simple rates have not climbed high enough to materially slowed down demand. Mortgage rates climbed considerably in both 2013 and 2018, which caused a shift in the market, demand cooled, the inventory increased. Market times grew and the market slowed from a hot seller's market to a much more balanced market. 2013 Rates rose from 3.3, to 4.5, And in 2018 they rose from 3.99 to 4.94. I don't know that they're going to go that high this time, but we need to be prepared and look at history to understand why they did it and what it did. Their recent run up in rates is much smaller. If they continue to climb, then the market could cool. But for now, Wall Street and investors have digested future Federal Reserve moves and they most likely will not rise much more from here. Like I said, 3.65-3.85. don't know that we'll hit four Rates would need though to climb to 4% or higher to slow housing. We don't know if we're going to get that high At 4%. The difference in payment for that same $900,000, mortgage example would be $478 more per month Or 57 39 per year at 4.25%. It would increase your payment by $608 per month. Now this is compared to the 3.56 that we're at today Or 70 - 99 per year. We just don't know if they're going to pull the trigger and go quite that high. We know they're going to go up a little bit. It should have at least a slight impact. But for them to have a tremendous impact, they do need to crank it to 4% or higher. Just don't know if they're gonna be willing to do that over the full summary of Orange County housing. The active listing summary. Active listing inventory shed 20 homes down 2% and now totals 1080 homes, as I have mentioned previously, which is the lowest level for this time of the year since tracking began 18 years ago In December, there were 2% fewer homes that came on the market compared to the three year average prior to COVID Last year. There were 2,627 homes on the market. 1547 additional homes or 143% more. That's the last year. Today Demand which is the number of pending sales over the prior month surged by 131 pending sales In the past two weeks up 10 1426 last year there were 2,055 pending sales, 44% more than today due to the impact of COVID on housing and due to the fact that there was inventory, I truly feel that if the inventory levels today were what they were last year, that demand that we have right now would be even higher because the homes are just going bonkers, Man surging and supply slightly dropping the expected market time, which is the number of days to sell. All Orange County listings at the current buying pace decreased from 25 days to 23 days in the past couple of weeks, which is an insanely hot seller's market. It was at 38 days last year slower than today but still insanely hot. Want to point out that that's what I just talked about is across all price points. So beginning first time Homebuyer move up And luxury across all points, price points. That averages to 23 days. Now we're going to get into some price point specific Homes priced below $750,000. The market is of course a hot seller's market with an expected market time of just 19 days. This range represents 28% of the active inventory and 33% of the demand For homes priced between $750 and $1 million. Our first move up level. The expected market time is even shorter at 16 days. This range represents 18% of the active inventory and 26% of the demand For homes priced between a million and 1.25 million. The expected market time is 14 days. This range represents 7% of the active inventory and 12% of the demand For homes priced between 1.25 million and 1.5 million. They expected market time is 20 days. This range represents 8% of the active inventory and 8% of the demand For homes priced between $1.5 and $2 million. The expected market time is 25 days. This range represents 8% of the active inventory and 8% of the demand as well. Now we're gonna talk about luxury. It used to be luxury was defined by homes Under $1 million 1.25 million. Now we have the threshold at $2 million. So now we're going to go over some luxury numbers For homes priced between two million and four million. The expected market time Has gone down over the last couple of weeks from 55 days to 34 days. That's right. If you have a $4 million dollar home that you want to sell today, it will be gone by the end of february. Roll this back to pre covid, you were looking at at least six months if not closer to a year at that price range and may sometimes even higher and longer for homes priced between four million and eight million. The expected market time also decreased from get this 100 and 59 days or almost six months to just 74 days or 2.5 months. So if you had an $8 million home that you wanted to put on the market right now, it would be gone by april, you would be moving before school's out. Let that sink in. There was a time not that long ago where that would be a year and a half to two years. You would have market times of 500 days, 700 days, 800 days in those price ranges. That's where we're at For homes priced above $8 million. Yes, we have those, we have quite a few of them in orange county, The expected market time decreased from 210 days. So eight or nine months, 272 days less than six months. Again, if you have a $10 million dollar home, it's gone by summer. You listed today gone by summer. That's the world. We're living in here. The luxury end all homes above two million accounts for 31 Of today's inventory and 14% of the demand. So listen to that. It accounts for a third of our overall inventory, but only less than 1/5 of our demand and yet it's still yielding numbers like that stressed homes. It's a combination of both short sales and foreclosures Made up only .2% of all listings And .6% of demand. There is only One foreclosure and one short sale available to purchase today in all of Orange County. To total distressed homes on the active market down one from two weeks ago, two weeks ago, there were three this time last year There were a whopping eight side note for all those people. They keep saying, oh well forbearance is over here. Come the short sales don't listen to him. It's not happening, not happening here said it at nauseum the days homeowner has something that the previous homeowner when the market did get depressed have that's equity. Everyone buying a home today with some exceptions, of course Is not buying a home at 100% financing, negative amortization, etc or multiple homes and 100% financing and negative amortization. Everybody has 20%, 10%, 5%. They're putting down. The competition has been so fierce for the last few years. It's hard to get a lower down payment offer accepted. It can be done. It's just really challenging and difficult. Therefore, the people that took advantage of forbearance even if they needed it or not and when the bank now comes calling, They are able to just refi out of it. They've got probably a better rate than they had in 2015 or 2013 when they bought their home. Anyway, they've got plenty of equity they can re fly out of it, get out of their forbearance, make it all up and stay in their home. We didn't have these options in 2007 and 2008 when the market crashed and everyone was trying to refinanced their home um and do all kinds of crazy things to stay in their homes. There was not enough equity for the bank to want to work with you. That's why we had a lot of foreclosures then why we're not going to have the foreclosures today. Don't listen to what you see on facebook with all the ads that are rolling up about about forbearance etcetera. Look at the numbers and understand what the math says For 2,486 closed residential resales in December which is 20% less than December of 2020 for the year through december. There have been 35,180 closed sales. So that's what we sold In 2021 16% higher than in 2020. And the most sales sense. 2005 December marked a 3% drop. However, compared to November 2021, The sales to list-price ratio was 101.1% for all of Orange County. It doesn't matter where you live, doesn't matter what your price point. If you listed your home chances are you're getting at or just slightly above your list. Price Foreclosures accounted for just .2% of all closed sales and there were no closed short sales in the month of December. That means that 99.8% of all sales were good old fashioned sellers with equity. Just giving you the summary and some information that covers all of Orange County housing. Obviously I have more detailed information on a city by city basis. I'm happy to send it to you. Send me a text message at 9499 to 9 to 270. Send me an email at real Estate one oh one at Ron Evans realty dot com. Let me know where you live. What kind of information do you like about your neighborhood if you just want general pricing or if you want some specific pricing information about the neighborhood and I'm happy to send it right over to you. No obligation, don't need to work with me. I'm not going to come calling. I'm not going to add you to some mailing list or database list. I genuinely just want to help people see you again very very soon. Thank you for watching folks. I appreciate your continued support if you haven't already done so please don't forget to subscribe and share this podcast with your friends, leave your comments and questions below and I'll get back to you when I can have a great day. See you soon 

DOOM OR BOOM - Rising Interest Rates Are Impacting Home Buyers

Mortgage rates are rushing higher, and last week that caused a major divergence in mortgage demand. Refinancing continued to dry up, but homebuyers appear to be rushing into the market. As a result, total mortgage application volume rose 2.3% compared with the previous week, according to the Mortgage Bankers Association.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.64% from 3.52%, with points remaining unchanged at 0.45 for loans with a 20% down payment. That rate was 72 basis points higher than the same week one year ago and has increased more than 30 basis points in just the last two weeks.

Each week I'll break down the Market Matters that comes from C.A.R. (California Association of REALTORS®). I'll go over all of the articles they share, with my own opinions thrown in. Please email ([email protected]) or comment below with any questions you'd like answered.

Ron Evans

Amy Sims Real Estate Team

DRE: 01965556

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UNPRECEDENTED START - Insanely HOT Seller’s Market In Orange County

The COVID-19 pandemic has severely disrupted the supply of goods and commodities. Initially, back in March 2020, there was a relentless run-on toilet paper when people stood in long lines for hours as new shipments arrived. As the pandemic evolved, so did the impact on the supply of computer chips, which ultimately hit the automobile industry the hardest. Flash forward to today and new car lots are empty, there is a COVID premium on the sticker price, and many must wait weeks or months for delivery. It is just as challenging to obtain a used car and prices have gone through the roof. It boils down to supply and demand. Even when demand levels do not change much, yet inventories drop substantially, prices soar.

That is precisely what is occurring in the Orange County housing market today. The supply of homes available to purchase today is at a staggering, mind blowing, record low level, and it is matched with strong demand that is not much different than prior to the pandemic. As a result, the market has been white hot, insane, from day one of 2022. It is an unprecedented start to the year that is without comparison. On January 3, 2013, according to the Primary Mortgage Market Survey conducted by Freddie Mac for the past 51-years, mortgage rates were at 3.34%, slightly higher than the record low, at the time, of 3.31% achieved on November 21, 2012. On January 7, 2021, mortgage rates hit a 17th record low since the start of the pandemic, dropping to 2.65%. That rate remains the record today, a year later. On January 6, 2022, mortgage rates had risen to 3.22%, the highest level since May 2020. Even with higher, rising mortgage rates, the housing market already has exceptionally strong momentum.

As the inventory dropped, housing has grown hotter and hotter. Today, there are only 1,100 homes available to purchase, an unmatched, ultra-low supply of homes that shattered the prior record low achieved in January 2021, at 2,633 homes. Last year’s start crushed the 2013 record start of 3,161 homes. The active inventory had been dropping prior to COVID, but the pandemic further disrupted housing and intensified the inventory crisis. The crisis had evolved into a catastrophe by the end of 2021 as the fewest number of homes come on the market in December and the second fewest occurs in November. That set up the unprecedented start to this year.

Every 2 weeks I'll bring you the latest information on the housing market in Orange County, CA. Other areas and specific cities and zip codes are also available. Please message me direct with questions or for more details.

See Show Notes Below for Summary Information. All stats courtesy of Reports On Housing.

Ron Evans

Amy Sims Real Estate Team

DRE: 01965556

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[00:00:00] : owning a home is still the american dream but it comes with plenty of emotional and financial challenges, join real estate broker Ron Evans each week as he shares the latest industry and local real estate market news through interviews with other agents and industry professionals. If you're confused about today's real estate market or just want to understand the home buying and selling process. This show is for you, here's your host, Ron Evans. Well, Hello Everybody and happy new year. It is 2022 and we are kicking off this new year in fantastic style. As you heard, I'm Ron Evans your host and today I've got a special treat for you. I'm going to be going through our Orange County housing market update But focusing on a 2022 forecast. Now a little housekeeping, our office is being moved currently. So I am coming to you remotely great. I cannot get my web camera working. So unfortunately you're just going to be seeing a static picture of my beautiful face today. And also I hope the sound quality is good. I'm using some remote sound equipment, not my normal studio equipment. So I apologize in advance if you're listening or watching and you're not getting the same sexy voice and image that you're used to Okay with that. As always. I use Stephen thomas's reports on housing for all of my information when it comes to housing forecasts and reports here in Orange County, I'm going to be giving you information that is Orange County specific, but also just Orange County in entirety. If you would like to have something specific to a neighborhood or city that you are interested in or that you live in. You can contact me via email At Real Estate 101 at Ron Evans Realty.com or Text me at 9499-9 2270. You can also leave a question or comment in either the podcast format that you were listening or on Youtube if you happen to be watching today and let's get going. So hopefully everyone had a good celebration, had a good end of 2021. If you want to know how 2021 was going, housing wise, especially fourth quarter with how we ended. I encourage you to go back and listen to the last couple episodes. Um you can look it up pretty easily. It's just all about marking uh forecast and housing forecasts that we had going on In 2021. I am going to specifically just be going over his Forecast for 2022. Today, I'm not gonna be talking much about 2021 unless it's a comparative analysis. So here we go, The 2022 forecast. It's going to be another hot year for housing. So the shock of going into a pandemic may have disrupted the housing market in 2020 for a few months, which it did, But there was absolutely zero disruption in 2021. In fact, it was a crazy, crazy year for real estate here in Orange County. And quite frankly nationwide demand surged despite Covid's winter wave. The summer delta wave and the current omicron wave, if anything, it has kept a lid on mortgage rates. And that is true. While we did see a little bit of fluctuation there in fourth quarter with rates Coming up to about 3 3.1%. Um it that was about it. Other than that it stayed between like about 2.8 and three Throughout all of 2021. The only thing that will slow housing down at this point is going to be rising rates. But as long as Covid continues to be a threat, rates will have a hard time rising much from their current record lows. So if you listened to some previous episodes, You'll note that we are expecting rates to rise a little bit here in 2022 throughout the year, incrementally. Excuse me, We may see it by the end of 2022, hit about, I think they're they're forecasting about 3.65, Somewhere in that range. And quite frankly, as these rates start to rise, that may finally grease the wheel of inventory and I'll get into more of that As I go through this report, housing is one of the strongest sectors of our economy yet the overall U. S. Economy has been on the mend as well, retail sales have soared despite what you've seen with supply chain issues that we had over the summer, unemployment has dropped substantially, despite what you may have seen or heard, job openings are surging, that's nothing new. The job market has been going crazy, The number of homeowners and forbearance dropped below 600,000 by the end of December And the vast majority of the nearly seven million exits are either performing or paid off their mortgages and four. Now, let's circle back on the forbearance issue. You heard throughout a lot of 2020 after they came out with four barrettes for covid that this might lead to a wave of foreclosures and distressed properties for sale once people realized that for barracks was not forgiveness and they were going to have to make a lump sum payments to catch up. Now, two things have happened that everybody should have expected from the very beginning, but for some reason, panic set in early and caused a lot of confusion. The first thing that people should have understood is that banks today, Just like in 2007 when the market actually did crash due to housing issues, do not want to have homes on their balance sheet, that they are now responsible for selling and taking a loss on. So they will do what they can today, which they wouldn't do back in 2007 to keep a homeowner in their home. They don't want to foreclose number two In 2007 when the housing market crashed due to housing. I'm sorry when the economy crashed due to the housing market leading the way it was because so many people were overextended on home loans And owned multiple homes either on interest only notes, 100% financing or even negative amortization loans. They had no equity, there was no way they could refinance out as the market started to crash to keep up today, even with forbearance. Mhm 99% of the homeowners out there that have bought homes since 2007 have a ton of equity in their homes because most people are putting 20% down, 15% down, 10% down. There are very very very, very few. 100% financing loans happening today. And even fewer negative amortization loans happening today. And a lot of those are being used as just stopgaps maybe to get someone in and then they refine it out of it. It's not being used as a primary means to own a home. So this means that if you took four barons and you took six months or nine months or whatever the term was that your bank gave you and now they're asking for it. $15,000 Balloon Payment. $20,000 Balloon Payment. Well you likely have $600,000 in equity in your home because the market has gone up 20% especially here in Orange County in that same year, you can just refi out of it, pay that up and you might even be in a lower payment than you were before because the interest rates are lower today than they have been when you, when you bought your home before. So it's a win win win all the way around. So for those two reasons, the forbearance thing um, should have never been used as a key indicator that we are going to have foreclosures and distressed properties coming for sale. And the data that Stephen is providing us today backs that up. The economy has dramatically improved. Overall inflation may have risen to highs not seen in decades, but mortgage rates have not budged, Which indicates that investors are competent that the inflation pressures will subside and eventually retract sometime in 2022. Mm hmm. Everything we're going through right now is temporary, folks. The low interest rate environment will continue and will be a tailwind that will continue to fuel the incredible run on housing. As a result, the local housing market is going to be hot In 2022. Here is steven's forecast, let's start out with active inventory. The year will begin with less than 1000 homes. This is the lowest start by far since tracking began in 2004, It will be 60% less than the 2500 plus homes. We had to start 2021, which was the prior record low to start a year With very few homes to purchase. Housing will be extremely hot on January one. The theme for 2022 will be the same as 2021. Not enough homes for buyers to purchase. Instead, they will all be in escrow Expected active inventory to peak around August eclipsing 5000 homes, which is still well below The over 7000 home peak that we would see at that time. Prior to COVID demand, let's move on to demand with the anemic inventory, Stephen rights and the historically low mortgage rate environment, buyer demand will be extremely strong from the start of the year through the summer market with tremendous buyer competition buyers will be willing to stretch above the asking price. So expect appreciation around 8-10% for this year, demand will be its strongest and most appreciation will occur from january through july and then we'll downshift during the Ottoman holiday markets. So we're gonna go back to like a normal cycle of how real estate works. But we're still gonna see really strong appreciation. Now, typically before Covid here in Orange County, we would average 4.95% year over year, like clockwork with annual appreciation of home values. I think the rest of the rest of the United States averages around 3 3.5%. We've always outperformed here in Orange County. I know there's some other areas in the country that also outperformed the national average. We're not alone in that, but that's just where we are right now. Last year we were up almost 20 and this year they're predicting us to have another 10% increase, which is still two X what we normally see, so it is going to remain extremely crazy and hot. Don't worry about the price of the house, worry about the house payment, that's what you have to budget today. Okay, the housing cycle, the housing market will follow a normal housing cycle this year. The strongest demand coupled with plenty of fresh inventory, will occur during the spring market. This will be followed by slightly less demand and a continued new supply of homes in the summer market from their demand will drop further along with fewer homes entering the fray in the auto market. Finally, all the distractions of the holiday market will be punctuated with the lowest demand of the year and few homer homeowners opting to sell, Moving on to close sales. The number of successful closed sales, he's predicting will decrease 3-6%, compared to 2021 with around 33,500 closed sales for 2022 and 2021, we had the most closed sales since 2005 Luxury market, luxury market for luxury housing will continue to be exceptionally hot. Yet sales will drop slightly from 2021's record year. The spring market will be the strongest for luxury and will become a bit more sluggish with more Wall Street volatility during the second half of the year. Interest rates overall, look for a mortgage rates to continue to remain at historically low levels until the pandemic improves dramatically, most likely during the second half of this year. Yet rates will have a hard time surpassing 3.5% I mentioned earlier. 3.65-3.8. That's what we've heard on a national level from the Fed. He's predicting they may not go above 3.5%. So let's keep an eye on that. Even with the Federal Reserve reversing their N. B. A. S, which is mortgage backed securities purchases and raising the federal funds rate, short term rates and heightened inflation. Long term mortgage rates will continue to bounce between 2.75 and 3.5%. If mortgage rates remain at these low levels, housing will be insane, distressed inventory. Here we go, folks circling back. Do not expect a wave of foreclosures. The number of active forbearance is will dwindle to nearly none. As home values have surged, very few homeowners are underwater, which is one of the main reasons the vast majority of forbearance exists, There are exits are either performing on a monthly basis or paid off their loans. The foreclosure moratorium resulted in very few foreclosures in 2021. So expect slightly more in 2022. Nonetheless, the total numbers will be very low and undetectable in the broader housing market. Bottom line. 2022 will continue. We're housing and 2021 left off insanely hot. It will be an insane seller's market, which is an expected market time below 40 days from the start of the year through the summer market multiple offers and bidding wars will be the norm for home prices priced below two million. Once again, the market will heavily favor sellers and buyers will have to pack their patients to isolate their piece of the american dream and take advantage of record low mortgage rates from mega oughta from mid august on the beginning of the auto market, housing will evolve into a hot seller's market Which is a 40-60 day expected market time with a bit less activity, not quite as many multiple offers and fewer homes selling above their asking prices. That's it folks buckle up. It's gonna be a wild and zany ride. I hope you'll stick around with me weekly to hear all of the updates on housing in Orange County again, this is Ron Evans. My contact information is real estate one oh one at Ron Evans realty dot com Or 9499-9-270. Please don't forget to subscribe and like take care. Okay 

10 Things YOU NEED TO KNOW Before Buying Your First House - Part 3

Are you hoping to buy a home soon, or in the future? Have you tried buying a home recently with no luck? You've come to the right place. Join me for part 3 of my series "How To Buy A Home". Today's real estate market is crazy, to say the least...It can be overwhelming and discouraging, especially for the first time home buyer. I'm here to you. This video series will take more of the guesswork out of the home buying process and give you the confidence you need to successfully buy a home. In this episode, I begin a series about the 10 Steps To Buying A Home In Orange County. This third and final part will cover steps 7 (Home Inspection and Appraisal) , 8 (Homeowner's Insurance), 9 (Do A Final Walkthrough) and 10 (Close On Your New Home). Even though I'm located in the Orange County real estate market, you can and should follow these steps everywhere. The steps to buying a home are no different, from city to city. Part 2 of this series will be release next week, so check back for more.

Ron Evans
Broker Associate
Amy Sims Real Estate Team
[email protected]
949.929.2270
www.ronevansrealty.com


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[00:00:00] : Mhm Hi and welcome, this is Ron Evans and you've reached my podcast, real estate 101 by Ron Evans and uh also available on YouTube, same name. You can search either one on any platform that you get your content from and you will find me And today I am coming to you with the 3rd in a series and final in a series of how to buy a home. It's 10 steps to how to buy a home. I covered steps 12 and three on the first episode, Steps 45 and six on the last episode and this week I will cover the final four, steps 789 and 10 today. So just as a repeat Step one was checking your credit score, Step two is determining how much you can afford. Step three, choose a lender and get preapproved for a mortgage. Step four, find a real estate Agent. Step five, start the home search process and step six was make an offer today we are going to cover get a home inspection at home appraisal, purchase homeowners insurance, do a final walk through and close your new home. Alright, let's dive right in. Let me get to my notes here for step seven, get a home inspection and home appraisal. So a lot of times people think everything is a slam dunk once their offer is accepted and they've opened escrow successfully. But honestly, I think I even mentioned it in the previous episode when we covered step six, getting to that point is basically where the fun really starts, you have all of your different contingency periods. If you have them in your contract to go through and this is your time as the buyer to do your due diligence to make sure this home is going to suit your needs for the long term and you know completely eyes wide open as best as possible what you're getting into. So from this point there are a few critical steps that remain. You're going to need to arrange for a home inspection and appraisal. Now, home inspections completely on you. Hopefully the real estate agent that you have hired to help you has a list of vendors to call upon for home inspections that they trust that are good if you don't already have people in mind yourself. Um It's very important in this industry that as we work with people as agents um we keep we keep around the people that we trust and that we value um so that our all of our clients are treated the same and get a really good um experience. Now the appraisal on the other hand, while you as the buyer technically pay for the appraisal through your closing costs and stuff to the bank, the bank actually hires the appraiser orders the appraisal and conducts that on their own. So you don't actually need to schedule that per se. Um but there are things and maybe we'll get into it. Maybe we want on this particular episode, but there are and there are things that the agent should hopefully do or be prepared to do and to help out with the appraisal. Anyway, let's dial into the home inspection because that's going to be the meat and potatoes of this section of what's uh you as the buyer um should be doing um without fail. So at home inspection is important. Um, what does the home inspection do? Well, it helps identify areas where there might be major repairs or renovations that require immediate attention as well as any work that needs to be done or completed in the future. So if there's some just some deferred maintenance that needs to be taken care of before something breaks home inspection should hopefully reveal that You should be hiring a professional 3rd party home inspector. Um I know a lot of times. We have people within the family that we trust. Maybe uncle bob is a contractor. Maybe he is, maybe he isn't qualified to do an actual home inspection. Um I always recommend hiring a completely independent 3rd Party company. I keep several in my own roller dex that are available that I trust that I've used multiple times because you need someone that is going to be neutral. They are fact finding they are not trying to fact find things to convince you to continue purchasing the home and there, they should not be fact finding things to scare you from purchasing the home that you're in escrow on, they should simply be stating everything out was pretty much no emotion. Um At the end of the day if everything does look good on inspection you should feel more warm and fuzzy about it but you should never feel, even if it was the worst inspection ever. Hopefully the home inspector you have isn't scaring you to death, they are just putting everything out there. Um Because typically what happens is anything that the general home inspection calls out. You may now go back and hire an independent inspector that's more specific to an area like a roof, like an air conditioning, like a cool if they call out things that they just see um at their skill level you do deeper dive inspections. So you you never want a home Inspector general home Inspector that's going to make you feel over alarmed and you're not, you should never have a home inspector that comes back making you feel super syrupy. You can feel warm and cozy when you're done. If everything's gone more or less according to plan. Um But you should just be taking everything at face value with what they're presenting and hopefully that's how they're doing it. So if you've included a home inspection contingency in your contract which here in California it's boilerplate, you actually have to write it out of a contract. You'll have the opportunity to have your inspection and then maybe maybe you may or may not have the ability to ask for repairs to be made prior to your contract closing. What else can I tell you about the home inspection. Um While you're in the contingency period, if the home inspection reveals things that you're not comfortable with, as long as your contingency is still in place, you haven't released a contingency. That is your chances the buyer to withdraw your offer, cancel escrow and more often than not you get your deposit back as long as you've done everything aboveboard. Now there's other things that fallen into the home inspection, contingency and home inspection um timeframe that you as the buyer should be reviewing hopefully with your agent and that is going to be the seller's disclosures. Okay. I personally like to get the seller disclosures first and then have the home inspection at the same time we get them or maybe like the day after. So I've had a chance to kind of review the home inspection. The seller disclosures first. I want to see everything that the seller is disclosing about the home that they personally know repairs that have been made um remodeling that's been done known damage that hasn't been taken care of because I want to see what the inspection uncovers and see if it follows along with what the homeowner is disclosing sometimes. And I can't say that the homeowner has the intent of hiding things. Sometimes they do, sometimes they don't, but it's not always the case, but sometimes you look at a disclosure and they don't talk about oh well there was a repair made here or we had this over here last year or whatever. They they either purposely or accidentally omit things and then the home inspector comes through and it's like okay well there was this here there's evidence of this here. There's evidence of this here and now you as the agent with your buyer can compare and and then you kind of have an idea of okay we need to go back and question these things and aren't on the disclosure were they aware of that? Did they omit it purposely or accidentally Kind of just gives you more mindset is to as to how you're what you're dealing with in your transaction. So that's why I kind of like to have them done at the same time. Um So I can review them together and know what I'm getting into. Or I might even have the seller's disclosure there while the home inspection is going on. And if if they've noted things in the seller's disclosure of remodeling and things that have been done? I will call that out to the inspector to say hey do you see evidence of this? Um Can you tell what the quality was? We already know there was some stuff done here. Okay Or they're telling me um that maybe they got a quote to do some repairs on things that haven't been done yet? What do you see? Mr Inspector do you see the same types of damage? Do you see the same breaks things, things, things that need to be fixed or is it more or is it more than what they're letting us know or less than what they're letting us know? Just a way to be informed. Okay. That's the home inspection. Um It is the easiest way if you needed to cancel in my opinion, a transaction, the way to cancel a transaction not that you should ever have the intent of going into it an escrow or buying a home with the intent of hey we might need to cancel. Um It's canceling should always be a last resort. I just know that from my own experience using the inspection, contingency time frame and all the things that all into. It gives you the most opportunity um to cancel home appraisal. Now like I said, the process for home appraisal buyer pays for it, but you do not hire the appraiser, the bank orders and hires the appraisal. It typically comes from a group of appraisers in a pool so that there's no um for lack of a better term coercion um happening to where a bank says, okay, hey I really need this appraisal to happen. I have a feeling that used to go on years ago, No longer is that way the uh the, the bank and the lender typically don't know who the actual appraiser is until after it's been ordered and someone on the other end on the appraisal side has accepted the order. So it's not like they can just ask for, hey, I want mike to go to this appraisal because he's always pretty loose with them. Right? He, he always makes sure that even if it's an overpriced home it appraises and we can get this loan done, it doesn't work that way. So what happens then is it's incumbent on the agent, usually the listing agent, but sometimes as me represent the buyer, I've also gotten involved if it's been a transaction where we are having to outbid people um to get our offer approved and maybe this is the first home in the neighborhood that is going to sell for well over what the comps say. Um I helped the listing agent. We pull comps, uh, and we do math and we put things on charts and and really, really show what upgrades have been done or what upgrades haven't been done compared to other things to help the appraiser really have a full picture when he comes, she comes. Um with why we are in escrow at the price that we're in escrow. Another thing that helps too is if you're in a multiple offer situation, have the listing agent show the appraiser. Hey look, we had seven offers and all of them were within X. Amount of dollars of where we are in escrow. So obviously the market is telling us that's what this home is worth even if the comps, immediate comps don't necessarily support that because nothing has sold in the neighborhood for a while. So appraisals can be tricky. Um Now what happens if your home doesn't appraise? It happens, It happens even in this market where things are going crazy, It happens in all markets where sometimes things just don't appraise. Well, if you have your appraisal contingency still in place, you haven't weighed it. The buyer can have an opportunity to back out of out of the deal if they can't come to an agreement with the seller. Typically, what will happen is Before anything like that happens where escrow gets canceled. If something doesn't appraise, let's just say you're in escrow for $800,000 and the home appraises for $760,000. Maybe it was listed for 7:50 and you're in escrow now at 50,000 over list. But it appraises for 760. Let's just run that scenario. So you've got a $40,000 delta. Now, either The buyer can try to negotiate a new sales price for the home and get it down to 762 where they don't have to come out of pocket more. The seller can hold firm and say no Mr buyer, it's we're in escrow at 800,000. I'm going to need you to kick in 40 grand. Um, you can split the difference if the buyer has the capability for that. Sometimes it's a moot point in these scenarios because the buyer is already Tapped out, they don't have an extra whatever $1,000 to bridge an appraisal gap. Um, so it depends on the market that you're in on. If you would have to do that or not or be asked to do that or not. In today's market, you probably would be asked to bridge an appraisal gap if you can, or the buyer or the seller will just move on to the next best offer. Um, That happens. But I've had it happen in the recent past and in the distant past where my buyers have come out of pocket, decent amounts of money to bridge appraisal gaps. I've also had sellers credit back and renegotiate the list or the selling price of their home to accommodate because they just really wanted that buyer tip to have their home. I've also had both sides concede and meet in the middle. I've experienced all of that and I've had things that haven't appraised and the virus just walked away because they couldn't we come, couldn't come to an agreement. The buyer had no more money to put down all these things can happen. You just need to be prepared for all of that regardless of what the market is. If it's a seller's market or a buyer's market. These things just sometimes happen. Um, the type of market will dictate who has more leverage in negotiating for that right now, the sellers have all the leverage. So typically they're not going to adjust their price down, even meet in the middle because they have plenty of other offers that they can call upon. So that's that by your pace for appraisal, bank orders the appraisal, nobody knows who the appraiser is until it's ordered and accepted by an appraiser. And then typically the appraiser context the listing agent. If you've got a good core, uh, uh, communication with your lender and the listing agent as the, and you're representing the buyer, you can be asked to be brought in on the appraisal if you think it's going to be an issue and you feel like you need to help otherwise as the buying agent, you, you stay out of it. Okay. That's inspection and appraisal. So that's step seven, step eight. You are going to need homeowners insurance, especially if you have a loan on property they're going to require. So it's not only in your best interest, but it's gonna be required. Um, it works as a safety net that protects your home and your finances. Um, it's not legally mandated. Okay. But like I said, the lenders are going to require you to have an insurance policy on the home before giving you a loan. They're going to ask for when you go to close escrow and sign your loan, docs, you're gonna have to show your declarations page that you have insurance in place. Now. Homeowners insurance. What it does is it covers damage to your home and surrounding structures as well as stolen or damaged personal property. There are different types and levels of coverage ranging from basic to comprehensive. So what does that mean? Basic coverage might just be like liability coverage to where someone gets hurt on your property or you have some accidental damage that happens. And then more comprehensive would cover if you accidentally did damage to your property or someone else did damage to your property purposely um as well as theft and loss and things like that. Nature fire here in California earthquake. Um Now I can tell you and I don't know how this is in other parts of the country because I don't always know where we, there are a lot of wild fires here in California and I know in the pacific northwest we've been hit in the last several years, it seems with wildfire after wildfire after wildfire and Arizona where I'm from. And when these things happen, um, homes and neighborhoods get re rated by insurance companies and they might be in what's called the fire zone or a fire hazard zone and some insurance carriers will not issue fire coverage and that's always a sticking point with a lender. If you have to have homeowner's coverage, they're going to require you to have a fire policy because that's the the most common way that there could be a loss on the home is with the fire. So it pays again to have an agent that you're working with that understands this, that understands the neighborhood where you were buying and some of the challenges that you might encounter in the neighborhood I live in. We are a fire hazard. We back to a wilderness area, like a regional park. And while we have had Several wildfires in the 15, 18 years I've lived in the area, they've never gotten close enough to where any of our homes were immediately threaten. They've always been at least like a mile or so away. Nevertheless, that entire area, that entire zip code and the surrounding zip code is considered high risk fire area and it is difficult to get homeowners insurance to get a fire fire fire policy. However, there's at least one agent in our neighborhood. One insurance agent Who's lived there for 30 years. He understands how to get fire policies accepted and has access to do so. So he is like the go to person, if you were dealing with, if you were coming to buy a home in our neighborhood and you're working with an agent who's from out of the area, they may not know this guy, chances are, they're not going to know this guy to be able to get it. Um, if you as a seller. Our hey, I'm just going to deal with. So, and so is my agent let them list my home and they're not from the neighborhood a buyer comes in, can't get insurance on your home and has to back out what your listing agent, if they don't know the neighborhood and don't know this particular insurance agent may not be able to help keep your deal together. It's just one that's a very small reason that turns into a big reason of of why it's really important to know who you're hiring and expertise they have in your neighborhood. So that's homeowners insurance and what it covers. That's step number eight. Okay. So we've covered step number seven, home inspection and appraisal. We've covered step # eight which is purchasing homeowner's insurance. Next is Honestly one that could be one of the most nerve wracking points. Um It should be the most excited times and it starts out usually to be in a very exciting time, but it can't end up being nerve wracking. That's step # nine is doing a final walk through um, here in California within three days of the close of escrow, you, as the buyer are instructed to do a final walkthrough of the property. You can wave it. I've never had a buyer wave it. I've always instructed them make sure you're doing it and what's the final walkthrough four. Okay. Um, It's one last walk through the property to make to see a if something still needs to be fixed, whether it was agreed upon ahead of time or not or if there are things that were agreed upon if they were fixed and fixed to the satisfaction that was agreed upon before you close. Um, and lastly purchase contract here in California states that the property is to be delivered and no less, basically the same condition as when you, as the buyer first saw it. So when you saw that home, if you saw that home and it was like *** and span and clean and didn't have any clutter, there was no trash, windows were clean, nothing was left on the ground. And that's how you saw it when you first saw it. That is the reasonable expectation you should have when you were taking ownership of it when you were taking possession. So if you go in on your final walkthrough and it looks like they've already moved out and they left trash behind everything else, you need to bring that up because that needs to be, that's something that should and could be remedied um, before you take possession. Now, I do need to state that a final walkthrough is in no way shape or form supposed to be used as leverage to not close on time. Um, so that's safe for instance that you had seven items on a repair list from your inspections that the seller agreed to do before close and you come on your final walkthrough and you noticed that two things aren't done, Five of them are done, but there's two things that aren't done. Okay, well you can't use that as leverage as the buyer and threatened to say, hey, I'm not gonna go sign my final loan docs and close this and take possession until those things are done. That can't be done. Does it happen? Absolutely, buyers will use that as try to use that as leverage all the time. But technically contractually, you can't at least here in California. Um, it just needs to be negotiated, need to come to an understanding. Maybe the two items couldn't be done by the time of clothes and the seller just hasn't told you, hey, it hasn't been done. You know that windows on order or there's a screen on order or something like that. It'll all be done after. Well then it gets put in writing and you sign off on it on your final walkthrough form that okay. I understand is the buyer, these things aren't done, but they will be done with an X amount of days after. Okay. Or it could also end up being a last moment thing where the sellers just like, oh my God, I had to get all my stuff out and I couldn't get that screen ordered. Um, I have the contact order at MR buyer, but I couldn't get it ordered or um, I couldn't get whatever damage fixed in time or maybe it's damaged happened when they were moving out and they didn't realize that that the movers caused damage. Right? Well, it's a last minute time. You just call it the seller and the seller's agent, let them know and maybe they'll offer like an additional credit like when you're closing. Hey, you know what, well we'll still pay for it and we're sorry we couldn't get done that. That happens quite often very rarely as a seller just will, will a seller agree to do things like repairs and things of that nature up front and they don't get all done and it was done in a malicious intent. So that's another reason why you should never be looking to use those things to try to get out of a deal or to threaten to not close the deal. Um, These things happen. Um, Now if the home is not clean, that's a whole another story. Um, you know, I have had that happen before where sellers just in so much of a hurry, maybe they're moving out of town out of state, whatever. Maybe it was a short sale, it's an embarrassing divorce, Whatever you don't know what their circumstances are and they bolt in a quick amount of time or they're running late trying to get out and hand over the property and either they don't take the time to clean or they just don't have the time to clean or have the home clean. That happens, that happens quite often, um happens way more than you than walking in and noticing repairs are completed. I as an agent for my buyers. Typically when we go to the final walkthrough regardless of the condition of the home, even if it looks *** and span. I always as soon as we close escrow, have my cleaners scheduled to go in there and spend a few hours cleaning at home. Now if I if we go in on the final walkthrough and it's the day or two before and I notice there's junk everywhere, well I take it upon myself, I never count on the selling agent or the sellers to make things right. I go I go into things eyes wide open just like my buyers with the understanding that this is a business. This is just something I I know I may have to take care of now do I try to get them to take care of it? Absolutely. But I never count on. So I am always prepared to be like, hey I gotta call my junk hauler in here. It's gonna cost me X amount. I gotta bring my cleaners in here which I'm gonna do anyway. But I just may have to do more. May have to have the windows power washer may have to have the pool cleaned or whatever that the cost of doing business folks. So hopefully you have an agent that also sees those things and understands that so that's your final walkthrough. It's your last chance as the buyer to make sure the home is in the condition it's supposed to be in when you take possession at close of escrow, that's it. Things can be negotiated after that. But you can't use it or you're not supposed to use it as a means to cancel or threatened to cancel as the buyer. Alright, final walkthrough. That was step nine Recap. Step seven, get a home inspection and a home appraisal. Step eight purchase homeowners insurance. We covered that. Step nine we just covered do a final walk through. We're up to step 10. Closing on your new home and how the processes of that. So congratulations. You've made it to the final step. When the time comes, make sure you review your closing disclosure. The closing disclosure comes from your escrow company and it comes from your lender. It's got all of the credits and the debits of exactly what you're paying for and where your money is going and where the money's coming from. Either by loan or buy your down payment or whatever it balances out to zero at the bottom. So it outlines your final terms. Final closing costs, any outstanding charges or fees included on your loan. Um Your lender will send the disclosure to you at least three days. This is required by law before closing. Now, what happens during closing property title will pass from the cellar to you and whatever method you've chosen to vest the property on title. A closing agent, which in our case here in California typically is either an escrow company that's been hired or the title company. If you're doing your escrow through a title company here in southern California, 90 something percent of time. We use a third party escrow company who was neutral in other parts of California. It's still pretty typical to use the title company. Either there's no wrong answer there. So they act as the closing agent, they're going to make sure all necessary parties um have done everything they're supposed to do, sign what they need to sign and turn in what they needed to sign. They act as a mediator between you and the seller, you, the buyer and the seller. They confirm all required documents are signed and turned in once all the documents have been signed. The agent ensures that all the funds that are supposed to be in the escrow account. Are there including closing B's and escrow payments. And then they properly disperse the money during closing you, the buyer have to responsibilities. Okay. Number one signing all legal documents. This includes the closing disclosure, the promissory note. So that's your lending paperwork, the deed of trust. This is your deed, how you're holding title and your certificate of occupancy. The lender. If you're if you have a loan is going to want to know if you are buying the home to occupy or buying the home as a investment property. So if you're gonna be occupying it, you've already stated that you're signing your certificate of occupancy. The second thing you have to do is pay your closing costs. This is all pretty automatic but it's detailed out on the closing disclosure. This includes fees from your mortgage application, your appraisal. If that wasn't already collected ahead of time. Some during the appraisal process some lenders collect that fee upfront. Some don't if there was any survey done, title search, title insurance um and your down payment the remaining beyond your deposit. If your deposit doesn't cover your full down payment, the remainder of that gets covered by you in your closing costs. That's it. Once everything is done. Ah The money gets dispersed, title gets and the deed gets sent over to the county. It may take a few minutes. It may take a few hours but eventually the escrow or your closing agent here's back that the deed has been recorded. So it's one thing to have everything signed and funded. The last thing is that the d they get notification. The deed has been recorded. That's the final thing. Once the deed recorded, you own the home congratulations you are a homeowner and depending on how your contract is set up, that's when the taking possession starts. Okay. Some contracts start immediately upon the recordation. Some maybe you've given the seller a few days or a few hours or what have you to vacate property that they were going to need to do that. That's all in the contract. But just know that once the deed recorded you are the legal home owner of the property all responsibility shifts from the cellar to you. The buyer you are, you are now the owner. So all the things of uh Mhm utilities, uh the insurance, the taxes, everything. The moment it records all that stuff starts counting towards you. That's it. So the bottom line why I did this whole thing, These three episodes, these streets put these 10 steps together is no matter if you're a first time Homebuyer, long time home buyer Maybe bought your first home 30 years ago. Now you're downsizing. It's just been a while. It can be intimidating and you need to know the home process before you buy. Bye arming yourself with the necessary knowledge and resources. It doesn't have to be as intimidating by following all the steps I've outlined in these three episodes and working with a great real estate agent that you trust. You can focus on what really matters and that's enjoy your new home get with the right people understand this process and the others work for you. Offload the burden and have fun as always if you have any comments or questions, you can leave them in the comment section on youtube or whatever podcasting platform you were listening. You can also always email me directly at real estate one oh one at Ron Evans realty dot com. You can also text me Area code 9499-9-270. It has been a pleasure putting this together for you. Um, save it. Save all three episodes. Maybe you're not ready to buy today. It's going to be six months a year from now. Two years from now, five years from now, the process is not going to change. The process has been this way forever. It's going to remain this way for quite a long time and you'll be golden. Thank you again. See you soon. Hey! 

[00:00:00] : mm Welcome everybody. This is Ron Evans and this is my real estate, one on one podcast and Youtube channel and I thought now that we are in christmas week and going into obviously the slowest selling season. Right? Yeah, Pardon Me 1 2nd. This, trying to go live on Youtube for the first time to see how this flies may end up having to come back and just re upload anyway, but thought I would give an audience an extra opportunity to see me live. Anyway, we're heading into the christmas week and this is the time of year when a lot of people choose to pull their homes off the market or they take a step back not wanting to sell because technically it is not the prime selling season, but you know what, Because there are so few homes on the market and because other things like interest rates are about to go up and have already started going up and will incrementally go up, most likely throughout 2,022. It's not the worst time at all to either get your home on the market or at least prep it to go on the market right after the first year. So I thought I would take some time today to talk about selling your home during the holidays or winter months and what you can do to set yourself up for the most success right now. So let's dive right in um you know, selling your home uh especially this time of year, it's very stressful. It's always stressful selling your home, but now you compounded with holidays and shopping and traveling and family and events and everything else going on, school's out school's and you never know if you're coming or going, it can honestly take away all of your energy, all of your positivity and turn everybody into a grinch. But um, did you know that Holmes still sell typically just as fast in the winter time as they do in the summertime, it's just, you might not have as much competition and that can change things around and make everybody very happy. So if you're thinking about selling now, if you're thinking about trading up to a more expensive home, um the savings you are likely to save, thinking you're gonna get a better deal in the winter and the spring time on your home, it's really going to be a wash because you're also going to pay more for the home that you're purchasing. So that's the number one reason why it's not a bad time to sell right now, is you can still take advantage of a really hot seller's market. But you can also go ahead and look for a home today and get yourself in and actually earn three or four months of equity in your home by buying in the winter versus waiting till spring and competing against everybody else when the prices will go up, it's all going to be uh equal or pretty close to equal, so start prepping now. Um, a lot of sellers, even ones that uh, wait until the springtime or the prime selling season they regret their number one regret is they didn't prep early enough. So it's not even if you do think you want to wait, it's not bad idea to start prepping now for the sale of your home way before listing it. So you can't make the decision to want to list and move and then prep because then you're going to be behind the eight ball, it's just going to add that much more stress. So start prepping first, then let it snowball in. On average sellers make at least two improvements, not one, but two improvements to their home before listing that could be painting, cleaning carpet, think small things, right? Not necessarily anything big, staging de cluttering things like that, but you're going to typically do too. So tackling weather dependent projects fairly such as exterior painting or roofing. We'll ensure that your home shows the best during the winter months. Um you would also be wise to prepare for all kinds of winter weather. You know, we don't just here in southern California or wherever you're listening. Our weather can change, we can go from 80°1 day in December or January two 45° a day or two later. We can go from sunshine to rain. I don't really get a lot of snow, but basically our weather can vary, it can go, the temperatures can vary and that can have a hard impact on the exterior of your home. So prepare the exterior of your home. So it shows the best during the maritime um, you want to make sure your home is looking safe and welcoming for all your buyers. Uh, if you're not in southern California, if you're listening elsewhere in our country, um, make sure you've taken care of, if you have snow shoveling the walkways, snow on the roof, rain gutters cleaned out if need be all those little things that all helps the way you, the way you maintain your home shows to a buyer create a cozy ambiance. Um, once you get a buyer into your home because you're taking care of things on the outside, give them a reason to want to stay, give them a reason to feel comfortable to feel cozy, to have an emotional connection to your home. You need to appeal to all five senses. Okay, in the wintertime, natural light can be a very difficult thing to accomplish depending on where you live in the winter, but it is always still one of the number one selling reasons of a home open space, natural light coming in. So do what you can to open up windows, move furniture around that might be blocking some light coming in maybe from other rooms reflecting light in. Do these little things to really create a warming and welcoming environment in your home. You should do other things to add flattering lighting, maybe some up lights behind couches or chairs or furniture. Okay, brighten up dark corners. You don't want nice, beautiful natural light to come into a home. But then the back half of the room is dark and just kind of sucks all that away. So maybe accent some lighting where it's dark. Maybe if you don't have a fireplace throw on a fireplace video, there's the crackling sound. Something that can trigger an emotion for somebody or trigger a memory for somebody. Um That all does work. Believe it or not. Yeah, as the days get shorter, try to keep your house as more light and bright as possible. Even during the daytime, I already went over having all the windows coverings open um even turn on exterior lights because maybe they will shine in through a window. All these things help if you have anything that can have a nice light, pleasant scent throughout the house and aromatherapy diffuser perhaps. Um Warm smells like vanilla, apple pie, cinnamon all work best in the winter because those are things that we always may be thought of as a child growing up, you would smell these things and when you smell them later on, it kind of brings you back to a happy place, incorporate some different textures and textiles with your furniture. Maybe some different faux fur rugs or throws, um wool chenille pillows and throws. Okay, turn on some soft music, hang some wind chimes on the back patio. Anything to create a relaxing atmosphere because you want people to come in and feel invited and you want them to stay and look at your house longer than they maybe normally would. And honestly, I know it sounds kind of quirky, but if you have the ability to bake actually baking an apple pie or baking some cookies or whatever on the day that you know, you're going to have some home showings isn't the worst thing in the world. The natural smells, even if you've got some aromatherapy going on, natural smells actually play a little bit better to the senses. It's really, really, really important during these months. If you're selling to highlight the right features, If you have a fireplace highlighted, have it on. Okay. Or at least have instructions there and give instructions to the, to your listing agent or the person coming to show your home on how to demonstrate it for the buyer. If you have heated floors may not be a thing here in southern California, but where you're at, it might be a big thing, have them on, really point those things out. Um, if you have a garage that's suitable to be utilized, maybe it doubles as like a man cave or it's all, uh, you know, set up. It's sealed, it's, you've got a nice floor, you've got it finished on the inside and it's set up for things that you can do, even in the wintertime, it's an extra space to get away for the kids to play or for things to be done in the wintertime. If the elements are bad outside, make sure they know about that, make sure it's open and it's inviting to them for that. Let's see what else. Just going through all my notes here. Um, have some nice inviting photographs up in the listing description. Okay, accentuate all these things. Make sure your agent is accentuating all these features in your listing description. Um, using having a music in key words like heated floor. It can actually boost The viewership of your listing by a little over three than other listings. If it's a true feature, make sure it's pointed out. Okay, Holiday decorating dues and donuts. If you want to incorporate holiday decorating into your staging, it can work. It can give your home a more inviting and homey feel. But remember one homebuyers mary could be another buyers tacky. So it's important to be mindful that not every buyer may celebrate the same holidays go very neutral with your holiday decor. Okay, When you're staging your house very, very neutral. Um, if you're adding seasonal items for the holidays, minimize other decor and furnishing furnishings when there's too much decor going on your home might look and feel cluttered to a buyer for lack of a better term or better phrase, you don't want someone to walk in and feel like christmas threw up in the house. Okay, keep it simple, keep it clean. That's not to say you can't still do your own thing and have family items out and have heirlooms out and things of that nature. But just knowing that your end goal is to also sell your house while you're celebrating the holidays, just keep those things in mind and just Number one, keep it clean, keep it simple, don't overdo it. Your holiday decor should not, or should match, I'm sorry. Um, your current color scheme of the home. So if your home looks, um, if it's like, you know, farmhouse, modern, farmhouse looking and that style and those colors, your holiday decor should look like it belongs with that. Um, allow the sellers to just rely on seeing items like garlands and wreaths to accent the home's best features such as a fireplace mantel or a staircase. If you need to have a holiday tree, christmas tree, make sure it fits the space you're putting it inappropriately. Okay, there could be nothing worse than having like a small corner, but you're used to like a nine ft tree and that's awesome for you when you're personally, you know, in your own personal space, but if it takes up too much space in that corner or too much space in front of that window, it'll be very distracting for someone coming in, looking to buy your home. So a big tree in a small area can make a home look smaller and cluttered. Conversely, a small tree in a big space can make it look empty and make it look cold again. We're looking to really warm up the space and keep your home feeling homey and comfy. So you gotta get it just right okay. If you've got kids, this next recommendation might be really, really tough. Um to stick with but try to avoid holiday yard inflatables and high wattage exterior lights. Think think christmas, vacation and clark Griswald, you're gonna want to kind of dial it back, keep it minimal, keep it simple, keep it classy, but still keep it, you you can still have your personality in there but just dial it back. If you're normally the overachieving type, you really want to pay attention to your homes. Online curb appeal. So not just the drive by curb appeal, the physical curb appeal but your online curb appeal. Did you know that about 95% of buyers now use online tools in their home search. And in the winter months, fewer home shoppers are inclined to get out and go to her homes if it's windy if it's cold, if it's chilly they just don't want to get out and tour homes and go to open houses Until they've done their window shopping 1st. So they do their window shopping 1st, they go from their big list to their small list and they're very dedicated and then they go out and they look because they don't want to waste their time going out and bad weather or being away from those family events, those holiday events that different kids being home. Okay, so they're gonna be much more purposeful in their search. So savvy sellers need to showcase your home's best features online. If you're not using me as your agent or someone on my team as your agent, make sure that your agent and you are and you are working collaboratively to accentuate your home's best features online. Make sure they're using professional photography, iphones take great photos. My google pixel takes amazing photos. I am not a real estate photographer. I do not have. It is a special gift to actually do real estate photography as a profession, hire a professional. You're hiring an agent right to be the professional to sell your home. If your agent isn't also hiring a professional photographer, please recommend that They do insist that they do drone photography if it's necessary in today's day and age. Even if you live in a condo, there's nothing wrong with having some drone photography and drone videos because they can be used to not just highlight your property but the surrounding neighborhoods, especially if you live in a master planned community that has a lot of amenities. Okay, It is very much the norm or at least should be the norm to include that in your listing online. A three D. Home Virtual Tour. Holy cow, especially in this time of year, make sure your agent is having someone come in and do a matter court or similar type of three D. Virtual tour that they can upload online. Again the buyers are out there, there's not as many of them because there's not as many homes available so everyone's taking a break. But if you can do all these right things even at this time of year, you can get your home listed, you can get your home sold. You gotta listen to me three d. Home Tour. It's going to make your home rank higher online. # one and then number two it's gonna catch the eye of the savvy shopper and they're going to look and be like wow, I can take myself into this home and now really put it high on my list to want to come back to go see it in person. There is actual research out there that homes with a 3D. Tour Get at least 45% more abuse online than homes without listen to that. Again, homes with a three D. Tour online are going to get At least 45% more views than homes without if you know that the pickings are slim Anyway, make yourself stand out, do these easy things to make yourself stand out. Even if there was only 20 homes available. Do you want to be the 20th home in somebody's search, You want to be the first home in their search, do all these things and you'll be the first home in their search. You want them viewing your home, you want a viewing at multiple times online and you want, I'm saving it online and whatever portal it is they're searching for you because then you know what they're gonna call and they're gonna come and they're gonna see your home in person and if it looks in person like it did online, you've done all these things, you're gonna get your home sold even in the wintertime, even at the holidays and almost every year I've been in real estate. I've had clients take me on in the holiday season, some as late as thanksgiving time and to a person. Almost all of them have said, well maybe we should wait till after the first year and almost always have had to sell and buy at the same time. I didn't have one this year, but I have the last few years, I have never failed to get somebody personally into a home by christmas when they've listened and these are people that I need to sell and then buy, listen to what I'm telling you, Listen to what the experts say, hire a good agent that's also going to listen to what the experts say and you're going to have an awesome holiday season. I wish you all the best. I would like to say merry christmas from my family to yours with whatever holiday you choose to celebrate. If you have any questions or comments, Please email me direct at [email protected]. Send me a text message at 949-929-2270. Or just drop a comment of whatever platform you were listening to me on. If it's the podcast or on Youtube, take care everybody see you again later this week. 

Welcome back for part 2 of my series "How To Buy A Home". Are you hoping to buy a home soon, or in the future? Have you tried buying a home recently with no luck? Today's real estate market is crazy, to say the least...It can be overwhelming and discouraging, especially for the first time home buyer. I'm here to you. This video series will take more of the guesswork out of the home buying process and give you the confidence you need to successfully buy a home. In this episode, I begin a series about the 10 Steps To Buying A Home In Orange County. This second part will cover steps 4 - How To Find A Real Estate Agent, 5 - Start The Home Search Process and 6 - Make An Offer. Even though I'm located in the Orange County real estate market, you can and should follow these steps everywhere. The steps to buying a home are no different, from city to city. Part 3 of this series will be released next week, so check back for more.

Ron Evans
Broker Associate
Amy Sims Real Estate Team
[email protected]
949.929.2270
www.ronevansrealty.com


 #rsmlakehomesforsale
 #ranchosantamargarita 
#ranchosantamargaritarealestate 
#orangecountyrealtor

 #homesforsaleranchosantamargarita 
#orangecountyrealestateagent

[00:00:00] : Yeah. Hi, everybody glad to have you back today. This is going to be part two of my series on how to buy a house. And there are 10 steps. There's 10 steps to buying a home successfully, and in part one, if you go back, I covered steps 12 and three, which is Check your credit score, determine how much you can afford and choose a lender and get preapproved for a mortgage. Today I'm going to cover steps 4, 5 and six. They are. Find a real estate agent, start the home search process and make an offer. Next week. When you come back, I will cover the final four steps. So this is going to be a three part series in total as always, wherever you're listening or wherever you're viewing. When you have questions or comments, please leave them and I will get back to you on those I reply to everything that I get. If you would like to ask questions direct in private, You can email me at real estate 101 at Ron Evans Realty.com. You can also text me at area code 9499 - 9 - 270. Get down here on my notes And we're gonna dig right in step two. I'm sorry. Part two of the 10 steps to successfully buying a home step number four And the 10 steps find a real estate agent. So sometimes, you know, there are a lot of steps, obviously, to buying a home. We've covered some. We're going to cover some today, cover some next week. Even with everything we've got going on today, all the contracts, all the litigation, all the different websites and the abilities to search and everything else. We still have some buyers who like to try to do it on their own. But what I want to talk about today is how having a good, reliable real estate agent can make your life and this entire home buying process a lot simpler. So when you hire an agent, they represent you, just You Okay, um, sometimes buyers I like to call the listing agent, thinking they might get a better deal or have a better opportunity of getting there. Offer accepted. And I will tell you from my own experience that occasionally it might seem like you're getting a better deal on paper or it might seem like you're getting a better deal because your offer got accepted. But what you always have to keep in mind is that that listing agent has a fiduciary responsibility to the seller. He owes you fairness and to treat you right he's supposed to. But at the end of the day, his fiduciary responsibility is to the seller. He's not your hired representation, and sometimes agents take advantage of this. It's just the reality of how things go. Some agents I don't even want to represent both sides because they know how it can look and they know how it can be such a difficult situation to be put in the middle. But the ones that do do it, some do it effectively, and some are fine. But there are quite a few out there that you know it's It's tricky at best, so just know going in if you're the type of buyer who's maybe you saw it on tiktok are you saw someone's post about on Instagram that you should always call our contact the listing agent. Sometimes it's good, sometimes it's not, and you're really taking a roll of the dice on that. So, um, again, your real estate agent that you hire represents you throughout the entire home buying process to make sure that you have found the right home. You're asking the important questions. You're making an appropriate offer because remember the agent you hire since they represent you, they're able to objectively look at the cops, the comparable sales, and help you formulate an offer and interpret the market data. They're not helping you. If you hire the listing agent, they might be helping you write an offer that they know. Like, Is there sellers pie in the sky offer again? Not. You're not always your interest. First, they also have the power to help negotiate and receive all the necessary disclosures and help you interpret them and understand them. There's a lot of paperwork are in California where I'm at. Our residential purchase agreement alone is 11 or 12 pages now just a boilerplate purchase agreement. It does not include any of the required disclosures that auto populate in. I believe you're about 18 x 18 or 20 pages. Now when you go to submit an offer of a contract and then once you're in escrow There are still other disclosures that you, as the buyer, need to complete or at least acknowledge you have received. And there are things that the seller completes to send to you to review. And trust me when I tell you it's not always written from a friendly point of view. A lot of a lot of legal wording, very official wording in there, and it can trip some people up. And I have. I have yet to have a client, a buyer client that hasn't had questions on how to interpret a lot of these disclosures. So it's important that you have an agent that can help you with that. But the most important thing about having an agent in your corner that you've that you've hired is there going to just give you invaluable peace of mind. You know, they're your buffer. There are a lot of times when I'm working with a buyer and we're in a transaction together. We're in escrow that I'm having communication with the listing agent, asking questions on behalf of my buyer that my buyer hasn't even asked yet. Or maybe I see things going on, a timeline that looks a little out of place, or I'm wondering why we haven't done certain things. And instead of waiting for my buyer to get these questions from escrow or whoever and throwing them off and getting them nervous because it's already the most nervous time they're ever going to have in their life, it's the biggest transaction most people ever complete. Um, I worked proactively to start asking those questions and getting that information in, so that when the time is right, I let my buyer no, and it just reassures them that everything is going smoothly. So the way to find the right real estate agent is by asking the right questions. And I'm going to give you some of the best questions that you should be asking. And I'd like to know. Maybe you want to drop a comment down below and and if you have other questions that you think might be appropriate or other questions, maybe you've asked in the past or information you thought might be applicable. Let me know what you're thinking, and I'll let you know if those two might be appropriate and good questions ask. So the first one, obviously, is. How long have you been working as a real estate agent. It should be of no shock to anybody that We have, especially here in California. We have a lot of licensed agents. I think it's over 400,000 Yeah, and sometimes it seems like the barrier to entry is not very difficult to even get into our profession. Um, someone who is new may not have the vendor contacts that you need the best vendor context that you need. You may or may not know, or they may or may not have the best set of communication skills you just don't know. So it's I'm not saying not to ever work with the new agent, not saying that at all. I'm just saying it's important to know how long they've been an agent, so you can gauge what their experience level is because that's what it boils down to. Is you having expectations? Another question, you may ask, is what makes you different from other agents? What's their value? Add to you? Are they just going to tell you? Well, I'll send you a bunch of listings, and when you see something that you like, you let me know and we'll go see it together. Is that their level of involvement? Or are they saying you know what I look for? I set you up with the search, obviously, in our multiple listing service. But I review everything before I send it to you so that I know when you have a question about a specific property before we go and see it. I've done a little homework upfront. I've looked at the pictures and I understand, Um, maybe in the pictures, it may have things a little bit different than what you were looking for, but I see the potential here, and I can explain that to you. I'm not just sending you blind properties and you're reviewing them and thinking, man, why is my agent sending me these? These don't even come close to matching my criteria. Sometimes there's a reason, at least for me. You know something's close, not exact. But I can see the potential. Or I can talk to him about what other people may have done to a house to kind of change it around. So it's all about that type of relationship. Um, so what? What makes you As an agent who's going to represent me and what makes you different from these other 400,000 agents that are in our state. Very good question. To ask another one is, how many clients are you working with? There's no wrong answer here. It's just so that you can understand what their level of engagement potentially may or may not be with you If they don't Do you know, if they say I have, like one or two, you know, then you can reasonably expect they should probably have pretty good communication skills. If the person says, Oh, I've got 30 I'm working with right now and I've got five in escrow and everything else that's awesome. A follow up, a little side question might be, Well, do you have a team that's helping you with that? Because I wanted to make sure that I understand how you're going to be able to communicate with me in a timely manner, because it seems like you might be too busy for me. Conversely, go back to the person only has one or two clients, or maybe no clients that they're working with a follow up question to that would just be, you know well, are you working another job, you know? Are you Are you? Is this full time for you? Um, just understand it again. There's no wrong answer to any of these as long as you are comfortable with what the level of engagement is going to be, level of communication is going to be that there's an expectation set and met. So how long have you been working as a real estate agent? What makes you different from other agents? How many clients are you currently working with? What experience do you have finding homes in my price range. Now, why is this important? Well, let's say you, five years ago were uh, a new couple, first time home buyer. You bought what you could afford, and it's just like an entry level home or condo in my area. But now it's five years later, you got a little family going. You're having success in your career, and now you are moving up into like, the luxury space of a home. You're going from the $700,000 condo 2 $2.5 million home again. There's no wrong answer here, but if you're you know, you may have a listing agent that you've hired to sell your condo, and they may want to represent you on the buying side of your home of your new home. You just want to understand what their level of experience and finding homes at that price range is because maybe they've never sold the home at that price range or they're not familiar with those neighborhoods. And there's specific things that you should be known about those neighborhoods. Um, so it may or may not behoove you to have a separate agent for your bio side verse and yourself side. A lot of times of yeah, people will stick with Okay, this person selling my home and they're looking for a home for me, but again understand what their experience level is at finding homes in your price range. Conversely, it could be the other way around to you. Could be you could be downsizing going from the $2 million and you know, you just need like the little single level condo. One bedroom condo, two bedroom condo is the luxury agent that only mainly sells luxury homes. Are they going to be able to give you the attention you need? at a lower price point like hate to say it, but will they take it seriously enough that that could be something you might be thinking of again? There's no wrong answer in that. Just understanding the level of commitment. Next question. How knowledgeable are you about my desired area? Kind of goes with the previous one, right? Price ranges tend to go from area to area, but you might have some things in the same price point in different areas, you know? Are you, um, familiar with the schools in the area that they're looking at? Are you familiar with the shopping, the walk ability? Um, maybe any special things about an area, crime rates and whatever, Like, how knowledgeable is that person in your area? Maybe you're coming from out of town. You know nothing about the area that happens a lot, too. And Mike, especially here in Orange County, we get a lot of people that relocate from other parts of California L. A San Diego, whatever. And they're selling a home up in LA and their agents making the drive down to Orange County with them to show them homes. The agent never comes to orange County. It really doesn't know anything about Orange County. And if you're if you're the listing agent on the home they're looking to buy, they end up asking you more questions and they're asking their own agent. So again, how knowledgeable is the agent? You're You're interviewing about knowing about the desired area that you're wanting to live in? How long have you been working as a real estate agent? What makes you different from other agents? How many clients are you currently working with? What experience do you have finding homes in my price range. How knowledgeable are you about my desired area? Last question, you may ask is Are you willing to provide me with references? Just about every agent out there has a website. And just about all those websites have reviews from clients. Those are all fine and dandy. But are they willing to actually go? Hey, you can call John. I did a deal with him two years ago. He's always told me that anytime anyone wants to call and ask about you, they can't. Is your agent willing to give you references like that? Or do they just say, Oh, yeah, I've got some great reviews on my website again. No wrong answers. It's just how deep you might want to dive into that. Now, once you have your agent that you've selected, it's best for you. They should be able to look over your approval letter and discuss your budget and help you set your priorities. And once you've got all that dialed in, you've been they've done in consultation with you, and they've got all that dialed in. We move on to step number five, starting the home search process. Mhm. So once you've got your agent set up and you've done a consultation with them and they understand your budget and your approval, maybe they've talked to your lender to understand anything special that might need to be done when making an offer or the types of homes that you may or may not qualify to purchase. It's time to start house hunting. The fun begins. Now remember as you as you're looking casually looking. Excuse me. Keep your priorities in mind. Hopefully, you have a list of what your priorities are. The area that you desire the size of home, that you desire closeness to schools that need to be close to work if need be. Have all those things in a priority list of like, your must haves would like to have. And I tell people the if everything works out, here's other stuff that would be awesome to have. But you've got to have your must have list that your main priorities. And then you have to have your plan B list that goes along with that, which is the would be really awesome to have. But I can live without if I have to. Then you've got plan C Over here, you've got your C list of items, which is like, Wow, if this also checks off these boxes, that's kind of like the ticker that maybe you're weighing a couple of different properties together. You're looking at like the C list to see if anything Tips one A The Other. Just remember, it's highly unlikely that any listing you find is going to check off every single box. Okay, especially when you're looking online. So try not to be too picky online until you actually see the home in person. Sometimes it's just a lot different. You get a lot different feel when you pull up the curb appeal the neighborhood. And I see it happen all the time. People make concessions that you never thought they would make just from seeing a home in person versus just seeing it online. Now, they're obviously they're gonna be things that you see online that will be nonstarters and deal breakers for you that you won't go see the home in person. But if you're on the fence about it, go see it in person tour different house houses and areas. Okay, um, you'll find the more houses you see, the more they'll start to blend together. Make sure you're organized. As you walk through the various homes again, keep your priority list with you. If you give it to me, I'll make copies of it for you, even so that you basically go from house to house and just check off boxes. Hate notes reflect on the house itself, as well as the surrounding area. I always do a debrief with my clients after we walk out between visits. Some things to consider the size, style and condition of the home. Okay, you got to do any work to it. The neighborhood the home is in what your commute may or may not be like in the schools in the area. Remember how sometimes people look for homes that are in poor condition that need to be remodeled, need to be fixed up, and they think it looks like a steal. Just remember, you're the one that has to do all the repairs And 99% of the time you find things as you start to make repairs that you didn't see before, that even a good home inspection didn't catch because you can't open up walls and things like that in a home inspection. Um, some people, even just replacing outdated appliances, can be a pain. So just really understand the condition. You may want to maximize your budget on a home that needs less work unless you're really, truly ready to dive into updating a home. All right, you selected an agent, they have consulted with you. You searched for homes. And now hopefully you've picked home And you're ready for step six. Make an offer. This is probably the most nerve wracking portion because a lot goes into this understanding the cops, understanding the price that you need to put on your offer understanding if you've got multiple offers you're dealing with and competition you're dealing with and then playing the waiting game, So when you find a house you want to buy, it's time to begin the process of making an offer. This is when you want to ask your agent to run the cops. The comparative market analysis to determine a fair price based on recent sales of similar homes in the area. Mhm. The less interest rate is, and the longer the house has been on the market always remember typically, the more power you will have to negotiate. Now, a real world today in 2021 homes are not lasting that long. And if they are still lasting longer than they should, um, you still may or may not have a lot of leverage just based on where our market is today. Very high demand, very low supply on a lot of competition. So in a normal market, my notes are are true and steady, and today's in our immediate market. It may or may not be that way again, why having the right agent working for you is key, so beyond the price you plan to offer you should speak to your agent about whether it makes sense to include any contingencies in your offer. Now, here in California, um, our contracts have contingencies already built into them, and they are understand they are already in the contract unless you, while making an offer, removes those contingencies, Sometimes it makes sense to remove some of them or all of them most the time. It doesn't, though. Contingencies are your way as a buyer to be protected in case something goes wrong on the transaction to make sure that your deposit is protected and that you're protected to cancel if need be. And it's always the things that we don't see coming that get in the way. You should never go into a transaction or into a purchase of a home playing a game with the contingency, so to speak and should always be going into it with the intent of completing the transaction. But it's important for you and your agent to understand what contingencies you already have, and if you need to add anything or remove something from the contract when you make your offer, so what a contingency is is. It's a stipulation, including in an offer that states that have a particular condition is not met. The buyer is free to break the contract without any repercussions. Okay, the three main ones we have here in California is we have an inspection contingency. We have an appraisal contingency if there's a loan and we have a loan contingency to make sure that you were able to as the buyer to make a get a final approval right before escrow is too close. If any of those contingencies fall through, typically you can cancel a contract. Get your deposit back, move on. That's why it's important to know, Like what? You can leave in the contract, which could take out the contract, maybe make your her more attractive or, depending on what you're doing. You may take stuff out. Those sellers well, sometimes balk. It offers made with contingencies. But there are some contingencies that are worth making, regardless of the sellers feelings about them. Okay, we're going to talk about a couple is more detailed alone. Contingency. If your ability to afford the home is dependent on your ability to obtain alone, you really should keep alone contingency in your offer. This contingency will make it possible for you to back out of your offer. If for any reason, you are unable to receive financing. Even if you've been pre approved for your loan, you should still right the the loan contingency in or keep it in the in your offer. You never know when you may have a personal life event that hits you At the 11th hour and derails your home. Buying home sale contingency or sale of home contingency. Now this is applicable. This contingency is applicable. Obviously, if you're already a homeowner and you're wanting to move and purchase another home, and your purchase that you're trying to make is going to be contingent upon selling your current home. Now, a lot of these kind of go hand in hand. You may have to sell your home to complete your loan contingency to make sure that your loan goes through okay, But if you're planning to sell your home and you require front funds from the sale to purchase your new home, you're going to want to make sure that you have a home sale contingency in place. There are some instances where you don't need to, and it has to do a lot with the lender that you're working with. Type alone, that you're getting the expertise of your agent so on and so on that those are one off situations. Um, what this does as it protects you in case you are unable to find a buyer for your home while you're in escrow for your new home. Um, it allows the seller to move on, and it allows you the buyer to move on again. Pretty much clean. Um, in today's market, a lot of sellers will not accept an offer that has a home to sell contingency or not even a lot, pretty much every. So it is not going to accept an offer that has a home sell contingency. That's our reality of 2021. But eventually things will change and it will be more applicable. You may or may not need to feel feel comfortable with or without. That the inspection contingency. This is the most, in my opinion, the most important contingency for you the buyer when it comes to protecting your investment. So the inspection contingency allows you the buyer to do any and all investigations you want on the home Within a whatever the specified time is the boilerplate here in California 17 days. But you can get a lot of it done in 10 to 12 days. So usually we'll we may shorten that to make an offer. Look a little cleaner. So the seller is not just sitting around thinking that you're going to wait 17 days to get things done. So but during that time that 17 days, that 10 days, whatever it is you choose with your agent, you're going to get things like home inspections, a general home inspection. If it's a pool home, I would highly recommend getting a separate independent pool inspection if you've got some high end h back air conditioning. If you've just got like a standard air conditioning, your general home inspection should be fine, unless he finds something wrong with it. And then you can have an independent H Vac inspection done. I personally had a transaction one time that had the home had six air conditioners. So regardless of what the home inspection was going to say, we had an independent air conditioning inspection done, um, a roof inspection again. You may or may not need a roof inspection, depending upon what the General Home Inspection finds. If they find signs of leaks or signs of repairs, which are easy to spot, then you might want to have a more in depth, specific, specific roof inspection or if the homes older and it doesn't look like the roof has been replaced in a long time, have an independent one or just for your peace of mind. If you want to have an independent one, regardless of what any of the other inspectors say all up to you, you just need to know what all your options are. And just know that if there's a working mechanism or a component in this house, you can probably have an independent inspection done above and beyond the General home inspection. But during your inspection contingency, it's not just for physical inspections of the home. It's also for reviewing all of the disclosures that come over from the seller specific to the home. They have what's called the seller's property questionnaire or the seller lists out everything that they know to be true of the home that made me work, that they've done things that they know work, things that they know that are broken, um, possible death on property if it falls within the right. Guidelines, nuisances, complaints, all those types of things going like the seller property questionnaire, Then there's also the transfer disclosure statement, and that's more, um, just boilerplate. They're checking off boxes of what's included with the home that they know that home has with it and different things. But during this inspection contingency timeline, you get to review all of that. Not just do physical inspections. Another Big one is if the homes in an HOA. This is your time to review and ask questions about the CC and RS and the documents and requirements. All that happens during your inspection. Contingency timeline. Now there's some other smaller inspection contingencies outside of this one that you know, Sometimes things get enacted because things get maybe paperwork. It's delayed sending to you that's a whole other conversation. But just know in general during your inspection, contingency timeline is your chance and your requirement as the fire to review things to make sure you are comfortable buying this house as it sits. Um, the other Big one is the appraisal contingency. If you're having alone, That's a Big one. Because in our market today, when you're having to bid and offer tens of thousands of dollars, possibly over list price and actually possibly over recent sale cops what they show appraisals can be very tricky. And you need to understand, with or without an appraisal contingency What that means to you If the home you're buying doesn't appraise for the amount you need needed to for your lung to go through, are you willing to Are you willing, Mr Buyer, to come out of pocket to make up any appraisal gap? Well, you're Linda allow you to do an appraisal gap. So these are all extra things you need to know. And if you have a good agent, they should know how to explain that to you. They should also know how to, um, translate anything that the lender is talking to you about. What? That as well. Okay, so today we're coming to an end here, coming to a close. But to recap We covered steps 4, 5 and six Of the 10 steps to success on how to buy a house. Keep in mind, I know that most of my clients and everything I work with here are in Orange County or in California. But these steps are pretty much applicable anywhere in the United States. So hopefully, if you're listening from outside of Orange County, let me know outside of California. Let me know. I'd love to hear some feedback on, um, what you think of these steps and if you have found them useful for you in the past or in the current situation that we've covered. Finding a real estate agent today, which step for Start the home search process, which is step five And making an offer, which is step six next week. I'll be wrapping things up When I talk about step seven, which is get a home inspection and home appraisal. Step eight. Purchasing homeowner's insurance. Step nine. Doing a final walkthrough and stepped in closing on your new home again. I thank you for coming back. Appreciate it, and I will see you next week. If you have any comments or questions again, you can leave them in the sections on whatever podcast you're listening to or on YouTube. If you're watching the video, you can email me directly at real estate one on one at Ron Evans realty dot com or text me 9499 to 9 to 270. See you guys again next week. Hey. Uh huh. Oh. 

Orange County Housing Summary ·       The active listing inventory shed 94 homes in the past two weeks, down 6%, and now totals 1,363 homes, its lowest level since tracking. In November, there were 8% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 175 less. Last year, there were 3,152 homes on the market, 1,789 additional homes, or 131% more.

·       Demand, the number of pending sales over the prior month, plunged by 277 pending sales in the past two weeks, down 12%, and now totals 1,944, its largest drop of the year and the lowest level since January. Last year, there were 2,549 pending sales, 31% more than today due to a delay in the Spring Market because of COVID. 

·       With an enormous drop in demand compared to the smaller drop in supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 20 to 21 days in the past couple of weeks, an extremely Hot Seller’s Market (less than 60 days). It was at 37 days last year, slower than today.  

·       For homes priced below $750,000, the market is a Hot Seller’s Market (less than 60 days) with an Expected Market Time of 18 days. This range represents 28% of the active inventory and 33% of demand. 

·       For homes priced between $750,000 and $1 million, the Expected Market Time is 14 days, a Hot Seller’s Market. This range represents 18% of the active inventory and 28% of demand.

·       For homes priced between $1 million to $1.25 million, the Expected Market Time is 14 days, a Hot Seller’s Market. This range represents 9% of the active inventory and 13% of demand.

·       For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 18 days, a Hot Seller’s Market. This range represents 7% of the active inventory and 9% of demand.

·       For homes priced between $1.5 million and $2 million, the Expected Market increased from 21 to 24 days. For homes priced between $2 million and $4 million, the Expected Market Time increased from 39 to 46 days. For homes priced above $4 million, the Expected Market Time increased from 103 to 112 days.

·       The luxury end, all homes above $1.5 million, accounts for 37% of the inventory and 17% of demand.

·       Distressed homes, both short sales and foreclosures combined, made up only 0.6% of all listings and 0.4% of demand. There are only 6 foreclosures and 2 short sales available to purchase today in all of Orange County, 8 total distressed homes on the active market, up 1 from two weeks ago. Last year there were 8 total distressed homes on the market, same as today.

• There were 2,570 closed residential resales in November, 10% less than November 2020’s 2,843 closed sales. For the year, through November, there have been 32,669 closed sales, 20% higher than last year. September marked a 7% drop compared to October 2021. The sales to list price ratio was 101.1% for all of Orange County. Foreclosures accounted for just 0.2% of all closed sales, and short sales accounted for 0.2%. That means that 99.6% of all sales were good ol’ fashioned sellers with equity.

 

In this episode, I begin a series about the 10 Steps To Buying A Home In Orange County. This first part will cover steps 1, 2 and 3.Now, these steps are actually applicable almost everywhere, but I speak to our local market here in Orange County. Part 2 of this series will be release next week, so check back for more.

Please see the show notes below for full transcript.

Ron Evans
Broker Associate
Amy Sims Real Estate Team
[email protected]
949.929.2270
www.ronevansrealty.com

[00:00:00] : mm Hey everybody, this is Ron Evans and you are on my podcast or my Youtube channel real estate one on one with Ron Evans and today I am going to start a series about the home buying process, how to buy a house. All the steps that you need to go through to be successful. And I'm gonna list off what I've broken down into 10 steps And within those 10 steps there might be some sub steps or there might be a couple of things kind of grouped together. But 10 basic steps in areas. I'm gonna list them all off for you. And then I'm going to do this in a series and I'm going to take 123 or so at a time because there's some things that kind of go together now um Right now and this is December 2021 that I'm recording this. I don't care if you're listening to this five years from now, five months from now, five minutes from now, the process is most likely not going to change. So the underlying process, the steps that I go through, that's never really going to change. Some other things that I might touch on. Um as I'm going through this might be based on how current market conditions are, that is what can change going forward obviously. But for right now, just know that if you land on this video, three years from now and the market is completely upside down and different from today, these steps that I'm going to go over will still be applicable. Um, so don't lose sight of that. Don't lose faith in that you are going to be just fine. I'm gonna give you my contact information here up front just in case I lose you throughout this thing or you want to come back to it again. My name is Ron Evans. My texting phone number is 9499-9-270. My email address that I used for the podcast on Youtube is real estate one oh one at Ron Evans realty dot com. Now you're going to see all this in the show notes or in the description on Youtube but I always like to let everyone know up front if you haven't tuned in before. A little background about me. I have been a realtor now for This is my eighth year 2014 when I started um, I just recently obtained my broker's license here in California. I live and work primarily here in Orange county California. However, I have sold homes throughout all of southern California. I have sales in inland empire, riverside san Diego La. I really don't discriminate if a client needs help and I have an ability to help them. I will do so I don't care where you're at. My license allows me to work throughout California. And so I feel like I should take advantage of that when I can. All right, let's jump in another little side note as I work About 5050 with buyers and sellers. Now there are some agents, they get into the business and they only want to work with one or the other. Um I don't discriminate If you need to buy a home, buy a property by a commercial property, whatever I'm your guy. If you need to sell a home, sell a property, sell a commercial property, I am a guy, I have experience across the board and all of that, Let's dive in. So here are the 10 steps and why am I going over this foot? Why am I doing that? Well in today's market, it is so competitive right now that you cannot afford as a buyer to be unprepared. You need to be able to go into the entire home buying process with eyes wide open, No surprises, no secrets. Full transparency. That's how I work. That's how I hope the agent that you're working with, if it's not me chooses to work. But it is so competitive right now for buyers, multiple offers happen to overbid all kinds of crazy things. Getting really creative with financing and down payments and how you're going to do stuff that if you're off even a little bit in any of these steps, you're going to risk losing the home that you want to buy simple as that because There are 10 other buyers just like you trying to buy the same house That's in today's market December 2021 go back and listen to some of my previous videos. Follow me from my market updates. You'll see that there's no there's no foreseeable end in sight with how the market is going. So this is this is what I'm going to talk about is gonna be very applicable for for quite some time. So let's get it. Step one, check and know your credit score. Step two, determine how much you can afford. Step three, choose a lender and get pre approved for a mortgage. Step five, find a real estate agent. Step six. Start your home search process. I'm sorry that was stepped five. Start the home search process. Step six make an offer. Step seven, get a home inspection and home appraisal. Step eight, purchase homeowners insurance, Step nine, do a final walk through step 10. Close on your new home now you're probably thinking to yourself over and I bought a house before or I've heard other people talking about things and there's you might be leaving some stuff out in this main master list. Yes, there might be some stuff left out. But if you remember what I said at the very beginning, these are kind of the key things. There are going to be some subsets that you hear within these that will bring the whole package together for you. I promise. Stick with me now for this first video This is gonna be part one. I am going to cover the first three. I'm going to cover checking your credit score, determining how much you can afford, choosing a lender. Getting preapproved for a mortgage. Okay. That's the that's the stuff that if you can't cover those three things, you absolutely do not go forward. Simple as that, checking your credit score. Now before you begin your home buying process, you want to make sure you're actually in a position to take on all that buying a house entails. That's why the first step is to do your research, check your credit score and review your finances. Notice how this is all under, check your credit score. But it's actually three steps in one doing your research, check your credit score, review finances, This is all under step one. Research different areas. Before you can buy a house, you need to know where you want to buy a house. The oldest cliche or. Adage about real estate is location, location, location. You can't, you can't swap a location. No two locations are the same. You can find similar houses from place to place. But the location itself, you can't find duplicates, make a list of the areas you're considering moving to and research them. Maybe you're coming from out of state to Orange County. Maybe you already live in one part of Orange County but a job is taking you to another part of Orange county or kids school retirement, whatever. Maybe you're in a specific city. I'm here in Rancho santa margarita California. But maybe you live in one part of our sm and you want to move to another part of our sm for whatever reason. Change of schools closer to work. Okay. Make a list of the areas And in that if you know if you're already local and you want to stay local, the list of areas should be the list of neighborhoods and start researching them. It's important, especially in today's day and age and especially if you have a family to look into crime rates, public school ratings in the area, not only public schools, but a lot of private schools are also rated along with those public schools. Great resource for that. Great schools dot org. Go to www dot great schools dot org. Put in the, you can put in an address not just a zip code, not just a city, but a specific address. To find out what elementary, intermediate and high schools are zoned to your specific address. And if there are any swap schools. Because here in Orange County it's very popular to maybe swap from school to school as long as it's in the same district, but maybe one school has a better curriculum or a different curriculum that suits your child's focus better. Okay. Crime rates, public schools but also don't forget about the regular day to day things of life. Where's the closest grocery store. How long will your commute to work be? Keep all of that in mind as you consider different cities, different neighborhoods, different streets and neighborhoods keep all that in mind. Okay. Research different areas credit score to buy a house. Now here's the here's the nuts and bolts. Getting finance to buy a house Isn't always easy. This isn't 2005 where you just needed a pulse in an income or at least a stated income to buy one home multiple homes. What have you? Okay mortgage lenders today use your credit score first and your financial history to qualify you for a loan. So it's very important for you to be one step ahead of them that when you are sitting down and talking to your lender, you already have an idea going into that conversation to obtain a conventional loan. Now there's different types of financing out their conventional is the most Others chosen. It's the one where you might hear, I gotta have 20% to put it for a down payment. Not entirely true for conventional these days but that's typical. You need a median fico score of 620 or higher. Now you have three credit bureaus that they pull. Okay Experian Equifax Trans Union They take the median score, it's got to be at least a 6:20 or higher. Okay. Different lenders might have different programs in case you're not exactly out of 6:20 or you don't necessarily have 20% down. You have things also like F. H. A. Alone. Okay that's a federally backed loan? Lower down payment instead of 20% down Maybe 1510 or five on a conventional loan. An F. H. A. Loans 3.5% down minimum. Okay But also the credit score requirement goes from a 6 20 on a conventional to 5 80 on F. H. A. Then there's also V. A. Loans through veteran's benefits. Quite often the most overlooked benefit that those who have served in our military don't realize that they have or they've heard about it but they haven't been educated on it and don't know how to use it. And quite frankly I've got a video in my channel here. Um that talks about V. A. Loans quite frankly a lot of agents and sellers and buyers are afraid of it because they don't understand it and it's actually an awesome benefit. Here's one of the reasons but it's an awesome benefit. The via doesn't require a specific credit score. The lender. The V. A lender you go through has their own policies on credit scores. Okay. I haven't personally heard of one going below 580 but I'm not that's not to say that under certain circumstances or special circumstances they wouldn't like an F. H. A. Some bigger banks or nationally known recognized lenders for V. A. Like rocket mortgage. You've heard of rocket mortgage by now. I'm sure you've seen their commercials they require a 6 20 for a V. A. But you can depending on who you talk to you. You can go lower and then there's some other benefits with via as well your credit and financial history that's gonna dictate whether you can obtain alone and be what your interest rate is going to be. The higher your credit score you can typically secure a better and just rate and better loan terms. This is why it's making, it's important for you to understand what you're getting into ahead of time. Okay. Yes you can roll into an F. H. A. Loan With a 580 score and only 3.5% down. That's an awesome thing. It also has a higher debt to income ratio. Your lender can explain that to you more than on a conventional but you need to understand all the ramifications of that. It can get you into the home of your dreams for sure. But you might pay a little bit of a premium for them being a bit of more lax on the qualifications. So you need to know all this. Someone who has a credit score of (727) 67 80 Is going to get a preferred rate versus someone who has even a 626-40 or that 580 you know they're not going to pay a penalty for those things. All right let's move on. Next step determine how much you can afford. Now even before you speak to a lender hopefully you understand the budget and if you don't talk to a lender that you really, really trust, maybe you worked with before and have them help you break down a budget because a lot of them can and we'll do it for you. Especially if it's like your neighborhood lender, they're local to you. You can go in and meet with them Face to face. They're not just an 800 number that you're calling. Okay, so before you speak to your your lender, it's useful to know how to calculate how much house you can afford on your own, your lender. We'll tell you how much money you qualify for but you want to make sure you won't be overextending yourself some lenders now, there's always a difference between what you qualify for on paper and what you qualify for in your heart. In your conscience it's always going to be different. The lender is just looking at the numbers. It's just the math. He's gonna say, hey joe, good news. We can get you into an $800,000 purchase price of a home. You don't need to do 20% down, but we can do it at 10% down on a conventional loan With your mortgage, insurance and everything tackled everything. We've got an estimated here a payment of about $53,000 a month. Now, joe sits back and he's like, wow, I've been renting For about $4,000 a month. But my landlord, I was going to raise me to 4500 a month and that's why I'm looking at buying because I don't think in my heart, and in my conscience I can even afford $45,000 a month. But now I've got, does lender telling me I can pay $5,000 a month. That's the difference between what any letter is going to tell you that the math tells you you can afford versus what you have to understand that you can truly afford. Maybe you can afford that 5000. It's going to require a little more sacrifice on your end. May be paying off some other debt. Maybe cutting out some different extracurricular activities that are typically in your budget to get you there. But if those extracurricular activities and that extra debt you have, you can't, you can't afford to pay off well then you need to try to keep your, your budget down to what you can comfortably without eating too much anxiety know that you can accommodate. Now, a typical rule of thumb from experts as they recommend no more than 30% of your gross monthly income on housing costs. Let's be realistic, especially in today's market, especially in where I live in California, southern California Orange County, 30% of your gross for most people okay, is not going to give them much affordability of a home or it's not going to allow them to afford the home that they want to buy Most often you're going to be, they're going to be closer to the 40 45% range. Okay? Um Not just how it is and that could be with a single or dual income. That's just the reality. Okay. Of where we're at. There's other parts of the country that might be a little bit different than that. There's also other parts of the country that might be worse. Or you have a bigger spread with what they're they're gross. Is that they have to use? Okay. But now let's just talk really quickly about what all these costs are that make up this 30% that the experts talk about. Okay first is the principal. This is the actual money you borrowed to purchase your home. This is what I'm about to talk to you about now these sections, this is what your house payment is broken down into principal interest. This is the fee the lender charges you to borrow the funds, your interest rate. Right now you can get a house about 3.1%. A couple weeks, a couple months ago it was below three. Okay, Couple years ago it was over four. This varies from time to time. All of this interest rate is something that is the main thing that you're lender can can put into an affordability calculator for you to kind of show you if you like acting now versus waiting on the cost of your home and you cost your payment. Okay. So we cover principle. We covered interest. The third part of your of your your monthly payment is your taxes, property taxes, you are required to pay property taxes to the government based on the value and location of your home. Your home is given what's called an assessment tax man collects on that twice a year. However it's broken into your payment. Um And it's kept in what's called an impound account. Typically it's a little bit about how the thing works. All this stuff gets broken into an impound account and then it's just paid monthly altogether. Principal interest taxes. 4th thing is insurance, homeowners insurance, this protects your home against any damages. If you have alone on your property, they are going to require your lender or your bank is going to require you to have homeowner's insurance protects against the fire, protects against accidents, damn leak damage. Lots of different things for homeowners insurance protects your investment. Okay. The last thing is variable because not all homes fall into an H. O. A. But if it does, you're going to have principle interest taxes, Insurance and number five H. O. A. Dues. Your association dues. These are fees you must pay if you're home belongs to homeowners Association. If your home is not part of a homeowners association, you won't have to pay this feat. This when it comes to researching neighborhoods researching cities. As one thing you need to think about when you're thinking about crime rates? schools, grocery stores et cetera is the home I'm looking to buy. Does it have an H. O. A. And if so how much is that? H. O. A. Because if you're a choco fuh away is 50 60 bucks 70 bucks. Probably not a big deal. If you're H. O. A. is $300. $400. $500. That impacts a lot of people's affordability. an old rule of thumb we used to go by when the interest rates were in the 4% area was For every $10,000 That you finance or pay or put as a down payment that equals about $50-$55 of a house payment. So if you took that rule of thumb and you had a $400 a month house payments. I'm sorry $400 a month h. o. a. This Knowing that approximately 50 to $55 Is $10,000 And purchasing power $80,000 potentially 70 to $80,000 of a home. If you have that higher than nature way very important to pay attention to that. That's and that's the one thing I'll be honest with you. H. O. A. Dues are the number one thing that everyone forgets about until they go to make an offer on a house and the lender tells him here's what you're payments going to look like. And you're like Oof wasn't quite expecting that. It's the H. O. A. Dues. Some places if you're buying a condom, you might have to H. O. A. Dues. Not just one. We can talk about the viability of Ecowas in another discussion. Probably make a whole video on that alone. That's neither here nor there with what I'm talking about tonight. So you have principal interest taxes, insurance association use that's what makes up your house payment to calculate how much home you can't afford. Consider using some sort of a mortgage calculator. Okay. I can send you one, I can send you a link to when I have one on my website. As a matter of fact Ron Evans realty dot com. Let's consider using some sort of a calculator, mortgage calculator. It will break all this stuff down into. You can kind of look online and kind of see the price of a house that you might like plug that in, plug in. How much you were thinking about putting a down payment and it will do the rest for you. Now, another part of determining how much you can afford is your down payment and closing costs. You need to understand this, understanding what you are responsible to pay and when is crucial to the home buying process. So this is when you start speaking to your lender to your real estate agent about which costs you have to pay up front. Okay, The # one thing you're going to have the down payment. Like I told you before, You used to always hear 20 was the recommended or was sometimes even the minimum down payment. But that's a big number, especially in a market like mine. So it's no longer the standard. You can get A minimum down payment of about 3% on a conventional loan. Now it's going to have a pretty high PMI private mortgage insurance attached to it. You're Leonard can go into all that. So I've personally never had a buyer Try to do a 3% down conventional loan. They are available to some lenders. I have had buyers do F. H. A. At 3.5% down but there were other factors than just down payment that went into that some of them have really good credit but they didn't have a huge down payment but they still want to have a j it's just easier. It was easier for them to qualify for some of the lower down payment conventional loans are still harder to qualify for because of the credit standards, the income standards and the debt to income ratio that we talked about before. So not all low down payment loans are the same. So keep in mind that the larger the down payment, the more equity you'll have when you close and the lower your monthly mortgage payment will be. So if you have that option, take advantage of that option to put more money down but weigh all your options and choose the right down payment for you. Use the affordability calculators, the mortgage calculators and talk to your lender, Talk to your agent. A larger down payment may be great. But not if it means emptying your savings because you still you don't want to deplete all your reserves just to put more of the down payment. It may not make that unless it makes just such a huge difference in your monthly payment. Lot of times it doesn't. The other large expense you need an hour. That is the closing costs. These are the fees that are associated with processing and securing your loan that the lender charges. Some of them are in pounds or prepaid. Um The exact amount you need will vary depending on the type alone the tax requirements. So basically they pro rate the taxes But generally it could be anywhere from 3-6% of the purchase price. Okay this includes like funding fees, the origination be excuse me, taxes, impounded insurance impounded. Okay you pre pay a lot of that stuff up front when you close because the bank requires it to stay in this impound account. So basically how you know keeps the process going smooth and make sure that everyone has skin in the game. So 3-6%. So if you're buying an $800,000 home your closing costs might be 24,030,000. Keep that in mind that's separate from your down payment, separate from your down payment. It does not go towards the equity of your home. Now sometimes lenders uh can pay some of those closing costs um or give you a credit toward them. Certain things you can never get a credit for. And those would be the impound things like taxes and insurance and stuff like that. Those are things that are required to be paid for by the buyer. You can't get a credit for from your agent from your lender, nothing like that. But sometimes on some of the other ones you can, so it's always important to ask if your work, if you happen to be working with a letter that will pay for some of your closing costs. All our all our part also depending on what the real estate market is doing, you might be able to get some of your closing costs paid for by the seller in today's market. Not going to happen. Not going to happen at all unless you got creative with your offer. We can talk about that off offline. But in today's market you're not going to get a seller to pay your closing costs. Okay? Um, when it becomes a buyer's market, so in a few years, when the market kind of maybe flips a little bit, that's when you can you negotiate closing costs into alone or into a purchase but you're not going to do it from the seller today. Keep it in the back of your mind depending on when it is you are coming across this video. Okay so we've covered step one checking your credit score and all that entailed. We've just now finished step to determining how much you can't afford. Now let's talk about step three choosing a lender and getting pre approved Scuse me for your mortgage many. So like I just said finding a mortgage lender and getting pre approved for a loan is your next step many first time home buyers don't realize they can and should shop around for lenders before choosing one, do your research and make an informed decision. Now I know when I listed the big list they're choosing a real estate agent came next. But if you're already working with a real estate agent which happens more often than not get advice from them too, you are never required to use a lender that someone else tells you you have to use unless the seller has it like in their listing agreement. But just because just because your agent tells you or the listing agent of the home, you put an offer in on it says oh hey we need you to talk to our lender. You can talk to him all you want but you don't have to use it. You can still use whoever you want to go through. So personally when I meet a new client, I asked them if they're already pre approved 99% of the time they're not. So they haven't gone through these steps in this order. My next question is what do you already have a lender that you're working with or that have you ever bought a home before? And you know of a lender or a bank that you want to work with? 75% of the time? The answer is still no. So then I typically get to know the person through a conversation maybe interacting with them once or twice, get a feel for their personality and then I go through my list of lenders that I like to work with. I usually have four or five um maybe two that are primary and the rest that I know like what they can do for me. Okay if I have like special situations but then I just recommend and say hey look I think you might works you might fit well with X or Z. And I will give them the contact information for the lenders that I'm telling them they should talk to and I recommend they talked to both. Not just talk to want to pick them but talk to both. I also contact the lenders with the buyer's permission and give their information to both of them as well. And I typically I'm always pretty upfront with my letters letting them know hey look you're one of two or you're one of three that they've asked to talk to. So my lenders know up front. Um So they can talk to all my people and choose one. They can talk to all my people and not choose one and still go find one on their own. I don't care as long as I have the ability to contact whoever they do end up choosing if it's not my someone that I've worked with in the past to vet them on my own so that I know like what I'm getting into with their lender communication is the key. Okay so get different loan estimates. There are often variations in interest rates and closing costs between lenders. Put direct lenders, mortgage brokers, different things. They all have different programs and they all have different rates, they have different requirements. So it's essential you do your homework with them. When you compare lenders, ask each one to provide you with a loan estimate. It's easy for them to do. This will spell out the loan terms, the projected payments based on whatever home uh purchase price you give them and closing costs for your potential mortgage. This form is provided in universal format. So it makes it simple for you to compare from lender to lender. They all should have the exact same information on them. It's a requirement be sure to consider factors beyond the bottom line. However, this is why I when I recommend the lender to somebody, I've gotten to know my client as best I can in a short amount of time. So I kind of have an idea of, okay this person's customer service style and skill is going to suit this client better. Um You know you have to figure out how to match personalities together and know what's important to your client. Sometimes I just asked my client, are you just like are you a bottom line shopper? Are you a numbers person or do you care about the customer service? You're going to get into communication you're gonna get but sometimes they don't go hand in hand. So be sure to consider factors beyond the bottom line. A lender might be offering a great deal but if it comes with lower quality customer service it may or may not be worth it. This is what I'm just talking about buying a house is a long enough and complicated journey. Just because you get approved for your loan today. Get your pre approval today. Doesn't mean you're getting into escrow tomorrow. We're just getting started. Might be a few months. Okay so it's really important for you to know how that lender works. You need to find a lender that you can trust to make the process as simple inconvenient as possible. Not all lenders are the same at all. Now you're going to get pre approved after you've chosen your lender. It used to be, you would get prequalified. You'd have a 10 minute conversation with a lender over the phone and they would send out a letter going. We qualify for you for this loan. Being qualified being is not a guaranteed that you'll actually be able to obtain alone when you get prequalified lenders only estimate your finances based on the information you provide. They haven't been given your W. Two S or your taxes that they're going to need to know all the other documentation they're going to need to senator underwriter to actually get you an approval. Okay. So prequalified does not guarantee that you can get that loan. It's just a conversation. It's based solely on the information you have basically verbally given. Getting preapproved requires a more thorough investigation of your finances. That includes verification of your income verification of your assets if you have any and credit rating. When you get preapproved for a loan, you are guaranteed you'll be able to obtain the loan, assuming your finances don't change between the time you got pre approved in a time that the home is supposed to close escrow. So it's basically telling you MR buyer all things equal all things remaining the same today. Three months from now. You're still gonna be qualified for this loan. As long as you have lost your job, bought a car. Um, got a divorce. I don't know lots of different things that can impact your credit rating or impact your income. As long as none of those things happening, everything has stayed the same. You're they're telling you you're golden. A preapproval is helpful because it tells you exactly how much the lender is willing to let you borrow and it specifies the costs to obtain the loan being preapproved also tells the seller that you're serious about buying. Which in any market I don't care if it's a buyer's market or seller's market is key. It helps you in a bidding war. Now we can even go, most lenders that I work with can even go one step further than just a pre approval. They actually run you through underwriting. So a pre qualification 10 minute conversation. A typical pre approval you can get like same day maybe 24 hours. But then you can also go through what's called a D. U. Desktop under it And it's online profile. They send you through and they or an underwritten pre approval that might take like 2-3 days depending on how fast you are getting them all the documentation they need to review. But once they have that that's an even more sure thing than just a standard pre approval. When you work with me. We'll go over all those options in detail with my lenders. Just keep that in mind that there are still different types of preapprovals. Not just a standard pre approval. So that's it that's it for this first video. I hope this helps you at least get the the wheels going. We've talked about checking your credit score determining how much you can afford to choosing a lender and getting preapproved for a mortgage next week. I'll drop the second video in this series and we will talk about finding a real estate agent, starting the search process and making an offer that's like the most fun part of this whole thing is getting to there. This first part we talked about tonight, it's tedious, it's boring. Um sometimes it can be exciting when you get the news you want to hear. Maybe news you're better than you wanted to hear. And sometimes it can be heartbreaking when you're maybe you're told you can't afford to buy a house right now but it's still very very important to do it first. Okay, so that's it for tonight again. You can contact me at (949) 9-9-270 Or real estate 101 at Ron Evans Realty.com will be happy to answer all your questions. Set up an appointment with you. If you have anything further or deeper dive you'd like to take and there you go. I hope you enjoyed this. I hope it was informative session. Thank you. See you next time. Hey. Uh huh.