BradyLoan.com

Which offer should a San Diego home seller accept during the COVID shutdown crisis?

Q- Which offer to buy your home should you accept?

A- The highest net offer which is most likely to close.

 

That seems obvious, doesn't it, Let's consider the second part of the answer though. An old friend and Phoenix real estate broker Greg Swann, was promoting this new listing on his Facebook and asked me this question:

 

Q- Can you reflect on the current state of borrowers? I've never loved FHA-ish loans, especially not in cash-poor offers. Obviously, everyone loves cash, and 80/20 conventional is hard to turn down. Are government loans still doable? If so, are they more or less risky to close than they were two months ago?

 

My answer is:

 

Great questions. Government loans are fine and, based upon whom the buyers may be, might be preferable. Here is the biggest concern from a lender/servicer's point of view; will the new buyers start deferring mortgage payments under the blanket of COVID?

 

Lenders are going to verify employment before the loan is approved, right before the loan docs are drawn, and right before they fund the loan-- yes, three times.

 

How might a seller mitigate that risk? Consider the buyers' jobs as well as their qualification standards. "Essential" workers are good buyers but government-funded paychecks are the best buyers.

 

If presented with a VA offer, from a Staff Sergeant at MCAS Miramar, take it. If presented with a VA offer, from a Navy veteran working for a start up, scrutinize it.

 

If presented an FHA offer from a Law Enforcement Officer, take it. If presented an FHA offer from a security officer for an office building, scrutinize it.

 

If presented a 40% down conventional offer from a business owner, scrutinize it. If presented a 20% down conventional offer from a public school teacher, take it.

 

The old saw "money cures all problems" isnt applicable anymore if there is a loan involved.

Each acceptance should have an addendum and/or counter which states that the buyers lock their interest rate within 24 hours and order the appraisal within 48 hours of acceptance.

 

Unless you have a cash offer, there is ALWAYS going to some risk that the loan is declined. Most lenders are looking for a 680 minimum credit score for conventional loans and a 640 minimum credit score for VA/FHA loans. Downpayment matters only inasmuch it can mitigate a low appraisal. Ability to repay a loan, especially in a time when forebearances are handed out without much scrutiny, has underwrters worried about the continuity of the income and employment.

 

It's a whole new world in mortgage lending...AGAIN. As always, Debra and I can help you

 

Call or text Brian at 858-699-4590. Call or text Debra at 858-228-0617

San Diego REALTORS: Please pick up your phone !

I hate being stuck at home during this COVID crisis. I hate it but I see an incredible opportunity for me and for you, the professional REALTOR.

 

My friend Leigh Brown is a real estate broker/owner in North Carolina-- I have known her for close to 14 years now. Leigh was interviewed by Housing Wire about what she is doing during the COVID crisis. While you would benefit by reading the full interview, please look at this:

 

The other thing that I’m doing to encourage my team is I’m just reminding them who we have to call and that we all have to be making phone calls. It’s not just the sales staff. It’s the admin team, too, and there’s different things that they can say, but they can still be touching their neighbors and checking on their neighbors because a lot of what we’re doing right now, of course, has zero to do with sellers and buyers, and everything to do with neighbors and humans. How can we help? Who needs help? What could we be doing? And that’s where we’re finding our positivity, is finding things you can take action on.

 

Russell Shaw, one of Phoenix's top real estate brokers has always said that lead generation is a REALTOR's most important job .

 

Your most important job...

 

Now is not the time to cold call for listings nor is it the time to push showings on potential buyers . You have probably heard the old saw, " People don't care how much you know until they know how much you care ".

 

Show everyone you know that you care about them during this crisis; pick up the phone and call them.

 

By the way, if you see my number come through on your caller ID, please pick up the phone and talk to me. I care about you and I care about your customers. Debra and I are here to help.

Realtors losing listings to iBuyers

Guess what?  Zillow is entering the San Diego residential real estate market and Realtors should take it seriously:

Zillow Offers is continuing its expansion, announcing Monday it will be buying and selling homes in San Diego.  Through its iBuying service, Zillow seeks to provide a solution by enabling sellers to forget about the hassle of cleaning their home, forgoing home repairs, open houses, and the like. They can even choose the date they want to sell and move by. (For more on what, exactly, is an iBuyer, read this.)

I know.  I know.  Zillow is no competition for a professional, local expert...or is it?  What San Diego Realtors often miss is that, while iBuyers may "low-ball" sellers, looking for homes with cosmetic repairs needed, the simple fact is that the iBuyers end up negotiating with sellers long before an agent has a chance to prsent his/her services.  Here is my friend, Phoenix real estate broker Greg Swann:

As for iBuyers being nothing to worry about: Ahem.

If they’re in your town, they’re in your potential-seller’s head – and maybe in his email in-box, too. They’re in everyone’s net.world, on billboards, radio, TV. If your prospect hasn’t solicited an offer yet, you need to get out in front of that eventuality.

The iBuyers are the elephant in the room at your listing appointment. If the seller doesn’t bring them up, you had better. It could be that iBuyer offers are already in play, so you may already be smoked. Or the seller may want your help going that way, in which case you just made the easiest money in your real estate career – although the party to whom you owe fiduciary duty may have just pissed away half or more of his accrued equity in the home. Or, god help you, he may want to be sold on the value of listing traditionally.

But to go in to a listing appointment assuming the listing is your to lose is a mistake, I think. In the iBuyer world, the listing is theirs to lose, yours to win. You got the appointment because the seller wants your advice, not because he wants your sign in his yard for six months.

Greg has done extensive research on just how poorly iBuyers perform and you should follow what he's doing.  More importantly, read the emboldened statement Greg made. I'll parse it for you here:

You got the appointment because the seller wants your advice, not because he wants your sign in his yard for six months

Realtors need a strategy to position themselves as a trusted advisor so that their clients contact them before the iBuyers do.  Gary Keller said, some 15 years ago, that Realtors are either going to be fiduciaries enabled by technology or functionaries working for technology.  Thus, San Diego Realtors are going to have to examine the way they charge clients for the knowledge, advice, and expertise.  For too long, Realtors have relied on the commission model ad the only way to charge for their services.  Developing a "menu of services", which includes pre-MLS solicitation of iBuyer offers seems like the only way to get ahead of the curve.

There are STILL great real estate investment deals in San Diego

Yes, you can still make money in San Diego real estate and no, I dont know if property prices are going to drop. Here is what I DO know; there is a housing shortage in San Diego and rental rates should keep rising.

 

This means that, if you buy a property at the right price, and intend to hold it for 7-10 years, you should really make some money. Let me share with you the most recent transaction I handled for an investor. I represented the investor and my wife Debra handled the financing.

 

Our investor bought a Mission Valley 2 BR, 1 BA condo for $355,000. We closed on it three days ago (June 12)   She put 30% down and, with closing costs, it cost here $113,000 cash-to- close. Her mortgage payment, including taxes, insurance, and HOA fee is $2096. You can see the whole financing breakdown here

 

I immediately advertised it for rent on Craigslist, Zillow, Trulia, Hotpads, and Cozy at $2095/month. Yesterday (June 14), we signed a multi-year lease with a tenant who has a credit score of over 750.   In two days, my investor signed a lease which covers all the debt servicing expenses.

 

I think rising inflation will double San Diego real estate prices in the next 10-12 years but, with just a 4% inflation rate, this property should sell for $525,000 in 2028. At that point, my investor will walk away with about $300,000, almost triple of what she invested today.

 

Was this easy?

 

Absolutely not. I toured over 40 properties for her and only showed her properties which met three criteria:

 

1- They were "clean", meaning it would cost less than $1500 in cosmetic repairs to move in

2- They were in a San Diego neighborhood which was in demand.

3- They had been on the market for 21 days and could be purchased for a price which produced positive cash flow with 30% down payment.

 

She spent a 4 hour period with me and saw 7 properties. She offered on three of them, we negotiated with two sellers, and settled on the Mission Valley condo

 

It wasn't easy for me but I made it easy for her, and now she has a great investment.

 

Want me to do this for you?

 

Call me at 858-777-9751. We'll meet for lunch and I'll listen to your investment needs and goals. If they match up with what I am doing, I'll find the perfect investment property for you. If not, we'll have a great time catching up with one another.

I can't think of a better time to be a San Diego County listing agent...

...and a worse time to be a San Diego buyers' agent.

San Diego is in a housing crisis and the simple explanation for it is that we have a tremendous backlog of new housing--the politicians aren't helping us either. NIMBY-ism, water restrictions, and traffic density are core issues which restrict housing and, while they are legitimate issues, the county has a 65,000 unit backlog of new housing.

Experts believe that San Diego County needs 170,000 housing units built from 2012-2025 to meet demand and population growth- some 15,000 housing units each year. Over the past five years, San Diego County has averaged 2000 new housing units.. We are already 65,000 units behind and, if we continue at this anemic pace, we will end up 120,000 housing units short in 8 years. That is pushing up prices of existing homes.

You might think that rising housing prices, and double digit rent increases, will halt population growth in the County. While it might, SANDAG believes the region will grow by another million people within 25 years. Increased demand for housing and restricted supply means one of two things to your clients: they have to move out of San Diego County or home ownership is now, more than ever, the only defense against this housing shortage. Your role, as a buyer's agent, is now more important than ever to your clients' futures.

We are here to help you--here are three ways we can do that.

1- TBD approvals: this isn't a pre-qualification, this isn't a pre-approval, this is a full underwriting approval for the buyers' credit and income. We take an application, gather up supporting documentation, submit the file to the underwriter, and have a clean approval within 5 business days. What this means is that we can close a transaction in 21 days, giving your buyers a competitive advantage when they make offers.

2- "Selling" the buyer to the listing agent: a lot of the buyer's agents we work with ask us to speak to the listing agent when they make the offer. We communicate to them that we have that underwriting approval and, more importantly, tell them exactly what that means. It means that the only issues for a full loan approval are property related: appraisal, homeowners insurance and title insurance. When we explain the process to the listing agent, and represent the strength of the buyer, more offers get accepted.

3- VA and FHA condo approvals. So many condominium buyers are shut out because the complex lacks an agency approval, The perception is that VA and FHA condominium complex approvals are burdensome and lengthy--nothing could be farther from the truth.  Debra and I are experienced experts at VA condo approvals-- we have approved over 130 of them in the past 8 years and we get those purchase transactions closed in 45 days or less.  FHA condo approvals are easier for us because we have a HUD-delegated underwriter who has the ability and discretion to approve the complex FHA-eligible

This is a great time to be a real estate agent in San Diego County, especially if you list a lot of properties.  Representing buyers however, is difficult.  We're here to make that job easier on you.

January 18, 2017 Mortgage Rates Report and New Listings

Mortgage rates are at the lowest levels since the week after the November election,    VA/FHA rates are still under 3.99% and conventional rates are above 4.125%.    

Right after the New Year, I suggested that rates would be lower at the end of January but higher by this summer.  This gives buyers a good opportunity to move quickly. There is no guarantee that rates will move lower in February, but at the very least it leaves buyers with more options.  

Check out our hot homes list.  These are new-to-market listings. all over San Diego County, for single-family homes. If you want to narrow this list down to a specific area, call 858-777-9751 and we will tailor the list for you.

VA Condominium Approvals Are Easy, We Close Them In 45 Days

Seven years ago, I said this about our ability to get condominiums added to the VA Approved condominium list in California:

I've probably funded 40 VA home loans in 2009, many of them for unapproved condominium complexes.  In Southern California, it's quite common along the coastal communities for buyers to look at condos, townhomes, or PUDs as lower-cost alternatives to single-family homes.  Declining prices, along with higher VA loan limits have afforded many active duty and former service members the opportunity to scoop up a piece of the California coastal lifestyle by purchasing one of those properties.

Sellers often cringe when they receive an offer using VA home loan financing.  The general thought is that the VA condominum complex approval process is time-consuming, onerous, and difficult...

Nothing could be further from the truth.

All loan types, including FHA and conventional vet the condominium association's organizational documents, finances, and residency mix.  In fact, the VA guidelines tend to be the least restrictive of all three loan types.

Over a year ago, we started getting the complexes VA approved without the use of an attorney opinion letter, saving our clients thousands of dollars in legal fees. Here are some comments from happy customers:

Air Force veteran, Marina del Rey:

Brian and Debra helped us through the loan approval process for a townhouse in Marina del Rey.  My husband was trying to use his VA loan benefit, but in this hot real estate market, a lot of the seller's don't understand or care to understand the VA loan process.  There's just a big misconception that the process is unduly difficult, or the VA loan is not as good, which is not the case at all!

Brian went above and beyond and talked repeatedly to our seller's agent to assure her that the VA loan process would be fine.  Anytime she had a question, she would call him.  When we closed, she went on and on about what a professional he was throughout.

Brian and Debra helped us to get our townhouse a VA condo association approval.  It was daunting for us, since we didn't know how to get through it, but they started our paperwork as soon as we got an accepted offer, and made sure all the proper documents were gathered and sent to the VA.  The VA is notorious for being slow, but they managed to get our condo association VA approved by the closing date.  We could not have done it without them

USMC Officer, Los Angeles, CA:

I, like many other of Brian and Debra's clients, wanted to use my VA loan and wanted someone with expertise with VA loans.  My situation was also complicated by the fact that condominiums / townhouse complexes must be VA approved for the VA loan to be used.  Fortunately, Brian and Debra have done over a hundred VA condo complex approvals and are experts with the VA loan process.  Working with them made my life very easy.  Brian was able to educate my real estate agent and the seller's real estate agent on the pros and cons of the VA loan and let them know what he would need to facilitate the home purchase.  He was always reachable, whether at 7 am in the morning or 9:30 pm at night, Brian always responded within an hour.

US Navy Officer, San Diego, CA:

OUTSTANDING experience during my first time condo purchase working with Brian and Debra.   Brian came referred by 2 of my co-workers, and I could not be happier that I decided to use him.  From start to finish, Brian and Debra handled my purchase as if they were buying it for themselves.  They continuously kept me in the loop, and answered emails promptly.  Brian went out of his way to work with the VA to get my condo approved in record time, and watched the market closely to get me the best possible VA rate.  I was impressed with their professionalism during the entire process

US Navy Officer,  Oxnard, CA:

We were told by our agents and their lender that the condo we were buying was on the VA Approved list, and all was good to go. Once into escrow, we learn it was not. Our agents said "we are sorry" and basically gave up. So we quickly figured out if we wanted this home, that we needed to get it on the VA Approved list of condos and quick. Google search. Up comes Brian. We call, and he calls back immediately even though it was quite late that night. We met the next day, and he took control of the process guiding both agents (buyer and seller) through the process. We closed and have the home we always wanted. He is a pit bull kind of guy who gets it done.

US Navy Officer, San Diego, CA:

I started the home buying process while still on deployment, and Brian graciously worked with me across 13 time zones to begin explaining the ins and outs of home buying.  The building we had looked at was not VA approved, which is crucial to securing a VA loan.  I googled VA home approval, and his was the first name to pop up.  Brian is an absolute master at working with the VA, within 5 weeks from putting in an offer on the home, the complex was VA approved, and we closed within six

We can help you with this process.  Call ,e at 858-777-9751

San Diego Mortgage Rates Report: January, 2017

WHERE ARE SAN DIEGO MORTGAGE RATES GOING?

Non-farm payrolls reported today at 156K vs. the expected 178K;  the unemployment rate ticked up to 4.7%. The mortgage bond market is DOWN a quarter point. That doesn't compute.

Today's released data also signaled an uptick in wage growth. Uh oh, that means we are seeing inflation, right?

Not so fast. As Debra points out, a lot of minimum wage laws were passed; 19 states raised the minimum wage effective Jan 1. Businesses often meet those laws prior to the effective date to be in compliance.

The wage growth is probably just a reaction to legislation rather than organic growth. It's a "false positive".

I still think we see lower mortgage rates at the end of January and higher mortgage rates at the end of the summer. If you want to know how this would affect you, call me at 858-777-9751.  A real conversation, with someone who has worked in capital markets for three decades, will give you greater insight

2017 San Diego County Real Estate Market Outlook

It's been a great run.  Back in late 2011, we were pounding the table for investors to buy a single-family home in San Diego County, especially in what we called  "Blue Collar Beach Towns".  Then, you could purchase a single-family detached property for $250,000.  We were nervous so we advised investors to put at least 25% down and only buy a property where the rent could cover the pre-tax housing expenses (mortgage, taxes, insurance, estimated maintenance).  If you were one of our investors, you are probably sitting on over $100,000 of profit today.  That means you will have almost tripled your investment in a period of about 5 years or earned an internal rate of return in excess of 27%.

It's been a great run but it looks like the party is over.  We think the first half of 2017 is going to be a good time for investors to take some money off of the table, especially if they have a plan for that money in the next 3-4 years.  This doesn't mean we think the market is going to crash, like it did in 2008-2012 but we think the prices are going to soften and perhaps decline 10-15%.

The three reasons we loved San Diego single-family homes, as an investment in 2012, are the same reasons we don't love them today:  median price and median income, price-to-rent-ratio, and mortgage rates direction.  We still like single-family homes for owner occupants but we just don't love them as investments.

The 2016 median income in San Diego County is $73, 500 for a family of five.  This translates to a maximum monthly mortgage of approximately $2050 (PITI) or a $344,000 mortgage.  Add a 20% down payment and the family of five, earning the median income in San Diego county, can afford to purchase a home for $430,000.  A median-priced home, in San Diego county, was $495,000 this past summer.  That's a 15% premium.

Keep in mind that. back in late 2011/early 2012, a veteran could purchase a single-family home, in Oceanside CA, for zero down payment and her mortgage payment would be cheaper than rent.  Today, if that same veteran purchased a median priced home in San Diego County, the mortgage payment would be $2800.  There are tax benefits to owning versus renting so let's make the after-tax costs of owning a home $2500.  That same home can be rented for $2200; this is after a rental shortage in San Diego County spiked rents these past few years.

Look at 3792 Atlas Street as an example.  It is being offered for rent at $2200 and the Zillow Zestimate is for a $528,100 value.  Even if a home buyer had 20% down payment, their after-tax mortgage cost would be about $2300; $100 month more than they could rent the property.  It still makes sense to own that property, if you intend to live in it for 7-10 years but it just isn't a compelling investment when looking at the price-to rent ratio anymore.

Finally, we think the carrying costs for real estate (aka mortgage rates) can only go up from here.  Interest rates may start climbing in a couple of months or it could take as much as a year for mortgage rates to rise.  Eventually, mortgage rates are going to be 1-2% higher than they are today.  More importantly, the threat of higher mortgage rates is starting to affect pricing now.  Back in 2014, people still thought rates could come down so they weren't too particular about paying 5% more than last year's prices; they figured they could refinance into a lower rate soon enough.  Today, the opposite is true.

 What does this all mean to you?

If you are a real estate investor, it might make sense to sell that San Diego County investment property, especially if you plan to use the money in the next 4-5 years.  If you don't plan to use the money, and want to avoid paying capital gain taxes, I have two ideas for you:

1- Consider the Greater Phoenix area.  You will increase your income (the capitalization rates are better) and there is still some upside appreciation to be gotten there (not a ton but better than San Diego County).  We refer our clients to Greg Swann of Bloodhound Realty.

2- Consider placing the proceeds from the investment property sale into a Delaware Statutory Trust.  This is a security so we don't handle these transactions but we refer our clients to investment adviser Tony Krvaric of Krvaric Capital.

What if you just want to buy a home to live in?

There is no greater place to live (in my opinion) than San Diego County.  We have beaches, mountains and deserts.  Our climate is second to none and our business environment is relatively robust.  Unemployment, in San Diego County, is less than the rest of California and the rest of the country.  San Diego County is a great place to own a home.... BUT....

...we think the short-term prospects of higher prices are unlikely.  Even with the Great Recession, if you bought and held a home fir ten years, you made money in San Diego County.  Our advice then is to be judicious when buying an owner-occupied home in 2017.  We suggest that you do three things:

1- Establish your holding period.  If you plan to move in less than 7 years, you could lose money.  If you plan to live in the property for at least ten years, you should make money.

2- Call us to run a rent v. own scenario for you.  This is where we analyze the price-rent-ratio.  For traditional, 20% down payment transactions, it can still make sense to own for the long-term in San Diego County.

3- Negotiate, be patient, and shop around.  You don't have to get a home at 15% under list price to get a good deal but we don't' think you have to pay list price to get a home in 2017.  Sales have slowed in San Diego County, ever so slightly, but they have slowed.

Conclusion:

Inventory is still under three months which suggests that this is a seller's market, That could all change once prices start softening (they are showing signs of that now).  If you are an current investment property owner, the first six months of 2017 will be an excellent time to sell and realize your profits.  If you are a potential home buyer, we think you are going to have more options next year than you do today.

1505 Circle Ranch Way #54 Oceanside CA 92057 MLS # 160035633

This beautiful, end town home has upgraded cabinets, granite counters, and tile and hard wood flooring in the well-maintained community of Rancho Rose in Oceanside.  Rancho Rose Community has a resort-style pool and hot tub, nestled beloe swaying palm trees, and a guest equestrian facility on the property. 

This Oceanside town home has granite and tile throughout the kitchen and all three bathrooms.  The living room has rich-looking hard wood floors.   You can park in your attached 2-car garage and relax or barbecue on your enclosed patio. Ample guest parking. 

Upstairs, there are three bedrooms:  the master suite is attached to the master bathroom and the other two bedrooms share a jack and jill bathroom.

You can finance this home, with no down payment with your VA benefit or use a conventional loan with 5% down payment.  an FHA complex approval is pending with World Wide Credit Corporation.

 Near the Home Depot and shopping, this Oceanside town home is convenient to Camp Pendleton and was built in 2004.

See pictures of this home

Look at the property information

Compare financing options

View the Rancho Rose HOA documents

Here is how to make an offer:

if you are represented by an agent, he/she will prepare an offer for you.  If not, call Brian Brady at 858-777-9751.

If the offer includes financing, the seller requests that you be  cross-approved with Debra Brady of World Wide Credit Corporation.  Here is how to do that:

1- Fill out an online loan application
2- Call Debra at 858-412-7585 to get a list of documents needed to upload to a dropbox.  These documents will include:  last two paystubs, 2015 and 2014 W2 forms, last two months' bank statements, and a copy of your ID.
3- Upload the documents to the Dropbox Debra sets up for you

The seller requests that the escrow company be Ticor Title in Solana Beach and that the title policy be issued by Fidelity national Title- Mark Boeh.