Enjoy!

I have been talking about getting these together for months and just haven’t been satisfied with the drafts, revisions and redos that I have been putting together. Finally, I am going to settle on what I have and let you fine folks be the judges. What I have is a ten part series of tips that I think are generally helpful in providing a broad understanding of the process that goes into buying a home. To start off with they are going to be on the blog for you to watch and comment on. That part about you commenting is huge though, I really need your questions and feedback on the series if these are going to do their job for other viewers. SOOOOO, go ahead and throw some thoughts together and get at me, once you see the vids of course. Additionally, if there is something else you wanna see on the site or learn about you can email me personally at dominic@tartagliarealty.com and I will make sure it gets addressed and your anonymity is respected.

Also, it’s Thursday night and that means only one thing… well it means a lot of things but where I’m going with this is that it’s Farmers’ Market tonight in Downtown SLO. It’s going to be a cold night sure but bundle up and come down and check out all of the local produce and support local farmers and vendors. It might be the last chance to go out this weekend without getting wet if the rain comes like it is supposed to this weekend.

Dominic Tartaglia touches on the broad realm of buying your first house. This is an introduction to a series soon to follow… Stay posted at www.dominictartaglia.com/blog

Dominic Tartaglia addresses local SLO real estate trends and market data, the county’s plastic bag ban and the national decrease in foreclosure activity in 2011.

It’s a simple concept that you need to know the price of something before you know whether or not you can afford it, however, buying a home isn’t like buying an item at the local market. When you buy at the market the cost is listed on a tag and you know by previous experience that you have to add sales tax to that and you have a total cost. When talking about the cost to buy a home there are a number of variables that make a total cost something that isn’t as cut and dry as a price tag and simple addition. A home’s affordability factor is composed of a few major factors that dictate what the final out the door cost will be including 1. asking price, 2. your down-payment, 3. your choice of loan program, 4. earnest money deposit, 5. inspection costs and 6. settlement costs.*

1. Asking Price: The bigger the price tag on the house the more difficult it becomes to afford to buy. If you are looking at the biggest and freshest home in town you are likely looking at a big cost based solely on the fact that the home is expensive. It’s a no brainer to say that the cheaper homes in the market are more affordable.
2. Your Down-payment: Depending on how well you have done on saving your pennies and how big your down payment fund is you will be able to afford more home. Once again it’s a no brainer but a part of the equation. Generally speaking a down payment is a minimum of 3% of the purchase price of a home and 10% is preferable. So figure for every $100,000 of asking price you will need between $3,000 and $10,000.
3. Your Choice of Loan Program: This ties in with the down payment because as you start shopping for loans you will see that with larger down payments lenders give better rates, terms and discounts. A prime example of this in action is a buyer with 20% down payment on a home that receives a lower interest rate on a 30 year fixed rate mortgage while also being given the opportunity to avoid Private Mortgage Insurance on their loan. The lender gives the break because they get more money up front and the buyer has less risk to them, thus the lender can be more competitive with their options. You will also run into the condition to get a loan to have home owner’s insurance to a specified value by the lender with many loans as well as miscellaneous other costs that the lender will explain.
4. Earnest Money Deposit: These are the funds that you submit with you purchase contract as a goo faith deposit into escrow. This money is held in an account until the purchase of a home is complete prior to being released to the seller as a part of the total consideration and is generally there to show the seller that you genuinely do want to buy their home and as such are willing to put that money on the line to cover any costs for material damage that you or your inspectors may cause during the purchase process. A REALTOR® can give you an idea of what that cost would be. Locally, $5,000 grand does the trick.
5. Inspection Costs: Having a home inspection and a pest inspection on a home that you are buying comes highly recommended. It allows you to see a report that details any existing and potential problems with the property before you sign the final signature to buy the home. Inspections are a different conversation altogether so in keeping on track here let’s get back to the point. Inspectors need to make money too! They get paid by you when you employ them to look at a house that your interested. In my home town a home inspection can range anywhere from $350-1,000 and up and a pest inspection generally starts at $125 for a standard home. That being said depending on what you ask of the inspector things can get price pretty quickly. Also, if you decide to have a home inspected by trade specialists that’s going to tack on some extra there (trade specialists include, structural engineers, geological and soils engineers, roofers, electricians and plumbers.)
6. Settlement Costs: These are the costs associated with escrow, title and lending activities to get you the keys. An escrow account is a third-party, neutral bank account where all funds and documents are held while the buyer and seller perform their responsibilities prior to transfer of the property and is a delicate process that is handled by an escrow and title officer at a specialized company. The fees charged by the company are generally for administrative tasks that they perform such as title searches, printing, obtaining title insurance, assigning notaries, wiring funds, reviewing documents and facilitating the transfer of documents to the county recorders office. When planning on the cost for that figure it to be around 3% of the total purchase price. Depending on your local market a buyer may pay the full 3%, the seller may pay the full 3% or they may split it. This is all determined by how the purchase contract is designed.

1. Arm yourself with a smart phone (I use an iPhone 4)
2. Download a QR Scanner (I use QRReader)
3. Locate the QR Code block on a house for sale sign
4. Pull up your scanner and scan the image according to the software instructions
5. Push the “view this property” button on the realestatebook.com’s splash page
6. Review the information, select more pictures to view and even share it on your Facebook page.
7. Gloat on your newly discovered search success!

So you have nothing to wait for, Get After It!

In the name of getting after this year I took a minute to show you how to utilize two things to get information on homes; your smart phone and a QR Code Sign rider. At DominicTartaglia.com I am always trying to help provide thorough and useful information and I hope that this little episode helps you out. Get After It.

1. Get financially fit
2. Get pre-approved for a loan
3. Meet up with a REALTOR®
4. Save money for your down payment
5. Start looking for properties (Get after it)

Happy New Year folks!

I got a phone call from my roommate this morning informing me that my dog had escaped the yard twice in my absence so I went back to check in on the situation and decided that the easiest thing would be to simply bring her to work with me. You know. Maybe put her to work sorting paperwork or something… see the video below.

Median SOLD home price for San Luis Obispo single family residences is at $509,500

Median Pending home price for SFR is at $519,000

Median List price for SFR is at $699,000

Figure 1.0 homes listed, pending and sold

When I look at the above data I see a few things happening here that are important to take note of. Firstly, I see that there is a hot segment of our market that is clearing out. That segment would be the SFR price range between $400,000 and $550,000. Homes that are priced in the $400′s are moving quickly and within the range of the median price we are seeing an average day on market of 86 days. When you figure in an average of 45 days of escrow that leaves 41 days of market time before listings are put into contract. That’s pretty aggressive. Buyers are in fact actively pursuing homes that are deals. I don’t think that we are seeing any steals in SLO but certainly there are deals to be had.

Secondly, when I look at the Figure 1.0 I see that less homes are for sale or sold across the board from month to month, year to year and in the 15 month overall. Furthermore, the decrease in those numbers is significant. Several things may be happening here starting with the fact that many homes are being put into contract and pending sale. The number of marketed homes and sold homes pales in comparison to the number of homes that are in contract. Pending sales are up by a significant amount  which leads me to believe that the number of homes for sale is down because the homes that would have been on the market in that segment are instead in escrow, an indicator that the market is picking up. Also, we should see a gain in December and January homes that sold due to the nearly 75% increase in homes put in contract. The number of homes for sale may be down also due to the fact that Fannie, Freddie and several large banks have put a moratorium into effect from Dec. 19- Jan. 2 that will halt foreclosure on homeowners that are in default of their loan.

While the moratorium may not be in effect today I would speculate that the banks have slowed down the foreclosure action and thus lessened the pressure for owners to short sell their homes or put them on the market. We may see a tick up in January once the moratorium is lifted.

In summation; there is a lot going on with the real estate market and when you couple the movement that is occurring with historically low interest rates we are gearing up for a busy 2012 in real estate. The foundation is set to get buyers into some great deals with very appetizing interest rates. For first-time homebuyers this is a golden opportunity to own your first home. For investors, there are deals to be had on homes that could be flipped you’ve just got to find them. 2011 may not have been a recovery year according to many but  I would venture to say that it was a foundation year, crucial to a recovery pattern that we may have never seen before. I certainly hope so.

Sure, not all buyers need to utilize an FHA conforming loan but some buyers will and it is a peace of mind knowing that the limit for FHA loans has been restored to $687,500 in SLO County. Why is our limit higher than other counties? Our Median home price in some of our areas are considerably higher. When you look at home prices along the coast it isn’t uncommon to see a price near 1 Million Dollars which may need to utilize that loan limit for a buyer to close. This also helps to preserve current values of homes here so that sellers don’t have to artificially lower their purchase prices just to get a property sold. Actually, there are many reasons why this increased loan limit is good for the housing market beyond just allowing qualified buyers to get loans.

San Luis Obispo County FHA Loan Limits: $687,500

Santa Barbara County FHA Loan Limits: $729,750

Happy Thanksgiving Folks~

Dom