REAL ESTATE NEWS (Los Angeles, CA) — Looking at the real background of today’s crashing real estate market, how should we determine when might be the best time to purchase a loft, condo or house? As interest rates go up and the housing market falters, many Angelenos are today delaying, putting off a home search until they feel the market hits a low point.
Deciding when to buy a house is one of the biggest financial decisions that most people ever make. Not only is it an enormous financial decision, it’s also an extremely emotional choice. Anyone who has put in an offer, gone through a bidding war, then lost a home — or who got their dream home — would agree that the process can have extreme highs and lows.
The last several years have been increasingly confusing to potential home buyers. Virus hysteria hit us with tremendous fear, and created massive anxiety about the future of the economy. The initial panic spurred home buyers to put a pause on purchases. Eventually, lockdowns, remote work and remote learning inspired many to seek additional space. That, coupled with what was a low-interest-rate environment and low inventory, spurred bidding wars, sending home prices soaring.
Now that the Federal Reserve is hiking interest rates, with more increases anticipated in the coming months, there is upward pressure on mortgage rates. The average rate on 30-year mortgages has recently risen above 7%. This is more than double what rates were toward the end of last year. With higher borrowing costs, the Mortgage Bankers Association has reported that mortgage demand is 86% lower than it was last year. They anticipate slowing housing demand for 2023.
Now, there are fewer bidding wars, and we are seeing more price drops. Downtown Los Angeles home prices fell significantly last month as compared to the same month last year. With all of this financial havoc, many are asking if now is the right time to buy a home. The answer really depends on one’s needs and current financial position.
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Greetings home buyer! Here is a guide to the major steps to buying a home in California: All you need to know about the process, from picking an agent to getting the keys.
Buyer consultation: Discuss the buying process, including finding the best home for the best price. Develop a custom search and a plan to help with a purchase.
A pre-approval letter and proof of funds — A pre-qualification letter is a preliminary evaluation of a potential borrower by a lender. Lenders use pre-qualification letters for credit cards and other financial products as a marketing tool. For example, pre-qualified mortgages are often different from a final mortgage offer. Sometimes a pre-qualification letter is sufficient to place an offer, but a full pre-approval is usually expected. A pre-approval letter is provided by a lender after the lender looks at the taxes etc and then calculates the amount of home that the buyer can afford.
The Buyer Benefits Agreementoutlines terms and conditions related to how the agent helps the buyer in searching for the right property. This gives buyers an understanding of what to expect from their agent during the home purchase process.
Automatic MLS emails, then look at properties 3 or more. Once the buyer has viewed 10-15 homes online, and at least 3-5 properties in person, then the buyer can know what’s available in the desired price range. The buyer will then have sufficiently learned the market and is likely ready to make an offer on a home that meets the buyer’s criteria.
What to look for when running comps: A list of comparable properties recently sold gives examples and shows factors to consider. The best comps include the sale date, location of the comparable properties, square footage, number of bedrooms and bathrooms, and lot size and shape.
Making an offer: In a competitive market where multiple offers are submitted, contingencies and timelines can decide whether an offer is accepted. When buying in a seller’s market, buyers want to obtain suggestions and advice from a professional to gain insights on what could make the buyer’s offer more attractive to the sellers.
Negotiate: When buying a home, the seller will likely expect to negotiate and compromise on the asking price, but not always. While most sellers price their homes a bit higher than market value to compensate for negotiations, some sellers will be firm, and most will expect an above-asking-price offer if they receive multiple high offers. Negotiating can be intimidating, but knowing what to expect can make the process less scary.
Open escrow – Opening escrow is actually quite simple. It involves the agent sending details of the purchase agreement over to escrow and requesting the opening of escrow. A deposit, or earnest money, is the good faith payment that is wired to escrow after the purchase agreement is signed and escrow is opened. There should be an agreement on how long the escrow process should take, typically 30 days, but escrow can be just about any length: sometimes just 7 days or less, and other times up to 180 days or more.
What is a house inspection report? A licensed home inspection professional visits, observes, carefully evaluates and reports the condition of the structure, roof, foundation, drainage, plumbing, heating system, central air-conditioning system, visible insulation, walls, windows, and doors. Only those items that are accessible buy normal means are included in the report.
Order mortgage — Each bank or lender will have specific service targets that they aim to provide a time frame to release funds, but, on the odd occasion, there may be a complication that extends this time period. According to research by Mortgageable, the current target time frame is that banks aim to release mortgage funds in 3 to 7 days after final approval and loan documents are signed.
The appraisal is estimating or judging the nature or value of the property being purchased. Occasionally, an appraiser will report that the property is worth less than the agreed price. If the property is being financed, the lender will usually require that the price be lowered or that the buyer place more down payment on the property.
Sign loan documents which include: Settlement Statement (HUD-1) Note Deed of Trust Notice of Right to Cancel Signature Affidavit and AKA Statement Customer Identification Verification
Close escrow — After signing documents and paying closing costs, the buyer get ownership of the property. The seller must publicly transfer the property to the buyer. The closing attorney or title agent will then record the deed with the county recorder’s office. In California, this is usually done by escrow, without the need of a closing meeting.
The buyer gets the keys and officially become a homeowner!
Bought a home recently. How did the closing go? #comment
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