1635976943342574 UA-72458003-1 google-site-verification=bpkXPmzUUBtm0pA_hz68HRCFRNqdIA9eF18eNT7U93w Why Fodor's Travel Says The 'Best Traces of Hip-Hop Culture Are Found Everywhere in Oakland' https://youtu.be/aTsDXAtfXdI

H o u s i n g P e r s p e c t i v e | January 2020

Housing Market Outlook – Slight Improvement in 2020

Despite having a double-digit decline in the first half of the year, California home sales only dipped slightly in 2019 as low interest rates boosted the market in the last six months of the year. With the average 30-year fixed-rate mortgage (FRM) dipping more than 100 basis points from the prior year for three consecutive months at the year-end, buyers became more motivated to get back in the market and lifted sales up.
December sales were up strong from 2018 with a jump of 7.4 percent, the largest increase since November 2016. For the year as a whole, there were 397,910 existing single-family homes sold in California in 2019, a drop of 1.2 percent from 402,640 units in 2018.
 
LET’S CONQUER EAST BAY REAL ESTATE TOGETHER!
📭Carlos.Camargo@BHGhome.com | ☎️ (510) 798-5016
🏠 #BHGReliancePartners | 🦸‍♂️ #REALTOR® #01988431
🔑#BUY carlosfcamargo.net 💰#SELL carlosfcamargo.com
____________
#SFBayArea #CarlosFCamargoPhD #homesales #homeprices #housingaffordability #housing #houseexpert #home #househunting #BHGRE #investment #RealEstateAgent #HomeOwner #homebuyers #homesellers #TheMoreYouKnow #noplacelikehome #interestrates
Posted on January 30, 2020 at 5:30 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, N.A.R. - C.A.R. Update, Newsletter-CFC, Real Estate Market Update

Guide to Buying a Home | Things to Consider – Winter 2020

4 Reasons to Buy a Home This Winter 

Here are four great reasons to consider buying a home now instead of waiting.

  1. Prices Will Continue to Rise
  2. Mortgage Interest Rates Are Forecasted to Remain Low
  3. Either Way, You Are Paying a Mortgage
  4. Waiting May Increase Your Long-Term Costs

Buying a home sooner rather than later could lead to substantial savings. Let’s get together to determine if homeownership is the right choice for you and your family this winter.

Guide to Buying a Home | Things to Consider – Winter 2020 Edition

Posted on December 20, 2019 at 10:35 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, First-time Buyer, Glossary of Housing & RE Terms

NAR Real Estate Forecast Summit: 2020 Consensus Forecast

2020 Consensus Economic & Real Estate Forecast

Fourteen economic and housing market experts were asked to give their housing market forecast for 2020 and 2021.

These economists predicted a 29% probability of a recession in 2020 with forecasted Gross Domestic Product growth of 2.0% in 2020 and 1.9% in 2021. The group expects an annual unemployment rate of 3.7% next year with a small rise to 3.9% in 2021.

 

When asked if the Federal Open Market Committee will change the federal funds rate in 2020, 69% of the economists said they expect no change, while 31% expect the committee will lower the rate next year.

 

Infographic: 2019 NAR Real Estate Summit Consensus Forecast

 

The average annual 30-year fixed mortgage rates of 3.8% and 4.0% are expected for 2020 and 2021, respectively. Annual median home prices are forecasted to increase by 3.6% in 2020 and by 3.5% in 2021.

 

“Real estate is on firm ground with little chance of price declines,” said NAR’s Chief Economist Lawrence Yun. “However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains.”

 

Apartment rents are expected to rise 3.8% and 3.6%, respectively, in 2020 and 2021. According to the group of economists, annual commercial real estate prices will climb 3.6% in 2020 and 3.4% in 2021.

 

“Residential and commercial real estate investment remains attractive as we approach the start of a new decade,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA. “Increased home building can serve as a stimulator for the overall economy, and we strongly encourage more homes to be built as buyer demand remains strong.”

Top 10 #Outperforming #Markets#Metro Areas NAR Expects Home Price Appreciation to Outpace in the Next 3 to 5 Years. http://ow.ly/ffgT50xxS0b #NARForecastSummit

NAR identified the top 10 metro areas based on a myriad of factors, including domestic migration, #housing #affordability for new residents, consistent job growth relative to the national average, population age structure, attractiveness for retirees and #home #price #appreciation, among other variables.

“Potential #buyers in these 10 markets will find conditions especially favorable to purchase a home going into the next decade,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA. “The #dream of #owning a home appears even more attainable for those who move to or are currently living in these markets.”

Strong job growth is one factor driving up prices in these markets, with payroll #employment rising about 2.5% annually in the last three years, higher than the national rate of 1.6%. In Ogden, Las Vegas, Dallas, and Raleigh, job growth rose nearly 3%.1

Movers flock to these markets at higher rates than the average of the 100 largest U.S. metro areas. In Colorado Springs, recent movers accounted for 21% of the total population, followed by Fort Collins at 17% and Las Vegas at 16%.

 

 
#CarlosFCamargoPhD, #REALTOR® DRE #01988431 | www.carlosfcamargo.net
 
#GDP #wagegrowth #income #mortgagerates #homeprices #multifamily #apartments #rents #BHGReliancePartners
Posted on December 12, 2019 at 4:39 PM
Carlos Camargo | Category: Credit & Home Finance, Credit & Home Finance, Investment Property, Real Estate Market Update

DISPELLING REFINANCING MYTHS: Reasons to Refinance your Mortgage

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run.


YOU’RE NOT TOO LATE.

For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some small increases, you’re still in a great position to drastically lower your interest rate. The general rule is if your mortgage interest rate is more than one percent above the current market rate, you should consider refinancing.

IT’S NOT TOO TIME CONSUMING.

Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with a lender to see how rates compare will only take a few minutes. There are also some programs for streamlining the application process. And besides, isn’t the amount of money you could save worth the time and effort?

ARMS CAN BE REFINANCED, TOO.

Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced, just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.

 


Reasons to Refinance your Mortgage

 


 

Posted on November 26, 2019 at 6:25 PM
Carlos Camargo | Category: Credit & Home Finance, Credit & Home Finance, Glossary of Housing & RE Terms, Home Care & Maintenance, Investment Property

HOUSING PRICE-TO-INCOME RATIOS

HOUSING PRICE-TO-INCOME RATIOS

The Housing Price-to-Income Ratio is an interesting and important measurement of housing valuation and affordability.

When purchasing an asset – whether it is a company through an acquisition or a home, there are two primary decisions to be made:

Investment Decision: What is the value of this asset that is being purchased? In an acquisition, this measurement can be made by using the “price-to-earnings”, or P/E ratio. This is how much is paid for each dollar of earnings generated by the asset. The higher the P/E ratio, the more expensive the asset. The value paid may be deemed reasonable if the asset’s value in the future is expected to rise more rapidly than assets with a lower P/E ratio.

Financing Decision: How will the purchase of this asset be financed? For an acquisition, it may be new equity through issuance of stock or it may involve debt. Measurements may include years to payback based upon cash flows or earnings contribution after financing costs.

For the “investment decision” for a home purchase, the P/E ratio depicts the number of years of family or household income that will be invested to purchase a home. A high Housing Price-to-Income Ratio may depict a housing market that home prices are expected to continue to grow rapidly or it may indicate a housing market that is over-valued. For the “financing decision”, the prospective homeowner will measure the percentage of the financing costs are to the family’s income.

Similarly, from an affordability perspective, the more years of family or household income that one must invest to purchase a home indicates lesser affordability. In this case, the family or homeowner must divert more of their income to paying for the home rather than saving or investing in other assets (e.g., 401k, investment portfolio, etc.).

Below are various charts that show the Price-to-Income Ratio for metropolitan areas across the U.S. The average for the U.S. is 3.7X. That is, it median purchase price of a home consumes 3.7 times the median family income. The U.S. average is shaded in dark blue. The green shaded bars represent markets where the average Price-to-Income Ratio is below the U.S. average. The red shaded bars represent markets where the average Price-to-Income Ratio exceeds the U.S. average.

Posted on October 12, 2019 at 6:24 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, First-time Buyer, Glossary of Housing & RE Terms

REAL ESTATE ADVISOR: SEPTEMBER 2019 –  Down payment got you down?

Down payment got you down?

Ten things to know before buying a home

• LOOKING TO BUY OR SELL A HOME IN THE EAST BAY? I can help! Visit ===> www.carlosfcamargo.net 

Posted on September 11, 2019 at 5:54 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, First-time Buyer, Glossary of Housing & RE Terms, Real Estate Market Update

First Time Home Buyer? 10 Facts No One Tells You

First Time Home Buyer? Ten Facts No One Tells You

Buying your first home can feel like both the best of times and the worst of times. Here are 10 facts nobody tells you when you’re buying your first home.

1. Something will go wrong

No move is ever perfect. Something will get broken or there will be something you’ve forgotten to bring or do. With any luck, the setback will be minor, and you can chalk it up to the old adage, “things happen.”

2. Some of your conditions might not be met

One of the least enforceable clauses in offers to purchase is one for cleaning requests. You can stipulate that carpets, refrigerators and ovens be cleaned. However, if they haven’t been, there is often very little that you can do about it.

If a major repair hasn’t been completed as promised, one of two things will happen: you either won’t take possession of the property on the day you planned or your funds will have to be placed in escrow pending resolution of the issue.

3. If you don’t have the closing fees, you don’t get your new home

Closing costs and legal fees are due on closing, and your funds won’t be released to the seller unless your closing-vendors (PSL, Sidewalk, Soft-Storey, Pest home service providers) are paid. Closing costs usually range from two to five percent of the purchase price, but be sure to verify this information before arriving on closing day. This money is in addition to your down payment.

4. Good schools increase a home’s value

You’ll pay more for a house in a good school district. Of course, the good news is you’ll get more for it when you decide to sell. If the home you’re planning to buy is your “forever” home and you don’t have, or plan to have children, this may not matter. Still, it’s something to think about.

5. Your neighborhood may be about to change drastically

The municipality may be planning a park, a school, or a playground for your area. Depending on your lifestyle, that can mean profound changes in a short period of time. Check with local administration and the area’s local representative. The first can tell you what the plan is. The latter will have a far better grasp of whether outlined timelines are accurate or not. You can base your decision on the information they provide.

6. You need to read all the documents yourself

It’s tempting when you’re paying a lawyer to review HOA or condo documents to simply delegate this task. However, a close reading of the minutes of meetings will teach you a lot about your neighbors-to-be and help you avoid nasty surprises, like planned increases in fees or devolving renovations that used to be the condo board, or HOA’s responsibility to individual owners.

7. Don’t apply for other credit while mortgage shopping

Applying for a loan or another credit card may seem like a good idea when you’re about to take the home ownership plunge and know you’re going to need to buy things like garden tools, a gazebo, and a grill. Don’t do it unless absolutely necessary. It can negatively affect not only the amount of your pre-approved mortgage, but it can also mean you don’t get pre-approval. Wait until after you’ve bought your home to apply for more credit.

8. You’re going to need “earnest” money

Also known as a deposit, you’ll likely need about $2000 per $125,000 worth of house available when you make an offer. This money is required as a show of good faith and will be held in escrow. You’ll get it back if your offer isn’t accepted, or it may be applied to your down payment. You may forfeit this money, though, if you’re the one who withdraws from the deal.

9. Your neighbors-to-be may be your best source of information

Walk around the area you where you want to live. If you see people out gardening or mowing their lawns, talk to them. Strike up a conversation and explain that you’re thinking of buying. Ask receptive individuals what the neighborhood is like, how long they’ve lived there, and how long they’re planning to stay. If you learn that your new home is located next door to some party animals who blast music every single summer evening, you may not enjoy your own backyard, so you may want to reconsider.

10. Check for rebates you may be entitled to

You may qualify for first-time homeowner rebates. There may be other municipal, state, or utility-provider rebates available, too. Start investigating early. It may make more sense to invest in attic insulation than an air conditioner if you’re going to get a rebate that covers some or all the cost of the insulation. Some areas offer rebates on newer, more energy-efficient appliances. You won’t know that unless you do your homework.

A good real estate agent can talk you through the buying process. Now you’re already ahead of the game with these ten facts nobody tells you, and you’ll be able to focus on offer strategy rather than the fundamentals.

BUY VS. RENT

BUY VS. RENT – Should you buy your home or rent it? This is an age-old debate that really has no right or wrong answer because it depends on each individual. For some, buying makes more sense, and for others, renting is the best fit.🏠 LOOKING TO BUY OR SELL A HOME IN THE EAST BAY?🏠 Visit: www.carlosfcamargo.net | Call: 510.798.5016#BHGRE #CarlosFCamargoPhD #RealEstate #RealEstateAgent #RealEstateBroker #RealEstateLife #NoPlaceLikeHome_EastBay #OaklandCA #Realtor #RealEstateForSale #RealEstateExpert #Broker #HomeForSale #HouseForSale #PropertyForSale #realestatemarket #HouseHunting #ExpectBetter #BHGRealEstate #bayarea #BHGReliancePartners #contracostacounty #alamedacounty #reliancepartnersbhgre #RealEstateLifeStyle #RealEstateTips #successtips #home #HomeDecor #HomeDesign

Posted by Carlos Camargo on Thursday, August 29, 2019

Posted on September 3, 2019 at 2:33 AM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, First-time Buyer

1st Half of 2019 – California Housing Affordability

2019-Q2 CA Housing Affordability – https://lnkd.in/eE2k2_J

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2019 dipped to 30% from 32% in the first quarter of 2019 but was up from 26% in the second quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). California’s housing affordability index hit a peak of 56 percent in the second quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

A minimum annual income of $122,960 was needed to qualify for the purchase of a $608,660 statewide median-priced, existing single-family home in the second quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,070, assuming a 20% down payment and an effective composite interest rate of 4.17%. composite interest rate was 4.62% in first-quarter 2019 and 4.70% 2Q-19

🏠 LOOKING TO BUY OR SELL A HOME IN THE EAST BAY?
🏠 Visit: www.carlosfcamargo.net | Call: 510.798.5016

#BHGRE #CarlosFCamargoPhD #RealEstate #RealEstateAgent#RealEstateBroker #RealEstateLife #NoPlaceLikeHome_EastBay#OaklandCA #Realtor

Posted on August 30, 2019 at 9:10 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, Español - Comprar Vivienda, First-time Buyer, N.A.R. - C.A.R. Update, Real Estate Market Update

Thinking About Buying Your First Home?

Thinking About Buying Your First Home?

Buying your first home can be intimidating, so take some proactive steps to make the process more manageable

A house could be the biggest purchase you will ever make, and the process of shopping for a home and obtaining a mortgage can be overwhelming. However, there are steps you can take to make the process more manageable and the purchase more attainable.

Download the FDIC Guide Today:
https://www.fdic.gov/consumers/consumer/news/june2019.pdf

 

1. Know Your Credit History and Score

One of the key factors in getting approved for a loan is your credit score. Your credit history determines your score, and the higher the score, the better the loan terms become. You are entitled to a free credit report once every 12 months from each of the three nationwide credit bureaus: Transunion, Experian, and Equifax. Go to www.AnnualCreditReport.com, the official site for consumers to obtain free credit reports, or call 1-877-322-8228. If you notice any errors on your report, work on correcting them as soon as possible. The Federal Trade Commission offers helpful suggestions on how to fix errors on credit reports at Disputing Errors on Credit Reports

A high credit score helps you not only get approved for a mortgage, it also improves the terms available. Here is a breakdown of the five major components that make up your credit score.

    • Payment History – Reported payments account for 35% of your total credit score. Late payments will affect your score negatively, so it’s important to consistently make payments on time.

 

    • Credit Utilization – How much of your credit is in use makes up 30% of your score. If you reach the credit limit on your credit cards, it lowers your credit score. Do your best to start paying down credit card balances to free up your credit.

 

    • Length of Credit History – How long you have been using credit and making payments as well as the amount of time each of your credit accounts have been open is 15% of your total credit score. If you’re trying to clean up your credit, closing accounts may not necessarily be the answer. It may be best to pay off accounts and keep them open to maintain long standing accounts.

 

    • New Credit – Be cautious when opening new credit accounts, which accounts for 10% of your score. Opening too many new accounts in a relatively short period of time could hurt your score.

 

    • Credit Mix – The remaining 10% of your score relies on the variety of credit accounts you have. Having a mix of revolving credit accounts, such as credit cards, and installment loans, including auto loans and student loans, with positive payment histories show that you can manage different types of credit and will increase your score.

 

Remember, the higher your credit score as a potential buyer, the lower the risk to a potential lender. 

2. How Much Can and Should You Spend?

When reviewing mortgage applications, lenders pay close attention to your debt-to-income ratio (DTI). DTI shows how much of your monthly gross income – your income before taxes or other deductions are taken out – goes to monthly debt payments. Many lenders prefer that your total monthly debt payments, which include housing payments, auto loan payments, student loan payments, and minimum credit card payments, not exceed 40% of your gross monthly income. Some lenders prefer a DTI of 36% or less. Others may accept a higher ratio. 

When looking at your finances to determine how much you can afford for a monthly mortgage payment, keep in mind that the payment will include not only the loan principal and interest but also taxes, homeowner’s insurance, and possibly mortgage insurance (lenders require you to pay mortgage insurance when your down payment is less than 20% to protect the lender in the event you default on the loan). While you will need more information to get an exact figure of the house price you can afford, such as the interest rate on your loan and how much of a down payment you will have to put toward the purchase, look at your DTI as discussed above to get a better idea of the monthly payment that will fit your budget. 

Many websites have calculation tools that can help you determine how much you can afford and the amount your monthly payment will be under different scenarios. The U.S. Department of Housing and Urban Development’s (HUD) maximum financing calculator is a good place to start and can be found at FHA Maximum Financing Calculator

For more information on figuring out how much you can afford, visit: 

Money Smart – Making Housing Decisions 

Money Smart – Buying a Home

Mortgage Moves: How much can you afford?

Decide how much you want to spend on a home

3. Save, Save, Save

Having savings makes it easier to purchase a home. Saving can be hard given the challenges many first-time home buyers face with high housing costs and student loan debt, but most lenders require a down payment, and you will likely be responsible for closing costs. You will also want to have money available once you complete the purchase for maintenance or repairs in your new home. So let’s look at the possibilities. 

To increase your savings, see if there is a way to tighten your budget and lower your current housing costs. Automating your savings may help keep you on task with obtaining your savings goals too. Check with your bank about linking a savings account to your checking account and creating a regular automatic deposit to the savings account. In addition, automatic savings apps, which help you save by rounding up certain purchases to the nearest dollar and setting the money aside, can add a little extra to your savings. 

The Consumer Financial Protection Bureau and Federal Trade Commission have useful resources for those interested in learning more about ways to save. Visit Start Small, Save Up and Make a Budget

You may also be able to take advantage of down payment and closing cost assistance programs offered by government agencies and non-profit organizations. Be sure to take the time to research what is available and what your qualifications are to apply for these special programs. Start with HUD’s website for more information about assistance programs in your state: HUD – Local Information

HUD also provides lists of approved housing counselors in each state that can help with the home buying process: 

HUD Approved Housing Counseling Agencies 

For suggestions on how to save money with worksheets to help you plan to save visit: Money Smart – Your Savings 

4. Start Organizing Documents

When you apply for a mortgage, most lenders will want one or two months of paystubs, two years of tax filings, three to six months of bank account statements, information about any retirement savings, and other documentation specific to your financial situation, such as explanations of any recent large deposits or withdrawals from your bank account. It can be overwhelming to pull together so much information in a short timeframe, so start early. By getting these documents in order at the beginning of your house hunting journey, you give yourself time to ensure you have all of the documents the lender requires. 

When you’re ready to buy a house, understanding the costs and benefits, researching your credit and housing options, and building your savings are the best first steps toward owning your first home. In next month’s article, we’ll take a look at the next step in the home buying process: applying for a mortgage. 

 

 

Posted on July 5, 2019 at 11:57 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, First-time Buyer

NEED-TO-KNOWS ABOUT REAL ESTATE CONTINGENCIES

 

You’ve found a house you’d like to purchase, and you’re ready to make an offer. It’s time to take a closer look at the purchase contract—perhaps the most important legal document for real estate transactions—and decide how you want to modify its terms, including adding various contingencies.

 

Contingencies? Yes, it’s an uncommon word. The real estate industry is filled with unfamiliar terminology. A contingency refers to particular provisions in a standard purchase contract. If the condition isn’t met, you’re allowed to back out of the purchase, without penalty.

 

Contingencies are a good thing, in terms of protecting buyers. They can also backfire if you insist on too many contingencies or are competing with less demanding buyers.

 

Here are several key points to keep in mind.

 

1. Know the market.

In a seller’s market (when there aren’t many properties in a specific price range or a particular geographic area for sale), contingencies will encourage sellers to find a more accommodating buyer.

In fact, in a strong seller’s market, some buyers severely limit their contingencies and offer more than the seller’s asking price, potentially triggering a bidding war.

In a buyer’s market (when there are more properties for sale than there are interested buyers), sellers are more likely to accept buyer contingencies.

Don’t know what market your area is experiencing right now? That’s okay. Your Accredited Buyer’s Representative specializes in staying current on that information for your local market. Just ask!

 

2. Understand which contingencies are common (and which aren’t).

Your buyer’s representative can also provide the best advice on which contingencies are appropriate and commonly accepted in your market. Every area operates under different standards and conventions.  

A few examples:

  • Home inspection – If something is seriously wrong with a house, you’ll want to know before you buy, not after the closing, when it’s too late to address the issue with the seller. Inspections are primarily designed to evaluate the structural and mechanical condition of a property, although specific conventions vary by market. Inspections may also check for mold, radon, pests, lead, septic systems, or other specific concerns. A home inspection (at the buyer’s expense) is a highly recommended contingency clause.

 

  • Attorney review – The seller, the buyer, or both may request a certain number of days to have their attorney(s) review the contract for sale and the closing documents.

 

  • Mortgage financing approval – Smart buyers secure a pre-approval letter from their lender before submitting an offer. However, your mortgage financing could still fail to reach final approval due to findings in the property inspection, a too-low appraisal, or a final review of your financial situation.

 

  • Approval of homeowner association (HOA) documents – If you are buying a property governed by an HOA, you can request these documents before making an offer to ensure the HOA is on solid financial ground. Alternately, this can be a contingency item.

 

  • Early occupancy (with payment of rent) or furniture move in – If your timeframe requires a critical move-in deadline, such as the start of a school year, you may want to stipulate this as a contingency.

 

  • Appraised value – The appraisal may come in lower than your offer, in which case an appraisal contingency can provide an option to attempt to renegotiate the selling price. Also, note that lenders can reject your mortgage application if an appraisal comes in too low.

 

  • Home warranty – A buyer may make the sale contingent on their ability to secure a home warranty on the property. Be aware that some home warranties require a home inspection before purchase to prove that a warranty claim is not a pre-existing condition.

 

  • Sale of a current home – This contingency requires the seller to agree to delay closing until you’ve found a buyer for your current home. It’s a tall request, especially in a seller’s market. If the contingency includes a “bump” clause or “kick out” clause, the seller can continue marketing their home in hopes of finding another buyer.

 

3. Watch those dates!

If your contract includes deadlines related to contingencies, be sure to monitor them carefully. Your buyer’s rep will help you stay on top of these too.

Dates matter, since even a one-day lapse could put you in jeopardy of non-performance of your contractual obligations, potentially resulting in the cancelation of your purchase contract and loss of your earnest money.

Add any critical deadlines to whatever calendar system you rely upon, as well as alerts a couple of days before the deadline hits.

KNOW YOUR CONTRACT CONTINGENCIES: CALIFORNIA’S REAL ESTATE INSPECTION CONTINGENCY 14(B)(1)

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“Buyer’s offer has no contingencies.” This phrase has become increasingly common in the Bay Area’s competitive real estate market, where buyers are looking for every advantage to stand out from the crowd. Whether you are the buyer or seller, it is important to know what contingencies are and where to find them in your contract.

In this three-part series, I will explain the typical real estate contingencies and help you identify them in your California real estate contract.

What Are Contingencies in Real Estate?

A contingency is a condition that must be fulfilled before the sale of a home can close. In California, these conditions are typically found in the buyer’s offer. The most common form we use to write an offer is California Association of Realtors (C.A.R.) Form RPA-CA.

Real estate contingencies typically fall under three major categories: appraisal, home inspection and mortgage approval. Think of these contingencies as a buyer’s and seller’s safety net. If a home does not appraise at a certain value, if an inspection reveals a major problem, or if the buyer cannot obtain adequate financing, the parties can back out of the contract without penalty.

In addition to specifying contingencies, your contract will set specific deadlines. For example, the buyer will have 17 days to complete inspections (see below). It will also state when and how notice of cancellation must be given and received.

California’s Inspection Contingency: 14(B)(1)

home_cutawayIn California, the default inspection contingency gives the buyer a little more than two (2) weeks – 17 days – to complete all inspections.

C.A.R. Form RPA-CA, section 14(B)(1) reads:

BUYER HAS: 17 (or ___) Days After Acceptance, unless otherwise agreed in writing, to: (i) complete all Buyer Investigations; review all disclosures, reports, lease documents to be assumed by Buyer pursuant to paragraph 10A and other applicable information, which Buyer receives from Seller; and approve all matters affecting the Property; and (ii) Deliver to Seller Signed Copies of Statutory and Lead Disclosures and other disclosures Delivered by Seller in accordance with paragraph 10A.

During this 17-day contingency period (or the timeframe agreed to between the parties), the buyer typically hires independent inspectors to look at the home’s roof, foundation, structure (termites, mold, etc), and any other areas of the home the buyer sees fit. Contact your real estate agent for referrals to trusted inspection professionals.

If any major problems are found, a buyer may then ask the seller to make repairs or may request a monetary credit for repairs at closing – see section 14(B)(2). The seller, however, has no obligation to respond to either request.

Lifting The Buyer’s Inspection Contingency

After the agreed upon inspection period has passed, the seller must request that buyer lift their inspection contingency. If seller does not obtain a contingency removal, buyer’s inspection period remains in effect, “based on a remaining contingency.” See 14(B)(4). This means that technically buyer’s inspection contingency can remain in effect all the way through the deal — meaning buyer can back out and recover any earnest money deposited with escrow.

Sellers, your agent will likely send a “Notice of Buyer to Perform” (NBP) requesting that buyer either remove the contingency or back out of the contract. This will allow you to move on to other back-up offers if buyer fails to adhere to the agreed-upon inspection timeline.

Should I Write a No-Contingency Offer?

Well, that depends. Has your seller already had a professional inspection completed? What did the inspection reveal? Was the foundation adequately inspected? What about the roof? How old is the home? What updates have been recently done by the seller? Were permits obtained for any structural work?

I have represented Bay Area buyers who successfully wrote offers with no contingencies and I have represented buyers whose succesful offers included more contingencies than are typical. No home is the same and I think your offer should reflect your comfort with the home’s condition, your ability to obtain financing (or pay cash), and your overall risk tolerance.

I recommend that buyers do as much due diligence as possible before writing an offer. There is no substitute for being 100% confident in your offer before it is sent on to the seller. This will set the tone for a smooth transaction all the way to the closing table.

 

Posted on June 27, 2019 at 10:49 PM
Carlos Camargo | Category: Buying a House, Credit & Home Finance, Credit & Home Finance, First-time Buyer