MDH Blog | The Marin Home Blog

Suddenly it begins. After all the anticipation of finding your Marin dream house, your agent calls and you’re off to see the first property that may be “it”. You’re excited, but are you really prepared to recognize the best deal when you see it? Too many buyers look at the wrong things, in the wrong way and end up paying more than necessary. As a buyer, you must look at things differently than a casual observer.

Here are five ways to get ready before you go:

1. Are you ready if the first one is the best one?
There’s not a magic number of properties to see before you find one you like. If your agent has been listening, the first one may be it. Can you make an offer if you love it? Have you been pre-approved for financing? Have you got all the advice you need from friends and family, or made arrangements with them to come immediately when you find “the one?” Measure your large items so you’ll know what will fit while you walk through. Unnecessary delay may put you in a bidding battle.

2. Viewing a property does not mean staring at it.
Watch television’s real estate programs and you’ll see real estate agents enter the room first while buyers hover in the doorway peeking in. Go completely into the room. Move around, so you see it from every corner, doorway and vantage point. Study the space so that your eye travels around the room following the walls, not the cleverly-staged furnishings. Make thorough observations first, then photograph key positive and negative features. Go through twice, but reverse the direction, so you have a different view of everything. Take as long as possible to get to know a property since you may not be back until the day you move in.

3. No property is an island.
Drive and/or walk the block and neighborhood to see what positives & negatives exist. Which noise sources, including parks & schools, and which pollution sources may impact the property? Check area official plans for upcoming construction and municipal use plans. If you’re purchasing a view, determine exactly what protects the view from future construction?

4. Establish automatic pre-offer follow up with your agent.
Make it clear that you need details regarding costs including utility bills, property taxes, inspections, repairs, escrow fees, etc. Have the agent ask about an existing mortgage or seller financing, which may be less expensive.

5. Take a reality check.
This is bricks and mortar you’re after. There will be compromises and disappointments however much you love the property. If the house has been made-over or staged, a multitude of unpleasant realities may be waiting below a coat of paint. Get excited about ownership, but stick to your budget.

There’s a lot to think about when it comes to buying your dream home. Every decision, small to large, is important! Let’s look at a list of common issues that homebuyers face when shopping for a new home.

1. Neighborhood: Deciding on what neighborhood you desire can be tricky. You must consider your wants and needs carefully. They vary by person. Do you have children and need to live within the boundaries of a specific school district? You might want a short commute, a neighborhood with historic homes, or homes that are within walking distance to restaurants and night life.

2. Square footage: What size of home fits your needs? The average home in the United States is 2,195 square feet. Thirty years ago the average size was just 1,645. The trend has been for larger homes, with special purposes like exercise rooms, offices, studies and media rooms. This trend is now receding.

3. Floorplan: Architectural styles in Marin County offer a wide range of choices! Open floor plans might appeal to you, with their great flow for entertaining. Or you may have a more traditional aesthetic, preferring cozy rooms. Think about how you live your life and what style best fits your needs.

4. Finishes: There are huge differences in the grades of homes in Marin. You can find a wide range of finishes from beautifully remodeled kitchens with granite counters, to various types of hardwood flooring and green building materials. Some are remodeled, many are not. These choices can dramatically affect price.

5. Amenities: Our homes extend past the borders of our property. We live in the parks, shopping and restaurants that surround us. Be sure to think outside the “box” of your house when you buy.

6. Landscaping: A large yard can mean lots of entertaining potential, but it can also mean a lot of work. Be sure to consider your needs now and down the road when it comes to yard maintenance. Many homebuyers prefer a townhouse or condo for this reason. These options afford buyers with much less responsibility!

Be sure to discuss all of these topics with your Marin real estate agent. He/she can help you decide on a happy compromise among the long list of choices. They’ll also help you know what items on your wish list you can get in your price range.

Good luck on your Marin dream house search!

It can be a tricky question. From employment status, to savings, downpayment, and even spending habits, there are a myriad of factors that come into play.

Here is a list of items to consider before settling on a budget.

1. Monthly Payment: Conventional wisdom tells us that your mortgage payment should be no more than 28 of your gross monthly income. This means that if you make $150,000 a year, the maximum amount you would safely want to pay each month is $3,500. How do you figure this for your own salary? Take ___ (salary) x .28 = total dollar amount for year. Then divide the total dollar amount by 12 (months in the year) and there you have it!

The National Association of Realtors also gives this simple equation for renters to use to figure out how much they can afford. Multiply your rent by 1.32 and that will equal your affordable mortgage payment.

2. Job Security: Have you just switched jobs? Is your company experiencing layoffs? In times of economic uncertainty, you may find it best to stay put. This is why many economic analysts keep saying that a housing recovery is dependent on a jobs recovery. When jobs return, so will the buyers.

3. Savings: The state of American savings is scary. According to Visual Economics.com, the average family has $117,951 worth of debt and only $3,800 in savings. And a quarter of Americans have no savings at all! Talk about crossing your fingers that social security will hold out for a while. The U.S. savings rate has risen steadily since the recession hit. It is now at 5.8 percent (American Express Spending & Saving Tracker). Hopefully, this rate will continue to be a trend.

How does your debt-to-income ratio stack up? The Federal Reserve thinks debt adding up to more than 40% of your gross income could indicate financial distress.

4. Emergency Fund: Before you even begin to think about buying a house or moving, you must have an 8-month emergency fund in the bank. This means you need to add up your living expenses for a month. Include all the necessities and things that must be paid (rent or mortgage, car payments, insurance, food, gas money, electric, phone, tuition, day care, etc). Then multiply this number by 8. You must have this in case you or your spouse loses your job, gets sicks, or some other disaster hits your family.

5. Downpayment: This is savings in addition to your 8-month emergency fund. And a downpayment should be at least 20 percent of your purchase amount.

Look at it this way. If your monthly expenses are $5,000 a month and you want to buy a $1,000,000 house, you’ll need a bare minimum of $240,000 in the bank to truly afford this move. That doesn’t include cash needed for closing costs, repairs, moving expenses, and renovation.

6. Lifestyle and Extraneous Factors: Everyone has different wants and needs. You may be fine spending a little more for your Marin Dream House in exchange for taking fewer vacations. Others abhor the statement, “house rich, cash poor,” and instead would rather have funds for shopping, dining out, and travel. And don’t forget about extraneous factors, such as aging parents, car repairs and maintenance. Things may come out of nowhere!

Buying a house is a fulfilling experience, but it comes with a lot of financial responsibility that shouldn’t be taken lightly. Be sure to mull these items over when considering a buy.

How can Marin homebuyers find their way in today’s market and feel confident they’re getting the best deal possible? Here are some suggestions:

• Be committed. Today’s buyers just aren’t as committed to the search in the same dogged ways buyers were in the high market. If you want to be successful, you need that same sense of urgency that homebuyers exhibited during the Marin real estate boom. My advice: Make the house hunt a priority.

• Be ready. With lenders making it difficult to obtain a mortgage, it’s more important than ever to line-up financing in advance. It’s not a buyer’s market; it’s an able buyer’s market! Besides, knowing how large a loan you qualify for will prevent you from looking at houses you can’t afford, even if you expect to be a hard negotiator.

• Do your homework. Smart buyers in today’s market have already studied the market and are ready to jump on a good deal when it comes along. Recently, I had clients who purchased after seeing only three houses. But they were ready only because they had been researching for about a year.

• Have a plan. Know what you want in advance. For instance, identify the key features you need – like the number of bedrooms, or the number of bathrooms – and then refine your search. Create a list of “musts” and “wants.” That way, you will be able to avoid being overwhelmed by the process.

• Start the process. Be ready to begin the negotiations. Otherwise, you could miss out on a great opportunity. Make an offer when you find a house you like, even if the first number is well-below the asking price. At worst, the seller won’t negotiate. But in this market, that is unlikely. Sellers don’t want a viable buyer to walk away.

• Avoid distractions. Don’t be diverted by media reports that prices are still falling. They may well be, but perhaps not where you want to buy. All real estate is local, so find out what’s going on in the neighborhood where you’re looking.

From 2000 to 2006, the average homeowner saw the value of his house jump by more than 50%. Many homeowners doubled, tripled and even quadrupled their wealth in just 5 years because of exploding real estate values. Indeed, plenty of experts will tell you what we’ve experienced over the last few years was just a ‘bubble’ that’s going to pop any minute now. Others insist that whether it was a boom or a bubble, it’s over. According to them, it’s now too late to get in on the party. Well, I’m here to tell you the homeownership dream is no fantasy. Homeowners have been getting rich off their real estate for years, and they will continue to do so in the future.

According to statistics compiled by the National Association of Realtors, U.S. real estate values have been going up steadily for 4 decades. Nationally, appreciation has averaged 6.3% a year since 1965. Marin County has averaged 8.3% a year in the same period. According to Freddie Mac, since 1950 U.S. house prices have never experienced a year-to-year decline nationally. Compare that to the S&P; 500 with no less than a dozen down years in the same period, or the market for U.S. Treasury bonds which has fallen in 17 of the last 55 years.

Of course, just because home prices have been rising for the last half-century doesn’t mean they’re going to continue doing so. Obviously, no investment goes up in a straight line forever. But real estate’s phenomenal track record is hard to beat, and most experts believe that homeownership is one of the best ways to invest your money over the long term. Remember, as long as you’re alive you have to live somewhere, and so does everyone else you know.