homebuying – OC Neighborhoods

Don’t Make Mistakes On Your Offer to Buy a Property

Since 2012, there’s been a consistent rise in home prices which is making new options for a lot of baby boomers and others nearing retirement.

According to CoreLogic statistics, the median Orange County home price has increased $267,000 since four years ago. Some home buyers see that as a signal to get themselves into a home. They’ll need to work with a good real estate agent to locate a suitable property and put in a purchase offer.

Agents who are representing buyers recommend that your offer should be based on the most recent sales prices of comparable properties in the area. This encompasses comparing all features of the properties to your prospective property.

Some examples of comparable features are: square feet, number of bedrooms and bathrooms, year built, location, lot size, parking, pool, etc.

The amount that you offer for purchase of a property should not be based on a percentage off of the List price.

Occasionally, after analyzing recent sales of comparable properties, you will discover that the list price is actually in line with current market values of similar properties that sold in the last 60-90 days or is even priced under current home values.

With this in mind, you shouldn’t expect substantial change from the list price. For that matter, if the property has appealing features, it’s not unusual for such properties to generate multiple offers or sell above the asking price, especially when inventory is low.

It is not a mistake to make an offer at the list price or above if the purchase price is at market value. The issue is many buyers have it ingrained that they’re not getting a deal. Some sellers understand this and simply list their home at a higher price to allow room for the buyer to negotiate.

Your offer should not be predicated on modifications you would like to make. Make an offer based on the property’s condition and current market value. If the modifications, you’d like to make cost $100,000, you should not simply subtract $100,000.

Offer Mistakes

Offers that are unrealistic to the seller, like lowball offers many times do not even get a response from the seller. Some sellers are outraged by such an offer and it indicates you are not a serious buyer.

Do not base your offer on the home’s tax assessed value. The tax assessed value is commonly less than current market value.

Do not base your offer on how much the current owner paid for the property. The current market value is what you need to pay attention to, not their profit. They may have bought it 25 years ago which means they’ve probably experienced equity appreciation of more than 300%.

Do not base your offer on the property’s value when home prices were at their peak. The price it would have sold for in 2005 is not important today, stay focused on how much the property’s current value is now.

Currently, Orange County is in a market when inventory has been reduced, so, generally, there’s adequate data to review to figure what the current market value is. In certain neighborhoods, especially those that are close to the beach, property values are stable and experiencing appreciation due to sales activity, reduced inventory, and high demand, so worries about future price declines based on your offer are less important.

A high percentage of today’s buyers are making “All Cash” purchase offers for homes, so the anxiety about a repeat housing crash due to mortgage defaults is a huge mistake and should not affect decisions about offering close to list price, at list price, or above.

Anytime we work with home buyers, we start the search by providing full data about neighborhood property values they’re considering so that practical expectations are known, as well as an accurate, informed understanding of the market.

Prices Return to Highs: It’s Still a Good Time to Buy in OC

With mortgage rates at record-lows, a healthy pool of buyers and an inventory shortage of homes, Orange County home and condo prices have hit the June 2007 price levels which was around the housing boom peak.

In April, Corelogic Data said the median price of a home touched the $645,000 level, helping Orange County become the first county in Southern California to return to their prices prior to the recession.

That may bring back bubble fears, however, today’s housing market is very different from the housing situation of 2007. One big difference now are the monthly home payments are lower by $406 than in June 2007.

Another is the availability of financing such as 100% financing with an option arm or stated income product for someone with credit scores below 600 was ridiculous back then.

A third factor, is one has to factor in some inflation. This means, a home valued at $645,000 in 2007 would equal a home of $744,000 if calculated in dollars today.

One similarity back in the peak years was you had happy sellers and some discouraged buyers. There continues to be concern over the shortage of reasonably priced homes listed for sale.

Because interest rates are very low, a lot of people are trying to purchase a home. Even a home for sale at $600,000 will receive around 7-10 offers in a matter of days.

So, realtors say and know it’s very competitive for the buyers and advise them to stay the course. Some home buyers get so anxious that they are paying over the asking price just to finish the process.

With climbing home prices combined with a low inventory of homes for sale, buyers understandably get frustrated.

However, Orange County home sales have fallen year over year in the past 14 months possibly resulting from buyers who don’t qualify due to income and credit.

At the same time, Orange County’s growth in employment, larger households, and low interest rates are keeping the need for housing ongoing. As a result, entry-level home prices range from $500,000 to $750,000 which keeps a lot of first-time home buyers out of the single family market. They end up going for the alternative which is a condo or townhouse when they are squeezed out of the home market.

In comparison ot Orange County, the prices of home in Los Angeles and San Diego counties is still 5.5 percent less their peak prices from 2007. Further inland it is more noticeable with Riverside County home prices 23.6 percent under their peak level, and San Bernardino County is approximately 28.9 percent under its peak price point.

Although demand is high in Orange County, significant price appreciation is not expected year over year from the indicators mentioned above. Many economists are in agreement that any equity gains will be modest in the upcoming years.

Costs Buyers Forget About When Buying a Home

Property Taxes – depending on what time of the year you buy and your lender you may have to come up with more than a year of property taxes for an impound account. In addition, there’s some areas in Orange County that require you to pay Mello Roos Taxes.

Lender Fees – Fees for a loan can range from 2-3% of the Loan amount and if you want to obtain that really low interest rate, be prepared to pay a discount point. Otherwise you can opt for a zero point loan that likely has a higher interest rate.

Remodeling – It is not uncommon for buyers to modify their new homes to their tastes and that can cost a good sum of money.

Private Mortgage Insurance (PMI) – Mortgage insurance fees are triggered for those who want to purchase a home with less than 10% down. Since Orange County is considered a high-cost area by lenders with the average home price just above $652,000 (per Zillow May 2016), many buyers today want to put down the least amount they can on a home.

If you’re looking to make the minimum down payment on your home, you’ll need to obtain mortgage insurance (PMI). Buyers can pay for their mortgage insurance in full in one payment for the full twelve months, or it can be added to their monthly mortgage payments. Speak to a local lender about that.

Ways to Reduce Your Closing Cost
If you’re buying a home from a seller who does not have any other offers, and has an urgency to close the deal, you may be able to have your closing costs paid by the seller. However, it’s important to know that in that situation, you should offer close or the full price. If you’re buying in a high demand seller’s market, the seller might receive offers above their asking price and even have backup offers. Therefore, don’t expect them to pay for your closing costs.

People overlook the cost of insurance on a home and do not think twice about it. That is a bad decision as rates will vary from one company to another. Homeowners insurance is much more expensive than renter’s insurance and could be an unpleasant surprise.

Why is it Important to Have Escrow in a Transaction?

In many real estate transactions in Orange County, California, once there is an accepted offer, which means the purchase contract is signed by both the buyer and the seller, copies should be delivered to escrow.

The reason for this is because, the escrow company acts as a neutral third party for the buyer and the seller. Instead of the seller holding your deposit money, escrow holds it in an account. Their job is to make sure that 1.) clear title is transferred to the buyer, .2) all of the purchase contract terms are satisfied and .3) that the home inspectors, the appraiser, the pest control company, the lender, title insurance company, and the seller’s agent if applicable, and other related parties, are paid their agreed upon fees from the remaining amount the seller receives prior to

accepted offer orange county — orange county home in escrow

the deed transfer.

Among the most important tasks that escrow performs is title research. This is sometimes accomplished by the Title Insurance company, yet many escrow companies are under the same umbrella as the title company. The main objective is to guarantee to the buyer and the lender that the seller has clear and transferable title to the property and that it doesn’t have any additional liens outside of a mortgage like a tax or mechanic’s lien,or a lawsuit that will put a cloud on title. Once title is assured as being free of these negatives, the Title Company can commit to insure both the home buyer and the lender even if detected after closing.

Escrow and title companies have developed into a more customer service focused business in the last decade as evidenced by them having a remote signing agent, which means a person who is a certified notary and will come to your home or work to finalize the final closing documents.

Based on the governing regulations involving real estate settlement procedures, RESPA , the buyer and seller do have the right to choose the Escrow and Title Insurance company for their transaction. Challenges may arise when each party selects a different company and are not under the same company. Therefore, either the seller or buyer may concede the choice and allow the other to select a company that can coordinate with a different department in order to expedite the process. Quite often it just isn’t worth all the fuss, unless there are 100s of dollars of difference from one company to another that one will have to pay.

Among the last vital tasks for you to fulfill prior to settlement is to setup hazard insurance and flood insurance, if required, for your home. Prior to gaining the keys to your homes, you must give the Escrow Officer proof that you have gotten this insurance. A good real estate agent will have you aware of this and other conditions during the process.

The Most Affordable Cities in South Orange County

1. ALISO VIEJO

Located in-between Laguna Niguel, Laguna Hills, Laguna Beach and Laguna Woods is the city of Aliso Viejo. A perfect place for residents and those who enjoy the ocean, since it is just 15 minutes from the beach, and close to freeways.

There’s a little over 50,000 people living in one of the most family friendly cities in Orange County, with low crime rates, and median housing prices of $533,800, which is far less than the $591,000 median price for Orange County as a whole. The city’s excellent schools include Wood Canyon Elementary School, Aliso Niguel High School just to name a few are in the acclaimed Capistrano Unified School District.

Over 57% of Aliso Viejo’s population has obtained a bachelor’s degree. Its Town Center features the Edwards Multiplex 20 cinemas, Barnes & Nobles, and plenty of shops and restaurants for socializing. The Grand Park in the summer provides free movies, concerts, and amazing performances at the performing arts center at the peaceful Soka University.

Outdoor recreation keeps going at Aliso and Wood Canyon Wilderness Park where you can bike and hike. The city has a modern aquatics center, and a golf course at Aliso Viejo Country Club. There’s also the Marriott Renaissance ClubSport a fitness resort.

www.cityofalisoviejo.com

2. RANCHO SANTA MARGARITA

Located upon rolling hills and a master planned community, Rancho Santa Margarita, is another family friendly city where the crime rate is low and where just under 48,000 people reside. The city of Rancho Santa Margarita was incorporated on January 1, 2000 in Orange County.

The median home value is $590,600 among several neighborhoods. Dove Canyon is a private guard-gated residential community located in eastern RSM, with all single family residences, a golf club designed by Jack Nicklaus, swimming pool, tennis, a horse trail, and a kids park. It is a neighbor to the affluent Coto de Caza gated residential community. Coto de Caza contains only single family residences and is near the intersection of Plano Trabuco Road and Dove Canyon Drive.

The public schools of Cielo Vista, Trabuco Mesa, Robinson Ranch, Arroyo Vista, Melinda Heights, and Tijeras Creek in this area have performed very well statewide with test scores ranking very high.

Outdoor activities include the 4,000-acre O’Neil Regional Park with a great deal of options for biking, hiking, the Starr Ranch Sanctuary, the Tijeras Creek Golf Club, as well as RV or tent camping. Additionally, there’s a community center, dog park, and skate park. Local restaurants favorites are Pizza e Vino (among the best pizza restaurants in Orange County), Tutto Fresco, and for movies the Cinepolis Luxury Cinemas.

www.cityofrsm.org

3. MISSION VIEJO

This large city of nearly 100,000 is set in rolling hills with lush green landscaping on the parkways. There’s a lot families can do such as a good jog or walk around beautiful Lake Mission Viejo, a freshwater lake, or you can fish, boat, sunbathe or even swim there. There are 52 parks within Mission Viejo’s borders.

Things to do include going to the Shops of Mission Viejo, an upscale indoor mall, swimming at the Montanoso Recreation Center or Marguerite Aquatics Complex, Marguerite Tennis Center, or events and courses at the Norman P. Murray Community Center or Saddleback College.

With consistently highly rated schools belonging to the Capistrano Unified and Saddleback school districts and low crime make the city a great location for families and couples.

source: cityofmissionviejo.org