West Los Angeles Real Estate Blog

Articles To Help You Through The Real Estate Transaction

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Jan. 9, 2020

5 TACTICS TO HELP GET YOUR NEGOTIATIONS OFF DEAD CENTER AND INTO A CONTRACT

 I must break you,” Ivan Drago told Rocky Balboa in “Rocky IV." (Spoiler: He didn't.) It’s the exact sentiment you may feel while staring at your dream home, thinking about its sellers, and pondering what to do when negotiation talks go cold.

Now you might not be able to break hard-headed sellers, but you can probably warm them up enough to at least bend a bit. We asked accomplished experts what home buyers can do when a real estate Cold War sets in.

 

1. Give back to the community

 

Do the sellers love their community? Open your wallet and show some goodwill.make a donation to a local charity in their name.

This shows your commitment to the neighborhood and will also allow the seller to leave a positive mark on his or her community

Sponsoring a park bench or a brick at a local school will be seen as much more valuable to a homeowner leaving the neighborhood than a straight monetary donation.

That way when they’re gone from the neighborhood, they can feel like they’ve left their mark.

 

2. Knock out the home warranty

 

When you need to sweeten the pot, it’s a smart idea to start focusing on some of the little things in the contract. The home warranty is a good place to begin.

In our market, it is almost standard now for a seller to pay for a home warranty for the new buyer. These home warranty clauses generally cost a seller around $500.

Being willing to drop little things like this may just break that standoff.

Now, a home warranty isn't always offered by the seller, if that's the case, start looking for other concessions you can make. If an inspection comes back with suggested repairs, “be willing to scratch a few of the minor items off that repair list. This will show goodwill and a friendly attitude of trying to make the deal close.

 

3. Offer a package deal

 

Does the seller seem to have a lot of stuff? Could you find a use for some (or most) of it? Then offer to shell out and buy it. It just may get you closer to closing day.

If they’re selling their boat or lawn equipment or anything that can be a pain to sell, along with their house, come to them with an offer to purchase those items, too. Well, maybe not a boat! This saves them the hassle of selling the item or having to figure out a way to bring it with them to the new location.

 

4. Add more earnest money

Sure, adding more cash to the pile is usually the best thing you can do to crack a stalemate or win a bidding war. But when you increase your earnest money deposit, it doesn’t actually mean you pay more. And if you have the right kind of contract and are committed to the deal, your risk of losing that money is extremely low. With all the contingencies you have as a buyer—inspection, appraisal, loan conditions, and more—it is very rare that a buyer ever loses their earnest money. It gives the impression the buyer is more serious, and they have at least some cash to show they’re a strong buyer. It’s more psychological than substantive, but that’s how many negotiations go.”

 

5. Quicken the pace

One edge you can give yourself over other buyers is showing the seller you can close fast.

Tighten up your timelines like inspection contingency. Instead of 15 days, make it seven or 10 days, If you run into some issue and need to extend, you can always ask for an extension later.

It’s similar to how salesmen create a sense of urgency to close the deal. Show the seller you can get to the closing day sooner, you mean business, and you’re a strong buyer. And yes, you will break them. In a good way.

 

You Have Questions We Have Answers

 

              

 

Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571

"Helping Guide Clients Through The Economic Complexities Of Real Estate

By Knowing Their Wants And Needs"

Dec. 28, 2019

10 THINGS TO LOOK FOR WHEN BUYING A HOUSE

Buying a house is a bit like planning for your wedding day — there are months packed with excitement, stress, planning, and then, finally, the big payoff. I know because I have 2 exceedingly interesting sisters (a hummus-making social worker and a gluten-free marketing maven) who both committed to the big stuff — husbands and houses — within the last 2 years.

Although I can’t help you with happily-ever-after, I can share the insight I gained while helping my sisters on their journeys to homeownership. Here are 10 things to watch for when buying a house.

1. Recognize a roof in need of repair

Before you ever set foot inside, check out what’s happening on top. Does the roof look relatively new or is it caving in? If the roof is eye-catching (as in, “My, look at that gaping hole”), chances are it could end up costing you.

A newer roof, on the other hand, could mean a lower homeowners insurance rate. Likewise, a roof made of an especially sturdy material is better equipped to defend against wind and hail (and can save you from a potential claim).

2. Don’t judge a room by its paint job

When you step inside your prospective abode, focus on the structural stuff — aging appliances, loose wires — and tune out any freshly painted walls or upscale decor. The foundation will be there long after the paint has started chipping and you want that to be what lasts.

3. Take its temperature

When you’re buying a house, keep in mind: if it looks rickety or old, it probably is. Heating and cooling systems are expensive to fix and replace, and inefficient ones can eat away at your utility bills. Make sure the furnace is up to date and in good repair.

4. Decide on your dealbreakers

Aside from the basics, like quality windows and countertops, think about the purpose of your home and the requirements for your lifestyle, like storage for a large book collection or a big backyard for barbecuing.

It can also be smart to spring for a home with an extra bedroom if you’re planning on kids or guests. And if your significant other is a night owl while you’re a connoisseur of cat naps, it might be a good idea to look for a house with an entertainment area set far away from the master bedroom.

5. Plumbing: what lies beneath

When you’re poking around a new kitchen, don’t stop at eye level — get underneath the sink and examine those pipes. Check for leaks, water damage, and mold.

Not only is mold unsightly and foul-smelling, but it can also cause health problems. If you live with a baby, an elderly person, or someone with asthma, you’ll want to be especially careful before moving in with mold.

6. Check out the land beforehand 

Don’t just look at the building — examine the area around it. Is the house in an area prone to flooding or wildfires? Is the driveway shared with another property? If there are fences, have they been built and positioned properly? It’s a lot to take in, but when you buy a house, you can’t ignore its surroundings. 7. Smell the roses (and more)

Do you smell sewage, gas, or anything equally unpleasant? Sewage systems in older homes can sometimes get clogged or damaged by tree roots. Luckily, some sewer or plumbing companies can send a camera through the pipes to detect any breaks or blockages.

Also worth noting: pet odors, cigarettes, and mildew.

7. Smell the Roses (and more)

Do you smell sewage, gas, or anything equally unpleasant? Sewage systems in older homes can sometimes get clogged or damaged by tree roots. Luckily, some sewer or plumbing companies can send a camera through the pipes to detect any breaks or blockages.

Also worth noting: pet odors, cigarettes, and mildew.

 

8. Invest in a well-insulated house

Above all else, your home should be comfortable. Check the attic, water pipes, and heating ducts to make sure they’re properly insulated. This can reduce heating and cooling costs and keep you comfortable in summer and winter. Double-paned windows can also save you money down the road. Plus, they can help soundproof your place from outside noise.

9. Get your hands on everything

I mean that literally. Turn on every faucet and light switch, open every window and door, flush the toilets, even taste the water. Buying a house is a big step — maybe one of the biggest — and you need to know how everything works firsthand. That way, you can address problem areas and see if there’s a cost-effective solution.

10. Have a home inspection done

There’s only so much you can do with your own 5 senses. You’ll also want to enlist a professional to ensure the foundation is solid and the wiring is up to code. Home inspectors can even check for lead paint and wood-eating pests.

The National Association of Exclusive Buyer Agents suggests that almost every house has a defect. Some will be obvious to you, and the vast majority will be fixable, but it’s best to know before you buy. Not only will that help you negotiate a lower price, but it can also prepare you for any necessary repair costs that may arise

You Have Questions? We have Answers

 

Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571

"Helping Guide Clients Through The Economic Complexities Of Real Estate

By Knowing Their Wants And Needs"

Dec. 26, 2019

WHAT ARE CONTINGENCIES, WHAT ROLE DO THEY PLAY & HOW TO WORK WITH THEM IN A REAL ESTATE TRANSACTION

Let’s Explore the role of Contingencies in a Real Estate Transaction in California

 

What’s a contingency? In the formal definition, a contingency is “a provision for an unforeseen event or circumstance.” In real estate, this means that the offer is contingent on a certain matter happening — it will happen only if all requirements are met.

For example, let’s say we have a house listed at $1,000,000 and we have an interested buyer. The market is hot right now, so they offer the full list price of $1,000,000. Great! However, there are a few contingencies attached to the offer — basically saying “we will give you $1,000,000 for this house, but ONLY IF certain conditions are met.” Now, what are the conditions that often accompany an offer? We will discuss the three main ones — appraisal, inspection, and loan. Let’s dive into each one individually below!

 

Appraisal Contingency

An appraisal contingency is very reasonable and protects the buyer (as do all contingencies) in the case that the house actually appraises at the correct value. The buyer, through the loan company’s closing costs, must pay for an appraiser to inspect and write a report on the home’s value. In our example, we have a list price of $1,000,000, so the seller hopes that the appraised value is $1,000,000 or higher. Let’s say it appraises right at $1,000,000 — the seller is happy, the buyer is happy, and the contingency check-box is checked. At this point, the buyer signs a form to remove that contingency from the offer.

 

Inspection Contingency

Though the appraiser does go to the house, they are not a home inspector, so they aren’t the ones that are putting together an inspection report. This is what the buyer would need to lift the inspection contingency. A Home Inspection entails a lot of subjects but for now, let’s just say an  Inspector comes in to take a look at the house and make a general report on the condition. They are not an electrician, plumber or roof specialist but the report can contain recommendations to use a specialist in an area that the Home Inspector feels should be looked at closer. In a future blog I will cover the Home Inspection Process.

 

Loan Contingency

 

This contingency is exactly what it sounds like — a contingency for the buyers getting loan approval from their bank or a mortgage broker. This one is absolutely crucial for the deal going through. Though the contingencies all are equal on the contract, people are more likely to waive the appraisal contingency than they are to come up with $1,000,000 cash. Most people don’t have that in their savings account! If for some reason, the lender will not approve the loan, the deal is often dead in the water — the sellers will have to select a different offer, with more stable financing. This is why cash offers are so highly prized: because the seller knows that there will be no issue with financing/loans.

              

 

Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571

"Helping Guide Clients Through The Economic Complexities Of Real Estate

By Knowing Their Wants And Needs"

Dec. 19, 2019

FINALLY A FULL EXPLANATION OF WHAT ESCROW IS AND DOES PART 3 OF 3

 

Here is the final installment of our series on Escrow in a Real Estate Transaction

 

What to look for in an escrow company 

Online security is one of the most essential elements in an escrow transaction since it involves one of the biggest purchases of most people’s lifetime: their home. So it is important to use an escrow firm that takes steps to ensure funds are not misdirected or personal information subjected to hacking now or in the future. Your escrow company is mandated to report the purchase or sale of a residential property to the Internal Revenue Service.  In the process, the escrow firm must collect all parties’ non-public personal information, such as Social Security numbers, date of birth, bank account numbers. It’s the kind of information you don’t want hackers to have. To be safe, select an escrow company that is SOC1 and SOC2 certified by a third-party auditor to protect against online predators. I have worked with many escrow companies and have a few that I highly recommend, please contact me and I will put you in touch with them. Send me your  to my email, bob_schmalz@wlaregroup.com and I will put you in contact with a couple of them.

 

How can you assure a successful escrow? 

Buyers need to make sure they are using an accredited lender that is savvy and familiar with new federal requirements. What are the current federal regulations? The Consumer Financial Protection Bureau (CFPB), an organization that governs financial institutions, including residential real estate and closing services, mandates the new federal regulations. “They have stricter timelines and stricter disclosure requirements for lenders,” Tegan said. “They make it a lot more difficult for a lender that is not savvy to meet these timeframes and get loans closed on time. So it is very crucial for a buyer to choose a good team in both an agent and a lender.” Of course to service my clients I have a few lenders that I highly recommend. So many of my clients have thanked me for these lenders and I consistently hear how they performed where other lenders could not. Send an Email to me and I will set up the introductions.

Buyers and sellers are now facing longer escrows than in the past, instead of the typical 30 days to close, it is now common to take up to 45 days unless they are all-cash transactions. Are there other ways to expedite the escrow process?  Let me guide you, little things like the exact closing date become important, ie;  Interest payments on a loan might continue over a weekend if a home isn’t recorded on a Friday, so the day of the week a deed conveyance is recorded can make a difference.

 

 

Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571

"Helping Guide Clients Through The Economic Complexities Of Real Estate

By Knowing Their Wants And Needs"

Dec. 17, 2019

FINALLY A FULL EXPLANATION OF WHAT ESCROW IS AND DOES PART 2 OF 3

 

Here is part 2 of our 3 part series of What is Escrow and What it Does

 

What factors are involved during the escrow period?

  • Various parties must perform due diligence to assure all elements are acceptable so the loan can be funded.
  • The elements during an escrow where the buyer is obtaining a loan include.
  • The home’s appraised value
  • Buyer’s income
  • Buyer’s employment history.
  • Typically, the escrow fees are covered by your closing costs.

 

         What causes escrow to fall through?

As many homeowners know various outcomes can slow or even end the escrow.

  • If a home does not appraise at the purchase price, that can be the main factor that ties the process up. For example, a home that is on the market for $750,000 and goes under a contract for that price could only be appraised for $735,000. If that happens, the lender may not lend until the price is reduced or, in some cases, the lender may still move forward if the buyer is able to bring in a larger down payment. When one or both parties aren’t willing or able to reduce the sales price,  it can lead to falling out of escrow.
  • One of the most common reasons for an escrow to cancel is the buyer not being able to obtain financing, even with a preapproval letter. Lenders tend to be very willing to write a preapproval letter to a buyer, but when it comes down to it after the lender performs its thorough loan-approval process, the buyer might not qualify for a loan.
  • The buyer doesn’t always find out right away even if they are approved, it could be well into the transaction before we get final approval. This is where the loan contingency comes into play. I will have an article next week on the contingencies needed in a real estate transaction
  • Another typical scenario is when a buyer asks for excessive repairs and the seller isn’t willing to provide them. The buyer might want all-new windows. But the seller might just say no and go on to a new buyer.
  • “I’ve even had escrows cancel because there was litigation against the HOA,  I even had one fall out because the buyer was a symphony cellist, but the HOA rules said no instruments were allowed to be played in the home.”

 

Tomorrow I will post part 3 and next week I will bring you a series on disclosures

 

 

Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571

 

"Helping Guide Clients Through The Economic Complexities Of Real Estate By Knowing Their Wants And Needs"

Dec. 11, 2019

FINALLY, A FULL EXPLANATION OF WHAT ESCROW IS AND DOES PART 1 OF 3

 

 

So, you’ve found the home of your dreams. You obtained a pre-approval letter from a mortgage lender. The seller has accepted your offer. You’re practically home-free, right? Not so fast. There’s still one step left in the home buying process: escrow.

Escrow is easy to define. But reaching the close of escrow and having the keys to the front door in your hand depend on many factors.

 

What is escrow and how does it work?

 

Over the years, the escrow process has evolved. It is no longer just a safe, independent third party or company that holds the money until the transaction is complete. Now, escrow officers have much more responsibility, one of which is drawing escrow instructions reflecting the terms of the buyer and seller.

Only when all conditions are met will the lender agree to fund the transaction. Once the funding takes place, the title company will request for the transfer of ownership to be recorded at the county recorder’s office. The buyer’s mortgage goes into effect as soon as the recording confirmation is received, and sale proceeds are released to the seller.

 

Who oversees the escrow process?

Each real estate transaction is assigned an escrow officer–whether it’s successful or not.

The escrow officer serves as the communications link, or the hub, for all the parties in a transaction.

 

Who is involved in the escrow agreement process?

1.    The buyer

2.    The seller

3.    Listing agent

4.    Selling agent

5.    Termite company Lender

6.    Title company I

7.    Insurance agent

8.    Homeowners Association (HOA)

9.    Transaction coordinators within each of these parties

          

Who pays the escrow fees?

The escrow fees are customarily split 50-50 between buyer and seller in Southern California. Fee arrangements can vary by state and even regions within states.

 

See part 2 tomorrow

 


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Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571

 


"Helping Guide Clients Through The Economic Complexities Of Real Estate

By Knowing Their Wants And Needs"

Dec. 11, 2019

5 TIPS YOU SHOULD FOLLOW IF YOU ARE CONSIDERING BUYING A HOME

5 TIPS YOU SHOULD FOLLOW IF YOU ARE CONSIDERING BUYING A HOME

 

If you are a pro at buying homes or a first-time buyer here are 5 tips to guide you in the process

1. Pre-Qualify For A Loan

Being pre-qualified for a loan determines how much house you can afford. It also allows you to move more swiftly when you find the right house, especially when you aren't the only interested buyer.

2. Shop For Mortgage Rates & Terms
A difference of even half a percentage point can make a huge difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.

3. Using A Buyer's Agent
A buyer agent is legally responsible for representing the buyer's interest in a real estate transaction. Generally, the buyer agent is compensated by the seller at the time you purchase a new home and has a fiduciary duty of care, honesty and integrity with you.

4. Features That Help Or Hurt Resale Value
In some areas, a swimming pool actually detracts from a home's value and makes the home harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value. Your Realtor can point out features that hurt, as well as those that help, resale value.

5. Rate The Houses You Tour
After touring each home, write down what you liked and didn't like. Develop a rating system which will help you narrow the field down to the house that's the best for you.

 


"Helping Guide Clients Through The Economic Complexities Of Real Estate

By Knowing Their Wants And Needs" 

 

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Robert Schmalz - Broker / Founder

West Los Angeles Real Estate Group

An Independent California Licensed Realty

California Broker Lic #01813025

bob_schmalz@wlaregroup.com

310.505.5571