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  • Sales & Marketing Specialist, Realtor
  • 44530 San Pablo, Suite 101
  • Palm Desert, CA 92260
  • P: (760) 218 – 5752
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  • E: Cathi@DesertAreaHomeFinder.com
  • DRE# 01346930
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A Message From Cathi & Ben...

We hear similar stories repeated in different ways from our clients; At first, they look forward to stolen weekend's to golf & relax in the desert - they gradually discover they're crafting ways to spend more time here until it becomes clear, life just doesn't get any better than this."

Once that realization hit's, the process of change begins... We know what an extraordinary commodity your home is - buying or selling a home can be one of the most important decisions you will make and having the right team on your side will make the difference.

We specialize in homes throughout the Palm Springs Valley including Palm Desert Real Estate & Homes, Indian Wells Real Estate & Homes, La Quinta Real Estate & Homes, Rancho Mirage Real Estate & Homes, Palm Springs Real Estate & Homes& Indio Hills Real Estate & Homes. Whether you want to buy or sell an estate, lock & leave property with income potential, a resort property, land to build your dream home, or a property located in a country club or golf community we know the desert and are here to help. Our motto, If its important to you, it's important to us, guides us as we help our clients buy or sell a home in the desert.

Thank you for visiting DesertAreaHomeFinder.com, we hope you find our site helpful and we look forward to speaking with you it's easy, just click on the picture of a cell phone in the upper right corner of this web site and it will ring our cell phone directly.

Personal Messages

Taxable vs Tax Deferred 1031 Exchange

1031 Delayed ExchangeInvestment Properties
1031 Exchange is a strategy used by real estate investors to defer capital gains taxes, and is allowed under IRS tax code 1031.

By using a 1031 exchange, an investor can defer paying capital gains taxes on an investment property when it is sold, as long as another “like-kind” property is purchased with the profit gained by the sale of the first property.

 

Traditionally, a 1031 exchange is
where1031 Exchange House Swap one property is literally
swapped for another property of like-kind. But finding someone that literally want’s your property and you want their property are pretty slim, so the delayed exchange is more common.

 

In a delayed exchange, you will need a middle-man who holds the cash for you after you sell your property.  they will use that money to buy the replacement property for you. This 3 party exchange is treated as a swap.

When you sell an investment property, even if you weren’t the one who initially purchased, you end up on the hook to pay capital gains tax.

If you’ve made some not so great investments, selling your investment can cost you more than you make.  But, if you own a rental property that’s worth significantly more today than what you purchased it for, you can make a come out ahead using this powerful strategy.  It’s an important tool for real estate investors, and has become a bulls-eye for tax reform evangelists.

However, the exchange rules require that both the purchase price and the new loan amount be the same or higher on the replacement property.

Example: An investor is selling a $500,000 single family home she’s using as an income property in the LA Area with a $400,000 loan. She wants to buy a multi-family home for income here in the Desert; the replacement property must be valued at  $500,000 or more with $400,000 or more leverage, (loan amount).

4 types of Real Estate Exchanges:

1031-Exchange-Simultaneous Swap1) Simultaneous Exchange – occurs when the replacement property and relinquished property close on the same day.  It is important to note that the exchange must occur simultaneously; any delay, even a short delay caused by wiring money to an escrow company, can result in the disqualification of the exchange and the immediate application of full taxes.

 

Three basic ways a Simultaneous Exchange can occur.

  • Swap or complete a two-party trade, whereby the two parties exchange or “swap” deeds.
  • Three-party exchange where an “accommodating party” is used to facilitate the transaction in a simultaneous fashion for the exchanger.
  • Simultaneous exchange with a qualified intermediary who structures the entire exchange.

 

2)Delayed Exchange – 1031 Delayed ExchangeThe most common type of exchange chosen by investors;  occurs when the Exchangor relinquishes the original property before acquiring the replacement property.  In this scenario, the investor has 45 days to identify the replacement property and 180 days to complete the sale of their new property.

Using this strategy, an investor has a maximum of 45 days to identify the replacement property and 180 days to complete the sale of their property. In addition to the numerous tax benefits, this extended time frame is one of the reasons the delayed exchange is so popular.

 

1031 Reverse Exchange3) Reverse Exchange – Also known as a Forward Exchange, occurs when you acquire a replacement property through an exchange accommodation titleholder before you identify the replacement property. Essentially, you buy first and pay later.  This type of exchange can be tricky because it requires all cash. Many banks won’t offer loans on reverse exchanges.  Taxpayers must also decide which of their investment properties are going to be acquired and which will be “parked.” A failure to close on the relinquished property during the established 180 day period that the acquired property is parked will result in a forfeit of the exchange.

The rules for a Reverse Exchange are similar with a couple of key differences.

  • Tax payers have 45 days to ID what property is going to be sold as “The relinquished property”
  • After the initial 45 days, taxpayers have 135 day to complete the sale of the identified property and close out the reverse 1031 exchange with the purchase of the replacement property.

 

1031-Under-Construction

 

4) Construction or Improvement Exchange
The taxpayer can use their tax-deferred dollars to enhance the replacement property while it is placed in the hands of a qualified intermediary for the remainder of the 180 day period.

It’s important to note that the taxpayer must also meet three requirements if they want to defer all of the gain (from the sale of the relinquished property) and instead use it as part of the construction or improvement exchange.

3 key requirements for a Construction or Improvement Exchange

  1. The entire exchange equity must be spent on completed improvements or as down payment by the 180th day.
  2. The taxpayer must receive “substantially the same property” that they identified by the 45th day.
  3. The replacement property must be equal or greater in value when it is deeded back to the taxpayer. The improvements must be in place before the taxpayer can take the title back from the qualified intermediary.

7 Primary 1031 Exchange Rules.
1) Like-kind Property
2) Investment or Business purposes only
3) Greater of equal value
4) Must not receive “Boot”
5) Same Tax Payer
6) 45 Day Identification  window
7) 180 Day Purchase Window

Check out this FAB Home in South Palm Desert for Great Rental Income

1031 exchange identify the houseWe hope your main take-away is; you too can end up with passive income from real estate.  But, it’s not easy for even the most seasoned real estate investor. Having the right team working for you will be important to set the stage properly.  We have a team of professionals that can help.  For more info, give us a call today – we’re happy to help.

Buying or Selling a Home with Solar Panels

Buying or Selling a Home with Solar Panels

Buying or Selling a Home with SolarMore than a 12 million homeowners across the U.S. added solar systems to their homes in 2018.  As solar systems have become more efficient and less expensive, they’ve become more popular with homeowners.

 

 

If you’re Buying or Selling a Home with Solar Panels, there are unique benefits and challenges you will want to know about

If you’re Buying or Selling a Home with Solar Panels how do you determine what value the solar system adds to the sale price?  In a recent study from Lawrence Berkeley National Labs, a research lab affiliated with the DOE, they found homes with solar sell for 4.1% more than homes without solar systems. The study found that home buyers are willing to pay a premium for systems that are owned.

The same is not true for leased solar systems. The home value premium only applies to homes with “host-owned” PV,(aka photo voltaic systems).  In other words, if you own your solar system vs leasing the panels from a solar company.

The study also found, just because you spend more on a larger PV system, the premium on the resale value may not scale to match the investment. Smaller systems for more modest homes return a higher margin on the investment when the home hits the real estate market.

When weighing the cost vs the benefit – the determining factor will be the ROI, how long it takes to recoup the hefty up-front investment. Through energy savings, tax credits, and the potential increase in your home’s value at time of sale.

There are many factors that influence a solar system’s true value, including the age, size, and power output of the system. No two solar systems are alike, which is why appraisers need to value each system independently.

One of the biggest gotchas of buying or selling a home with a rooftop solar system has to do with who owns the system and that depends how the system was purchased.

There are for ways to purchase solar panels:
Cash Purchase, Loan, Lease or Power Purchase Agreement. 

Buying or Selling a Home with SolarCash Purchase
Homeowners who purchase a solar system outright with cash own the system. That’s the simplest scenario in a real estate transaction. A solar system purchased outright is considered “real property,” in real estate parlance, or a fixture of the home, and can therefore be appraised as part of the home’s value.

 

Buying or Selling a Home with SolarLoan
The same applies to a system that was purchased with a loan that has since been paid in full. That system belongs to the homeowner. If, however, the homeowner is still making payments toward a loan, ownership will depend on the contract the homeowner signed with the lender. Most lenders allow the homeowner to claim ownership while they make payments. These systems can be appraised as part of the home’s value.

Other lenders may place either a lien or UCC-1 Filing (part of a legal set of rules that allow creditors to secure assets as collateral in the event of default by claiming third-party ownership) on the system. UCC-1 filings are technically not liens, but are often treated by title companies as a lien. If the system is secured with a lien or UCC-1, the lender may claim ownership of the system, which may therefore impact whether or not the system can be included in the appraised value of the home. Appraisal practices and underwriting guidelines continue to evolve as rooftop solar becomes more common, so be sure to work with your lender and title company to understand the specific guidelines in your area.

It’s also worth mentioning that sellers are on the hook to pay off any loan tied to a property prior to a sell. Solar is no different. Sellers are ultimately responsible for paying off their loan obligation as part of the sale or through other means if the buyer is not willing to take over the loan, and may want to adjust their asking price accordingly.

Buyers who are willing to take over the loan on the solar energy system will need to qualify concurrently for both a mortgage and a loan for the system, which may affect their debt-to-income ratio.

Buying or Selling a Home with SolarPower Purchase Agreement, (PPA) or Lease
Under a Power Purchase Agreement or Lease, the homeowner pays for the right to use the system for a specified period of time, but does not actually own the system. The system is owned by the solar provider, who typically places a UCC-1 Filing against the system as described above. Systems financed in this way are owned by a third party (not the homeowner) and cannot contribute to the appraised value of the property.

Sellers with a solar system obtained through a Power Purchase Agreement or lease must either transfer their systems to their new residence or “buyout” their contract. The specifics vary by solar provider, so be sure to read your contract.

Buyers looking to purchase a property with either of these types of agreements should obtain a copy of the solar contract tied to the property and decide if they are willing to take the contract. This process may add to the timeline, but may be worth the effort. Power Purchase Agreements and solar leases are a way to take advantage of the benefits of solar with little or no up-front costs. The rates are typically lower and fixed for a specified term.

BRINGING IT ALL TOGETHER

Buying or Selling a Home with Solar

Buying or Selling a Home with Solar Panels – Tips for Buyers

  • If buying a home with a solar system is high on your wish list, make sure your agent knows that.
  • Work with agents, lenders, and title companies trained or at least familiar with rooftop solar whenever possible.
  • Ask your agent or title company to check if a UCC-1 Filing (a lien) has been placed on the system. If there is, you will need to work with your agent, title company, solar provider, and the property owner to determine how you will negotiate the UCC-1 Filing as part of the deal.
  • If the system is tied to a Power Purchase Agreement or a lease, make certain you understand the risks and obligations of the contract before taking it over. You can also request the system be removed by the seller as part of the deal, assuming the seller is in a position to do so.
  • If the seller is still making payments on the loan for the solar energy system, work with your agent to decide if you will take over the loan or ask the seller to pay off the loan as part of the deal. Remember, if you intend to take over the loan, you must qualify for both the solar loan and your mortgage.
  • Ensure the appraiser accurately accounts for the value of the system. The appraisal validates the system’s value should you need to sell the property in the near future.
  • Allow extra time in your purchase contract for the closing date.  There can be a lot of moving parts when trying to completely understand the details, negotiate who will pay, etc

If you have solar installed on your Desert home and unsure how the solar impacts the value of your home for the current real estate market, give us a ring – we’re happy to help.

Buying and Selling a HomeBuying or Selling a Home with Solar Panels – Tips for Sellers

  • Work with agents, lenders, and title companies trained or at least familiar with rooftop solar whenever possible.
  • Get a jump start on the process, collect all of your system’s documentation together, along with 4 – 6 months of your most recent electric bills, and share those with your agent.
  • If you acquired your solar system through a Power Purchase Agreement, a Lease, or through a Loan; check to see if there is a UCC-1 Filing placed on the system. If there is, work with your agent,  title company, solar provider, and the buyer to determine the best way to negotiate the UCC-1 Filing as part of the deal.  Rarely, but possibly, the solar provider or finance company may be willing to provide a “subordination agreement”.  Taking 2nd position behind a 1st mortgage, if the buyer is willing to take over the contract.  This would be an exception not the rule.
  • If you’re still under contract with a Power Purchase Agreement, or Lease, or if you are still making loan payments be prepared to buy out your contract if the buyer is not willing to take ownership of the contract.  If the market is strong, you may be able to adjust your asking price to account for the added expense or search for a buyer willing to take the contract.
  • Ensure the appraiser accurately accounts for the value of the system. Remember, $0 valuations must be supported with sufficient evidence.
  • Chances are, potential buyers aren’t looking at your house just because of the solar panels and people unfamiliar with solar panels won’t know about the added value, so it’s important for you and your agent to explain this value. The appraisal can help with that, but a knowledgeable real estate agent will be an important part of this.  Be prepared to share past electric bills to demonstrate the savings you enjoy as a result of your solar energy system.

If you have solar installed on your Desert home and unsure how the solar impacts the value of your home for the current real estate market, give us a ring – we’re happy to help.

Final Thoughts
Buying a home with Solar, or installing solar on your home is generally a sound investment; If you live in your home for the duration of the warranty, you can expect a grid tie system to pay for itself 2-3 times over. With tax breaks and energy savings.

Even if you decide to move before the warranty is up, you still come out ahead. The value of the system can translate into a higher sale price when your home hits the market. That premium is typically enough to cover the cost of the hardware; which is a break even on the solar investment.

If you’re looking at purchasing a home with solar, and not sure what the price premium actually is, give us a ring we’re happy to help.

Desert Real Estate Market Update

The Coachella Valley Real Estate Market is Strong. 

When we look at prices now compared to one year ago, we see that detached home prices are up 4.6% and attached home prices are up 7.3% from last year.  Eight of Nine Valley cities saw a price increase.

Detached and Attach Home Prices by City

The total number of sales have slowed a bit from last year, down about 5.3%. Detached homes were down about 4% while Attached homes, which saw a bigger price increase, has had a bigger dip in the number of sales, down about 7.6%.

Number of Home Sales for Detached and Attached

When we look at the number of sales by Price Range, we see that the majority of the sales are between $200,000 – $500,000.  The largest dip in number of sales is in the $800,000 – $1m price range, then picking up again over $1m.  However, when we compare the number of sales year over year by price bracket, we see that the largest dip in the number of sales in 2019 was below $400,000. From $500,000 and up the number of sales were at about par over last year.

Number of Sales by Price Range

Currently there are about 3,600 homes listed for sale in the Valley, about the same as this time last year. This is a seasonal market; you can see the pattern on the chart below.  We reach our lowest inventory levels in September every year and gradually increase to an annual peak in February and March.

Housing Inventory

Breaking down the inventory levels; it’s no surprise that the lowest inventory levels are in the $200,000 – $400,000 price range.  The month’s supply starts climbing over $500,000. Based on the current number of homes listed for sale divided by the number of sales each month, if no new inventory entered the market, we see there is a 6 month supply in the $500,000 – $600,000 range.  About a 7 month supply for homes priced between $700,000 – $900,000 and a 13 month supply for homes priced over $1m.

Months Supply by price range

Based on price trends, the number of sales, inventory levels and low interest rates, we can say the Coachella Valley Real Estate Market is Strong.  The trends we see suggest that we will continue to see a strong real estate market throughout 2019 and into 2020.

If you would like more detailed market information about your city, your community, or your home specifically, give us a ring – we’re on standby to help.   (760) 218 – 5752

Desert Real Estate Market Report

DESERT REAL ESTATE MARKET REPORT
2018 Year in Review

As we start 2019, it’s time to take look back at how the Desert Real Estate Market performed last year and look for developing trends.

Home Prices are Up

In 2018, there were 5,836 single family home sales throughout the Coachella Valley. Those homes sold at an average of $610,300 and an average of $260. / Sq Ft.  Homes that were priced correctly for the market, sold on average in 89 days.  The highest sale price in 2018 was $12,000,000 for a home located in The Madison in La Quinta.

With those statistics, we compared 2018 sales to the previous year and found that while the number of sales were down slightly overall, (2%), Selling Prices were up 10% and the price / sq ft was up 8%. The time it took to sell was down 10% from the year prior.  The highest priced home sale in 2017 was $8,700,000. for a home located in The Vintage Country Club in Indian Wells.

When we look at the performance of each individual city; prices are up across the valley with two stand-outs – Palm Desert had a 20% price increase and La Quinta had a 15% price increase.

While prices are up, inventories remain low as compared to this time of season in years past.  Historically when the  inventory of homes for sale is low, prices tend to rise due to the pressures of supply and demand.

Interest rates also play an important role in how markets perform; rates are still low despite the fact that the Fed gave us 4 rate increases in 2018.  As rates increase, buyers can afford less house for the same mortgage payment, which ultimately puts downward pressure on home prices.

But good news, rates pulled back a bit this week. Conforming loans, (up to $484,350) for a 30 year fixed rate is still just 4.47%.

The Coachella Valley has long been viewed as a destination for the soon to retire and already retired home buyers looking for an active lifestyle, but with the increase in mobile commuting, people can work from anywhere.  We’re also seeing more young home buyers who are looking for a quality lifestyle, moving to the Desert full time.  Easy Freeway and International Airport access makes that possible.

Combine the Lifestyle that only the Coachella Valley offers along with affordable home prices – the Valley is and will continue to be a destination for both full time residents, second home buyers and

We have a strong and steady real estate market here in the Coachella Valley.

If you would like more detailed information about your neighborhood specifically, drop me a line – we just finished our  2018 “Year in Review” Market Report, I’m happy to send you a copy.

Cathi Walter
Broker Associate with Bennion Deville Homes
(760) 218-5752
Cathi@DesertAreaHomeFinder.com

 

The Real Estate Corner Desert Market Update

The Real Estate Corner Desert Market Update

NUMBER OF SALES
September_2018_Home_Sales_by_City

Home sales are up Valley-wide.  The total three-month sales are up 2.9%.  On a city by city basis, six cities show higher sales, with three; Palm Desert, Desert Hot Springs and Palm Springs showing the largest increase in sales.

The three cities with the largest sales declines are Indio, Indian Wells and Cathedral City.

INVENTORY OF HOMES FOR SALE

September_Inventory

While home sales are up, inventories are down.  Typically our inventories dip to to their lowest point every year toward the end of September, but this year inventories are even lower.

Low inventory acts as both a positive and negative; it’s positive for sellers and future home sellers as it tends to move home prices higher.  But, it’s also a negative in that low inventory puts the brakes on the number of sales. If interest rates continue to increase, that can put a damper on sales as the cost of borrowing money for a mortgage becomes more expensive.

MONTHS SUPPLY OF HOMES FOR SALE BY CITY

Months_of_Supply

The month’s of supply ratio is down valley-wide compared to one year ago in every city.  Most have less than 4 month supply except two; La Quinta which currently has a 4.5 month supply and Indian Wells with a 6 month supply of homes to sell.

MONTHS SUPPLY OF HOMES FOR SALE BY PRICE BRACKETS
When we look at the supply of homes by price category, we see the supply is lower across all price brackets compared to one year ago.  The biggest change is homes priced above $800,000.  Last year the higher price points were taking 7.5 months – 1 year to sell.  Now, it’s taking on average 5.3 – 8 months

Months_Supply_by_Price_Range

The tipping point when using this metric is 6 month’s.  6 months is considered a “Balanced Market”, not particularly favoring either Home Buyers or Home Sellers.  Less than 6 months, the market is tipped in the Sellers favor, otherwise known as a “Sellers Market”.  More than 6 month supply is viewed as a “Buyers Market”.

As home prices or the cost of buying a home, (rising interest rates), increase – sales will start to slow putting downward pressure on pricing.  Markets are always in a state of flux, moving from one market to another and rarely stopping at “balanced” for long.

While there is typically a lag period between market shifts, the lag time is shorter as the number of sales are increasing.  Home sellers quickly see an improving market and strive to maximize the price they can ask.  When prices increase too fast or too far ahead of sales, potential home buyer’s become reluctant to make offers, fearing they could be buying at the peak.

DISCOUNT FROM ASKING PRICE

Sale_price_discount_from_asking_price

In 2018, when negotiating a sale price with buyers; home sellers are discounting their listed price an average of 2%.  One year ago, sellers needed to discount an average 2.4% off their asking price to close a sale.

For example, this ratio means if a home is listed at $400,000 it’s selling at an average of 98% of their asking price, or $392,000. a discount of $8,000. This metric also shows a strong and improving real estate market here in the Desert.

When we look at the story each of these metrics are showing for the Desert Real Estate Market, we can see an improving but pretty balanced market.  In addition, we can see that the market has had and continues to show sustained growth. Making now the right time to be a participant in the market.

The Desert Lifestyle is unlike any other, as we head into our season now is a great time see what the Desert has to offer.  Check out these FAB Desert Homes!

 

Palm Desert Golf Cart Parade

Palm Desert Golf Cart Parade 2018
Sunday, October 28th from 12:00 – 3:00 p.m.

Palm Desert Golf Cart Parade

It’s time to kick off a new season in the Desert with the Palm Desert Golf Cart Parade!  This years theme is “Celebrating our Super Heroes” Our community will showcase and celebrate all of our different types of Super Hero’s including our Police Officers, Fireman, Veterans, Teachers, Parents, the list is endless.  Come be a part of the pageantry and fun as scores of whimsically decorated golf carts and bands march down El Paseo.

Palm Desert is a progressive city with an eye on the future – this picturesque desert community has a Dynamic Big City Vibe; with Exclusive Country Clubs, Fine Dining, Art Galleries, Live Theater, World Class Championship Golf and home to the valleys only zoo, The Living Desert, which combines an indigenous zoo with an authentic arboretum.  Be a part of what makes Palm Desert the place to be, check out these FAB homes for sale in Palm Desert!

Top 6 Summer Staging Tips

Welcome

SUMMER STAGING TIPS
Did you know that more than 50% of the desert home sales happen during the summer  months?  The desert summer real estate market is as hot as it is outside; knowing how to present your home for sale will be an important factor for you to ask and receive top dollar.

 

Top 6 Summer Staging Tips

Keep it cool as a cucumber. no one wants to walk into a hot house.  All of a sudden, they’re thinking how do I get out of here instead of looking at your home.  Now is not the time to skimp on energy bills.

Show that the grass is greener. High water costs and water conservation are hard on our summer desert landscape.  However, keeping at least the front landscape looking fresh and lush will make your home stand out as the gem. The curb appeal will lure them in.

Set the Mood. set up a refreshing beverage station for your hot and tired home buyer’s and their agents. Place a vase with fresh flowers. Have a pitcher of Ice Tea or Lemonade with lots of ice and pretty glasses set out just before your showing.

Visual Power. Use fresh flowers in as many places througout your house as you can.  Make sure your home looks fresh, cheery and refreshing as possible.

Making Scents. Aromatherapy can help make your home more alluring. Scents like Citrus,  Eucalyptus or Rosemary say summer. They add a clean refreshing scent to your home.

In the Swing. There is an intimate relationship between music and marketing.  Music can evoke an emotional response.  The awkward sound of heels on a hard floor is hardly inspiring.  Heighten the senses of your buyer with background music, it changes the ambiance and heightens the senses and mood of buyers touring a home. Music has a persuasive impact and can create an illusion of life inside your home for buyers increasing their emotional attachment. The music you play is important, pair the music style to the style of your home and the buyer’s you’re targeting.

 

Summer Desert Market Report

Desert Summer Market Report

Summer Desert Market Report  – Median home prices rose for the 8th straight month. Up 9.6% from last year. The hottest cities for sales by volume were Palm Desert (233), Palm Springs (213), La Quinta (156), Indio (131), Rancho Mirage (97). Each city and each community has its own story some communities have seen huge growth, while others are relatively flat. The cities that had the largest price increases, have seen the number of sales flatten, which tells us that prices were getting ahead of the market.

Inventories are down again putting upward pressure on pricing. Overall the desert has seen a decline in the time it’s taking to sell, nicely presented homes in a good location and priced well are selling quickly. Currently there is a 3 month supply of homes for sale in the desert, which puts us in a “Sellers Market” as we head into season.

The Fed has indicated there will likely be two more interest rate increases before the end of the year, which could start to weigh on the market and slow sales until the shock is absorbed.

Southern California and specifically, the Coachella Valley continues to be a sought after destination for a second home get a way.

As we head into our “Season”, we expect to see continued strong home sales and price appreciation valley-wide.

How’s your neighborhood doing?  Send me an email, I’ve got the details!

How much income you need to buy the average home in each state

Ever wonder how much income you need to buy an average home in other areas of the country?

@HowMuch.net just published a map showing How much income you need to buy the average home in each state in the U.S.

They collected average home prices for every state from Zillow and then plugged that information into a mortgage calculator to figure out monthly payments. The interest rates used varied from 4 to 5% depending on the market, a 10% down payment, and total cost of housing not exceeding more than 30% of gross income. Using this rule as the benchmark, they calculated the minimum salary required to afford the average home in each state.

The Top Three Places Where You Need the Highest Salaries to Afford the Average Home 1. Hawaii: $153,520 for a house worth $610,000 2. Washington, DC: $138,440 for a house worth $549,000 3. California: $120,120 for a house worth $499,900 Here’s a quick snapshot of housing affordability across the United States.

Home much income do you need to buy the average home in each state; Check it out!Home much income do you need to buy the average home in each state

Home Sale Negotiations

HOME SALE NEGOTIATIONS
Home Sellers Want the Highest Price and Home Buyers Want a Deal. 

How Can They Ever Find Common Ground?

Home Sale Negotiations

THE TUG OF WAR BEGINS!

 

The foundation for any negotiation starts with the data, the black and white of it all.  Then it becomes a dance of personalities, emotions, and skill.

At the end of the day, Sellers want to sell and Buyers want to buy and both have the goal to close the deal. It’s the in between that can get a little murky along the way.

In every market, one party has the upper hand; in a Buyer’s market, there are lot’s of choices and it can be easy for the Buyer to walk away in favor of the home down the street.  In a Seller’s market, inventories are tight with limited choices, which can create multiple offers or bidding wars and the Seller can be picky about the price and terms.

Typically, in any kind of market, a truly motivated Seller is less inclined to want a lengthy negotiation, they just want to get the deal done.

TOP 10 THINGS TO KNOW WHEN YOU’RE
NEGOTIATING YOUR NEXT REAL ESTATE DEAL

PRICE – it means different things to different parties.  The Seller wants the highest price and the Buyer wants to pay the least amount possible. They don’t want to overpay or price themselves out of a resale when it comes time for them to sell.

CLOSING COSTS – Buyers will pay the prepaid closing costs for their mortgage. Items like taxes and insurance.  The Buyer might ask for a flat amount paid by the Seller to go towards their closing costs; up to 3% of non-recurring closing costs are allowed by the lender.  In this case, if the Seller is asked to make a concession, that will typically end up in a higher sales price for the Buyer.

CLOSING DATE – Sellers may want to get out from under the monthly costs as quickly as possible to preserve their capital.  Buyers, when getting a mortgage will pre-pay the first month’s mortgage payment so they don’t have to make their 1st mortgage payment until the 2nd month, in this case, the Buyer will likely want to move in at the beginning of the month so they can skip the next month.

FINANCING CONTINGENCIES – Buyers who are getting a mortgage are competing with all cash offers, which is more appealing to any Seller knowing that there isn’t a financing contingency.  The best way for a Buyer to compete is to get complete loan approval prior to making the offer, that way they can move quickly to remove or waive the financing contingencies.

APPRAISAL CONTINGENCY – If the Buyer is getting a mortgage, the Seller can push the Buyer to waive the appraisal contingency. On a conventional mortgage, banks will lend 80% of the appraised value or the purchase price, whichever is lower. But if the house doesn’t appraise for the contract purchase price and the appraisal contingency has been waived, the Buyer must come up with the difference.  Any shortfall would have to be paid in cash by the Buyer.

HOME WARRANTY – The Home Seller will typically provide a one year home warranty that covers the mechanical’s, appliances and pool equipment.  This is a “Peace of Mine” insurance policy for the home seller in case something goes wrong.

LEASEBACK – The Seller may need a little extra time to make the move, especially if they’ve lived in the home for many years. The Buyer could offer a zero cost rent back for 30 days to entice the Seller to accept a price that they may not otherwise accept.

REPAIRS – When a home needs a lot of updating, the Buyer has a lot of room to negotiate if the home is priced on par with properties that are updated. If the Kitchen and Baths are out of date, the appliances are old and there’s popcorn on the ceilings the Buyer will make a lower offer to accommodate the repairs necessary. The Seller can price the home accordingly ahead of time and say they won’t make any repairs, in this case, there will be less room to negotiate on price.

FURNITURE – Negotiation over personal property such as the furniture has killed more than one deal, this is when emotions can get heated.  It’s best if the Seller will consider selling the furniture to make out a list of items and their prices ahead of time.  An important note here, a lender will not lend on personal furniture.  If there will be personal property transferred it must be done outside of escrow with a bill of sale.

APPLIANCES – The stove, dishwasher, built-in microwave and any other built-in appliance will be included, but a free-standing refrigerator or the Washer and Dryer don’t necessarily.  Seller many times will wait to see how the negotiation goes first before they commit.

INSPECTION CONTINGENCY – Buyer’s remorse and waiving their home inspection contingency generally go hand in hand. It’s never a good idea to waive the home inspection unless it’s a complete remodel and you re a skilled investor / contractor / remodeler.  But the Buyer can shorten the time frame for the inspection from 17 days to maybe 10 or even 7 days.

HOA ASSESSMENTS – If the home is in a homeowners association – there could potentially be special assessments in place or coming up.  The Buyer may ask the Seller to clear the assessment, paying it all.  This can be negotiated between Buyer and Seller for who pays and how much they pay toward the assessment.

Get In Touch

  • Cathi & Ben Walter
  • REALTOR ®
  • 44530 San Pablo, Suite 101
  • Palm Desert, CA 92260
  • P: (760) 218 – 5752
  • E: Cathi@DesertAreaHomeFinder.com
  • CalBRE# 01346930

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