Posts Tagged ‘Gino Blefari’

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Intero Insider: 5 Home Purchase Cancellation Prevention Techniques

By Gino Blefari | February 1st, 2012 0 Comments

The real problem in the housing industry right now is not lagging sales or falling prices. With lots of supply and rock-bottom interest rates on mortgages, demand from buyers is shaping up. The real problem now is in cancelled contracts.

In its December Pending Home Sales Index released last week, the National Association of Realtors said that pending home sales remained strong at 96.6 – still well above the same month a year earlier when the index was at 91.5. (An index of 100 is considered to be a healthy market.)

The index measures the number of contract signings made in a month and is viewed as a forward-looking indicator because contract signings in a perfect world lead to actual sales either the following month or month after. So, with all the positive numbers here, why aren’t we seeing a boom in closed sales? The answer is  simply that deals are falling through.

NAR says that one-third of Realtors are reporting that contract failures remain a big issue. This is no small potatoes. Now that we know more buyers are ready to bite, we can’t let you get blindsided or discouraged by contract failures. Here are five home purchase cancellation prevention techniques:

1. Have enough cash: A no-brainer, I know. Lenders are much stricter these days about how much cash they want to see at closing. You should know how much you can bring – for both down payment and closing costs – well in advance of your house hunt.

2. Prepare your paperwork now: Agents say that many times contracts fall through because the buyers didn’t have their paperwork ready when it was needed. To save your deal, make sure you’ve got all your financial information in line before you make an offer: proof of income, assets, debt, and proof of down payment, and letters you may need to explain gaps in income or employment.

3. Tighten up your finances: Just because your offer was accepted doesn’t mean you’ve got the house. You still need to get a loan (unless, of course, you’re independently wealthy and plan to pay cash). Long before you go house hunting, be sure to visit with a loan officer or mortgage broker to get a picture of your finances so that you’ll know whether a bank will lend to you and how much.

4. Understand your comps: Many deals are falling through because of appraisals coming in below the purchase price. While there’s nothing an agent or home buyer can do about a low appraisal, you can do something about the offer price. Make sure you know your market inside out. Pull good comps that are similar, local and recent. Get a good inspection and be sure that any defects are accounted for in some way. You need to know about any little thing that may come up to negatively impact the appraisal the bank will use to determine the home’s value.

5. If buying a short sale or foreclosure, educate yourself on these processes in advance: These types of transactions take much longer to complete in many cases. But when they move, you need to be ready to move with them. That means you should first know what to expect before making your offer, and then follow through on what is expected of you every step of the way.

Extreme caution, hyper preparedness and highly informed home buyers are the only combination that’s going to make a dent in the large portion of contract failures the market is experiencing. While we can’t control lenders, we can control our readiness to respond.

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Intero Insider: Why Low Interest Rates Are Still Vital to the Housing Economy

By Gino Blefari | January 17th, 2012 0 Comments

Interest rates. It’s a constant topic of conversation in real estate, and this year so far is no different than the last few: We’re kicking it off with some of the lowest interest rates on long-term mortgages that the market has ever seen. The average rate on a 30-year fixed-rate mortgage reached an all-time low of 3.89% this month, according to a survey tracked by Freddie Mac.

Two messages are important in this news for home buyers and sellers. They are:

1. Low interest rates are significant for home buyers, equating to big savings when locked in at the right time. This is a point that can actually motivate a lot of buyers to get off the fence.

For instance, let’s look at a .5% increase in a mortgage rate on a 30-year mortgage for $425,000. Say our buyers could get a 4.75% interest rate when they first start their real estate search. If they indeed buy a home and lock in a mortgage at this rate, they’ll end up paying $373,120.42 in total interest over the life of the loan.

But say these buyers get lost in their decision-making process and end up taking eight months to make a decision on a home. By the time they lock in their rate, they end up with a 5.25% interest rate on a 30-year mortgage for the same $425,000 loan. Now, they’ll end up paying $419,871.66 in interest over the life of the loan. That’s a $46,751.24 increase in the final interest bill – substantial to the average family buying a home.

Taking advantage of the lowest rates possible is a key message that will help to motivate a lot of buyers in 2012.

2. While no one can predict when interest rates will increase or by how much, we know they inevitably will increase, but can also feel comfortable that they’re not going to jump suddenly. Most analysts and industry observers expect rates to remain low as long as the economy is still in a slow recovery. That’s good news for buyers and sellers alike (more affordable borrowing means more buyers in the market, in most cases).

Low interest rates alone cannot save a housing slump, or single-handedly create a boom (remember that our last boom was also fueled by very loose loan underwriting standards that created a lot demand from market segments that would not be eligible for loans under today’s standards). But they’re still extremely important to the recovery story. They still have a vital role. Let’s not undermine that, or let that point get lost in the shuffle.

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Intero Insider: How Sellers Can Sharpen Their Competitive Edge

By Gino Blefari | October 4th, 2011 1 Comment

Selling a home is a hyper-competitive endeavor in many markets across the country. Even here in the Bay Area where many neighborhoods are doing well, we’ve got pockets of buyers’ markets that are posing challenges for home sellers.

Does this mean it’s a terrible time to sell? Not necessarily. But it does mean that sellers need to be ready to compete when putting their homes on the market. What can a typical homeowner do to make their home more appealing in a market where buyers may be looking at dozens of other similar homes in the same neighborhood?

Here are the top 4 things sellers can do to up the ante and ensure their home is in the right condition to get the best offer:

  1. Get a bird’s eye view on how your home compares. Take a sweep through a few open houses next Sunday to see what’s on the market in your area that’s comparable to your home. Take good notes on what you notice is common in all these houses. Do they all have new carpet? New hardwood floors? A fresh coat of paint? New windows? You may not be ready to invest in a large project for your home before selling, but often something like painting or installing new carpet can pay for itself in the end – especially if all the other comparable homes for sale have these things.
  2. Remove all your clutter and store it away while your home is on the market. There’s no bigger turn-off to buyers than a house that is filled to the brim with objects and furniture. Buyers need to be able to look at your home and envision their lives in it, which includes all their own furniture and belongings. That’s much harder to do the more stuff you have in your home. This is by far one of the best things you can do to help the sale of your home.
  3. Consider staging. Staging basically means removing all your clutter as outlined above and having someone – either your real estate agent or a staging specialist – look at your home and make recommendations for how to set up the furniture and décor. Often, a stager will even remove some of your furniture and bring in other furniture to best accentuate the space of your rooms.
  4. Research your market and price accordingly. This may seem like a no-brainer, but in all my years of the real estate business, the one tactic that agents say over and over again makes the biggest difference in selling a home is how it is priced from day one. This means you need to do a lot of upfront research with the help of your agent. Look at as many comparables as possible and decide on your listing price based on what has recently sold and what is currently for sale. This is how your buyers will be calculating their offers to you so it’s best to be realistic and not try to play price games.

There are dozens of other things that sellers can do to help their homes sell quickly and at the best price. Ask your Intero Real Estate agent for pre-list tips.

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Intero Insider: A Quick Pulse on the National Market

By Gino Blefari | September 27th, 2011 0 Comments

The housing market had a glimpse of good news this past week when the latest report on existing home sales showed an increase in sales both from the previous month and compared with a year earlier. There were a lot of things going on this report, so let’s dig in:

  • Sales of existing homes increased 7.7% to a rate of 5 million in August, up from 4.67 million in July. Sales were up 18.6% from August 2010. Obviously, this is a great sign. While many news reports early this week focused on the dismal housing starts numbers, existing home sales are a better indicator to watch because as long as there’s a glut of existing home inventory in many markets, starts will remain low. In other words, existing sales need to move first before any improvement in starts will take place.
  • Investors continue to gobble up property; the share of investors buying existing homes in August accounted for 22% of total sales, up from 18% in July and 21% in August 2010. Investors are motivated by the incredibly low cost of borrowing right now and the hot rental market that continues to see more demand and rising rents in many areas.
  • First-time buyers remained steady, accounting for 32% of home purchases in August. That was unchanged from July, and up slightly from 31% in August a year ago. This is surprising, given the many problems with contracts falling through. But again, it’s a great time to buy for those buyers who are financially ready – rock-bottom interest rates, amazing affordability, and plenty of home inventory to choose from.
  • Contract problems persist. The percent of contracts that fell through in August was 18%, up from 16% in July and 9% a year ago. Realtors say cancellations are largely due to declined mortgage applications or problems with appraised values coming back too low to support the negotiated price.

What’s the overall read? Not much has changed, despite the positive growth in sales. Low rates, bargain prices and a healthy rental market continue to lure more investors and first-time buyers. Restrictions in the lending market and problems with fluctuating home values continue to plague a lot of deals. What we’re seeing now is the slow growth many predicted and expected to happen earlier in the year.

What’s next? The Fed’s been discussing its new “Operation Twist” tactic, which basically means it’s going to be manipulating long-term interest rates by buying long-term bonds. The Fed has already said it’s keeping short-term rates low for the next two years – and at zero, they can’t even really do much more on that front. So, you guessed it – even lower interest rates may be on the horizon for home loan borrowers, which should help to fuel demand going into the traditionally slow season.

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Intero Insider: Housing and the Freelance Economy

By Gino Blefari | September 20th, 2011 0 Comments

Most of us in the real estate business understand what it’s like to be an independent contractor, aka freelancer – or as I often refer to it as “we eat what we kill.” The various challenges with getting a loan or line of credit are quite different when you’re in this type of employment situation. This has become an important issue in the housing market as millions more American workers move to independent or freelance status in a continuously tight job market.

Now is the time to be mindful of the challenges ahead. What happens when a self-employed individual tries to buy a home? He’s making decent money, has a sizeable down payment stashed, and is ready to jump in. But with extremely tight lending standards and non-traditional income, he faces a complicated battle.

Here are some tips for independent contractors looking to buy a home and for agents who have them as clients:

  1. The road is difficult, but not impossible: This is the first thing to keep in mind. As a contractor, you will have to prepare a lot more than a traditionally employed borrower. But this doesn’t mean you won’t get the loan. Brace yourself for a mountain of paperwork as lenders naturally are going to ask more questions about your source(s) of income, and you’ll need the paperwork to back up your claims.
  2. Highlight income stability: What lenders are looking for is proof that your income is and has been stable for a period of time. Basically, they can’t take a chance lending you money if you’ve not proven that you can consistently pay them back. Many mortgage brokers say to expect to have to show your earnings for the year-to-date when applying for a loan this fall. This goes with the point about income stability. They need to know that you’ll have steady income throughout the year, not just seasonally.
  3. Pay off other debts: All borrowers’ credit and debt situations are highly scrutinized these days. You’re going to help your case much more by coming to the loan with a lot less debt already on the books.
  4. Gather three years’ worth of tax returns: Even if you’ve only been self-employed for the past year, showing a few years’ worth of returns can help the lender see that you have been entrenched in your industry, and even give a view of what kind of salary you’ll likely fetch should you get a payroll job once again.
  5. Seek out local banks and credit unions: Don’t rule out larger lenders, but take some extra time to shop around at local banks and credit unions. These smaller operations are sometimes more willing to take the time to get you qualified.

The Freelance Economy is a new reality for post-recession America. But it shouldn’t stop those individuals who own their own business from buying homes. Freelancing is a legitimate way of making a living – you just have to expect a lot more hurdles when seeking a loan.

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Intero Insider: Study Spotlights Bay Area College Towns for Investing

By Gino Blefari | September 6th, 2011 0 Comments

While the real estate and economic news is often bleak these days – no new jobs in the latest national report, persistent foreclosures, softening values and slower sales – the reality is that now is a great time to take advantage of the lows. This is especially true for investors.

An interesting report from ZipRealty last week tackled an age-old question in real estate investing: Are college towns better investments for landlords? The study included data pulled for Berkeley compared with the East Bay in general, Palo Alto compared with the South Bay in general, and Cambridge, Mass., compared with Boston in general.

In each case, the college town proved to be a much better real estate bet. In Berkeley, home to the University of California, the median price-per-square foot for homes sold doubled that for the East Bay as a whole for almost two years. This is no big surprise to anyone who’s tried to buy a home in Berkeley over the last few years; the market has been just as fierce for the most part as that the rest of the country felt back in 2004.

In terms of market distribution, though, Berkeley showed more market-priced sales than distressed ones compared with the East Bay as a whole. While this shows stability, distressed sales are often the sweet spot investors need to really make waves.

In Palo Alto, home to Stanford University, the data showed a similar story. The median price-per-square foot for homes sold doubled that for the South Bay as a whole for almost two years. Palo Alto also had a much higher distribution of market-priced sales than distressed sales.

College towns can be great investments for the real estate-minded. A steady influx of young twentysomethings attending school makes for a steady supply of renters. These renters usually have financial support of some kind as well, making them reliable sources of income.

However, a university alone isn’t a great gauge of whether or not to invest in one town over another. Berkeley, for instance, is infamous for its restrictive rent stabilization laws, which can quickly become a landlord’s biggest nemesis. College towns are also much more transient than other towns – so that steady influx of potential renters also means constant turnover, which can eat into profits.

One other thing that may turn the “college towns are great places to invest” theory on its head is a way investing Warren Buffet lives by – the best investments are those that no one else is paying attention to. Buffet says (about stocks), “The time to get interested is when no one else is. You can’t buy what is popular and do well.”

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From luxury to bank-owned, a review of this summer’s real estate market

By Teressa Francis | August 30th, 2011 1 Comment

This Intero Insider – Video Series brings you Dominic Nicoli, one of our top real estate agents at Intero Real Estate Services from the Los Altos office. He speaks candidly with Intero COO Tom Tognoli and shares his insight and projections on today’s real estate market from luxury real estate to foreclosures – where we have been, where we are now, and where we are headed.

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Intero Insider: Why We Love Our Homes

By Gino Blefari | August 9th, 2011 0 Comments

I caught a recent episode of “Louie” on FX. It’s the humor series based on the stand-up comedy of Louis C.K. This show is often funny – painfully funny. And sometimes it’s just painful because the observations are pretty dead on, unapologetic and completely honest.

In this particular episode, Louie decides he’s ready to move from the apartment he once lived in with his ex-wife. He goes out looking for suitable rental properties in New York City for himself and his girls, who live with him part-time. Of course, after several trips through some bad places and a few bait-and-switch ads, he becomes exhausted – until he stumbles upon a townhouse for sale.

This is where the show goes from realistic to hyperbolic. The scene reminds me of what it might look like to take the collective conscience of America during the 10-year run-up in housing prices and play it out in front of an audience. See, it wasn’t just any townhouse; it was a $17 million townhouse. And Louie of course, while famous, is not exactly part of the crowd that can afford to buy such a place.

Louie then becomes determined to buy this place. He is consumed by the idea that this house will make his girls happy, and make everything fall into place in his miserable life. Never mind the fact that he only has $7,000 in the bank. Never mind the fact that that $7,000 isn’t even one-tenth of one monthly mortgage payment. He wants the house.

But, why?

I believe it’s because homes are more than the walls they’re made of – more than the investment of many years of hard work. Real estate isn’t just a market; it’s a state of mind. Homes are deeply connected to the life we live. This is why all buyers will “imagine” themselves living in a particular home when they go to see it, and why they try to think about what life would be like within those walls. This is why it was so easy to get in over your head during the days of loose lending. This is why foreclosure is so emotionally draining.

A home is a future, a present and a past. It’s a living thing. It’s where we feel attached to life, where we dream and where we plan for what’s next.

As for Louie – his show isn’t the type to slap on a happy ending. He didn’t buy the house. He merely told the real estate agent that he would buy that house, and instead went back home and repainted his apartment with his daughters. He already had it.

That episode for me said something really profound about where we live – the places we call home. The connection and what’s inside are the most important aspects of any real estate deal.

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Intero Insider: Foreclosures Coming to a TV Near You

By Gino Blefari | August 2nd, 2011 0 Comments

Dating, singing, dancing, physical challenges, trivia – these are all standard components of a typical reality show (well, the kind without housewives, anyway). And now we can add foreclosure investing to the mix.

Just as the housing boom gave rise to house flipping shows, the housing fall is now giving rise to home foreclosure shows. The Wall Street Journal reports that this summer and fall, several TV networks will premier reality shows about buying foreclosed homes. This was a bit unsurprising to hear – an obvious next step for TV.

While last week’s foreclosure report from RealtyTrac showed that foreclosures decreased in 84% of markets across the U.S. in the first half of the year, there’s still a glut of foreclosed homes out there to buy. This is the year of the real estate investor, and where there’s money to be made, there is TV to be made.

Will TV glamorize foreclosure investing, making it look easier than it is? Or will we witness the realistic blood, sweat and tears that go along with the territory (much like we saw in the house-flipping shows)? I’m guessing the latter. Anyone who’s ever gotten involved in real foreclosure investing knows it’s not the “get rich quick” scheme it’s made out to be on late-night infomercials. There’s real risk involved, solid know-how, and you do need cash – despite the no-money-down proponents.

I think it will be interesting to watch, though. We all know that every real estate deal comes with its own set of problems and solutions. This market presents plenty of opportunities, but that doesn’t guarantee success.

Here are the shows, the WSJ mentions will premiere soon:

  • Spike TV’s got a new show called “Flip Men” coming in September. It’s about a duo in Salt Lake City trying to make a profit in foreclosures.
  • Bravo’s reality show, “Flipping Out,” starring Jeff Lewis starts its fifth season later this summer. Apparently, Lewis wrangles with lenders in a quest to buy a foreclosed house to live in.
  • DIY Network has a show in development about flipping foreclosed houses that’s expected to air in 2012.
  • A&E Television Networks reportedly tapped a former “Survivor” contestant to star in a new show later this year about flipping houses.

Tune in and see how this blood sport unfolds. Reality, sugar-coated or just plain fantasy?

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Intero Insider: 3 Hints for Buying Distressed Property

By Gino Blefari | June 14th, 2011 0 Comments

With more and more distressed sales filling local real estate markets in coastal and other post-bubble areas, maybe it’s time for a quick check-in on tips for buying distressed property.

Just because there’s a lot more distressed property in the market doesn’t mean it’s any easier to deal with. In fact, it’s just as complicated and frustrating as it always was. But again, the opportunity is pretty amazing if you’ve got it.

First, what is distressed property? A distressed property is usually one that is either in danger of going into foreclosure or that will be up for sale because the homeowner defaulted on his mortgage. These transactions are quite different from your average home sale because you’re dealing with the bank’s own red tape, which can add a lot of time to close.

Just remember these three things:

Be flexible. When buying a distressed property, it’s good to have flexibility – especially with your move-in date. That’s because closings often can get delayed and the closing date is more or less an “estimated” date. Take a bit of stress off your back by either having a back-up plan (crash at your in-laws’ place for a couple of weeks?) or trying to give yourself an extra month at your old place if you can afford to do so.

Be patient. With a distressed sale, you’re dealing not just with your lender and a seller, you’re dealing with the original lender on the property and its whole chain of command to get things approved and moving. This can be frustrating. But honestly, there’s not a whole lot you can do at times except be sure you’re on top of your own deadlines, deposits, inspections and paperwork, and sit back and be patient.

Work with an experienced agent. OK, so you can’t always sit back and be patient. There will be times when you might need to get a little aggressive to keep things moving. An agent experienced with distressed property will know how to handle those times. In fact, there may even be situations where the best outcome is to decide to walk away and find another property. It’s important to find an agent who knows the process, local market conditions and you (as in, your threshold for stress and panic, your motivations, your limitations, etc.).

Buying distressed property can be a pain, but it’s one that can also come with many rewards. Many markets are flooded with distressed properties so if you’re in the market to buy, now’s the time to consider whether it makes sense for you.

Good luck!

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