Carlsbad Buyers Ask – What is Proposition 13?
Folks buying property in Carlsbad and other California communities need to know about Proposition 13 as it impacts property taxes. Each state seems to have different regulations about property taxes, how they are calculated, what they are used for, when they are paid, and so on.
Here in Carlsbad and other California communities, Propositon 13 regulates the property tax amount and caps it at 1% of the assessed value of your home, and real property (such as a home) can only be reassessed
(1) with a change in ownership (there are some exceptions)
(2) with new construction (e.g., room addition).
This means that the property assessment cannot go up by more than 2% in any given year, based on the California Consumer Price Index.
The property taxes, therefore, are 1% of the assessed value PLUS any special fees, bonds, etc. (such as Mello Roos). A very rough calculation of the tax, thus, when you buy is 1% of the purchase price (but at the low end). Check with the town in which you are buying to find out the actual tax rate - for Carlsbad homes for the current tax year it ranges from 1.01714% to 1.04842% plus any special fees.
More information can be found on the Assessor’s website.
READ MORE on homeowner property taxes in Carlsbad here.
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Start your CARLSBAD HOME SEARCH here (and other San Diego communities as well).
Request Free BUYER and SELLER REPORTS here.
What Repairs Should I Request to Taken Care Of?
Buyers have often asked me about what repairs they should request a seller to take care of.
Some of them? All of them? None of them?
It really is a personal choice, but for me, I always suggest requesting that safety issues be taken care of (electrical, plumbing, heating). These can be serious hazards, and often the repair is not costly. There may be other things you can overlook, or that you would prefer to fix yourself.
The major repairs should also be considered – rotted steps, cracked plumbing, leak in the roof - since these can end up causing more costly damage. If the seller is not willing, then perhaps a negotiation on price is in order to compensate.
It is a good idea with more extensive repairs to have a professional examine the issues so you know what they mean, and what the costs might be to fix them. This can help in your negotiations with the seller, but you will also know what you are up against if the seller is unwilling to take on the repairs.
As I said previously, you can always walk away if you and the seller cannot reach a reasonable agreement. No house is perfect, but you DON’T want to take on “the money pit” unless you really enjoy that sort of thing.
Read my previous post on What if Problems Arise in an Inspection.
Start your SAN DIEGO HOME SEARCH here.
Request Free BUYER and SELLER REPORTS here.
What Should I Do? What Should I Do?
I think alot of buyers, especially those who are trying to buy their first home, are wondering “What Should I Do?” right now. Certainly with all the news about the mortgage industry many buyers are considering holding off buying to see what happens. And for some that IS the right decision, for financial reasons.
If you ARE still interested in buying, just make sure you
- examine your financial situation very carefully (especially your personal budget)
- get pre-approved with a competent and respected mortgage broker (need some names? Let me know)
- stay in touch around the rates and programs in case there are changes
- make sure you do not step outside your budget and overspend. Even if the home you really love comes along, do not let this sway you into paying more than you should.
We don’t know where the rates are going to go, nor the prices. They are all over the place in many areas, with some declines, so working with a knowledgeable REALTOR(R) will enable you to understand what is happening in your specific marketplace, so you can decide your best course of action. Local markets can be very different from what you might read on the Internet or in the media.
Obviously if you need to buy (relocation, family circumstances, etc.) then these recommendations are especially important so you make an informed decision. There is a good inventory out there, especially here in the San Diego area, and more and more sellers are willing to negotiate, and are pricing their homes in line with the market demands.
If I can provide any assistance, please don’t hesitate to ask.
Start your SAN DIEGO HOME SEARCH here.
Request Free BUYER and SELLER REPORTS here.
What is my Credit Score – Is It Good or Bad?
As a buyer who is going to be borrowing lots of money to buy a home (especially here in California), your credit may be one of the most important things to be concerned about. And you may be wondering – what IS my credit score – is it good or bad?
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If it’s good you are probably in good shape, baring other financial matters
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If not, you will not be able to qualify for a loan.
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And if you can’t demonstrate that you can handle credit, you probably should NOT be borrowing money anyway.
Given that lenders are being much stricter, credit issues have become even more problematic. Given how important your credit is to you financially, you owe it to yourself to know as much as you can.
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If you have credit problems you will want to fix them, and there are ways to do this
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Many folks have errors on their credit reports that can prevent them from qualifying for a loan, and may now know it, but once these are fixed the situation can change dramatically.
I am NOT a credit expert but I know someone who is. A friend of mine, Morgan Brown, has written an excellent series on credit….probably everything you want to know and more. So I urge you to take a look at his series. You won’t regret the time it will take to review this material and you will learn some very practical things about credit in general, how to find out about your credit report, ways to improve your credit, and much more.
Start your SAN DIEGO HOME SEARCH here.
Request Free BUYER and SELLER REPORTS here.
Short Sale Contingencies
Because of the market conditions, short sales have become commonplace in some parts of the country, including the San Diego area. And many buyers are interested in these properties because they perceive them to be potential “great deals.”
I’ve talked about that issue in the past, pointing out that this may not be true, since short sales attract lots of bidders, and the banks want their money so they generally will only approve an offer at market value.
But let’s assume you are going ahead with an offer on a SHORT SALE – so what are the short sale contingencies you want to include? (keep in mind I am speaking from the perspective of offers here in CA – things may be different in your area and you should consult with a knowledgeable agent…presumably you are working with one).
First, you will want the financial contingency – unless you are a cash buyer, the offer should be contingent on your ability to obtain a loan.
Second, you will definitely want to have an inspection and your offer must be contingent on this. This is especially important for short sales, since it is likely the seller cannot do any repairs and the bank will require you to purchase the home AS IS.
Finally, you will want to make the offer contingent on the bank’s approval of the short sale AND request proof that the seller has provided the bank with the appropriate paperwork, application, and hardship letter that is required as part of the process. If that has not happened you will want written confirmation of when that is to occur.
Also, your agent should check with the listing agent to get a sense, if possible, of how long it might take for the bank to respond. Your offer can have an expiration date if you want, but it is likely that the time for the bank to respond will be rather lengthy and the offer might expire within that time. Know that if that happens you have the right to just walk away, or you may continue to wait. It’s your choice.
Read: What to Know About Buying a Short Sale.
Start your SAN DIEGO HOME SEARCH here.
Request Free BUYER and SELLER REPORTS here.
Check in With Your Mortgage Broker
With all the changes occurring in the mortgage industry (programs disappearing, stricter standards), now is a good time to check in to make sure you still qualify for the program you are interested in, and that there haven’t been any changes that might impact your transaction.
Your mortgage broker (assuming you have contact in the past, say when you got pre-approved) may or may not call you to raise any issues. So be proactive, and watch out for yourself.
You don’t want any surprises, like finding out you cannot do 100% financing or your loan will not be approved because of stricter standards.
What Happens if the House I am Buying Does Not Appraise?
Unless you are a cash buyer, you will be taking out a loan and the bank will require an appraisal to make sure the home is worth what you are paying for it (or that they aren’t loaning you more money than the collateral is worth – most banks hate that; the unscrupulous ones don’t).
It is possible that the home will not appraise out where it should – perhaps you are overpaying, or the market prices are dropping. And with more rigorous mortgage standards that seem to be appearing daily, and increased concerns about the industry and its lending practices, banks are becoming much stricter, and more careful.
What can happen?
- You may be able to get a second opinion, if the bank allows it and they will accept it.
- The bank may review the file more carefully (secondary review)
- You can put more money down, thus decreasing the amount of the loan
- You can re-negotiate the sales price with the seller
- You won’t be approved for the loan and the deal will fall apart.
One way to avoid this is to make sure, when deciding on an offer, or the counter-offer that you will accept, is that you and your REALTOR (R) do a thorough due diligence and check on the comparable homes. If you are paying more than the market value you very likely will run into a problem, unless you are making a big downpayment. You should also understand what prices are doing in your particular market – your agent should have this information.
Start your SAN DIEGO HOME SEARCH here.
Request Free BUYER and SELLER REPORTS here.
Natural Hazards Disclosures
Here in California (these disclosures may vary from state to state) we have a sizeable list of disclosures about natural hazards. These must be shared with buyers during the due diligence period so they are informed about the home they are attempting to purchase.
Property ID is the major company that provides these disclosures on behalf of the sellers, to the buyers, who must review them and acknowledge receipt. These issues are not negotiable, but buyers can decide whether or not to move ahead with the deal based on what is shared during these disclosures.
Here is the list of what you can expect in your report:
- Earthquake Fault zone
- Fault Activity
- Flood Hazard Zone
- Wildland Fire Area and Very High Fire Hazard Severity Zone
- Landslide Inventory Report
- Liquifaction Susceptibility
- Flood and Inundation Hazards
- Mello Roos Facilities
- Military Ordnance Facilities
- Land Conservation Determination
- Industrial Use Areas
- Ultramafic Rock Zone Determination
- Airport Facility Determination
- Critical Habitat Determination (endangered wildlife)
- Proposition U Bond Determination
- Radon Gas Determination
- Special Tax Assessments
The report also includes special handouts on environmental hazards (asbestos, formaldehyde, radon, hazardous wastes, household hazardous wastes and lead – the last a federal discosure).
There is a Homeowner’s Guide to Earthquake Safety.
Start your SAN DIEGO HOME SEARCH here.
Request Free BUYER and SELLER REPORTS here.
Why You Should Not Use Multiple Agents
I’m sorry for being somewhat absent in the last week. Between a very heavy work schedule, several days away in the desert for a quick (and short) vacation), a business trip to San Francisco on blogging, and other personal stuff, it has been really busy.
I suppose those are not good excuses, but I feel badly nonetheless.
Anyhow, one of the issues that I have seen recently is the situation where buyers (new AND experienced) are using the services of multiple agents without commiting to any particular one.
As a consumer, and a REALTOR(R), I don’t understand this approach. Sure, you have the right to handle your search this way, but I don’t see what advantages you are gaining by doing so. I’m sure you must have your reasons.
If you perceive there are some good reasons to not commit to an agent and solicit assistance from multiple people, I would love to know – honestly, I would, ‘cos I just don’t understand. Perhaps there are things that we agents need to better understand.
I just wrote a longer blog about this and wanted to share it with you. I welcome your comments.
