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This section of our website is here to provide you with as much real estate information as you might want about Riverside and Riverside County real estate.


Informal, short, and right to the point. Opinions, vital statistics, suggestions, screw-ups, and editorial comments about the occasionally insane world of professional real estate…and we have a sense of humor as well, so enjoy.

Real Estate Thoughts for 2017

Westcoe Realtors, Riverside Ca…As we roll into a New Year, many of our clients want to know our opinion about what they can expect with regards to housing in our local Riverside area.  The saying goes that all politics are local, and the same can be said for real estate as well.  So…while we hesitate to venture into the world of predictions, what we can do is give you the benefit of our 32 years of selling real estate in Riverside, and answer for you the 3 most often asked questions regarding what to expect in 2017.

Interest rates have gone up a little…will this affect the real estate market?  The short answer is “not really.”  Don’t get us wrong, everyone wants rates as low as possible, but we need to get “real” here.  Rates have risen a tick from the 3 7/8 range to about 4 1/2, but that marginal amount is not going to keep any buyer from purchasing a home.  Yes, there will probably be a very small window while buyers react to a slightly higher payment, but in the end, 30 year fixed rates in the low 4’s are the kind of interest rates that we all would have begged for just 5-6 years ago.  Interest rates go in cycles, but there is nothing on the horizon we can see that indicates rates are going to any level we need to worry about.  Buyers may wind up purchasing a slightly lower priced home, but these rate changes will not stop anyone who wants to buy a home from doing so.  Therefore, we see the number of home sales remaining steady.

As an FYI issue, please understand that the recent Fed rate hike of ¼% will have almost no effect on 30 year home loan rates.  The Fed rate is what banks are charged to borrow money from each other overnight, only affects short term rates, and had already been factored into the rise noted above.

We hear a lot about “affordability.”  Can buyers still afford to buy a home?  Here, the answer is a profound “yes.”  Don’t forget that the average home in Orange County costs approximately $330,000 more than the average home in Riverside.   This is an enormous difference, and is a huge benefit to housing in our area.  More and more people can now work from home (meaning no commute), and with this type of flexibility in job criteria, it only helps bring buyers to our area…an area they can afford.  Sure, as we said above, no one wants higher house payments, but since our Riverside area shines so much brighter on the affordability scale than our neighbors in Orange and Los Angeles County, we have a long way to go before affordability becomes a factor in housing sales.  Also, rumor has it that the 91 freeway will actually be totally open one day, so there is always that minor miracle to help us as well!

What do you see in 2017 for housing appreciation in our Riverside area?  Well, we are headed into the “tea leaves” area here, but our feeling is that if you liked 2016, then you should be very comfortable with 2017.  The rise in interest rates will probably have a tendency to slow appreciation rates just a little, but nothing to worry about.  Remember, when you hear an appreciation number from any source, it has very little bearing on your particular property…there are just too many variables.  Discrepancies in home amenities, property location, price range, home size etc. make a generalized appreciation rate almost meaningless for obtaining a value for your home.

However, if you use quoted appreciation rates as a simple barometer on how the market in general is doing, then you are fine…and given all the above, we are looking for home appreciation rates to be in the 4% range for 2017.  Naturally, should the world fall apart and things run amok, then all bets are off…but if we can avoid a major catastrophe, then we should see a very solid, very steady housing market in our Riverside area in the New Year ahead.

We hope this information proves helpful to you in whatever plans you may be making for 2017, and naturally, if you need any detailed information about any real estate matter, we are only a phone call away and would be happy to help you in any way possible.

Happy New Year, and let’s all hope for a banner 2017.

Buyer’s Final Home Walk-Thru…What’s The Purpose?

Westcoe Realtors, Riverside Ca…One of our buyers asked us this question this week, and we thought any potential buyer of a home should know the answer…so here we go.

As a buyer, you do a final home walk-thru to verify two things: 1) that any repairs the seller was supposed to make have indeed been made, and 2) to make sure the home is in the same condition as it was when you made your offer.  

Let’s examine these two items a bit further.

All agents should recommend a home inspection by a professional, and if as a result of that report the buyer and seller negotiated any repairs for the seller to perform, then it is essential that the buyer verify said repairs are done.  This needs to be done BEFORE the close of escrow, because if they are not done, the buyer has the leverage of holding off the closing in order to get them done.  Don’t get us wrong…most sellers understand this and make sure the repairs are actually finished, but sometimes sellers get in a hurry, or mean well, or whatever, but the end result is that some of the repairs may NOT be done.  This is why the buyer needs to see for themselves what is (or what is not) done…and if you blow this off and figure all is OK, and then move in and find out the seller didn’t do what they promised, then it just creates a very large hassle to get them done after the closing.  For all you know, the seller is now on their way to Wyoming, and good luck getting them to do a $200 repair.  So…always see for yourself that the work has been finished.

Secondly, as a buyer, you want to make sure that the home is as you first saw it when you made your offer.  You want to verify that the lawns are not dead, the pool is not green, and that the walls were not spray painted by the seller’s 5 year old child!  Again, most of the time, sellers understand all this, but trust us…every Realtor has a horror story about what some seller has done on the way out the door, so it is best to verify a few days prior to close.  Again, your leverage is delaying the close and keeping the seller from getting any money until you are satisfied with the condition of the home.

However…please understand that the final walk-thru is not for you, as a buyer, to re-negotiate the contract, or for you to call out repairs that were never part of the original repair negotiations.  For example, if one of the bedroom windows had a crack when you made your offer, and it was noted in the inspection, and you never brought it up for repair, then 3-4 days prior to the close is not the time to address the window.  You had your chance when the home inspection report was issued, and now it’s too late to spring this on the seller.  In fact, the Standard Purchase Agreement addresses this issue of a final verification of condition (#15, page 7), and makes this all very clear for all parties.

In the end, all anyone wants is for both parties to be completely satisfied with the purchase and closing of the home…but sometimes it’s prudent to just make sure everyone does what they said they would do.  After all, the saying goes….”Good fences make good neighbors”, and we can adapt that to “Good repairs make for a good sale!”

Take care, thanks for reading, and Happy New Year.

 

How Long is a Standard Listing Contract For Sale?

Westcoe Realtors, Riverside Ca…One of our internet readers asked us this question today.  It seems they were getting ready to list their home for sale with a local broker, and were getting all kinds of conflicting information about the duration of a standard listing contract, so they asked us if we could simplify the answer…and yes, we can make this very simple for any seller.

There is no standard time frame for a listing, and every seller has the right to list their home for as long, or short, a time period they and their Realtor can agree.  In essence, it is totally negotiable between the seller and the real estate agent.

In most cases, the Realtor wants enough time for whatever marketing they intend to do for the seller to have time to work.  Not many agents are willing to spend the money and time to market a home if the time frame is too short to see the results of the agents efforts.  However, there is also a reasonable time limit to how long a seller is willing to commit to an agent, and this makes sense as well.

So…what is reasonable?

That depends on two major factors….the general activity of local real estate market, and the price range of the sellers home relative to the average sales price for the area.

If the local market is really slow, with few houses selling (for whatever reasons…high interest rates, no jobs in the area, etc.), then a seller can expect a listing broker to ask for a longer time frame for the listing…something that will more than cover the average time it takes to sell a home.  Every area is different, but the agent should be able to give a seller the average time it takes to sell a home, and then both parties can take it from there.

When it comes to price range, just remember that the more the home is priced above the average sales price, the longer it can take to sell.  That make sense, as in any market, there are always more buyers at the lower price ranges than at the higher range.  Having a home that financially works for the most buyers will generally lead to a faster sale than a home that financially works for only a few.

In the end, just remember that the length of time for the listing contract is completely negotiable between the broker and the seller.  Try to find the balance between too long and too short (anyone remember Goldilocks?), and all will be well….and if that doesn’t work, then keep your listing contract between 90-120 days, and that should work for both parties.  Remember, you can always extend the time frame if the broker has done a good job.

Take care, and as always, thanks for reading our blog.

How Long Can The Seller Stay in The House After Escrow Closes?

Westcoe Realtors, Riverside Ca…What a great question posed to us by one of our on-line readers.  Just how long can a seller stay in a home after the escrow closes?

The short answer is…as long as the buyer let’s him.  Now…let’s clarify this a little.

Standard procedure in our business is that the seller normally gets the date of close of escrow plus 3 days to move out.  This means that if escrow closes on Monday, then the seller gets Monday (the day escrow closes) plus Tuesday, Wednesday, and must vacate by Thursday at 6:00 PM.  This is not set in stone, nor is it a law, but it is the customary procedure for the sale of a home.  The reason this is done is that most sellers simply do not want to move out of the home before it actually closes.  Things can go wrong even at the last minute, and the seller does not want to have moved everything out in the horrible event that the buyer fails to close at the last minute.

When the above policy is followed, then there is normally no charge to the seller for the 3 day delay in the buyer gaining occupancy of the home.  It is a courtesy extended to the seller, and allows for the seller to know for sure that all is well, the escrow is closed, and the seller’s money is coming in a day or so.

Can this policy be different…or extended…or be shorter or longer?

Of course, but this is best done at the time of the offer, and as long as both buyer and seller agree, almost anything can be done.  The seller could agree to be moved out on the actual day of closing (rare, but it can be done), and the seller can also ask to stay in the home for longer than the standard 3 days….5 days, 7 days…maybe even 30 days.  As long as the buyer agrees, then whatever works for the both of them is pretty much OK.

However, if the seller is to remain in possession longer than the standard 3 days, then it is also normal for the seller to pay some rent to the buyer for this “extra” time.  Usually the amount is simply a daily prorated amount based upon the buyers new payment, including taxes and insurance.  As an example, if the buyers new total payment was $3,000 per month, then the daily rate would be $100 per day ($3,000 divided by 30 days in the month).

If the seller wants to stay any longer than 5 or so days, then there is also more paperwork involved, since you are bordering on the seller becoming a tenant.  The California Association of Realtors has a form for this, and when the seller is remaining in the property for more than 5 days, it is highly recommended that this form be used and signed by both buyer and seller.  By doing this, it greatly reduces any chance for miscommunication between the buyer and seller.

What happens if the seller is not moved out by the time they were supposed to?  Well, that is a legal matter, and while we are not attorney’s, and while this is very rare,  we have found that the police are very helpful if you meet them at the property with all your paperwork.  This usually gets the sellers attention, and solves the problem.  Again, please understand this situation is very rare.

Lastly, once the buyer and seller have agreed to the possession date in the original purchase contract, in most cases, it is very hard to change the possession date as you near the close of escrow.  Sometimes as the closing date nears, the seller feels they need more time to actually move out, but by then, it is our experience that the buyer also has plans set (time off work, moving truck, friends to help, etc.) and extensions are just not possible.  Remember:  in the absence of any new agreement by the buyer and seller, the original time referenced in the purchase contract will control.

Good luck, and we hope this helps you plan your next move and close of escrow. Moving is stressful enough for all parties, and the last thing anyone wants is a conflict over who gets the home when.

Take care, and as always, thanks for reading our real estate blog.

Is The Seller Liable if the Fence is Not on the Boundary Line?

Westcoe Realtors, Riverside Ca…This query was posed to us this week by a gentleman who having one of our agents assist him in the purchase of a home…and it is a good question.

Is the seller liable if the fence for the home is not on the property boundary line?

In a nutshell, NO…unless they knew it was in the wrong place and didn’t tell you.

In the case of a “normal” development, where the lots are generally of similar size and dimensions, and where a fence exists when the buyer purchases the home, it is reasonable to assume that the existing fence is basically on the property line.  Most fences are initially installed by a professional fence company, and when done so, the company usually measures the lot, and installs the fence accordingly.

Does this mean they can’t be off by inches, or perhaps a foot?  Maybe, but once the fence is installed, in most cases, if there is any issue or doubt about the location, it will be dealt with at that time by the neighbors involved.  Therefore, if a buyer is purchasing this home years later, and the fence has been there for years, it is normal for all parties to think the fence is where it belongs.

Now…if the new buyer moves in, and for some reason gets a survey, and finds the fence off by inches, chances are the fence will just stay there.  There are legal remedies for situations like this if someone really wants to go crazy, but you would need to check with an attorney, because they are extremely complicated.

However, if it is later discovered that the fence is off by a larger margin, and the seller knew about this and simply failed to disclose it to the buyer, then that is a different story.  In this case, the seller will probably have some liability, although if the fence is still only inches off, it might be tough to prove any damages.

The simple rule of thumb is that for properties that have no fencing (large lots, acreage, etc.) the buyer should have the seller locate the corner markers as part of the escrow.  Simply pointing out a tree hundreds of yards away and saying the lot lines are “somewhere near the tree” doesn’t cut it…get the property surveyed.

But if the home is one of many in a housing development, and the fences are already up when you purchase, then our suggestion is to roll with what is there, and not worry about inches etc.

Hope this helps if you are deeply concerned about fences and lot lines.

Should my Real Estate Agent Verify Building Permits?

Westcoe Realtors, Riverside Ca…This was a question posed to us by one of our on-line blog readers…and it seems simple enough.  However, upon further review, like most things, simplicity is not really that easy.  So…to help out anyone else out there who may have the same question, we will do our best to explain.

First, for most companies, the answer to this question is up to the individual office and their policies.  This is not an issue covered by any law, but more of a liability question for most any real estate office to consider.  So…our policy here at Westcoe may not be universal for everyone.  Therefore, if you have a specific issue with a specific agent/office, it’s best to take that up with the office management.

So…that having been said, here is our general answer on whether a real estate agent should verify the building permit status of a home, or any additions to said home.

In a nutshell, NO…an agent should not go down this path for a client…but please read why.

Every agent wants to help their clients with whatever issues the client may have regarding a particular home.  However, in this case, the reluctance comes not from being lazy, or non-responsive, but instead of a necessity to avoid some potential legal issues that can come from pursuing an answer of this type.

Let’s say that a potential buyer wants to know if a room addition for a home they are considering buying has been permitted by the city/county.  This is a very reasonable question, and deserves and answer.  But, here is the rub.  If the buyers agent goes down to the city/county to get this information, or goes on the appropriate website, and gets the wrong information, then the agent becomes liable for said wrong information.

But what if the person at the city/county got the information wrong, and all the agent was doing was passing on to the client the information that later proves to be incorrect?  

Well, in that case, because the agent was the middle-man, and is a real estate professional, the agent becomes liable for the mistake by the city/county…and governmental agencies like this make mistakes all the time!

It doesn’t seem fair, but that is the law.  If we, as real estate professionals, pass on information to a client from another party that proves to be wrong, we become legally liable for the other party’s mistake.

So…now you understand why your real estate professional may be hesitant to get you the answer to your question.  However, all is not lost.  What your agent should do for you is go to the city/county with you, or get on the appropriate website with you, and assist YOU in getting the answer, and explain why.  In other words, we will facilitate you in finding the answer you need, but it must come directly from the appropriate governmental agency without us being in the middle.

This situation also usually applies to any zoning questions a buyer may have as well…same theory applies.

So, in the end, we will make it possible for you to get your answer, we just have to make sure it comes from the mouth of the city/county, and not from ours.

Do we like it this way?  NO…we would rather provide this service for our clients…but in the legal climate of our current world, we really have no other choice.  We hope you understand.

Why Aren’t New Builders Building Affordable Housing in Riverside?

Westcoe Realtors, Riverside Ca…One of our buyers asked us this question this week.  They had noticed that there is a dearth of affordable new housing being built in our area, and wondered if we had any idea why?

Well…yes we do know why, and it’s not just Riverside that is facing this issue.

To jump to the bottom line, the reason there is no affordable housing being built in our area is because builders cannot produce a finished “affordable” home and sell it for a profit.  To be more succinct, it’s too expensive to build a home and sell it at the low end of the price range.

To elaborate, according to our data, there are over 200,000 construction jobs open in the United States, with no skilled labor to fill these jobs.  We lost so many skilled laborers in the real estate meltdown of 2007-2012 (think electricians, plumbers, framers, concrete workers, etc.) and those people have not come back into the industry.

As a result, labor costs for new home construction have not just gone through the roof, but are now in the stratosphere.  There are reports of framers being offered huge pay raises to walk off one job and report the next day to another job with a new builder.  We talk a lot in this blog space about supply and demand, and here is a prime example…huge demand for workers, very limited supply, and that is a recipe for enormous wage hikes.

In line with that are material suppliers, who have some of the same issues.  So many left the industry that when a builder bids a job, the cost of supplies (again, think lumber, copper pipes, roof tiles, etc.) has also risen due to fewer places to get said supplies.

Therefore, mix all this in the “building stew” and you have a situation where lower priced homes are just not able to be produced…and we haven’t even addressed land costs.

That’s why much of what you see being built is either multi-family units (apartments…lots of units to rent to make-up for the cost to build), or homes being built in areas where the entry level market is very high…parts of Orange County, Los Angeles County etc.

In an area like the Inland Empire, where affordable housing is defined somewhere in the 300’s, new construction just doesn’t pencil out for the builders.  The cost of building a $600,000 home is not that much more than a $300,000 home, so you can see where a builder is headed…where the profit is.

So…what happens next? Hard to say.  Our crystal ball is no better than anyone else…but what we do know is that areas like Riverside, with it’s strong affordable housing base, are remaining attractive to buyers who simply cannot find affordable housing in our neighboring counties.  We are where first time buyers and young families come to live, and that is good for us all.

Does a Seller Have to Get a Termite Clearance?

Westcoe Realtors, Riverside Ca…Our question today comes from an internet reader, who sounded very confused on what exactly does a seller have to provide a buyer in the way of a termite report or clearance. So, to answer his question (and possibly yours), here is all you need to know about termite reports.

First…the answer to our question above is….NO, the seller does not have to provide a termite clearance…but if you haven’t purchased a home in the past 5 years or so, this will come as a surprise to you.  Please allow us to explain.

Years ago, the seller in almost all cases was required to provide a termite report and clearance if there was a new loan being created in the purchase of the property (as opposed to an all cash offer).  The reason for this was that the new lender wanted to make sure the home was free of termites, thereby protecting their interest in the property.

About 10-15 years ago (don’t quote me on this), termite reports were split into 2 sections, creatively called “Section 1”, and “Section 2”.  With this split, Section 1 items were termite issues that currently existed in the home, that were causing problems right now.  Section 2 items were conditions that existed, but were not yet causing a problem, but might in the future.

When this split happened, it became practice for the seller to be responsible for the repair of Section 1 problems, and the buyer was responsible for any Section 2 items if they wanted them repaired.  As far as the new lender was concerned, they only cared about the termite issues that existed at the time of the loan…hence, the Section 1 repairs.

However, in January of 2014, for some reason that shall remain locked in the minds of the lending “powers-that-be”, lenders stopped caring about the termite report!  To be specific, they no longer required a termite clearance.  In fact, they didn’t even require a termite report.  Maybe the figured out that it would take termites light years to actually destroy a house…but who knows?  The bottom line is that the seller was no longer required to mess with termites.

So, as a result of this 2014 change, how does it stand now?

Easy…everything becomes negotiable between the buyer and the seller.  Sometimes the buyer wants just a report, but no clearance…sometimes the buyer wants both, and sometimes the buyer could care less about termites.  Every purchase is different, and any repairs or costs the seller will pay simply becomes part of the negotiations between buyers and sellers.  Most of the time, this issue is easily resolved, and the principals can move on towards closing escrow.

In the end, if you are a buyer and termites are a big issue with you, then by all means at least ask for a report so you know what you are dealing with (reports cost about $50-$75).  If it is clean, then good for you…and if there are problems, then try to work it out with the seller.  Maybe they will pay for the corrections, and maybe they won’t…but at least you will know what is happening with regards to termite issues in the home.

Good luck, and thanks for reading our blog.  Let us know if there is any other real estate issue you would like us to address for you.

 

Why Lenders Won’t Lower Credit Standards

Westcoe Realtors, Riverside Ca…We had a question posed to us by one of our internet readers:  “I see that HUD is allowing lenders to make home loans to borrowers with lower FICO scores, but most lenders I check with still demand a higher FICO score.  What gives?  Why aren’t the lenders doing what HUD says they can do?”

Good question…and here’s why local lenders are not climbing on board with HUD’s latest “help.”

The bottom line here is that HUD can say all they want about credit guidelines, but since the local lender still retains the responsibility if the borrower on a loan fails to make the payments, then the local lenders will call their own shots on lending criteria.

To simplify, understand that no matter what HUD says, the local lender will pay the price if a housing loan goes bad…not HUD.  This is a result of all the “new lending protections” enacted by the Dodd-Frank act after the housing crash of 2007.  Therefore, in today’s lending world,  many times, if a housing loan goes bad, and the borrower fails to make the payments, HUD can force the original lender to make-up HUD’s losses, or worse yet, pay a fine.

This was all done to keep the local lenders in check, and to keep them from making so many of the bad loans that led up to the crash of 2007.  However, since the government is so good at constantly proving the “law of unintended consequences”, the net result is that in 2016, lenders are now afraid to make a loan to anyone who might look like they may be a lower credit risk…ie; borrowers with lower FICO scores (a FICO score is a numerical rating that reflects a person’s credit history…the lower the score, the worse the credit history…and the worse the credit history, the bigger chance the borrow will get in trouble with the new loan.)

So…HUD looks magnanimous in their pronouncements about helping people get loans by lowering their credit requirements, but until they also accept the responsibility for these loans if they go bad, don’t hold your breath for the local lenders to start lowering their credit standards.

Look at it this way.  Dad says his 10 year old can stay up until midnight on school nights, so the child does as Dad says.  I mean, it’s OK, right?  However, soon the child’s grades plummet because he is sleeping through class, and Dad goes nuts and punishes the child for getting bad grades.  The kid says he was only doing what Dad said he could, but Dad is holding the child responsible for Dad’s new sleep policy.  Eventually, the child blows Dad off and starts going to bed early enough to get some sleep.

Now you get it.  Until Dad takes the responsibility for his new sleep policy, don’t expect the child to follow suit…and don’t get mad at the local lenders when they refuse to be a part of HUDs new plan.  Can you really blame them?

Such is the way of life in our current lending world.

As always, thanks for reading our blog, and don’t hesitate to contact us with any questions you may have.

Stock Market and the Housing Market Are Not the Same

Westcoe Realtors, Riverside Ca…So…when the stock market takes another ridiculous roller coaster ride as it has the past few weeks (think Brexit), some of our clients want to know if this has any bearing on our local real estate market.  The concern is that if the stock market is “tanking”, is the housing market far behind?

In short, NO…there is almost no connection between the daily machinations of the stock market, and the strength of the housing market…and here is why.

The stock market feasts on the short term.  Oh sure, there are great long term investments that can be made in the stock market, but the media hype of the Dow Jones average on the nightly news is all about what happened today…right now.  The focus is on the “micro” events of the day, and as we all have seen, what crashes today rises from the ashes tomorrow…and by the end of the week, it’s as if nothing ever happened.

On the other hand, the housing market is all about the long term, and not about what happened today.  Sure, there can be news today that can have a long term affect on housing, but most of the time, the daily peaks and valleys of the stock market are ignored by the housing market.  That’s why people flock to real estate as a long term investment, not a short term investment.

Think of the housing market like a cruise ship, and the stock market like a speedboat.  Both can get you where you want to go, but one will be slow and steady, the other can go in circles before it reaches it’s destination.

As a specific example, this latest “Brexit” news that had the stock market all twisted up will actually be a good thing for real estate.  In the big picture, Britain leaving the European Union has our economy very uneasy at the moment…lots of chatter about what this all means for business.  As a result, the Fed will continue to keep interest rates low, which will be an additional boon for real estate.  Already, 30 mortgage rates have dropped a little, and there are some pundits predicting home loan rates dropping into the 2.5% range with all is said and done.

Who knows if all that will happen, but the important take away here is that there is no direct connection between our housing market and the stock market.  Wall Street can shout the sky is falling all they want, but for those of us in the real estate business, the only thing we see falling is interest rates!

Take care, and as always, we appreciate you reading our blog.  Let us know if there is anything you would like to see us address in this space.