SAN PEDRO HOMES-ISSUES FOR 1ST TIME HOME BUYERS

SAN PEDRO HOMES -

ISSUES FOR 1ST TIME HOME BUYERS

Buying a home in San Pedro is one of the most significant investments you will make in your life. Not only are you choosing the place you will live, and the place in which you will bring up your family, you are most likely investing a large portion of your assets into this personalized space. The more prepared you are at the beginning, the less overwhelming and chaotic the buying process will be. My goal is to provide you with the detailed information you will need to assist you in making an intelligent and informed decision. Remember, if you have any questions about the process, contact me, Wendy Rich-Soto at 310-944-8062.

As you begin keep the end in mind by keeping your mind focused on your ultimate out come, being a homeowner. At some point you have to trust someone who is a Real Estate professional to help you navigate through the process. There are so many things to consider that you need someone who is specifically trained and has your best interests at heart. There is a starting point to a purchase and it is something that must be done in order to get started. If you will be obtaining a mortgage to purchase your home, you need to speak with a lender. That should really be your first stop. A lender will be able to go over your credit, income, assets, and debt. Once they do, they can give you a budget to shop within. Now some buyers hear the top dollar that they can spend and they do not want to go that high. They don't feel comfortable with a monthly committment that seems like it will take away so much from their lifestyle. That is understandable. So they decide on a price that has more to do with monthly payment and their comfort level. This is a huge step in the right direction!

Most 1st time home buyers choose FHA financing. The primary reason for that is a down payment of 3.5%, more lenient guidelines with regard to credit scores. Some buyers will need a seller to help with their closing costs which can range from $8,000-$10,000 on average. With so many San Pedro homes and condos on the market at affordable prices one would think it should be really easy to find a home and get a great deal. So why are so many first time buyers having trouble finding a home that suits their needs at a price they can afford? Until 2008 it was almost impossible to find decent homes in San Pedro for under $500,000. Prices have been dropping so rapidly over the last 2 or 3 years that some homes have finally become affordable to first time home buyers. Recognizing this, many are out shopping, trying to make the dream of home ownership a reality.

Where are the great bargains? Homes currently on the market that are affordable to first time home buyers, are predominantly short sales and foreclosures or bank owned properties and are not necessarily in the best condition. Even with a deep price reduction many of these homes are still beyond the reach of first time buyers because the buyer will have to lay out considerable cash after purchase to bring the house into livable condition. First time home-buyers just dont have this kind of cash to invest in the home for repairs and upgrades after the purchase. In some cases FHA will not finance if serious repairs are required or kitchens and/or baths are missing.

Some of the problems buyers have discovered in many of the available homes for sale on the market are:

• Damaged foundations
• Damaged chimneys
• Excessive layers of roofing
• Bent ridge-boards (part of roofs framing)
• Leaking, damaged and old roofs in need of replacement
• Potential mold issues resulting from leaking and damaged roofing
• Kitchens in need of replacement
• Baths in need of replacement
• Incomplete renovations leaving partially completed kitchens and baths
• Badly damaged flooring
• Leaking plumbing and/or replacement
  
• Electrical problems and upgrades
• Unpermitted additions not up to code

Many bank owned homes have several of these issues placing the seemingly affordable home into the unaffordable range for the FHA buyer. For instance a buyer may be able to afford a new shower, but not be able to afford new plumbing if that too is necessary, this can become a large expense. When a San Pedro home becomes available in really good condition, priced to sell it will likely receive multiple offers very quickly. FHA offers are often being put to the side while banks and sellers entertain offers with 20% or better down payments and all cash offers, often from investors. It is critical for an FHA buyer to write the strongest NET offer possible. Even with a strong offer it is very difficult for an FHA buyer to compete against the stronger offers.

FHA buyers who successfully purchase are finding that their best option is often looking at homes and condos that have been on the market for a while. These homes and condos don't present the multiple offer problem and often result in a sale. While homes and condos that sit for a while sometimes do have issues beyond the buyers ability to deal with, if you pick through them you can often find an overlooked gem. Don't just assume if a home as been on the market for a long time that it isn't worth considering. More often than not, a seller may have listed the home to high for the current market and it took them a long while to realize that in order to sell they had to adjust their price significantly. Other times, if a home is priced out of your price range, comparable recent sales may unveil that the home is worth what you can afford. That is the time to strongly consider that home if it meets your needs.

Give yourself some room! If you look at homes that are below your price range, you give yourself room to negotiate. When you look at property that puts you at your max, it doesn't give you any room to go up. That doesn't mean that you won't get the home, but it does make it more difficult. Many times a seller may not consider an FHA offer and so an FHA buyer must shop smart. While it may take some time, it is still possible for an FHA buyer to purchase if they are dedicated to the purchase. Trusting your Realtor to help you through these types of things will make the process so much easier for you!

Friends & Family: Our friends and family always want what is best for us and so when we are getting ready to buy a home, they want to help! Many of them have purchased homes in the past and they know a lot about the process. The thing is that this market is different now than it was even 12 months ago. Lending guidelines have changed so much that every time you think you have everything that you need in place, a new change comes up and can make it impossible for you to buy the home the way you thought you could. It is important to get a pre approval letter, a budget, a Realtor you trust, and then get ready to find the home you want. Family and friends should be supportive but they should also defer to those who are working in real estate and lending today and know what the requirements are that will allow you to become a home owner.

This is "Your San Pedro Real Estate Girl" Wendy Rich-Soto, signing off~~