zephyrsf.com san francisco home buyer seminar presented by matthew borland, crs, crb, e-pro natasha...
TRANSCRIPT
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San FranciscoHome Buyer Seminar
Presented by
Matthew Borland, CRS, CRB, e-PRONatasha Lovas, Guarantee Mortgage
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What we’ll cover today
Overview of the Home Buying Process Choosing and Working With Your REALTOR® Selecting and Obtaining the Right Financing Finding the Right Property Offers and Negotiations Current Market Conditions
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The Home Buying Process Definition: What is Escrow?A neutral third party
Takes instructions from Buyer and Seller, only proceeds if
instructions are the same
An account into which funds/docs are deposited
A process which
Holds deposits
Transfers the deed to the property
Pays off the Seller’s loan(s), and forwards any proceeds
Processes buyer’s loan docs from lender, arranges for
funding
Good to know: Choice of an escrow usually belongs the
buyer. Buyer & Seller almost never meet.
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The Home Buying Process Definition: Title Company
In Northern California, the Escrow Company typically handles title insurance in addition to escrowThe title officer issues a preliminary report of title, which your agent will review with you
Lists current ownership
Lists all recorded liens, easements or other recorded matters affecting title
The title company issues you, and your lender, a title insurance policy at close of escrow.
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The Home Buying Process
“Signing”
“Funding”
“Closing”
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Choosing a REALTOR®Your agent acts as your guide and advocate through the entire buying process.
Research the agent you want to work with onlineCheck their agent record at the California Department of Real Estate website for violations, www.dre.ca.govMeet with your prospective agent in their office to determine whether they are a fit for youMake sure your agent has the backing of a reputable firm, and has the appropriate local market knowledge and resources available to them
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Prior to meeting with a REALTOR®What general thoughts do I have on type of property and areas where I might want to live:
What Neighborhoods?Single Family? Condo? TIC? Multi-unit?What condition? Move-In? Fixer? What are the other priorities?
Number of Bedrooms Baths Parking View Style Fireplace Other
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Prior to meeting with a REALTOR®What price range?
What do I have for down payment?How large a loan will a bank approve for me/us?How much do I really want to spend on housing?Get a recommendation for a mortgage broker from the agent, and give them a quick call.
Make sure to communicate the areas, styles, property types and price ranges to the agent prior to your meeting.
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Meeting with a REALTOR®Questions to consider asking:
How familiar are you with the areas we like?With how many clients are you presently working? Do you have time for me/us?What do you like best about your job?Can you provide references?Why should I work with you?
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Obtaining the Right FinancingMortgage Broker vs. Direct LenderAccess to loan programs—brokers give you access to more loans than direct lenders. They shop banks, trust companies, credit unions and finance companies to find you the best product. Direct lenders have access to their products and rates only.Reaction to market conditions— interest rates change daily. Brokers can start a loan with one lender and switch to another lender if the rates improve at a competitor. Direct lenders cannot do this.You can tell brokers everything, and they’ll present your information to the lender in the most favorable light; once you tell your bank something that's not in you favor, it's too late to take it back.Brokers give the consumer an efficient and cost-effective method of shopping various lenders while still receiving individualized attention tailored to your needs.
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Zephyr and Guarantee MortgageOur clients have been well served over the years by our relationship with Guarantee Mortgage.
Priority serviceCompetitive rates Cost competitiveBreadth of product offeringsAccountability – They won’t leave you stranded if things don’t go exactly as planned
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Qualifying for Financing Lenders look at the following in evaluating a loan application:
Credit - History and RatingCapacity - History of IncomeCapital - Assets, PITI Reserves, etc.Collateral - Appraisal & Prelim Title
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Monthly Housing ExpenseYour monthly housing cost is referred to in the industry as PITI:
PrincipleInterestTaxesInsurance
Note: For condos, in addition to Home Owner’s Association (HOA) Dues, HO6 supplemental insurance is now required; PITHI
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Calculating The RatiosLenders calculate two ratios when qualifying you
Front End Ratio – considers housing costs only Monthly PITI divided into your monthly gross income Current guidelines: 25%-33%
Back End Ratio – considers housing costs plus all other debt as well Monthly PITI + monthly debt divided into your
monthly gross income Current guidelines: 33%-45%
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Required Downpayment
Single Family, Condo or Loft: 3.5-20% typical Tenant-In-Common (TIC): 25% minimum Multi-unit building: typically 25-30% Some downpayment can be gifted from close family
(There are exceptions to the above, based on the property, buyer’s qualification and credit)
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First Mortgage Options Fixed Mortgages
30 Year Fixed 25 Year Fixed 15 Year Fixed
Adjustable Rate Mortgages 3/1, 5/1, 7/1, 10/1 Adjusts to Index + Margin
Interest Only Mortgages
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Less than 20% Down?Second Mortgages
Financing from 80% to 90%Home Equity Line of CreditFixed SecondsCombined Loan to Value (CLTV)
Private Mortgage Insurance
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Loan Points Required on some loans Optional on most loans
Buys down the interest rate Assists in qualifying for the loan Lower monthly payments Takes about 4 ½ years on average to break even Can be paid by the Seller
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Closing Costs 1.5 - 2% of Purchase Price
Appraisal Escrow Title Insurance Processing Fees Points (optional)
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Occupancy restrictionsCan I move into the property I just bought?
San Francisco Rent Control also contains Eviction Controls for property built before June 14, 1979.
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Occupancy restrictionsFor buildings subject to eviction controls:
Tenant occupied single family home or condo? Most likely you can move in. May require an attorney, payment of mandated moving expenses and timing your move around the San Francisco school schedule. Keep in mind that an unwarranted/illegal unit turns a single family into a multi-unit building for rent and eviction control purposes.
Multi-unit building? Same issues as a single family or condo, plus there may be a designated owner’s unit- meaning this is the only unit you can evict a tenant from to move in yourself.
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Your agent can provide a detailed primer on owner occupancy for San Francisco property owners
Some tenants are protected from owner move in (OMI) eviction, preventing an owner from moving into a multi-unit structure (or if they own more than one condo in a condo development)
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Special Consideration: (TICs)Tenant-in-Common (TIC) interests are a unique and creative way to own and occupy property, but TIC ownership is not without risk.
Not a subdivided interest like a condo or loftYou own a percentage of the building and the right to occupy a particular unit, by agreement of the partiesMany TICs are structured so all parties share one loanSome TIC interests offer separate financing for each co-tenant, these are more expensive loans with limited availability
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Should have a written TIC agreement between co-tenants Financing Arrangement / % Interest House Rules Agreement to Condo Convert, if applicable Safeguards Against Default others
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TIC’s and Condo ConversionToday, some TIC interests have the ability to condo convert, but the laws change regularly.Two unit buildings may be able to convert after one year of full owner occupancy, provided the prior eviction history has not disqualified the building.Three to six unit buildings are subject to a lottery process, after specific owner occupancy requirements are met. The process can take 10-15 years or more for these larger buildings. Again, prior eviction history can disqualify a property from ever converting, under current law.Five to six unit buildings must go through a state approval process, in addition to local requirements.
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Finding the Right PropertyMore and more, clients are finding property on
their own through the internet. The agent’s role has shifted further to that of advocate, resource and guide.
Your agent previews property to hone market knowledgeYour agent typically tours with you until they understand what types of properties and locations appeal to youWhen you see something you like, call your agentAlways identify yourself as working with your agent when at a showing- the listing agent will be more likely to leave you alone to focus on the property
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Finding the Right PropertyTouring property
Sunday Open Homes Zephyrsf.com’s Home Tour Feature
Tuesday Brokers Tour Information available from your agent
Special Showings Advance notice typically required, unless pre-scheduled
New Home Developments Agent must register you on your first visit
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Disclosure ReviewPrior to writing an offer, your agent will review
the myriad disclosure documents available for the property.
Important items to consider are called to your attention and reviewed with youYour offer price is typically reflective of the current condition of the property, as you understand it from viewing the property and reviewing the disclosures provided by the Seller
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Crafting Your OfferBased on market conditions, and the amount of interest in the property your agent will tailor recommendations for you:
Purchase PriceInspectionsLoan ConditionsClose of EscrowOccupancyPersonal Property Other Terms or Contingencies
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Typical Contract Contingencies Loan terms and approval Approval of title report Pest inspection Contractors inspection Condo documents (if applicable) TIC documents (if applicable) Other inspections, as requested
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Current Market ConditionsInsert commentary on the market here
At a recent sales meeting:X sales over askingX sales at askingX sales under askingX sales with multiple offers
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Current Market ConditionsMedian Price (Single Family, Condo, TIC,LOFT)
Data for San Francisco, from SFAR MLS. Deemed reliable, not guaranteed.
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Current Market ConditionsDays on Market (Single Family, Condo, TIC,LOFT)
Data for San Francisco, from SFAR MLS. Deemed reliable, not guaranteed.
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Current Market ConditionsMonths Supply of Inventory (Single Family, Condo, TIC,LOFT)
Data for San Francisco, from SFAR MLS. Deemed reliable, not guaranteed.
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Why Buy Real Estate in San Francisco?
People choose to buy property for many reasons, including:
Long term equity gainTax benefits
Income tax deduction Property tax deduction Shelter gain, $250,000 per individual; $500,000 per couple
Control of their living space Remodel, paint Permanency- cannot be evicted
Diversify their asset portfolio
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Why Buy Real Estate in San Francisco?Many tenants find the tax benefits of owning property make owning an excellent choice. Ex: Renting vs. Buying, Rent: $ 2,600/month
Avg. Purchase Price $600,00010% Down Payment $60,000 (401k, savings, gift, etc.) Loan Amount $540,00030 yr. Term @ 6% $2,700 Interest Only Payment
Principle $00.00Interest $2,700Taxes $600Ins. or HOA $250.00
Total Monthly Housing Cost Before Taxes $3,550
Less deduction -$990, (assuming 30% Tax Bracket)
Total After Taxes $ 2,560
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Why Buy Real Estate in San Francisco?
Traditionally, San Francisco real estate has weathered the ups and down of the market better than other areas.
Landlocked on three sidesLimited supplyAlways desirableLess price volatility
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How We Can Help You? We welcome the opportunity for a private consultation We offer unique and innovative tools to track the market, at no cost
to you MarketTracker: area specific bi-weekly newsletter Invitation to MyZephyr: Routed home tour directions,
neighborhood stats and more! No obligation pre-qualification available We are available as a trusted referral source for you
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Your Hosts
Matthew BorlandCRB, CRS, e-PRO
Zephyr Real Estate2523 California Street
San Francisco, CA 94115
(415) [email protected]
Natasha Lovas
Guarantee Mortgage636 Fourth Street
San Francisco, CA 94107
(415) [email protected]