An article on CNN Money titled “9 Ways to Tough Out Tough Times” provides a number of ways to protect yourself during times of economic instability like our current situation.  While many of the talking points concern one’s financial portfolio and tips for trading in an unstable stock market, a couple of ideas deal directly with real estate buyers. 

The fifth item discussed in the article concerns raising and maintaining your credit score, one of the most important components analyzed by lenders when deciding whether or not to help finance your new home.  Not only does good credit make a lender feel more comfortable about lending money, but better credit may help you to get a lower interest rate.  The article states that the two most important factors with maintaining good credit are your payment history and account balances.  Paying bills on time should be a no-brainer (and accounts for 35% of your credit score), but keeping your account balances below 50% of your credit limit dramatically improves your overall credit score (this accounts for 30% of the total score).  The article also advises you to not open unnecessary accounts or make too many credit requests, as multiple credit inquiries could ding your score.   Credit history is important because it establishes your payment history, showing any potential lender that you have a good background with regards to paying off debt.  Even if buying a home is not in the foreseeable future, taking these steps now can make obtaining a loan for your first home that much easier.

The seventh talking point in the article concerns finding a great deal on a mortgage, something that is on everyone’s minds these days when thinking about a real estate purchase.  One of the reasons that the housing market is in trouble is due to unscrupulous lenders taking advantage of people with little money and substandard credit by offering them loans that looked good on the surface but turned out to be nightmares when the interest rates adjusted.  In these tough times, banks are much more careful when lending money, and securing a good interest rate might mean putting down at least a 20-25% down payment.  The article states that buyers can find good interest rates without having to deal with mortgage brokers, who may add upwards of 27% to a loan’s fees.  The article suggests going to a site like bankrate.com, where you can put in your desired location and loan amount to discover different lenders in the area and their loan terms.  Once you narrow down the list to a couple of potential lenders, contact each of them and ask for a good-faith estimate (usually free of charge).  The interest rates you receive from each may be in the same ballpark, but pay attention to the additional fees they charge for loan origination, document preparation, etc.  This takes a little work on your part, but it could end up saving you a nice chunk of change in the long run.

For more information on tips to help your purchase of San Clemente real estate become a reality, please do not hesitate to contact us. 

Mortgage rates have fallen below 6% for the first time since this past spring.  The 30 year fixed rate dropped from 6.35% to 5.93% last week making San Clemente real estate more affordable.  For example, a San Clemente home or condo financed at $700,000 based on a 6.35% rate would cost $4,355 per month.  The same amount financed with this past weeks rate of 5.93% would cost $4,165.  This would be a savings of $190 per month or 4.37%.  This would equate to a savings of $2,280 per year or $68,400 over the life of the loan if never refinanced.  The drop in rates is both good news for buyers and sellers.  Buyers can now afford more for their San Clemente real estate purchase and for sellers, this relieves some of the downward pressure on prices.

For more information on financing or San Clemente real estate, please contact us.

On Sunday, the government announced the bailout Fannie Mae and Freddie Mac due to these mortgage giants having serious liquidity issues.  The national housing market was at risk since these two entities back nearly half of all mortgages in the U.S.  But what does this mean for San Clemente real estate and the cost of borrowing?

The Good News: 

The bailout is crucial to turning the corner on falling prices for San Clemente homes and condos for sale.  The availability of mortgage financing and getting approved over the last year has been extremely difficult, meaning fewer individuals were able to buy.  With the bailout, there will be a greater availability of credit as the mortgage giants will be able to continue buying mortgages from lenders, which have been traditionally packaged and sold in the secondary markets.  Interest rates could drop by 1% as investors in the debt of Fannie Mae and Freddie Mac may require lower returns as the risk of losing their money is now fully protected by the government.  This is good news as the higher rates required by investors over the past year have made mortgages more expensive, and therefore, in part explaining why mortgage applications have been down 27% and home prices have fallen.

The Bad News:

With foreclosures and deliquencies at an all-time high, lending standards will remain tight, especially for borrrowers with weaker credit histories.  Down payments up to 20% may still remain on San Clemente real estate and lenders are requiring credit scores of 700.  Borrowers with scores in the 600s may pay an additional 2.25%.   This would mean an extra $1100 per month on $700,000 financed for a San Clemente home or condo.  Once the housing markets show more stability (i.e. fewer foreclosures and deliquencies, inventory clearing and prices stabilizing) down payment requirements should begin to ease and lending standards return to historical norms.  Nevertheless, San Clemente should begin to see an uptick in sales as their are some great deals  to be had, specifically on foreclosures or sellers desperate to move.  Buyers with patience will find these deals with the assistance of a specialist.

For more information about San Clemente real estate and what the bailout means, please contact one of our specialized San Clemente real estate agents.

In a recent study conducted by J.D. Power and Associates to determine the real estate companies that rank highest amongst buyers and sellers in customer satisfaction, a couple of very interesting trends were highlighted.  As has become the norm over the past couple of years, a large proportion of buyers and sellers began their real estate process online; 68% of buyers used Internet tools throughout their real estate purchase process, and 61% of sellers primarily used a website listing to market their homes while crediting online methods as the most important aspect of marketing their homes to potential buyers.  While the Internet has become a central force in the buying and selling of real estate, the report also notes that agent professionalism, responsiveness and market knowledge are still crucial components to customer satisfaction.   

For the past couple of years, study after study has shown the rising importance of Internet marketing with regards to real estate.  From a seller’s perspective, this is a low-cost method of marketing that will reach the widest possible audience by utilizing the Internet and its variety of search engines.  With over two-thirds of buyers using the Internet for their real estate searches, your property’s online presence is vital to its ability to sell.  The study shows that the average time a listing stays on the market before a sale is a little over 6 months, meaning sellers need to think outside of the box in order to get their homes sold in a shorter amount of time.  At San Clemente Coastal Living, we focus on the Internet as our primary marketing arena to help sell your San Clemente home.  Our listings receive home page placement on our website and are not mixed with listings from other areas - we deal exclusively in San Clemente in order to attract serious community buyers, not shoppers looking throughout Orange County.  On top of this, we display your listing on a variety of real estate websites to create maximum exposure, and we do not settle for simply cutting and pasting a link to the MLS listing.  We use the latest technology to create state-of-the-art online listing presentations so that potential buyers have a clear picture of the property before they even pick up the phone to call us.  For more information on the services we provide to sellers, please click here.

While having a strong presence on the Internet will help both buyers and sellers with their San Clemente real estate processes, our customer service is what sets San Clemente Coastal Living apart from other real estate companies.  Our mission has always been very clear - the client is always more important than the deal.  We are experts on the San Clemente real estate marketplace because we are exclusive to San Clemente, unlike other companies that work in multiple locations.  Our blog serves as a great educational tool for buyers and sellers, not only to provide national, regional and local real estate news and analysis, but to give you a better feel for San Clemente as a wonderful beach community with a small-town feel.  We are just as interested in finding a lifestyle that fits your needs as we are in putting a roof over your head.  Buyers can feel confident that they will receive the utmost amount of care and expertise when searching for their home with San Clemente Coastal Living.  For more information on the buyer’s services we provide, please click here.

If you have more questions about our services or wish to learn more about utilizing the Internet for your real estate needs, please contact us.

For the first in this series on Financing 101, San Clemente Coastal Living thought it would be appropriate to address how important your credit score is to getting approved on the the purchase of a San Clemente home or condo for sale.  The first thing as a buyer you need to take a look at is your financial profile, or in other words, your credit score.  Credit scores range from 300-850 and borrowers with a score of 700 or above are typically considered prime borrowers.  So lets break down how your credit score is calculated and how you can improve it.

First, 30% of your credit score is based on what’s known as your credit utilization ratio.  This is how big your balances are compared to how much credit is available to you.  It’s recommended you leave 50% of your available credit open in order to not ding your credit score.  Therefore, one of the fastest ways to improve your credit score is to pay those balances down.

Another 30% of your credit score is based on your payment history, and therefore, paying on-time is critical.  Late payments will stay on your records for as long as seven years, however, your credit score will begin to improve after six months of on-time payments.   After one year of on-time payments, you should see a huge leap in your credit score.

10% of your credit score is based on how many times you apply for new credit, and therefore, opening new credit lines before you want to refinance or take out a mortgage could prevent this from happening.

 The rest of your credit score is based on length of credit history among other factors.  One thing to keep in mind, however, is to review your credit report annually for errors as a recent study found that over 75% of credit reports contained some sort of error.  Having an error on your report could prevent you from buying the San Clemente home of your dreams.  With this being said, you are entitled to a free credit report every 12 months and can obtain it off FreeCreditReport.com.  If you happen to find errors, then you can respond to the credit bureau as they have 45 days to investigate the claim once found.  You will also want to contact the creditor who reported the error.

For more information about financing or San Clemente real estate, please feel free to contact us as we will be happy to provide you a free consultation.

Due to recent requests from current and past San Clemente real estate clients, we have added a foreclosure and short-sale section on our website under Real Estate.  This page includes all the current foreclosures and short-sales currently available in the San Clemente real estate market.  In addition, you now have the opportunity to search foreclosures and short-sales through our property search engine at the top of our website.  This will enable you to search San Clemente real estate foreclosures and short-sales by price, bedrooms, bathrooms, neighborhoods, etc. 

Please keep in mind the majority of the foreclosures and short-sales are in the Talega real estate market, the most inland and newest area of San Clemente.  Talega real estate, both homes and condos, has experienced the most foreclosures due to the majority of the community being developed and sold during the real estate boom.  Since a lot of the Talega homes and condos have been sold over the past couple years, many homeowners are either forced to foreclose or face the difficult choice as their homes are worth less than the amount they owe.  Some of the other areas of the San Clemente real estate market are experiencing the foreclosure pain as well, however, not as significant.  Lastly, buyers need to remember that while the San Clemente real estate market has experienced price declines and foreclosures, the market has held its ground relative to the rest of the county and state as median price has fallen around 10% over the past year as compared with 26% for Orange County and 35% for California.

For more information on foreclosures, please read our past blogs, “How to Buy a San Clemente Foreclosure“ and/or contact us.

The OC Register has reported some excellent news for real estate sellers in Orange County.  According to this article, Orange County home sales in July increased by 17% from last year, the first increase since September 2005 (a 33-month span).  The numbers also show a 45% increase from last month.  It seems that buyers are finally recognizing the great values to be had in the current real estate market and are making the decision to move ahead with a purchase.  Besides bargain prices, the change in consumer confidence in buying real estate can be attributed to the passing of the Housing Bill and the return of investors to the marketplace. 

For sellers in San Clemente with houses currently on the market or residents thinking about putting their home up for sale, this is very welcome news.  Buyers are returning to the marketplace throughout Orange County, and if you look at the large increase in sales as compared to last month, they seem to be doing so very quickly.  Another interesting point the article uncovers is that investors have changed their outlook and are renting out their purchased properties until the market recovers enough to begin “flipping” the real estate in their portfolios to turn a profit.  As we have stated repeatedly in this blog, real estate is one of the smartest, low-risk investments one can make, regardless of the economy’s health.  Even when the housing market is down, investors still see the benefit in purchasing real estate; the patient ones know that they will see excellent returns on their investment, it just will not happen as quickly in this type of market.  There is also good news here for buyers: homes are at the lowest median price ($461,000) since January 2005, meaning there are still amazing deals to be found in the resale and foreclosure markets.  Another positive sign for buyers and sellers is that, due to the recent passing of the Housing Bill and federal aid to Fannie Mae and Freddie Mac, the amount of cash flow for borrowers has increased. 

The lesson San Clemente buyers should take from these developments is that, if the market continues this upward trend, home prices will slowly increase, and the great deals on San Clemente real estate will begin to disappear.  As you can see, the Orange County resale market is beginning to show signs of life, and as the saying goes, “Strike while the iron is hot.”  For more information on purchasing or selling San Clemente real estate, please contact us.

With the San Clemente real estate market being a buyer’s market, sellers should consider a pre-inspection.  In this article, the value of the pre-inspection incurred on the sellers behalf may completely outweigh the cost of $300-500.  The pre-inspection allows you, the seller, to fix the problems before they might surface during a buyer inspection.  This could prevent a potential sale from falling apart in today’s market and take a lot of time and hassle out of negotiations. 

San Clemente real estate buyers are in the drivers seat right now, so the pre-inspection may also function as a marketing tool.  For example, we can advertise in the listing that the property was pre-inspected.  At the house, there can be a sign out front and cards in the house alerting potential buyers and their agents that a pre-inspection report is available.  This becomes a great bargaining tool to differentiate yourself and your home from your competition, the other properties the buyer is interested in the San Clemente real estate market.   Lastly, it will give you much more confidence in the price at which we list your house.  In today’s buyers market, this pre-inspection could mean selling your house next week versus six months from now.

In this article “How to Buy a Foreclosed Home” many great points are brought to light to educate buyers on the different stages of foreclosure and their implications.  If you are looking to buy and find a good deal, it might be a foreclosure as 40% of California homes sold in the second quarter were foreclosures.   Below, you will find a description of the different stages of foreclosures and their implications to you as a buyer in order for you to make a more informed decision:

1.  Pre-foreclosure

A pre-foreclosure occurs when the borrower has fallen behind on payments but their property has not been auctioned off.  Lenders will file deliquency notices with county courthouses when a borrower has fallen behind.  All it takes is a little research to find out what homes might be coming on the market.  This is also the time when a short-sale can occur, which means the buyer pays less for the house than owed with the lender agreeing to the price and foregiving the debt.  More recently, lenders have been more open to the short-sale as going through the entire foreclosure process can cost them thousands.

2.  Sheriff’s Sale

A sheriff’s sale is the next stage of foreclosure when homes are auctioned off at the county courthouse.  While this could be the biggest bargain, there are greater risks.  As a bidder, you cannot inspect the property and you have no idea what kind of liens are on the property, such as unpaid property tax and other fees.  Also, as a buyer you need to come up with 10-20% down immediately.  Lastly, the purchase could fall through if the current owner can come up with the amount you bid.  To conclude, a sheriff’s sale has the greatest risk-reward relationship.

3.  Post-Foreclsure

A post-foreclosure occurs after a lender takes back a house and the property goes back on the market as an REO (real estate owned) property.  REOs are like a typical sale with a listing broker.  Deals may not be as good as a sheriff’s sale, however, there is a lot less risk.  Typically REOs sell for 95% of listing price, which is already marked down 10-15% below current market levels.  If you shop wisely and with patience, you could get a 15-20% discount off market price.

For more information on San Clemente real estate foreclosures, please explore our website or contact us.

At San Clemente Coastal Living, we thought it was time to give all of you current and potential San Clemente real estate buyers or sellers a snapshot of the market’s performance from 2000 to present.  First, however, it would be appropriate to bring a few facts to light about the San Clemente real estate market’s performance against the county and state as everyone needs to realize that real estate markets are very local. 

The San Clemente real estate market, being a coastal market, has held its ground when compared to the year-over-year price change for Orange County and California real estate.  The San Clemente real estate average selling price is down 10.97% from its high in 2006 or 8.76% over the past year. On the other hand, Orange County real estate over the past year is down 26.6%.  Even worse, California is down 35.3% for single family residences and 19.8% for condos.  Clearly, San Clemente real estate has held its ground, and we hope this helps ease the nerves of potential buyers sitting on the fence. 

While prices have held strong in the San Clemente real estate market, there are a few things that need to come back into balance before a full recovery occurs.  First, average days on market (DOM) is currently 102 days, or 42 days above the 2000-2008 average of 60 days.  Secondly, sales in 2008 are off by 34.57% from the eight year average of 886 per year.  Lastly, there is approximately 600 housing units currently on the market representing around 12 months of supply based on sales to date in 2008.  In order for the San Clemente real estate market to make a full recovery, inventory needs to return a historical average of 6-7 months, fewer listings need to come on the market, and sales need to return to average levels.

While this might make you nervous, remember the fact that the San Clemente real estate market has held its ground and that there are some great deals on San Clemente homes and condos for sale if you have the patience to shop as some homes are priced to sell quickly well below comps in the market.  When the market does turn, a lot of these deals by sellers to get their homes off the market will quickly go away and you may find yourself wishing you had purchased a couple months prior.  For more information, please explore our website or contact us today.