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Should I Downsize Now?

by Craig Whitlock

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market.

In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, let's meet up to help guide you through the process.

 

LA Westside Sales Highlights - February 2017

by Craig Whitlock

This report will provide a quick overview as to how the Westside micro-markets are currently performing and then compares that data to the same period a year ago. 

The key market indicators are:

Pending Sales Activity - sometimes referred to as the 'Number of Properties Under Contract'. This is a forward-looking indicator of current sales activity where there has been an accepted offer and escrow has opened.

Median Sales Price - that point at which half of the properties have sold for a greater amount and half have sold for a lesser amount. This indicator pinpoints where in the price spectrum homes have sold rather than reflecting home value. There is a common misperception that a drop in the MSP directly indicates a drop in home value. It is far more likely that the drop indicates either smaller, older and/or homes in lower-priced areas have sold during the period.

Months Supply of Inventory (MSI) - a leading indicator of market supply, which directly impacts pricing. Generally, a five to six month supply indicates market equilibrium while anything less signals a 'seller's market' and anything above a 'buyer's market'.

LA Westside Sales Highlights - February 2017 © 2010–2017 10K Research and Marketing®

To view a portfolio of three additional reports trended over the past 12 months: Properties For Sale, Days On Market and New Properties For Sale, visit the Market Sales Data section. If you have any questions or would like to discuss this data at greater length, just drop me a note or give me a call.

Property Profiles Versus Preliminary Title Reports

by Craig Whitlock

There are several steps in the process of purchasing real estate. Reviewing property profile reports and preliminary title reports is an important and necessary step, and it’s important to know the differences between the two products.
 
Property Profile
 
What is a Property Profile?
A Property Profile report is a snapshot of the financial and ownership status of a property generated by customer service.  It can help determine:

  • The owner of the property
  • The loans and liens that may exist on the property

What is the benefit of a Property Profile in a real estate transaction?
Property Profiles are the quickest method of obtaining a cursory view of the property in question. Information is quick, but not vetted.
 
A Property Profile package typically consists of the following information:

  • Comparable market analysis
  • Vesting deed/current owner
  • Open deeds of trust/mortgages
  • Plat map of the property
  • Tax status for current year
  • HOA liens
  • City liens
  • Solar agreements *
  • UCC financing statement *
  • Any other document recorded on the property *

* When specifically requested.
 
Preliminary Title Report
 
What is a Preliminary Title Report (PR)?
A Preliminary Title Report is an offer to issue insurance. It’s a starting point for the title company to eventually issue a policy of insurance. It shows the full ownership of a specific parcel of land, with the liens and encumbrances thereon, together with recorded matters that will be excepted from the policy of insurance if not addressed and removed before escrow closes. Significant time, energy and resources go into producing a PR.
 
What role does a Preliminary Title Report play in the real estate process?
A Preliminary Title Report lists the conditions under which the title company will issue a particular type of title insurance policy. It shows if anyone, other than the seller, has a legal claim on the property.
 
The PR may be reviewed and discussed by the parties to the real estate transaction, providing the opportunity to seek the removal of items referenced in the report which are objectionable to the buyer prior to the transfer of title.
 
The Preliminary Report is not a written historical representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land, it merely reports the current ownership and matters that the title company will exclude from coverage if a title insurance policy should later be issued.
 
A Preliminary Title Report identifies the following:

  • Title defects, liens of record or encumbrances that must be satisfied prior to issuing a title insurance policy
  • Legal and equitable ownership
  • Covenants, Conditions and Restrictions (CC&Rs) or recorded restrictions which have been placed in a prior deed or contained in recorded documents
  • Detailed easement information
  • Thorough real property tax information
  • Status of the property
  • Possible lien items that need to be cleared prior to the close of escrow

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Photo of Craig Whitlock Real Estate
Craig Whitlock
COLDWELL BANKER BRENTWOOD
11661 San Vicente Blvd., 10th Floor
Los Angeles CA 90049
Mobile: (310) 488-4399
Fax: (310) 820-1457

Broker/Agent does not guarantee the accuracy of the square footage, lot size or other information concerning the conditions or features of properties provided by the seller or obtained from Public Records or other sources as presented in this website.  Interested parties are advised to independently verify the accuracy of all information through personal inspection and with appropriate professionals.  Information herein deemed reliable but not guaranteed.

CalBRE LIC 01827537