What Should I Offer?

https://www.youtube.com/watch?v=JzzR2XEWv-A You've found a home you really like and you're ready to take the next step but what should you offer?

I've put together a few things I think are important to consider as you prepare your offer.

2 Tips for Home Buyers Today

https://www.youtube.com/watch?v=XKav8JrB110 It's a tough market out there for buyers, but there can be great opportunities if you know what to look for.  I've put a few tips together to help buyers in today's market.

Rent vs Buy- 3 Bedroom House

Rent vs Buy - San Francisco 3-Bedroom House

Please Note: Rent vs. buy calculations can be performed a wide variety of ways, and results will depend on your own financial circumstances and economic projections. The below calculations represent simply one scenario.

This rent vs. buy analysis compares the cost of buying a San Francisco 3-bedroom house at the June 2013 median sales price of $1,050,000 – adjusting for tax deductions and principal pay-down of the mortgage – with the cost of renting an SF 3-bedroom house or apartment at the June 2013 average asking rent of $4500/month (per MyApartmentMap.com).

Assumptions: approximate 20% down-payment; 30-year fixed-rate loan at an APR of 4.5%; and closing costs; property taxes; ongoing insurance and maintenance costs; annual inflation and home appreciation rates - all at what seem to us to be reasonable projections. We've also used a combined income tax rate of 25% for the mortgage interest deduction. But especially when projecting for long periods of time, many of these figures are simply guess-timates. You may perform calculations based upon your own financial situation and projections here:

http://www.paragon-re.com/Calculator_Rent_vs_Buy/

You can also find our Rent vs. Buy- 2 Bedroom Condo scenario here.

The following may be easier to read if you adjust your screen-view zoom to 125%. In Windows systems, this can be done by pressing the Control and + keys simultaneously.

 

June Market Update

	Dramatic Spike in San Francisco Home Values June 2012 Market Update Drama, drama everywhere.  There so much going on in the San Francisco homes market right now it’s a little hard to decide what to highlight in this month’s newsletter.  The supply and demand situation has created the most ferociously competitive environment for buyers in years.  There’s huge buyer demand and an extremely low inventory of homes available to be purchase.  We saw this start to build when the market turned in 2011.  It made a quantum jump early this spring.  Now we’re seeing big increases in sales prices.  Certain neighborhoods blazed the way for this recovery and they’re showing the most dramatic changes in values, but pretty much all the city’s neighborhoods are now experiencing similar supply and demand dynamics. Any data you view on recent closed sales will reflect the market heat from 4-10 weeks prior when the new listings first came on the market and offer were accepted and negotiated.  The April/May spike in values reflects the market in February, March, and early April.  If anything, the market has gotten even hotter since then.  In the past, the market has usually slowed down during the summer months.  We’ll have to wait and see if that happens this year or whether the current trend will continue. Explanations for the statistics referenced can be found on the Paragon website: Statistical Definitions -------------------------------------------------Short-Term Trends in SF Home Values Median and average sales prices are calculated in different ways, and each has its advantages and weaknesses as a statistical measure. Any statistic is a generalized, market-condition snapshot taken from a specific angle on the data. Ideally, different statistics should all point to the same conclusion regarding market trends, which is what we're seeing below. Long-Term Trends in San Francisco Home Values By some measures, property values, at least in April and May - which is a very short statistical period of time - are rapidly approaching peak values in 2007/early 2008. In the next couple quarters, it will be seen if this is simply a dramatic fluctuation or an initial indication of a sea change in market prices. Based upon what we are seeing in the statistics and on the street, we lean toward the second view. Home Value Trends by San Francisco Neighborhood Some neighborhoods, such as the greater Noe Valley area, the greater South Beach/SoMa area and the older, prestige northern neighborhoods such as Pacific Heights and Russian Hill, have been at the leading edge of the market recovery. Other areas, such as many neighborhoods in the southern districts of the city, are a step behind and price increases have not yet shown up as dramatically in the statistics. But we believe they will very soon: the markets there have become very hot as well. The Distressed Home Market in San Francisco Distressed home listings in San Francisco are rapidly declining by units and as a percentage of the overall market, and as home values and home equity increase, this trend will continue. Since distressed home sales have a negative effect on values, this dwindling will continue to strengthen the market. The New-Homes Market in San Francisco Another important dynamic is the crash in new-home construction 5 years ago and the resultant reduction in new homes (mostly new condos) now available to purchase. As these units are highly sought after, this adds to the crunch in supply and the upward pressure on prices. As the city's economy and housing market has recovered, builders are jumping back into the market in a big way, but there is a significant lag time between the decision to build and the acquiring of permits and having new condos ready to sell to eager buyers. Supply & Demand Statistics Units for sale and Months Supply of Inventory: Probably at their lowest in decades. Percentage of San Francisco Home Listings Accepting Offers In many ways, this is the single clearest statistic regarding what's going on in the market. Average days on market have also plunged in May (not shown on this chart). Mortgage Interest Rates Interest rates just hit another historic low. Someone buying the same priced home now as in 2006-2007 would have a monthly mortgage payment approximately 25% lower. The Rent vs. Buy equation in the city has changed dramatically as interest rates have dropped and apartment rents have soared. Median Home Prices Around the Bay Area This is a companion to our recent San Francisco home-values-by-neighborhood maps. SF Mapped Values These statistics are based upon sales reported to the Multiple Listing Service (MLS) by June 4th. May data reported after that date will change the numbers but probably not significantly. We are always reluctant to make too much of statistical fluctuations over relatively short periods of time, but as virtually every statistic points to the same conclusion, we believe they indicate a genuine, substantiated trend in the market. Of course, the eruption of a new financial or political crisis could always significantly disrupt the market. All data herein is from sources deemed reliable but may contain errors and is subject to revision. June 2012 © Paragon Real Estate Group SF Open Homes | Market Dynamics Charts | Property Search | Calculators Contact me anytime for assistance, information and resources regarding living in San Francisco. Paragon Real Estate Group (415)738-7000 | (415)565-0500 | www.paragon-re.com Simone Koga DRE# 01897985 1400 Van Ness Avenue San Francisco, CA 94109 Direct (415) 738-7209 Fax (415) 738-7259 Simone@SimoneKoga.com http://simonekoga.com/

Beautifully Updated Studio in Lower Pacific Heights

Schedule a Showing/Request Info Search For Homes in Lower Pacific Heights San Francisco Homes For Sale Homes Close to Where You Work What is your home worth? Short Sale Homes For Sale Simone Koga Showing Agent - Paragon Real Estate Group 415-706-1586 simone@simonekoga.com MLS#: 392552 Information valid for the date of this posting only. Please contact us for the most current information and status of this property.

1730 Broderick Street #12 San Francisco, CA Scan with your smartphone & take me with you. Description Features Photos Maps & Local Schools Virtual Tour ***)))Beautifully Updated Studio in Charming neighborhood(((*** $ Click for current price 1 BATHROOMS (1 full) Sunny top-floor studio in beautiful Edwardian building is waiting for you!!!  Enjoy a custom-built sleeping alcove, hardwood floors, skylights, large storage space and classic architectural details.   Only steps to Laurel Village shops and restaurants as well as easy transportation. Listing Provided by Kristina Hansen and James Haywood- Paragon Real Estate Group L2L Property Websites WP

January 2012 Market Report

Real Estate Cycles and Turning Points January 2012 Update Statistics are generalities that may fluctuate for a number of reasons. All data herein is from sources deemed reliable but may contain errors and omissions and is subject to revision. These charts do not include sales not reported to MLS, such as occur in some new-development projects. How any statistic relates to the value of any specific property is unknown without further analysis. 2011 Unit Sales The number of sales as reported to MLS climbed about 7% in 2011 from 2010, bouncing back from the trough of 2009, though still far below the peak years. All SF property types saw increases in sales. However, if inventory had not been so drastically low all year long, the increase in unit sales would certainly have been much greater. click for larger image S&P Case-Shiller Home Price Index If Case-Shiller did an Index just for the city of San Francisco itself, instead of the 5-county “Metro Area,” we believe it would indicate a significantly greater recovery than indicated in this chart. San Francisco is strongly outperforming the markets in the other counties included in their local Index. (And SF itself only makes up a small percentage of that Index.) For a more detailed explanation of the S&P Case-Shiller Index: Case-Shiller Deciphered click for larger image Average Dollar per Square Foot Values Looking at the last 6 quarters, we see a very gradual increase from mid- 2010 of average-dollar-per-square-foot values for SF houses of $750,000 and above, except for the hiccup which occurred during the 3rd quarter of 2011 when the European debt crisis and the U.S. debt limit boondoggle greatly increased financial anxieties. The latest quarter saw the highest value, by a tad, since 2008. This chart also shows how the market is divided between the lower-priced housing segment (for SF) hard hit by distress sales and the mid-to-high priced segment which has been little affected by distress sales. Remember that quarterly fluctuations of average and median figures are not particularly meaningful – what are important are consistent longer term trends. click for larger image Percentage of Listings Accepting Offers The main 3 residential property types in the city have been hitting their highest percentages in recent memory for listings going into contract (accepting offers). This is a very clear graphic of the dynamic of very strong buyer demand meeting a very low inventory of homes available to purchase. The dip in the third quarter was, as mentioned, probably due to the burst of financial markets anxieties that occurred over the summer. click for larger image Sales Price to Original List Price This chart shows the enormous difference that proper pricing, preparation and marketing make in achieving the highest sales price in the lowest amount of time. Most of the homes that do sell actually accept offers relatively quickly at very close to, or even a little over, the list price. About half as many sell after price reductions, with big discounts on list price and large delays in closing the sale. And then, even in a market of strong buyer demand, about a third of listings expire or are withdrawn without selling, typically due to being perceived as overpriced. click for larger image Months Supply of Inventory (MSI) MSI measures how long it would take to sell the entire inventory of homes currently for sale, at existing market-activity rates. The lower the MSI, the stronger the demand as compared to supply: We don’t recall ever seeing overall MSI rates this low. As a comparison, the MSI in the United States as a whole right now is 7 months. In certain SF market segments, the MSI is down to 1.5 months or lower. In the 4th quarter, there was a story of one listing, admitted egregiously underpriced, receiving 26 offers – which gives an idea of the level of unsatisfied demand in some neighborhoods. click for larger image Number of Homes for Sale This chart tracks the number of homes listed as available on MLS on the last day of each month. It is true that inventory always plunges during the holidays and then starts to recover in January, but throughout 2011 the number of homes available to purchase in any given month has been far below the levels of previous years. And if one factors in the huge decline over the last few years in new-development condos on the market, it looks even worse. Inadequate to buyer demand, this has led to an increase in multiple offers and buyer stress -- and increasing values in some of the city’s neighborhoods. click for larger image SF Luxury Home Sales in 2011 Homes selling for $1,500,000 and above make up about 10% of San Francisco’s sales and this is a snapshot of where they occurred by neighborhood and property type. For houses, the biggest prices still come in the Pacific/ Presidio Heights area, where one mansion on Broadway sold for $29,500,000. For condos, the highest dollar-per-square-foot figures are found in Russian Hill and South Beach for luxury units with astounding views: a penthouse in the St. Regis in South Beach/ Yerba Buena sold for $28,000,000. But in number of sales, the central Noe Valley/ Castro/ Cole Valley district has grown immensely over the past 10 years and is now firmly established for a particular type of affluent buyer, many of whom want easier access to Silicon Valley. click for larger image SF Distress Home Sales As a percentage of sales, distress home sales peaked in January 2011; overall, they made up about 20% of total unit sales last year, but were largely clustered in certain neighborhoods, often in the less affluent areas of the city, and in the lower price ranges. To a large degree, they have not impacted values in many of the city’s more affluent central and northern districts. As seen here, the number of such listings has been markedly declining in 2011. Compared to other areas of the Bay Area, state and country, SF has been relatively unaffected by foreclosures, and so far the much dreaded “shadow inventory” of foreclosed-upon home listings has never arrived in the city. click for larger image SF Home Sales by Price Range The largest percentage of SF home sales occurs in the $500,000 to $750,000 range. One of the biggest changes over the past few years has been the enormous growth in unit sales in the under-$500,000 price segment, much of which has been driven by distress sales. Even from 2010 to 2011, the lower end price segment has increased as a percentage of sales – and this continues to impact overall median sales price, which is simply that price at which half the homes sold for more and half for less. click for larger image Average Days on Market (DOM) This chart shows the large difference in how long it takes to sell distress homes as compared to regular homes (about a month longer); the effect that pricing, preparing and marketing the home correctly can make in days on market (over two months); and the different speeds of sale for the 3 main residential property types. (Distress sales are not broken out for TICs, because they have been relatively unaffected by foreclosures.) General appeal homes that are effectively priced, presented and marketed often receive offers within 2-3 weeks of coming on market. click for larger image How Buyers Find the Homes They Purchase A simple graphic of how things have changed in real estate buying and marketing in the past 10 years. An effective marketing plan has to include very comprehensive components of high-quality online marketing and broker-to-broker marketing – this is what reaches by far the most buyers. Professionally taken real estate photos are now an absolute necessity since they are how most buyers and agents will first see and evaluate your home. (All Paragon listings are photographed by professional real estate photographers.) Effective neighborhood marketing and open houses come next. The value of print advertising in newspapers and real estate magazines has become negligible. click for larger image Mortgage Interest Rates Between the decline in prices since 2007-2008 and the decline in interest rates, the monthly cost of owning the same home has generally declined 30-40% in San Francisco over the past 4-5 years. (Chart below is from Bankrate.com.) Conversely, SF apartment rents have been increasing lately (especially due to the growth of high-tech employment). One of the standard ways economists evaluate whether a real estate market is correctly priced or not is by comparing the cost of renting vs. the cost of owning the same home. This equation has gone through a huge change since 2008. click for larger image ************************** “There are three kinds of lies: lies, damned lies and statistics.” Benjamin Disraeli  Statistics without informed context are usually worthless, easily manipulated and often misleading. One can make virtually any case -- positive or negative -- by choosing a single average or median statistic relating to a short period of time and a small data set, and then cherry picking what you’re comparing today’s data to (last month, last year, or the peak of the market). Conversely, too large a data set may be misleading: the overall national trend may misrepresent California’s, and the state’s can be different from the Bay Area’s, the Bay Area’s from the city’s, and within San Francisco itself, distinct neighborhoods are often different markets going in significantly different directions. In particular, absent some huge economic event, such as the September 2008 financial markets meltdown, monthly fluctuations in median home sales prices are usually meaningless. Median prices often fluctuate up and down within a 5 to 10% range from one month to the next, even in stable markets. One can only be sure market values are trending up or down if that trend is consistent over the longer term, minimally 4 to 6 months. Any definitive trend in prices and values should also be reflected in other market statistics such as average dollar per square foot, days on market, months’ supply of inventory, percentage of listings accepting offers, percentage of distress sales, and so on. When assessing market changes calculated by computerized algorithms using very general data sets – such as Case Shiller’s or Zillow’s -- one should be clear on the details. For example, the Case Shiller Index for “San Francisco” reflects an analysis of a “metro area” comprising 5 counties with wildly varying markets (Pinole to Pacific Heights). And for the city of San Francisco, one should look at the Case-Shiller “High Tier” price Index, not the general Index. It also makes sense to assume a sensible margin in error. As an egregious example, Zillow’s property valuations usually build in a 10-25% margin of error on either side of their “Zestimate” of value. A 1-3% value change indicated by the Case Shiller overall home Index for the SF metro area, then applied by a commentator to condo values in SOMA or house values in the Marina, should be taken with a grain of salt. Always look for consistent, longer term trends across a wide range of market quantifying statistics. MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. The median sales price for homes (in all their infinite variety) is not like the price for a share of stock (all the same), and monthly fluctuations in median price are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends. AVERAGE SALES PRICE is calculated by adding up all the sales prices and dividing by the number of sales. It is different from median sales price, but like medians, averages can be affected by other factors besides changes in value, such as fluctuations in average unit size. Averages may also be distorted by a few sales that are abnormally high or low, especially when the number of sales is low. Average sales prices are usually higher than median sales prices. DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market. MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a "Seller's market", 4-6 months a relatively balanced market, and above 6 months, a "Buyer's market." DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks -- though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. Generally speaking, about 60-80% of listings report square footage and dollar per square foot averages are calculated on these listings alone. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings. SAN FRANCISCO REALTOR DISTRICTS District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands District 5: Noe Valley, Eureka Valley (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin District 9: SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin. SF Open Homes | Property Search | Neighborhood Values Contact us anytime for assistance, information and resources regarding living in San Francisco. Paragon Real Estate Group (415)738-7000 | (415)565-0500 | www.paragon-re.com

The Process of Buying Your New Home- Getting PreApproved

The Process of Buying your New Home

Buyer is Loan Pre-Approved

So you've decided it's time to buy a home. You've outlined the important things you'd like in your home and found a great agent to work with you.

Time to hit the streets and start searching right?

Not quite yet.

There's a really important step that needs to be taken before you begin looking for you perfect home.

First, Get Pre-Approved for a mortgage.

I very frequently hear from new clients "Oh, I know I can get a loan.  No problem.  I've got great credit and I know my income is enough for what I'm looking for."  Well, when they finally find their perfect home and get started on the loan approval process they discover...hiccupps.  Here are a few common ones:

-There's an old medical collection account that you paid off but hasn't been updated with the credit beaureaus and you no longer credit qualify.  It'll be at least 30 days before everything's patched up.

-You find the perfect house that 5 couples love too.  You've got 24 hours to get your offer on the table but no pre-approval letter in sight.   No seller in San Francisco these days will take your offer seriously without a pre-approval letter and your offer goes out the window.

-While you make $100k a year,  you write off approximatley $15k in business expenses and didn't realize that banks now view your qualifying income as $85k and now your dream house is outside your price range.

These are just a few of the complications that can trip up the process.  The more information you have up front, the better.  You don't want to be disappointed by looking at homes that turn out to be outside your rice range.  You might also discover that you are able to look up in price without too much of a stretch after all.  Either way, it's good to know all your optinos before you're too far along in the process.

If you're ready to get started on your home search in San Francisco, I'm here to make the process smoother for you!

Let Me Help!

The Process of Buying Your First Home

The Process of Buying your New Home

Step 2: b) Find Your Agent

I told you I felt that part b was just as important as part a.  Here are a few things that a good agent will do for you:

• A good agent won't mind that you're not ready to buy "right now" 

• A good agent will take the time to help you learn the market 

• A good agent will never make decisions for you or push you to make decisions in a certain way. 

• A good agent will offer you an array of professional resources-from inspectors, and lawyers, to contractors and escrow agents. 

These are just a few of the things that a good agent provides you (I'll outline even more anothr day), but here's what your take away point should be--

 

If you don't choose any agent early on in the process, you may not end up with a "good agent".  It does take some time to find one that you feel comfortable working with and that you're sure can aggressively, and competently protect your interests and get you into the perfect home. Plus, if you choose an agent early on, you won't miss out on a lot of great things that agent can provide for you including education, guidance and resources.  It can be a lot to manage on your own.

 

Take the time to meet with a few agents and see which one best fits with you and your needs and will be able to provide you the best services throughout your entire home-buying process. 

 ----------------------------------------

If you're looking for an agent in San Francisco, contact me!

 

 

The Process of Buying Your First Home: Reviewing Needs, Wants, and Priorities

The Process of Buying your New Home 

Step 1:   a)  Review Your Home-buying Needs, Wants, Priorities

(There is a part b but that will come later)

           We'll focus today on the first half:

First things first.  You really need to pin down what it is that you need in a home, what you want in a home, and what you're willing to compromise when looking.

Do you absolutely need 2 bedrooms or will 1 bedroom with additional office space work for you?

If you found a great home that was perfect in every way but it was slightly further than you wanted to be from work, would it still be in the running?

A lot of times buyers start out thinking they know exactly what they want and need, but find that as they're searching, things they thought were necessary aren't quite as practical as they'd hoped.

Here's an example I've seen time and again. Many people are really attracted to the trendy live/work lofts that have popped up all over the SOMA district and they start their home-searches looking for the perfect loft for them.  After a while they start noticing that those wonderfully open spaces don't afford much privacy when guests come over and maybe an airy open condo could work just as well if not better.

(I'm not dissing lofts, cause I personally think they rock.  Just saying they're not for everyone!) 

Think about your daily routine and how your home is a part of that.  How will you use your space?  Do you grill outside a lot?  Spend ages in your closet picking out the perfect outfit?  Do you entertain often, or love cooking?

It's good to start thinking about these things early on, but don't worry, it's okay to change your mind.  Don't forget, the more you see, the more you'll learn about your own needs and wants, so keep your eyes open!

Condos in San Francisco

Condos

For many people the word conjures up images of large apartment complexes and high-rise buildings.  While these traditional condos do exist in San Francisco, newcomers to the area may be surprised at what else get's labeled Condo here in the city.

To clear things up, let's look at what condos are and how they work.

Condos: A group of units where each individual unit is individualy owned by a homeowner and the common areas within that group are owned and shared equally by all the homeowners of that group.

This collection of homeowners is often called a HomeOwner's Association, or HOA.  Collectively, this group decides how they would like to use and maintain the areas that they own in common.  To cover the costs of upkeep and maintenance, the group will often charge a fee of all the homeowners.  Sometimes these fees will cover things such as water, garbage, lawn maintenance, building insurance, or building amenities such as pools, gyms or doormen.  These HOA fees and what they cover vary greatly from group to group.

Back to San Francisco.  The same rules apply whether there are 250 units in a building or 2. Most condos here in San Francisco belong to smaller sized associations.  It's not uncommon to find condos in a 2 unit building.  In this case the HomeOwner's Association is comprised of the owners of the two units and that's it.  HOA fees are determined by them to cover what they feel is important in the maintenance of the building and common areas.

Whether you're looking for a high-rise or a smaller building, let me help you find the condo that's perfect for you!

Am I Ready to Buy My First Home - Conclusion, Do You Want To?

  Welcome to the conclusion of our Am I Ready to Buy My First Home series.  We've discussed whether staying in the same place was something you could do, whether you have the cash, the savings, and the credit to buy a home now, and if your current debt would harm you.  Now we come to the most important point in the series.

Do You Want to Own a Home?

For some people this is no brainer.  Of course I want to own a home, why would I be reading this if I didn't?  Great, you probably have the home-owning bug in you and one way or another, you'll find a way to get there.  If it's your dream, follow it all the way.  Being a home owner is incredibly rewarding for many people.

On the flip side, owning a home comes with a lot of responsibility.  Not everyone is cut out for it.  Even if all the numbers balance out and buying a home is a great financial move for you, if you're not ready to be responsible for your home, or if you don't want to bother with going through the process of becoming a home owner, don't do it.  It's plain and simple.  Take a minute to really think about whether owning a home is something you want or something others have told you you should want.

If you do want to own a home, work through the steps to get yourself in a great position to do so.

If you are ready to buy a home, or want to know if it's the right time for you,Let Me Help You!!!

Am I Ready to Buy My First Home - Part 5, Debt

Catch up with  Part 1, Part 2, and Part 3, and Part 4.

Continuing on...

Am I Ready to Buy My First Home

Do You Have Debt?

By now you may have realized that pleasing banks and lenders is really important when purchasing a home.  It pays to know what's on your credit report because you better believe lenders use every bit of it when making their decisions on who to give mortgages to.

Your FICO score isn't the only thing from your credit report that's important lenders.  They like to know how much of your hard earned income is going towards debt payments every month.  Let's say you make $8,000 a month in gross income.  Let's also say you have a $500/month car payment, a $700/month student loan payment, and $1000/month towards various credit and department store cards.  That equals $2200 in total debt payments every month, remember this cause we'll come back to it in a minute.

Here's where things get interesting.  Lenders look at your projected monthly housing payments: Principal+Interest+Taxes+Insurance (aka  PITI) and balance that against your income as well.  This ratio is called the front-end ratio and for FHA loans these days it can't equal more than 29% of your gross income.  This means with $8000/month coming in, the max PITI housing payment you could afford is $2320 every month.

Lenders will then add the rest of your debt (remember the $2200 from before) to your PITI so your total debt payments are all together.  In our scenario the total comes to $4520/month or 56.5% of your income.  Ouch.  For FHA loans  the maximum qualifying ratio is 41%. Looks like we'll have to pay down some credit cards, or sell the car, or make a lot more money if we want to buy a home right now.  Whether or not you want to is something we'll explore next time on...

Am I Ready to Buy My First Home.

Am I Ready to Buy My First Home - Part 4, The Magic Number, Do You Know It?

Welcome back to Am I Ready to Buy My First Home Catch up with Part 1, Part 2, and Part 3, 

and without any further ado...

Am I Ready to Buy My First Home - Part 4

The Magic Number, Do you know yours?

If you don't have the money to buy your home flat out, chances are you're going to some sort of lender to get the funds.  In the past, especially in the mid-200's, getting credit extended to you wasn't an insanely difficult thing to do.  Since the housing crash in 2008 though, it has been quite a bit harder to qualify for good loans.  We've discussed a few of the things banks look at, your job and income situation, your cash reserves.  Today, we'll focus on another big factor for the banks:  Your credit and your debt.

You've probably heard of a FICO score before now.  If you keep you bills payed on time, show you can handle debt responsibly, and keep your debt limits down, you'll have a higher score than someone who can't do those things.  You're shooting for a perfect score of 800 and the closer you can get to that, the more comfortablle lenders will feel with entrusting their funds into your hands.  Scores under 620 are considered too risky by most lenders these days, and quite a few frown on anything below 650.  I highly suggest checking your credit report a few times a year just to make sure nothing looks unusual.  It's not uncommon to find erroneous, or outdated information on a credit report and the faster you can have those items fixed or removed, the closer you are to getting into your first home.

Don't despair if your credit score isn't up to snuff right now, there are a number of strategies that you can use to help bump your number up a bit.  It may take a bit of sacrifice and some time but those numbers aren't fixed in stone and you can do something to put yourself in a better position to buy your first home.

Join us next time when we discuss what else might be important on your credit report as we continue to explore the question:

Am I Ready to Buy My First Home?

Am I Ready to Buy My First Home - Part 3

Let's plow onward with the Am I Ready to Buy My First Home series with Part 3. In case you missed it, here are links to   Part 1, and Part 2

Am I Ready to Buy My First Home - Part 3

What's In Your Piggy Bank?

These days, you cannot buy a home without ponying up some of your own cash. Gone are the days when you could finance an entire home purchase with a piggy back loan. Lenders want to see that their consumers have some of their own skin in the game.  Conventional loans will require at a minimum 10% of the purchase price as a downpayment.  FHA financing does allow for as little as 3.5% down but they are constantly debating whether they'll continue offering these programs.

That's not all the cash you'll need though.  There are a lot of extra fees that add up during a home sale transaction.  Fees for the lender, prepaid insurance, escrow and title fees, courier fees, recordation fees and a whole lot more.  These fees are called closing costs and typically can run between 2-4% of the total purchase price as well.  

That means that if you were buying a condo in San Francisco for $680,000 (average price right now in SF) you would need to have, at a bare minimum, 5.5% of that purchase price in liquid funds to become a proud homeowner. That's $37,400 and that's on the low end of the spectrum.

But you don't want to drain every penny out of your piggy bank right now, do you? Some lender's may require that you have a certain amount of reserves in the bank to cover your payments for a few months, should something happen.  Honestly, this is a great policy for you to adopt for yourself as well.  3-6 months of reserves will keep you from feeling pinched if a hiccup comes along in your life.  It's always a good idea to have a nice rainy day fund in place. 

Buying a home takes a big chunk of change, especially here in San Franicso.  It takes a bit of planning and saving, but if you know what you need and can set goals for yourself, you can find yourself in your very first home in no time.

Stay tuned for Part 4- coming soon.

Am I Ready to Buy My First Home - Part 2, Income

I'm continuing my series Am I Ready to Buy My First Home with Part 2 (If you missed part 1 you can check it out here)

 Am I Ready to Buy My First Home - Part 2

Is Your Income Steady?

This may seem extremely simplistic to some people but I'm going to break things down so we're all on the same page:

• Houses cost money
• If you don't have enough money to buy a house on your own, you'll need to borrow money
• Banks and other lenders have money that they lend out for people buying homes
• You must pay back this loan, and the interest that comes with it (a.k.a. a mortgage)
• Banks have a lot of rules on who they'll lend to based on how likely they feel they'll be paid back, in full
• You must appease the Lender Gods

The first thing banks will look at is what you're income stream looks like. For people that are steadily employed with a track record of employment behind them this isn't too difficult at all.  Show them a couple of your last pay-stubs and the last two years' tax returns and you're golden.

But what if your income depends a lot on bonuses that can vary year to year?  What if you're self-employed and things are just now starting to look great for you.  Well, you've got a tougher road to travel.  Typically, banks still want to see the last two years of records so they get a feel for what you can afford.  Just be aware that the paper work stack may be a lot thicker and you may have to provide a lot more evidence than the regularly employed.

Here's a quick little tidbit the self-employed may find useful.  If you grossed $200,000 last year but you wrote off $100,000 in expenses, guess what lenders will consider your qualifying income?  That's right, only $100,000.  I'm not a tax expert, and you should certainly consult yours about your own situation, but keep in mind that what may be good for you tax-wise, may hurt ability to qualify for a larger loan.

Join me for Part 3 as we take a look at a few other things lenders like in my Am I Ready to Buy My First Home Series

Am I Ready to Buy My First Home - Part 1

To Buy or Not to Buy

That is the question almost everyone faces at some point in their adult lives

Home ownership has been a long-standing dream of most American's but whether or not it is right for you, and if now is the time, well...that's something that should be considered carefully.  

There are several things you should consider before making this decision and I'm going to highlight a few of the major ones for you in my Am I Ready to Buy My First Home Series

Here we go with Part 1...

Are you staying put?

If your life involves moving from place to place every couple of years, and you expect to continue doing so, owning a home is probably not a great choice for you.  

Even if you were to make a profit every time you sold your home to move on, the process of selling your home and buying a new one every couple of years can be extremely draining.

While the San Francisco real estate market has seen some crazy growth spurts over the past several decades, there's always a significant gamble if one expects the equity in their home to grow in less than 5 years.  Historically, 5-7 year periods have overall growth rates that tend to exceed the rate of inflation.  

So if you're looking to buy, you should be looking to stay in the same place for the next 5+ years.

Stay tuned for Part 2 of Am I Ready to Buy My First Home, coming soon!

Rent Vs. Buy in San Francisco

Renting vs. Buying One of the standard ways to evaluate if a home market is valued correctly is to compare what it costs to rent a home versus to buy it. The Economist magazine, one of the earliest to predict the housing bubble, recently stated that based upon current rent vs. buy costs, U.S. homes are now slightly undervalued. In SF, rents have been climbing.

This analysis compares the average asking rent for a 2 bedroom SF apartment ($3350 per Rentbits.com), to the median price for a 2 BR, 2 BA condo in Noe Valley ($850k). (There is a full report that accompanies these charts.) Calculations vary hugely depending on assumptions regarding down payment, mortgage rate, future inflation & appreciation, closing costs and other financial criteria. Perform your own calculations at: 

Rent vs. Buy Calculator

Buying a Home in San Francisco?

Here's how I can help you buy a home in San Francisco:

I Make Sure You're In Control:  I'm here to inform and advise, but YOU are ultimately making the decisions.  You shouldn't feel rushed, pushed, or pulled into anything you aren't ready for, or don't fully understand.  It's just not my style to do any of those things to my client.

I Make Sure You Are Informed: Real estate transactions can be very complicated and the more you understand what's going on, the more in control you feel.  I want you to feel comfortable asking me any questions, no matter how basic or complex.

I Make Sure You're As Stress-Free As Possible: Let's face it, there's a lot to worry about during a real estate transaction.  I thrive under pressure, but you shouldn't have to feel it all on your shoulders.  I work hard to diffuse the chaos and help you feel as much peace as you can during the process.

I Make Sure You Have the Best of the Best:  Paragon has been dedicated to going above and beyond our clients' expectations from the start.  We're always exploring the leading edge of technology and making it work for our clients.  Our agents are constantly collaborating to find the best deals for our clients and to give them the best of many different styles.

Ready to buy a home in San Francisco?  Give me a call, I'm happy to help! Simone Koga Realtor-Paragon Real Estate Group 415-706-1586-cell 415-738-7259-fax simone@simonekoga.com http://simonekoga.com DRE#01897985