Your choices are endless, and opportunity surrounds you. Home Buyers in California have an abundant supply of homes to search from while looking for a new home.
Unfortunately, California Real Estate markets are notoriously seller favored, as demand in this area typically exceeds supply. With a little planning and forethought, you can turn this to your advantage as you pursue your new home. The key will to be better prepared, and better educated with regard to your potential new home than most other buyers are.
Being better educated puts you in a position to better understand the strengths and weaknesses of any property you may be interested in, and to use that to your advantage as potential buyer.
Common difficulties occur when trying to organize your search, make financial arrangements, or tendering highly acceptable offers. Each of these is crucial to getting your very best results, and is addressed in its own section of this article.
Real Estate Markets in California move at breakneck speeds and require a methodical approach to get the very best home you can get for your hard earned money. Take the time to read and follow the recommendations in this article. It will make the difference between getting a mediocre home, and getting a fabulous one that you really love.
If appropriate, read this article one section or subject at a time. This is some of the best information you will find that addresses how to position yourself and your activities for best and most effective use of your time, talents, and efforts while searching for a new home.
Start With The Right Tools
We recommend the following to get yourself ready for an intensive search for a new home:
Buy a Thomas Guide Map Book: Thomas guides are used by all Real Estate Agents to establish a home's proximity. All home listings contain a TG# field that will tell you what Thomas Guide page and grid the home is located on. Use of these maps will help you to quickly determine a homes proximity and whether or not it is in your target area.
Thomas Guides include very detailed information about streets and highways, Zip Code boundaries, City and County boundaries, and locations of typical landmarks and large civic structures.
Find a good Internet Search Engine: Internet search engines for homes are everywhere, including this website. The most authoritative ones are the ones you find on local Realtor websites and usually allow you to search directly from their own Realtor association listings (like ours does). This type of search engine will show you all of the homes currently offered for sale by Realtor's in the areas that you are searching.
If you are searching a larger area that spans multiple counties we recommend using www.realtor.com . However, Realtor.com does not have the accuracy of a local listing service, so we really recommend a site like ours once you know what area you want to search (our search engine covers the entire Inland Empire, for both Riverside and San Bernardino Counties).
Tune into popular home sale publications. Every area of the country has popular "home for sale" publications that list homes for sale in that area. They are typically advertising vehicles for Realtors. Reading of these publications is a great way to get a feel for an area, although they are notoriously short on information. Many will not have pricing in them, and frequently do not include addresses. In the Inland empire you will need to find the "Home Seller" published by the Press Enterprise. It is available as a supplement to the Press Enterprises normal Saturday edition. The Home Seller also sponsors a smaller free version that can be obtained from various free periodical racks around town.
Take the time to compile a list of "must have" items, and a list of "would like to have items". Then prioritize this list. Don't rely on conversations to align priorities, write them down so everyone working on your project with you is aligned properly with your priorities.
Almost every home will be missing something. It helps to have everyone (Realtor, family members, etc..) working toward the same set of goals.
Organize and Focus your search
Organize your search: Keep copies of the homes you like in one central location (you can save favorite properties under your userid on this website). This will allow you to follow up and track your progress as you get questions answered and get closer to determining if you would like to schedule a visit to the home. Always keep track of things like taxes, association fees, commute distances, and Mello Roos to factor into your cost for the home.
We recommend keeping these notes here on our website under our "Saved Properties" section (you must be a registered member to access this section). We have provided a place within each saved property for your personal notes.
Narrow Your Search: Each individual neighborhood and city has its own relative property values, and there are literally thousands of listings in each city. Narrowing your search to individual cities, zip codes, and neighborhoods allows you to get a relative sense of what the homes in that area are worth.
Having a relative sense of the value in an area gives you the ability to quickly eliminate homes that don't present the right value for you. Parameters like garage requirements, bedroom requirements, bathroom requirements, and square footage requirements help even more.
We recommend saving these search parameters so that you can constantly be reusing the same ones. It may be appropriate to keep a few different sets of search parameters if you are looking in more than one area, or for more than one type of property. Searches entered into our search engine can be saved under any name you want to use, and reused with one mouse click whenever you are ready to use them.
Enlist the help of a professional: Find a good Realtor to assist you in this effort. Realtors are compensated from commissions paid by home sellers and cost buyers nothing. This provides you with a way to hire a seasoned professional worth thousands of dollars without spending a penny. In spite of the fact that they are compensated by the home seller, California law requires them to be YOUR representative/agent as long as they are not also selling the home you are planning to purchase.
Realtors can bring very intense focus to your search. The range of tools they have available to them and the experience they provide make a tremendous difference in maximizing your own efficiency. They also tend to have extensive contacts within the industry to bring to the table in assisting you with your search and transaction(contractors, loan agents, appraisers, home inspectors, etc...).
Sign up for neighborhood specific notification of New Homes: Realtors in the Inland Empire can sign you up for notification of new homes listed in this area as soon as they become available. They can focus this notification to specific Thomas Guide Grids, and can use any other search parameter you can enter into a search engine. This will get you the information SOONER than it will get to most Realtors, who at best tend to check new listings daily.
Get Your Financing Ready
We just can't tell you how many times we have had a good qualified buyer, who makes a very good offer, get their offer rejected because they had not yet taken the time to arrange their financing. This is a critical step to preparation for engaging in a home search, even though it has no bearing on the search itself. It enables you to act quickly once you find an opportunity and want to move forward.
Pre-qualify vs. Pre-approval.
Pre-qualifying is the process of engaging a loan officer and discussing your qualifications. Some will run credit reports to verify your credit history. When this process is complete, the loan officer will provide you with a letter stating that you are prequalified, and the amount you are prequalified for.
Pre-approval starts with pre-qualifying, then proceeds to the next step. You will submit a formal loan application stating your assets and liabilities (what you own, and what you owe) along with proof of any income of cash assets.
This application will be forwarded to the loan company's underwriting staff, who are responsible for approving loans. They will go through all the normal processes of approving the loan application, except for those parts that relate to approving the specific home (appraisals and risk assessments on the home itself).
When this process is complete, they will provide you with a letter stating that you are pre-approved, and that they are prepared to lend you the amount you are pre-approved for. This is a loan approval in process, not a completed loan approval. To complete it you must provide an acceptable home that meets with the loan companies expectations and risk assessments.
Understand the difference:
Loan officers who take your application and process pre-qualifications are not authorized to approve loans. They do not go through the process of verifying your application or assessing the loan company's risk. A Pre-qualification letter is based on the information you provide the loan officer only, and perhaps some rudimentary verification (credit reports, employment verification, etc...). It is the opinion of the loan officer that you should be able to obtain financing.
Pre-approvals on the other hand, are verification of a decision made by a lender's underwriters to loan you money, subject to your completion of their process by providing an acceptable home. In other words, your ability to obtain financing is no longer in question, providing you submit a home to them they can approve the financing for.
Why Does this Matter?
Read our next section on preparing offers...
Prepare Your Offer Now
Desirable homes in Southern California tend to receive multiple offers during the time they remain listed. Demand constantly exceeds supply, and growth projections for the next few years in the Inland Empire show this will continue (and get a little worse).
This forces home buyers to compete for the available homes in this market. If you find a home you think is desirable, others have found it too, and will most likely submit offers to the seller to buy it. In a multiple offer situation, everything you can do to increase the quality and presentation of your offer reaps tremendous rewards.
Offers will generally be ranked on three major categories: Offer Price (and terms), Buyer credentials, and probability of closing Escrow on time (or at all).
The seller has hired an Agent to sell their home, and will usually avail themselves of that Agents experience in evaluating the quality of the offers they receive. They want to sell their home, but can't afford failed escrows and the time they involve (30 to 60 days on average). We frequently see high value offers rejected due to lack of Buyer credentials, and subsequent uncertainty about the probability of closing escrow.
That was a mouthful, what does this mean to me?
This means that every home seller out there is looking at both the amount of your offer, and your ability to deliver on what you offer. Price alone will not dictate acceptance, your financing status and ability to close will be carefully measured as well.
Clearly you can't prepare an offer on a specific home now, but having your credentials in order and ready to present puts you ahead of the game. Taking the time to prepare a statement (it will resemble a financial resume) of your financial credentials optimizes your ability to respond quickly when you find a home you like, and to do so in a manner that presents you VERY well to the seller. They will notice the difference between your offers and any others they receive.
Preparing Your Personal Credentials
Your Personal Credentials statement should include the following:
Your name
Your financing status, preapproved or prequalified, along with the contact information for your loan officer. Attach a copy of the letter from your loan officer to the back of your credential statement.
Your credit score from at least one major credit reporting company, but would be better to have all three. If you have copies of reports from these companies, attach them to the back of your credentials with ALL personal information except your name whited out. Do not include any pages with personal credit history or analysis, they should list CREDIT SCORES ONLY
Proof of reserves to complete the transaction (remember - they want to be sure you can pay your escrow costs and down payment), and where that cash is (what banks, equity companies or gift amounts if relatives are helping you - DO NOT supply account numbers). Attach the most recent copies of statements from these companies, with the account numbers whited out to the back of your credentials.
What assets, if any, you plan to use in the transaction, for example list your home if you plan to sell it in order to buy their home. If the home is currently listed and for sale, provide the listing Agents Name (No Contact Information - don't offend the sellers agent) and the MLS number and area the home is listed under. If it is not yet for sale, attach a copy of your last property tax bill to the back of your credentials (proof of ownership). If you do not have a copy of your last property tax bill, your Realtor can obtain the relevant information for you.
A statement of confidentiality prohibiting the seller, his agent or any other party from copying or redistributing your credentials and attachments, and requiring that they return them to you, or to your agent via normal mail should your offer not be accepted
This Credentials Resume is highly personal and should not be broadly distributed. You may want to leave a copy with your Realtor/Agent for quick preparation of any offers.
Be sure to type it out on one page, and each section listed above should be a subtitled in bold for quick reference.
Lets Get Started!
Lets take a moment and review:
- California Real Estate Markets favour Home Sellers
- Educated, Well prepared buyers Stand Out
- Organizing and Concentrating your efforts leads to better opportunities
- Pre Preparation of your own credentials leads to higher acceptance rates among sellers
- Well Prepared Buyers get better homes!
Even in our high priced home markets, there are still homes that present better value than others do. Following the recommendations in this article you will find them, know how to present your best offer (both for you and the seller), and have a better chance of acquiring them.
Take advantage of us! There is NO downside to using a Realtor in your search for a new home. We work for the compensation paid by the home sellers, and are legally bound to represent YOU and protect your best interests as a home buyer. We can help in all aspects of this process, including signing you up for notification of news homes that are listed, as they are listed, in our local Realtor's MLS system.
We understand that not everyone is ready to move now, some are months or even a year from making that decision. We also know that in time you will be ready, and we want to get you off on the right foot now toward getting the best home you can acquire when the time is right.
Take a few moments and call us. We will take that time to see how we can best assist you, and to offer our best advice and counsel on how you should proceed in your planning. That few moments will help you to better focus your areas of interest, and start the process of concentrating your search efforts.
We look forward to hearing from you.
Steve Graham
Virtual Realty
1121 Pampas Circle
Corona, California
(951) 833-5818