Minimum Property Requirements For VA Home Loans

There are plenty of advantages of having a VA home loan compared to a conventional mortgage, including a minimal down payment requirement, no Private Mortgage Insurance (PMI), and competitive interest rates. Most military members, veterans, National Guard members, and spouses of military members who died on active duty can apply for a VA loan and reap the rewards that come with some mortgages.

However, not only do you have to be eligible for this specialized type of home loan, so does your property. The reasons for this is to protect you against any unexpected and unpleasant surprises that can end up being very costly.

In order for a home to qualify for a VA home loan, it needs to meet Minimum Property Requirements (MRPs) to help ensure that military personnel and veterans have a safe place to live.

minimum-property-requirements-for-va-home-loans-featured

Access

The property you’re trying to obtain a VA mortgage to pay for must be accessible all year long, no matter how your next-door neighbor’s property is being used. There also needs to be adequate space between your home and the one next door to allow for sufficient maintenance of each building.

Residential Needs

VA appraisers will look at a number of things about the property before it is considered eligible for a VA home loan: it needs to have a space for living, sleeping, cooking and eating, as well as a bathroom.

Water, Sewer, and Mechanical Systems

Not only does the home have to provide an actual residential living space for the occupants, it also must pass certain requirements as far as its mechanical, sewer, and water systems are concerned. The property must have:

▪ Safe waste flow into a sewer or septic tank

▪ An adequate water supply that is continuous and safe to drink, and is sufficient for all its occupants if it is shared

▪ No more than four units that share a utility room, storage space, and laundry facilities

▪ A separate shut-off for gas, power, water and sewer

▪ An adequate and safe mechanical system

▪ Proper drainage away from the building with stable ground cover

Roof

The roof of the home can’t have any leaks, and if any repairs were done in the past, at least three layers of shingles had to have been removed before replacing the roof with new shingles. 

Attic and Crawl Space

These spaces need to have natural ventilation that is void of any dirt or dust, and have plenty of room for any ductwork, plumbing, and electrical repair.

Structure

The actual building itself needs to be in good shape. That means no termite damage, mold, rotting wood, broken windows, bad construction, moisture, or exposed electrical wires should be present.

The Bottom Line

Basically, the MPRs associated with VA home loans require that a home should be safe, sanitary, and structurally sound for those who live in it. A VA appraiser will need to assess the home and the lot it sits on to ensure that it meets these requirements before a VA home loan can be approved.

The Home Buying Transaction From Start to Finish

Before you get the keys to your new home, there are a few steps you’ll need to go through first. After you’ve got your credit and finances in order, got pre-approved for a mortgage, found a reputable real estate agent to work with, and found the home of your dreams, the actual real estate transaction can begin.

If you’ve never entered into a real estate contract before, these are the steps you’ll typically go through in succession.

the-home-buying-transaction-from-start-to-finish-featured

Making An Offer

All negotiations for the purchase and sale of real estate in California will typically be done via a written contract by way of a Residential Purchase Agreement. Your offer will be submitted to the seller through this completed document, which will include a number of components that can be negotiated, including your offer price, closing date, deposit amount, and contingencies, among others.

Be prepared for any one of these things to be negotiated by the seller. An offer is often followed by a counteroffer by the seller, which you can then counter again until an agreement can be reached that meets both parties’ needs.

Your real estate agent will make sure that the necessary contingencies are included in your purchase agreement to protect you. The most typical ones include financing and home inspections, which provide you with a certain amount of time after an offer is accepted for you to arrange for a mortgage and have a professional home inspector come into the home to identify any deficiencies, respectively. All of these items, as well as disclosure requirements and agreed-upon fees, are specified in the Residential Purchase Agreement.

Once the offer is accepted, all parties – including you, the seller, and real estate agents/brokers – must sign and date the contract. At that point, the contract is legally binding.

Entering Into a Representative Contract With Your Realtor

The California Association of Realtors (CAR) offers a standard contract that buyers enter into with their representing real estate agent: the Buyer Broker Representation Agreement. This form is an agreement between buyers and their real estate agents/brokers. It outlines what the real estate agent will do for you, and how you will be represented.

The agreement doesn’t make you obligated to the real estate agent for any services, even if the agent helps you find a home and a successful purchase agreement is entered into with a seller. Buyer representatives typically get paid through the seller or listing broker.

Even though it’s a contract, the Buyer Broker Representation Agreement can be canceled by the buyer or the agent at any time. There’s also an expiry date specified on the form, which outlines how long the agent will be representing you for.

Paying the Deposit

Once the purchase agreement is accepted and signed by you and the seller, you’ll have to provide the seller with a deposit check within the next day or so. This money is kept in an account by the listing broker, and is kept separate from any of the brokerage’s other accounts. On average, these deposit amounts are typically anywhere between 1% to 3% of the purchase price of the home. This money goes towards the down payment for the mortgage.

If, for whatever reason, the deal falls through, the deposit amount is either returned to you or kept by the seller, depending on the reason for the fallout. For instance, if you were unable to obtain approval for a mortgage and a financial contingency was included in the offer, you would typically get the deposit back. On the other hand, if no contingencies were included in the agreement and the home was sold firm, the seller often has the legal capability of keeping that deposit money.

Fulfilling the Contingencies

The majority of offers come equipped with contingencies, which can include any one of the following:

  • Financing
  • Home inspection
  • Appraisal
  • Clear title

After a purchase agreement is accepted by both you and the seller, you will be given a certain amount of time to fulfill the contingencies included in the offer. During this time, the home is said to be  ‘escrow.’ This is the time for you to get approved for a mortgage from the lender, get a home inspection completed, have a lawyer ensure the title is free and clear of any liens or other issues, or have the home appraised. 

Once these contingencies are fulfilled, the deal is done, and the title is transferred from the seller to yourself. However, if one or more contingency cannot be fulfilled by you, the deal is dead, and the home remains under title of the seller. 

Closing Day

If all goes well, the deal will close. This is when the title of the home is legally and officially transferred from the seller to yourself, legal documents are signed, the down payment and closing costs are paid, and the keys are handed over.

You will also be given a copy of an HUD-1 Settlement Statement, which specifies all the little detailed costs of the mortgage, including the interest rate, escrow fees, mortgage insurance, and title insurance fees, among others. A final copy of this document is a part of the closing of a real estate transaction. The lender is required to provide a Good Faith Estimate of the total amount due upon closing within three days of the loan application being received.

An Initial Escrow Settlement Statement is also due at closing, or within 45 days of closing, which outlines the amount that needs to be paid to cover taxes, insurance premiums, and other fees that need to be paid out from the escrow account throughout the mortgage’s first year.

The Bottom Line

The real estate transaction can be a very detailed, complex, and lengthy process, and it often is. That’s why a deal of this magnitude should only be made with the help of an experienced real estate agent licensed in the state of California. With this guidance and expertise, the transaction should be a smooth and streamlined one.

What You Need to Know About Dual Agency in a Real Estate Transaction

what-you-need-to-know-about-dual-agency-featured

In typical real estate transactions, buyers and sellers are usually represented by their own separate agents. Each agent has a fiduciary duty to protect the interests of their clients.

But what happens in a scenario when one single real estate agent represents both the buyer and the seller in a transaction?

It’s called “dual agency,” and it occurs when one realtor has the role of acting on behalf of opposing parties. It’s not very common, but it does happen. For instance, it can happen if a buyer who does not have an agent visits an open house and falls in love with the home, and the seller’s agent agrees to take on the buyer as a client. 

Dual agency also occurs when the buyer and seller each have their own separate agents, but both work for the same brokerage. This is more common with large agencies with lots of agents and listings.

Not every state in the country allows dual agency, but in California, it’s permitted as long as the buyer and seller are both made aware of the situation, and consent to it in writing. Before entering into a dual agency agreement, it’s critical to fully understand its legal implications and how it could impact your ability to get the best deal on a home purchase.

Obviously, the goal of a buyer is to pay the lowest amount for a home, while a seller’s goal is to get the highest possible amount. This is where it can get a little sticky when one agent represents both parties. How can a dual agent adequately represent both competing matters? Some situations can actually benefit from a dual agent, while other scenarios call for separate representation.

California’s Required Disclosure and Consent for Dual Agency Representations

In the state of California, buyers and sellers must obtain a written contract confirming the professional relationship and representation during a real estate transaction. Just about every broker in the state will present clients with a “Disclosure Regarding Real Estate Agency Relationships” document at some point before an offer is made on a property.

This form dictates the broker and agents involved in the real estate transaction, and outlines the duties of the buyer’s and seller’s agent, or an agent who represents both the parties – the dual agent.

The form will also describe the fact that all agents owe their clients a fiduciary duty to act in that party’s best interests, including being honest, acting in good faith, exercising reasonable care, and acting in full competence. The agents must also disclose all pertinent facts within the scope of the agent’s knowledge that would impact how desirable the property would be to the client.

Dual agents are in a precarious position: they need to walk a fine line that does not compromise either party’s best interests. Balancing these interests is essential, and failure to do so could put the agent at risk for infringing upon the fiduciary duty of one of the clients.

Why Would You Agree to Dual Agency?

Despite the potential downfalls of dual agency, there are some possible upsides to this scenario as well:

Streamlined process – A dual agency scenario can definitely streamline the home-buying process. When both buyers and sellers are working with the same agent, there’s one less schedule to have to work around. Documents can be signed more promptly, and all communications can be made more quickly. With one agent out of the picture, the entire process can be faster and easier.

Save on the commission – If there’s only one agent involved, the commission won’t have to be split two ways. Instead, a dual agent will keep the entire commission payment. As such, dual agents might be a little more willing to slightly reduce the commission, saving the seller (who typically pays this amount) a little bit of money.

The Bottom Line

Whether or not you agree to a dual agency, your decision should only be based on the specific details of your real estate transaction. Every situation is a little different; what may work in one situation may not necessarily work for another. For instance, if the market is somewhat slow, or you’re a newbie who’s just starting out on a home hunt, having your own separate representation might be best.

However, if the market is hot where you are, there could be a number of scenarios where dual agency can be considered, such as when you’ve done your homework and have a solid idea of what homes in the area are worth, or if you feel that you can get a better deal by using the same agent who’s representing the other party. Either way, make sure that the agent representing you has plenty of experience, and is a trustworthy figure who will ensure that your best interests are met.

Hottest Rental Markets to Buy Into in California

California has a ton of hot markets from top to bottom. There is plenty to choose from for any real estate investor looking to snatch up valuable properties to rent out for top dollar. Regardless of precisely what you’re looking for, the Golden State certainly offers plenty.

What real estate investors should be focusing on are markets with a common denominator: upward growth. Luckily, there are plenty of centers across the state that have been on this upward swing for a while now, and continue to be headed in the same direction. Getting in sooner rather than later can help investors reap the most rewards and solidify their return on investment.

hottest-rental-markets-to-buy-into-in-california-featured

Here are some solid markets to purchase rental property in California.

Irvine

Located in Orange Country, Irvine is an affluent city that boasts a ton of colleges and universities where students are constantly and actively seeking out places to rent out. With so many educational facilities in and around the area, there is a constant influx of students who typically rent a place if they choose not to live on campus. This in and of itself presents a unique and prime opportunity for investors.

Irvine is a wonderful city with a low crime rate, and offers residents a number of attractions and amenities. The driving force of rental growth in the city is the price of homes, which are continuing to increase year over year. As such, the majority of residents in the city are actually renting, which makes Irvine an excellent choice for investors who plan on buying and renting out their properties. Right now, the median rent price in Irvine is $2,316 per month.

Merced 

About 110 miles southeast of San Francisco lies Merced, a Central Valley California city that RealtyTrac boasts as one of the top markets in the entire country for investors to buy property to rent out. With a current median sale price for homes sitting at $189,000, it’s an affordable place to buy. The annual gross rental yield in Merced is a beefy 7.6%, which by any standards is considered quite high for investment purposes. Median rent checks collected currently stand at $1,201, which is quite impressive considering the rather affordable purchase price of the average home in the area.

Santa Clara

Thanks to the incredibly high demand to reside in gorgeous Santa Clara, rent prices here are among the highest in all of California at $2,925 per month. It’s heavily populated, yet has a low crime rate in comparison. Santa Clara is conveniently positioned and located in Silicon Valley, and is not terribly far from the large urban center of San Francisco. Upward growth seems to be continuing, though it’s uncertain how much further this will continue. As such, investors may want to short-list Santa Clara as more of a short-term real estate investment compared to the other centers on this list.

Oakland

Very close to San Francisco is the large urban center of Oakland, which is continuing to grow. Residents flock to this city because of its plentiful amenities and close proximity to San Fran without the same sky-high cost of living. That’s not to say that living in Oakland is cheap: median home prices are $619,800. Values have increased 12.5% over the past year, and are expected to increase another 3.3% within the next year.

Investors who snatch up properties while prices are on the uptrend can take advantage of this increase in value. In addition, they can also benefit from the handsome median rental price in the city of $2,760 per month. Rent prices in Oakland have realized the biggest increase in the area. That reason alone is enough for investors to buy into Oakland today.

Riverside

Riverside is currently experiencing a growth in its economy and employment opportunities, and is considered an excellent location for college and university education. For these reasons, people want to live here, which has a positive effect on demand.

Currently, the median home price in Riverside is $385,000, and values have been on the upswing over the past year. In fact, home values in the city have jumped 8.3% over the past year, and are continuing to climb. The average rent that investors can expect to collect in Riverside is $1,800 a month. which is rather decent considering the modest home prices in the area.

Bakersfield

Another great city in California to buy investment property in is Bakersfield. It has a large, growing population, as well as a healthy and diverse economy thanks in part to its successful oil production industry. While the $904 monthly median rent isn’t as expensive as some of the other cities on this list, it is growing year over year, and investors can still reap a sizeable ROI based on the median home price in the area of $212,000.

The Bottom Line

There are seemingly endless places throughout California to invest in rental properties. And with continued increases in home values and rents, landlords literally have their pick of the litter. The key is to team up with a seasoned real estate agent who is experienced in the investment niche of the housing market to guide you in the right direction.

6 Ways to Tell That a Buyer Isn’t Serious

Sellers don’t have a crystal ball to tell them who is going to bypass their homes and who is serious enough to put in a solid offer. However, buyers do exhibit certain traits and behaviors that will allow sellers and their agents to be able to distinguish those who just aren’t in the game. 

Keep an eye out for any of the following signs that likely point to a buyer who’s not serious about purchasing your home.

6-ways-to-tell-that-a-buyer-isnt-serious-featured

1. The Buyer Just Started Their Home Search

Most buyers don’t settle on the first house they see without continuing their search. If a buyer expresses interest in it but is only a few days into their search, you might want to take it with a grain of salt. It usually takes buyers about two or three months to find the home they want to buy after they’ve had the chance to see a variety of other properties. If they’re in the early stages of their house hunt, odds are not in your favor that they’ll be putting in an offer on your particular property.

2. The Buyer Makes a Ton of Empty Promises

Buyers can verbally tell you that they will likely be putting in an offer, but actions speak louder than words. If a specific buyer expresses a lot of interest in buying the home but no offer is coming in, that’s a sign that no offer will be received from that particular buyer. It’s likely that he or she is checking out other properties to compare to yours before finally putting in an offer, which might not be on your home.

3. The Buyer Hasn’t Been to a Mortgage Specialist Yet

Just because a buyer seems to be genuinely interested in your home doesn’t necessarily mean he or she can actually afford it. If buyers visit your home but haven’t even been to a mortgage broker to get the ball rolling with a pre-approval, they’re likely not anywhere near ready to make a firm purchase. 

6-ways-to-tell-that-a-buyer-isnt-serious-mortgage

4. The Buyer Rushes Through the Home Showing

A buyer who breezes through the home during a showing and leaves within a few short minutes is clearly not interested. Prospective buyers who are serious about a home will spend as much time as they can spare to meticulously go through every space and see exactly how it will work for them. Leaving the home quickly after entering without any questions isn’t a good sign. 

5. The Buyer Seems Overly Picky

Some buyers are just impossible to please. While some buyers may simply have in incredibly specific taste and are not easily won over, others may actually be looking for faults in the home to justify not putting in an offer. If all you’re hearing are complaints about minor little issues here and there, the buyer is probably not serious.

6. The Buyer Throws You a Really Lowball Offer

Many buyers will start the back-and-forth bantering with a price that’s often lower than the asking price. However, some lowball offers can be classified as completely preposterous, and are not a sign of good faith that the buyer absolutely wants the house. A serious buyer may offer under the asking price, but only within a justifiable range. If they’re definitely interested they’ll put their best foot forward to let the seller know that they are serious. If buyers are just tossing out a silly number, there’s likely no reason to further entertain the offer.

The Bottom Line

The game of real estate often involves a little psychology. Sizing up prospective buyers can give you some insight about who is serious about buying your home, and who’s just wasting your time. Luckily, your real estate agent will be experienced in deciphering who’s serious and who isn’t. If you’re selling your home, be on the lookout for any buyer who displays any of the above traits.

4 Ways Smart Technology is Evolving Home Security

Keeping your home safe is a crucial component to being a homeowner. After all, we’ve all got locks on our doors and windows for a reason. Other homeowners have added other layers of protection, including installing security cameras or alarm systems. While these are very helpful, home security systems have evolved a great deal over the years thanks to the emergence of digital technology.

A number of key advancements have emerged and shaped the modern home security market, providing homeowners with much more convenient and efficient means of keeping their homes safe.

4-ways-smart-technology-is-evolving-home-security-featured

1. Remote Monitoring

Today, homeowners have the ability to keep tabs on their homes even when they are not there. Whether you’re at work, running errands, picking the kids up from school, or even away on vacation, you can still monitor your home remotely thanks to real-time videos and images of what’s happening at home. Innovative features of today’s remote monitoring systems now offer homeowners with the capability of arming and disarming home security systems, stream security camera feeds, and even send alerts of a fire, flood, or break-in.

2. Recognition Technology

The realm of biometrics is now playing a role in the world of home security. Now, you have the option to arm or disarm your home using a part of your body. With this sort of security system, homeowners are offered hands-free authentication using their fingerprints, faces, eyes, or voices.

Since no two individuals have these exact same features, recognition technology is quickly becoming one of the most effective security systems today. Authorized persons have their features stored in a database, which means only the person him- or herself is needed to disarm or arm a home. While recognition technology is still somewhat in its growing stages, it’s quickly gaining speed and popularity among savvy homeowners.

4-ways-smart-technology-is-evolving-home-security-eyes

3. Sensor Technology

Sensor technology has been around for a while, but has evolved to become more efficient than ever before. Motion detectors, in particular, have long been heavily used among many homeowners in an effort to protect the home from intruders. These devices detect any movement in the sensor’s vicinity, which is very useful when the home is unoccupied at any given moment.

Also falling within this category are infrared cameras, which read thermal heat signatures of a moving body close by. These cameras have become so innovative that they can even detect heat signatures from as far away as 10 miles.

4. Smartphone Apps

These days, there seems to be an app for just about anything. Whether it’s to play games online, tally up daily caloric intake, or quickly reserve a taxi ride, apps have become heavily depended on in just about every realm you can think of.

In addition to these purposes, smartphone apps are also being used for home security. More specifically, apps are available that will allow you to unlock your front door as soon as you – and your smartphone – get close to your home. You can use this app on more than one phone if there are more family members living there. Each household member can have the app downloaded on their phone to provide easy and secure access to the property and keep the home secure when you’re not there.

4-ways-smart-technology-is-evolving-home-security-phone

The Bottom Line

There’s never been an easier, more effective way to keep your home secure than today. With the advent of digital technology, homeowners have plenty of innovative options when it comes to arming their homes. Not only are the above technologies keeping homes safer, they’re also making it a lot easier and more convenient for homeowners to protect their properties.