Buying your first home – Where to start??

January is such a great month.  It’s the month with the most opportunity.  Resolutions having us taking a look within to see what changes we can make to our lives and planning for the next 11 months.  For many January is the month where they say, “This will be the year we buy our first home.”  Although buying a home can be a very exciting time, it can be a bit nerve racking as well.  Can you get a loan?  How much money can you put down?  What will you be able to afford?  How do you know you are buying the right house?  All questions that first time home buyers face.  So where do you start? 

My suggestion is to first think about what you are comfortable paying a month for housing.  For many that is the amount of rent they pay plus that amount they seem to easily accumulate at the end of each month.  If you are married or plan to buy the house with someone it may be the combination of your rents.  Whatever the case know what you are comfortable paying, and then find out what that translates to in home prices.  Some may say that you shouldn’t be a payment buyer, but let’s be realistic!  For many of us we look at things in terms of how much we make in a month and how much we spend in a month.  I’m not saying you should determine what you “could” afford in a monthly payment and then go about making sure you spend every dollar of that money.  Just know what payment is comfortable for you.  You can contact just about any Realtor or mortgage broker and just tell them the payment you feel you could comfortably pay and they will give you a ballpark on what type of house that would buy. 

While you are on the phone talking that over with a mortgage broker, get qualified!  Yes, get qualified BEFORE you got about finding a house.  There are many reasons to do this.  The first is it gives you a realistic idea of what you could buy.  There is no sense looking at $500,000 houses when you have no chance of buying a house that expensive.  Conversely, I have worked with people who were surprised that they could buy more house than they expected.  Again, I’m not saying you need to buy more than you are comfortable with, but just having the knowledge is good.  The other reason to meet with your mortgage broker first is to give you a Pre Qual letter.  Although a Pre Qual letter isn’t a sure thing, lock it in, the loan is a no brainer, it does give your potential seller a good idea that you are legit.  It shows the seller you have been to, and are working with, a loan officer and should have an idea that you can obtain a loan.  Once you have done this you are now ready to start looking at houses!  As a Realtor I think this is the fun part!

As many as 80% of all buyers start looking for homes on the internet.  Websites like Zillow.com and Realtor.com are good places to start, and in some places the local board of Realtors may have a similar site that allows you to see most any home listed in the Multiple Listing Service for the area.  Even though I am a Realtor I encourage people to start on the internet.  Look at some pictures.  See what style you like.  Narrow down some houses you think look good, and then give a guy like me a call.  What I can do is get you into all of those homes, and that is crucially important because, as you will soon learn, pictures can be quite misleading!  I’ve seen pictures of houses that I just couldn’t believe were in a price range only to get out to the house and have a reality check.  And truthfully, I’ve taken pictures where, when showing a house, the prospective buyer comments something like, “Well, it’s okay, but it isn’t as nice as the pictures!”  One reason for this is that many Realtors (myself included) use a wide angle lense which can drastically improve the look of a room because it makes it look so much larger. 

Should you use a Realtor or go it alone?  Well, as a Realtor, I bet you can guess what I think, but let me explain why.  To you, as a buyer, my services are essentially free.  You are probably thinking that although I may say that the cost of paying me is coming from the seller, and hence the buyer is still getting stuck with the cost.  Good point, but you are wrong.  Most Realtors will prepare a listing agreement and indicate the percentage or cost to sell the house in advance.  For instance:  You are selling your home for $100,000 and I will list it for 6% (3% is my listing fee and 3% goes to the agent that brings the buyer).  If a buyer sees the sign or calls off the internet and does not have a Realtor I, as the listing agent, brought that buyer.  I may not represent the buyer, but my advertising dollars got them to us.  I am then entitled to the entire 6%.  So the seller is paying 6% (in this scenerio) regardless.  The listing agent isn’t going to pass off the saving (in most cases) to the buyer.  Why should they?  So it only makes sense to use someone who knows more about the process than you.  Yes, Realtors know more than you do.  It’s not a big deal, just relax.

So where do you start when buying your first home?  1) Mortgage Broker – Get qualified and informed.  2) Realtor – Have help getting the most for your money!

If I can help you buy your first home, CONTACT me!  I’d love to work with you!

CHRIS COWLEY
www.ChrisCowley.com
210-389-606
Chris@ChrisCowley.com

Builders going out of business – Buyer Beware…or not

Just yesterday I took a client to a Kimball Hill neighborhood in Alamo Ranch, which in in San Antonio, TX.  We were actually just trying to get her an idea of what her $150k of buyer power could pull in during a buyer’s market.  As we walked into the model home she whispered to me, “There is no way I can afford to live in this area!”  I asked her to just hang with me and see what the on-site sales guy could show us.  He jumped right into his sales pitch, which I might add was nicely done without any pushiness, and proceeded to direct us to a home built on speculation that was about 1600 square feet and was originally listed at about $160k.  He then told us that because Kimball Hill was shutting down operations the home was discounted to $139k, well within my client’s budget.  The only problem – she didn’t fall in love with the house.  It was nice, no doubt.  The neighborhood offered more than she thought she could get, but the fact was the house just didn’t “do it” for her.  I took a look at list of available homes and saw one that was 1900 square feet and had originally been listed at $189k, but was marked down to $157k.  No too far out of our range, but still a stretch and really more than we were comfortable with paying.  The on-site guy said there was an additional 2% he could take off any home so we were getting closer.  “Let’s just check it out,” I suggested.  The home was AWESOME!  The floor plan was just right, the ceilings were taller than the first house, it had a study, and upgrades galore.  Now our only problem was the price.  $150k was the absolute top my client wanted to spend, and I could tell that would make her uncomfortable.  On top of that we weren’t looking to buy something ready so soon as my client is in a lease, but she just fell in love with a great house.  So what did we do?  We made an offer.  Our offer was $145k with a $1200 lease buyout.  That would get my client out of her lease without any additional funds coming from her pocket and put the house in a much more comfortable range for her.  And guess what – They accepted the deal just as we wanted!  Why?  Because Kimball Hill is going out of business.  Just like when any store goes out of business things are on big-time sale.  This house was originally priced nearly $45k more than she will end up paying. 

My point – Just because a builder is going out of business, don’t shy away from a potentially good deal!!

What to remember: 
You need to remember that the builder is going out of business so if you have an issue with the house after you close they will NOT be around to help you out.  With this in mind, MAKE SURE they have purchased a third party warranty for you.  The warranty my client is getting is actually BETTER than most builder warranties. 
You also need to remember the importance of a third party inspector.  The builder will still be in business when we close so before that we will have a third party inspector go through the house and identify any items that need correcting.  Between that and the warranty we should be in as good a shape as we could hope for, because at some point any builder could make an announcement that would prevent them from being around in future.

This is a tough real estate market.  Many builders jumped in when the getting was good, but now that money is not being thrown around like before they just can’t make it.  Maybe you can make a deal that would put you in a home or neighborhood you previously thought was way too expensive for you.  Always work with a qualified Realtor who can guide you through the process, make sure the builder offer a warranty from a THIRD PARTY, and never buy a house without an inspection from an inspector you hire (not just one a builder offers). 

If you live in San Antonio, TX and are looking to buy a new home, or a pre-owned home, I’d love to work with you to make sure you get the best home you can afford.  PLEASE, call or email me anytime!

CHRIS COWLEY
www.CHRISCOWLEY.com
210-389-6006
chris@chriscowley.c0m

The Debate Rages on…

I’ve lived in San Antonio, TX for nearly 9 years, and all of that time I have worked in the real estate industry so I have met a lot of people moving to our fine city. There seems to be debate on what can be a very sensitive subject for some of the people who live here. The aggrevation seems to be greater among those people who were born and raised here. That is the use of San Antone instead of the city’s full, and proper name, of San Antonio. I know this seems trivial if you are not from here, and just being here 9 years, I must admit, the argument is a bit lost on me, but it is a serious one.
Now it may seem odd that someone who hasn’t lived here their entire life has figured out the long-time gripe, but I have.
Here is how it is:
1) If you live here you cannot call San Antonio “San Antone”.
2) San Antone can be used in any song that speaks favorably of the city because it’s just too darn difficult to rhyme anything with San Antonio.
3) If you do NOT live, but have a deep admiration for the city and are speaking of the city graciously you can call San Antonio “San Antone”. This is especially the case if you are old. Old people often call it San Antone and that’s just fine.
The main thing to keep in mind is that it is NOT okay to call San Antonio “San Antone” if you are not doing so in a kind way. I have never heard of anyone doing this though so most of you are okay.
It is my sincerest hope that this clears up the debate and folks can now understand the rules.
Since there is no spell check feature available on this Quick Press I’m sure this will be full of mis-spelled words, but I think you get the message.
Chris Cowley
http://www.ChrisCowley.com
210-389-6006
Maybe sometime we’ll discuss why Bexar is pronounced like “bear”, or why it is not ok to call West Ave, “West” without the “Ave”. Who knows?

$7500 Tax Credit for Home Buyers – What’s the catch??

Is anyone else out there just a little sceptical of what the government says or does?  Well I am now more of a skeptic of both sides of the political isle than I have ever been so when I hear there is a “tax credit” for first time home buyers I want to know what the catch is.  Here is some decent information I found on this so-called “tax credit”:

The “first-time home buyer credit” is a temporary refundable, repayable tax credit equal to 10% of the purchase price of a home, up to $7,500 for singles and married couples filing jointly. (Singles who buy a house together get only $3,750 each, as do married couples filing their tax returns separately.) […]

But the way the credit works, it’s actually more like an interest-free loan. Two years after you claim this credit, you have to start paying it back. The payback comes over 15 years in 15 equal installments–meaning you owe an extra $500 on your tax return each year. Sell your house, and you have to pay the rest back that year from your profits. (No profits, no pay back. Also, if you die, your heirs are off the hook.)

The allowed credit starts being reduced once a single has $75,000 of modified adjusted gross income, or once a couple has $150,000 of income. The credit goes away entirely at $95,000 for singles and $170,000 for couples.

So what you really get is a tax free loan.  That little bit of info is not on the main page of the website.  If you go to the FAQ section all the way down to number 16 you get:

Does the credit have to be paid back to the government? If so, what are the payback provisions?
Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

I’m not saying this isn’t something you should look into if you are going to, “close on your new house between April 9, 2008 and July 1, 2009.”  It may be a tool that is beneficial, but just remember that when you buy owe $150,000 on your house and sell it for $200,000 you will now not only have to pay Realtor fees and closing costs, but you will also have to pay back $7500 you “borrowed” which might leave you with something more like $24,500 profit when you are clearly expecting more. 

If you are a first time home buyer in San Antonio, TX please call me to help you navigate your way through buying your first home! 

Chris Cowley
210-389-6006
www.ChrisCowley.com

Is Real Estate Dead?

As a real estate agent I often think that my day to day activities are a good indication of what is going on in the world of real estate.  Why?  Because if I start getting calls from more and more people that they want to buy investment properties then I know other agents are as well.  So if more of us are getting those calls then I know there will, at some time there will be a shortage of investment properties on the market, or prices will rise.  On the other side, if my phone ain’t ringing then I know others’ are not either.  That or I am bound to go out of business. 

So what I am seeing in the real estate market?  The year has been an unusual one to say the least.  I’ve had 2 great months, a couple pretty good months, and I’ve had some months where I thought I wouldn’t ever see a closing again.  The one thing I think I have noticed most of all is that every time I think I’m dead in the water something happens to keep us going.  The phone rings with someone unexpectedly wanting to buy a house, I get an email from an agent on a listing that hasn’t had the showings it needs, etc. 

I certainly feels like we have hit the bottom.  Several months ago guys like Jim Kramer were saying that if you bought a house you would lose money, but now he is saying to not put money in the stock market and refi your house or go out and buy a new one.  Why?  Because investors make a living by buying things on sale.  We all know the saying buy low and sell high, but so few of us do that.  There is a section in the book The Purple Cow that talks about that to some extent.  Now, I’m totally paraphrasing here because I’m not really good on retention, but you have Trailblazers and they are the few who do the research and take the risk.  Trailblazers go out and buy a property when NOBODY else is.  They hold it and sell it and make a ton of money on it, and then they tell some friends about it.  Enough of those people (the general masses) start learning about this, but they are afraid to jump in.  More and more people slowly start doing it before the general masses do.  So by the time the general masses jump in and buy you are no longer “low”.  You are more like “mid” or “mid-high”.  That causes a problem because everything goes in cycles and, at some point, the market will take a down turn.  Now the Trailblazers that bought first aren’t too worried about it because they bought so LOW that even after the beginnings of the downturn they can sell at a profit.  A big chunk of the general masses cannot because they bought too high when things were sold at a premium.  So when should you buy?  Discount?  Or Premium?  Well, DISCOUNTS ARE OUT THERE RIGHT NOW!  HELLO!!

I often tell people that years from now you will look back on this time and say, “Man, had I bought that house I’d have made a bunch of mone!”  I totally think that is true.

If you are considering buying check out my website for more information, and if you are in San Antonio, TX and want to work with me, CALL ME!  EMAIL ME!  FLAG ME DOWN ON THE STREET!  That is what I am here to do!

Chris Cowley
www.ChrisCowley.com
210-389-6006

Can You Still Invest in Real Estate?

Ah remember the days of not so long ago when you could put a house under contract, let the builder build it and then sell it someone else for several times what you put it under contract for when you started?  In most cases those days are gone!  GONE!  So now real estate is a terrible investment choice, right?  Well, maybe not.

That strategy worked nicely when we were in a seller’s market.  It works until the market tops out and then you don’t see the rise in price you need to make the big bucks when it is time to sell, and in some cases (or parts of the country) the house may be worth less when you close on it than when you put it under contract!  The problem came when too many people got in on the action.   You had school teachers buying up properties to flip, and you had some properties that flipped many times and nobody ever lived in them!  It was crazy.  The way it worked was as long as the house gained appreciation nobody could lose! 

Now the charting line is going the other direction and this strategy can no longer yield returns.  So do you scrap investing in real estate all together?  I would say, “NO!”  What you have to do though is look at your local market (REAL ESTATE IS EXTREMELY LOCAL), look at what appears to have bottomed out price wise, buy it, and hold it for the length of time needed for it to gain value.  You may be thinking, “WHAT A TERRIBLE IDEA!”  But what if you can take a property that has nearly bottomed out and negotiate from there with the seller.  Essentially tell the seller that you understand they have the property priced to sell, but you still need an additional discount to buy it.  Then you have taken the property and added immediate value.  That value you can then reap when you sell.  This may sound strange to you, but this is how investors played the investing game for years before the last boom. 

• LOCATE A PROPERTY
• BUY IT AT A LARGE DISCOUNT
• ADD VALUE TO IT
• SELL

LOCATE A PROPERTY:  There are probably many properties available in your area.  That is the easy part!

BUY IT AT A LARGE DISCOUNT:  This is a trickier part.  You have to go through many properties to find one that will work.  Sometimes sellers are not willing to go that low, and sometimes they cannot go that low, but every now and then you find someone who can and WILL.

ADD VALUE:  This is typically what you see when people FLIP a property.  You remodel it, add a room, etc.  It doesn’t always have to be this extreme though.  I’ve seen properties in a tough market that just need to be cleaned and have the yard cut to make an improvement.  Remember in a BUYER’S MARKET there are more homes than buyers so buyers can be picky.  If the house is dirty and unattractive they will just pass it by.  I know of 2 properties just like this in my area that I have seen in the last couple days.  GREAT DEALS, but people are passing them by because they need some work – minimal work…really minimal!

SELL:  You have to be able to sell property…or do you.  Maybe you rent the property for a year or two while the market works itself out.  Or if the deal is right maybe you can sell it at a discount.  You have to know your area, and I suggest you work with someone who is knowledgeable.  Sell can be the trickiest part of all so have a game plan and a back up plan if you can’t sell it like you’d like.

If you are wanting to invest in San Antonio’s real estate market, call me!  I’ve worked with a number of investors and know how to make money in this market!

Chris Cowley

www.ChrisCowley.com

Is the Open House worth it?

Selling your home is stressful despite the market conditions, but when you are in a buyer’s market you can really feel it!  A buyer’s market is defined as when there are more homes for sale in the market than there are buyers.  A buyer’s market is typically associated with more competitive pricing and an overall feeling of “it’s close, but not exactly what we want so we’ll keep looking” by buyers.  They know there are a lot of homes on the market so why settle? 

Realtors with a large number of listings love a SELLER’S MARKET because it is defined by having more buyers than homes for sale.  You can tell a SELLER’S MARKET when a house is listed for more money than any other comparable home has been purchased for in the area and there still is a buyer for it…sometimes several!  When Realtors have to actually work to get a home sold many turn to the OPEN HOUSE.  There are many different ways to market an OPEN HOUSE, but the question is, DO THEY WORK? 

I can answer that question with an emphatic – sometimes.  As a Realtor in San Antonio, TX I work hard to get my client’s homes sold quickly and for a fair price.  At times I use the OPEN HOUSE as a tool to get more people in the house.  Sometimes they work very well and sometimes I sit in the house by myself for most of the time. 

WHAT HOUSE MAKES FOR A GOOD OPEN HOUSE? 

-A house that already has a good deal of traffic going by the house really helps.  The more people who drive down the road and see the “Open House” signs increases the chances of additional folks stopping by. 

-A home with GREAT CURB APPEAL helps.  If the home doesn’t look good as you approach it then many people will just drive on by.  Make sure your grass is green and cut, flowers look good, and you are ready for the people to come by.

There are other things that really help, and if you want to discuss them further, call or email and we can talk through more ideas.  Of course, a Realtor who actively promotes and works to get people there makes a huge difference and if you are looking for such a Realtor, give me a call!

Chris Cowley

www.ChrisCowley.com

210-389-6006