The process of buying home is never easy; however, what I can promise you is that—as trite as it may sound—it always works out the way it is supposed to AND it is always worth it in the end. If you are not already aware, working with an agent in the purchase of your home is free of charge to you, yet absolutely priceless!

If you are not already working with an agent, here are several reasons why you should consider having a real estate agent represent you and your best interests in the purchase of your home:

o For educational purposes, to learn the ins and outs of the market and process.
o To help you negotiate a good deal on your home.
o To have an advocate and friend throughout the process
o And, as I mentioned… hiring a buyer’s agent is free. The Seller of the home pays your agent, so you do not need to worry about it!

If you are interested in discussing the San Francisco Market or home buying process in further detail, I am happy to sit down with you to answer your questions. I have a true passion for working with and educating home buyers; first-timers and seasoned buyers alike!

I look forward to hearing from you with your questions or comments. Thanks for reading my five-part blog. Stay tuned for more soon!

The San Francisco Market & Neighborhoods

• There are currently some incredible deals that are currently available on units in gorgeous, newly-constructed buildings in San Francisco. I personally have negotiated some great deals in the past few months (e.g., a 1BR/1BA home with parking, in-unit laundry and storage all in the mid-$400k range). Although the $10k new home state tax credit has been used up, legislators are currently lobbying for that $100M allocation to be extended by another $200M!! Just to name a few of my favorite buildings that still have units available:

o Arterra
o BLU
o SOMA Grand
o Esprit Park
o Infinity
o 77 Van Ness
o 901 Bush

• For those of you interested in TICs, there are some interesting opportunities to obtain 90% seller financing with 10% down at favorable rates on several properties throughout SF.

• Foreclosure properties: REO (bank owned) and short sales. Believe it or not, there is a decent amount of bank-owned and short sale properties popping up in San Francisco. The majority of these properties are available South of Market, Central Waterfront and parts of Potrero Hill; however, they are also popping up in other prime areas of SF as well from time-to-time.

• Areas of opportunity due to current and future development:

o Mission Bay: China Basin Seawall Lot 337; UCSF; Genentech

o Central Waterfront: Crane Cove Park; Central Waterfront Neighborhood Plan

o Mid-Market: Redevelopment Zone on Mission & Market from 5th to 10th Streets.

o Divisadero Corridor: Between Geary & Waller Streets

For more details, please feel free to reach out so that we can discuss potential opportunities that could work for you—with all of the great deals out there, I can assure you that it is finally possible to find a home in San Francisco that not only feels great, but that is also an excellent buy from an investment standpoint as well!

Stay tuned for Part V of my 5-part blog; The Home Buying Process & Working With a Realtor.

Along with the excellent tax credit programs & historically low interest rates that are now available to home buyers, here is yet another program that you should be aware of:

• The California Association of Realtors Housing Affordability Fund recently rolled out a Mortgage Protection Program to help build consumer confidence in the purchase of a home and reduce the fear of foreclosure in the event of job loss or disability. This program would insure that first-time home buyers who lose their jobs or become accidentally disabled may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments on their primary residence. A qualified co-buyer may also participate and receive $750/mo for 6 months. Hey, anything helps! There are no income caps under this program; however, you must close escrow by 12/31/2009 and you must use the services of a licensed Realtor in order to be eligible.

Don’t forget, if you use a buyer’s agent like myself, my fee is covered by the Sellers NOT the Buyer! Like I always say, my services are actually free to buyers, yet “priceless” at the same time!

Last but not least, back to the basics…

• We all know how much we love paying the IRS, right?! One of the primary benefits of purchasing a primary residence are, not only the current tax credits available, but also the tax benefits of being able to write off your mortgage interest and property taxes. Always check with a Certified Public Accountant (CPA) on these sorts of things; but, believe me, it helps a whole lot! Not to mention building equity via appreciation. If you purchase your home at the right price now, you will be a happy camper later when you see your compounded tax benefits & your wealth grow with the ownership of your property due to the growth over time of the SF market.

Thanks for stopping by! Please stay tuned for Part IV of my blog series, the SF Market, and Part V, The Home Buying Process.

As promised, welcome to Part II of my blog series! Today I will cover the topic of financing. Below I have touched on several points that will help you understand where financing currently stands today. I have also included some creative ways to finance your purchase if you do not have or simply do not want to spend a large lump sum of cash on your purchase!

General Overview of Real Estate Financing

• Interest rates are at all-time lows; in the high 4% range to mid 5% range, depending on the loan amount, property type, and borrower. The rates have been yo-yoing a bit, but they have consistently come back down over the past 6 months.

• There are 3 loan amounts that you may fall under when you purchase your home, “low balance conforming”; “high balance conforming”; and “jumbo” loans. Low balance conforming loan amounts are below $417,000. High balance conforming loan limits for San Francisco and some surrounding areas where housing is more expensive are now up to $729,750 for a high balance conforming loan. High balance conforming loans are between $417,001 and $729,750. Then there are jumbo loans ($729,750+). Each category you step up, the higher your interest rate will most likely be.

• Bank guidelines are very strict, for the most part. In most cases, you MUST have strong credit, income/assets, and a strong employment history as well. Before you spend time shopping for a home and going out on Sundays to see open houses, I highly recommend that you contact a Realtor like myself, as well as a mortgage broker to find out what you can afford and what sorts of properties will work best for you. I personally love working with Glenn Rodriguez of Guarantee Mortgage—he is very responsive and on top of the market. He has great relationships with banks and always gets the job done! He can be contacted at 415.570.0400 or glenn@cahomefinancing.com

• Due to the fact that banks are overloaded, keep your expectations low when working with them, especially regarding the timing of your escrow period (e.g., appraisal, loan approval, close of escrow)! The lenders are swamped with stacks and stacks of files on their desks waiting for review due to the large amount of re-finances that are occurring & home purchases as well—rates are low & people are wisely taking advantage of this! Escrow periods can take anywhere from 35 to 60+ days (from contract acceptance to close) due to bank delays. In the end, I always remind my clients that—although the process can sometimes be frustrating when dealing with the bank—it is always worth it in the end when you close escrow, move in & get to enjoy your beautiful new home!

Ways to creatively finance your purchase

• In order to obtain a conventional loan nowadays, you are required to place 20% down and show full documentation as a borrower (e.g., bank statements, tax returns, etc.). However, there are several alternative ways to finance your purchase if you do not have 20% down. With the following options, you will still need to come up with between 2.5% to 10% down:

o FHA loan is a federal assistance mortgage loan issued by the Federal Housing Administration. They initially were designed for low-income buyers with poor credit who could not qualify for a conventional loan; however, these loans are now being utilized by Buyers who simply would like to purchase a home with less money down. In my experience, FHA loans work best for Single Family Homes. You can also use such loans for condos in buildings that are already FHA-approved or those that meet the guidelines for FHA “spot approval”. With these loans, you can put as little as 3.5% down; however, at some buildings in San Francisco such as Arterra and Esprit Park, you must put 10% down minimum on your FHA loan there. Note that there are rumors going around that the FHA “spot approval” option may disappear, so if there is a unit you have your eye on today that’s in a unit that has not yet been FHA approved, GO FOR IT NOW before it’s too late!

o Seller financing is when the seller agrees to be the second mortgage lender, so basically the Seller will be your second bank & you will write two mortgage checks per month; one to your first lender & one to the seller. The title company drafts up a promissory note outlining the terms and a deed of trust to secure the second mortgage against the property. Market rates are around 6% – 7% and can be a principle and interest or interest only payment. First mortgage lenders require the term of the second mortgage to be at least five years, but ten years is also quite common

o Seller Credits are another option that have become more popular for buyers tight on cash. How this works is that the buyer can request a seller credit of up to 3% of the purchase price to cover closings costs and potential interest rate buy downs. For example, you can structure your offer for $500,000 and ask for the seller to credit you back 3% of the purchase price for closings costs and potential interest rate buy downs. This will give you $15,000 and allow you to conserve your current capital for down payment and potential repairs and improvements after closing escrow. There is even some discussion among lenders to increase the allowable seller credit up to 6%, which happens to be the current limit on FHA financing.

o Down Payment Loan Assistance Program (DALP) is a San Francisco Mayor’s Office of Housing program. With this program you can put as little as 2.5% and, through this program, you can obtain a second loan through the city at a favorable interest rate; however, you must not exceed the eligible income levels. You also must work with a participating lender in order to obtain a DALP loan.

o CalSTRS (California State Teachers’ Retirement System) loans only require 3% down payment. They are for Cal STRS members, active, inactive or retired. Almost all public school employees (not just teachers) K-12 and community college.

Thanks for stopping by to learn more about financing. Please feel free to reach out to me if you have any questions or feedback. Next week I will cover the topic of Other Buyer Incentives. In future parts of this blog, I plan to touch on the San Francisco Real Estate Market specifically; and The Home Buying Process in general.

Nowadays I can look buyers straight in the eyes and whole-heartedly tell them that it really is the best time to purchase a home here in a very long time. If you are considering purchasing a home in San Francisco or the SF Bay Area, or if you are simply curious to hear my thoughts, please feel free to follow my five-part blog, which I will post over the next few weeks covering the following topics: Tax Credits; Financing; Other Buyer Incentives; The SF Market; and The Home Buying Process.

General Market Overview:

• Over the past month, sales in San Francisco definitely picked up; however, the good news for buyers is that it is still a Buyer’s market & the deals are still out there!

Affordability in San Francisco has gone up due to the fact that supply is high and the demand is on the lower side (by default; due to difficulties folks are having in obtaining loans, unemployment, etc); this has driven the prices down, among other things. If you can afford to buy right now & have the resume to obtain a loan, you are golden!

Tax Credits that you should be aware of:

• There is tons of new construction in San Francisco and California that developers need to move! California came out with a $10k new home tax credit for those purchasing a primary residence in CA. The home needs to have never been occupied by a previous owner or tenant. There are no income limits on this credit; however, you must close escrow on your home by 2/28/10 in order to be eligible & you must stay in the home for at least 2 years. The $100M allocation for this credit has almost run out, so hurry up and get your $10k tax credit while it’s still available!

• A federal tax credit of $8,000 is being offered to first-time homebuyers of primary residences (buyers who have not owned a home in the past 3 years). In order to be eligible for this a credit, one must make less than $95,000 per year. If you make between $75,001 and $95,000, you will be eligible for a credit, but not the full $8,000. You must close escrow on your home by 11/30/09 in order to be eligible & you must stay in the home for 3 years.

• If you are eligible for both tax credits, you may by all means take $18k in total tax credits for the purchase of your home!

• If you are taking out an FHA loan, this $8k federal tax credit can be used for your down payment. You must come up with 3.5% down yourself (or via a down payment assistance program, gift funds from family, etc.); so, this $8k credit can be used on top of the 3.5%

• FYI – Currently state legislators are going back and forth trying to extend the $100M allocation for the $10k California State New Home tax credit to be extended to $300M. A bill was also recently introduced that the Federal $8k tax credit may be expanded to a $15k per eligible home and, with this bill; the income caps ($75k to $95k) may be lifted. Fingers crossed! No guarantees, but this would be good news if it passed.

Bottom line—get these tax credits while they are hot and available! This is a short window and, if you have any remote interest in buying, you should start exploring the process now before it’s too late and the window closes!

Stay tuned for Part II – Financing…

I remember 7 years ago when I first got into real esate, Buyers had a rough time finding and buying property in San Francisco. It was a very competitive market, prices were shooting through the roof, and Sellers had the upper hand. Every listing had an offer date, would receive 15 offers, and would sell at least 20% over the asking price. Working with buyers back then, the resounding comment I would hear from them would be ” San Francisco is so expensive”, or “real estate never goes down here and I will never be able to afford a home here.”

Now the market has shifted to the Buyers side of the scale, and there are a number of factors and benefits that make NOW the best time to buy real estate in San Francisco. First, prices have declined in San Francisco over the last year. We have seen as much as 15-25% price declines across the city, depending on neighborhood and type of property. This this does not only include the lower priced neighborhoods like Bayview/Hunters Point and Excelsior, but also includes traditionally higher priced neighborhoods like Noe Valley, Eureka Valley, and South Beach. Secondly, Buyers can take advantage of historically low mortgage interest rates. Even though mortgage rates have ticked up a bit over the last week, rates are  as low as they have been in decades. These rates will not last, and are expected to go up soon as the economy starts to stabalize. Thirdly, Buyers have a number of government programs that can help them with purchases. The federal government has an $8000 tax credit available for first time home buyers, and the State of California has a $10,000 tax credit available for new construction purchases. Both of these programs allow the credit to be used as part of the down payment in the purchase. Also available is the FHA loan program which allows certain FHA approved properties to be purchased with as little as 3.5% down payment!

All of these factors and benefits will not last much longer as the window will soon be closing on these great deals.  We have already seen signs that the economy is starting to stabilize, and as the economy improves we will see less government assistance in the housing industry, and housing prices will start to rise again in San Francisco.  Take advantage while you can!

Depending on where you live in The City, you may have driven past this historic house at Market and Clayton hundreds or thousands of times.  The home is nearly 140 years old and has only been owned by 2 families in all that time.  Now is your chance – it’s on the market, looking for it’s 3rd owner.

While the full article, as written by the Examiner, says it is a Twin Peaks home, I see it as being technically in the Corona Heights District of San Francisco.  Nevermind those details, it’s a home rich with history and will be interesting to see inside.

If this historic home is the home of your dreams, let me know and we can discover it together.   Read the entire Examiner article here. Priced at $2.5MM.

Real Estate on the rebound in San Francisco? Watch!

All the news that is news isn’t bad news.  Watch this CBS5 report from Hank Plante.  Those who are waiting should get ready, the San Francisco real estate market is poised for a rebound.

Last week I shared a bit about knowing the importance of knowing comparable sales in your neighborhood and the best sources for that information, in preparation for refinancing your property and/or lowering your property taxes.  While it may seem like you are having an identity crisis, on the one hand you are trying to argue that your property is worth as high a value as possible and on the other you’re trying to plead that you have suffered a great loss of value and would like the city to therefore, lower you property taxes, it can work both ways.

Refinancing: Due to the strict lending/financial market conditions, being able to refinance your property is a challenge. Lenders generally require a minimum loan-to-value ratio usually around 20%-25%; some lenders even require as much as 35%. Therefore, with declining property values, it is paramount to know the latest sales data, so that you can show proof of higher value in case the appraisal seems low.

Property Tax Reassessment: In San Francisco, property owners can request to have their property taxes reduced due their property declining in value. There is are 2 ways to request the assessor to lower your property taxes: 1. Request for Informal Review and; 2. File an Assessment Appeal. In both cases, the property owner must show the decline in property value based on comparable sold properties in the same neighborhood.

In these economically challenging times, it helps to save money wherever and whenever you can. As a property owner, if you are considering refinancing your property to take advantage of the very attractive low interest rates and/or would like to save money on your property taxes, you need to know the comparable properties that have sold in your neighborhood.

Property information websites, such as the popular Zillow, is a good start to finding the necessary information. However, the site only provides the basic data found on the tax records, such as square footage, number of bedrooms and bathrooms…etc, and “featured” listings (properties currently on the market, being advertised on the site).

This is not enough information to help you when you are talking with your lender or the tax assessor. You will need to have a better grasp of more detailed information of the comparable properties.