I guess the biggest differentiator is if it is a short sale or not.

If it is not a short sale, if you make a back up offer, and the seller has options, they can use the two offers against each other to drive up the price.  It also puts the first buyer in a position where they may accept the house under less than ideal circumstances solely because there is a back up offer that might take it if they don’t.  It gives the existing offer less bargaining power, giving the seller advantages over both of you!

If it IS a short sale, it may be completely different!  Because short sales typically take a very long time to get bank approval, it is very common that after making an offer, the original buyer may have found another property, and have moved on.  So the bank will often quickly move on to the back up offer.

Each situation is different, but when you find a home that you might like, talk to your Carlsbad real estate agent to discuss your negotiation strategy.  They will determine what might be best for your situation, especially based on how much you may want THAT house!

The simple answer is probably – as long as you aren’t too far into the purchase transaction.  If your Carlsbad real estate agent is savvy, they have normally written a number of contingencies into your purchase contract – allowing you to get the home appraised, get loan approval, get an inspection, etc.  The period of time for you to get all these answers, and “remove your contingencies” is typically 14 to 17 days.

At the end of that time period, you either have to sign off on the contingency removal, or get the seller to agree to an extension of a contingency.

HOWEVER – Buyer BEWARE!!!  If you are purchasing a San Diego foreclosure or San Diego REO property, then you have likely signed a very “non-standard” California purchase agreement.  Most REO homes have very specific terms that will often leave you without your earnest deposit if you pull out of the purchase.

This is one of the largest reasons most buyers should have a buyer’s agent working on their behalf!  You want a representative that has a fiduciary responsibility to look out for YOUR best interest – even if it costs the agent a sale!  If you are working with the agent that is representing the bank, they have been hired specifically by the bank to get this home sold – and unfortunately, it is YOUR interests that suffer!

As always, if you are in a current situation, and need legal advice, we strongly encourage you to contact a real estate attorney.  If you have general questions, or are looking for a La Costa or Carlsbad home for sale and would like someone to ensure that YOUR best interest is protected, contact The Mewborn Team.  We promise to always deal with our clients with fairness, honesty, and integrity, giving you as much information as possible to make your best decisions!

By being pre-approved, you know what you qualify for, as well as what the bank will actually lend you -so there aren’t big, disappointing surprises at the “end” of your transaction!

As a lender is looking at whether or not they will lend you money, one of the first, and biggest things they will do, is to look at your debt to income ratio.  What is that?  How is it calculated?

To make it simple – your debt to income is the percentage of your income that is spent on loans (car loans, home loans, credit card debt, etc).  Your other expenses – utilities, insurance, etc are not included in this calculation.

In order to get a loan in today’s environment, your debt to income (DTI) often has to be below 40-45% of your gross income.  So in order to get a better idea of what you can afford, add up all your monthly loan payments and divide it into your total monthly income.  This simple calculation will give you your current debt to income ratio.  It will also tell you how much more monthly debt you can take on to remain below that 40-45% of your gross income.

If you have any questions about calculating what you may be pre-approved for, please contact The Mewborn Team.  We would be happy to work with you and a lender to get you pre-approved for a loan for your future home!

As of the end of October, the median San Diego home price was down to about $357,000 from $364,000 in September. Overall, San Diego home prices are down about 7.1% since last October.

As most home owners are seeing in their neighborhoods, the largest single influence in our prices right now are due to distressed sales. Any time a home goes into a short sale or foreclosure, those homes tend to sell at a lower price, ultimately bringing all of our home values down.

Foreclosures in particular tend to drastically lower prices – with many foreclosures selling for a full 10-20% less than its non-foreclosed upon neighbor.

As less distressed properties hit the market, we will start to return to more normal sale prices – and that is when home values will start to rebound. If you, or someone you know, owns a home that you are not able to continue making payments on, please contact us to discuss a short sale. A short sale will look more favorably on your credit report, as well as your neighbors’ home values.

2. Don’t buy Carlsbad real estate unless you can afford to stay put.
Although property values have been on the upswing in La Costa and Carlsbad, there are still concerns about a coming wave of foreclosures.  We may have seen Carlsbad property values at their bottom, but that is still unknown.  Don’t buy Carlsbad real estate hoping to flip it quickly at a profit.  Now isn’t the time to take that kind of risk!

3.  Only buy what you can really afford
Most of our recent real estate problems have come from families buying homes they can’t afford.  The average family can afford a home that is 2 1/2 to three times their annual salary.  But take into consideration, your other expenses and debts before you commit to a monthly mortgage payment.

If you have any Carlsbad real estate questions, please contact us.  A home is one of the biggest purchases you may ever make.  Please be informed and make the best decision possible!

What To Do Next:
1.  Fill out the San Diego County Assessor’s form. 

2.  Provide all the necessary documentation – current Carlsbad property tax bill, opinion of new value, and your Carlsbad neighborhood comparables (back up of opinion of value).  Please contact us at (858) 205-2000 for your comparable values.  Please be prepared to provide your name, address, email address, home square footage, and number of bedrooms and baths.

3.  Mail to the San Diego County Assessor.
Upon completion, mail your forms to:
Clerk of the Board of Supervisors
Assessment Appeals Services
1600 Pacific Coast Highway Room 402
San Diego, CA 92101

Please contact The Mewborn Team for more information.

1. The tax credit expires on December 1st, 2009.  That means all real estate purchases have to be CLOSED before then.  You can not still be in escrow.

2. If you were hoping to use the tax credit – you can no longer buy a short sale.  Most short sales take about six months to complete.  There is no longer time to complete the short sale process and close escrow before November 30th.

3.  Because of the large amount of buyers, there are often bidding wars on properties under $400,000.  If this is your price range, be prepared to make full price offers, and often be forced to counter above asking price.

4.  Financing is still tight - and slow!  Most “easy” mortgages are taking around 45-60 days to fund. 

If you are looking to take advantage of this First Time Buyer Credit – please consider all these facts above.  In order to close by November 30th, you probably need to be in a contract by September 30th.  You need to be prepared to make strong offers, and you need to work with your professional team of real estate and mortgage consultants to keep the process moving quickly.

If you have any questions about Carlsbad, La Costa, Encinitas, Del Mar, Oceanside, or San Marcos real estate, please call The Mewborn Team.  We specialize in coastal luxury San Diego real estate.  We are happy to serve as your personal real estate advocate!

Rent-to-own contracts, usually require buyers to pay a premium on each month’s rent and sometimes an up front fee/deposit of about 5% of the purchase price. The regular rent then goes in owner’s pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.

If done properly, a rent to own (or lease option) may be a great way for a buyer to build up down payments and improve their credit scores, while living in that home they wanted to buy.

An example that we have seen was this – On a $600,000 Oceanside home, the buyers paid $3,300/mo – $1,000/mo more than market rent. After three years, there would be $36,000 accrued in an account for their down payment and closing costs. If the buyer could not perform at the end of 36 months, the contract was void.

The real risks are to Carlsbad real estate buyers. The contracts are typically written to protect the sellers. Some specific risks:

Loss of your payments to date – often if you fall behind or can not perform, you are not entitled to a refund of any previously paid fees, deposits, or rent premiums paid.

Lack of Financing - Most Carlsbad, Oceanside, and San Marcos buyers are entering into lease option contracts because they can’t get financing in the current market place. If you can’t get financing at the end of the lease option contract, you forfeit everything you have paid to date.

Falling home prices - Most lease options establish a set price at the time the contract is signed. As we have seen over the past couple of years, prices don’t always go up. If after signing the contract, Carlsbad home prices fall, the buyer may not want to continue with the purchase, but that still doesn’t mean that they get their money back.

The House Going Into Foreclosure – Some Carlsbad renters have paid their inflated rent payments on time, only to find out the seller hasn’t been paying the mortgage. Instead the house goes into foreclosure, with the buyer/renter being evicted, never benefiting from their inflated payments.

Although these rent to own options seem like a great solution when it is hard to make a deal, there are plenty of pitfalls to consider.

If you have any questions about Carlsbad, La Costa, Oceanside, or San Marcos real estate or mortgages – please contact us.   Talk to a professional and make sure that YOUR interests are represented!   We are always happy to answer any Carlsbad real estate or mortgage questions.

What is the first time buyer tax credit?
It is a tax refund for 10% the purchase price of a primary residence (up to $8K). If you do not use the entire $8,000 on your 2009 tax return , the remainder will be refunded directly to you.

Who is eligible to receive the credit?
First-time home buyers and those who have not owned a principal residence in the last three years prior to purchase.

Are there income limits?
Yes. The full amount is given to:

Individuals with adjusted gross income less than $75k
Married filing jointly with adjusted gross income less than $150K per year

There is a phase out between:
$75K and $95K for individuals
$150K and $170K for joint filers.

Because a normal real estate transaction takes between 40 and 60 days to close, TIME IS RUNNING OUT! A short sale may already be too late.  If you want to discuss this further, contact us today.

The federal tax credit is 10% of the home’s purchase price (up to a maximum of $8,000). 

Please contact us to find out more about the benefits available to you ONLY until the end of 2009!