Interest Rates 101: What They Are and How They Affect the Real Estate Market

Interest rates have exploded recently, going from around 3% in November 2021 to nearly 6% in August 2022. And most mortgage experts agree that rates will increase over the coming year or two.

So we thought this might be a good time to offer an Interest Rates 101 lesson. Even if you don’t know a single thing about interest rates, by the end of this short article, you’ll know:

• Exactly what they are and how they work,

• How they affect your mortgage payment and the real estate market in general, and

• How to get the best possible interest rate

Welcome to Interest Rates 101!

What Exactly is an Interest Rate?

An interest rate is simply the cost of borrowing money. Borrowing comes with a cost for two big reasons. First, lenders take the risk that the borrower won’t repay the loan, so lenders charge interest to make the risk worth it. Secondly, lenders are tying up their money by lending it to borrowers. So they want compensation for not being able to use their money on other things.

Interest rates are expressed as a percentage. For example, if you borrow money with a 5% interest rate, you would have to pay 5% of the loan amount each year until the loan is paid off.

How Do Interest Rates Affect My Mortgage Payment?

Each month, a percentage of your mortgage payment will go toward the interest amount.

The higher your interest rate is, the higher your monthly mortgage payment will be.

Interestingly, the amount of your mortgage payment that goes toward interest changes each month. At the beginning of your loan term, most of each mortgage payment will go toward interest, with very little going to repay the loan balance. Over time, less and less of each payment will go toward the interest, and more and more will go toward the principal loan balance. This process is called amortization, and your loan documents will have an “amortization schedule” to show exactly how much of each payment will go toward interest vs. principal.

Why Do Interest Rates Change?

Interest rates change because the “reasonable” cost of borrowing money changes, depending on the economy. The Federal Reserve has the power to raise or lower general interest rates, and lenders use the Fed’s rate as a guideline when setting their own rates.

The Fed generally lowers interest rates when the economy is headed toward a recession. Lower rates encourage people to get loans, which increases their purchasing power and stimulates the economy. The Fed raises interest rates to avoid inflation. Higher rates dampen buyer demand and slow economic growth to more sustainable levels.

How Do Changing Interest Rates Affect the Real Estate Market?

When mortgage interest rates rise, it becomes more expensive to borrow money for a home loan, so fewer people look to buy, and the real estate market slows down. When rates fall, more people can afford to buy homes, so the real estate market heats up.

What is a Good Interest Rate?

A “good” interest rate depends on market conditions. In 2021, mortgage interest rates were under 3%. But in 1981, rates were over 16%. By historical standards, rates under 8% are pretty good.

How Do I Get the Best Interest Rate Possible?

The exact interest rate you can get depends on multiple factors, including your credit score, your down payment amount, your lender, and your loan type.

Here are a few tips for getting the best interest rate possible on your home loan.

• Boost your credit score by making all your payments on time and keeping your credit card debt as low as possible.

• Compare multiple lenders to find the one offering the best rate.

• You can get a lower rate by making a higher down payment. You might also be able to purchase “points” for an upfront fee, which will reduce your interest rate.

• VA loans typically have the lowest interest rate, but they are only available to military service members, veterans, and their spouses. Conventional loans are the next best option.

• Shorter loan terms typically come with lower rates.

Are You Ready to Start Your Home Search?

With interest rates expected to rise, now is the time to buy your new home.

Contact Sequoia Real Estate today to speak with a well-qualified buyer’s agent who can help you find the home of your dreams and lock it down before interest rates rise again.

Five Reasons to Buy a Home Before the End of 2022

With the busy summer season starting to wind down, some buyers are asking if they should continue their home search or wait until 2023.

This is an easy question to answer. If you can afford to buy a home, do it now.

It’s important to note that there’s never a bad time to invest in real estate. Even homeowners who bought right before the Great Recession in 2007, and saw their home values plummet, came out ahead as long as they held onto the property until the values rebounded.

But the general rule is that the best time to buy is al ways five years ago, and the second best time to buy is always today.

And we have five compelling reasons why you should buy a home before the end of 2022 instead of waiting until 2023.

1. Rents are Increasing

Cities like San Francisco may offer some protection from increasing rents for renters. But even with the rent control measures in place, rents are increasing quickly. Two-bedroom rents are currently averaging $4,200 per month, up from $3,800 a year ago.

But when you buy a home with a fixed interest rate, your housing costs remain fairly consistent. You might see small increases for items like property taxes (which are capped in California) and homeowner’s insurance premiums. But your principal loan payment and interest amount won’t increase.

2. Prices are Still Climbing in Most Markets

Home values are still going up across most of the country, albeit at a slower rate than we’ve seen over the past two years. The median American home price in August 2022 was up 11% year-over-year.

This means waiting to buy a home is likely to cost you more money than buying today would.

3. Experts Agree There isn’t a Crash Coming

Some buyers have been waiting for the market to “crash” so that home values will come back down to the pre-pandemic prices. But there is no indication that a crash is coming.

Unlike the housing bubble of 2006, which was fueled by irresponsible lending practices, our current value increases are the result of legitimate supply and demand. This means that there is no bubble to burst.

It is possible that some markets could see a temporary dip in home values at some point in the next few years. But it’s more likely that we’ll see values growing at a slow, sustainable pace.

4. Mortgage Interest Rates Will Continue to Increase

Interest rates are expected to continue increasing to combat today’s high inflation rates. This means that homebuyers in 2023 could pay more than today’s homebuyers even if home prices dip.

For example, a $1,000,000 home with a 3% down payment and a 5.1% interest rate would cost about $5,266 per month in principle and interest. If the price drops to $975,000, but the interest rate increases to 5.5%, your monthly payment actually goes up to $5,370!

It’s better to lock in today’s rate. Then, if rates do come down a few years from now, you can refinance to the lower rate.

5. Home Loan Assistance is Available

Conventional home loans might be the most common loan type, but they aren’t your only option. Government-backed loans can come with more favorable terms, depending on your circumstances.

• FHA loans are specifically designed for buyers with lower credit scores.

• VA loans offer a 0% down payment option for military service members, veterans, and surviving spouses.

• USDA loans offer a 0% down payment option for low-to-medium income borrowers looking to purchase a home in a rural area or small town.

There are also grants and assistance programs available by state, particularly for first-time buyers. But there is no guarantee that these programs will be around in the future. Mortgage financing is always changing, so it’s smart to lock in good terms while they’re available.

How to Start the Buying Process

Are you ready to buy a home in 2022? The experts here at Sequoia Real Estate are excited to help you! The process starts with a free buyer’s consultation. Our buyer’s specialists will go over your needs and help you get pre-approved for a home loan with a reputable lender.

We’ll search for properties that meet your needs, combing through the listings on the market and following up on potential off-market opportunities. And when you find the right home, we’ll negotiate aggressively on your behalf to get you the best possible price and the best possible terms.

Contact us to schedule your free consultation today!

What is a CMA? And Do I Need One to Buy or Sell a House?

If you’re considering selling your house, you might have come across the term Comparative Market Analysis (or its abbreviation CMA). But what is a CMA? Do you need one to sell a house? How much do they cost? And where do you get one?

Here’s everything you need to know about CMAs.

What is a CMA?

A CMA is a tool used to value real estate. When you’re selling your house, the CMA helps you price your home correctly so that it generates interest from buyers. If you price too low, you could be leaving money on the table, but if you price too high, buyers and their agents might ignore your listing.

Buyers also use CMAs. Before making an offer on a home, the buyers’ agent will complete a CMA to make sure their offer price is fair. It’s necessary for buyers to have their agents complete a CMA because there is no guarantee that the list price reflects fair market value. And even if the list price was fair on the day the home hit the market, values can change quickly in fast markets.

How Do CMAs Work?

CMAs determine the value of a home by comparing sales prices of similar homes that sold recently. For example, if your neighbor’s house is similar to your house, and it sold last week for $990,000, the value of your home might be around the same price point.

The tricky thing is that all real estate is unique. Even in a subdivision of cookie-cutter homes, one home might be near a noisy street, while another might be near a peaceful nature preserve. So the CMA needs to account for all the factors that are relevant in deciding on home values, including:

• Location,

• Size,

• Age,

• Lot size,

• Amenities,

• Views, and

• Condition.

For your CMA, you want to find comparable properties that are as similar as possible to your house and sold as recently as possible. Then, you need to adjust the sale prices of those comps to see what they would have sold for if they had been identical to your house.

This process is an art and a science. To get it right, you need to know how much value an extra bedroom or a pool adds to a property in your market. You need to know how much more today’s local buyers will pay for a good view or a quiet street.

Most sellers simply don’t have enough information or experience in the local real estate market to be able to do this themselves. And that’s why you need a real estate expert to complete your CMA.

Do I Need a CMA to Sell My House?

A CMA is the best way to quickly find the fair market value of your home. If you want to price your home correctly when you put it on the market, you need a CMA.

Is a CMA the Same as an Appraisal?

CMAs and appraisals are very similar. They use the same process to arrive at the fair market value of your house. The difference is that a CMA can be completed by any real estate expert, while an appraisal must be completed by a licensed real estate appraiser. Appraisals are most often used to confirm the value for the buyer’s lender. Before the lender will fund the buyer’s loan, they need to make sure the property is worth the amount the buyer is paying since the property is used as collateral for the loan.

Where Do I Get a CMA and How Much Do They Cost?

To get a CMA, simply contact the real estate experts here at Sequoia Real Estate. We provide professional CMAs, completely free of charge, to any local homeowners considering selling. Because we believe you should have accurate information before making your decision to sell.

Contact us today to request your free CMA. One of our friendly, professional listing agents will collect your property details and get to work finding comps and adjusting their sales prices to show you how much your house is really worth in today’s local market.

How Accurate are Zestimates®?

Zillow’s Zestimates® are used by millions of American homeowners to estimate the value of their homes at-a-glance. But you might be surprised to learn how inaccurate Zestimates can be.

In this article, we’re answering all of your Zestimate FAQs:

• How accurate are Zestimates?

• Why are they so inaccurate?

• How can I get a more accurate estimate of my home's value (without paying an appraiser!)?

How Accurate are Zestimates?

As of summer 2022, Zillow reports that their Zestimate has a 3.2% median error for on-market properties, and a 7.52% median error for off-market properties.

This means that the Zestimate for the average American home that is listed on the market for sale is 3.2% off. And the Zestimate for the average American home that is not listed on the market for sale is 7.52% off. Which might not sound too bad…until you look at some real home values.

Let’s imagine that you’re thinking of maybe selling your home, but you haven’t listed it on the market. If your Zestimate is $1 million, the true value could be up to 7.52% lower or 7.52% higher. This means your home is probably worth somewhere between $924,800 and $1,075,200. That’s a gap of more than $150,000!

And that’s just the median error rate. Half of all Zestimates will be off by even more!

Why are Zestimates so Inaccurate?

There are a few reasons why Zestimates are so inaccurate:

1. Property information can be inaccurate. Zillow pulls data from county records and previous listings on other websites, so a typo in the original data can result in errors on Zillow. Data errors in square footage, lot size, and year built can dramatically impact the accuracy of a Zestimate.

2. Property details can be out-of-date. Zillow has no way of knowing the improvements you’ve made to your home. If you’ve renovated, updated the heating system, or made the house more energy-efficient, that’s not reflected in your Zestimate.

3. The algorithm may not choose the best comps. Residential real estate valuations are based on recent sales of similar homes (called comps). But Zillow might not know which homes are most similar to yours. Sure, the algorithm can compare square footage and the number of beds and baths. But information that is more difficult to define (like views, interior design, and plot location) is often ignored.

4. The algorithm may have inaccurate values for comp adjustments. Once comps are selected you need to make adjustments to the comps to reflect what their sales price would have been if they were exactly like your home. For example, say you live in a planned community where floorplans are the same, and a home across the development, near the highway, just sold. But your house is located far from the highway and backs up to a peaceful nature reserve. The sales price of the comp would need to be adjusted to reflect the higher price you can get because of the better location. But how much is that better location worth? Experienced, local real estate agents know, but Zillow’s algorithm probably doesn’t.

How Can I Get a More Accurate Estimate of My Home's Value?

You don’t have to make any buying or selling decisions based on Zillow’s inaccurate Zestimates. And you don’t need to pay hundreds of dollars for a formal appraisal every time you need to know the value of a home.

You can simply contact us at Sequoia Real Estate for a fast, free, and friendly custom home value estimate. We believe that buyers and sellers deserve to have accurate information before making any real estate-related decision. And we’re happy to provide a free value estimate and no-pressure consultation so you can make a well-informed decision.

Contact us today to learn how much your home is really worth!

10 Staging Tips to Transform Your House

Staging is all about highlighting the best features of a home and neutralizing any potential negatives. We want to create a space that will appeal to a wide range of buyers. And we want to showcase the lifestyle afforded by the house so that potential buyers can imagine living their best lives there.

Here are 10 staging tips to transform your house into a must-see listing that all the buyers are talking about!

1. Replace Family Photos With Something Neutral

When buyers see family photos, they are reminded that they’re in someone else’s home. And this makes it harder for them to imagine themselves living there. So pack the family photos away for a quicker sale.

2. Paint

Fresh paint can completely transform a space. Painting is one of the most cost-effective ways to give your house a complete facelift. You can use light colors to make small rooms feel larger and use darker colors to make cavernous spaces feel cozier.

Even if you keep colors similar to those you already have, fresh paint makes any house feel cleaner and newer!

3. Consider Staging a Designated Office

With so many people working from home in the 2020s, home offices are a premium feature. Even if you’ve not been working from home, you can set up an office space in one of the bedrooms to assure buyers that there is plenty of room for a home office.

4. Don’t Neglect the Closets

Buyers love to see closets with just a few items hung neatly. Imagine a high-end retail clothing store with lots of empty space and only a few curated pieces displayed.

This aesthetic is clean and modern. And it makes buyers feel like there is more than enough storage space.

5. Get Creative with Lighting

There are so many ways to use lighting to enhance a home. Use spotlights to highlight exceptional features. Use uplights to brighten up dark corners. And use strings of bulbs to add a sense of fun and festivity to an outdoor area.

Speaking of outdoor areas…

6. Show Outdoor Spaces Some Love

Buyers love useable outdoor spaces. Whether you have a small balcony or a large backyard, show off those areas by creating conversation areas with your furniture and adding accessories to make the space feel like an extension of the home.

7. Add Thriving Plants

Plants bring fresh life into a home. You don’t need to go crazy, but a few living plants will make a big difference in how your house feels.

8. Skip the Table Setting

Back in the 2010s, home staging almost always included setting the table as if for a dinner party. But most markets have moved away from that trend. Perhaps because formal dinner parties have become a rarity.

Instead, simply place a runner down the center of the table and use candles, bowls of fruit, or a floral arrangement as a centerpiece.

9. Add Lifestyle Elements

Think of the kind of life people might want to live in this house. If you have a great bathtub, for example, stage it with candles and home spa products so your buyers can imagine soaking in the tub at the end of a long day. If you live near a bike path, position your bikes in the garage or backyard as if you’re going to hop on them and go for a ride as soon as you get home.

A bottle of wine on the kitchen counter with two glasses is always a nice touch.

10. Make Your House Smell Like Home

Scent plays a major role in forming our perceptions. The smell of freshly baked cookies makes a house feel like a home! So it’s important to incorporate scent into your staging. Fresh flowers and candles work well. You could also have spices simmering on the stove or in a crockpot. Just be careful with synthetic air fresheners as they can be too heavy.

We’re Here to Help!

The experienced agents at Sequoia Real Estate are experts in marketing homes. We know what it takes to get a home sold quickly, for top dollar, in the Bay Area. And we’re excited to help you find the right buyer for your house.

If you’re considering selling your home, contact us today for a free, no-obligation consultation. We’ll let you know how much your house is worth in today’s market and how you can maximize your profit on the sale. We look forward to serving you!

Tips for Helping Your Home “Pass Inspection”

The home inspection is one of the biggest hurdles on your path from contract to close. If the condition of the property is not up to the buyers’ expectations, you could be asked to make expensive repairs, or your buyers could even potentially back out of the deal.

So how do you pass your home inspection? We’ve got three tips to help!

How Do You Pass a Home Inspection?

First, a note of clarification. You can’t actually fail a home inspection. An inspection isn’t pass or fail; it’s simply a report of the property's condition. When people say a home passed inspection, they simply mean that the buyers decided to proceed with the purchase as planned after reviewing the inspection report.

So the real question is how do you prepare your home to perform well on the home inspection? And here are three ways to do just that.

1. Consider Getting a Pre-Inspection

If you’re not sure how well your plumbing, electrical, and heating systems will hold up during the inspection, you may want to get an inspection done before you even list your house for sale. This will bring potential issues to your attention so you can address them before listing. You might be able to make repairs, or you might choose to set the price lower or offer a credit so the buyers can make the repairs themselves. Either way, you’ll know what to expect so you can plan accordingly.

Some sellers are concerned that they’ll need to disclose potential issues found in the pre-inspection to buyers. And this is true; you generally need to disclose any potential defects you’re aware of. But these issues would have come out in the buyer’s inspection anyway. And if the buyers are aware of issues even before completing their inspection, they might be less likely to panic and try to rescind their offer.

Having said that, talk to your listing agent before getting the pre-inspection. In a competitive seller’s market where buyers are waiving their right to an inspection, you may be better off without a pre-inspection.

2. Fix All Visible Problems Before Making the Property Available to the Inspector

Common home maintenance issues like clogged drains, burnt-out lightbulbs, and loose handrails can all generally be fixed quickly and easily. So go ahead and take care of those minor repairs before listing your home. This will give the inspector fewer problems to note in their report. And when prospective buyers see that the home is well-maintained, they will feel better about making an offer!

It’s also important to make sure the home inspector has full access to the property so they can compile a complete report for the buyers. Make sure the inspector can get into the house and into areas like attics, basements, garages, and outbuildings. And don’t forget to keep your pets out of the way by crating them or taking them out with you during the appointment.

3. Find Your Permits, Invoices, and Warranties

If you have completed any substantial renovation projects on the property, make sure your permits are available to the home inspector. This will avoid potential red flags on the inspection report where the inspector has to state that the work might not be permitted. And it will avoid potential delays in having the inspector or the buyers research permits at your local permit office.

If you skipped the proper channels for getting permits when you completed the work, simply be upfront about that. The buyers may be willing to accept the liability of unpermitted work. Or they might choose to retroactively get the permits for the work. It is entirely possible to sell a home with unpermitted work.

Similarly, if you have invoices and warrantees for upgrades made to the home, this can help the inspector make positive notes on the inspection report in confidence.

We’re Here to Help!

The home inspection is just one small piece of the complex selling process. And the knowledgeable real estate agents at Sequoia Real Estate have the experience to professionally represent your interest throughout the entire process.

Our seller services include strategizing, promoting your listing, and negotiating the best price and the best terms for you!

We proudly offer no-cost, no-pressure consultations for home sellers. We can give you a home value estimate, explain the selling process, and answer all your questions about current market conditions. Contact us to schedule your private consultation today!

Everything You Need to Know About USDA Loans

USDA loans are designed specifically to help lower-to-moderate income buyers purchase properties in rural areas. If you’re looking to explore homesteading or simply enjoy a slower pace of life outside of the city, a USDA loan might be the right fit for you.

By the way, if you’d prefer to stay in the city, or if you make too much money to qualify, you consider other funding options like conventional loans or FHA loans. And if you are a qualified military service member, you should consider using your VA loan benefits.

In this article, we’re going to explain the ins and outs of USDA loans:

• What is a USDA loan?

• Who qualifies for a USDA loan?

• And the pros and cons of USDA loans.

Here is everything you need to know about USDA loans!

What is a USDA Loan?

There are actually two different types of USDA loans:

1. USDA guaranteed loans. This is the most common type of USDA loan. With a guaranteed loan, the US Department of Agriculture agrees to back your loan. This means that the USDA will help your lender recover their investment if you default on your loan. And since your lender has this extra assurance of payment, they can offer better loan terms, like a 0% down payment!

2. USDA direct loans. USDA direct loans are loans made from the USDA’s own funds, directly to buyers. Instead of simply guaranteeing your loan to a lender, the USDA becomes your lender. This type of loan is less common and is reserved for low-income households.

In each case, the USDA is willing to offer these favorable loan terms in order to promote rural development.

Who is Eligible for a USDA Loan?

Each lender is able to set its own eligibility requirements for USDA loans (within legal limits, of course). But you can generally expect the following criteria:

• The property must be in a qualifying area and must be in reasonable condition. You can check the USDA Eligibility Map to see which areas qualify for a USDA loan. And because the USDA is backing your loan, they need to confirm that the property is in reasonable condition according to the minimum property requirements.

• Good credit. A good credit score shows that you can be trusted to manage debt. Lenders like to see a score of at least 620. If your score is lower than 620, you might still qualify for an FHA loan.

• Acceptable income. Lenders need to see that you make enough money to cover all your debt payments (like credit card bills, student loans, and car loans, plus your new home loan) and still have enough money to cover living expenses like groceries and utilities. But because this program is designed to help low-to-moderate income buyers become homeowners, your income can’t exceed the program limits. Limits vary by county, so it’s best to check with a lender or to check the “Income Eligibility” on the USDA’s website.

Pros and Cons of USDA Loans

USDA loan pros:

• No down payment

• Lower interest rates

• Closing costs can be rolled into the loan

• No prepayment penalty

USDA loan cons:

• Geographic restrictions

• Income limits

• USDA loans can only be used for primary residences. You cannot use a USDA loan to buy a vacation home, income property, or multifamily structure.

• USDA Fees. You’ll pay an upfront origination fee for processing the loan. And then you’ll have recurring fees in the form of mortgage insurance premiums.

• Potentially longer processing times than other loan types

We’re Here to Help!

At Sequoia Real Estate, we want to make the home buying process as enjoyable and stress-free as possible for you!

We know home financing options can be overwhelming. So we’re happy to answer your questions and refer you to reputable lenders who can explore your unique circumstances and find the ideal funding solution for you.   

Don’t let financing delay your house hunt! Contact us today for a friendly, no-obligation consultation!

How to Appeal Your Property Taxes in the Bay Area

Are you paying too much in property taxes?

Every year, beginning in July, California property owners have the chance to appeal their property taxes if they feel the tax bill is higher than it should be.

As real estate experts, serving Bay Area buyers, sellers, and homeowners, we at Sequoia Real Estate want to make sure you know tax appeals are an option. Here’s an insider look at how the process works in five simple steps.

Step 1: Find Your Current Assessed Value

In California, most of your property taxes are based on the value of your home. But, thanks to state legislation from the 1970s, the value can only increase by up to 2% per year, starting from the time you either purchased the house or completed new construction on the house.

The value that the County Assessor is using to determine your property taxes is called the assessed value. You can find this amount on the “Notice of Assessed Value” that you receive in the mail each year. Or you can go to your County Assessor’s website, where you can find a value search option to look up the value online.   

Step 2: Decide if the Assessed Value is Too High

To decide if the Assessed Value is higher than it should be, you need to know the market value of your home as of January 1 of the current year. January 1 is the “lien date” that assessors use for tax purposes since home values can fluctuate month to month (or even day to day).

You could search property records online to find comparable homes that sold around January 1, then adjust those sales prices to account for the differences between those homes and yours in a process called “running the comps.” But, since Sequoia Real Estate offers this service for free, just contact us, and we’ll take care of it for you.

When you contact us, please specify that you need to know the value as of January 1 for property tax purposes. We normally run comps to find the current market value for people who want to sell their homes, and of course, your home value could have changed dramatically in the months since January 1! So we want to make sure we’re using data for the right date.

If the assessed value is higher than the market value as of January 1, you have grounds to appeal.

Important: Home values across the Bay Area skyrocketed in 2021, so for 2022, most homes will actually be under-assessed. This means that the Tax Collector is charging you property taxes based on less than your home is actually worth. And that’s a great thing! But you still want to check to be sure.

Step 3: File a Property Tax Appeal

Each county in California has a Property Tax Appeals Board that reviews appeal applications. Many counties allow you to file your appeal through an online portal, while some simply have a form you can download and mail in.

It’s worth noting that some counties charge an application fee (usually between $20 and $50). And you must submit your appeal before the deadline.

For the Greater Bay Area, 2022 deadlines are:

• Alameda - 9/15

• Contra Costa - 11/30

• Marin - 11/30

• Napa - 11/30

• San Francisco - 9/15

• San Mateo - 11/30

• Santa Clara - 9/15

• Santa Cruz - 11/30

• Solano - 11/30

• Sonoma - 11/30

Step 4: Present Your Comps

It may take your County Board several months to process your application. They’ll send you a notice with an appeal number once your application has been processed. The Board might ask you to contact the County Assessor’s office to informally discuss the assessed value, or they might have the Assessor’s Office contact you. Either way, all you have to do is provide the information on the comps that we prepared for you when we established your market value as of January 1. There may be some negotiating, and hopefully, the Assessor’s Office will agree to reduce the value of your property tax bill!

If you and the Assessor’s Rep can’t see eye-to-eye, you can request that the case proceeds to a formal hearing in front of a Hearing Officer or the Board itself. This is rarely necessary for residential property taxes, but it’s an option.

Step 5: Collect Your Savings

If the Assessor’s Office or Assessment Appeals Board finds that you were over-taxed, they will correct your tax bill. If you’ve only made one of the two tax installments, you’ll get a reduced tax bill for your second installment. If you’ve already made both installments, you’ll get a refund.

Contact Us Today for Your Home Values

Even if you think your home value is higher than your assessed value, it can’t hurt to check! And Sequoia Real Estate is always happy to help you determine the market value of your home. So don’t hesitate to contact us for a free, no-obligation home valuation.

5 Quick Tips to Enhance Your Curb Appeal

Your curb appeal is critically important to the sale of your house. Not only is it the first impression visiting buyers get when they arrive to tour the house, but it also features prominently in the cover photo for your online listing. With so many listings on the market, online house hunters take very little time to dismiss a listing that doesn’t grab their attention.

So what can you do to quickly and easily enhance the curb appeal of your house to appeal to a wider range of buyers for a faster sale at a higher price?

Here are five quick tips to enhance your curb appeal.

1. Clean, Clean, Clean

Nothing turns buyers off faster than dirty, dingy spaces. Even if they’re outdoors and exposed to the elements. Invest some time in giving the outdoor areas of your property a good cleaning, focusing on the front of the house.

Clear out cobwebs, power wash the walkways, wash the windows, sweep the landings, clean out the gutters, and wipe down the door and all the fixtures around the entryways. Starting with an ultra-clean base will give you a solid foundation for the rest of our quick curb appeal enhancements.

2. Add Some Welcoming Accessories

Just like we use home staging to show buyers what it could feel like to live in the home, we can stage the area around the front door to make the house more inviting.

A new welcome mat and seasonal wreath are the quickest ways to add a touch of warmth to your entry area. You could also consider upgrading lighting fixtures or adding a new door knocker for a little extra visual interest.

3. Freshen Up the Landscape

Landscaping doesn’t need to mean water-dependent grassy lawns. A drought-resistant landscape can still enchant buyers. As long as your landscaping is clean and well-maintained, there are many “correct” ways to landscape. The important thing is to give life to your curb appeal through living, thriving plants.

What if you don’t have a front lawn? Many San Francisco homes are built so close to the street, and so close to the neighbors that there is no unpaved ground area available. In that case, add some potted plants going up the stairs or a couple of topiaries to frame the front door.

4. Add a Pop of Color

Having been exposed to rain, wind, and sun, there’s a good chance that your front door could use a little facelift. And this is the perfect opportunity to add a pop of color that will help your listing stand out, particularly in the online listing photos where buyers need an immediately visible differentiator.

“We should make an appointment to see that one house closer to my office…you know, the one with the red door.”

5. Leave the Light On

If your front door is nestled in a small alcove (which is exceedingly common because it allows guests to seek shelter from any adverse weather as they wait for you to answer the door), the front door can look dreary because the light can’t reach it as well.

The solution is simple: turn the light on! Make sure the light is on for your listing photos, private showings, and open houses, even during the daytime. You may even want to consider leaving the light on while your home is on the market. Many buyers like to drive by houses on their short-list after dark because they want to get a feel for the nighttime vibe of the neighborhood. And having your light on will make your house stand out as being warmer and more inviting than the others.

How Much is Your House Worth?

If you’re considering selling your house, you deserve to get an accurate home valuation so you can project your proceeds. And you can’t get this from a website that provides estimated values. For homes that are not yet listed on the market, these websites are regularly off by more than 20 percent!

Instead, contact the listing experts at Sequoia Real Estate. We proudly offer free, no-obligation custom home valuations. We can even review your house with you to find opportunities to enhance the curb appeal of your unique home! Don’t wait; contact us today!

What Happens When the Home Appraisal Comes in Low?

Have you ever heard of a home “not appraising?” It sounds like the home somehow failed the appraisal. But what it really means is that the value from the appraiser came in lower than the agreed-upon purchase price. And this can create an additional hurdle for buyers and sellers.

So, in this post, we’re going to examine what happens when a home appraisal comes in low. We’ll look at how this impacts buyers and sellers and what your options are.

What a Low Home Appraisal Means for the Buyers

As the buyer, a low appraisal means that you might be offering to pay more than the house is worth. Keep in mind that there is an art to valuing real estate. Many of the factors that determine a unique home’s value are somewhat subjective. So if the appraiser feels that the value is a little lower than the price you offered, you might still be perfectly happy to pay what you offered. Especially if you were competing with other buyers for the house.

And if you’re paying all cash (or making a large down payment of more than 20%), this is probably not a problem at all. You can simply proceed as planned, despite the lower value on the appraisal.

But if you’re getting a home loan for 80% or more of the purchase price, your lender will have an issue with a low appraisal. They won’t want to loan you money to overpay for a house. So in this case, you’ll need to adjust the terms of the deal in one of the following ways:

1. Increase your down payment to cover the appraisal gap. This means you would cover the difference between the appraised value and the purchase price out of pocket.

2. Ask the seller to reduce the price to match the appraisal. In a buyer’s market, you might have enough negotiating power to make this work. But in a seller’s market, probably not.

3. Walk away. If you can’t afford to cover the appraisal gap, and the seller won’t reduce the price, you might be forced to terminate the contract at this point. Most contracts have an appraisal contingency that allows you to cancel without any penalties in this case.

What a Low Home Appraisal Means for the Sellers

As the seller, if the appraisal comes in low, you probably want to wait to see how the buyer reacts before worrying or taking any action.

As we just saw, buyers have options when an appraisal comes in low. And a few of those options (simply proceeding as planned or increasing the down payment to satisfy the lender) won’t impact you at all. You’d still be getting the same price for the house.

But if the buyer asks for a price reduction, you have a decision to make. You can:

• Accept the price reduction. You would walk away with less money, but at least you wouldn’t have to start looking for a new buyer.

• Decline to reduce the price. You’re not under any obligation to reduce the price to match the appraisal. Just know that declining to reduce the price could mean that the buyer walks away from the deal, and you would have to start the sales process from scratch to find a new buyer. In a hot seller’s market, this might only be a small setback, but in a cool buyer’s market, this could delay your plans by a few months.

There’s One More Option for Buyers and Sellers: Get a Second Opinion

Appraisers are highly trained and well regulated, but because home valuations are somewhat subjective, it is possible that a different appraiser would offer a higher appraised value.

Getting a second opinion would be unnecessary in cases where the buyer is willing and able to cover the appraisal gap in cash. But if that isn’t an option, it’s probably worth getting a second opinion before allowing the deal to fall apart.

Either party (buyers or sellers) can get a second opinion by:

1. Appealing the results of the original appraisal. If you believe the appraiser had incorrect facts or irrelevant comps, we can ask the appraiser to review the appraisal and reconsider the value. Or

2. Ordering a second appraisal from a different appraiser. This would simply require a separate appraisal fee to the new appraiser and a few days of wait time until the results are available.

There are no guarantees that a second opinion would provide a different appraised value, but it may be worth exploring if the deal is in danger of falling through.   

We’re Here to Help!

Having a home appraisal come in low is just one of the potential complications buyers and sellers can encounter in their real estate transactions. The experts at Sequoia Real Estate are well-trained to handle these complications with as little disruption or stress to our clients as possible. Whether you’re buying or selling, you deserve to be represented by an experienced agent that knows how to navigate the complexities of the real estate market. Contact us for a friendly, no-obligation consultation today!

Everything You Need to Know About VA Loans

VA loans are reserved for military service members, veterans, and their spouses. If you are entitled to military benefits because of your service or your spouse’s service, VA loans come with lots of benefits, including a no down payment option.

If you are not entitled to military benefits, you’ll want to consider other funding options like conventional loans or FHA loans.   

In this article, we’re going to explain the details of VA loans:

• What is a VA loan?

• Who qualifies for a VA loan?

• And the pros and cons of VA loans.

Here’s everything you need to know about VA loans!

What is a VA Loan?

A VA loan is a home loan that is backed by the US Department of Veterans Affairs. This means that the VA guarantees your lender that you will repay your loan. If you don’t pay, the VA will make sure the lender is compensated up to a certain amount. This guarantee means that lenders are willing to offer more favorable loan terms, like 0% down payments, no private mortgage insurance, and relaxed credit score requirements.

So even if you have a few negatives on your credit report and no money for a down payment, you could still become a homeowner now through your military benefits from the VA!

Who is Eligible for a VA Loan?

Each lender has its own requirements for VA loan eligibility (within legal guidelines). But, generally, lenders are looking for:

• Military service members, veterans, and spouses. You’ll need an “entitlement” from the VA to confirm your military relationship.

• Reasonable credit. Lenders want to see a score of around 620. The higher your credit score, the better your interest rate could be.

• A reasonable debt-to-income ratio (DTI). Lenders want to make sure you can cover all your expenses with your new home loan. So they want to see all your debt payment (student loans, credit cards, auto loans, etc plus the new home loan) stay under 41 percent of your pre-tax income.

Because the VA is backing your loan, they want to make sure the property is in reasonably good condition. So the property you choose will need to meet the VA’s minimum property requirements.

Pros and Cons of VA Loans

VA loan pros:

• You could buy a home with no money down!

• There is no PMI (private mortgage insurance) required.

• There are no income limits, so you can get a VA loan no matter how much money your household makes.

VA loan cons:

• There is a VA loan funding fee, typically around 1.65 percent of the loan amount. But this fee can be rolled into your loan, so you don’t have to pay it out of pocket at closing.

• VA loans can only be used for your primary residence. You can’t use a VA loan for income properties or vacation homes. However, you can get a multi-family property of up to four units, as long as you live in one of the units. This is a great option for military members and veterans who want to invest in income-producing properties.

• There are limits on how much you can borrow with a VA loan. But the limits are generous, and won’t restrict most homebuyers.

• Some sellers might hesitate to accept your offer with VA financing because they may need to do extra work to make the house meet the VA’s property standards.

We’re Here to Help!

At Sequoia Real Estate, we specialize in making your real estate transactions as smooth and enjoyable as possible. This includes helping you get pre-approved for a home loan with a reputable lender, which will tell you how much money you can borrow.

Don’t wait another day to start your home search. Contact us for a friendly, no-obligation consultation today!

Pros and Cons of Open Houses for Sellers

Homebuyers love open houses because they get to tour houses in a casual, low-pressure environment without making an appointment for a private showing. But what about sellers? Are open houses worth the effort for sellers? Will they really help you sell your house faster?

Here are the pros and cons of open houses for sellers.

Pros of Open Houses for Sellers

1. Greater Exposure to Potential Buyers

The more potential buyers you can reach in your first weeks on the market, the more likely you are to sell your house quickly for top dollar. And open houses typically provide additional exposure to a wide range of buyers.

In addition to marketing the open house, your agent will personally invite their buyers as well as other agents from the brokerage (and their buyers!). Your agent might even invite the neighbors. Even if your neighbors aren’t likely to buy your home, they might know someone who’s looking to buy in the area. So the neighbors can actually help us find a buyer!

2. Convenience

We understand that having your house on the market is inconvenient. Having to keep your house show-ready and leave the house for each private showing is tiresome.

But, if the open house brings you a buyer, and we get the house under contract, we can stop showing your house! Having one open house for an afternoon is more convenient for many sellers than hosting countless private showings.

Just keep in mind that some private showings will still be necessary. Open house guests might even want to schedule a private tour to take a second look. This is a good sign that the buyers are very interested!

3. Can Foster Buyer Competition

When one buyer sees other buyers asking questions and showing interest at the open house, it can make them want the house more.

You might even see multiple offers after an open house!

Cons of Open Houses for Sellers

1. Unqualified Buyers

Open houses are inherently open to everyone. So you will likely have a few people who would not qualify to buy the house in attendance. This is different from private showings, in which buyers are usually pre-qualified or pre-approved by a lender to confirm that they can qualify for financing to purchase the house.

2. Not Suitable for All Listings

Open houses in the city or suburbs might get a lot of traffic as people happen by, see the open house signs, and decide to pop in spontaneously. Rural properties are far less likely to get traffic from an open house. Casual buyers won’t want to make the drive to the property, and serious buyers will make an appointment for a private showing. Your listing agent can help you decide if an open house is the right fit for your unique property.

3. Possible Damage or Theft

While damage and theft are not likely during an open house, they can happen. The real estate agent hosting your open house will take precautions (like asking attendees to sign in and keeping an eye on the property as buyers walkthrough). But it’s also a good idea to secure any valuables or take them with you when you leave before the open house.

Should I Have an Open House?

Many factors play a role in deciding whether an open house is the right move for you. Market conditions, location, buyer expectations, and your personal preferences are all important considerations.

Your real estate agent will be able to explain if an open house makes sense for your unique house in your current, local market. Then you can discuss any questions or concerns you may have about how the open house is managed.

Don’t have an agent yet? Contact the experts at Sequoia Real Estate! We have the skill, knowledge, and experience to properly advise you on your open house and to negotiate the best price and best terms on your sale. We look forward to serving you!

3 Ways California is Addressing the Housing Shortage

Despite a slight population decline during the pandemic, California still struggles to find enough housing for the 39 million people who call California home (and the many people who would love to move to California, if only housing were available!).

California housing data confirms that the tight housing market is getting tighter. The number of homes available for sale was down by 11.6% in April 2022 compared to April 2021. And the average home sold in just 18 days (compared to nearly 40 days pre-pandemic). The high demand and low supply have driven prices up by another 13.3% over the past year state-wide, bringing the median sales price up over $850,000. Of course, residents in high-value markets like the Bay Area would love to find a property for $850,000! In San Francisco, for example, the median is over $1.6 million.   

So what is California doing to address the housing shortage? Here are three key legislative changes intended to ease the housing crisis.

1. Streamlining the Building Process

Multiple bills were passed between 2019 and 2022 to help builders complete developments faster.

• AB 1485 was passed in 2019 to “build on existing environmental streamlining law and encourage moderate-income housing production.”

• SB 330 was passed in 2019 to “accelerate housing production in California by streamlining permitting and approval processes, ensuring no net loss in zoning capacity and limiting fees after projects are approved.”

• And SB 10 was passed in 2021 to allow local city councils to speed the construction of apartment complexes of up to 10 units, as long as those new developments are located near transit hubs and urban infill areas.

2. Allowing Build Multiple Units on Single-Family Lots

One major hurdle in the effort to address the housing shortage is the number of single-family lots in California. Compared to urban areas on the East Coast, California has a lower population density because so much of the state is zoned for buildings that can accommodate a single family. Multi-family lots ease the housing shortage by allowing more households to fill a single lot.

So legislation has been passed to allow for more units on single-family lots.

AB 68, passed in 2019, “makes major changes to facilitate the development of more ADUs [accessory dwelling units, commonly called guest houses or in-law quarters] and address barriers to building. The bill reduces barriers to ADU approval and construction, which will increase production of these low-cost, energy-efficient units and add to California’s affordable housing supply.”

But even that wasn’t enough. So in 2021, SB 9 was passed. SB 9 allows property owners to build duplexes (two housing units) on single-family lots. And, in some cases, property owners can now build up to four units on a single-family lot.

3. Making More Land Available

One final way California is combatting the housing shortage is by trying to make more land available for development. Between mountains, deserts, and coastlines, much of the state is not geographically conducive to real estate development. There are also state lands that could be developed if the public could access those areas.

SB 6, passed in 2019, “requires the state to create a public inventory of local sites suitable for residential development, along with state surplus lands.”

It Will Take Time for These Changes to Take Effect

While these measures will allow for more housing units to help meet the demand of the population, it could be years before we see results. We need time to build these new units. There is a long waitlist for many home builders, and ongoing supply chain issues are making it difficult to get building materials.

If you’re hoping to buy a home in California, you might not want to wait until new units are available. With interest rates rising, the cost of buying a home is going up. Even if home prices flatten, which isn’t guaranteed, the cost of your loan could reduce your purchasing power.

To buy in this market, you just need an experienced real estate agent who can give you a heads-up on new listings and advise you on pricing and negotiations. Contact Sequoia Real Estate for a free consultation with a Bay Area market expert today.

4 Signs it’s Time to Refinance

Refinancing your home loan is a simple process but a big decision.

Refinancing simply means that you get a new mortgage to pay off your existing mortgage. So your current mortgage is replaced by a new mortgage with new terms.

But how do you know when it’s time to refinance your home loan?

Here are four signs it’s time to refinance.

1. You Can Get a Better Interest Rate

If you can get a lower interest rate than you have on your current mortgage, you benefit from lower monthly payments and a lower interest expense over the term of your loan. There are fees for refinancing, but if you can lower your interest rate by just a single percentage point, it’s usually well worth it.

There are a few times you might be able to get a lower interest rate through refinancing:

• When interest rates are down. Mortgage interest rates change over time based on the Federal Reserve raising and lowering general interest rates. If rates are lower today than when you got your current mortgage, you can most likely refinance under today’s lower rates.

• When you have substantially improved your credit score. Having a higher credit score qualifies you for a lower interest rate on your home loan. So if your credit score is much higher today than when you got your current mortgage, you could potentially get a lower interest rate with a refinance. Just remember that this will be limited by today’s going interest rates. So if interest rates are up, it’s possible that you won’t be able to get a better rate, even if you have a higher credit score.

• When you have a new domestic partner with a higher credit score than yours. If you and your new partner are comfortable being co-borrowers, you can leverage your partner’s great credit to potentially get a lower interest rate. Again, this will depend on today’s going rates.

2. You Have Enough Equity in the Property to Remove Your Private Mortgage Insurance (PMI).

If your original down payment was less than 20% of the purchase price, and you don’t have a VA loan, you are probably paying private mortgage insurance (PMI) or mortgage insurance premiums (MIP). Once you have enough home equity (through paying down your debt, increases in property values, or both), you can probably refinance to remove the mortgage insurance.   

3. You Need to Tap into Your Home Equity for Cash

Did you know you can pull cash out of your home when you have enough home equity? Whether you need money to pay off high-interest debt, start your own business, or fund a new investment, cash-out refinances allow you to get a new mortgage that pays off your original loan and puts cash in your pocket!

Just understand that cash-out refinances increase your loan balance, so you’ll likely end up paying more in total interest expenses over the term of the loan.

4.  You Need a Lower Monthly Payment

If you’re struggling to make your mortgage payments, you can probably refinance to spread your current balance over a new 15 or 30-year term. This could mean substantially lower monthly payments. Of course, extending your loan term will likely result in a greater interest expense over the term of the loan. But if it will make your monthly payments manageable, it could be well worth this trade-off.

We’re Here to Help!

At Sequoia Real Estate, we help Bay Area locals buy and sell homes. But our service doesn’t end on closing day! We want to continue providing useful information to area homeowners to make their homeownership experience as enjoyable and profitable as possible.

If you have questions about refinancing, we’re happy to connect you to a reputable lender who can explain your options and help you get the best terms possible on your new mortgage. Whether you’re buying, selling, or refinancing, Sequoia is here to help with all your real estate needs. Contact us today with your real estate questions!

Everything You Need to Know About FHA Loans

Originally created to help first-time buyers get on the property ladder, FHA loans are now available to all buyers. And they’re the second most popular home loan option, just behind conventional loans. But is this the right home loan option for you?

Here’s everything you need to know about FHA loans.

What is an FHA Loan?

An FHA loan is a mortgage loan backed by the Federal Housing Administration (FHA). The FHA insures your loan, essentially guaranteeing lenders that the loan will be repaid. This means less risk for the lenders, which means lenders can be more flexible with credit score requirements and down payments.

The relaxed credit and down payment requirements make FHA loans an excellent option for first-time buyers. You might only have a down payment of 3.5%, and you might have a few negative notes on your credit report, but you can still become a homeowner!   

Who is Eligible for an FHA Loan?

Each lender sets its own requirements for FHA loan eligibility (within the legal boundaries), but in general, lenders like to see the following from FHA borrowers:

• Reasonable credit. Lenders want to see a score of at least 580. But you can qualify with a score as low as 500 as long as you can put 10% down.

• A 3.5% down payment (or more). You need to put at least 3.5% down with an FHA loan. But if you can put 20% down, you can avoid paying the Mortgage Insurance Premium (MIP). MIP consists of a one-time upfront fee of 1.75% of your loan amount, plus an annual fee of 0.45% to 1.05% of the loan balance. These amounts are typically included in your monthly mortgage payments.

• A reasonable debt-to-income ratio (DTI). Lenders typically want to see borrowers spend less than 36% of their income on debt payments (like their new mortgage plus any student loans, auto loans, etc).

In addition to meeting these requirements, your chosen property must also qualify for an FHA loan. The FHA has strict minimum property standards for safety and living conditions.

Pros and Cons of FHA Loans

FHA loan pros:

• Because the borrower requirements are more flexible than conventional loans, it can be easier to qualify for an FHA loan.

• You can get a loan with a low 3.5% down payment, even if you have minor credit issues.

• There are no income limits. No matter how much you make, you can apply for an FHA loan.

FHA loan cons:

• If you have a MIP, you can only remove this charge by refinancing.

• There is no 0% down payment option with FHA loans.

• You can only use an FHA loan for your primary residence. You can’t use an FHA loan for a vacation home or investment property. However, you can use an FHA loan to purchase a multi-family property with up to four units, as long as you live in one of the units.

• There are strict limits on how much you can borrow with an FHA loan.

We’re Here to Help!

At Sequoia Real Estate, we want to make your home purchase experience as smooth and enjoyable as possible! We can help you get in touch with a reputable lender who can explain your loan options, and get you pre-approved for a home loan right away. This pre-approval will tell you exactly how much you can borrow so you can start your search in the right price range. And, when you find the right home, your pre-approval will assure the sellers that you’ll be able to get the financing to close the deal, making your offer more appealing.

Don’t put off your new-home dreams any longer. Contact us to start your home search today!

What Increasing Interest Rates Mean for Buyers and Sellers

On May 4, 2022, the Federal Reserve raised interest rates by half a percentage point. This might not sound like a lot, but it’s actually the biggest rate increase in 22 years.

The purpose of this rate hike is to fight inflation. By making it more expensive to borrow money, the Fed de-centivizes large purchases, which will slow the movement of money through our economy and slow down the price increases we’ve all seen over the past few years.

With the Fed’s interest rate directly tied to mortgage interest rates, this move has a major impact on home buyers and sellers. Let’s take a look at what the increasing interest rates mean for you.

What Increasing Interest Rates Mean for Buyers

If you’re looking to buy a home, this interest rate hike directly impacts you today by making your home loan more expensive. In our article, How Much Do Interest Rates Matter When Buying a Home, we saw that an interest rate of just half a percent can add hundreds of dollars to your monthly mortgage payment.

But there is some good news. If home loans are more expensive, fewer people will buy homes. And this means lower competition for you. Those of you who have lost homes in bidding wars in this seller’s market will be especially relieved to see fewer buyers in the market.

This raises two important questions: Will home prices drop with fewer buyers? And should you buy now or wait.

Will Home Prices Drop Because of Rising Interest Rates?

Probably not. Even if some buyers opt out of the market, buyer demand still far exceeds seller supply. This is why real estate analysts are forecasting increasing home prices in the Bay Area despite increasing interest rates.

Should I Buy Now or Wait?

Without a crystal ball, we can’t tell you what you should do. But here’s what we know:

• The Fed has plans to raise interest rates further. So buying a home a few months from now will likely come with a higher interest rate than buying today. This is the projected path for the foreseeable future until inflation is fully under control.

• There is no indication that prices will drop. And even if they dip temporarily, any money you might save could easily be offset by the higher interest rates.

• Perfectly timing the market is nearly impossible. If you want to buy a home, there’s no reason to wait.

What Increasing Interest Rates Mean for Sellers

Unless you’re selling your house to immediately buy another, today’s increasing interest rates might not directly impact you as a seller. But they will impact you indirectly by changing the market landscape.

With interest rates thinning the buying crowd, there will be fewer buyers competing for your listing. This means you’ll need to work a little harder to make sure your listing stands out if you want to maximize your profit. It also means you’ll have less negotiating power as the market slows, so if you wait to list, you might need to consent to concessions or repairs that you wouldn’t need to agree to today.

Should I Sell Now or Wait?

Some sellers want to wait for the market to “peak” before selling. The problem with that strategy is that you can only see the peaks in hindsight. As we advise buyers: if you’re ready to make a move, make a move, even if market conditions aren’t “perfect.”

By selling today, you have the advantage of relative certainty. You can’t know for sure what will happen next month or next year, but you know that you can get a great price and a quick sale in today’s market.

The Bottom Line

Increasing interest rates will slow the rate of growth the housing market has seen over the last few years. And that’s not a bad thing; the current growth rate was never sustainable, and we need to reign in the excessive inflation.

But the interest rates can complicate things for buyers and sellers. Luckily, the real estate experts at Sequoia Real Estate have the market knowledge and experience to navigate these changing market conditions. Whether you’re in the market to buy or you’re looking to sell, contact us today for a friendly, no-obligation consultation.

Is a Wave of Foreclosures Coming?

Last month, FORTUNE reported that Foreclosures were up 11% in February. And, to make matters worse, double-digit increases in foreclosures are expected for the next six months. 

To the casual observer, it may look like a wave of foreclosures is coming. Some buyers might even plan to wait until “foreclosures flood the market” or “the housing bubble bursts.” But we have additional information that will prove these scenarios to be highly unlikely. 

Let’s look at three key facts indicating that there will not be a wave of foreclosures.

The foreclosure moratorium expired in October 2021. 

Fact: Foreclosures Were at Historic Lows During the Pandemic

Yes, foreclosure filings are up. In February 2022, there were 25,833 foreclosure filings nationwide, representing an increase of 129% from the previous year. Please note that this number is filings, not repossessions (only 2,634 homes were repossessed through foreclosure that month). 

But remember, there was a foreclosure moratorium from Spring 2020 through Fall 2021. So homeowners could not be foreclosed on for non-payment if COVID impacted them. And because this legislation was drafted and implemented quickly, there were some gray areas. So most lenders erred on the side of avoiding foreclosure whenever possible. They didn’t want to risk lawsuits over misinterpretations of the temporary legislation.

This led to a historic low in foreclosures throughout the worst of the pandemic. In 2021, the foreclosure rate was only .11% (for comparison, rates in the recession-recovery years were right around 1%). While foreclosures are increasing by large percentages, it’s only because they were well under the average for the last two years. 

Fact: Most Homeowners Have Enough Equity to Avoid Foreclosure

In 2009 and 2010, foreclosure rates were up over 2.2% because of the housing market collapse. These extra-high figures are because many homeowners were underwater on their mortgages; they owed more than the house was currently worth. That’s not the case today. 

Most of today’s homeowners who are in financial trouble have enough equity to avoid foreclosure by refinancing or selling the home.   

Option 1: Refinance

Refinancing can lower monthly payments by reducing the interest rate or extending the loan term (or both). Homeowners struggling to pay the mortgage in the COVID aftermath may be able to refinance to keep the home. 

Option 2: Sell 

Selling is another viable option for homeowners struggling to make mortgage payments. With the new remote-work structure, many workers are able to relocate to less expensive housing markets, further from their employer’s office. For example, you might decide to sell your San Francisco home (with a median price of $1,500,000) and buy a less expensive home in Oakland (for a median price of $900,000).  

Fact: CA Mortgage Relief Programs Can Help 

There are still COVID-related mortgage relief programs available to CA homeowners in financial distress. Through the California Mortgage Relief Program’s Homeowner Assistance Fund, past due housing payments that were legally deferred during the pandemic can be eliminated completely for eligible homeowners. 

So, No Wave of Foreclosures Then?

Nope, no wave of foreclosures; just a gentle market correction. 

So please don’t wait for a flood of foreclosures to drop housing prices. If you want to buy, do it now before interest rates rise. Because, even if prices temporarily dip slightly in the future, any potential savings could be completely wiped out by rising interest rates. 

On the other hand, if you’re concerned about a potential foreclosure on your home, you have options. You might apply for mortgage relief, refinance your mortgage, or sell your home and use the proceeds to relocate to a more affordable neighborhood. 

Whatever your unique situation, we’re here to help. You can contact us anytime for a friendly, no-obligation consultation. We’ll answer all your questions, and get you on the path to achieving your goals!

Conventional Loans 101

Conventional loans are a popular home loan option because they work for a wide range of buyers. But will a conventional loan work for you?  

Here’s what you need to know about conventional home loans. 

What is a Conventional Loan?

A conventional loan is a home loan that is not backed by a federal department. While some home loans are insured by government entities (like the FHA, VA, or USDA), conventional loans are not. 

What does this mean for you? It means you’ll need to have solid credit and income to assure lenders that you will repay your loan. Since the lender doesn’t have the security of government-backing on your loan, they are extra careful about confirming creditworthiness for conventional borrowers. 

Who is eligible for a conventional loan?

Every lender has their own criteria, but in general terms, lenders like to see the following from conventional borrowers:

• Good credit. Lenders want to see a score of at least 620. But the higher, the better! With a higher credit score, you can typically qualify for a lower interest rate, which means a lower monthly payment.

• A 3% down payment (or more). You need to put at least 3% down with a conventional loan. But if you can put 20% down, you can avoid paying for private mortgage insurance (PMI).

• A reasonable debt-to-income ratio (DTI). Lenders typically want conventional borrowers to spend less than 36% of their income on debt payments (like their new mortgage plus any car loans, student loans, etc).

Pros and Cons of Conventional Loans

Conventional loan pros:

• They work for any property type. Government-backed loans are typically only available for your primary residence, but conventional loans can also be used to finance vacation homes, rental properties, or even commercial property.

• You can cancel your PMI once you have enough equity in the home.

• There are no “program fees” like you often see with government-backed loans.

• You can choose from more flexible loan terms. Conventional loans come in fixed-rate or adjustable-rate options and different repayment periods.

Conventional loan cons:

• Qualifying for a conventional loan can be harder than qualifying for government-backed loans.

• There is no 0% down payment option with conventional loans.

What if I Don’t Qualify for a Conventional Loan?

If you don’t qualify for a conventional loan, don’t worry; homeownership can still be within your reach!

Government-backed loans can be a good alternative, depending on your situation. Here are the most common options for borrowers who don’t qualify for a conventional loan:

1. VA loans: Available only to military service members, veterans, and their spouses, VA loans provide benefits like 0% down payments and no PMI.

2. FHA loans: Ideal for buyers with credit issues, FHA loans were created to make homeownership more accessible to the general public.

3. USDA loans: Reserved for smaller towns and rural areas, you can get a 0% down payment USDA loan if you’re searching within a qualifying rural area.

We’re Here to Help!

At Sequoia Real Estate, we understand that buying a home can feel overwhelming. And we’re here to make the process simple and enjoyable for you. We can put you in touch with lenders who can advise on the best home loan option for you, and even get you pre-approved so you’ll know exactly how much you can borrow. Contact us today to start your home search!

5 Ways to Protect Your Personal Items When Your Home Is On the Market

When your house is on the market, you inevitably will have people come through your home to tour the property. This is great because it increases the exposure for your listing and improves your chances of getting top dollar for your home. 

But some homeowners are nervous about having strangers come through their homes, particularly when it comes to personal items. While it’s rare for personal items to get damaged or go missing after a showing, it’s not completely unheard of. At Sequoia Real Estate, we want to make sure our sellers are as comfortable as possible with the idea of having people tour their homes. So we have a few tips to help you protect your personal items while your home is on the market.

5 Ways to Protect Your Personal Items When Your Home Is On the Market

1. Safely Store or Remove Valuables

The most effective way to protect your valuables is to make them inaccessible to the people touring your home. High-value items like jewelry and collectibles can be stored in a safe or even a safe deposit box in a secure location like a bank. 

2. Insist on Qualified Buyers

Naturally, you want all serious buyers to be able to see your home so they can confidently make an offer. But it’s ok to require that buyers be qualified to purchase your home before they make an appointment to tour it. Serious buyers typically complete a mortgage pre-approval process to confirm that they can qualify for a home loan large enough to cover the purchase of your house. All-cash buyers only need to show proof of funds to their agents to confirm their status as qualified buyers.

This does give buyers a small hurdle to jump before seeing your home, but it also limits your traffic to buyers with the means to purchase your home.

3. Use a Home Security System

If you have a home security system, most local jurisdictions allow you to have your security cameras running during home showings. You should just have a conspicuously-placed sign to let buyers know that the security cameras are rolling.

4. Fake a Home Security System

In most cases, the idea that the home may be under surveillance is enough to make buyers extra careful with your belongings. If you don’t have a home security system, you can still post a security system sign to make visitors think someone may be watching. 

5. Move Your Belongings Out and Stage the Home

If you are still nervous about your belongings despite these precautions, you may want to consider moving all of your personal belongings out of the home and having a home stager bring in items to replace your personal things. 

With this strategy, you can be completely confident that your belongings are not exposed to the public. You also get the benefit of having a professional stager design a space that will appeal to as many prospective buyers as possible. Home staging often results in faster sales and higher sales prices.

Are You Planning to Sell?

Being professionally represented by a well-qualified listing agent is the key to getting the results you want from your home sale. Whether you’re ready to sell now or you just have general questions about the selling process, contact Sequoia Real Estate today for a free, no-obligation consultation with one of our real estate experts. 

What Buyers Should Expect From Their Real Estate Agents

A few months ago, we shared our seven insider tips for choosing the best buyer’s agent. And today, we want to show you what you can expect from your buyer’s agent. 

Here are five things buyers should expect from their real estate agents.   

1. Understanding and Support

Having your agent understand your needs and support your real estate goals is critical. Good real estate agents know how to objectively evaluate properties without allowing their own tastes and preferences to interfere. Good buyer’s agents also respect your budget. You should expect your agent to prioritize listings that meet all of your needs, include several of your wants, and fall within your price range. 

Having said that, this only works if your budget is reasonable for the items on your needs and wants list. If your agent suggests properties that don’t suit you well or are too expensive, it may be because there is nothing on the market that meets your needs in your price range. Having a frank discussion with your agent about what your budget can get you in today’s market can help you avoid confusion and frustration.  

2. Lots of Behind-the-Scenes Work

While you might only see your buyer’s agent for a few hours at a time, you can expect them to be investing many hours of work that you never see. Here are just a few of the many things buyer’s agents do for you when they’re not showing you homes: 

• Combing the MLS (Multiple Listing Service) to find homes that could meet your needs

• Contacting other agents to find out about listings that aren’t on the market yet, but are coming soon

• Previewing homes so they are personally familiar with many of the listings on the market

• Contacting their network of potential sellers to find off-market deals for you

• “Running comps” to see if listing prices reflect fair market value

• Providing feedback to sellers on why you are or are not interested in their listings

• Working with the many professionals involved in the due diligence process once your offer is accepted

3. Availability and Communication

In a competitive market, you often need to tour homes within a few days of listing to have a chance at making an offer. So, while you can’t expect your agent to always be available without notice, you do need an agent who can be available within a day or two. Some agents will even work as a team or will hire “showing agents” to make sure someone is available to assist you, even if your agent isn’t personally available. 

You should expect all communication from your agent (and their team) to be prompt, honest, professional, and clear.  

4. Market Knowledge and Negotiating Skills

Your buyer’s agent should know the market inside and out. They should be able to explain current market trends, advise you on locations, and help you make a competitive offer when you find the right home.

In a hot seller’s market like we’ve seen over the past few years, buyer’s agents have very little leverage when negotiating with seller’s agents. So you can’t expect your agent to negotiate a reduced price or concessions to help pay your closing costs. But you can expect them to advise you in creating an offer that will appeal to sellers and presenting your offer to the listing agent in the most favorable light.  

5. Transaction Management    

Completing a real estate transaction requires several industry professionals. You need a listing agent who can coordinate with the:

• Lender,

• Seller’s agent,

• Home inspector(s),

• Appraiser,

• Tile rep,

• Surveyor (if necessary)

• Escrow officer,

• Attorneys (if necessary)

• And any other professionals needed to smoothly close on your new home.

Good buyer’s agents know how to keep your deal moving smoothly forward, despite the many moving parts.

How to Find the Best Buyer’s Agent

Whether you have general questions about the home buying process or you’re ready to start your home search today, contact the experts here at Sequoia Real Estate. Our experienced real estate agents are ready to exceed your expectations!