The first-time buyer’s guide to real estate

Jim McKinley wrote a blog that I’ve made slight edits to below. Let me know what you think!

Buying your first home is exciting, but it can also be full of confusion, fear, and apprehension. After all, buying a home is a huge commitment, and if you’ve never done it before, there can be a lot of questions. However, by getting informed and preparing yourself appropriately, you can avoid many of the common pitfalls of buying your first home and step into this new stage of your life with confidence. To help everything go as smoothly as possible, follow these tips and tricks.

Get your Finances in Order

Many people might assume that it is time to become a homeowner based on their life situation, such as recently landing a well-paying job. However, no matter where you are at in your life, it takes quite a bit of financial preparation to correctly prepare for buying a house. First and foremost, you need to ensure that you have a solid budget. Some people might encourage you to put this off until after you buy your house, but your budget is an indispensable tool to figure out how much home you can afford. Secondly, save up a reasonable down payment. According to the Motley Fool, squeezing out enough money for a down payment might require a lot of expense cutting. We recommend using a savings calculator to help you figure out how much you’ll need to save each month.

Get Pre-Approved

Before you even begin to look at houses, go to some lenders to get pre-approved for a mortgage. This is not as scary as it might sound and can take a lot off your plate later. To be approved for a mortgage, the lender considers your credit score, how much you make, the amount you put down and your debt-to-income ratio, among other things. There are many different financing options available and a good lender will advise you accordingly.

Find a Great Agent

A good real estate agent can provide you with huge benefits when it comes to looking for your home. The housing market and lingo can be confusing. When you work with a real estate agent, they can advise you on how to write the best offer and discuss the current market so you can focus your energy on searching for a home. According to The Balance, an agent is a great asset; they can ask questions for you and obtain disclosures. Real estate agents are particularly helpful for first-time homebuyers who might not be aware of the home-buying process and a good referral source for reputable lenders.

View Houses in Your Area

Now that you have all the preliminary work squared away, it’s time to start looking at houses. Preferably, you’ll want your real estate agent to set up showings based on your criteria. Your agent can point things out that you might have missed and help gauge whether the home is listed for a good price.

Image result for house for saleNegotiate your Closing Costs

Once you find your perfect house, you need to close the deal. There are fees tacked on to buying a home called closing costs. Everything from lender fees, title insurance to title search fees. To the average person, these can begin to sound like a second language. You can shop a rate, but many lenders will quote you the lowest rate of the month, because until you lock in a rate, it is a moving target. Look to reviews and potentially how smooth your closing will go. Review your Loan Estimate closely and ask about all fees you do not understand. Once you understand everything, negotiate with your lender for lower fees.

Move

Give yourself more than enough time to pack and move to prevent yourself from rushing. If you hate packing, you might even want to consider hiring a moving agency. If you have children, you might drop them off at a family member’s house to give yourself a couple hours of uninterrupted packing.

Home buying is an exciting, nerve-wracking process. By following these steps (and hiring the right lender and agent), your can home-buying process will be a lot smoother.

Art Town: Echo

If you’ve been wandering around downtown after a movie, or had a hankering for Chipotle, or really wanted to get a drink at The Cheesecake Factory, you’ve seen the lovely pair of statues on either side of Locust St. in Plaza Escuela. They tower above fountains or pedestals where pedestrians rest their feet. The artist, Yoshio Taylor, created these in 2002 out of bronze, and placed them on terra cotta bases.

 Look closely, and you’ll see a lot of history in these twin pieces. First, did you know that Walnut Creek’s first school once stood in this spot, hence the name of the plaza itself (“Escuela” = “school” in Spanish!)? The female figure is reading, and the male figure is holding several books. In another nod to Walnut Creek’s history, Taylor surrounds the feet of the figures with native plants that have disappeared from the area. If you look closely, you’ll see frogs, birds, foxes and more around the bases. The reason for the grape leaves is to celebrate Walnut Creek’s agricultural history; apparently we celebrated grapes in the Fall Festival long before we celebrated Walnuts!

Taylor says he created this with classical influences and wanted to give a proportional stance to his figures. The columns, in his description, give place, presence, and power to the figures. They serenely invoke a quiet restfulness. Taylor, who got an MFA from UC Berkeley and resides in Sacramento now, has given Walnut Creek’s downtown art scene one of its most treasured and aesthetically-pleasing works with Echo.

Annual Chili Cook-Off!

For those who have been following this blog for a few years, you may remember an annual event we’ve been doing in Parkmead for the last 4 years: the Chili Cook-Off! The 2018 event took place on November 3rd from 3-6 p.m. We had nine chili-makers, a keg of Allagash White, cornbread, brownies, and kids with chalk and scooters running around the blocked off Lee street in the Parkmead community.

Usually, we have a great turn out and many different chilis to try in the neighborhood, then we crown a winner each year with the Parkmead Wooden Spoon!  This year a new homeowner David Chiorini took home the bragging rights. He made an El Pato (spicy style) Texas Chili garnering over 24 votes. There’s nothing better than a few warm cups of chili and a cold beer on a Fall afternoon, especially when you’re doing it as a neighborhood community builder! The Parkmead Community Association organizes these types of events and it is what makes the neighborhood so darn special and desirable.

Hope to see you next year, and what a great idea to organize in your own neighborhood! And, if you are thinking you would like to live in this type of neighborhood, give me a call.

Oktoberfest: Not enough beer, but tons of fun!

I went to the Walnut Creek Oktoberfest at Civic Park a few weeks back – an event I’d recommended in a previous blog! It did not disappoint, however, I don’t think the people running the event had any idea what they were in for. They ran out of beer fairly quickly, and also didn’t have enough pretzels or funnel cake for the hungry and thirsty masses!

Overall, it was still an awesome event. There were a few people dressed up and the beer they did have was served from Brauerei Weihenstephan, which is apparently the oldest brewery in the world. They also had some local artisanal beer selections, as well as wine. The main issue (besides running out of it!) was that the drink lines were so long, that you had to wait for 20 minutes to get a stein or in this case a glass of beer and then you could only have up to two at a time.

So, even though the food and drinks were good, the crowd was large, and the Civic Park venue was much more appropriate than the old location on Locust St., there were some operational issues to work out for future events. There was a kids area, plenty of food vendors, art vendors, beer batter dipped french fries (What?!), music, and a bunch of new people to meet. I went towards the end, but the consensus seemed to be that it was a very successful event.

Oh, and did I mention it was dog-friendly? What a bonus! I would have brought Bodie if he would do well in crowds with dogs everywhere, but I didn’t want to risk it. Still, what a great event for downtown Walnut Creek that will surely be replicated in the Octobers to come and may surpass Clayton – just with more beer next time! Did you go? Let me know what you thought!

Congrats to my clients who bought in Pleasant Hill!

I want to congratulate my recent client Vimi and her partner Liz for closing on their new home! They celebrated in a unique, cultural way that I found really interesting and was thankful to be included in such a personal experience. As you can see in some of the pictures below this was a house blessing which they called a puja. It’s always exciting to help a client find their home, get their offer accepted, and then close. This was definitely a first; they were not allowed to move in until the blessing occurred and they spent the night in the vacant home after the blessing!

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Vimi is of Indian (Hindu) descent and this is how it was explained to me:  A “puja” ritual, which is performed many times to mark lifetime events (birth, wedding, new home, etc.), is not required in their religion but many do it. Some Hindus do a daily puja ritual in the home, some do it at regular temple ceremonies or festivals, and some don’t do it at all! It was a very cool spectacle to witness. We started with an incense stick, flower petals, bananas, spilled rice, boiling milk, fire, and red and yellow powders (that, when mixed with water, allowed them to mark the Om symbol on the frame of the door). There were songs and hymns, and personal prayers.  A Ganesha statue was also part of the ceremony, who is the remover of obstacles. As the god of beginnings, he is honored at the start of rites and ceremonies. What a beautiful way to honor and celebrate a new home.

Everyone has their own way to celebrate buying a new home. I was honored to be a part of this ceremony, and am really happy that I was able to help Vimi and Liz find their home.

Why borrowers should consider a 30-year mortgage

Jay Vorhees at JVM Lending has written an excellent blog about borrowers and their understanding of liquidity, and why borrowers should consider the lower 30-year mortgage payment. Besides the flexibility it offers, it allows a sort of cushion for any borrowers who may find themselves in personal trouble, and is also usually a good long-term investment. Read on below to get the full picture, with two cents from me – can you say liquidity:

 Borrowers often underestimate the importance of liquidity. Especially when times are good. When rates are relatively low (under 8%), we always recommend using financing (obtaining a mortgage) to buy real estate, even if borrowers have ample cash. Similarly, we usually advise borrowers who want lower 15-year rates to take a 30-year mortgage. Even though borrowers can afford the higher 15-year mortgage payment, the lower 30-year mortgage payment offers them more flexibility. There are several reasons why borrowers should value liquidity more:

1. Job Loss, Major Illness, Injury, Legal Troubles, Recessions. People often forget how quickly fortunes can turn (especially those of us in sales), and how important cash is when income dries up. This is particularly the case when the economy turns and financial instruments and hard assets drop in value and become difficult to sell.  An abundance of cash during unexpected hard times often means the difference between bankruptcy and muddling through.

2. Ability to Buy Distressed Assets. When the economy turns and asset prices tank, there are often tremendous bargains to be had for anyone with even a little cash. After the mortgage meltdown, for example, one of our clients purchased eight rental properties for around $100,000 each. He was out of pocket less than $250,000 for all of those purchases, and all of the properties cash-flowed from the start. In addition, they are all worth close to $300,000 now. I watched many other clients do the same thing in the stock market after both the dotcom crash and the 2008 meltdown.

3. Investment Returns Exceed After Tax Cost of Mortgage. This does not apply to everyone of course, but many borrowers can often invest money that they do not put into their home and earn a return that exceeds the cost of their mortgage, especially after tax benefits are taken into account. Example: Borrowers A and B both have $250,000. “A” puts down 50% on a $500,000 house; “B” puts down 20% and invests the $150,000 he saves. In the long run, Borrower B will have a much higher net worth and more liquidity along the way if his investment yield exceeds his rate by 2% or more (not difficult over the long term).


Interesting, right?  I saw this first hand in the down turn, people with cash bought investment properties.  They are usually patient and don’t get caught up in all the hubbub.  Many can’t see past the downturn and believe it will never improve, however we are not building any new land and history shows us that what does down, goes back up.   Remember cash is king, so start saving and get a leg up on the next down turn.

Road Trips: South Lake Tahoe

I’ve touched on South Lake Tahoe (and Tahoe/Reno in general) a few times in this feature, but I had a whole new experience last time I visited Tahoe and I wanted to share with you all! I went for a summer hike in South Lake that was about 3.5 miles one way and had some of the most beautiful views ever!  I was with another friend and heading back home and they were staying, so we had two cars.  We parked one at DL Bliss and one at Emerald Bay.  Then we proceeded to walk down to Vikingsholm and follow the trail back to DL Bliss.

Vikingsholm was closed for the season, so unfortunately I have still never been inside.  It was one of the first summer homes at Lake Tahoe. Ben Holiday, stagecoach magnate and early-day transportation king, constructed a home there in the late 1860s. His land was eventually sold to Paul Kirby in 1880. The Kirbys built a number of cabins, intended for resort use. The William Henry Armstrong family acquired the property in 1892 and they used the cabins as their summer residence for over 32 years. In 1928, Mrs. Lora Josephine Knight bought the Armstrong’s land with the desire to build a summer home that would complement the magnificent natural surroundings.

Emerald Bay reminded her of fjords she had seen on numerous travels to Scandinavia. She commissioned her nephew by marriage, Lennart Palme, a Swedish architect, to design the home. Vikingsholm was completed in the fall of 1929. In 1945, the estate was sold to Lawrence Holland, a rancher from Nevada. He subsequently sold it to Harvey West, a lumberman from Placerville, California. In the early 1950s, Mr. West, a noted philanthropist, negotiated with the State of California and said he would donate one-half of the appraised value of the land and the Vikingsholm outright, if the State would pay him the other half of the land value. These terms were agreed upon, and in 1953 the house and property were acquired by the state.  This landmark home is now a park and can be enjoyed by all and not developed.

This trail is part of the famed Tahoe Rim Trail, which is exactly as epic as it sounds. We came across a small waterfall still flowing in October and the views were truly spectacular. It is an easy hike, even if you do it round trip, as long as you have good weather, it could be a fun date idea or family adventure.  When we were parking one car at DL Bliss, two guys were running down the hill at a good pace.  As we started on the trail at Emerald Bay, here came the same two runners, making great time, but they still had a big hill to climb up.



This hike is mesmerizing! It is called the Rubicon Trail, primarily running along the water’s edge and afforded breathtaking views of Lake Tahoe, the pictures say more than a thousand words. On my way home I stopped at  Camp Davidson for some food. They are known for their rum runners and summer parties on the beach with live bands – but that will have to be another blog. Next time you head up to Tahoe, definitely give this hike a try; in summer months the parking is tough. October is the perfect month: not too crowded and before the snow hits and 89 closes.

My new found sport: Pickleball!

I didn’t necessarily expect this new sport to jump out at me. I went the first time because I was interested in hanging out with the people who invited me – ok let’s be real, a cute guy. But now, I’m hooked! You have to give pickleball a shot next time you’re looking for a new, fun sport to play.

And, no, it has nothing to do with actual pickles. It’s basically a game of tennis, combined with badminton and ping pong, using wooden paddles and a wiffle-ball to go back and forth over the net. It’s a variation and combination of many other court-based net sports, but it’s really fun and fast-paced and a great workout!

Pickleball is the fastest growing sport in the nation; for every tennis court, you can fit approximately four pickleball courts. There is strategy and finesse involved, and where you stand is huge. The game requires two teams consisting of two players each. If you don’t have enough players, you can always go to the Concord courts off of Olivera and pick up some games.

I met the coordinator of the Walnut Creek Pickle Ball group in the summer (they play at Rudgear Park), but as it gets darker, they move to Concord. I have now played three times and the last time with the Walnut Creek Group. I was told I should take a lesson or two to figure out where to be and the overall game – not bad advice, however, they did say my shots were good and have potential; probably because I have played a lot of racquetball and volleyball. I just bought a racquet and a couple of balls, now I just need to learn how to dominate and stay out of the kitchen…

Walnut Creek has a bunch of courts at Rudgear Park on the corner of Stewart and Dapplegray, some indoor at Tice, and Concord has around 14 courts which are lit for night play. If you want more information, send a reply and I will hook you up!

Interest rates: is the latest increase a deal-breaker?

My friend Jay Vorhees at JVM Lending had a fun blog about the 1/4% rate increase recently. He compared it to be equivalent to just less than four lattes per month, to put it into context. You can see the highlights of that blog below, and then our fun take on it!

From Jay: There have been a lot of rumblings in the news lately about rate increases…mostly b/c rates have been increasing :).

The Fed recently announced an increase in the Fed Funds rate with more on the way, and rates have been increasing in general in response to positive economic reports, as most everyone knows. As a result, rates are now back at levels not seen since 2011. The good news is that rates remain very low by historical standards, as we remind everyone over and over (6% was a “gift” in 2006; 7% was awesome in the 1990s; and 9% was unimaginable in the 1980s).

The other good news? Rates affect payments much less than most people think. Here is the rule of thumb: for every 1/4% increase in rates, a mortgage payment increases by about $15 per $100,000. That’s less than four Starbucks Lattes per month. So, in a “Starbuckian economy,” a 1/4% increase in rates will increase the payment on a $500,000 loan by about 20 Lattes per month. That’s not too bad, especially when you consider that those lattes may be tax deductible too.

From Kristin: So, let’s compare a 6-pack of beer, an average cost of which is about $9, to the 1/4% rate increase. You could get almost two 6 packs for that increase. Or maybe a new shirt on sale at Old Navy. A decent bottle of wine at Trader Joe’s will run you about $15. Eating out at many restaurants in downtown Walnut Creek might cost about $15 per person before tip.

So, before you get too worried about the rate increase, consider that what you’re really losing is just a new shirt, or a couple of beers, or one lunch out with friends. Or, god forbid, a handful of lifeblood, I mean lattes, before work! All said, this increase won’t have too much of an effect on your life.

Of course, it’s not all sunshine and rainbows. According to this article, mortgage rates are fast approaching 5 percent, which is a fresh blow to the housing market.