A Step-by-Step Process to Selling a Home in California
Nationally syndicated radio host Dave Ramsey, a guru on personal finance and real estate agent by trade says of California real estate: “the good news is you own California real estate, the bad news is you own California real estate.”
That contradictory statement nicely sums up the most volatile and unpredictable housing market in the nation.
The good news as Dave might also say, is that with a plan, a good realtor and a little knowledge, this roller-coaster ride can be at least somewhat tamed.
Here are 5-steps to take that will guide you as you venture into buying a piece of property in the golden state for the first time.
- Hire a good realtor
The first and most critical step in this process is to hire a realtor. Realtors are the experts on the topic of buying/selling a home, and should be the first step every time you go to buy. Eva Grijalva has been serving California for many years, even the most competitive areas. She knows what it takes to get the job done.
A realtor (should) possess excellent local market knowledge including recent sales history in the area you’re looking at, and the average rate of appreciation for a considerable period of time in that neighborhood.
How do you vet your agent to determine their competency? A good way, according to a recent post in Money magazine, is to negotiate with the agent you’re thinking of hiring. Suggest to them to take a discount on their commission, if they agree, you probably want to hire someone else.
2. Keep the Buying Personal
What we mean by that is keep your priorities straight. Just because the market is doing this and its projected to do that next month doesn’t mean you should react. In fact, in most cases it means the opposite.
Wait until your finances are in a responsible place before buying.
3. Know The Market Trends
According to Money, California is predicted to have five-of-the-ten-hottest real estate markets in the nation, with San Jose predicted to be the hottest of the California five, with an expected value growth of 14.6 percent. The other California markets on the rise are: Oakland, San Francisco, Los Angeles and Fresno.
4. Understand the Impact of Taxes
Part of the unpredictability of the California market is the incredible tax burden faced by the state’s population. According to this article by Kiplinger, California has the highest tax rate of any state in the nation. Fortunately state property taxes themselves are a bit more manageable. But even that may be changing soon.
A recent proposal by Sen. Robert Hertzberg D- Van Nuys calls for a 6.5 percent service tax every time a consumer engages the use of professional services. With the myriad of services required to buy/sell a home, that number could add up to as much as $2500 on a $500,000 home.
5. Buy on a 15-year Fixed-Rate Mortgage
While not always possible, if you can manage it, buying on a shorter term will save you thousands in interest over the life of the loan. Make sure your income is stable though, as spreading your loan over 15-years instead of the more common 30 can add around $170 per-month onto what you would pay on a typical 30-year $300,000 loan.
There you have it, the top-five steps to take when beginning the process of buying a home in California: A mix of state-specific and general best practices that will hopefully help you make the right choice when buying your next home.
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