Lenders carefully consider your credit score because it provides them with an objective measure of your creditworthiness.  When buying a home in Auburn, the loan officer will first pull up your credit report to see what credit score you have.  Credit scores range from 300 to 850, and anywhere in between.

It is wise for a potential buyer in Auburn, WA to check his/her own credit reports regularly before applying for new credit, to be sure the credit reports are accurate and up-to-date.  As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as www.myFICO.com, your own inquiries will not affect your FICO score.  You can also get 1 credit report from each of the three major credit bureaus (TransUnion, Equifax, and Experian) once every 12 months from www.annualcreditreport.com.  However, this site does not provide credit scores.

Also, another one that is advertised is freecreditreport.com. It is free for a limited time (7 day trial period), and then they charge a monthly fee. Obviously they are marketing towards people who have a high chance of forgetting to cancel.  Another one with a free credit report is www.creditkarma.com. It has a great blog site with a lot of subjects about credit and personal finances.  A savvy Auburn home buyer will get a lot of information from this site.

The one that I have been using for many years is www.creditnotify.com.  I pay a small monthly fee for this (currently $12.95 a month).  It provides me with my credit score, and another HUGE plus is that it immediately alerts me to any inquires or changes from the 3 leading credit bureaus. This prevents identity theft and other unauthorized use of my personal credit. This beats just getting my credit report for free, this service is worth a lot of money for me to have peace of mind and not have to worry about what is happening on my credit reports.

What about companies that claim they can improve my credit report for a fee?   The Federal Trade Commission (FTC) cautions consumers to be wary of companies that make claims regarding credit repair. The FTC and state attorneys general have filed actions against those who pursue these fraudulent practices. These companies do not do anything for consumers that consumers and Auburn home buyers cannot do for themselves.

Also, beware of proxy websites, which are sites that mimic popular websites to lure consumers into disclosing confidential information.  In order to protect yourself against proxy activity, access the above recommended websites or any websites directly by typing its address (URL) into your browser and then bookmark it.

If you would like more tips on improving your credit, please let me know.  I can put you in touch with a reputable consultant in the Auburn area who can work with you to help improve your credit score.

By now most everyone in Auburn, WA is aware of the $8000 tax credit for 1st time homebuyers or buyers that have not owned a home in the last 3 years.  But what Auburn home buyers may not be aware of is that the deadline is coming faster than you may think!  In order to take advantage of this tax credit, you must close (by definition “closing” means be recorded with the County) the sale of the house by November 30, 2009.  FHA now allows the tax credit to be used upfront for some closing costs, but not the down payment. To keep everything in perspective, here is the timeline that you will need to keep in mind in purchasing and closing by the deadline:

____ Allow 2 to 4 weeks for your search to buy a house, which means you should be starting NOW.  You should have your purchase and sale agreed to and in escrow no later than October 1st.
____ Allow 45 to 60 days due to system delays and/or lender issues.  There is a much longer closing time now than previous years starting from the point of making an offer on a home (a purchase and sale agreement with mutual acceptance) to actually owning the home (recorded with the County).  Your part of it includes providing the lender will all the necessary documentation, etc. in a timely manner.
____ Other delays can be caused by new lender procedural issues, or delays in appraisals.
____ Overload with the lender and escrow caused by too many home buyers all at once, causing processing and underwriting to get backed up.
____ Delays caused by new rules that require the home buyer to receive another Good Faith Estimate 7 days before closing, and which will not allow transactions to close if there is a variance of 0.125% higher in APR (annual percentage rate) from the last Truth-in-Lending provided to the consumer (upon application,or another one upon locking in an interest rate)
____ Last but not least, there is something else that good real estate professionals realize.  The last week in Nov. is the Thanksgiving Holiday week!   This is extremely important especially this year because it means that you basically lose most of the last week in Nov. because:
1.  The Wed. before Thanksgiving is a King County furlough day (Nov 25th) when the King County Recorder’s Office will be closed due to budget cuts.
2.  Also closed will be Thanksgiving (Thursday, Nov 26), and Friday, Nov 27th, which is a legal holiday. (And of course Sat. & Sun.)  No escrow offices or lenders will be doing business on any of these days.
3.  This leaves Monday, Nov. 30th, 2009 to record the sales, and there is a limit on how many sales can physically close on that last day.

Time is of the essence.  The sooner you buy a home and the sooner it closes, the more confident you will be that it will close far in advance of the deadline.  I will be glad to help guide you and assist you in finding the best home in Auburn or elsewhere for your needs, and minimize the stress for you by handling your purchase efficiently and as stress-free as possible.  Call me today to get to work for you right away.  Remember, the seller pays all the commissions, so it doesn’t cost you to get started!

Even if you know exactly what you are looking for, the house hunting and home buying process can be overwhelming.  It can be overwhelming due to many factors, including that there are many different homes on the market including short sales and bank owned, and other homes that are priced too high or sometimes too low (some short sales).  A knowledgeable and experienced real estate agent can guide you in the differences in the buying procedures of these various homes.  In addition, after you find a home, the loan and mortgage procedures are constantly changing, due to new laws being enacted to protect the consumer.    Once you know how much money you can borrow and have an estimate of your closing costs, you will know the price range in which you can afford to buy.   Here are 10 tips to use in the home buying process:

1.  Stick within your budget – don’t look at homes that you cannot afford.

2.  Be flexible. Do not be disappointed if the homes in your price range differ from your dreams.

3.  Concentrated on a few neighborhoods.  Decide what is the most important to you about the neighborhood you want. This can help to narrow down your search.

4.  Carefully consider commuting times and costs.

5.  Ask about utility costs and maintenance costs.

6.  Bring a family member or trusted friend to get an objective opinion on the home that you want to buy.

7.  Do not look at more than about 6 homes a day, or you will start getting them confused.

8.  Compare what you would like to have in a home with what you really need in a home. (wants vs needs)

9.  Find a real estate agent you can trust, and work with him/her exclusively.  It is unfair to waste all of the agents time and gas money, except for the one that you will eventually use to buy your home.  Instead, choose one trusted real estate agent only, and let him/her know that they are the only agent that you will be using to buy a home, and as a result that agent will work extra hard on your behalf.

10. Print out and take along the home buyers worksheet House Hunting Worksheet.

As for me and my method of business, I have buyer’s packets available for buyers that work exclusively with me.  I am honest and hardworking, and I have an extensive knowledge of many areas.  You can count on me, so give me a call today.

Since we are now at the end of June and midway through 2009, here is an update on how sales are going this year from January until now.

TOTAL CURRENTLY ON MARKET: There are currently 732 listings of residences on the Auburn, WA real estate market. This includes residential homes (487), condominiums (129), manufactured homes in parks (74 ), multi-family duplex and four-plex (24), and small commercial dwellings (18).

UNDER CONTRACT w/pending sales: Currently, out of the above listed properties on the real estate market, the following listings in Auburn have pending sales: residential homes (149), condos (18), manufactured homes in parks (3), multi family (3) and small commercial (2).

SOLD: The closed sales from January 1, 2009 through the end of June, 2009 include residential homes (191), condos (38), manufactured homes in parks,considered personal property instead of actual real estate (35), multi-family (3), and small commercial (2).

BANK OWNED AND SHORT SALES: On the market from the above active and pending listings, here is some interesting data: For the properties under $400,000 there are 53 bank owned and 129 short sales, which is 29% of the active listings in this price range. In the price range over $400,000, there are 3 bank owned and 16 short sales, which is 7.6% of the listings in the over $400,000 range. This is a total of 201 listings. There is no data available yet for the number of bank owned and/or short sales that actually close, due to the fact that the MLS (multiple listing service) has just recently incorporated this into the criteria of the listing.

Active: Quantity

$75,000 thru $159,999: 56
$160,000 thru $249,999: 148
$250,000 thru $299,999: 104
$300,000 thru $349,999: 59
$350,000 thru $399,999: 29
$400,000 thru $599,999: 53
$600,000 thru $899,999: 30
$900,000 thru $1,999,999: 18
Other: —-
Pending sales: 175
Manufactured homes under $75,000: 60

TOTAL: 732

From the beginning of the year up until now, we are seeing an increase in pending and closed sales. Also, I have counseling readily available for anyone who is interested in loan modifications, short sales, foreclosures, and great new mortgage products. Call me today to take advantage of what I have to offer. No risk, just honest advice.

First impressions are important.  Often Auburn buyers will judge a home from the outside before ever coming in.  It is important to have the outside of your Auburn home looking as spiffy as possible. As we all know, here in the Pacific Northwest and Auburn, we are fortunate to have an abundance of native evergreen plants that grow naturally and look green and nice throughout the year.  Here are some tips for making the outside look as eye-catching as possible.

1. Add splashes of color. Put a pot of bright flowers on your porch or entryway in spring and summer.  In fall, decorate with fall colors and decorations.  In winter, put a small evergreen on the porch.

2. Have the lawn well-manicured with proper edging, mow the lawn every week in the spring & summer (and right before the buyers are scheduled to come), and water consistently as necessary to produce a green lawn.  A green lawn demonstrates tender loving care.

3. Trim bushes so that they do not block windows, doors, and other architectural features on the home’s facade.  It is important to be able to see the home as clearly as possible, and nice bushes that are neatly trimmed catch the Auburn buyer’s eye.

4. Add fresh bark to border areas to enhance the “newness” of a home.  This is comparable to painting the interior of the home.   A fresh, new look is very desirable.  Of course, along with this, weed any flower beds that border the lawn and sidewalk up to the home.

5. Use decorative architectural elements.  A new mailbox, planted window boxes, a park bench, and a low fence are some ideas that can help to create emotional appeal.  An excellent additional is an arbor, if there is room to have one in either the front or back yard.

6. If you have a patio or deck, have a nice patio table and chairs to complement the outdoor living space.

7. Clean the gutters, rake any pine cones in the yard and borders, and stain any fences to look fresh and new.

8. Pressure wash the driveway, sidewalk, and decks.  Here in the Pacific Northwest and Auburn, we tend to have a green moss-like growth that loves this climate, and grows abundantly over the winter particularly in shady areas.

9. On the house, polish or replace the house numbers, install new doorknobs on the front door, and buy a new doormat for the outside of your front door.  As necessary, upgrade your outside lighting with more attractive fixtures.

10. Let them hear the water.  The sound of water appeals to buyers, and you shouldn’t reserve this for your backyard.  A small fountain accented with rocks provides a pleasant splashing sound, blocks street noise, and is affordable.

Please call me for recommendations on local Auburn landscapers and yard maintenance workers. Also call me for price recommendations and other help on preparing your Auburn home for sale. The market is picking up with sales happening in Auburn, and we do not want to miss the spring, as this is normally a very busy time of the year.  Also, with the first-time home buyer incentives available, the Auburn homes are selling, and selling fast if priced properly and are in top condition, both inside and outside.

If you purchase a principal residence in Auburn, WA on or after Jan 1, 2009, and before Dec 1, 2009, you can elect to take the first-time home buyer’s tax credit of up to $8000 on either your 2008 return or next year on your 2009 tax return.  The credit is equal to 10 percent of the home purchase price, up to $8000 limit. Here in Auburn, because home prices are higher than some parts of the country, the full credit will most likely apply.

According to the National Association of Realtors, there are a few filing options for the credit this year:

**If you purchase your home between Jan 1, 2009 and April 15, 2009, you can claim the $8000 credit on your 2008 return, due by April 15, 2009.

**If you are planning to close on your home after April 15,  but by October 15, you can file for an extension and just wait until the October 15th tax deadline to file your 2008 tax return to claim the credit.

**If you have already filed your 2008 return and qualify for the $8000 credit but want to take it this year, you can file an amended return on Form 1040X.

**You could also wait and take the credit on your 2009 tax return which is due April 15, 2010, or adjust your withholdings now to get the benefit before filing your return.  However, adjusting your withholdings now may be risky in case you cannot close the purchase before Dec 1, 2009.  Remember, closings MUST occur before Dec 1, 2009 (Not Dec 31st).

On Feb 17, 2009 President Obama signed the massive stimulus bill, the American Recovery and Reinvestment Act of 2009, thus making the $8000 buyer tax credit official.

How does this affect us here in Auburn?  One of the incentives is for first time home buyers who have not owned a home in over 3 years to receive a tax credit of up to a maximum of $8000.  Since this went into effect, I have seen an increase of the number of first time home buyers searching for their first home and showing up at realtors “open houses”.

To some potential purchasers in Auburn, $8000 may not seem like that much money, but for most first time home buyers it will help make the difference in achieving the ability to buy a home. Here is a brief overview of how it works:

1. The tax credit is not a loan and does not require repayment, except if the home is sold within 3 years.  This encourages Auburn first time home buyers to remain in their home for three years at least and hopefully longer, and discourages the practice of short-term buying/selling.

2. There are income limitations, and a phaseout begins when the modified adjusted gross income exceeds $75,000 ($150,000 if married filing jointly).  The credit is eliminated at $95,000 ($170,000 if married filing jointly).

3. The purchase must be for a primary residence, and the purchaser will not eligible for the credit if the seller is a relative of the buyer.

4. The credit is available for first time home buyers on home purchases between Jan 1, 2009 and Dec 1, 2009.

5. It is a refundable credit, meaning that if the credit exceeds the tax owed, first time home buyers get the rest refunded to them. Every dollar of a tax credit reduces Federal income taxes by a dollar.  Credits are claimed on an individual’s IRS income tax return.  See first time home buyer tax credit for more easy-to-understand and detailed information from the National Association of Realtors.

6. The funds are unfortunately not available up front to use for  closing costs.   The credit will be reflected on a new Form 5405 that will be attached to the 1040.

Note: Another important aspect of the American Recovery and Reinvestment Act of 2009 is funds for each state for infrastructure. Here is a good website for keeping track of where the stimulus money is going state by state, including Washington state.   Rebuilding America’s Infrastructure.

1. Make sure your leases are legal.  If you make a mistake on the lease, you will find it more difficult to litigate if a tenant violates the terms.

2.  Screen your tenants with credit checks, criminal/civil background checks, prior unlawful detainers (evictions), and take the time to call references. It is better to take the time to investigate these items rather than rushing to get someone to fill the vacancy.  It can cause more time, money and problems later trying to get them out.  There are companies that will do this for you, but the ultimate decision is still yours.  For example, you may be able to overlook some things if they have good explanations, for example, for poor credit.  Some prospective tenants may have had to leave their homes recently due to not being able to afford their higher prior house payment.

3.  Be available to show the property to prospective tenants. In order to rent a place quickly, you must live nearby so that you can show it at the caller’s request. Show it to them as soon as possible within a day or two at the latest, since normally they need to secure a place within a week or so, and they need to make a decision as soon as possible.  Good renters will have no problem finding another place to rent, and will move on.

4.  Utilize free advertising.  Craigslist is very popular and is free advertising.  Prospective renters search by price and location, and in you ad you should list neighboring areas and parks to which your rental is near in order to expand your number of hits on your ad.

5.  If you are unable or do not want to do the above items yourself, hire a property management company to do the work for you.

We have seen that in January, 2009 there were approx 180 single-family residential properties for sale below $250,000.  Some of these Auburn homes would be great to purchase as rental properties.  There is always a demand for reasonably priced rentals that are in good locations such as Auburn, WA.   Auburn has public transportation such as buses, and also is fortunate to have the Auburn Sounder Station and train to commute to other locations in Kent, Seattle, and Tacoma and other places along the way.  Also, there is easy freeway access to Hwy 18, Hwy 167, and I-5.  For employment, there are lots of business located right in Auburn in the industrial area of Auburn, as well as the downtown areas of Auburn, and other surrounding cities that employ many people.  All of these amenities make for a great location for owning a rental property.

However, before purchasing an Auburn rental property, an investor must do his/her homework and consult with the following professionals who can advise the potential investor on his/her specific situation.  They include the investor’s financial adviser, accountant, lawyer, Realtor and mortgage professional.  They each have areas of expertise that are crucial in making the proper decisions in purchasing a rental property in Auburn.

The advantage of rental real estate is the fact that when you own rental real estate, you own a tangible asset over which you have a great amount of control, as opposed to ownership of stocks, bonds, mutual funds, etc.  The disadvantage is that you have liability, so you must make sure that the Auburn property you are renting out meets all government standards.  Also, there will be unexpected expenses for repairs, and there will be vacancies from time to time without the desired monthly income being generated.

FHA can be a great way for first time home buyers to get into the investor market when they are buying a 2-4 unit home in Auburn.  The buyer must intend on residing in one of the units and the mortgage will be treated as an “owner occupied” transaction.  You will have upfront and monthly mortgage insurance and can buy with as little as 3.5% down payment.  Currently there are 27 properties in Auburn that are 2-4 multifamily units.

Seasoned investors know that obtaining a mortgage for a non-owner occupied property is much different than buying one in which you will reside.  For instance qualifying is tougher, down payments are larger, and mortgage interest rates are higher since it is a riskier transaction for the lender.

Once the investor has purchased the home in Auburn, obtained the loan, and then closed on the rental property, the investor now has the next challenge ahead of him/her, which is renting the property.  If you as the investor decide to manage the property, then pay yourself for being the property manager.  Property management costs need to be accounted for as operations costs.

Auburn real estate prices are down and interest rates are still at an all time low.  Renting out homes is a hot choice in today’s real estate investment market.  There are many homes and 2-4 unit residences available for purchase in the Auburn area.  Let me help you find the investment property that will work for you.  Call me today for a list of these Auburn investment properties.