Want to buy a luxury home but the down payment is daunting? Here are 10 things that will help.

It used to be that buying a home meant coming up with at least 20% of the purchase price, a sizable amount. But purchasing a luxury or high-end home was even more cash cumbersome, with some lenders requiring a 30% down payment. If you were purchasing your dream home for $1,000,000, $750,000, or even $500,000, the down payment can easily add up to an intimidating sum.

Likewise, even an average home purchase can require a sizable down payment in high-cost areas (hello, California!), often preventing first time home buyers from getting their first keys. Studies show that renters in the nation’s 20 largest metro areas say that coming up with a down payment is the #1 obstacle to buying a home. And in areas like San Jose and Los Angeles with super high-cost real estate, a 20% down payment adds up to 180% of median income for one year! 

Thankfully, there are better options for home buyers these days when it comes to down payments. In fact, last year, the average down payment on a single-family home purchase was only 14.8%. And according to Freddie Mac, about 40% of all homebuyers put down less than 10% on the overall value of their homes. 

Of course, you’ll want to contact a great mortgage broker to discover all of your loan options, but here are 10 great ways luxury home buyers can make that down payment more affordable:

1. A jumbo loan may offer less than 20% down.

When purchasing a luxury home, you’ll likely want to explore a jumbo mortgage loan. A jumbo loan is just a non-conventional loan for a purchase price/loan amount higher than Fannie Mae and Freddie Mac’s loan limits. Currently, those limits sit at $636,150 in high-price areas (much of California), or $424,100 for the other 93% of the U.S. While a jumbo loan will give you the funds necessary to close on your dream home, it does come with additional scrutiny and requirements from the lender. 

Some jumbo loans traditionally even required 30% down payment, but the good news is that these days, certain jumbo loans will allow you to put only 5 or 10% of the purchase price down, making a luxury home purchase imminently more realistic.

2. Ask the seller to finance a piece of the mortgage.

While this practice has become far less prevalent, having the seller offer some form of secondary-financing is a great option for luxury home buyers who don’t want to (or can’t) part with a sizable down payment. Quite simply, the seller will back up your mortgage financing with a small second personal loan, maybe for 5, 10 or even 20% of the purchase price, closing the gap on what you need to put down. 

Why would a seller do this? Luxury homes are often harder to sell, with fewer buyers to choose from and bigger price drops in a soft market. So seller-financing is a great win-win for the seller, too, if it means the difference between finalizing a sale at the price you want.

3. Borrow from retirement funds.

One legitimate option for luxury home buyers to come up with the necessary down payment is to borrow or withdraw from retirement funds. Of course, you'll want to consult your financial planner and tax adviser to work out a strategy that makes sense. But some 401(k) plans allowed you to take out 50% of their vested balance up to $50,000 as a tax-free loan, although the loan has to be repaid after a specific period (usually five years). 

You can also withdraw funds from a traditional IRA or up to $10,000 without getting hit the 10% penalty, although you might have to pay taxes on the amount.

Again, check with your financial planner well ahead of time and also ask your mortgage broker about doing this within loan guidelines, but many luxury home buyers find a little down payment help from their retirement accounts.

4. Borrow from family.

Today’s home buyers are having such a challenging time coming up with the necessary down payment that about 25% of them are turning to family and friends for gifted funds to help them buy. There’s no reason why you can’t formulate a similar arrangement to come up with the funds for a luxury home downpayment.

5. Consider an FHA loan.

FHA’s loan limits are based on a percentage of the national conforming loan limit. So in high-cost areas (like most of California!), the FHA loans may go all the way up to $636,150. AN FHA loan may also be attractive because it usually allows a much lower down payment, sometimes as low as 3.5% for qualified borrowers. While you may have to Private Mortgage Insurance and there are other restrictions with FHA loans, it's worth looking into for a higher-end house purchase.

6. Work with a mortgage broker who specializes in luxury real estate. 

You’ll have a lot of options when searching the right mortgage broker or lender to handle your purchase loan, but you may be well served interviewing a lender that commonly works with luxury real estate. Their experience, product and industry knowledge, and relationships with banks and lenders could prove helpful! 

7. Keep a great credit score.

One of the best ways to ensure that you get the best rates, terms, and loan options available – including a minimal down payment – is to keep a great credit score. Typically, lenders consider home buyers with super-prime credit scores (760 and above, but an 800+ score doesn't hurt!) as low-risk borrowers, so they'll offer the best possible pricing and conditions. Consult your mortgage broker, but you'll also want to check your credit well before your home purchase and make sure your score is tip-top.

8. Check with your bank.

You’ll have plenty of options when it comes to applying for a mortgage loan, but it may be worth your time to check with the bank that has your accounts, too. If you have significant funds, investments, or retirement accounts with one bank branch, they may have some leeway in offering great low down-payment options for your luxury home purchase.

9. Take out a second loan.

In years past, it was common for home buyers to take out an 80% first loan and then back that up with a 20% second loan, eliminating the need for any down payment at all – and also avoiding Private Mortgage Insurance. While those subordinate loans aren't as popular these days, you may still be able to find second position financing to ease the burden of coming up with a big down payment out of pocket. 

10. Find funds from other sources.

When necessity requires, homebuyers often become resourceful and find funds from other sources to soften the down payment blow. That may include tapping into an equity line or cash-out refinance from another property, personal loan, or business loan. 

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Contact us if you have more questions about down payments or buying your dream home! 

5 More home selling science and psychology secrets that will make you big money! (Part 3)

When it comes to selling your home, everyone wants to walk away with the highest profit possible. Fortunately, there is a whole hidden science to selling a home, based on mountains of data, copious independent research, and the psychology of perceptions and human behavior. When you list your home for sale with The Alfano Group, you not only have hard work and great service at your disposal, but strategies and tactics developed over decades of successfully representing home sellers. 

We'll share more and more of these home selling tips so stay tuned, and of course contact us if you want to find out how to make the most money when you sell your home!

1. Your greatest marketers could be your neighbors!

Your neighbors are one of your best assets to help market and sell your home, yet rarely utilized. But it makes perfect sense to spread the word about your home hitting the market to those live around you, as they have a vested interest in choosing a great new neighbor. In fact, if you go knock on their door (or have us do it) and let them know the details of the sale and even provide them flyers or brochures, they’ll do a great job telling their friends and coworkers, providing a boost of serious and motivated buyers.

They’ll actually thank you for briefing them before the listing even officially hits the market, and will hustle to generate interest. In the same vein, you can also spread the word about your for sale home to neighborhood associations, local schools, and other community organizations.

2. Personalize your listing with a quick introduction video.

When buyers are in a competitive offer situation, Realtors often advise them to write a personal letter about how much they love the house and a little bit about themselves. In some cases, it can absolutely sway the sellers into accepting their offer, as the personal touch balances out all of the contracts and numbers inherent in a real estate transaction.

The same tactic can work for sellers if they put together a very short (maybe one minute or less) video about their family and their home. Talking candidly about how much they loved the house, the great memories they had there, how they loved the neighborhood and schools, their favorite local parks and restaurants, and giving a valid reason why they’re selling and moving can all be part of a seller’s video.

It’s not the information in the video per se that will make a difference to buyers, but psychology shows that it will humanize the listing, allowing it to stand out from the pack and establishing positive feelings of trust and familiarity. Ask us more about what would be appropriate for a great seller video and how we can use it on YouTube, Instagram, Facebook, etc. to help market your home.

3. Focus on low-cost home improvements in kitchens and bathrooms.

To fix up or not fix up, that is the question for many homeowners before they list their home. Research shows that it doesn’t pay to undertake huge and expensive home improvements before listing your home, unless they are essential or safety concerns, like leaking roofs or faulty electrical systems. But additions, adding a pool, remodeling every room, and other significant upgrades will probably only yield you 20-40 cents on the dollar once the home sells.

Instead, data shows that the wisest investment is to put resources into smaller, cosmetic improvements into your kitchen and bathrooms. Repainting the walls, replacing dated appliances with stainless steel, modernizing light fixtures and possible retiling floors in the kitchen all keep the budget under control but will be a huge selling point when buyers walk through. In fact, that will yield an ROI of 85% or higher, and buyers pay most attention to the kitchen and master bathroom when making a first impression of a home.

4. Impress buyers (and their agents) by having your inspections all done.

There is a lot of uncertainty in any real estate transaction, with inspections, appraisals, disclosures, and contingency periods all reason for a buyer to get cold feet – or choose to renegotiate. But one great way to relieve that uncertainty from the get-go is for sellers to get all of their inspections done before they even list the home. Potential buyers (and their agents, especially!) will love reading in your listing description that the house has a clear pest report, a roof certification, a completed home inspection with the appropriate fixes already done, and maybe even a current appraisal.

Not only will it eliminate any surprises during the transaction so it’s psychologically comfortable and safe, it signals that you are serious and ready to close. By having all of your inspections completed ahead of time, you’ll attract a better, more motivated breed of buyer that won’t waste your time or nickel and dime you on every fee and issue that comes up. This strategy works especially well for higher end and luxury listings, but for all sellers it ultimately saves a lot of time since the deal can now close as soon as their loan clears, saving days or weeks, and we all know that time is money when you’re selling your home!

5. Have your home professionally staged.

For any high end or luxury home, enlisting the services of a professional stager is a must. But is it really worth it? If you’re worried about the cost or inconvenience, consider these statistics from Realtor Magazine and The International Association of Home Staging Professionals:

95% of professionally staged homes sell faster than non-staged homes.

Homes that are staged stay on market only half as long as homes that aren’t.

Staged homes sell for an average 11% higher purchase price than non-staged homes.

Only 4% of homes in high price brackets are staged (which means two things: some real estate agents aren’t doing their jobs correctly, and your luxury home will stand out like a diamond in a pile of coal when you do stage it.)

The median dollar value for home staging services is only $675 (but higher based on more work and the nicer the home/higher the listing price),

But the great news is that surveys show that staging generates a Return On Investment of 8-10% when the home sells

With those benefits and financial returns, can you afford NOT to stage your home?

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If you'd like to check out more home selling secrets from The Alfano Group, try these past blogs: 

http://thealfanogroup.blogspot.com/2016/04/home-selling-science-psychology-and.html

http://thealfanogroup.blogspot.com/2016/05/home-selling-science-psychology-and.html

We asked our past clients to rate our service. We never expected THIS!

At the Alfano Group Real Estate Agency, our greatest passion (ok, obsession!) is to help our clients with their real estate needs. We take pride in our focus on always putting the client first and always aim to be the most knowledgable, professional and hardest working agents in the business.

But talk is cheap without results, so we decided to find out what our past clients think about us. So The Alfano Group used an independent firm to conduct a detailed poll of our past clients. They asked people who've bought or sold a house with us six questions about our service, how they felt about the transaction, and if they'd use us again or refer us to others. 

When the survey results came in we never expected THESE answers:

1. I will use The Alfano Group when I buy or sell my next home:

5 out of 5 stars

2. I would recommend The Alfano Group to family or friends to buy or sell their home:

5 out of 5 stars

3. My agent empowered me with the best information, resources, and technology:

4.9 out of 5 stars

4. My agent helped me make a great investment or maximized profit on my sale:

5 out of 5 stars

5. My Alfano Group real estate agent always served my best interests:

5 out of 5 stars

6. My real estate agent was knowledgeable, helpful and professional.

4.85 out of 5 stars

While we were pleasantly surprised, we wanted to make sure that these answers portray a fair representation of our reviews. So we also checked our Yelp.com listing, and found that we also have a 5-star rating there based on 14 reviews, including:

“Tony is top-notch when it comes to professionalism, responsiveness, and true interest in his clients and colleagues needs."

“We felt very comfortable and with his guidance and expertise, were able to find the perfect home at a good value while selling our previous home for top dollar in less than a week!”

“Anthony is a fantastic realtor who is very detail oriented and knows the Lincoln/Rocklin/Roseville markets; and all of Northern CA well.”

We also checked in on our Facebook page, were we have 20 reviews.

What did our past clients rate us?

4.9 out of 5 stars!

In fact, 19 out of the 20 total reviews gave us 5-stars, with only one review for less than 5 stars! Some of the reviews include:

"My wife and I recently purchased and sold a house using the Alfano Group. Our experience was very smooth throughout the entire process. Tony was patient, straightforward, always available, and extremely knowledgeable of the real estate industry. We felt very comfortable and with his guidance and expertise, were able to find the perfect home at a good value while selling our previous home for top dollar in less than a week!"

"Tony has helped me buy and sell 4 properties - He is a true professional that knows the real estate business!!!"

"I love the Alfano Group!"

Rest assured, even with our near-perfect customer satisfaction ratings and sterling reviews, we'll never stop striving to be better, bringing you the latest tools, resources, education and technology to make sure you have a perfect transaction - and make a lot of money - when you buy or sell with us.

Would you like to give us some feedback, too?

If you've bought or sold a home with the help of The Alfano Group, we'd love for you to take this quick survey: http://ow.ly/qrtd301ALOR

And please leave an honest review on our Facebook and Yelp business pages.

Of course if there if you ever have a question, concern, or something extra we can do to help, feel free to contact us!

Thanks so much for trusting us with your business - and your reviews!