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! 

Study finds that the average family use only 40% of their home's floorpan regularly.

This floor plan hasn't been afflicted with red chickenpox – it's part of a fascinating study into how the modern family uses their home, and it’s contributing to a new field called “Residential Behavioral Architecture.”

What you’re seeing is a “heat map” of foot traffic in one of the subject’s homes in Los Angeles, with each red dot showing a person standing or walking when they took a survey photo every 10 minutes.

The study originated when a UCLA research group used advanced sensors and cameras to follow 32 middle-class families around the first floor of their home over two weekday afternoons and evenings – prime time hours. The UCLA team was trying to track the patterns and use of residential space for today's family and this heat map of the subject group "Family 11," a typical family living in an approximately 1,300 square foot single family home in the Los Angeles suburbs, tell us a lot. 

Even a cursory glance reveals something important about the location of each parent and child on the first floor of Family 11’s home: they don’t use a whole lot of it.

In fact, the study found that the family’s movements were concentrated mostly in three rooms: the dining room, family room, and kitchen. In the case of Family 11, the dining room, kitchen and family room comprised almost half of the total square footage on the first floor, yet the other rooms remained virtually untouched even during prime traffic hours.

While the “hottest” imprint occurred around the kitchen cooking space, kitchen table, and between the computer and TV area in the family room, the living room was untouched except for a piano lesson, the dining room only had one person walk in, and same goes for the pantry/laundry room.

Jeanne Arnold, who ran the UCLA study, said, "The propensity for the family to aggregate near the kitchen with table space is almost universal" among all of the subject families and homes they monitored.

Even the outdoor front porch went completely unused even tough the weather was perfect in temperate LA at the time they family was observed. It’s estimated that Americans use their outdoor living spaces only 10% of the year, even when the weather conditions are welcoming.

In all, it’s estimated that of the 1,344 square feet on Family 11’s first floor, only 528 square feet was used regularly – or just shy of 40%.

This ensuing heat map was featured in a Wall Street Journal article about the book "Life at Home in the 21st Century," which documents the findings of the UCLA researchers.

The map doesn't just document our typical daily lives in a unique aesthetic but speaks to the patterns of how we're living in the 21st century.

For instance, the average home size was about 2,662 square feet as of 2013, but the average home was only 938 square feet in the 1950s. We also had more people per household in 1950, with 3.37 people/house then compared to only 2.54 now.

Even in the 1970s, we had larger family sizes and more people in each home, with 40% of the US population comprised of married couples with kids in that decade. These days, that number has dropped in half to only 20% of our population that’s made up of married couples with children.

But our homes are still big and bigger – even though we aren’t using even half of them regularly according to this study. In fact, 20% of American houses have four or more bedrooms, 41% have three bedrooms, and 26% have two bedrooms, and only 12% are either one-bedroom homes or studios.

With expansively larger homes comes larger lots and. As residential behavioral architects point out, longer commute times, a bigger carbon footprint and environmental impact, and a propensity to purchase things that we really don't need or use. That overabundance includes a whole lot of unneeded square footage that we're not even using, according to this UCLA heat map study of Family 11.

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How much of your floor plan do you and your family actually use? Conduct your own study by putting a notepad in each room on the first floor. Every time someone goes into that room, they are to mark a check on the pad. At the end of the allotted period (one afternoon/evening or one weekend day when everyone is home) add up the check marks, put a red dot on your floorplan graph for each one, and you'll be able to see how much of your space is being used.

Fool's Gold? These luxury home amenities may not be worth the price tag.

If you’re selling your luxury or high-end home, you may survey your listing and see a lot of amenities that you think are attractive to buyers. But in reality, there is a long and distinct list of features that are trending down with luxury buyers, and may be seen as a negative, no matter what you paid for them. Some of these amenities have simply gone out of style, some are impractical and rarely used, and some just waste valuable money – and space. Since it’s important to always take the temperature of buyers in order to maximize profit on your sale, here are some amenities that currently may be overrated or not pay dividends in luxury homes:

Wine cellars with elaborate tasting room:

In the past couple of decades, there has been a huge uptick in high-end homeowners that wanted to enjoy their love of wine with their own custom wine cellar. Many even had large and elaborate wine tasting rooms. But while people still love wine, most of those tasting rooms were rarely used and inordinately expensive, and that trend is starting to fade.

High-end industrial stove:

Homeowners still want large and luxurious kitchens more than anything else on their wish list, but research shows that a professional or industrial range or stove in the kitchen is overkill. Many of these units cost an average of $10,000, require specialty utilities, and are actually not as fun as they may seem for simple family cooking.

Chef’s kitchen:

The same goes for industrial/chef’s kitchens. They are somewhat paradoxical because luxury buyers still see them as a desirable amenity and they may help you sell your home, but surveys show that people don’t feel the same way once they live in the home and use the kitchen every day, and they are vastly underutilized.  Luxury homeowners still want beautiful kitchens with top-end appliances, but they actually use those intended for the home, not restaurants.

Warming drawer:

Intended to keep food at serving temperature during parties, functions, and several-course dinners, in reality warming drawers are hardly ever used.

Pot filler:

Another restaurant-like feature, some kitchens in luxury homes have a swiveling water spigot right by the stove, so large pots don’t need to be lugged to and from the sink. That’s rarely a problem for normal residential homes, making this a superfluous feature for luxury homes.

Whirlpool tub with jets:

Most people have the fantasy of soaking for hours in complete relaxation in a huge spa tub in their home’s master bath, and it is an attractive selling point to home shoppers, but the reality is that whirlpool tubs with jets require more maintenance and clog with fast-growing germs and bacteria. Conversely, it’s becoming more popular for luxury homes to have ornate walk-in showers with multiple heads, and simple soaking tubs, often in copper or replicating antique models.

Sitting areas in walk-in closets:

Buyers still want spacious walk-in closets that are well lit and organized, but the trend of large sitting areas in the middle of walk-in closets seems to be passé. Instead, luxury homebuyers prefer His and Her walk-in closets.

Hot tub:

Some people use their hot tub religiously, but the vast majority only go near it when it needs cleaning, chemicals and maintenance (or pay someone to do it!) so hot tubs are becoming far less popular.

Huge, ornate swimming pool:

Swimming pools are still a commodity among buyers shopping for a luxury home, but instead of garish and large pools of yesteryear, they are now trending towards simple, rectangular, and modern minimalist.

Cathedral ceiling over family room:

High ceilings are highly valued in luxury homes, but only to a point, and the days of cavernous Cathedral ceilings over family rooms and entryways are numbered.

 Sunroom:

 Sunrooms are only prevalent in luxury homes in cold weather climates, but luxury homeowners in California and other warm places will almost never use them, and could use the square footage to expand their kitchen, family room, or great room.

Outdoor fireplace:

 Outdoor amenities like kitchens, living areas, and grand built-in barbecues saw their stock rise precipitously over the last decades, but some of those amenities are starting to slow. Especially in warmer climates, outdoor fireplaces just aren’t used a lot, or homeowners are opting for smaller/portable and less expensive fire pits.

Wood kitchen cabinets:

Wood finished cabinets are considered extremely outdated, with white, gray, black modern cabinets the newest hot look, some with faux natural patterns and often purposely mismatching with other elements to highlight secondary and tertiary colors.

Traditional metal fixtures:

In luxury homes, silver or nickel door handles, pulls and other hardware are being updated with brass.

Granite counter tops:

In luxury homes, kitchen counters constructed in laminate or tile were unheard of, almost like hanging fuzzy dice on the rearview mirror or a Rolls Royce. Granite countertops were largely standard issue in luxury homes, but now granite is becoming the new tile, and high-end buyers are looking for exciting new countertop materials like quartz, sandstone, concrete, and even composite glass, recycled materials, and natural wood.

Here are some other amenities that are trending down in luxury homes, with the percent drop in popularity this year compared to last:

Outdoor built-in barbecues    - 16%

Hardwood floors   -13%

Plantation shutters   -13%

Covered patios   -11%

Lush landscaping   -9%

Custom cabinets   -9%

Fireplaces   -9%

Double sinks   -8%

Stainless steel appliances   -7%

Pool   -7%

Gated communities   -6%

Center island in kitchen   -6%

Bonus room  -6%

Granite countertops   -5%

Formal dining room   -4%

Formal living room   -4%

Surround sound and tech systems   -4%

Large master suite   -3%

Gourmet kitchen   -3%

Breakfast nook   -3%

Defining luxury; what you should look for in a high-end home

“Give me the luxuries of life and I will willingly do without the necessities.” – Iconic architect Frank Lloyd Wright

These days, the word “luxury” is everywhere. The promise of high-end goods, services, and experiences is no longer reserved for the most affluent of Americans, but now available to just about everyone. We can easily buy luxury brands at the clothing store, drive luxury automobiles like Mercedes Benz and BMW – or similar facsimiles at fractional prices - and even buy a home that is described as ‘luxury.’

In fact, the L word designation is everywhere in advertising, as a recent survey approximated that the word ‘luxury’ comes up in 34% of real estate listing descriptions, up to 42% of appliance and furnishing ads, and 26% of clothing marketing. Googling a query like “How to write real estate descriptions that sell” will yield list after list including the words “luxury”, “distinguished,” “quality”, “exclusive”, etc.

So if we cast aside the watered-down marketing version of ‘luxury,’ what does it really mean? What should it represent?

The Oxford Dictionary defines ‘luxury’ as:

A state of great comfort or elegance, especially when involving great expense;

An inessential, desirable item which is expensive or difficult to obtain;

[In Singular] A pleasure obtained only rarely

When it comes to high-end and top-of-the-market homes, what makes a home ‘luxury?”  Is it merely having an abnormally steep price tag? Cavernous square footage? Fancy amenities that you don’t find in typical homes? All of those things may factor into luxury homes, but the certainly don’t define them – not in an age when high-end materials like vanity sinks and chandeliers are mass produced and offered at rock-bottom discounts at places like Home Depot and Ikea.

Too often, builders and home sellers take advantage of the public’s thirst for status and a superstar lifestyle, purposely including certain features that we associate with luxury, but are little more than a façade or marketing gimmick.

Likewise, adding expensive and frivolous features and fixtures to a mid or even up-market home doesn’t automatically propel it to the rarified air of luxury. Custom swimming pools, wine cellars and electronic self-closing blinds are great, but they are still no substitute for class.

But before we start defining luxury as a certain je ne sais quoi as the French say - that certain indefinable something - there are tangible elements we can pinpoint that most luxury homes enjoy.

1. Neighborhood:

The Locationx3 adage is a real estate cliché, but it’s also never been more true. You just KNOW when you’re in a luxury neighborhood – and so does everyone else. Over the last housing boom of the early 2000s, too many people bought into the dream of living in a luxury home and community by purchasing new(er) construction that had all of the bells and whistles. But research shows that established and mature homes and neighborhoods are actually of a higher building quality and retain their values better, as they have more long-time owners and a well-established exclusivity.

2. Uniqueness

It’s very rare that luxury homes are homogenous with the rest of the homes in the neighborhood. They have unique characteristics, architecture, and design that set them apart and are hard – or impossible- to replicate. Beware of McMansions and “semi-custom” homes that builders slap up and then adorn with fancy facing and certain high-end amenities just to justify a higher price tag, but are basically still cookie cutter. When you are looking into any luxury home, it’s important to research the builder, ask around about their reputation, other projects they’ve completed, and make sure there is a unique “story” to the architect, the home, or the community that sets it apart.

3. The little things

If God is in the details, then take a close look at the small details in a home; if unequivocal quality extends to small touches like the millwork, doors, hardware, cabinets, fixtures, appliances, tile, grout lines, etc. then you know you’re surrounded by luxury. Our eye always gravitates towards signature show pieces like grand chef’s kitchens and dazzling room-size showers, but in a luxury home, the quality of construction and use of top-end materials and amenities won’t be compromised at all down to the smallest detail, even those people rarely see or use.

4. Views

No matter where you are, most truly luxury homes have some sort of great view to set your eyes upon. Whether it be ocean and coastline, hills and valleys, a beautiful garden, park, or fountain, luxury homes that just stare out at the home across the street are almost unheard of. For this reason, authentically luxury homes are usually at higher elevations than their surroundings, or right on the waterfront.

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Tune in for part two of this blog with the rest of the top 10 things to look for in a luxury home.

10 Tips to spruce up your front porch so it's the envy of the neighborhood.

For many households the front porch is a place for family and friends to pass the time, a tranquil open-air alternative to stuffy, confining indoor rooms. In essence both an indoor and outdoor living room, the front porch a place to relax, kick back and reflect on the day, play games, talk to neighbors, or simply sip an ice-cold beer and watch the world go by. 

Once upon a time, the front porch represented the ideal of the American Dream like no other architectural feature, only surpassed by the white picket fence. The middle ground between the public and private, a common area shared between the purity of the home and the community outside, the front porch united the neighborhood and community.

These days, the traditional porch is making a comeback, but this time with a modern twist. Less confined by rules and architectural conformity, the porch is now a fun and inviting celebration of community, proving that the more things change, the more they stay the same.

Here are 10 tips how you can spruce up your porch to make it the pride of the neighborhood:

1. Lighting

Lighting dictates what mood you want to set on your porch. Many people are using ornate lighting fixtures made for outdoor use. Built-ins help backlight a front porch, giving it that magical glow. Or why not use some globe string or paper lanterns for a touch of charm? Need a little more light to brighten up the space?  Invest in a standing floor lamp or full on hanging outdoor chandelier. There are so many great designs available nowadays you are spoilt for choice. 

Candles are also a great lighting feature. To ensure safety, use hurricane lights - housed in a glass container in many great designs, where you can light a candle and forget about it without worry.

2. Flooring

What do you want to feel under your feet when you walk out for your morning coffee, greet friends for a dinner party or have a moonlit dance? Reclaimed timber floors, polished concrete, low-maintenance synthetic wood, tiles, or area rugs are all suitable options for your porch floor. Just remember that this area is more than likely to be a high traffic and ideally will be waterproof, so take that into consideration when making a decision.

3. Music

How can you possible expect to socialize, entertaining and really relax without some great music playing? Sure, you can buy a stereo or outdoor iPod dock, but these days, homeowners are turning to the classier and higher quality option of hidden, wireless speakers outdoors. Don’t forget that wing chimes, hanging seashells, and decorative bottles can make comforting melodies on your front porch.

4. Materials

Bricks, natural stone, concrete blocks, white-washed clap boards, bamboo, antique wood, copper, glass tiles – there really are no rules when it comes to using interesting and imaginative building materials on your front porch. You can even add faux pillars, a decorative railing, or other building elements to make your porch look more traditional. Experiment with bright colors and even stripes and other patterns to find something that fits your personality.

5. Staying cool in the summer and warm in the winter

Nowadays it’s easy to create exactly the type of temperature you want on your porch. Whether you want to use your front porch during the chilly, rainy winter or need a cool outdoor space to escape the intense summer sun, you now have the choice of fans, misters, portable AC units, shade barriers, and indoor-outdoor heaters that will make your porch so comfortable, you’ll never want to go inside.

6. Themes

Try a theme when designing your porch and see where your imagination takes you. You can recreate an Oceanside beach house with a nautical theme using blue and white striped cushions thrown over a crisp white sofa, Adirondack wooden chairs, and seashells and pots of high grasses to finish the look. Or dedicate your porch to your favorite vacation spots around the world by collecting artwork, trinkets, furniture, fabrics and throws from your travels.

7. Spruce it up for the holidays

When it comes to celebrating holidays, we love to go all out! Halloween is just around the corner so turn your porch into the spookiest space ever, decorated with pumpkins, lights, cobwebs and fake spiders to creep out those little trick-o-treaters. Or cover your front porch in twinkling lights and scenes that would make Santa proud around Christmas time, and of course use plenty of red, white, and blue for the 4^th of July!

8. Think of your porch as an outdoor room

When looking at the interior finishes for your porch, think of it in the same way as you might approach a room in your house. Of course you’ll consider flooring, lighting, color, pattern, scale and texture, but also don’t be afraid to take it a step further with mirrors, framed photos, book shelves, water features, a dining table and chairs, curtains, and other amenities that you might see indoors. There are some really cool creations that use synthetic materials, all-weather fabrics, and furniture designed for indoor/outdoor use these days, so don’t feel limited.

9. Seating

Figuring out what kind of seating you want is one of the biggest decisions in designing your porch. Hammocks and swinging chairs really make a porch fun and relaxing, or you can use an outdoor sofa, benches, comfy deck chairs, or even the good old-fashion rocking chair.

10. Plants and nature

Soften the look of your porch and inject some natural color with plants and flowers. Make sure you choose the right plants for your porch however based on if the amount of sunlight, protection, and water they’ll receive. You can also use hanging plants or easily design an area for creeper vines to grow, and adding a birdfeeder will give it just the right touch of natural beauty.