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Welcome to the BeSmartee blog. Enjoy a wide selection of articles related to mortgages, the industry, and real estate.

What You Should Know Before Buying a Home in California

By Laura Agadoni · Jun 19, 2016 · Real Estate

What You Should Know Before Buying a Home in California

Image courtesy of Flickr, Hakan Dahlstrom

There's no doubt that California, with its beautiful weather, great cities, and its beaches, mountains, deserts, forests, national parks, and lakes, is a desirable place to live.

There's no doubt that California, with its beautiful weather, great cities, and its beaches, mountains, deserts, forests, national parks, and lakes, is a desirable place to live. I was fortunate to have been born and raised in this great state. But when it came time to buy a home, my husband and I decided to relocate to a more affordable place.

California Is Expensive

One of the first things you should know before buying a home in California (if you don't already) is that it's expensive. There are some bargains to be found in California; they are just more difficult to find here than they are in much of the rest of the country. And a bargain price often entails a long commute in California traffic. But think of what you're getting. ''The price is what you pay. Value is what you get,'' says Jerry Koller, an Irvine, CA, real estate broker. ''Many people try to compare here to their market,'' he says. But Koller reminds people who say they can get a lot more house elsewhere, ''You get lifestyle, great weather, amazing career opportunities, and world-class entertainment [in California].''

But just how much will you pay? Be prepared for ''sticker shock,'' says David Feldberg, a Newport Beach, CA, broker. ''The median price for a single-family home here in Orange County is near $600,000. This is for a three-bedroom, two-bathroom home on a modest lot and not in a coastal city,'' he says. Spending $1 million in California is not unusual. But Feldberg points out that spending that much in many other parts of the country would buy you ''an estate.''

Many California Houses Are Old

Some desirable California towns, such as Pasadena, have many old homes. ''Many were built in the early 1900s and have not been updated,'' says Doug Willis, a Pasadena, CA, real estate broker. ''You can easily spend approximately 10 percent of your purchase price upgrading the existing systems (plumbing, electrical, roof, new heating, and air),'' he says.

Los Angeles real estate agent Chantay Bridges says that California homebuyers should ''Check permits, confirm square footage, and have an inspection.'' Expensive homes don't necessarily ''equate to homes being in tiptop condition,'' she says. And not only that, around town, ''Much of the infrastructure is old and dated,'' says Willis. ''Example: very few intersections [in Pasadena] have a protected left turn. You have to pull out in the middle of the street and wait before making a left.''

You Can, as Carole King Says, Feel the Earth Move Under Your Feet

California is prone to earthquakes. The 800-mile long San Andreas Fault runs from the San Bernardino Mountains to the Mendocino coast. Most scientists don't debate whether there will be a deadly earthquake; the only questions are where and when it will be.

But besides living with that knowledge in the back of your mind, there are also effects of the smaller earthquakes that long-time Californians don't even pay much attention to anymore. ''You are going to have settling cracks in the side of your home and usually on the concrete,'' says Feldberg. ''You should probably plan on buying earthquake insurance and factor that into your monthly payment.''

California Is a Hot Market

The good appears to outweigh the bad concerning California real estate, and houses sell like hotcakes. ''Houses are going extremely fast,'' says Bridges. ''If you snooze, you will lose.''Just how fast is fast for a home sale? What about one day? Or less! ''We have had cases where we have seen five offers in the first hour on the market,'' says Koller. So how do you get a house when there's such fierce competition? ''Be prepared to work fast and make real offers,'' says Koller. In other words, a hot California market might not be the best time to try to get a deal. You might need to pay at least asking price and maybe even more.

One way to get the house you want in a seller's market is to offer cash. This method, however, is typically reserved for the very rich or for investors. If you're a buyer looking for a primary residence, you probably can't pay cash for a home. But there are ways you can still compete with investors. One is to get preapproved for a loan. Another is to ''Keep your offer clean and simple,'' suggests Bridges. ''Now is not the time to ask for the moon and the stars.'' And when you do make an offer, ''Make it a strong one,'' says Bridges.

Property Taxes Aren't Too Bad

If you want to pay a lot in property taxes, then you'd live in New Jersey, the state with the highest property taxes of 2015. California's property taxes aren't too high, though, because of Proposition 13, a measure California voters of 1978 passed. This proposition caps property taxes at 1 percent of a home's assessed value at the time of purchase.

California ranked as the 17th lowest state for property taxes in 2015. But you should still expect to pay a decent sum in property taxes if you buy a home in California. ''Property tax rates are reasonable, but the current home valuations can make your property taxes very high,'' explains Willis.

California Has Water Problems

Scientists who've studied California droughts over the last 1,000 years found that there have been several drought periods here that have lasted between 10 and 20 years. 2013 was a particularly dry year for the Golden State. It rained less that year than any year since California became a state. A growing population worsens the water problem, and the agriculture industry feels the effects of drought the worst.''Water is a valuable resource,'' says Willis. ''Some cities have water rationing and will only allow you to water your lawn on certain days.''

Bottom Line

California is a great place to live, but it can be challenging to buy a home here. Once you know what's in store for you, however, you can plan for obstacles, taking you that much closer to owning your California dream home.


Real Estate Commission: Explained, Revealed and Compared
By Arvin Sahakian · Aug 17, 2015 · Real Estate Data

Real estate agents receive commissions from home buyers and sellers, collectively earning over $50 Billion per year. Learn how commission amounts are set, who pays them, and how they work in this article. Read more.

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California Property Tax: Complete List by County 2014-2015
By Tim Nguyen · Nov 26, 2014 · Real Estate Data

List of secured property tax rates for all counties of California fiscal year for 2014-2015. Read more.

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California Proposition 60 and 90: Your Complete Guide
By Tim Nguyen · Nov 28, 2014 · Real Estate Data

If you live in California and are over the age of 55 you can effectively reduce your property taxes when buying a new home. Read more.

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The Surge in Foreign Real Estate Investment in the United States
By Laura Agadoni · Feb 24, 2016 · Real Estate

Foreign real estate investment in the United States, both commercial and residential, is a huge phenomenon that is only expected to accelerate, maybe even to skyrocket, in 2016. Read more.

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By Arvin Sahakian · Feb 24, 2015 · Mortgage

You've heard the term used before, but what does loan closing mean? Find out all you need to know about the process. Read more.

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5 Illegal Borrowing Activities: Things That Are Illegal When You Try to Get a Home Loan
By Laura Agadoni · Jan 22, 2016 · Mortgage

Whenever there is money to be made or money to be spent, some unscrupulous folks will take advantage, trying to game the system or commit all-out fraud. Read more.

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16 Ways to Improve Your Debt-to-Income (DTI) Ratio
By Veronica Nguyen · Nov 29, 2014 · Mortgage

Your DTI is used by mortgage lenders to determine whether you qualify for a loan, and if so, for how much. Improve your DTI with these 16 tips. Read more.

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By Amanda Curry · Jul 20, 2016 · Mortgage Rates

One way to determine if mortgage rates are affected by the Presidential election is see to if there is any correlation between their direction and elections. Read more.

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5 Tips on Getting a Mortgage Loan after Bankruptcy
By Veronica Nguyen · Apr 15, 2015 · Mortgage

A bankruptcy will make it very difficult to attain a home loan. These 5 tips will help you re-establish your credit quickly in order to qualify for a home loan. Read more.

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How to Calculate Debt-To-Income Ratio
By Veronica Nguyen · Nov 13, 2014 · Mortgage

Your debt-to-income (DTI) ratio is used by mortgage lenders to determine how much of a monthly payment you can afford. Read more.

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