Real Estate Blog - First Time Buyers need CMA and PITI calculations ---and good photos for a good first impression

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First Time Buyers need CMA and PITI calculations ---and good photos for a good first impression

Before my young first time buyers and I look at properties we do as much research as we can online. But all the research still doesn't adequately prepare them for what to expect once we see properties up close.

A picture doesn't tell the whole story

We saw one property that sort of looked nice in the pictures, but looked so much better when we got there. It had panoramic views of the hills, the bay, and from a distance, San Francisco and the Bay Bridge. This is where a visual tour, or a better selection of pictures could have turned what initially looked to be a blah listing into a fantastic one.

Calculating monthly payments

Thank goodness for Fidelity Agent. I am able to prepare a matrix to show them the what-ifs in $$$ where they can easily determine what will work for them. Their main questions revolve on how much they will need to close escrow and how much will their monthly payments be?

In one of my blogs, I posted on what this is, and how I use it. It's been an invaluable tool --- I have it both on my computer and on my iphone so that I can do quick calculations (and impress my clients!).

Here's a sample, using 3% initial deposit, 20% downpayment, 5.25% interest for 30 years.

Offer price	$550,000	$560,000	$570,000	$580,000	$590,000
Initial deposit	16,500	16,800	17,100	17,400	17,700
how much to bring at closing (balance of down payment and closing costs)	127,234	129,485	131,735	133,980	136,231
Principal, interest taxes and insurance/mo	3,163	3,221	3,278	3,336	3,393

CMA before writing an offer

In addition to providing quick calculations, I also prepared a Comparable Market Analysis (CMA) for this property so that they can see the recent activity. For example, a home on the same street was in contract after only 14 days. The property they're interested in is larger, has better views and in the market for 12 days.

And I remind them of the question we always ask at each property we see: "Will you be happy living here?"

My clients told me that they appreciate all the help and guidance they need to make an informed decision. I'm keeping my fingers crossed that I help this delightful young couple buy their first home where they will be happy for a long, long, time.

RELATED POST AND INFO

Fidelity Agent: A WOW tool for quick answers for real estate calculations --- for your computer and your PDA!

Don't know how to estimate PITI? Closing Costs? Copping out by deferring estimates to escrow officer?

My Fidelity National Title Company introduced me to Fidelity Agent. Here's how you can contact the folks for info and subscription:

Call FidelityAgent to talk to a representative

Corporate 757-271-1287
  Toll free 1-866-629-5091
  FidelityAgent Inc.
  639 N Coalter Street
  Staunton, VA 24401.

Or email us at  support@FidelityAgent.com

Posted by Pacita Dimacali - e-PRO, SRES, CDPE, MBA East Bay, North CA real estate on 06/14/2009 05:38 AM

Comments (24)

CMA and PITI Calculations for First Time Buyers in the ActiveRain Channel

first time buyers, cma for first time buyers, piti calculations for first time buyers, fidelity agent, mls photos

Originally posted at: Pacita's Quick Bytes of Real Estate: First Time Buyers need CMA and PITI calculations ---and good photos for a good first impression

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24 Comments on First Time Buyers need CMA and PITI calculations ---and good photos for a good first impression

JUN

I love this degree of intensity in buyer representation. Buyers are far more comfortable when they know the facts before making buying decisions.

Good job.

All buyers need to be educated in the current market. Even the ones that purchased in the past find that this market requires different approaches.

Just read an article advising that a high percentage of first time buyers have never heard of the $8,000 tax credit.

Follow me on Twitter: http://twitter.com/roykelley

First time...every time...as a buyers' agent we give them all the information we can...including pictures of the interior in a binder with each listing sheet so when they leave, they do't confuse the homes and can make their own comparisons in addition to the spreadsheet we provide...information is power...good job !

ToulaRosebrock,com

Hi Pacita:

Very important to walk through each buyer this way.

No matter if it's the first home or the 10th home they've purchased, a great agent will walk them through every step of the process.

Great post!

Hi Pacita great post... all of the above are important but to me pictures are the most important. With so many homes on the market, I won't even put it on my list without good pictures

Pacita...

This is an excellent way to keep buyers on track for a purchase that meets their financial requirements. Great advice.

Pacita, great post. I'd like to think that all buyers need this information, not just first time buyers.

Pacita, you're a girl after my own heart! This is what Buyers should get from EVERY buyers rep and the way we prove our value! I always tell younger/newer agents that if you teach a buyer on their FIRST transaction what a GREAT agent can do for them, we will all be better off! Great job!

As I read this post, my first thought was "doesn't everyone do this?" My second thought was the sad answer. I use the Amortize App on my phone to get the PI and the calculator to get TI, MI, downpayment, etc.

Occasionally, I do the full thing in Excel and give them a table showing a range of payments based on purchase price.

I'll have to look into fidelity agent.

Currently, I use a 'what if' spreadsheet i created in Excel. It's amazing how many agents can't work the easiest financial calculator, and leave everything up to the lender. Providing a good estimate of closing costs is also necessary.

All buyers whether first timers or not should be given a CMA to allow them to better understand the purchase and their offer. This market has so many variables that the buyers need all the information they can get as they are the only active participants in the transaction after it closes, and if it's not done right, then they risk becoming a statistic as well. Nice post, Pacita!

Hi Pacita - this is a very good post and you are right about how it is presented online. And thanks for the information.

All buyers need all of the possible information that we can provide, first time buyers also need us to help explain and interpet this information in a greater detail for them. In todays economic and legal environment if we don't provide this information and help our clients interpet the data we run the risk of later being dragged into a lawsuit for negligently practicing real estate and therefore of violating our fiduciary duty. Providing this information and advice to ALL clients is the best way to do business ethically and legally.

Pacita - I do this scenario for every one of my clients from the get go. My philosophy has always been that buyers need to determine what their housing budget is when getting pre-approved and they need to stick to it.

Just because I can get you approved for 400k doesn't mean you should spend that much if the monthly payment for that amount doesn't fit into the budget that you've created for yourself, unless, of course, you are willing to sacrifice something else on your budget.

Pacita, I went to your related post and can not find how much Fidelity costs? Is it a one time charge or monthly? You can not get the price info on the link you provided unless you sign in.

Great post - I like the format of your matrix & agree that the CMA before offer is very important. Knowing how close comparable properties are selling to asking price and how quickly can sure save some frustration & disappointment since even in this "buyer's market" we have some neighborhoods & price ranges where listings tend to sell very, very fast & often with multiple offers. The statistical evidence can powerfully support our advice that on a particular house there really may NOT be a ton of negotiating room (or conversely may show that it's probably safe & appropriate to try a test "low ball" offer)

Lenn --- it really makes it easier visually, to show clients a property's value, and how much it will cost them.

Roy --- I try to do this for most of my buyers, but some are quite savvy, and don't need the bells and whistles. This is why I love first time buyers. They have a hunger for knowledge. And yes, not everyone knows about the $8K tax credit, or the $10K California tax credit for new homes, or the up to $1.5K energy efficiency tax credit. So we blog about them.

Sally and David --- I also print the info on every house we see. Then I ask them to jot their notes on each one so that they will remember, or put a giant X if the property won't work for them. I had a buyer who had a folder with all his printouts of properties he was interested in. And it was getting confusing what he's seen and what he didn't like. So i told to start marking each one or to ditch old listings.

Toula --- yes, all buyers deserve the same level of care and information. First time buyers seem to need it more, right?

Judy --- isn't it appalling when new listings come up, and either there are no pictures, or the pictures are muddy, or they are just bad? This particular listing showed an ordinary-looking ranch home as the primary photo. But once we went in --- the view were fantastic. The listing agent should have used the view as the main photo. (But as the buyer's agent --- I'm glad the pictures are bad. Maybe we won't have to compete with other buyers.)

Richard W. --- I remember when I was younger and buying my first house...I was terrified! I remember one particular agent who took special care in helping me every step of the way. I try to model my behaviour and customer service accordingly.

Gabe --- all buyers deserve this level of info. True. But first time buyers are a little more nervous, so I make sure the have as much info as they need by holding their hand from beginning to end.

Sarah --- One of my past first time buyers is a lawyer. I gave her a Home Buyer Guide, courtesy of one of my title reps. Wherever we went, whatever property we saw, she had that guide with her, and she filled it with all the info I can give her. It was more than an primer --- more like her security blanket

Erik ---do check out Fidelity Agent. I bought the software and had it loaded both on my computer and Blackberry. And now, on my iPhone. I don't remember the cost --- either $99 or $199. Such a minimal expense for such a valuable tool.

Greg ---- same comment. I edited this post to provide info on how to contact Fidelity Agent.

Ed --- the CMA goes a long way. Some agents thought CMAs are only good for listing presentations. It is jut as important to buyers.

Sharon --- when I do a calculation on Fidelity Agent, I can print this as a pdf, or copy and paste the info as part of my email text. Really easy to use.

Gary --- someone once said to me, "Be the source OF the source." I can provide the info, but I can't interpret it for them. So the clearer the info is presented (as in the form of a matrix), the better informed people can be.

Donne--- I try to get my first time buyers to meet with me at my office. First, I'd like to gauge how far along they are in the process by the time they call me. Some are just starting out, and that's when I walk them through, from the beginning, starting with getting themselves preapproved first. Can't show them property if they don't know how much (for sure) they can afford.

Rebecca - I sent you an email, and also updated this post to include info on how to get hold of Fidelity Agent. Hope you like it as much as I do.

Nancy --- the matrix can show them just how little difference it makes to write an offer $10K over or less, since people look in terms of the now, versus the long-term. Like $10K in one sitting is significant; but spread over time doesn't seem to make that much difference in the monthly payments. Makes buyers think that they shouldn't lose the house they like because they were haggling over $10K.

Good post today, thank you for taking the time to get it out to AR members.

Patricia Aulson/portsmouth nh real estate

So right about pictures and tours. When I see a listing that says large backyard, or backs up to a greenbelt, and no dimensions or pictures, I want to trashcan the listing, but for the sake of the buyer I do not want them to suffer for the lack of a Realtor putting in the basics. We also do the calcs, but also show absorption rate on a excel spreadsheet just like at listing appointments.

Pacita: this surely gives the buyer in all markets the information and being comfortable before deciding taking that big step into home ownership....great work!

Great information here.. Photos can actuall make or break a buyers decission to look at the home

JUN

Patricia -- thanks. I really like being on Active Rain. We pick up lots of good info (and laughs, from time to time)

Joe -- in a way, I'm glad the listing agent didn't post the best pictures. This way, maybe no one else is going to write an offer on it, and maybe mine will be accepted!

Celeste -- my buyers are very savvy, very sharp, very smart, very informed. They want me to provide them with as much info and options as possible. Not the average first time buyer. They soak up the info.

Roland -- isn't that Real Estate Listing Agent 101, to take good photos to represent your listing the best possible way? Some folks just don't know how to take good pictures, and in their case, they should hire a professional photographer.

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