Plenty of issues can slow down, delay, or even kill a real estate transaction, and liens are one of them.

Property liens are basically legal notices that are placed on the title because of some sort of unresolved issue or unpaid debt. If you owe a creditor, they can place a lien on your home until you agree to repay them what they’re owed.

Liens are often the result of either unpaid bills, unpaid taxes, or court judgments. Maybe you’re behind on your mortgage payments or you haven’t fully paid the contractor who renovated your home.

If you currently have a lien on your home and want to sell, you could be faced with some obstacles. Usually, liens will have to be dealt with before the title can be transferred to a buyer and a real estate deal can go through.

What Types of Liens Can Be Placed on Your Property?

There are all sorts of different liens that can be placed on a property, and the following are among the more common:

• Mechanics lien – Any contractor who does work on your home will obviously want to be paid on time. If this doesn’t happen, they can place a lien on your home in the form of a mechanics lien until they are paid.
• Judgment lien – If you’ve been taken to court and lost the case, you may owe the winning party some form of payment. Until this payment is made, a judgment lien can be placed against your home.
• Tax lien – If you are in arrears on your taxes, the government can file a tax lien on your property.

Any liens that are on your property will be listed on the title report, which can definitely turn prospective buyers off. Buyers might even wonder whether or not there are other potential issues with the home as well.

How Can a Lien Impact Your Ability to Sell?

A number of common things happen during escrow after a buyer puts in an offer and you accept it. Before closing, the buyer will need to solidify financing, a home inspection will likely be conducted, and a title search will be done to make sure title is free and clear of any issues.

If a lien is discovered during the title search, the transaction will have to be suspended until the issue has been dealt with. No buyer is going to want to take over a property that has a clouded title.

The buyer’s lender may not agree to approve financing for a property with a lien on it. The lender will likely take a back seat to others with a lien on the property, which places them at risk for not being repaid themselves.

If you have a lien on your home, your best course of action would be to deal with it as soon as possible. Whoever is owed payment and is holding a lien against your home should be repaid in full in order to clear title and be free to sell your home without a hitch. If not, any potential real estate transaction will be delayed or put on hold indefinitely until a resolution is met.

That said, it’s important to make sure that the lien that’s on your property is actually yours. There’s always the possibility that someone by the exact same name or someone else in the family is actually attached to the lien as opposed to you. Mistakes can happen, so you’ll certainly want to verify whether or not the lien belongs to you.

But if the lien is legitimately against your name and property, then you’ll definitely want to deal with the situation right away. Any delay in resolving your lien can make selling your home much more difficult. 

Can You Still Sell With a Lien on Your Home?

It’s not recommended to try and sell a home with a lien on it. However, you choose to do so, you’ll want to work with a real estate professional who has experience with this type of situation.

Any liens against your property will have to be carefully evaluated. You’ll then be tasked with finding a buyer who is actually willing to accept a home purchase knowing that there is a lien on the title, which is not an easy feat.

There is also the risk of the buyer not being able to secure financing, as mentioned earlier.

All in all, it’s much easier to deal with the lien and make the payments as necessary in order to ensure a much more streamlined real estate transaction.

But if you do decide to proceed with trying to sell your home with a lien on it, it will have to be settled at closing so that the buyer will be able to get clear title on the property.

As far as paying and settling the lien is concerned, the money can come from the proceeds of the sale of your home if there is enough equity built up. This will just be added to all the other closing costs that are typical of selling real estate.

But if you owe more on your mortgage than what your home is valued at and there isn’t enough money in the pot to settle your liens, you’ll need to come up with the cash some other way.

If you choose to go this route, it’s recommended that you obtain some advice from the title company on how to proceed. Sometimes it might even be necessary to speak with a real estate lawyer if things are more complicated.

Most buyers will expect no liens on a property, and if there are, they’ll expect them to be paid off to make sure they get clear title.

The Bottom Line

Selling a home can be a bit stressful and even overwhelming at times, and throwing in a lien can just exacerbate things. If it is discovered that there is a lien on your home when you try to sell, you’d be well-advised to deal with it as soon as possible. Most buyers will probably bail out on a deal if a lien is discovered.

If you’re in this situation, team up with a professional agent who is well-versed in handling liens on properties to help you deal with these often complex scenarios in the best way possible.

Homeowners insurance usually offers some coverage for any damage done to homes and belongings as a result of wildfires. But as the latest slew of wildfires across the Golden State has shown, homeowners insurance might be increasingly tough to get.

Over 6,000 wildfires have plagued California this year, ravaging more than 580,100 hectares and causing damages worth over $2.6 billion. And according to experts, the situation isn’t expected to get much better over the foreseeable future.

So what does this mean for homeowners? More specifically, how will this impact their ability to secure homeowners insurance?

Homeowners Insurance More Difficult to Get

The California Department of Insurance has stated that the growing number of wildfires across the state will make it more difficult for homeowners to secure insurance. And as the wildfires continue to pose a problem, the issue of insurance will likely become even worse.

It’s expected that an increasing number of insurance providers will choose not to renew policies, even for those who are already clients. They may also decide not to undertake any new policies for properties that are located in higher-risk areas.

At the very least, homeowners who are still able to retain policies will likely experience a rate hike.

There aren’t exactly any precise numbers of homeowners who are unable to get insurance, but the Department of Insurance estimates that insurance policy non-renewals increased about 15% between 2015 and 2016, and over 10,000 policies in high-risk counties were dropped by insurance providers over the same time period.

If homeowners want to secure a policy, they’ll have to do plenty of searching for companies who would be willing to cover them. They’ll also have to dig a lot deeper into their pockets to get one.

However, all losses that insurance providers have paid out thus far cannot be thrown at policyholders all at once. According to state law, rate hikes can only increase over time rather than all in one shot.

But at the same time, the state is not permitted to force insurance companies to cover homes from the risk of fire, either.

What Can California Homeowners Do?

Homeowners who have been denied policies from their insurance providers or are finding it difficult to find a company who’s willing to offer coverage may still have options.

Rather than going the traditional route and obtaining a policy from conventional insurance providers, there are policies available through “surplus lines.” These policies can be obtained from surplus line insurers that may be licensed in the state that they are based in, but don’t have to be licensed in California.

For instance, a surplus insurer based out of Oregon must be licensed in that state. But they don’t have to be licensed in California, even though the policy they are offering is specifically to cover a property in California. 

Homeowners may also want to consider going with the California FAIR plan, which offers insurance for homes located in high-risk areas. However, these policies only provide minimal coverage. That said, more and more homeowners are choosing to go with the FAIR plan, which is reflective of how difficult the insurance market currently is in the most vulnerable counties in California.

Some homeowners are even choosing to forego insurance altogether simply because they can’t afford the rates or are just out of luck when it comes to obtaining a policy. Instead, they are turning to the government for some help in this area.

California has always been vulnerable to wildfires given the dry, warm climate. And some areas are certainly at higher risk than others. With wildfires continuing to ravage the state and expected to continue into the future, the trend of insurance companies making it more difficult to obtain a policy will likely continue as well.

Regardless, there are other avenues that homeowners may want to consider in order to ensure they are covered in the event that their homes are damaged by wildfires.

Swimming pools are a common staple in California backyards and provide homeowners with a convenient retreat to and get some relief from the hot sun. But like any other component of a home, they need regular maintenance and upkeep.

If you’ve got a pool or are thinking of installing one, there’s a bit of a learning curve when it comes to maintaining it. To make things easier for you, we’ve compiled a list of tasks that you’ll want to get familiar with in order to ensure your pool is always in perfect condition for a dip.

1. Skim Debris

You’re going to have to get used to skimming your pool’s surface because this important task should ideally be done every day. This is especially important if you’ve got large overhanging trees that drop leaves in the water at all times. And heavier, denser objects that might make their way in the pool water can eventually sink, which will make them harder to remove and is why daily skimming is a good idea (unless you’ve got a pool cover).

By tackling this task every day, you can effectively boost the pool’s circulation system’s efficiency and reduce how hard it has to work.

2. Clean Out Baskets

The baskets are eventually where pool debris will end up if you haven’t skimmed them out. Depending on how much debris falls into the pool water, you could find full baskets every time you check on them. You’d be surprised what can make its way in there. Even dog hair can accumulate (if you’ve got a furry friend who’s fond of swimming) if you don’t clean out this basket on a regular basis.

Consider cleaning out the basket a couple of times a week – or more if required. If there are smaller particles that won’t become dislodged when shaking out the basket, take a hose to it to really get it clean.

3. Vacuum and Brush the Pool Walls and Floor

Heavier debris that makes its way to the bottom of the pool, algae, and calcium deposits can all accumulate. That’s where vacuuming and brushing can be really effective. Depending on the exact type of material that your pool’s interior is made out of, you’ll want to make sure that you use the right tools so you don’t damage the pool’s interior. The right equipment will also ensure a more effective cleaning job.

Stiff brushes are best suited for plaster-lined pools while softer brushes are better for fiberglass, vinyl, or tile pool walls. Be sure to add this to your list of weekly chores.

4. Check the Pool Chemistry

In order to make sure your pool water is sanitary and safe for swimming in, you’ll want to check the chemistry of the pool about once a week. A proper pH level should be around 7.2. The higher the pH level is, the less effective chlorine becomes. By keeping your chemical levels in proper rages, you won’t need to add as much chlorine to keep the water clean.

5. Keep an Eye on Water Levels

If your location experiences a major downpour of rain, you might notice your pool’s water level is a bit high, which will interfere with how well the skimmer works. On the other hand, a string of hot days or plenty of roughhousing in the pool can cause water levels to reduce, which can damage the pump. Whether you pump some water out or pour some back in, take steps to ensure the water level goes back to where it should be.

6. Keep Your Chlorine Generator Functional

If you have a salt-water pool, then you’ll likely have a chlorine generator. This unit is responsible for producing chlorine so you don’t have to keep messing around with the chemical. It’s important for the cell to be kept clean and the water chemistry to maintain proper pH levels.

7. Clean Out the Filter

Your pool’s filter needs to be cleared out on a regular basis. This component plays an extremely important role in keeping the pool water clean. When the pool water is filtered, dirty water makes its way through the filter’s pipes and ends up at the water distribution head within the tank.

Any tiny particles will be caught by the filter. Depending on how often the pool is used and how harsh the outside elements are, the filter will have to be changed as needed. The dirtier your filter is, the harder it will have to work and the less effective it will be at keeping your pool water clean.

8. Have the Heater Professionally Serviced

If your pool is heated, it may need to be serviced from time to time. This isn’t really a DIY type of job and should be left to the experts to deal with. The only thing you need to do here is keep tabs on it to make sure it’s operational. If you notice any signs of problems, call the pros to have the heater serviced.

9. Caulk Cracks

As your pool ages, its structure and the hardscaping around it might start to show signs of cracking. If you notice any cracks, be sure to seal them up right away with caulk. Any water that makes its way into these cracks and under the surrounding deck can cause problems down the line.

The Bottom Line

Having a swimming pool and keeping it in pristine condition requires some work. But if you set up a schedule and tackle it a little bit at a time, it shouldn’t have to be a major ordeal. It’ll all be worth it in the end when you’re relaxing by the cool, clean, crystal waters of your very own pool.

After a real estate deal has been negotiated between a buyer and seller and an agreement is reached, it’s time to go through the steps to actually close the deal.

Buyers may have spent a lot of time and effort searching for the perfect home and visiting many listings, and sellers may have done the same by marketing their home and holding open houses. But the work is not over yet. In fact, there are still several tasks that need to be done before a real estate deal can close.

Whether you’re on the buying or selling end of a real estate transaction, the following steps will need to be completed before the deal is sealed.

1. Escrow is Opened

After a real estate contract is signed by both the buyer and seller, the escrow process will start by opening escrow with a neutral third-party. The escrow company will handle the money and contracts involved in the real estate deal.

The purpose of escrow is to make sure that each side is acting in accordance with the contract and to ensure that the money involved is dealt with appropriately and securely.

2. A Title Search is Conducted

A title search is important because it provides the buyer with the chance to verify whether or not the seller is actually legally allowed to sell the home. For example, the seller might be trying to sell the home on their own, but an ex-spouse is also on the title, which means they would both need to be part of the transaction in order for it to go through.

There could also be clouds on title, such as liens, which can make the transfer of title much more complicated.

A title search will find issues like these so they can be rectified before the sale goes through. Title insurance can also be obtained in order to legally protect the buyer from any long-lost owners from popping up in the near future and claiming the home as theirs.

3. Contingencies Are Fulfilled

There can be any number of contingencies that both the buyer or seller can include in the contract. The most common are financing and home inspection contingencies.

A financing contingency gives the buyer some time to apply and get approved for a mortgage to finance the home purchase. If they are unable to secure financing, the contingency will provide them with a way out of the deal so they can get their earnest money deposit back and protect themselves from being sued by the seller.

A home inspection contingency is designed to give the buyer some time to have a professional inspector investigate the condition of the home to see if there are problems that could spoil the deal.

4. Final Mortgage Approval is Provided

It’s highly recommended for buyers to get pre-approved for a mortgage before the house hunting progress starts. This will help buyers determine how much they would be able to get approved for and narrow down their search for homes that fall within their price range. It also helps get the process moving along once you find a home and an offer is accepted.

But the actual final mortgage approval process cannot start until after offer acceptance. The buyer’s lender might already have all the financial information they need, but they will also need a copy of the purchase agreement to find out exactly how much was agreed to be paid for the property.

The lender will then have a professional appraiser determine the precise market value of the home to make sure the lender isn’t dishing out more for the home than it’s actually worth.

5. Contingencies Are Removed

Contingencies such as the ones just mentioned will come with their own respective expiry dates before which they must be either fulfilled or waived. Your real estate agent will help you determine the appropriate amount of time that will be required to fulfill these contingencies.

Once the contingencies are fulfilled or waived, they will need to be removed from the contract in writing.

6. Final Walk-Through is Conducted

The buyer should have the opportunity to conduct a final walk-through to make sure the home is in the same condition as it was when they first agreed to buy it. It will also give buyers the chance to ensure that all items that are supposed to be left behind are still there and that all other items are removed according to the contract.

7. Final Papers Are Signed and Keys Are Handed Over

On the day of closing (or even the day before), the buyer will sign a number of documents in order to seal the deal. The paperwork can be quite lengthy but is all part and parcel of closing a real estate transaction. If everything is as it should be, the title will be transferred, the money will be distributed appropriately, and the buyer will be given the keys to their new house.

The Bottom Line

Real estate deals go through a pretty lengthy process from the time an offer is accepted between a buyer and seller to the time the buyer actually has the keys in their hands. Considering how in-depth the process can be and the number of steps involved, it’s always advised for both buyers and sellers to be represented by a seasoned real estate agent to make sure that each step is completed appropriately and the closing process can be completed without a hitch.

With housing prices as high as they’ve ever been in California, many have been wondering if we’re in the middle of a housing bubble.

But what exactly is a housing bubble and what are the telltale signs that we may be in one right now?

What is a Housing Bubble?

A real estate bubble occurs when people make purchasing decisions based on emotions and even fear rather than actual economic data. Buyers get caught up in the excitement of the environment, and when they see prices continue to spike, they rush to buy in order to get in before prices climb even further.

As more and more buyers get into the market while housing prices increase, many buyers find themselves extending themselves much too far financially. If and when the bubble bursts, prices, and demand drop, leaving many homeowners underwater on their mortgages and facing foreclosure. That’s exactly what happened to millions of buyers back in 2008 when the bubble finally burst.

Here are some signs of a real estate bubble to help you determine where you stand in the housing market today.

Home Prices Are Skyrocketing

The first thing that people may notice that can cause them to worry about whether or not a housing bubble is in the works is fast-rising prices. This is particularly concerning if prices are rising much faster than salaries, making mortgages a lot more difficult to afford.

Many markets across the state – and the country – are currently seeing prices as high as they’ve ever seen. And with wages not necessarily matching such price hikes, many wonder if we’re truly smack dab in the middle of a bubble that will eventually burst. When property values are far exceeding the ability of the market to handle such prices, a real estate bubble may be growing.

That said, it’s possible for the bubble to be contained as long as mortgage lenders keep their lending criteria tight.

City centers tend to be the places where housing bubbles are focused on, so buyers who are looking to get into the market right now may want to consider looking in the suburbs and outskirts where there are still opportunities to buy at lower prices and realize appreciation over time.

Interest Rates Increase

We’ve seen historically low interest rates for a while now, which has made mortgages much more affordable for buyers. But such low-interest environments can set the market up for a bubble, because once rates rise, homeowners who’ve stretched themselves out way too far and took out high-ratio loans can quickly find themselves struggling to make their mortgage payments.

Even if rates increase by a fraction of a percentage point, that can translate into an extra few thousand dollars that they’ll have to pay towards the interest portion of their mortgage, which can be just enough to put them over the edge.

Rising interest rates can also affect buyers who haven’t yet entered the market. As rates start to rise, homebuying suddenly becomes out of reach for many, keeping more and more buyers out of the market. That’s why a rise in interest rates tends to slow demand for housing, which can affect all those who have already purchased at sky-high prices and mark the end of a real estate boom.

Risky Loans Are More Commonplace

Back in the early to late 2000’s, subprime mortgage lending became increasingly common. Lenders were approving mortgages to subprime borrowers who may or may not have been as financially sound as they should have been in order to support a huge mortgage. Lending criteria was lax and borrowers were getting approved for high-ratio mortgages that stood on shaky ground.

By 2008, millions of foreclosures occurred specifically because of subprime lending. Even the slightest increase in interest rates or dip in housing prices could send these borrowers into a tailspin, which is precisely what happened to many.

Even the government is backing up home loans that may be risky, especially those that require a very low down payment amount less than the 5% required for conventional mortgages.

Overleveraging With Home Loans

Leveraging refers to the amount of debt you take out in relation to the amount of equity it will provide you with. It simply involves borrowing money – such as with a mortgage – in order to purchase something of value – like a house – to realize a return on investment.

This practice has allowed countless investors to build incredible wealth and continues to be depended on for such purchases. Imagine you’ve got $200,000 in cash to spend. Rather than buying a small condo for $200,000, you can use that same money as leverage to purchase a larger, more expensive piece of property that is expected to appreciate in value over time. That way you can expand your investment.

But a housing bubble can easily occur when buyers leverage to the max. Coming up with a tiny down payment relative to the purchase price and value of the property will mean you’ll have to borrow more. Housing bubbles always involve a ton of leverage.

When buyers financially max themselves out to purchase a home in a sizzling real estate market with very little money down, this can lead to major trouble in the near future. When prices finally start to plateau and even decrease, many homeowners can wind up with negative equity in their homes.

If a market is overloaded with leverage, that may be a good sign of a housing bubble.

The Bottom Line

While there are certainly signs of a housing bubble, it can still be tough to know for sure whether one exists. And if it does, it’s equally difficult to decipher if and when it will burst. Before you make a move in the housing market, be sure to consult with an experienced real estate professional who will be able to guide you and provide you with sound advice about buying or selling.