San Diego Short Sale and Foreclosed Homes

 
 
The Sunday real estate open house is a longstanding ritual in the real estate marketplace, and many homes have been sold on a lazy Sunday afternoon. When used properly, open houses can be a great marketing strategy. 

According to the experts, the following steps will help you get the most out of your real estate open house and increase your chances of selling your home for the price you want. 

-Be sure to meet with your agent in advance of the open house. Discuss all the various details about what is involved in holding a successful open house. While many home sellers are comfortable with an open house, others are not. If you choose not to host an open house, there are other ways to sell your home.
-Be certain to go through the entire home with the real estate agent the day before the open house. Take careful notes and follow all of his/her recommendations.
-Try not to become emotionally involved when evaluating the condition of your home prior to the open house. Remember that your real estate agent is trying to make your home more appealing to potential buyers, not criticizing your decorating style or choice of accessories.
-Any needed home repairs should be completed before the open house begins. This includes things like peeling paint, loose stairs, banisters in need of repair and the like. It is crucial that guests see a home that is in immaculate condition.
-Never underestimate the importance of making a good first impression.Many visitors make a decision about the home in the first few seconds. Be sure the entranceway to the home is immaculate, and that the steps leading up to the home are well swept and free of debris.
-Ask the real estate agent to create a professional-looking sign in sheet for all visitors. It is important to get the name and phone number of all attendees to the open house.
-Always discuss the price of the home prior to the open house. This will allow the agent to negotiate the price on the spot if a good prospect attends.
-Be sure to consider unusual ways to market your open house. For instance, if you belong to any special groups or organizations, be sure to market the upcoming open house to the members. For instance, the local garden club may be very interested in attending an open house that includes a beautiful outdoor garden.
-It is a good idea to provide cookies, brownies or other snacks for guests at the open house. A punch bowl is also an attractive addition.
-Pets should be kept away from open house visitors. It may be a good idea to have a friend or family member takes care of your pets until the open house is over.
-Be sure to lock up all medications, both prescription and non-prescription. Also be sure to lock up any cash or valuables in the home prior to the open house.
-Make sure that the home is spotless and free of unpleasant odors prior to the open house. You may want to bake a fresh batch of cookies an hour or two before the open house begins. Not only will the aroma mask any unpleasant smells, but it will create a warm and inviting ambiance as well.
-Be sure the temperature in the home is pleasant. A home that is too hot or too cold can make visitors uncomfortable, and lead them to wonder about the quality of the heating and air conditioning system.
-Play soft music in the background during the open house. Background music helps set a good mood for visitors.
-Always open the curtains and the drapes prior to the open house. This will allow fresh air and sunshine in and help give the impression of a larger space.
-If your home does not have plants, you may want to buy a few before the open house. Plants can provide a warm feel and help make guests at the open house feel more at home.

Following the guidelines outlined above, chances are your public open house will be a big success. Even if the home is not sold at the open house, the prospect contacts gained and the word of mouth exposure may well result in a sale.
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“I’m persistent until prospects tell me to take a hike,” explained Bob Cenk, mega agent and Craigslist aficionado. “And I’m good at taking a hike,” the former mountain climber joked while on a panel discussing the best Internet strategies during Mega Agent Camp Wednesday morning. Just last year he made $700,000 off Craigslist alone and isn’t showing signs of slowing down – this year he’s projected to crest nearly $1 million in GCI.

After leaving mountain climbing to spend more time with his family, Cenk got into real estate and quickly realized he needed a free method to generate leads. So he jumped on Craigslist and started posting. Here are the lessons he’s learned and the strategies he’s currently implementing to stay on top of his game.

1. Capture their attention. Traditional thinking might tell you to describe the home, its price and the neighborhood in the title. Through trial and error, Cenk has found that those headlines actually send people away from your post. “Consumers usually go onto Craigslist only once, and they are automatically looking for ways to disqualify the home,” he says. The best headlines, he explains, are the non-traditional ones. Here are three that are proven to pull in leads. 

!!!! START PACKING … LET’S MAKE A DEAL!!!!

***** WHAT’S NOT TO LIKE ABOUT THIS JEM******

!!!! PINCH ME I MUST BE DREAMING!!!!

2. Simple is better. A lot of agents make the mistake of writing too much about a home. “That just gives the consumer another way to disqualify the home – which loses you a lead.” Cenk has found that the simple posts which merely describe his service are the ones that get the most attention. For a full explanation on how to post simple ads, watch the video below.

3. Consistency and persistency with marketing and messaging: “We’ve found that people typically don’t click to the second page.” The strategy: “continue to post throughout the day to stay at the top of the first page. As redundant as it seems, posting the same message over and over is effective.” Cenk was quick to remind the audience that once leads (hundreds a day in his case) start coming in, it’s important to leverage your time and add someone to your team to handle your posting, and follow-up for you.

4. Adapt. Through trial and error Cenk has successfully found his way to success on the site. Liking his adaptation to climbing a mountain, he said “when you climb and come to a rough patch, you go back down; train and then head back up a new way.”


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E-mail is one of the best, low cost marketing tools that helps companies keep up with their customers. A successful e-mail driven strategy can trigger a massive sales surge and increased revenue in a company. According to e-mail marketing consultant Amber Thompsen, the following can help real estate agents implement a successful e-mail campaign within their company. 

Come up with the content 
The content of the e-mail is one of the most critical components of having a successful e-mail driven campaign. The content, which can also serve as the subject line of the e-mail, should be brief but intriguing and inviting for targeted readers. When creating your content, think about targeting a particular niche whose business you want to attract. 

Rich graphical format 
Graphically rich e-mails can ensure the success of the campaign through attracting readers to the e-mail. You should use e-mail software to come up with attention pulling graphics which should be fresh and vibrant. The graphics shouldn’t be overwhelming though, as this can cause readers to lose interest in the actual content. 

Personalize the e-mail 
In putting together and launching a successful e-mail campaign, you are always working to create a relationship with your readers. By building rapport with your audience, you are establishing a foundation of trust between yourself as a real estate expert and the individuals who are reading your e-mails. 

Establishing a goal 
To take full advantage of e-mail driven campaigns, you must set realistic and measurable goals which will reflect the return projections. A company using e-mail marketing campaigns will be able to track the amount of visitors that are driven by the e-mail unlike other marketing campaigns. Goal setting will ensure that you do not surpass your allocated budget.

Evaluating the campaign 
Evaluating your e-mail campaign is just as important as setting up an effective campaign. An evaluation should be done in order to determine the amount of sales you and the company have been able to achieve through the use of e-mails. The evaluation enables both yourself and the company to perform cost benefit analysis which will serve as a guide when creating e-mail driven campaigns in the future.
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Many highly successful real estate agents and brokers have narrowed their real estate marketing niche focus to a specific geographical area, a type of property or a category of consumer. Here, James Kimmons, a real estate consultant describes the most popular niche opportunities and how you can start taking advantage of them today. 

1. For sale by owner properties (FSBOs)
Don't discount the for sale by owner property as not worth your time. These sellers will, in many cases, find that they really don't have the ability to successfully market their home and decide to list with a real estate professional instead. Structure a marketing plan around helping these sellers learn what they need to know to market their property and may choose to list with you once they are aware of the complexity of the task. 

2. Resort and vacation homes
If you're lucky enough to live in an area that appeals to vacationers and those looking for getaway properties, this can be a very successful niche market for you. With most of the prospects coming from outside the area, a good Internet marketing strategy can position you as the area expert and cut down significantly on the competition. Providing usable information to out-of-area buyers will get you business, and at some point they'll likely be your sellers also.

3. Hispanics are a growing home-buying group.
The Census Bureau places Hispanics as the nation's largest minority group, with more than 42 million in the United States. With a median age of 27, this group is highly likely to comprise a large chunk of the first-time home buying market. Look at marketing venues that will attract this group and determine their needs and fill them.

4. More and more singles are buying homes every year.
With almost 90 million unmarried and single Americans, this is a group you cannot ignore. Fifty-five million households are headed by unmarried individuals. Women make up about 54% of this group according to the Census Bureau. Real estate professionals that can embrace the differing needs of these heads of households will surely find a wealth of opportunity.

5. Baby Boomers are a huge market influence.
Different income considerations, as well as special housing requirements, make this group a great niche market. Determine their needs and develop marketing and services that are tailored to them. Look into the SRES Designation (Seniors Real Estate Specialist) to position yourself as a specially-trained professional serving the needs of this age group.

6. Luxury homes - a market requiring specialized skills and money.
The luxury home niche looks quite inviting, with the high home prices usually generating correspondingly high commissions to the agents. Although luxury homes do result in a higher per-transaction commission, don't think there aren't some trade-offs. Luxury homes require special marketing venues that generally require a larger investment on the part of the listing brokerage. Overall, the percentage of net profit after marketing can be similar to lower priced homes. 

7. Helping first-time buyers is fulfilling and profitable.
First-time buyers are new to the entire process, with anxieties about financing, inspections and just about every facet of the transaction. They want and need a real estate agents help. It's a great feeling helping them into their first home, and this niche market is a large one. Develop marketing and transaction information materials that will help them to understand the process and view you as the expert they need to carry them through it. They'll be a huge source of future repeat business and referrals.

8. Condominium buyers and sellers offer a great niche opportunity.
Nationally, there has been a huge growth in the number of condominiums in the last decade. Particularly in resort and vacation communities, an enterprising real estate person can capitalize on this specialization. In many cases, the owners use the condo only partially and wish to rent it out at other times. This provides another area in which you can be the expert—helping them to select the most rentable properties. It can also lead to referrals to management firms or to your own business.
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Short Sale Negotiations with a Fannie Mae Loan

In the past few months I have written several posts on my experiences with short sale negotiation on a Fannie Mae Loan. I have reported about the latest trends in these short sale negotiations based on my experiences with the short sale negotiations at my third party short sale negotiation company.

Today I had one of those “I told you so” moments when I was scooting around dsnews. I feel like one of those mothers whose child cannot find a certain book or a particular pair of pants. The child looks for “hours” and cannot find the item anywhere—even after Mom has said, “It’s in your closet.” Then, Mom goes in and finds the item in no less than 5 seconds: one of those “I told you so” (or “You should have listened to me”) moments.

This moment, however, is bittersweet. It is bittersweet because it has to do with short sale negotiations on Fannie Mae Mortgages and the fact that Fannie Mae does not want to postpone Trustee’s Sales (foreclosures) in order to entertain a short sale transaction. However, this moment had to do with information that I reported to you in July (and I do not have a crystal ball or a bat phone).

According to dsnews, Fannie Mae issued a notice last week in which they state that they will penalize mortgage servicers who allow delinquent mortgages to “languish too long”. The tone of Fannie Mae’s notice indicates that they want those delinquent mortgages off the books as soon as possible.

A few years back, delinquent sellers with forthcoming foreclosures were able to swing small deals with their mortgage servicers and make a payment or initiate a loan modification at the eleventh hour in order to delay foreclosure proceedings. In several of my blog posts reporting on the latest trends in short sale negotiation of Fannie Mae loans, I have reported that those days seem to be long gone.

Any borrower or homeowner who is considering selling the home in a short sale absolutely cannot wait until the last minute. Fannie Mae’s latest notice shows what could happen due to a homeowner’s inaction on a Fannie Mae short sale.


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It seemed like a great idea 20 years ago. You'd buy that condo in Florida, vacation there as often as possible, then someday sell your primary residence and spend your "golden years" basking in the sun. But like so many Americans, the nation's recent economic troubles have given you reservations about taking on too much risk, so your golden years will have to wait. And though you'd hate to sell your beloved getaway, keeping up two homes just won't be possible on your recessionized budget. Is there a solution?

"Absolutely yes," says Christine Karpinski, director of Owner Community (www.OwnerCommunity.com) for HomeAway.com. "Renting out your second home will allow you to keep it during these tough times and sets you up with an easy business that will continue to bring you profits long after the economy has gotten back on its feet."

Many, many seniors find themselves in this position, she adds. A good percentage of second homeowners fall into the "retirement age" demographic, but because of recent financial troubles are finding that they need to continue working and push back their retirement a few more years. Meanwhile, they have these great real estate investments they made in better years. Rather than sell those properties, possibly for a loss in today's tough real estate market, Karpinski suggests they maximize these investments by turning them into vacation rental businesses.

If you're a second homeowner, Karpinski offers 4reasons why you might consider renting out your second home:

· Your fixed income hasn't kept up with your lifestyle. Admit it. Even when you're happy to give up the daily grind of your job, losing the paycheck that comes with it can be pretty painful. Factor in inflation, rising taxes, a depleted 401K and unexpected "new" expenses, and you may find that what seemed like a manageable cost of living five years ago doesn't seem that way anymore. Your second home, even if it's paid for, may start looking like a liability due to property taxes, homeowner's association dues, and maintenance costs. Not if you rent it out, says Karpinski. Then it becomes a great source of revenue.

"If you have a loan on your second home, renting it out only 17 weeks will cover your house payments for an entire year," she says. "If it's paid for free and clear, only five off-week rentals will cover costs like bills for your phone, power, cable, and association dues. All the rest is profit! When you consider that in some markets you can earn as much as $30 to $40 thousand in rental revenue per year from your second home, you're looking at a nice 'raise' for yourself."

· You've decided to "retire" from retirement. It is not unusual for people to test-drive retirement and find that it's just not for them. Work can provide many rich rewards—structure, social interaction, mental stimulation, a sense of purpose, and so forth—that people keenly miss when they retire. And when they discover that quitting "the rat race" isn't quite what they thought it would be, more and more people are opting to return to the workplace. And (let's be honest), nowadays people simply can't afford to quit the working world completely.

"When people decide to postpone retirement, they may also postpone moving to their retirement home," says Karpinski. "Even if they do retire and then rejoin the workforce either full-time or part-time, they may not want to live in the city they associate with retirement. It's a psychological thing. And so, in these cases, it's better to keep the vacation home a vacation home. Renting it out allows them to do that."

· Circumstances have changed since you made your retirement plans. Maybe grandchildren have arrived on the scene and you can't bear the thought of moving hundreds of miles away from them. Or your parents are in poor health and need you nearby. Or your spouse has passed away and retiring in the Great Smoky Mountains was his idea, not yours. Regardless of specifics, your life bears no resemblance to what you thought it would look like back when you made your retirement plans.

"Life rarely turns out to look like we thought it was going to look," notes Karpinski. "That's okay. Some of the happiest, most successful people I've met during my years working in this field never dreamed they would rent out their second home, and yet once they tried it they loved doing it. It pays to be flexible and keep your options open."

· You've suddenly realized there's no place like home. Maybe there are no dramatic life circumstances keeping you from moving to your "dream destination." Maybe you've simply changed your mind. You've decided you like being near your friends, you don't want to leave your church or synagogue, and your Tuesday lunch with "the girls" or Thursday Bridge night with "the guys" is a tradition you just don't want to give up. Or perhaps you'd like to stay in your hometown most of the year (you kind of like the change of seasons) and spend the bitterest winter months in your beachfront condo. Renting your second home out during the time you are not staying there makes it financially feasible to keep both homes.

"Traditionally, many retirees would sell the home they lived in for 40 years, downsize to a smaller house or apartment, and split their time between that home and their getaway in, say, Florida," explains Karpinski. "But there are drawbacks to doing that: you lose your neighbors, you're no longer close to your familiar grocery store, and so forth. And you don't get to pass the 'homestead' down to your kids. Rent out your second home and you can have the best of both worlds. You can afford both places. It's the perfect balanced solution."

"Renting out your second home can make for a valuable revenue stream that will not only prop you up now when you need it most, but could also make your golden years even more golden in the long run," says Karpinski. "And if you're like most people, you'll find that not only will you quickly get the hang of renting, it's actually fun. I've been doing it for years and I can't imagine ever not doing it. It's more than a way to profit from an investment. It's a richly rewarding way of life—at any age."
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Despite the economy's sluggish recovery, a new national survey from Weber Shandwick with KRC Research found that nearly seven in 10 Americans (69 percent) have an optimistic outlook about their household finances for the next two years. Nearly one quarter (23 percent) are very optimistic.

Since the downturn two years ago, the vast majority of Americans (81 percent) say they are more responsible with their household's money today than two years ago, with nearly half (46 percent) considering themselves much more responsible. Many indicated they've changed their financial habits, including buying items on sale (80 percent), becoming more concerned about saving money (78 percent) and learning how to budget better (68 percent). In fact, Americans say they are more likely today to be "saving as much as possible" than before the financial downturn (42 percent vs. 33 percent, respectively). 

Moreover, six in 10 report they are likely to continue the savings and spending patterns they started when the downturn began as soon as the economy recovers.

Women, on average, are more optimistic than men about their household financial future over the next two years (72 percent vs. 65 percent, respectively), more likely than men to have turned to family for help managing their finances over the past two years (59 percent vs. 50 percent), and more likely than men to feel in more control of their household's financial destiny today compared to two years ago (35 percent vs. 27 percent).

Few Americans relied on the help of an expert over the last two years. The survey found that a small segment leaned more than usual on financial advisors (19 percent) or their banks (17 percent) to help manage their household budget or finances.

"On the second anniversary of the financial collapse, Americans have a mostly positive outlook on their financial futures although many report not feeling in control just yet. Interestingly, few have turned to professional resources for help. This begs the question of what can be done differently by financial institutions, advisors and others to effectively promote the resources available to empower Americans," said Barbara Iverson, president of Weber Shandwick's Financial Services practice group.

Financial services organizations should consider how they can turn their customers' optimism into empowerment by helping them budget better and making financial advisors more available to answer questions. Engaging customers online may be one area for the financial industry to further explore. While only 17 percent of Americans in the survey reported using social media during the past two years to obtain information on managing their finances, the nationwide trend of social media usage is rising exponentially.

"Done well, a social media presence puts a face on an organization and helps engender trust, confidence and a sense of community," Iverson said. "Building a strong following on networks such as Facebook and Twitter can also help financial services organizations address customer dissatisfaction and mistrust. In our survey, nine percent of Americans posted or tweeted comments or complaints about their finances online. While these 'badvocates' represent a small group, their potential to cause damage to their financial institutions could be considerable."
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Mark your calendars. The Van Ripers have moved up the date of their mortgage-burning party. When the couple purchased their St. Paul, Minn., home in 2005, they locked in a 6 percent interest rate for 30 years. But with mortgage rates at jaw-dropping lows, they were able to refinance into a 4.125 percent, 15-year mortgage that will save them more than $100,000 in interest and allow them to pay off the mortgage by the time their 3-year-old son is in college. All this for a $100 increase in their monthly mortgage payment.

Shorter-term mortgages are deliciously low. Last week, the average rate for a 15-year fixed-rate mortgage was 3.83 percent with an average 0.6 point (a point equals 1 percent of the loan value), according to Freddie Mac. The rate on a 30-year, fixed-rate mortgage wasn't much higher, weighing in at an average 4.35 percent with an average 0.7 points paid.

Refinancing to a shorter-term mortgage if you can afford the payment seems like an obvious smart-money move. You'll pay far less in interest, get rid of the monthly fixed expense earlier, and have freer cash flow in retirement. Plus there's the high that homeowners feel when they imagine making their last mortgage payment.

"It's just nice to think it's going to be done," said 33-year-old David Van Riper.

But there's a camp out there that believes locking into a shorter-term mortgage is unwise, especially when rates are so low on 30-year mortgages and economic uncertainty so high.

When Kevin McKinley, a Wisconsin financial planner and co-host of Wisconsin Public Radio's "On Your Money," learned I refinanced into a 15-year loan, he e-mailed me a list of reasons why I shouldn't have. His primary concern? That I've locked myself into higher payments at a time when the job market is shaky and home equity is tougher to access. "It's about having the cash right now and being able to do what you wish instead of being at the mercy of the bank, or the real estate market if you have to sell, or your own job," he said.

McKinley would have refinanced into a 30-year loan and stashed any money freed up by the lower payment in a savings account or CD.

I could also have taken the excess and put that money to work in the stock market or even in bonds. Considering my mortgage interest rate after the tax deduction is in the 3 percent territory, it wouldn't be hard to beat that in the market. But that's not a sure thing.

"Given the recent variations in the stock market and whatnot and the low interest rate in savings, it just seemed to make sense to put it into the house," Van Riper said.

Alex Stenback, a mortgage banker with Residential Mortgage Group in Minnetonka, Minn., said this difficult economic stretch has brought out the conservative side in most of us.

"When savings rates go up, when people start talking about 15-year mortgages or paying their mortgages off ahead of schedule, that's really just a form of self-insurance. They're no longer as comfortable with the fact that the sky's the limit and the ladder goes up for them economically," he said.

Anticipating your financial future is hard, but that's exactly what Bill Schwietz, president of the Minnesota Mortgage Association, tries to get clients to do when choosing between loans. He's seen several friends who started with 30-year mortgages, then refinanced to 15-year loans with a big promotion and then refinanced into a 30-year loan again when their children's hockey fees and private school tuition became too much.

Problem is, if you lengthen your loan and roll in closing costs with each refinancing, you'll never pay down the principal.

Kate Wilson, branch manager for Fairway Independent Mortgage in Bloomington, Minn., said 15-year loans can certainly make sense. But she always reminds her clients that there's no law against paying off a 30-year mortgage on a 15-year schedule. You'll still save a boatload, even if your rate on a 30-year mortgage is half a percentage point higher than a 15-year would have been.

Here's the example she calculated: On a $200,000, 30-year mortgage at 4.5 percent, you'll pay $164,813 in interest with a monthly payment of $1,013.37. Pay down that loan in 15 years (by making prepayments of about $517 per month on the mortgage balance) and your monthly payment would be $1,529.98 and you'd pay $75,396 in interest. If you went with a 15-year mortgage at 4 percent instead, you'd pay $66,286 in interest and have a payment of $1,479.37.

So ask yourself if you'd be willing to pay a few thousand dollars more in interest for the flexibility of having an extra $500 a month to cover life's expenses without tapping home equity. Also assess whether you're disciplined enough to actually prepay the loan. If the answer is no, then a shorter-term mortgage is a good fit, provided you can truly afford it.

Most mortgage bankers, including Wilson, have calculators on their websites. The financial calculator site dinkytown.net has several calculators to choose from, including a 15-year vs. 30-year mortgage calculator.

Of course, there's that little problem of declining home values that's making it hard for people who put little money down or bought at the peak to refinance. But having little equity doesn't slam the door. Borrowers with an FHA loan can reduce their rate without an appraisal using the FHA streamline refinance option if they meet the requirements, which include paying the mortgage on time, having income and meeting the minimum credit score requirements set by their lender (generally around 640 these days, Stenback said).

There's also the government's Home Affordable Refinance Program as well as the recently launched short refinance program for non-FHA borrowers who are underwater. 

Even if your current circumstances lock you out of a refi, there's nothing stopping you from prepaying a longer-term mortgage. Make an extra payment on your 30-year loan each year and you'll retire it approximately seven years earlier.

"That's a huge pile of money," Wilson said.
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Foreclosure is blind.

After the mortgage meltdown and the plunge in home prices, record numbers of ordinary houses tumbled into foreclosure across Southern California as borrowers became unable or unwilling to pay their mortgages. But the rich aren't so different after all: Million-dollar-plus homes have reverted to lender ownership in increasing numbers — previous sales prices, prime locations and even celebrity pedigrees have provided no immunity.

Earlier this year, Oscar-winning actor Nicolas Cage's English Tudor joined the foreclosure fraternity. The nearly 12,000-square-foot house, once marketed at $35 million, now is listed for $11.8 million; the seller, Citibank.

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The Bel-Air mansion wasn't even the most expensive lender-owned property — known in the industry as REO, or real estate owned — in Los Angeles County, according to a records search of houses on the Multiple Listing Service in the county's most posh ZIP Codes.

Higher priced still was the alleged Wells Fargo party house, which was listed nearly a year ago at $21.5 million and sold this month for $14.95 million. The beachfront house in gated Malibu Colony became the center of controversy when neighbors complained that it was being used by a Wells Fargo & Co. executive for social events; the executive was subsequently fired.

Although the pace of foreclosures has slowed in the general housing market in Southern California and much of the nation, it's still rising for upper-tier homes.

The number of homes in the $1-million-and-up slice of the market that have become bank owned has tripled in the second quarter compared with the same period three years earlier in Los Angeles County, which has the majority of Southern California's high-priced REO houses. And the trend has shown little sign of slowing, according to data from ForeclosureRadar.

By comparison, the number of homes reverting to banks in all price ranges combined peaked in the third quarter of 2008.

Many of the reasons the rich lose homes to foreclosure are no different from those of moderate- or low-income borrowers — poor financial management, the loss of a job, a drop in home value — said Mark Goldman, a foreclosure expert and loan officer who teaches about real estate investments and finance at San Diego State University. That the top of the market is still seeing increased foreclosures may reflect the staying power of owners with deeper pockets who could hold on to their homes when the economy first faltered, he said.

Some well-heeled homeowners were hit particularly hard when the stock market tanked and the financial scene fizzled. Others, such as the original owners of the Wells Fargo beach house, saw their investments wiped out by Bernard Madoff's massive fraud scheme.

But none of that unsavory association was apparent in the polished staging and marketing materials about the 3,800-square-foot home prepared for Wells Fargo by listing agent Chad Rogers of Hilton & Hyland. ("Walls of glass create an unparalleled indoor/outdoor environment.... Wake up to the gleaming Pacific in the sumptuous master suite.")

In fact, unless one reads the fine print, it is sometimes hard to identify a pricey property gone bad.

Rogers' Hilton & Hyland colleague David Kramer, however, takes a different approach when selling bank-owned property. A 12,000-square-foot contemporary Mediterranean he has listed with other agents recently hit the market at $8.595 million. Included in the MLS remarks describing the property: "lender owned" and "originally listed at $16.95 million." Who doesn't want to know they are getting 50% off?, he said.

Not every REO is owned by a bank. Sometimes the new owner is a private money lender.

One such corporate-owned REO in the Beverly Hills Post Office area is an 11,000-square-foot Mediterranean on more than two acres with a tennis court and swimming pool that is priced at $7,999,000. The original owner had purchased the property in the 1990s, but after borrowing against the property for a business that didn't survive the economic downturn, he couldn't support the payments, said listing agent Danny Batsalkin of L.A.-based Boulevard Realty.

Unlike the bank-owned competition, the house comes with an offer of financing — 20% down at a 5.99% interest rate and three years of interest-only payments. "This does make it more attractive," Batsalkin said.

Changes in banking requiring full-documentation loans have altered the financing picture in the upper end of the market, Goldman said.

"In 2006, you could borrow 70% to 80% on a $10-million house," he said. "Today you might need 50% down."

Working with a seller that is a bank can present challenges.

"In general, my experience has been that banks are really bad at managing real estate," Goldman said. "You probably have to go through three or four good offers before someone will sign on the line to sell the asset."

The lender is not motivated to let the property go at a discount, because it still shows a higher value while it's on the books, he said.

That opinion, however, is not shared by Karen Caskey, an REO property specialist with RS Capital who is based in Beverly Hills.

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The bigger lenders all have specific documents and forms to file, such as proof of cash, said Caskey, who has worked with REO buyers and sellers since 1993. "If all their requirements are met, I've had an answer the same day."

Caskey says she is sometimes competing against multiple offers for multimillion-dollar REOs.

Other lenders are lowering prices. A bank-owned property in Beverly Hills listed at $3.1 million that Caskey has been tracking was dropped to $2.65 million this summer. "There's good savings in the $2-million- to $4-million range," she said.

Though there has been much speculation about a so-called shadow inventory of REOs ready to hit the market and depress prices further, Goldman is not concerned.

"We've been waiting for a year and a half for the deluge of bank-owned properties, and it hasn't happened yet," he said.

Another reason to be less concerned about shadow inventory, Goodman said, is that now there's more interest from banks to modify loans or go for a short sale, in which the house sells for less than the lenders are owed.

Some high-end homes have not returned to the market and instead are being leased back to their former owners.

"The banks will sell them in four or five years" when prices have rebounded, Caskey said.

In the current market, it can take years to get a new owner into a property that went into default. Retired pro ballplayer Jose Canseco lost an Encino home in 2008 to Washington Mutual. He had purchased the property for $2.785 million. A sale finally is pending on the REO, listed at $2.125 million.

Whether luxury REOs represent bargains that won't be available again for years remains to be seen.

Bryan Ochse of Media West Realty in Burbank, which works with 11 lending institutions and specializes in REO sales, isn't betting on it.

"We believe the high end is ready to fall apart," he said.

Goldman is more optimistic about the market's recovery.

There has been a lot of talk recently "about a double-dip" in the housing market, Goldman said. "I've been thinking of the housing market as a light airplane landing and it kind of bounces. Until things stabilize, we're going to see some up and down here."
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A growing number of homeowners are choosing to pay down their mortgages at a faster rate--even if it means a substantial jump in their monthly payments.

Between January and June, 26% of homeowners who refinanced chose a 15-year fixed-rate mortgage, according to data from CoreLogic, a provider of financial, property and consumer information. During all of 2009, 18.5% of borrowers who refinanced opted for a 15-year term.

What's prompting the shift to shorter loans? Historically low interest rates for fixed-rate mortgages.

Homeowners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets, says Bob Walters, chief economist at online lender Quicken Loans.

The average rate on a 15-year fixed-rate mortgage was 3.86% for the week ending Aug. 26, according to Freddie Mac's weekly survey of conforming mortgage rates.

A Change in Thinking
The financial situation of those capable of refinancing today is a factor in the shift, Mr. Walters says. These people typically are homeowners with the best credit and the most equity -- and, therefore, most suited for a shorter-term loan.

But there might be some other psychology at work. "We're seeing a different view on debt than maybe we've seen in the past," he says. Today, homeowners are saying, "I really want to pay this off. I'm going to bite the bullet and take the payment and work toward paying this down."

A 15-year mortgage also acts as somewhat of a forced savings account for homeowners, says Leif Thomsen, chief executive of Mortgage Master, a privately owned lender, given that the higher payments help a borrower pay down the principal at a quicker clip.

This is a huge shift in borrower thinking. "There was a drive a couple of years ago to take out the biggest mortgage that you could and use all of the money you would have otherwise had in the house and put it into stocks and bonds--to think of your house and mortgage as part of your entire investment portfolio," says Amy Crews Cutts, deputy chief economist for Freddie Mac.

"That worked for people who do investment finance for a living and are good at managing accounts," she says. "But for the average person, debt is a drag on their psyche as well as their overall budget." Many Americans have reverted to the goal of paying off their house and getting rid of their mortgage, Ms. Cutts adds.

Doing the Math
Refinancing into a shorter-term mortgage isn't a strategy for everyone, however.

Choosing a shorter term usually means you'll get a better rate--and you'll pay much less interest over the life of the loan--but a shorter time frame ramps up monthly mortgage payments.

For example, with a 4.5% interest rate on a 30-year fixed-rate mortgage of $200,000, you would have a monthly payment of $1,015, including principal and interest, Ms. Cutts says. The monthly payment jumps to about $1,480 with a 4% interest rate on a 15-year fixed-rate loan.

Of course, if the refinancing borrower's current 30-year loan has a higher rate, the difference between the monthly payments could be lower. Still, you should count on some increase in monthly payments.

In general, Mr. Walters says, those who choose 15-year fixed-rate mortgages are older and have more equity and less debt than other folks. They also earn higher incomes and don't have some of the added expenses that younger homeowners typically do.

"People who are taking these loans are financially stable and can afford the payments, but at the same time are planning on staying in their home for an extended period of time," Mr. Thomsen says.

Mr. Walters says you shouldn't take on a 15-year fixed-rate mortgage unless you have substantial savings, including at least a year's worth of living expenses in liquid accounts.

Also, he recommends having a debt-to-income ratio below 35%. So if you have a gross salary of $5,700 per month, for instance, your monthly debt--including any mortgage payments, taxes, insurance, homeowners-association dues as well as auto and student loans and credit-card debt--would have to be a max of $1,995 to get a 35% ratio.

Make That Extra Payment
“I was about 12 years ahead of the trend to minimize the dollars flying out of my pocket to pay for a house. I know the trend for the last 30 years or so has been "Me now!" There's at least a faint possibility that delayed gratification is a better choice.”
—William Skiba
Borrowers who don't meet those standards, or are worried about future loss of income, might be better served taking a longer-term mortgage but making extra payments on the principal to pay off the loan faster, says Mr. Walters.

For instance, if you refinance a $200,000 mortgage into a 30-year loan with a 4.5% rate, and then apply $100 of the savings to the principal payment each month, you'd save $31,700 in interest over the life of the loan, Ms. Cutts says. And you would pay off the mortgage in 25 years, instead of 30, she adds.

What's more, you would have the flexibility of not paying that $100 in months when money gets tight. "Maybe today you're feeling flush with money. Maybe you're worried in the future that income might change," Ms. Cutts says. With a 30-year mortgage, you have more flexibility. "Shortening to 15 years is a pretty big bump in payment."





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