San Diego Short Sale and Foreclosed Homes

 
 
Home buyers are an increasingly rare breed these days. Many who were eager to buy a house raced to take advantage of federal homebuyer tax credits. When those government perks expired in April, home sales essentially went into deep freeze, plummeting to levels not seen in more than a decade, according to the latest numbers from the National Association of Realtors.

Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market–and the record low mortgage rates.

But woe to the overconfident buyer. Here are five common missteps that first-time home buyers make.

1. Snubbing the real estate agent

With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps–the price of comparable homes on the market–is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up, says Shii Ann Huang, an associate broker with The Corcoran Group in New York.

When you hire an agent to act as your "buyer's representative," she's obligated to put your interests first, even if her commission is paid by the seller and based on the sale price. Skeptical? That's all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.

But don't let the agent find you. When Viviane Ugalde and her husband, both physicians, bought their first home in Sacramento nearly two decades ago they made this mistake. "We stumbled onto an agent when she saw us peeking in the windows of an empty house for sale," Ms. Ugalde recalls. The agent, who happened to live on the same block, came out of her house (wearing pajamas), offered to show the couple around the neighborhood, and ultimately helped them find a house. Then the agent, who was new to real estate, neglected to show up for the closing. "It was scary and confusing signing what seemed like a thousand pages," says Ms. Ugalde.

2. Guesstimating how much you can afford

Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. "The process is so different than it was four or five years ago," says Diann Patton, a broker with Coldwell Banker in Grass Valley, Calif. Not only are lenders reading loan applications closely, she says, they're verifying employment and running credit checks multiple times during the process.

Make a date with a mortgage broker or banker before you get serious about your search, says Ms. Patton. Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it's up to you to account for maintenance costs, moving fees and association dues.

3. Letting charm cloud your judgment

No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you're prepared to pay for repairs and upgrades, an old house can quickly lose its allure. Last year Alison Koop, a public relations manager for the University of Washington, came dangerously close to saying "I do" to a seemingly fabulous mid-century home in northeastern Seattle. Ms. Koop was so smitten with the big windows and vaulted ceilings in the living room that she neglected to notice the exposed wires, shoddy roof and other structural problems. Any delusions Ms. Koop had were laid to rest in the guest bathroom. "When the inspector turned the faucet on," she says, "the spigot fell off, hitting the floor of the tub with an exclamatory thunk."

If you're considering an old home, don't let the inspection be your last line of defense, says Jay Papasan, vice president of publishing at Keller Williams Realty. "Negotiate a long due diligence period," he says. That gives you time to get real estimates from contractors and back out if need be.

Of course, new homes aren't without their drawbacks. Recently, many newly built homes experienced serious problems with Chinese-made drywall, for example. Proceed with care whatever the home's age.

4. Focusing on the house, not the hood

In hindsight, many buyers say they wish they'd taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there's no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. When Laurie Tarkan and her husband bought their first home in 2001 they were so infatuated with the circa-1924 three-bedroom cottage that–in addition to brushing over some of the headaches of an old house –they didn't give a whole lot of thought to its somewhat out-of-the-way location about a mile from downtown Maplewood, N.J., a popular New York suburb. "As a first-time buyer you're not aware of all the things you should think about that aren't about the house," says Ms. Tarkan, who after living in New York City for 17 years, still hasn't gotten used to driving everywhere.

Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.

5. Making arbitrary offers

With housing inventory running high and sales at record lows, in most markets, there's no shortage of houses for sale and sellers desperate to get out from under them–all the more reason to hold out for the right house and the right price. But when you find that perfect house, don't assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.

If the house has been on the market for months, you probably don't need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don't be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don't get suckered into a bidding war.


Add Comment
 
 
We knew the housing market news was grim when the National Association of Realtors released numbers recently showing that existing home sales dropped 27.2 percent from June to July, a 15-year low. We knew things were even grimmer when Fed Chairman Ben S. Bernanke said recently that despite low interest rates and lower prices, the glut of foreclosed properties and difficulties getting mortgages were "likely to continue to weigh on the pace of residential investment for some time yet." Oh, and then there's the figure of "25 percent of mortgages are underwater" that's been floating around. As far as stats go, that's almost as scary as nearly 20 percent of Americans thinking the president is Muslim.

But my real scare happened a few weeks ago when, amid my daily surfing of Internet real estate sites, I happened upon a particularly gruesome scene. Included among the photographs for a listing of a four-bedroom, four-bath house in a relatively desirable area was a close-up of an open toilet choked with what appeared to be a tangle of dark hair. A large tangle. Imagine a trichotillomaniac Morticia Addams who won't flush.

Granted, this was a short sale (last sale price $995,000; today's asking price $499,000), and short sales aren't known for fancy photo shoots. But the toilet picture seemed to represent a new downturn in the market, and I wasn't the only one who noticed. The real estate blog Curbed L.A. picked up on the listing, wondering aloud if the agent "hates house hunters."

Despite going on to view countless photos of spotless, flawlessly staged homes — think ridiculously wide-angle shots of spotless bathrooms, framed art posters, a single orchid in an earthenware vase — I couldn't get the hairy toilet out of my mind. It wasn't just the visual. It was the way it served as a brutal (if pathetically literal) metaphor for the state of the economy.

Finally, I called the real estate agent to find out what in the world she'd been thinking. I immediately reached a very nice, perky-seeming woman named Kaili Richards.

"It's not hair," she told me. "It's tree roots."

Richards explained that she'd included the photo because she wanted people to understand how much work needed to be done on the house. She hadn't realized how much the roots, which were growing through the plumbing into the toilet, looked like hair.

"I definitely wouldn't have included a toilet shot if it was just hair," Richards said. "Hair is an easy fix."

Her listing is hardly alone in its commitment to, shall we say, gritty realism. Lately I've run across photos showing unmade beds piled high with laundry, grease-stained kitchens whose countertops bear the remains of breakfast, and unkempt pets crouching in corners as if they fear they'll be auctioned off with the furniture. These drab, artless images could be this recession's version of the dustbowl photographs that came to symbolize the Depression. It's hard to look at them without wondering about all the sad stories beneath the surface.

Of course, painful as this recession may be, it's not the Depression. And if snapshots of countertops are our era's answer to Dorothea Lange, well, that's painful in its own right.

Looking at these photos, I can't help but think of the last time I saw such blatant disregard for buyers' senses. Oddly enough, it was only five or six years ago, when we were on the other side of the housing market pendulum.

I can't count the number of open houses I saw back then where sellers were so sure their homes would be snapped up in a bidding war that they didn't find it necessary to do the dishes before a Sunday showing, much less perform the repairs and renovations that, once upon a time, were considered standard in selling a house. We now see those days as an aberration, a reckless, decadent interlude in which a passive approach to selling was a function of cockiness rather than inertia.

Now, however, we're faced with a new strain of inertia, a new reason to explain why roots are growing in toilets. It's called desperation. And like the distressed properties themselves, it doesn't appear to be going away anytime soon.
Add Comment
 
 
Will the launch of the Apple iPad mean the end of the listing presentation folder or flip chart style presentation? Will we see agents showing off their listings via the iPad? Or perhaps they’ll be using it to watch real estate training sessions or live streamed sales meetings? Either way, could it be a game changer?

While most real estate professionals use a laptop for the activities listed above, there are numerous advantages to using the iPad for these same activities. 

Just like a restaurant could use the iPad for taking orders or displaying their menu, real estate agents can use the iPad to demonstrate how professionally they can present a potential sellers home, show comparable sales and create a marketing campaign digitally. In addition, the pricing of the iPad means that Apple has provided an affordable way for real estate agents to make their company appear more high tech while out in the field.

According to real estate coach Greg Vincent, here are 10 ways that real estate agents can use the iPad to gain an advantage in their marketplace. 

Use it for digital listing presentations
Show property photos and videos in high definition
Visit websites for doing CMA’s and show other related sites
Create an individual property website demo for a client right before their eyes
Instant database entry at open houses
Get directions
Show off real estate iPhone apps on a larger screen
Portable client management
Show details of current listings to buyers on the run
Check e-mail enquiries and setting appointments
Add Comment
 
 
In the wake of the economic recession, parents are talking about money with their children more often and earlier in life, according to a recent survey.

And yet most parents — 62 percent — say they are still looking for ways to convey the importance of money management to their kids, according to The National Money Night Talk Survey, developed by American Express and personal finance guru Jean Chatzky and endorsed by the Council for Economic Education.

So here are some tips from experts and resources for parents:

BE A ROLE MODEL: "If your children see you buying whatever you want, and worrying and arguing about money and not talking about saving for the future, it's not hard to predict what kind of financial behavior they will exhibit," said Jim Roberts, a professor of marketing at Baylor University who studies compulsive buying and credit card abuse.

Involve children, in an age-appropriate way, in family discussions about spending, such as the cost of vacation destinations and a new car purchase, as well as routine money chores, such as balancing a checkbook or clipping coupons, said Jan Brakefield, a professor of consumer sciences at the University of Alabama, who teaches money seminars called Cash Camp to middle-schoolers.

PRACTICE: If you want your child to be skilled at putting a basketball through a hoop, you give them a basketball and encourage them to shoot repeatedly. Similarly, if you want them to be skilled at managing money, you must give them money and encourage them not only to save it but spend it too. Allow them to make spending mistakes they regret, and occasionally let them to run out of money. Require them to choose among similar purchases with different features and prices. Of course, parents retain veto power over inappropriate purchases.

ALLOWANCE: An allowance system can be the centerpiece of money lessons for kids. It governs how money gets into their hands and how it leaves. Rules should be consistent, and payments should be regular.

Children are ready for allowance as soon as they understand that money can get them items they desire, said Melanie Javier, executive director of Kids Wealth International Club, which runs youth financial literacy day camps in Illinois.

Parents should customize amounts for how much their kids can handle, what they can afford, and what parents expect kids to buy with the money, Brakefield said. Do they only buy discretionary items, such as video games and a baseball cap, or will they have to buy school lunches and back-to-school clothes with the money too? Rules of thumb include giving weekly allowance in dollars equal to half a child's age: A 10-year-old gets $5. Or try a buck per grade in school: A seventh-grader gets $7.

Parents often get hung up on whether to link allowance to chores. Some experts say no, that managing money is a different lesson than earning it. While fostering a work ethic and entrepreneurial spirit is important, some parents think children should do chores to be contributing members of the household, not for pay.

"I'm not big on allowance as payment for doing chores," Brakefield said. "If you're joining this group as a family member, you're pledging to do these things."

Others say linking allowance to chores is fine. A compromise is an optional-chores system, where children are given an allowance unlinked to regular chores to manage, but they can earn extra money by doing extra chores they're not usually expected to do, such as washing the car or cleaning the garage.

TEACH LESSONS: Some fundamental lessons should be part of any allowance system, experts say. Kids should be able to evaluate the difference between spending needs and wants. They should also have to make trade-offs, meaning if they spend money on x, they won't be able to spend money on y. Children also need to learn how to delay gratification, or resist spending temptations, because they have bigger goals for the money, Brakefield said. And at some point, you should talk about how to deal with all the marketing messages bombarding your child.

JARS: Successful allowance systems often allocate money to jars (envelopes, etc.), typically labeled spend, save and give jars. It's a simple way for children to budget for current expenses, long-term goals and charitable donations.

Javier adds a college savings jar and a financial freedom jar, containing money to be invested so one day the child will not be reliant on job earnings. She also divides the spending jar into "living" (needs) and "play" (wants).

DIGITAL TOOLS: Much of your child's money life will exist online in the future. ThreeJars (threejars.com, $30 per year) is a simple but feature-rich online accounting system for allowances. The digital currency is IOUs that represent actual money controlled by parents. Allowance IOUs are credited to a child's account weekly and dispersed into the usual three jars.

Free site Digibeanz (digibeanz.com) helps parents "pay" students for doing chores, earning good grades and reading books. You assign children tasks to earn a number of Digibeanz. When completed, they go online and select items they want to cash in their beans for (each is worth 10 cents). The items are sold through Amazon.com, where parents buy the product.

Disney teamed with financial firm T. Rowe Price to create a free online companion to a financial-education exhibit at Walt Disney World's Epcot theme park. The Great Piggy Bank Adventure (thegreatpiggybankadventure.com) incorporates money lessons into an online game. Among the topics are goal-setting, saving, spending, inflation, asset allocation and diversification.

TEACHING RESOURCES:

Here are additional free resources for kids and parents:

—The National Money Talk Night at moneynighttalk.com encourages parents to take a pledge to talk with kids about money on Sept. 16. The site provides talking points to get started. "How to Raise a MoneySmart Child: A Parent's Guide," at jumpstart.org.
—Junior Achievement, ja.org.
—Feed The Pig by the American Institute of Certified Public Accountants and the Ad Council: tweens.feedthepig.org.
—Handsonbanking.org by Wells Fargo Bank.
—History in Your Pocket's Pocket Change site sponsored by the U.S. mint: usmint.gov/kids.
—Wow!Zone by TD Bank, tdbank.com/wowzone.
Add Comment
 
 
Real estate professionals know that a short sale transaction can take months for it to be approved and closed. 

The reality is that short sales usually take three to four times as much as a regular sale to finally get to the closing. From the time the Realtor actually gets the property under contract to the time the lender approves, it could take anywhere from 30 days to six months, depending on how fast the borrower provides critical information for lender and Investor approval. 

Even then, you still have one more variable to account for which is the buyer waiting for all this time to get the contract approved by the lender. For this, setting the expectations is a key factor in any short-sale transaction.

Buyers Expectations
Buyers who make an offer on a short-sale property need to know that lenders have to "reverse underwrite" a short-sale and make sure that they are allowing the sale to happen close to market value. I say "reverse underwrite" because instead of determining affordability, they will look for "un-affordability."

They will check the seller's financials to verify that they can't afford the house anymore and consequently, they will order a price opinion from a broker or certified appraiser, commonly known as BPO (Broker's Price Opinion) to make sure the house is being sold close to market value. If the offer is too low compared to what is owed, it will make more financial sense to the Lender to just foreclose the property and re-sell it as an REO (Bank-Owned Property). All this will happen while the buyer is still waiting for a response so it is very important to set the expectations correctly from the beginning to avoid losing the buyer close to the end of the process.

Seller's Expectations
On the other hand, it is important to also educate the Seller and set the expectations with them from the beginning. They need to understand that the Lender takes its time responding, but when they do, they usually give a 72-hour timeframe to respond or provide the missing documentation. If the documentation is not provided within the specified timeframe, it usually ends up in a closed file and countless work-hours lost. Another common situation that is happening very often is borrowers being served with foreclosure paperwork from either the lender or homeowner's association while the short-sale is being processed. It is crucial to let them know that this might happen so that they are prepared for it and receive the documents knowing that they are in the best hands. Foreclosure and short-sale are parallel processes and one does not cancel the other. Sometimes a short-sale might delay a final sale date, but it will definitely not stop the Lender from starting the foreclosure proceedings.

Closing the Short Sale
Short sale success comes from educating not only the seller but also the buyer and everybody else involved in the transaction. Setting the right expectations is the most crucial part of a short sale. There are many hours involved in processing a short sale and the last thing you want is a seller or buyer walking away because the expectations were not set correctly.
Add Comment
 
 
Many prospective homeowners find out the hard way the importance of a good credit score when they apply for a home mortgage, especially after the subprime loan crisis. If you are considering buying a home in the near future, it is a good idea to give your credit score a check-up and then take positive steps to improve your credit score if you find problems. Ideally, it is best to begin working on improving your credit score at least six months before you plan to start shopping for a home. 

According to the experts at Buy-and-Sell-House-Fast.com, the following tips will help you improve your credit and should be taken before you begin your home search. 

The first critical step in taking care of your credit is to check your credit report. Unfortunately, many people fail to take this all important first step. Instead, they wait until they have applied for a mortgage loan to find out from the lender that there are problems with their credit scores. 

By checking your credit score before you apply for a mortgage loan, you gain the opportunity to find out if there are problems which you can correct and discrepancies that need to be removed. When you check your credit report, make sure you check all three of the national credit reporting agencies: Experian, Trans-Union and EquiFax. 

Review your credit report carefully for items that may be erroneous. If you believe that an item on your credit report is reported in error, you have the right to contest it. To do so, you will need to contact the credit reporting agency and explain why you believe the item is inaccurate. Supporting documentation such as receipts and cancelled checks can help your claim. Alternatively, you can engage a credit report repair services firm to fix your credit report. 

If there are derogatory items on your credit report that are accurate but which could cause problems in your loan application, you cannot have them removed; however, you can take positive steps to counteract them. In the event that you have missed payments in the past, take steps now to get your bills current. Even if it means tapping into money that you might be planning to use for a down payment, it is essential that you get your accounts current and keep them that way. Begin by immediately making your payments on time. There is nothing which can lower your credit score more quickly than late payments. Ideally, make an attempt to begin sending in your payments a few days ahead of time to make sure they arrive on time and you do not have any more late payments on your record. If necessary, begin taking advantage of electronic payments in order to make sure your payments are made on time. Over time, this can make significant difference. 

Keep in mind that eradicating all of your credit balances is really not the solution. In fact, credit can be your friend when you are looking to make a big purchase such as a home. The key is to make sure your credit is positive, not negative. Toward that end, avoid actually closing out your accounts. Instead, make an effort to pay down your balances and keep them paid down well below the minimum or completely paid off, but do not close the account. When your lender runs your credit to make a decision on your mortgage application, he or she will want to see that you have had a long credit management history. 

After reviewing your credit history, if you see that most, if not all of your credit cards are maxed out or nearly maxed out, it is time to sit down and plan an aggressive strategy for paying some of them down. One of the critical factors that often determine your ability to be approved for a mortgage loan is your debt to income ratio. In addition, high credit card balances can drag down your credit score. Therefore, it is important to look at paying off some of your balances. 

It is generally better to begin with your highest-rate balances first. Many consumers are tempted to move around balances when they receive an offer from another bank that is good; however, before you do this, remember that the worst thing you can do when you are trying to make a major purchase is to open new accounts. 

By following these guidelines, you can improve your credit score and improve your chances of being approved for your home mortgage loan. 
Add Comment
 
 
The Federal Housing Administration (FHA) is giving homeowners and buyers until October 4 to lock in a low monthly insurance premium, according to Gibran Nicholas, chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. “After October 4, the monthly insurance premiums on FHA loans will increase by over 63%.”

What does this mean for home buyers?
A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $148.01. 

“In this example, the home buyer would lose $59.55 per month, or $7,146 over a 10-year timeframe,” Nicholas said. “Although the upfront mortgage insurance premium is going down after October 4, the real impact to the home buyer is actually a net increase in their out of pocket costs because the monthly premium is going up by 63%. Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so homebuyers rarely pay the upfront premium out of pocket. On the other hand, the increase in the monthly premiums will be paid right out of the home buyer’s pocket with their mortgage payment each month.”

Ironically, home buyers who plan to be in the mortgage for less than three years and decide to pay the upfront fee themselves (instead of having the seller pay it for them), may actually save money by waiting until after October 4 to apply for an FHA loan. 

“Home buyers with a short term time horizon may actually benefit from this change because the upfront premium will be reduced to 1% from 2.25%,” Nicholas said. This change will impact over 30% of the home buyers in today’s market who use FHA-insured financing. Home buyers considering an FHA loan should find and contact a CMPS professional in their area to discuss their options and what this means for their situation. 
Add Comment
 
 
Many companies are like acquaintances who always want something from you, but never give anything in return. They bombard you with offer-driven marketing, a strategy designed to generate new business through endless discounts and special promotions.

While offer-driven marketing focuses on transactions, the goal of value-driven marketing is to create business through long-term relationships. Value-driven marketing is particularly important to salespeople and business owners whose customers don’t need their services very often. Examples include home loans, real estate purchases and home renovations. In these cases, marketing that centers on offers for more of the same product or service lacks relevance, and does little to strengthen your relationships with past clients.

Expensive products or services that dramatically impact consumers usually create a need for more information. That’s where value-driven marketing hits the target. An example is a newsletter with high-quality information that helps customers better use, understand, enjoy or gain value from the product or service you sold them months or years ago.

All strong business relationships are built on the mutual exchange of value. If your transactions with customers are by nature infrequent, then you must use value-driven marketing to maintain and strengthen your relationships. Value-driven marketing creates gratitude, positions you as an expert and provides information that customers actually need. Use it consistently and watch your referrals and repeat business grow!

Add Comment
 
 
When showing your clients a home that needs repair, give them some information on our Federal Housing Administration (FHA) 203K renovation loans. These loans are perfect for a bargain hunter who has spotted a fixer-upper or a foreclosure in need of immediate repair, or a client who has found a home that would be ideal if only there were a third bedroom and a second bathroom.

Our renovation loans provide the money to both purchase the home and finance the homeís renovation. With one loan, there is only one application, one set of fees, one closing and one monthly payment. At closing, the house is paid for, and the repair money is put into a trustee account for disbursement as repairs are completed. Improvements can include anything that adds value to the home, such as a room addition, new carpeting, landscaping, plumbing, roofing or a new kitchen. The loan can also be used for energy-efficiency improvements that qualify for tax credits* under the new stimulus package.

Another great advantage of a renovation loan is that it provides borrowers a loan based on the increased property value after renovation. But that's not the only financial upside. The required down payment on a renovation loan can be as low as 3.5%. As a tax deductible first mortgage, the renovation loan will usually feature a lower interest rate than a second mortgage and improvement costs can be spread over the term of the loan. The loan can also provide financing for up to six months of mortgage payments if the house is not occupied during construction.

Just knowing about our renovation loans may make the vital difference to motivate buyers to purchase. Give me a call today to learn more about how I can advise your clients on the right loan for their needs!

*Always consult your tax advisor for tax information and advice.

Add Comment
 
 
The lead component of teamwork is a common goal. All team players must agree with the goal and pursue it with unrelenting commitment. The common goal serves as the long-range vision and should override any short-term failures. The long-range vision gives team players direction and confidence, and keeps the team on focus. John Maxwell, in his best-selling book 17 Indisputable Laws of Teamwork, calls this the law of the compass. If you have a vision, you have a compass.

It is the team leader's responsibility to create and communicate the long-range vision. This vision must be presented clearly, creatively and continually. When a team can see the vision, the team can seize the vision!

It's essential to get the right team member in the right place. Jim Collins, in his best-selling book Good to Great, refers to this as getting the right people on the bus, then getting the right people in the right seat on the bus.

Team players require a balance of freedom and responsibility within a framework of clear expectations. Don't micromanage. Allow team players a sense of ownership for what they do. Nurture a collaborative climate. And use an objective measure of achievement with your team.

To help measure achievements, John Maxwell suggests using a scoreboard. To not have a scoreboard would be like going bowling without pins — you may work hard, but you don't know how you're doing. Alternatively, the benefits of a clear and concise scoreboard allows team members to know where they stand, make adjustments and be held accountable.

Add Comment