Buyers already need the patience of Job to close a short sale which currently represents anywhere from 45-65% of all home purchases in our area. The statistics show that they take an average of 120 days to get to the negotiation stage in our area with an average closing another 30 days. Additionally, over 38% of recent home purchases were funded by FHA, which typically adds 15-30 days to close the transaction. What this adds up to is more frustration for anyone involved in the real estate market today.

For clarity, a short sale is subject to the lender approving the sale. MLS rules require that when the seller has accepted a short sale offer the listing has to be changed to a contingent status. Most real estate agents will not show contingent listings because once the seller has sent it to the bank for consideration it is essentially off the market to other buyers. The dirty little secret is that banks don’t really want to see more than one offer because they are overwhelmed with work, so agents oblige them by taking highest and best and keeping others in back up.

Adding more frustration for buyers are the new FHA requirements. News of increased down payments and higher mortgage insurance premiums doesn’t bode well for those using this type of financing.The beauty of an FHA loan is its “relaxed” standards for qualifying. The rates are typically a bit higher than a conventional loan but the credit score required is lower, making it easier for buyers to secure a loan. Since it is backed by the Federal government should the buyer default, it’s no wonder these loans soar in hard times. Recent news of FHA’s reserves nearing bottom has increased the conditions lenders are putting on buyers making it harder to secure these loans. Now is the time to strategize and take advantage of this program before congress increases the minimum down payment and interest rates.

One glimmer of hope I have experienced is the increase in Broker Price Opinion (BPO) requests from the banks and asset management companies. These opinions are used by the banks to gauge the value of a property in a given area. Once the bank determines the value of its asset, the property is then released for sale. The increase in BPO requests tells me that there are new REO’s (Real Estate Owned)  coming online within the next couple of months. This is good news for those buyers ready to purchase and even better news for brokers working hard to survive this market.

Water is the most intrusive element known to man and gutters are a wonderful invention to control it around your house. They function to keep the water from pooling at your foundation but aren’t  effective if they’re clogged with leaves and debris. I once paid to have a client’s gutters cleaned on a home she was purchasing since I knew she would never sacrafice her manicure. Pine needles are especially toxic since they leech acids which rust and gutter guards don’t completely prevent their intrusion. There are many handyman companies that will clean them but make sure whoever you hire to check out their insurance policy…it could be a very costly mistake should they not carry one.

Most people think of getting pest inspections done just prior to listing their home for sale but did you know it is recommended to get one every 5 years?  I never thought twice about getting one until I isted my 17 yr. old house for sale. Since maintenance is something I’m very attuned to I didn’t think I’d have any issues until the inspector found Borer beetles. Fortunately for me the beetles had a terrible sense of direction and made a right turn upon entering my trim board on the corner of my home. I guess it’s their natural inclination to go up, which saved me from having to tent my house.  That saved  about $6000 which is the average cost of tenting a 2 story structure.

Another critter that loves to live with you is the dreaded termite. My neighbor was sprucing up the house for the holidays and as she was wiping off the window sills noticed some holes bored through. The pest inspection found a colony of termites had infested her walls due to the Oak trees on her property. Apparently termites like to switch it up and find Doug Fir a nice diet change from Oak. Since her home was on a slab foundation she had to have holes bored into her concrete and poison injected under her foundation. The fun didn’t end with that becasue she had to wait 3 months to see if it took…which it didn’t.  After a second application had to be done she finally received a clear report . Her new carpet was not exactly the Christmas present she was hoping for.

These are just some of the horror stories I hear from clients regarding deferred maintenance. So take some extra time to tune up the exterior while taking down the decorations and save yourself some serious money this new year.

High school was a great learning experience for me because I learned how to trust my gut. High school is the first time you get to choose which  teachers you have for each class. I soon found  those that I enjoyed I learned a lot from, and those I endured didn’t learn much from. By my senior year walking out of a class after the first day and heading to the counseling center to re-schedule wasn’t a big deal. I wasn’t intimidated and didn’t make excuses…if I didn’t like a teacher on the first day, it wasn’t going to get any better.

Searching for a real estate agent is similar to finding a good teacher. You want to find someone who will teach you the ropes and who you can trust to give you good information. After all, a home purchase is statistically the biggest purchase you will ever make. This video makes a humorous point about intimidation when it comes to real estate agents but unfortunately some agents still use these tactics…Click here to view the embedded video.Professionals Teach -

My attitude has always been to get the information to my clients in order for them to make an intelligent decision. The Realtors Code of Ethics requires that I offer my clients the utmost in service, and intimidation shouldn’t be part of the package. If you feel uneasy or that your requests are not being heard, find another agent who will take the time necessary to help you find your home. Referrals are a good start but don’t stop there. Interview at least three agents and get an idea of their approach. Some agents don’t work weekends, and others only work business hours, so if you want to go shopping after work, or need to list your house after dinner, you’re out of luck.

One of my clients purchased a house from me a few years ago, sight unseen. He worked for the government and had only one week to find a home. The market was hot and my client put in three offers before he left to go back to his job but none of them panned out. He had used up all his vacation time and decided to trust me to find him a home. He said he felt he could trust me because while we were previewing homes he heard me comment on everything he was concerned about. If the house was located on a busy street, I commented on that. If the house had a smaller than average master bedroom, then I commented on that. I didn’t ignore the obvious, nor did I pressure him into making a decision…I simply gave him the information and let him decide. He found he could trust my information and that enabled him to find a home that he eventually re-sold at a tidy profit.

So to bring it all together trust your gut. If the agent seems to be something other than what they appear, you’ll probably find proof to support your intuition once you get to know them, so don’t waste your time. Secondly, make sure they listen to you. If you say you only want to see single story homes and they show you two stories, then realize they are not looking out for your best interests. And finally, if you feel pressured into a purchase and don’t feel you have enough information don’t be afraid to ask for more. If the agent counters with more pressure then you know he is only looking to make a sale. Remember this is a decision that you only make about once every seven years, so enjoy the process. A good agent removes the pressure and intimidation from the process…they don’t create it.

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 According to the National Mortgage News article of June 18, 2009 the tax credit granting new home buyers $10,000 will soon be gone. Apparently there is a cap of $100 million and the governor’s office said “there is a bill to extend it or increase the money allocated.”  The expiration date is March 2010 but it might not last until the end of 2009 at this rate.

According to the sales rep at Elliott Homes this has accounted for the majority of sales in their Chelsea subdivision for March and April. Folsom doesn’t have much left in the way of new home builder’s since Elliott purchased the last of the remaining land in Empire Ranch. Originally Empire Ranch consisted of about a dozen different builders offering a variety of homes styles. What is left are a couple of condo developers and some custom lots in the Hillcrest subdivision.

For related articles: http://folsomlakehomes.com/2009/02/24/tax-credit-for-new-homebuyers/

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As promised I would scour the landscape to find the best deal happening in Folsom CA this week and I’ve found a wonderful home listed in the coveted Briggs Ranch subdivision. This 3bedroom 2 bath was built in 1988 and is just under 1300 sqft. It has a 2 car garage and is approximately 1/6 of an acre. 

Briggs Ranch is well known for it’s grammar school, proximity to Folsom Lake and mature landscaping. Additionally the fact that there are no Mello Roos fees or HOA’s keeps people who live there from selling and moving on. In fact, there are a number of neighbors who have bought and sold within this subdivision and the investor properties are few. This subdivision hosts many activities from July 4th parades to placing Christmas luminaries throughout the entire subdivision.

This home was posted on the MLS on June 12th and has a few offers in negotiations which is not unusual considering the $259,900 price tag.  Although higher in price the location is what adds value given the excellent condition and favorable location but is still a deal at $204 per sq.ft. Because it is a short sale there is still a possiblity of landing this deal given the fickleness of today’s buyer.

Folsom currently has just under a 4 month supply of inventory with a median price at $355,000. The average price per sq.ft. is $178.00 but you have to remember that this is an average of all the homes sold in May 2009.  If interested in conducting your own search just log on to my MLS search and let me help you get started finding your deal.

For related articles:

http://folsomlakehomes.com/2008/11/09/thanksgiving-day-race-in-folsom-ca/

http://folsomlakehomes.com/2008/10/29/folsom-soccer-membership-exceeds-3000/

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Seven Myths of Short Sales Exposed

Having just completed my designation for the Certified Distressed Property Expert (CDPE) I wanted to share more about short sales and expose some myths that you might have heard. The Distressed Property Institute  recognized the need to train real estate agents to handle the current crisis and has received overwhelming approval by the National Association of Realtors in endorsing this certification. The president of Remax currently sits on their board and encourages all agents to obtain this designation.

Myth #1 -Foreclosing is easier than a Short Sale

The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure. There are three pre-requisites needed to qualify for a short sale:

• 1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
• 2. Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
• 3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Myth #2 – You Need to Miss Payments to Negotiate a Short Sale

This was the way it used to be but today lenders are looking for a verifiable hardship. If you have a monthly cash flow shortfall, a pending shortfall and show you are insolvent you meet these three requirements. If you believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options.

Myth #3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

This probably hurts homeowners the most. Many people do not realize that foreclosure is a process, and that there is time to make decisions. The foreclosing party-in most cases a lender-can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract.

Myth #4 – Listing a Short Sale is Embarrassing

Recent estimates show one out of five homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution. In our area we are seeing up to 70% of all listings on the MLS in a short sale status.

Myth #5 – Short Sales Never Get Approved

This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process. Professionals who have the CDPE Designation are fully trainied in methods to help homeowners in distress and process short sales.

Myth #6 – Banks are Waiting on a Bailout and Not Approving Short Sales

The reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. Denying a short sale in the hope that some future legislation would pass and pay them for losses is preposterous. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”

Myth #7 – Buyers Agents Are Not Showing Short Sale Properties

This is a myth that potential sellers hear all the time. Smart agents are getting calls from buyers who say they only want to look at foreclosure and short sales. For buyers, short sales and foreclosures have become synonymous with “good deals.” Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.

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Related articles:

http://folsomlakehomes.com/2009/05/06/foreclosures-fixer-scams/

http://folsomlakehomes.com/2009/04/28/short-sales-impact-on-credit-scores/

http://folsomlakehomes.com/2009/04/14/california-prevention-act/

http://folsomlakehomes.com/2009/02/16/loan-modifications-vs-short-sales/