Advance Fees in California

Even though a law was passed in 2009 in California, there still seem to be advance fees being requested and sometimes paid for in exchange for certain services. Here is important language to read and understand, because there are people who are still trying to take advantage of homeowners who want a loan modification, loan modifications or attempts to avoid foreclosure that just don't work out. And the homeowner loses money.

It is illegal in California, as of October 11, 2009, for a lawyer, real estate broker, real estate salesperson, including corporations and companies, to demand or collect an upfront fee, retainer fee or other advance fee for loan modifications.  There have been, and continues to be, many people who have lost thousands of dollars through misplaced trust. And, if you have experienced this, please click on the link below to find out more about reporting to the Attorney General.

Remember, calling up your own bank is the first step to finding out about loan modifications. A property owner is able to do this on their own, although you may want the assistance of a consultant, because it can be an involved and lengthy process, depending on your bank. But there is no advance fee that can be charged, not until the close of escrow.

See the Dept of Real Estate story.

Tips for Increasing Your Home's Value

It's not unusual for a Realtor to hear a property owner say that their home is worth a certain amount because of a particular recent sale price of another house in their neighborhood. Many times the Realtor has a different opinion about the home's value than the property owner does, not because it ultimately couldn't, but because of the way it looks right now.

It's like selling a car: A prospective buyer is far more attracted to a pretty, shiny, vacummed-out, cleaned-up, polished car sitting out on the curb when they first pull up to take a look. They are far more ready to have a discussion about it, since it compares favorably or more favorably than most other cars they looked at, and a buyer is more ready at that point to believe the car has been well-maintained, which means it's worth more to them because there will be fewer repairs.  And this is the same approach owners need to take with their houses and yards. You probably wouldn't consider getting maximum value out of your car without putting some effort into its presentation--and you need to do the same with your home:

• Trim overgrown trees and bushes so that branches are at least 10 feet away from your roof -- and possibly include that same guideline for driveways, walkways, and outdoor sitting areas, or if vegetation visually obscures too much of your house so that it cannot be clearly seen from the street. Water your landscaping so that it looks green with no bare spots, and remove dead plants.
• Consider having the house power-washed--it may eliminate a paint job (unless you have the next issue). This should be done only by a professional.
• Touch up peeling paint. Not only is this an "attractiveness" issue, it signals negative messages about maintenance, and is also an FHA loan condition issue for an FHA buyer.
• Have a professional inspect your roof and replace curled or missing shingles. Remaining life-expectancy is important, especially if most of the nearby roofs are much newer looking. Stains and plant matter such as moss can be removed with a cleaning. Considering that total roof replacement could be up to $20,000, a roof in poor condition could make your house appraise lower.
• Routine maintenance and cleaning eliminates setting off alarms: repair gutters, obtain a pest/mold inspection report annually, replace missing bricks, repair exposed wood beams and window frames, remove or repair deteriorated gates and fencing.
• Colorful plantings in the are a minimal investment, but will do much to show off your yard and your home.

It's important to remember that the money invested now will help you obtain a higher price from the buyer, and will help to eliminate value issues when the buyer's appraiser comes out to see your property during escrow. Many times sellers overestimate the amount required to prepare -- this amount will also depend on how much deferred maintenance you have and your budget. Spending $2000-$5000 dollars may bring you another $10,000-$15,000 in price, or at least help your house sell faster if your market is sluggish. Attempting to sell without any preparation could affect offering price, impact negotations during escrow if the buyer discovers further issues through their physical inspection and decides to walk away, and/or impact the appraisal. 

You can find more information on the Landscaping checklist and at the HouseLogic tab at the top of this blog.

The Economic Impact from a California Home Sale

While at a meeting yesterday, I heard a statement from another attendee that somewhere between 30-50% of California's job market has been directly affected by the change in the housing market in this state--the local closings of some long-established independant businesses and the empty storefronts are a testimony to that.

When the prices of the housing market were out of reach of many buyers, I frequently heard and read statements about what a good thing it would be if housing prices dropped "back where they should be." But nothing happens in a vacuum, and when housing prices fell, so did the rest of the economy. The activity generated through the sale of one residential property conducted through a REALTOR® in California may impact up to 40 different occupations, starting with the buyer's lender and its employees and underwriters, appraisal services, escrow officer and affiliated company, title company representatives and employees, home warranty company, MLS employees, all the internet and print advertising services for marketing the property and which help to attract the buyer, accountants and attorneys connected to the transaction, home stagers whose services may be critical to helping sell the property at current market price, insurance agent, messenger companies, home construction contractors, moving truck services, property managers, car rental companies, to name some of those closer to the "ripple" effect. All of these occupations serve vital connections to a real estate transaction, and moreover, a Realtor usually has requirements to assist or coordinate with many of these participants, each of which has its own job to do. Without a home sale, many people are literally "out of the swim".

Information reported in 2009 from National Association of Realtors, Bureau of Economic Analysis and Harvard Joint Center for Housing Studies shows that when one home is sold in California, the income generated from real estate related industries $49,383.00, the additional expenditures on furniture, paint, and applicances is $5,331.00. Also, there is addtional economic multiplier impact as greater spending on charity, sports events and restaurants estimated to be $26,263.00. The new home production value, estimated at one new home constructed for 8 existing home sales,  is $68,588.  The total income derived from the sale of one California home (report used an earlier CA median price of $548,700--currently $311,950 for a single family home as of June, 2010) is $149,564. The National Association of Home Builders has estimated that nationally, approximately $8,900 is spent on home furnishings and improvements within 12 months following a home sale. In other words, what happens to the housing industry happens to a lot of people.

Houses in Long Beach for July: Prices Softer, Sales Volume Up

July in Long Beach was a pretty busy month for single family home sales but it also saw a lowering of the median price: 196 sold at an overall median of $360,000, down from $380,000 and $375,000 from the prior two months, and down 5% from July, 2009.  The July average for sold-price-to-list-price was 98%, with a low of 72%.

The peak for the last 12 months was $415,000 in November, 2009. The median list price, however, has steadily increased since December, 2009, and is up 4% from one year ago, with 1,234 single family homes currently on the market citywide. And, total number of SFRs in escrow is up 42% since one year ago and at 276 houses, is at the highest number under contract in the last 12 months. But, expired properties in all price ranges were at the highest number in the last 12 months, while the months' supply of inventory is at the lowest in the last 12 months. It has never been more important to price the house right and make the right improvements for showing.

A quick search on the MLS shows that today, there are 528 single family houses in escrow, and 434 of them are under $500,000, and 94 are listed over $500,001.  See the entire report for single family houses.