Top Ten Legal Mistakes Home Sellers Make-Part III

Verifying the buyer's finances.

The standard contract form used by California REALTORS says that the buyer must provide verification of their financing and/or funds to close within 7 days after the contract is entered into.

But why wait until then? The seller shouldn't have to find out a week later to find out the buyer may not have the upfront pre-approval, or that there may be some other doubts. The buyer's motivation should be such that he or she is ready to provide all that information with their offer to the seller, and in fact, the seller may have required their agent to request this in the MLS listing.  It only makes sense to find out as much as possible in the beginning, at least that one contingency can be out of the way. All too often, it turns out the buyer can't get a loan when it's time to fund. There are underwriting issues, or appraisal issues, that may come up that were unforeseen by the buyer, but sometimes not enough of the right questions were asked in the beginning. 

So why overlook the easy things up front, such as having your agent contact the buyer's lender for a direct conversation, and getting copies of statements (via the buyer) showing source of funds if it is not submitted with the offer? And, does the buyer currently own other property that he's not selling that could impact financing; or, is their source of closing funds in a liquid account? Seven days after a contract is entered into is not the time to learn about some uncertain source of buyer funds or fuzzy loan approval, the seller should want to know as much as possible beforehand.

These are just some of the reasons for verifying the buyer's finances up front. For more questions, please contact me or visit www.juliahuntsman.com.

What California Homesellers Sometimes Overlook: 10 Things, Part II

Because homesellers may feel eager to sell, they sometimes overlook what could turn out to be very important clues about an offer.
 
About the buyer deposit:

What if the buyer submits an offer for your California home at $250,000, which also happens to be your list price? You think you've got a good offer for your equity sale listing, right?  And you see the letter from their lender saying they're pre-approved and that they have funds to close. So what could be wrong?  It's this:  the amount on the deposit line in the offer is for $500.00. and their down payment shows 20% down and they are paying their own closing costs, so they are presenting themselves as strong buyers. So why aren't they putting down a good $5,000-$7,500 for their deposit so they show you they really want your house? First-time buyers with an FHA buyer assistance program might not be able to do more than $500.00 deposit and be highly motivated, but a investor or other buyer with more assets would be ideally putting down 2%-3% deposit because they have the monetary ability to show their motivation.

Important to remember:  The buyer's deposit is fully refundable to the buyer within the buyer's contingency terms of the standard California of Association of Realtors form contract, but if the buyer defaults later on and walks away, the seller will have little or no buyer deposit as liquidated damages to which he/she may otherwise be entitled.  If you, the seller, question the amount of deposit, remember, you can include a reasonable amount in your counteroffer to the buyer if you believe the buyer has the capability and you want the commitment.

For more help and real estate information, please go to http://www.juliahuntsman.com/Home-worth.html

What California Homesellers Sometimes Overlook: 10 Things, Part I

Regardless of when and where the homeseller could be selling in California, or whether there's a shortage of inventory or not, the transactional issues and facts are still tied to the contract between buyer and seller.

Here's a handy list for the Top Ten Legal Mistakes, with some added commentary by me.

What are the other contractual terms?
Sellers quite naturally want to sell at the highest possible market price, and have very good reasons for doing so. But selling price is not the only term in the contract-- for example, what if the buyer has a contingency to sell their own property, or what does it mean if the buyer is willing to remove their appraisal contingency but not their funding contingency? What if you agree to the liquidated damages clause? In a short sale, do you understand all the terms of the short sale addendum? And what do you need to consider with an all-cash buyer vs. a financed buyer?

What may happen with multiple offer situations?
In multiple offer situations, many buyers could be submitting offers but the seller is not obligated to any one buyer. The seller may respond to all buyers or choose one (but without discrimination). But what if additional offers are submitted in a regular sale after a signed contract exists with buyer no. 1? And what if you're a short sale seller, and a higher offer comes in after the first offer was submitted to the bank? (Hint: the short sale addendum states property may continue to be marketed after contract with the 1st buyer, and other offers may be presented to the bank.) Or, what if the buyer is submitting multiple offers on multiple properties, should they tell you that, or not, in their offer?  (Hint: Yes, they should disclose.) 

These are issues the seller should take time to review carefully and ask questions, preferably before a contract is signed--it saves on remorse later.

Every Day There is Another Story That Housing is Recovering, and Then It's Not: Read More

What is the real story on short sale numbers and borrower delinquencies? The story seems to vary on a daily basis.

But according to the Mortgage Bankers Association, which keeps track of these statistics, the delinquency/foreclosure rate was still 11.33% as of the end of the 1st quarter of 2012.  That's the lowest since 2008, but is still a lot of homeowners on a national basis.

The Potection of the Mortgage Debt Relief Act Coming to End

With some recent news about positive signs in the real estate market, some owners may be taking the pressure off themselves.  However, the national statistics seem to indicate that about 30% of properties nationwide are in negative equity.

The federal Mortgage Debt Relief Act was passed at the end 2007 to allow homeowners debt relief on their principal residences if foreclosed on or sold in a short sale. California later passed a bill also helping homeowners in this situation.  Currently, it is set to expire at the end of 2012, meaning that if the deadline is not extended by Congress, owners after that date will be responsible for debt after a foreclosure or a short sale. Previous to this Act, the amount forgiven in a short sale, or walked away from in a foreclosure, was treated as "phantom income" to the owner, and taxed.  California's Debt Forgiveness Relief Act also expires as of January 1, 2013.

So, after December 31, 2012, if a property is approved by the bank in a short sale and sold for

Sellers, Buyers Are Competing With Multiple Offers

Did you know that Long Beach and surrounding areas have less than two months of inventory?
This chart covers up to 2011, and the trend of multiple offers in the lower price ranges is even stronger in 2012.
Think you can't sell?  Think again, and call me.

Long Beach Parks Summer Concerts for 2012

Now that "House" is over and gone forever, there's no reason to not remember the summer concert schedule for the Long Beach Municipal Band.
Long Beach is lucky to have such a music resource, not every city can maintain its own group of musicians.  Plus, Larry Curtis, the band conductor, used to be the conductor for my high school band eons ago, so that's another reason I like this band.

				Week 2:
Week 1:				July 10 TBD
July 5 Marine Stadium July 6 El Dorado Park West				July 11 Los Cerritos
				July 12 Marine Stadium
				July 13 El Dorado Park West
Week 3:				Week 4:
July 17 TBD				July 24 TBD
July 18 Los Cerritos Parks				July 25 Los Cerritos Parks
July 19 Marine Stadium				July 26 Marine Stadium
July 20 El Dorado Park West				July 27 El Dorado Park West
		Week 5:
		July 31 TBD
		August 1 Los Cerritos Parks
		August 2 Marine Stadium
		August 3 El Dorado Park West

http://www.longbeach.gov/park/recreation/lb_municipal_band.asp

Don't Overlook California CO Detectors

Carbon monoxide is colorless, odorless and toxic. It's called the "silent killer" in homes because some victims are not even aware that the deadly condition exists.
In California, detectors must be installed:

(1) For all existing single-family dwelling units on or before July 1, 2011.
(2) For all other existing dwelling units on or before Jan. 1, 2013.

Where should they be placed?  For minimum security, a CO detector should be centrally located outside of each separate sleeping area in the immediate vicinity of the bedrooms, and  should be located at least 6 inches from all exterior walls and at least 3 feet from supply or return vents. I have even heard that during escrow, some appraisers will "call out" a missing detector on their appraisal. If you're a homeowner or landlord, don't wait to comply with this requirement now.
Property owners must be concerned about unmaintained furnaces, water heaters and appliances that can produce the deadly gas. Other sources could include leaking chimneys, unvented kerosene or gas space heaters and even exhaust from cars operating in an attached garage.
The Environmental Protection Agency suggests the following to reduce exposure in the home:

• Keep gas appliances properly adjusted
• Install and use an exhaust fan vented to the outdoors over gas stoves
• Open flues when fireplaces are in use
• Do not idle your car inside a garage
• Have a trained professional inspect, clean and tune-up central heating systems annually

Lower levels of carbon monoxide poisoning can be mistaken for the flu.

It's also possible to buy them in combination with a smoke alarm. Read more at HouseLogic.

Investor Buyers are Making a Difference in This Market

Investor buyers, do you know you make up about 27-30% of the current buying market?  Most investor buyers are looking to hold onto their properties for a while--only 5% of properties purchased last year have been re-sold.

The second home market surged in 2011, according to data from the 2012 NAR Investment and Vacation Home Buyers Survey. The combined market share of investment and vacation homes rose to the highest level since 2005.

Investment home sales in 2011 jumped 64.5 percent over 2010. Vacation home sales climbed seven percent, year-over-year, and accounted for 11 percent of all transactions last year.

How Many Single Family Homes Under $300,000 in Long Beach?

Since this Spring of last year, the last time I wrote this post, not as many as last year.

The great majority of residential properties included here are single family houses and condominiums; the list also includes lofts (a separate MLS designation), own-your-owns and co-ops. The grand total from SoCalMLS is 340 listed as "active", regardless of selling condition (short sale, REO, probate, etc.), or the amount of HOA dues in the case of common area properties.

This inventory is quite different from one year ago when there were a total of 618  on the market.

The breakdown includes the following: