How To OutBid the All Cash Buyer

The real estate markets in many areas, and not just in the United States, have much to be thankful for in the all-cash buyer. The all-cash transaction will be able to avoid a buyer's loan and appraisal requirements, in a market where appraisals alone have held up -- or killed -- some transactions completely. Appraisal issues, due to guideline changes, have eased up a little, but this does not lessen the desirability of the all-cash buyer in the eyes of the seller. This is especially true for "difficult" properties, such as major fixers, and condominiums in HOAs where the association may have other legal or financial challenges, including too many owners who haven't paid their monthly dues on time.
But it's a knife that can cut both ways. Some all cash buyers traditionally have believed that the seller will sell for a lower price in order to avoid a buyer's loan process. While that strategy may apply for certain cases, sellers are still just as concerned as ever about their net cash at closing. In a tougher market however, some sellers do prefer to get to a faster closing if they can accept the buyers terms. Buyers with loans who are attempting to compete with all-cash buyers should take a look at the percentages below, and also learn the specific neighborhood where they are likely to compete. The National Association of Realtors states that all-cash buyers made up 33% of all buyers in February, 2011. In 2010, the total was 59% nationally.

All Cash 1st Quarter 2011 Closings for Single Family Homes and Condominiums:

• Long Beach (23%) - 155 Cash out of 665 Total:  $254,091 average price, up to $1,800,000.
• Cerritos      (23%)  - 19 Cash out of  84 Total:     $382,210 average price, up to $990,000.
• Seal Beach   (32%) - 8   Cash out of 25 Total:      $440,706 average, up to $800,000 .
• Lakewood   (9.59%) -  17 Cash out of 163 Total:  $330,173 average, up to $500,000.
• Huntington Beach (20%) - 69 Cash out of  344 Total:  $452,409 average, up to $1,500,000. 

Therefore, buyers need to prove their strength to the seller, because if your seller has a lot of equity in their property, they are less likely to be interested in a "low-ball" cash offer.

Before shopping for a new home, go to a recognized lender and get completely pre-approved, by allowing your credit to be run and submit all requested to documentation to the loan officer.
Learn what the list-to-sell percentage is in your neighborhood of interest so that you can make a good offer that applies to the true value of the home.
Submit your lender's pre-approval letter and contact information with your offer.
Write in a strong deposit amount, at least 2% or higher, with your offier--this shows your commitment to the seller.
Understand the terms and conditions which may be associated with a short sale or and REO property: they are not the same negotiating experience as with an equity seller.
Be prepared to act quickly--you may not have days to decide if you want the property or not.
Have the patience and fortitude to keep looking if you lose an offer in the beginning, but asking some questions up front through your agent may help to avoid the worst calamities, and may help you find out what's important to the seller. If you can be flexible, your chances may improve.

And also remember, sometimes the cash deals fall apart also.

A Lower Assessment?, or, Have You Checked Your Property Tax Data Lately?

During the 1990s recession, many property owners filed for a re-evaluation of their property taxes because of the falling market prices, which meant a lower property tax. To do that--then, as now--there were certain forms and a procedure to follow to apply for that lower assessment. That information, by the way, is posted on the County Tax Assessor's site. One thing to know right now, though, is that the Los Angeles County Tax Assessor's office has been diligently pursuing the market trends and automatically lowering property assessments during this latest downturn.

If, however, you think you are still not getting the correct assessment, you should know that deadlines must be met, or you wait until the following year to make an appeal. Review your property data for square footage, number of bedrooms and baths, etc., to make sure it compares correctly with the real configuration of the property.

If you believe your property data as entered in the tax records does not represent the property, documentation will be required in the form of an appraisal (if you have one) or other documentation. For instance, if your home shows as a 3 bedroom on the tax records, but it was later modified and is functionally a 2 bedroom, this will require documentation to present to the Tax Assessor's office.

Be able to provide recent comparable sales (usually about 3) in your area to show current market values. If you need help with this, please contact me for information on filing deadlines, or the sold listings provided through the MLS that would be a comparable for your property.

And, while you're at it, you should make sure you've taken your $7,000 Homeowner Exemption, which also saves you a little more because it lowers your tax basis by $7,000.

By lowering your assessment, you save money.

How Many Short Sale Listings in Belmont Heights, the Shore and Naples Areas?







3923 E Vista

 Currently, including actives and those taking backup offers, there are 20 single family properties in short sale status in the 90803 zip code. They range in price from $449,000 for 3923 E. Vista St. to $2,350,000 for 5649 E. Corso Di Napoli.

3923 E Vista is a two-bedroom 1923 bungalow style home in Belmont Heights, east of Redondo Ave, with a detached garage.
The Treasure Island home on Corso Di Napoli is a bay front home with open water view, and includes two 48' boat docks.
It is listed as a two-story house, with 3 bedrooms and 3 baths, and a 2-car garage.



5649 E Corso Di Napoli

 There are 12 more active short sale listings in this area, including 2703 E 2nd St, listed at $740,000 in Bluff Park Historic District. This property is a 1909 craftsman style house on a corner lot, and is waiting for an offer! This is a great price in a neighborhood where recent sales have closed over $1,000,000.

Since December 1, 2010, 3 short sale (single family) properties have closed in this zip code; 3 properties closed as bank-owned sales; and 25 were listed as "standard sales", out of a total of 33 sold in all categories in the same time period.

If You Have Investment Property, Here Are Taxing Issues

It's tax time, and a lot of people are hitting my site to find out property tax rates. (As I've said before, in California, figure approximately 1.25% of the selling price for the initial property taxes. For more information on that, go to your local county tax assessor's site.) And, the lower federal income tax rates that were set to expire on December 31, 2011, have been extended for another two years.

Tax deductions which owners of investment property could be dealing with include:

Mortgage Interest – The interest owed on a loan used to acquire or improve an investment property is a tax deductible expense. In addition, interest payments on credit cards for goods or services used in rental activity is also deductible.


Depreciation – Residential income property can be depreciated over 27.5 years; commercial 39 years. Depreciation is often the largest deduction a real estate investor can take.

Repairs - The cost of repairs to rental property are fully deductible in the year in which they are incurred. The repairs must be ordinary, necessary, and reasonable in amount. Some examples of deductible repairs include painting and fixing broken fixtures. Replacing a roof would not be considered a ‘repair’, but rather a capital improvement and the cost associated with replacing the roof would increase the basis of the property.

Travel Expenses - Property owners are entitled to deduct the costs associated with traveling to and from the rental property. The drive to a property to deal with a tenant complaint would qualify as a tax deductible expense. Likewise, flying to Hawaii to repaint a rental property would also qualify as a tax deductible expense. For overnight travel, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction. Please note however that IRS auditors closely scrutinize deductions for overnight travel. To stay within the law and avoid unwanted attention from the IRS always properly document long distance travel expenses.

Home Office – Landlords may be able to deduct home office expenses provided certain minimum requirements are met.

Employee, Independent Contractor and Professional Services Expenses – Fees paid to gardeners, painters, attorneys, accountants, property management companies, real estate investment advisors, and other professionals can be deducted as operating expenses as long as the fees are paid for work related to the rental activity.

Advertising – Any advertising costs associated with marketing the property for rent or for sale can be deducted.

Insurance – Insurance premiums can be deducted for almost any insurance policy related to the rental property. This includes, fire, theft, and flood insurance for rental property, as well as landlord liability insurance.

Vacant Property -If the property is vacant either because the property is up for sale or is waiting to be re-tenanted, the owner may still be able to deduct all ordinary and necessary expenses (including depreciation) for managing, conserving and maintaining the property while the property is vacant.
 (Courtesy of Leonard Spoto, http://www.ax1031.com/)

Contact your tax advisor for complete professional advice.

Long Beach Sales Are Still Moving Forward

There's a lot of talk about how flat the market is right now, but it's important to keep in mind that real estate is local.



6 months sales in Long Beach

 The 6 month sales volume chart for single family houses in Long Beach (since October 1, 2010) shows about 206 sales citywide for February, which is higher than previous months.
And looking at the entire zip code for 90803 for the last 2 years (Jan. 2008 to Feb. 2011), sales have peaked at 18,19 and 20 in each of the highest 3 months in that cycle. January of each year shows typically the lowest number of sales, ranging from 4 to 7.

(Four years ago shows June 2007 with a peak of 31 sales in 90803 (Belmont Heights, Belmont Shore, Naples, Bluff Park), the highest of the entire 4 year period in one month.)


3 year sales volume 90803

 The average days on market in 90803 in the last 6 months has ranged between 72 to 143; the average sale price in the last 6 months has ranged from $688,000 to $1,113,000.

For a market snapshot of the MLS information for your area, just contact me about current average prices, times to sell and other information to help you know your market.

Lakewood Home - Reduced to $359900!!

Reduced to $359,900! Can be used in conjunction with FHA Rehabilitation Loan Program--Buyer may choose from a menu of options for repairs. Call me about this property today!! Less than one-half block from Lakewood High School, walk to nearby shopping on Woodruff Ave.  Very residential area. It needs some help but is a great opportunity for the right buyer. Has two-car attached garage, solar panels on roof, nice hardwood floors in the interior, large master suite, family room. Call! 
Julia Huntsman, Broker
Lic 01188996

UPDATE: this property is now sold.

A Short Course in the Meaning of Home Equity

What is your property's equity? This topic came up just recently in a discussion, and though we think it's a basic real estate question, we can't always assume that everyone knows how it gets answered. 

Basically, equity is the amount equal to the current market value of your home, minus all your liens, or what you owe. Ideally, if you bought a house for $200,000 and your only outstanding lien is your total mortgage amount of $150,000, then you have $50,000 equity in your house.

Some people may think that because they invested a certain number of dollars in their house as a down payment, i.e., $50,000, plus their additional funds to pay for closing costs, that they will get the remainder back when they turn around and sell.

But just like the disclosures advise about deposits into investment funds, that depends on what's happened to the market values in the time you've owned the property. And what improvements you've made to the home, and how they are currently valued (but not usually by the dollar amount you spent on them). And the location, and the condition of the property, and how your property may be perceived by the target group of buyers searching at any given time for a home like yours. In addition to these "standard" value issues, we have the following:

As is well known now, property values increased greatly a few years ago, and then started to fall--all due to numerous complex global market forces. This was great for people who sold their homes on the upswing: That $200,000 house might have sold for $400,000, and the owner's gross net at the close of escrow, after paying off their loan, was approximately $250,000--before paying closing costs.

But for people who did not sell until the market went down, maybe they broke even: Perhaps their home was worth $165000 on the current market and they had just enough left over to pay off the loan and their closing costs. Or, or if their home value declined even further to $150,000, then they are digging into their pockets to pay off the $150,000 mortgage plus the extra money for additional closing costs. This why many people, possibly as much as 30% of all mortgage borrowers at the present time, are in a short sale position, or "under water" in the market value of their home. If you don't have a need to sell, then you should not be affected by the downward cycle. However, if your employment income has been affected and you cannot continue with payments and you have to sell, or you have experienced some other stressful impact to your financial status, you are most likely in a short sale situation because the market values may have decreased below your mortgage balance (which is tied to your amortization schedule, not the economy), and therefore you have no equity.
First of all, you should get a good assessment of your current home value, some people actually still have some equity, or could possibly "break even", and a short sale could be avoided. If, however, you think you might be in a distressed situation, please contact me to find out your options, or you may go to the Distressed Properties section at http://www.juliahuntsman.com/ for a few free reports.

Real estate goes in cycles, and it always has. Some are harder than others. There are many many people who, through no fault of their own, have experienced a negative equity situation or even the loss of their home. But before that happens to you, you should find out if you're able to get a loan modification, or it not, what a short sale vs. deed-in-lieu vs. foreclosure would mean for you. It will cost you nothing, and could help you from the most severe impacts and a faster recovery in the future.

How Many Properties Are For Sale Under $300,000 in Long Beach?

Lafayette - Downtown Long Beach condos

The answer is, a lot.



The great majority of residential properties included here are single family houses and condominiums; the list also includes a much smaller number of lofts (a separate MLS designation), own-your-owns and co-ops.  The grand total from SoCalMLS is 618 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 not too different from last September's post when there were 631 on the market.

The breakdown includes the following:

• 295 are single family houses, 31 of which are partially in Wrigley, Alamitos Beach, North Long Beach, Rose Park, and their adjacent neighborhoods.
• 1 is classified as a loft in downtown Long Beach, and only 7 are own-your-owns or coops. More of the OYOs and coops have converted to condos, one of the recent projects underway is a co-op on Atlantic Ave.

• 314 (about 50% of the total) are condominiums, including the Marina Pacifica complex, Belmont Heights, Bluff Park and adjacent neighborhoods, The Lakes on Spring St.  The majority of condominiums are located in the 90802 zip code which includes Alamitos Beach, downtown Long Beach, Ocean Blvd. luxury buildings (31 condos are for sale along Ocean Blvd.!!)

There is opportunity for many people here right now--including 1st time homebuyers, second home buyers, and investors. For a property search of these areas go to http://www.juliahuntsman.com/ at the property search tab, where all types of properties, including 2,3, and 4 units, may be searched throughout Long Beach, Los Angeles County and Orange County and all cities in Southern California. And, also take a look at two listings: an Emerald Villas Condo at $185,000 and a single family home in Lakewood for $365,900.

Emerald Villas is an FHA approved complex!!



Short Sales are Working Better in 2011

Lenders are primed for short sales in 2011 because short sales are a terrific option for homeowners struggling with unaffordable mortgage payments. In fact, lenders’ losses due to foreclosure are projected to increase at record rates in 2011, giving them more reason to pursue short sales. Lenders are projected to incur losses as severe as 85 percent in foreclosure! Meaning, after deducting the expense of the foreclosure process on a $100,000 loan, they may only get back $15,000!

It’s common sense that lenders will be looking toward the short sale solution. Even though they are accepting less than is owed on the property, they lose far less than in a foreclosure sale.

In fact, right now in the Long Beach market, short sale transactions for condos and lofts increased by more than 200 units from 2009 to 2010.  Short sale transactions for single family houses grew from approximately 762 home in 2009 to 875 homes in 2010, or about 27% of all sold, cancelled or expired single family listings in the MLS.

Thus far in 2011, there are 593 single family homes in short sale status as active, in escrow, or otherwise on the market, out of a total of 1280 or 46%; and 380 condos and loft units are in the same categories of short sale, out of a total of 738, or 51%.

It may be a surprise to many that lenders actually want to work out a solution that benefits all parties. Oftentimes, the lender is seen as the villain in the situation. I’ve found that the lenders want to avoid foreclosure just as much as homeowners. The free, downloadable report at "Distressed Property" called "On the Edge of Losing Your Home" on this website at Long Beach Condos and Homes talks more about working with your lender, and details all the foreclosure alternatives available to you.

Download the report and call me today; I can help you develop a plan to work with your lender and avoid foreclosure.

Take These Steps Towards a Successful Short Sale

Lenders and the federal government, prompted by the sheer volume of loan modification and short sale requests, have overhauled their systems and programs, making the foreclosure avoidance process much easier than in the past. If you haven't considered this option before, maybe now is the time to find out more.

If you are considering short selling your home to avoid the financial and emotional fallout of foreclosure, you should be aware of the five steps you should take to increase your chances of a successful transaction.

First, do you qualify?

You must:

1. Have a verifiable hardship, like unemployment, medical bills, or relocation

2. Must have a monthly income shortfall

3. Be insolvent (you have no cash or assets that can be sold to pay down the mortgage), or headed towards insolvency



If you meet these qualifications, follow these five steps to a successful short sale:

1. Contact me so we can identify your servicer, fill out a short sale packet for the lender, and assemble all the required information needed to list your home for sale

2. Gather financial information (i.e., bank statements, pay stubs) from at least the last three months

3. Keep your house in showcase condition for showings, and make as many repairs as necessary and that you can afford

4. Expect the lender, junior lien holders, and private insurance companies to request more paperwork, and try to gather requested information quickly to ensure transaction efficiency

5. Set realistic expectations and work with me, the lender, and the buyer to the satisfaction and benefit of all parties involved


For more information about how the short sale process works, or about any other foreclosure alternatives you may qualify for, call me today. I can help you alleviate the burden that the threat of foreclosure brings, and we can develop a strategy to help you breathe a little easier.

Looking Down That Road: Borrowers Need to Know Their Options

For some people, the picture of this highway might represent escape. For others, it could mean taking a new direction. It's important to know how this looks to you, or someone you're helping, because it probably represents the starting point of dealing with a potentially distressed property issue.

The national average is that about 1 in 7 or 1 in 8 homeowners is facing a difficult time with their mortgage. And recent statistics were published from the 4th Quarter U.S. Census data stating that there were 18.4 million vacant homes in the U.S. (11 percent of all housing units vacant all year round). While the breakdown of rentals, foreclosures held off the market, or homes not sold, etc., is not clear, we know that many of those homes used to be occupied by people whose were foreclosed on.
Did you know that many many people allow themselves to go through foreclosure without first checking their options, which include:

Consumer Credit: Tips for the Way to Better Credit

In spite of general information available online, many consumers are still "in the dark" about how credit scoring functions and the best actions to take to improve it.
In spite of advice on repairing credit, a tip from an professional who has been in the business for many many years, often the best way to improve your credit is to simply pay your bills on time and reduce your credit line debt as much as possible--your payment history accounts for 35% of your FICO score.
Many consumers have recently experienced reduction of their credit lines, which then increases the percentage of debt, which then lowers their credit score. If a line of credit allows up to $50,000 and the outstanding debt is $45,000, but then the line of credit is suddenly reduced to $30,000, the borrower now appears to have exceeded the credit line. So now, the FICO score may be lowered, even though the borrower is always on time with payments.
Another factor that can impact credit scores is that not all banks report their credit limits for a borrower, but instead reports the highest balance--this actually can end up lowering the borrower's credit score because the debt utilization percentage does not show up. (See Liz Pulliam's "Weird Stuff that Hurts Your Credit.")
Borrowers, in an effort to simplify their credit history, make the mistake of voluntarily closing a credit account. This actually can be a very bad thing, especially if it was established much earlier in the consumer's credit history.  Your credit history accounts for 15% of your score, so you could anticipate seeing that much of a reduction on your score: A score of 750 could be reduced to less than 650. And, for instance, if you had a bankruptcy, you may be categorized with others who have also, but if you have that bankruptcy removed from your record, you will now be compared differently, which can impact your score negatively.
Something else not generally known, is that simply by paying bills on time and reducing debt, your FICO score can also improve in a short period, sometimes in as little as 30 days (or a few months), depending on the various factors of your credit history. The FICO score is a mathematically produced number based on certain elements that are used by the Fair Isaac Corporation, and is very complex, but you can know its basic components:

• Type of Credit:               10%
• New Credit Inquiries:      10%
• Payment History:             35%
• Length of Credit History: 15%
• Amounts Owed:              30%

Further, many borrowers think that the credit scores they obtain online from a free credit reporting site is an accurate representation of their score, but in fact, they cannot substitute for the ones lenders must obtain when working with a potential homebuyer or refinance borrower.
Further, many borrowers believe that it is best for them to pay down all debt prior to obtaining a home loan, when that is not always the case.
Another important thing to know is that Fair Isaac Corporation, the maker of the FICO score, changes its model, and may be doing so again at this moment--this can change how much you are going to pay for your home loan. If you are looking into borrowing or refinancing at this time, current information would be extremely important for you.
One company works on "credit mapping" as opposed to credit repair. The borrower is advised to investigate what either type of company could do for them, but in general credit repair companies may cost $800 or more and in certain cases has not helped the borrower through it's actions. Another company uses credit mapping outlines for a particular borrower--at a much lower fee cost--based on their credit report and other circumstances, and what may best work for them, as opposed to the generic information found on sites such as http://www.myfico.com/ .  For more explicit information about credit mapping and general advice, see this article in the Orange County Register published last September.
In summary, you really need to know about your particular situation to best know what to to, before you make a move.
More tips about credit:  Improving Your Credit Score, Recognizing a Credit Repair Scam

California Market: Neither the Best Nor the Worst?

The Housing Predictor has published its 25 best and 25 worst markets for 2011, and fortunately or unfortunately, California is not on either list. Are things getting better finally? The appreciation predicted for the 25 best areas ranges from 2.3% to 3.6%, and depreciation in the 25 worst markets ranges from 8.2% to 11.5%.  For Los Angeles County, Housing Predictor foresees an overall 5.4% loss for 2011, with Sacramento and San Diego faring a little better in the 3-4% loss range, with Sacramento also on the list for one of the first markets to recover.  Sacramento is considered one of the most affordable cities in the state. Meanwhile, pointing out that California is the world's 6th largest economy, and that it's not "falling into economic ruin", the sluggish housing market is still affecting Los Angeles County. The tax credit that boosted sales in 2010 is not around now. Per Realist Tax Data, in fact, the overall median price of a single family home did increase from October to November in Los Angeles County, from $330,000 to $335,000--but the median price of a condo decreased by $5,000 from $305,000 in October to $300,000 in November.

Per data by Dataquick released yesterday and published today by the LA Times, a Southern California median home price was up by 1% in December from November, even though lower when compared to the end of 2009, while sales volume was up (Dataquick tends to lump both house and condo prices into one overall median).

However, did you know that a long-gone single family loan type has returned? The 3% down conventional loan for houses is back on the scene--and some condos and condo buyers may be eligible for a 5% down conventional loan. These loans should be a great help to the conforming loan market buyers and sellers.

This would be a good time to review The Cost of Waiting To Buy -- a blog article that receives the most hits since last May.

New Listing: 2 Bedroom Condo in Emerald Villas in Downtown Long Beach

This is a well-situated condominium in the gated Emerald Villas, a 1991 complex with resort-like surroundings.  This light and spacious-feeling 2 bedroom, 2 full bath unit features indoor laundry, including the stackable washer/dryer, a cozy fireplace in the living room and a city lights view towards the east. Both bedrooms are carpeted, and the hall area provides extra counter space and cabinets for work area and storage. There's plenty of closet space in each bedroom.

Parking is in a secure, gated garage for two side-by-side spaces. The central courtyard in the common area has a beautiful pool and spa, and the fountain and the well-planted entry area are a gracious introduction to this beautiful complex. The HOA also features a BBQ area, sun deck and exercise room, and is within short walking distance to a nearby school and park, and is very convenient for freeway access. More information on this unit listed at $189,000 at 555 Maine Ave., #208, Long Beach, CA 90802.
Julia Huntsman, Broker
Lic 01188996

NOTE: off market 9/7/2011

New Listing: Lakewood Single Family Home $379,900

A cute vintage 1942 home, ready for a buyer in Lakewood. It has a master suite with higher ceilings, and a large family room with a rock-faced fireplace. One bedroom could work well as an office or library, and there's room in the backyard for the spa and playspace. An attached 2-car garage has a door into the family room, and the huge tree in the front yard provides plenty of shade for this west-facing home.
While it needs some work, it has plenty of charm in this circular floor plan. Hardwood floors in the formal dining area, living and front bedrooms. Very well-priced for the area and the size, at $379,900.
Please see more at http://www.juliahuntsman.com/featured-listings.html.
2/25:  Now $365,900!!

Julia Huntsman, Broker
Lic 01188996



Monthly 1-Minute Newsletter

See my monthly newsletter below for December, 2010. Just click on the logo below for the best summary around of local and regional market info! Have a very Happy New Year in 2011!



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Are You Having Trouble With a Loan Modification?

It's probably no surprise to many mortgage borrowers by now in this Christmas season to realize that they've had a tough time getting their loan modified this year. If they do not qualify for the Home Affordable Loan Program (HAMP), they try their bank's program. Often this application process goes on for months, while the homeowner may grow short on funds and cannot continue the monthly payment, and then they begin the process for a short sale, or worse, foreclosure. This story has been repeated over and over by many borrowers. If a loan modificaton is approved by the lender, often times the delinquent payments and refinance fees are added to the principal, making the new higher payment very unattractive, so the borrower rejects it.
One issue is that lenders have very little incentive to modify loans, as the cost of doing so cannot be billed back to the investor, and the work involved is very labor intensive and is not easily automated. Many banks have not invested in qualified staffing to take care of the high volume of distressed owners. And their agreements with investors on securitized mortgages may not actually cover the details of completing loan modifications, but do address foreclosure, so they believe they are in a risky situation with fulfillment of their contract terms.
In a 31-page study by the Federal Reserve, based on data from over 105,000 loans from 94 loans servicers dating from 2005 from California, Oregon and Washington, to determine who receives a loan modification (no discernible differences according to race and income differentials were found, "In fact, we find that Blacks/African Americans, Hispanics/Latinos and Asians are slightly more likely to receive a loan modification, and that these loan modifications have slightly larger reductions in their interest rate than those of similarly situated white borrowers"), it was still unclear after its research into the behavior of various financial institutions as to why the number of loan modifications was still falling well short of the number of foreclosures, even though the HAMP program has been declared effective with borrowers who received one, a group with a low re-default rate, despite literature published to the contrary.  Here is the complete Federal Reserve study. 

Another very clear problem is that some banks do reach out to their customers, but many borrowers fail to make contact with their banks, even after being contacted by them. And the longer a delinquent borrower spends in delinquency without contacting their bank, the more likely the home will be lost to foreclosure.

If you are interested in a loan modification, you might be successful, and you should contact your loan servicer.  But it's important to understand that possibly no matter how much information you submit to your bank, for a variety of reasons you may not get one, or you may have to struggle for up to a year or more with them. Banks are not equal in this situation--one of the factors may be if your loan is a portfolio loan or one securitized with investors. The study mentions the "lack of transparency" because data is issued in the aggregate, and information directly linked to borrowers is still difficult to track. Also, according to this study, 52% of foreclosure sales lack "reciprocal servicer contact" (does that mean the bank didn't return the borrower's initial contact)?

Overall, banks recoup a little more money if a property is sold in a short sale, rather than going into foreclosure and coming back on the market as an REO. This usually costs banks more money, and their "loss severity" rates are looked at closely when making their decisions.

The bottom line is: If you are having trouble making payments, contact your bank now. If you have to keep submitting your information over and over again for periods of 30-60-90 days, then you should obtain assistance through a Realtor who is familiar with short sales, or an attorney who specializes in loan modifications, not just any attorney, for further help. Don't wait too long.

Is the Southern California Market Stabilizing?

With so many analyses and predictions going on about the direction of the real estate market, the average person is often uncertain about the real truth. Recently, I've heard a few prospective buyers that I've been talking with express the belief that the market is going to drop even more by a certain percent, or just drop in general, all depending on what they've most recently read. But there's one truth that most real estate experts and practitioners agree on, all across the country: All real estate is local. So whether or not a large bank stops foreclosures for a while, or some other wave hits on the financial scene, it may or may not affect your immediate market in your part of the state, county or city, or even your neighborhood, depending on the many economic characteristics and forces that make up your area.
So, having said all real estate is local, in general, the number of Southern California residential sales for November fell, but overall, prices stayed stable. Southern California means the six counties of Los Angeles, Ventura, Orange, San Bernardino, San Diego and Riverside.
For Los Angeles County, the sales volume dipped by 11.5% compared to the prior year, but the median price (lumping new and resale houses and condos all together) for LA County decreased by only 1.2%; Orange County's median increased by .6%; San Diego and Ventura Counties increased price by over 3% and 2%, respectively; San Bernardino, hard hit by foreclosures, decreased another 5% in median price over last year. Per Dataquick,  the overall median price for all six counties increased by .7% even though the sales volume decreased by 15%.
Local cities, per the most recent information for new and existing houses and condos published through October 2010 by California Association of Realtors, show:

• Long Beach decreased its median price by 4.7% from prior October.
• Cerritos increased its median price by 5%.
• Lakewood stayed the same.
• San Pedro decreased by .1%.
• Bellflower decreased by 1.7%
• Gardena increased by 9%
• Buena Park increased by 3%
• Huntington Beach stayed the same
• Westminster increased by 1.1%
• Newport Beach increased by 17%
• Downey decreased by .4%.

Breaking down by zip codes in some cities show that certain areas such 90810 and 90813 in Long Beach are showing increases, but the higher priced 90803 zip code is still showing decreases in median price. That's a similar story for other zip codes such as in Newport Beach, when compared to a higher priced section within the same city.
And, to top it off buyers, the past two weeks or so saw the biggest jump in interest rates in the past several months. Many mortgage professionals believe the floor of close to 4% may be permanently gone, and as of today, FHA quotes were at 4.75%, while a 5% down conventional loan for a condo was quoted at 5%. It's easy to take a calculator to check out this would affect your monthly payment. A free calculator download is at Real Data.
Buyers should start making hay while the sun is shining!

Have a wonderful Merry Christmas, Happy New Years, and Happy Holidays.

Christmas Homes Afternoon Photo Time

Getting into the local neighborhood Christmas spirit!

How Many Properties Under $300,000 in Signal Hill?

This is a good price point to consider because it works for second home buyers, 1st time buyers, and people looking for a good investment in a desirable location. The property in this price range will most likely be a condo but if a buyer is willing to consider North Long Beach or West Long Beach, it could be a single family home. For a two-income couple, the total monthly payment (principal, interest, taxes, HOA dues and insurance) may be $2000 or less at current interest rates. It's actually a very competitive price range because of the number of investors able to invest cash or a very large down payment, and it's an affordable price range for many buyers. Some areas of Signal Hill have great views towards the mountains and toward the ocean, and in fact, the City has taken a stance to protect those views. It has gone through much development in the last 20 years to shed its oil derrick image, and most recently a new grocer's has opened up across from Home Depot on Cherry Ave.

Right now in Signal Hill, 29 properties are listed at $300,000 or less (out of a total of 66 active listings in showing in the MLS as of today). This is almost 50% of the inventory, where the average of all list prices is over $400,000.  All of these properties are condos, except for two single family homes, and almost half are standard sales. With interest rates still under 4.75% (but see this article from Zillow about the biggest change in 5 months) a buyer could possibly meet the goal of keeping the total payment under $2000.
To see Signal Hill properties now, click here.

Opportune Time for Buyers.

National Association of Home Builders comments on the current market, both for new housing and existing homes. Prices nationally --and locally -- have returned to the 2003 levels. NAHB believes there is price stabilization in many areas of the country. Future household formation--which has slowed in the current economy--will eventually demand more housing. This is the "opportune time for buyers" because buyers who are motivated to buy and are qualified at this time should take advantage. Los Angeles County, though experiencing fewer sales than one year ago, has not lost in the median price point of a single family homes since one year ago: Year-to-date in LA County the median price of a single family home is $340,000, Click on the video for more on housing market conditions currently.

When Is "Diving" into Lease Option a Good Idea in Southern California?

Sometimes I'm asked about the possibility of a lease-option as a way to buy a single family home.

Lease-options were used extensively with commercial properties in the past and have also become a method for purchasing a single family home in the residential market.

They work best when: 1) the owner wants to sell but does not have to transfer title right away; 2) or the seller may need continuing cash to pay fthe mortgage, 3) the house may be vacant or will soon be because the seller has already moved on, 4) the money from the sale is not needed immediately by the seller, 5) and, very important, the seller has equity in the property or has other income. When a seller's market is slow and a house with equity in it is not selling, a seller might consider this scenario from a renter/buyer.

There are advantages for both the buyer and the seller in this arrangement.  It's also important to use a good lease-option agreement which covers, among other things, the percentage of rent credit towards the down payment, the date by which the sale will close, and other clarifications concerning who is paying the taxes, who is maintaining the property (usually the seller), agreement on the final sales price. Tenants in this situation are more likely to treat the property very well since they see themselves as the future owners.

An advantage for the seller includes retaining the income tax deductions and having good tenants. The advantages for the buyer are getting into a house for little money up front (the amount is negotiable of course),  building up a rent credit towards a down payment, trying out the neighborhood, still having time to shop for the best mortgage or interest rate, and the possible benefit of the price being locked in if the value goes up.

The buyer must first find out what the seller's circumstances are, which a Realtor can definitely help out with, before spending time on making lease-option offers. In many neighborhoods, short sales are about 50% or more of the local market and many if not most of those properties will not have a seller who will be able to rent out the house at local market rent because their mortgage payment may be much much higher, and they do not have either the desire or the ability to carry a negative cash flow.

However, if an equity seller can wait 6 months or even a year for the buyer, it might be worth the wait.

For some additional explanation, see this general article about lease-options.

If You Got a Home Loan From the Bank, Are You Its Client?

No. You're the borrower. And as the borrower, you voluntarily took the loan from the bank, and according to the usual circumstances of an arms-length loan transaction, there is no fiduciary relationship.

However, Bank of America's investors, for example, include Pimco of Newport Beach, TCW Corp. of Los Angeles, BlackRock, Inc. of New York, and Federal Reserve Bank of New York. Bank of America has about 500 investors, all of whom it may owe a fiduciary obligation because of their investment/purchase of funds. Banks in these cases are the servicers for these investors, with whom they have agreements or contracts. Those contracts are known as PSA's, Pooling and Servicing Agreements, which guide the specific demands made on loan modifications or short sales requested by the borrower. It may not be easy to find out the exact terms  in those agreements, and in fact, it's often difficult to find out what investor holds the note due to the use of MERS in the last few years. But those servicing agreements spell out the relationship of the Bank to the investor, and ultimately, the course of your short sale or loan modification request. The servicer may actually have leeway in negotiating for the investor, but if the investor is able to accuse the servicer it did not act in the investor's best interest, the servicing bank could have a lawsuit on its hands. So you might be told the "investor" is making demands, but is that really the full story?

The banks/servicers frequently require the use of their bank addendums to be added to Realtor contracts--adding another layer to interpret in the transaction.  Here is another use of the term "fiduciary"--On a recently published Purchase Contract Addendum by Wells Fargo in July/August of this year, the following language definitely confuses the issue: "It is the Brokers’ fiduciary responsibility to present the highest and best offer to the servicer." To be very clear, 1) the seller's broker has a fiduciary duty to the seller, not to the seller's bank, and 2) offers are presented to the seller, not to the bank. The "highest and best offer" (and the best offer may not necessarily be the highest price) is presented to the seller, who ideally accepts an offer when it then becomes a contract, which is than submitted to the bank for its approval to accept less than the outstanding loan amount. Naturally, the bank is interested in recouping as much money as possible, but the issue of fiduciary relationship--the person to whom you owe the greatest care--is clearly laid out for brokers in agency law, and that person is your seller if you are the listing broker, not the bank. The broker cannot be the servant of both because the broker already has a contract (the listing agreement) with the seller who owns the property, not with the bank--or investor--which owns the note.

Sellers would like a clear, black-and-white outlook for their property, and it's rarely easy, and full of complications. It's very important for the seller to read the letter issued by the bank when a short sale has been approved--the seller should not assume the bank is issuing language that is completely in the seller's interest without taking the time to examine it, or have it looked at by a tax or legal advisor!