If you’re really asking “Have we hit the bottom of the California housing crash?”, I would have to say I don’t think so, not yet. Millions of homes are still being foreclosed on, and despite what everyone says, banks are still not truly working with their customers. While working on loan modifications on one hand, the banks are taking the homes to the courthouse steps with the other.

If you’re asking “Should I sell my home now before it loses any more value?” I would say that this is the slow time of year to sell even in a good market. It’s true, your home may lose more value if you hold on to it going into 2011. As I said, I personally don’t believe we’ve hit market bottom yet. Right now rates are at an all time low, which allows more buyers to buy, giving the seller a larger market. Historically, around the middle to end of February rates start to rise knocking people out of the affordability circle. You also widen your market if you are willing to do a little ‘creative financing’ such as carrying back a note for part of the money you receive and having the buyer pay on an installment contract.

Last but not least, if you’re asking “Is this the time to buy a house?” I would say it’s a great time to buy if you’re planning on being in it for awhile. Unless you’re buying a fixer upper way below market and doing the work yourself, the days of flipping it right back out and making a huge profit are a little slower these days. If you buy a home planning to raise a family, or stay located in that spot for the next 5 to 10 yrs., opportunities abound.

You have the advantage of the lower rates, and this time of year most sellers who have their home on the market are sincere about really wanting to sell. The inventory may not be as large, but neither is the competition for the same house. Sellers tend to be a  little more negotiable when there aren’t any offers coming in.

If you’re just curious about what’s happening in your neighborhood because you’re trying to keep track of where you are financially, equity wise, I would be happy to give you a full report of the activity in your neighborhood for free. No obligation. Just remember, I only deal with the Santa Clara County, California area. I can be reached at 408-313-3270 or at LauriBeamish@gmail.com

Private Transfer Fees are the fees a builder/developer puts on a property usually through the CC & R’s that pays the original builder/developer a fee in the future every time the property sells. In Silicon Valley and the San Francisco Bay Area where real estate is rather expensive, these fees can be substantial even at just 1%. Being aware of whether or not the property you’re purchasing has a clause like that could make a difference to the new home buyer when negotiating the price. In the future depending on how much appreciation the home gained when you go to sell, it could actually break a deal.

Just recently the Governor of Minnesota signed a law prohibiting such fees, as have 9 other states. Two more are considering a ban. In California though, Private Transfer Fees are still legal. There have been some adjustments to the law making disclosure of the fees more prominent. Yet there are many exemptions, just like any other property transfer disclosure, such as if you buy your newly built residence from a bank who had taken the property back in foreclosure.

Anytime you buy a property and hopefully are going through an escrow, you should receive a preliminary title report. In that report are “exceptions” to the coverage. Its these exceptions you should be interested in and where you will likely find any PTFs, or Private Transfer Fees that go along with the property.

If you have had any experiences with this kind of fee, feel free to tell your story below. New home buyers really do need to be aware of PTFs that could effect their property forever.

Looking for a home?

Everyone’s aware of the first time home buyer tax credit of $8000.00  and the existing home owner buyer tax credit of $6500.00, but are you aware of a very small window of opportunity where you could actually take advantage of a possible $18000.00 in tax credits?

If you’re looking to buy a home, especially if it’s for the tax write off because you have nothing to protect your earnings from Uncle Sam, this may be a great opportunity for you.  It’s good even if you already own a home, but if you’re a first time home buyer that has been sitting on the fence thinking about purchasing, it’s even better for you. The thing is though, you have to move quickly.

If you have been thinking about buying a home and have been watching the market for any time at all, then you should know the first thing to do is go get pre-approved for a loan by a lender.  If you have no idea which lender to go to, ask friends that own homes for referrals. Just remember, if you go to your bank, they have the strictest guidelines. If you go to a credit union, they are next, and the last but not least would be a mortgage broker or mortgage banker as they have many sources to find the loan that is right for you, and a lot more flexibility. You do not want to get “Pre-Qualified”. You want to get “Pre-approved”. If you find the house you want, especially if it’s a bargain basement house, you want to have an advantage to being able to purchase it.

We all knew about the federal tax credits, but under a newly enacted California law, you may be eligible to receive an extra $10,000.00 in tax credits if you are a first time home buyer or if you are a current homeowner purchasing a brand new home never lived in before. (Obviously trying to help out all the building contractors going under).

The basic guidelines are the same. You have to have a house under contract by April 30th and close by June 30th. (There is a little discrepancy in that the state law is May 1, but if you wait until then, you may lose the federal credits).

I am not an accountant, and there is no way I could possibly know a “blanket policy” when it comes to everyone’s tax situation, so you definitely need to consult your CPA or tax attorney.  If you are looking to buy a home, live in it for 5 years or more, this may be a great opportunity for you. If you’re buying a home thinking you’ll own it for a year, sell it and get rich, not so much.

For a ton of free information on buying or selling your home, be sure and visit my website at Silicon Valley Real Estate Online. If you’re a homeowner in trouble, feel free to contact me as I have “been there done that”, and I can help. If the governments going to give it, take advantage of the $18000.00 Tax Credit possible loophole. Why not us!

When applying for a mortgage, the lender you have chosen will take many factors into account. These factors not only influence what type of loans you can qualify for at what interest rate,  but also what your monthly payments will be and how many years you will take to pay the loan off completely.

Knowing these factors and doing what you can to improve them all can make a tremendous difference when you go and see your lender and start the process that will get you your new property.

Some of the basic factors apply for just about any loan but are especially important if you are trying to get a mortgage. The big one is, yep, credit.

How good is your credit? Get copies of all of your credit reports from the 3 major consumer reporting companies and check each one for errors. Some companies will give you all three in one spot for one price. You want to be sure and get copies that include your “credit score“.

Many times they have errors that can be corrected in just a few weeks and that helps boost your score. If you have credit cards, pay them off as well as any other outstanding bills.

A nice large down payment will always improve your chances of being approved. If your credit isn’t completely top notch, the bigger the down payment, the more likely you may get approved. Now adays, what used to be a great credit score is only marginal, so it’s important to know what you are facing. If your credit is great, you can still put down as much as possible to lower the monthly payments or decrease the total loan time.

Above all else, don’t lie to your lender. If you tell them you are a supervisor of a power plant and they find out you are a UPS man who has only had the job for 6 months, you will be totally screwed. Be honest and your lender will do their best to work with you. Make sure you have w-2′s, tax returns, a list of your current bills and balances. All these go together in figuring out what the lender thinks you can afford.

For more information whether you are buying or selling a home, be sure and visit my website at http://www.SiliconValleyRealEstateOnline.com Feel free to leave any comments or questions you may have below.

It has actually been a law for years that if you apply for a real estate loan, you are supposed to get an estimate of what that credit will cost you within 3 days of the day the loan application was taken.  For the most part the mortgage industry did that, except the estimate was just that. Merely an estimate and it was rarely correct.  If you’ve ever bought a home you know exactly what I’m talking about. It’s that piece of paper that puts you into shock when you look and see the $100,000.00 you’re borrowing to buy that $120,000.00 house is actually going to cost you $300,300. to pay back, or something like that. They figure in the APR which is the amount of the fees, etc. you are paying and shows what your loan may adjust to if you have an adjustable rate.

In the past, you’ve gone through the escrow period, you’ve gotten loan approval, you’re at the title company to sign off on the house you’re buying and low and behold, these are not the costs the lender had told you about. This is not the interest rate you applied for.  Welcome to one of the most stealth real estate scams ever run. You are at the perfect point where if you don’t agree to what’s before you in escrow, you don’t get your house. This was the perfect spot to insert a little “emotional blackmail”. This was an industry standard for many years and I personally have never seen one person in escrow refuse to sign.

Finally there is a new law to protect home buyers from this type of thing in the future. Oh sure, where there’s a will, there’s always a way, but for now it will be a little tougher. There is a “uniform” form to be filled out, lender fees cannot change between when you get the statement and when you get to escrow. All fees for closing costs where the lender has provided the service provider have to be within 10% of actual costs (which to me is still too much leeway). They still have to give you the estimate within the allotted 3 day time period from when they take your application, but for the most part there will be no more drastic and last minute changes in escrow.

This is supposed to provide a lot more transparency into actual fees the new buyer is paying, and to avoid any more of one of the oldest real estate scams on the books.

To see the new law, actually made in 2008 to take effect Jan. 1, 2010, just visit the HUD website, and click on RESPA. The FAQ’S may be easier to understand, and you can find them here RESPA.

If you have any comments or questions, don’t hesitate to leave a comment. If you’re looking to buy or sell a home, or if you’re a homeowner in trouble, visit my website at SiliconValleyRealEstateOnline.com and get some free information.

What the heck?

It’s pretty scary times for real estate out there, and I don’t just mean because of foreclosures and big drops in value causing people to lose all their equity. It’s scary because on one side you have people who still think like it’s 2005, on the other side you have “real estate gurus” coming out of the woodwork teaching creative financing and doing deals like they did 30 yrs. ago, and then in the middle you have the government relaxing standards and doing the same kind of loans that got us here in the first place.

Then I see a question posted in one of the Real Estate forums from someone wanting to know about hiring a Realtor or a real estate attorney to help with the paperwork on a piece of property she’s buying. One of the answers she got was from someone saying to let the other agent do the paperwork, and the title company handle everything. That’s how they bought theirs and there was never a problem. While I concede that there are many deals between people that didn’t use either a Realtor or an attorney that turned out OK, there are many that turned into nightmares. In a transaction described like the one above, who is looking out for her interest? What recourse is she going to have against the seller if she has the seller’s agent write up the contract? Do you think that agent is going to worry as much about taking care of her as he is the person that actually hired him and is paying him? I don’t think so. While we have a code of ethics that states we have to be “fair and honest” in all our dealings, do you think everyone really is?

Then we have the ads on Craig’s List where investors love to advertise to buy homes. One I read yesterday specifically said “No Realtors or attorneys”. Now why do you think that is? I understand they want to save on costs so they don’t want to pay commissions, or a lawyer a fee for looking over the paper work, but do you think it might be also because all their contracts, etc. may be geared their way with no concern for the seller, or buyer, whichever the case may be?

Remember the old saying “Desperate times call for desperate measures”? Don’t be so desperate you make your situation worse instead of better. If you’re in a situation where you need some help with a contract most Realtors will look it over for you for free (like me. LOL) in the hopes of either getting your business in the future or a recommendation to your friends on what a nice person they were. Take advantage of the service.

I have a buyer that has a friend whose a Realtor, but until I came along no one ever went through the contract with him and his wife to know what they were signing. It’s like hiring a stock broker. No one is going to watch out for your money with the same love and care that you are, and the same is true when it comes to getting involved with buying or selling real estate. It’s your job to make sure you are protected. No one is going to cry with you when you get yourself into a mess. All the courts care about is what you signed your name to. It’s up to you to make sure it’s something you can “live” with.

If I can help with any of your real estate needs, please feel free to contact me by phone, email, or leave a comment below. I’d be honored to help in any way I can. Like I said, it’s pretty scary times in real estate right now.

Investing in Foreclosures

Investing in real estate in Silicon Valley is a real possibility right now but there is not much of a margin for error. As prices have fallen and rates are low, it is possible to buy a “rental” property for specifically that reason, to rent it out. This is an opportunity for investors we haven’t seen for many years and they are coming out of the woodwork like crazy. I must get at least 5 e-mails a week from somebody with a new “system” for buying up property. Unfortunately, they’re not “new” and most of them are totally illegal for a licensed real estate professional here in California.

I’m sure most of you have heard that the FDIC is going broke. That FHA is in trouble. Fannie Mae and Freddie Mac have been in trouble. Besides what’s on the market (the MLS) these institutions are dumping properties as well.  It’s amazing some of the bargains you can pick up, although you do have to be careful and do your own due diligence. Make sure you crunch all the numbers. A condo that looks attractive numbers-wise when you figure the mortgage payment, may not be so attractive if you add in a hefty Homeowner’s Association Fee, along with insurance on the unit itself. Remember, the Homeowner’s Association only insures the outside of the unit, nothing inside the 4 walls.

What is amazing to me is that for as much as everyone is saying credit has dried up, etc. many of the same loans that got us where we are today are still out there. Oh sure, for now your credit score has to be a little higher than it used to be, but I’m not sure how long that’s going to last since now even people with A+ credit are going into foreclosure. FHA has laxed a lot of their standards so that their loans are more usable. Not only that but they have a loan program that will help you buy the property and give you “fix up” costs. It’s almost as if they will pay you to fix up your new property. VA still has a no money down adjustable rate mortgage. Some of the conventional lenders are willing to bend criteria a bit to get properties off their books.

The one thing FHA has tightened up on is “flipping”. They have a “no flipping rule” that says if you buy a property using an FHA loan, you may not sell it for at least 90 days. Now to me, if you move into a property you’ve bought, fix it up while you live in it, which is not at all unusual for investors, and you’re flipping houses every 91 days, you can still do quite well. You have to pay to live somewhere anyway. Why not the property you’re buying to fix up and sell? Not only that, but the lenders look much more kindly on properties that are going to be owner occupied.

I realize it’s pretty much a feeding frenzy out there, but if you’re going to invest, invest smart. The “gurus” of real estate don’t talk about the properties they get stuck with, or the holding costs, or the bad tenants. They talk about the upside without the downside. I’m all for investing in real estate to build your wealth, but be prepared. It’s not all the bed of money it’s cracked up to be. And if you think you can go negative cash flow on a house because it’s only $50 or so, think about how much that turns into per month if you do 10 of them, or 100.

If I can help you with any of your real estate needs, whether looking for a bargain on your first home, looking to invest in a rental property, or selling your home for the best price in a down market, feel free to contact me or leave a comment below.

I’m curious to know

1. How did the banks spend that money
2. And why aren’t any bailout home loans going through?

Whether you’re purchasing or refinancing, I don’t see the money coming down the pipeline like it was supposed to. While many programs have been put into place by the big bank bailout of 2009 to help the homeowner, there are just a few that have actually received the help these programs were put into place for. (When I say a “few” you have to remember as an individual number it would be a lot. As a number against the number of homeowners in trouble it’s a few).

I read this today in an email from Agora Financial. This is a chart as to bailout money to home loans by the banks, based on the top 5.

Banks vs. Us

Notice how Citigroup is MINUS 21? So if you’re looking for any kind of home loan, don’t go there! LOL.

So let me ask you, what good did it do? If we loaned the banks all this money to save their butts, but they won’t lend it back to the people in trouble even with good credit, what good did it do us at all? And new purchasers? Good luck. You’re living up to a higher standard now than we have ever had to live up to in the whole credit history of this country.  Even when I first got into real estate and interest rates were 19 and 20% (God forbid) the requirements to obtain credit were not as stringent as they are now. You not only have to be golden, you have to manipulate your scores to be perfectly golden to qualify.

What did the banks do with the first round of bank bailout money? Who knows. From what I’ve read they never had to account for it. Any time the public got wind of some bank boondogle or there was a bank scandel, the bank usually relented and called it off (although I don’t remember seeing Wells Fargo call off theirs when they got caught. Oh yeah, it came from “other” funds).

If you are planning on staying in the home for a very long time and don’t care if it still drops in value for the next few years, I would say yes. The only reason I say this is because some of the first-time buyer programs that have been available for part of this year are getting ready to run out, specifically the $8000.00 federal tax credit available to first-time homebuyers that ends Nov. 30, 2009. While the National Association of Realtors and many of my colleagues are fighting hard to extend, and maybe even expand it, it may not be here when you finally decide the market has bottomed and you’re ready to jump in. The state of California (the state gov. program)stopped taking applications as of July 3, 2009 for the “new home credit” they were giving. All $100,000,000.00 they had allocated was gone. Also coming into this time of year, many local programs that are working with limited funds are running out of money. There again, many of them don’t know if they will be around next year.

Despite all the hoop-lah in the market, I don’t believe we’re any where near a recovery, as I have stated before. Many besides me say there is a whole new wave of foreclosures on the way, continuing our housing crisis. This, along with the fact the commercial real estate is crashing all around us which of course means even less jobs, more drops in the value of homes are inevitable. One thing I will say is first-time homebuyers are probably getting treated better than ever before as Realtors are hungry for sales. This year the Housing Affordability Index reached it’s highest point in 40 years. Since first-time buyers accounted for over half the sales for the first half of the year, according to the National Association of Realtors, Realtors affections have shifted.

For the not-so-savvy buyer, this can be a double edge sword.  Many agents because they are so hungry, end up pushing buyers to buy from their brokerage’s listings as opposed to the complete local inventory. If a buyer is not represented by their own agent (which you should if you want someone to look out for your interests more than the seller’s), they report sellers’ agents are calling them several times a day. Once a deal gets to the contract stage, many
cash-strapped brokers have been adding vague fees and other surcharges. Usually all these items they’re charging separately for are covered in their commission. If you’re agent or broker is adding in fees, ask them what the commission covers. They are already getting paid if they write up a successful contract.

Many first-timers are unaware of cozy ties between agents and the lenders, home inspectors and title companies they recommend—relationships that can boost a buyer’s costs. If your agent or broker is recommending someone or using “their own people”, ask them if they are getting a kick-back or referral fee. All of this is supposed to be disclosed to the client to start with. Many of us have our own people that treat us well because of an on-going business relationship. I use my people because they’re good, and many times they will give my clients and me a break because of the volume of business. I don’t want a referral fee. I want to close the sale.

Bottom line is no one knows for sure what shoe will drop next, but if you have been wanting to buy a home and you need assistance for the down-payment, the tax credit, etc., and you’re planning on being in your home for several years to wait until the market turns around and you have some equity, then this could be a perfect time for you. A National Association of Realtors survey showed that the average first-timer hopes to stay in the home for 10 years, up from seven at the peak of the boom.

If you have any questions about the market or anything to do with real estate, feel free to leave a comment below or contact me direct. There’s no obligation and no “fees” for talking to me. LOL

Yesterday I was watching People’s Court on TV. There were two women, one who sold a house to another. Both women used attorneys vs. Realtors. When the woman who was buying the home did the usual walk-through a couple days before the close of escrow, it was quite aparant the woman who was selling the house was not leaving any time real soon. As should have been done, the lawyers provided for a seller rent back for 2 weeks to allow the seller more time to move. They also tacked on a heavy penalty to the seller if she didn’t move within the 2 weeks, which she didn’t.

They held the money for the 2 weeks rent in escrow, which was correct, but they didn’t have both buyer and seller sign a release of the funds with instructions for the money to either be released to the buyer on the date the 2 weeks were up, or to be pro-rated between buyer and seller according to how many days the seller stayed. That was the first mistake. The poor buyer went through weeks of calling escrow, trying to get a hold of the lawyers to release the money, etc.

The reason they ended up in small claims court is because the seller wouldn’t pay the penalty rent for the extra 10 days she stayed over and above the 2 weeks rent back. When the seller finally did leave, she left a ton of trash and all kinds of stuff in the property that the buyer had to pay to have removed. While this kind of thing can happen to anyone, the attorneys were both done with the transaction once the house closed escrow and the buyer couldn’t get either one of them to help her any longer. They ended up in small claims court.

Now, don’t get me wrong. This transaction could have gone this way even if they had used a Realtor. Many Realtors are in a hurry to collect that commission check and would have closed the deal also. Once you close escrow on a house, if the seller is still occupying the property, you have to go through regular legal channels to evict them just like you would any tenant that refuses to leave a property. What should have been done here to truly protect the buyer was to not close escrow until the seller was out of the property. At the very least it should have been explained to the buyer what all could happen if they close escrow while the seller was still in the property, and let the buyer decide what she wanted to do. In the meantime the buyer is paying on a mortgage to a house she can’t even occupy yet.

When I first got into real estate many moons ago, I was told “You wouldn’t want a Realtor defending you at a trial, and you don’t want a lawyer doing your real estate transactions.” Once you close escrow on a home, you have lost all leverage to have things come out the way they should. If things aren’t right when it’s time to close your transaction, don’t let anyone intimidate you into closing anyway. After it’s all said and done is not the time to get what was promised in the contract.