What Goes Up Must Come Down

The real estate market was just entering an upswing in 2000 and 2001. Prices were rising and the market was strong. Lending guidelines were pretty much as they had been with tight qualifying restrictions. But as the market continued to strengthen banks became greedy...disguising their actions of loosening lending guidelines and offering new loans as an attempt to help people purchase a home but in reality it was just another way to generate revenue. The market went nuts. People were buying homes they could previously never afford and in reality still could not afford but these new loans eased the initial burden by offering low interest rates or no interest loans making in easy to get in over your head. More buyers could suddenly buy and prices reflected this new surge in buying. Sellers were making a bundle as prices soared. But as the saying goes "What goes up must come down" and in 2006 the bottom was looming. The real estate market slowed as buyers started feeling the pinch of higher payments. As the market slowed prices started to fall and many homeowners who were told by their lender to simply refinance when their payments adjusted didn't have that option any longer. Their only option was to sell but so many people were in the same situation suddenly the market was flooded with homes and the few buyers out there could pick choose and dicker. The bubble didn't burst it had a slow leak that started in 2006 and finally will loose all it's air this year (hopefully) Unfortunately because of such a huge number of people finding themselves unable to make higher payments and unable to refi, they have no alternative but to let their home go into foreclosure.

The funny thing about this whole situation is the Banks who are faltering because of their own greed and mismanagement. They gave people loans they couldn't afford and when the realization hit, it's now the banks who are suffering along with the people they were deceptively "Helping to Buy a Home".

I've talked to many homeowners in this situation. Some who aren't behind in payments yet or their loan has not readjusted, but see the writing on the wall and try to take steps to save their home. They contact their lender hoping to negotiate something with their mortgage company that will ease the burden of a much higher payment. But in almost every case the bank simply won't deal with anyone who has not missed a payment. So if you know you payment will be rising above what you can afford and the bank only laughs in your face when you ask for help what are your alternatives? Sell your home as a shortsale? Guess what most banks won't consider approving a short sale unless you are behind in your payments. Do you let your home go into foreclosure? Many people are because they don't realize there is an alternative. But what is the alternative? It's simply buying another home before the readjustment of your current mortgage payment. Take advantage of your GOOD credit before it's ruined by a mortgage company who's only interested in your money. They won't lift a finger to help until they have to so don't be a victim of the mortgage crisis. Come out a winner. Buy another home before it's too late. The banks won't help you so YOU'VE GOT TO HELP YOURSELF!

The Wait is Over BUYERS

Many buyers have been fence sitting for a while now. Some for a year of more waiting for the market to BOTTOM OUT. The problem with this is the buyers who are waiting are the inexperienced buyers. These buyers seem to think that if they buy one second before the dreaded BOTTOM hits then they've made a huge mistake. So what happens is these inexperienced investors wait too long making an even bigger mistake. If these buyers look at all the pluses of the market right now, could digest the information, they would realize the time to start looking for that awesome investment is now. Lets look at the facts.

1. The Temecula Real Estate Market is at an all time low. Yes you've seen homes drop $100,000 or more in the last year. The fact of the matter is the homes that dropped $100,000 were the homes that were severely over priced to begin with. The sellers who priced their homes realistically from the start sold their home for a fair price. Yes, homes sold last year. And the good ones will sell this year also. By waiting you'll often be dealing with a stale and unhappy seller who has watched his imaginary equity eaten up by greedy buyers. How far do you think you'll get with this type of seller? Buyers, start looking now and when that good deal comes along pounce.


2. Interest rates on home loans are the lowest they've been in years, so why not get a great price on a home and low interest rates as well. There is nothing wrong with a Two-Fer


3. The Temecula Real Estate Market is saturated. The inventory for available homes in Temecula is many many months . Buyers, take advantage of this huge inventory and let it work for you. More homes mean more competition and buyers can name their price many times. So why not let the real estate market work for you.

By knowing the market and understanding the real estate process buyers can become millionaires in this real estate market. Don't let the fear of making a minor mistake keep you from acheiving your goals. These days a real estate mistake is hard to make.

Buying Before Foreclosure

There are many homeowners who owe more on their homes these days than that home is worth. These homeowners are often making high mortgage payments. Some may face circumstances where they need to move, but in this declining real estate market selling a home these days can be impossible. So what is a person to do? Some buyers who are faced with having to move are taking drastic steps to ensure their family will have a home. These steps involve some moral issues as well as some credit issues but these people are willing to take the risks. So what is this scenario you might ask? It’s simple and many people today are considering it. It’s buying another home and then letting the existing home go into foreclosure. Yes it’s possible and actually quite easy, with minimal if any risk. There are however, a few criteria buyers must understand and meet before attempting this plan.

1. The buyer must be current on their existing mortgage. This means no Lates what so ever or you probably won’t qualify.
2. You will have to qualify for two mortgages, the existing and the new one.
3. The buyer must have good credit and be prepared for his credit to be ruined for a while afterwards.
4. The buyer should have a down payment or buy a home through a down payment assistance program. (HART)

There are factors surrounding the foreclosure as well. In California the foreclosure laws prohibit banks and financial institutions from seeking the difference between what the owner owes and what the home actually sells for. This is called a non deficiency and is a requirement of a trustee sale as apposed to a judicial foreclosure. A trustee sale is most common in California and your mortgage contract will determine whether a trustee sale is the method of foreclosure your lender will be using. In order for a homeowner to qualify for this situation there a few criteria that must be met.

1. The buyer should still have his initial purchase money loan. This means the original loan he used to buy the home.
2. The buyer can have a first and a second as many owners do but, it’s better if the buyer does not have a HELOC as his second.
3. The buyer should be in his current home for more than 2 years. This will eliminate any IRS ramifications of capitol gains although there are other ways around this and a tax representative should be consulted.

There are more and more buyers who are faced with the dilemma of selling a home in a declining market. Some of these buyers have no choice due to circumstances and this method offers these buyers a change to own a home rather than rent for years as their credit is slowly repaired. This situation of buying another home before foreclosure often helps the buyer rebuild his credit much more quickly after the foreclosure as he has another mortgage to help boost his score.

This method may not work for many buyers as they will have to qualify for a new mortgage taking into account the existing mortgage. Other factors will need to be considered as well but all in all this may be the light at the end of the tunnel for some homeowners.

If this scenario is one you are considering please consult with a tax professional before taking any steps and get as much information regarding your personal situation before taking this drastic step.

Off Season Sales

In late November and into December the market really picked up and some homes that had been sitting on the market for a year or more were now finally in escrow. Buy why did this happen? Some say the market is finally hitting bottom and these buyers wanted to beat the rush of people this summer searching for and bidding on the best real estate deals. Others say this is a regular occurrence and despite what most people say it's always busy this time of year. I personally think it's a little of both. Many economists say the market will bottom out this year somewhere around August. So the smart buyers are starting a little earlier finding a good deal then coming in low. This makes their purchase now comparable to what they might expect to pay later in the year and they don't have the competition of other buyers to outbid them. Smart move.

Temecula Real Estate...Last Chance to Buy Before the New Year

If you're looking for a tax deduction to help alleviate your tax consequences for 2007 then time is running short. If a real estate transaction is on your shortlist of possibles then there is just enough time left to buy a great house and get a great tax deduction from the purchase. It's a double whammy and lots of investors do it. Buying at the end of the year for investors is one of the easiest ways to get a nice little bonus deduction at the end of the year.

If you are thinking of buying before the end of the year there are a couple of things to look out for. First avoid a short sale they are notoriously slow and if you want to close before the end of they year you'll need a very smooth and timely transaction not one that has you on pins and needles constantly waiting for a slow bank to respond to the simplest of requests. Also if you're going to attempt a foreclosure your agent will have to be on top of things the whole escrow period as does your lender. They will have to get their side of the transaction done quickly to compensate for a sometimes slow turn around on the part of the bank. But a foreclosure is a much safer and quicker bet and can easily have a successful 30 day close.

Buying from an owner at this time of year can be tricky. Many people don't want to be moving during Christmas, so a vacant house can be a great way to get a quick escrow. For an owner occupied home a hold over after escrow may be the determining factor. Giving the owner enough time to find a home to move to will help your situation and give the owner the added incentive to cooperate in a quick sale.

Temecula Real Estate...Online Foreclosure Auctions

The real estate market is rough everywhere...even for foreclosures and bank owned homes. In fact many bank owned properties are sitting for months. The reason they're sitting is simple. Either the bank or the listing agent has priced the home too high. SOUND FAMILIAR? well it should, owners aren't the only ones who can over price a home. The banks are more motivated to sell than owners though and if the home continues to sit at least the bank understands why and takes action. One route for many banks is online auctions.

Online real estate auctions are nothing new but these days many of them have a new twist. NO LISTING AGENT AND A HIGH BUYERS AGENT COMMISSION. The buyers agent can be referred by the Online Auction if you don't already have an agent or they can be your own agent. If you find a home listed in the MLS it could easily be an online auction. If you have your own agent he or she will simply need to register, which is only a confirmation that their license is current and they are with a broker. Once confirmation of these facts is completed (usually takes a few hours) you can then bid. Your bid reflects the price you're wiling to pay before any closing costs. For example, if a home is $400,000. and you've decided to bid that amount but need closings costs as well your agent will bid the $400,000 and once you win you'll add additional costs to the price you won the auction.

Once the auction has ended the bank wants an offer in writing reflecting the price, closing costs and terms. If you won the auction for less than the asking price the bank doesn't have to accept your offer so be prepared for a refusal if you won at a low price.

The auction I recently won for a client had been listed with another agent for 90 days at a price of about $60,000 more than the auction price. At the new low price the home was at the very bottom of the appraisal price so there was definitely room to ask for closing costs on top of the bank price. A very good candidate for my buyers. We won the auction and are just waiting for the process to be completed.

The bank is very specific as to what they'll pay as far as their own closing costs. They will pay their own escrow fees and Title for the buyer but other fees the seller usually pays ,they won't. These fees include Transfer Tax and Natural Hazards Report, both common seller fees in California. These fees are relatively low. As far as what the buyer can ask for in closing costs paid, the bank doesn't care as long as the home will appraise for the higher price and the lender will allow the costs to be paid. So if the buyer needs all their closing costs paid it's not a problem.

The bank owned home is sold as is meaning no repairs of any kind. The buyer can do a home inspection and should, but the bank won't fix anything.

The only contingency the seller will accept is a loan contingency for the normal period in California of 17 days. One thing to remember the contingency is not removed until it's removed in writing despite the period of time that's passed.

We haven't received a bank addendum yet with the normal closing penalties and because there is not listing agent the buyers agent is expected to complete all needed paperwork. The higher commission is their compensation. So really you can consider the bank owned home as a FSBO with the agent receiving single party compensation and the seller representing himself but depending on the agent to complete all the necessary paperwork.

Temecula Real Estate...Over Pricing will Eliminate Buyers

The popular concept of overpricing your home to compensate for low offers can hurt you and the sale of your home way more than it can help. First of all, many qualified buyers and their agents don't like to low ball a house. The only people that try this are the investors or the people fishing for a great deal and often these buyers aren't serious about buying unless they get a home for a minimum of $100,000 less than the VALUE, not the PRICE. There is a big difference between the two these days.


Serious buyers are looking for a nice home at a good price and most often if the house is over priced, it's telling the serious buyer t

1. The seller is out of touch with the market
2. The agent doesn't have a clue about the market
3. The agent doesn't care and is only worried about how many listings they have
4. They may both be hard to deal with.

So the serious buyer often avoids even looking at the over priced home. And the seller just lost a golden opportunity

So, what is an over priced home? Pricing your home has less to do with whats on the market and more to do with whats sold. Unfortunately, sellers look at what they're neighbors have priced their home at and except that price as legitimate when in fact that home could easily be over priced as well so now you have two homes on the same street that can easily sit for months and in this market the longer your home sits on the market the more money you've lost.

It's too bad more agents out there don't have a back bone and tell their sellers the truth about the market instead of letting them sit on the market, over priced month after month loosing money month after month.


For sellers, if you don't have to sell right now take your home off the market. In fact think about buying a few investment properties cause there are plenty of sellers who have priced their homes accordingly and are willing to sell. Or look at foreclosures, they're always priced very well. These homes can be a rental and with the amount of foreclosures and short sales the rental market is really seeing an up swing.


Try buying a new home and renting the old, especially if you've had your home for a while and the payment is reasonable. This allows you to get a great new home at an awesome price while saving the old home and potentially selling when the market recovers. There's a huge potential for profit is this scenario.


Don't make the mistake of over pricing your home. These days a mistake like that can cost you tens of thousands.

Temecula Real Estate Foreclosure Sale

Well, the foreclosure sale at the Temecula Creek Inn on Tuesday evening was well attended. About 200 people came to watch and bid. The atmosphere was charged as buyers received their bidding number and waited anxiously for their choice to come up for bid. I'm pretty sure all the homes sold; at least in the eyes of the buyer. It seems most homes sold for about $100. per sq ft on average. Unfortunately, many of these homes will not be sold to the highest bidder. Despite the fact that someone won the bid on a particular home doesn't ensure the bank will except their final bid. Many of the homes sold at pretty low prices and I'm sure many of them will have the high bid rejected by the bank. Of course the bank will give the buyer a chance to raise their price to one more acceptable to the bank but I don't thing the price the bank has in mind and the price the buyer has in mind are very often the same. Especially when the home is at auction. Every buyer there wanted a deal, while every bank there wanted the buyers to foolishly overbid. With the amount of foreclosures out there, no buyer has to overpay for any house. After all there are more than enough homes to go around right now.

Temecula Real Estate Buying Before You Walk Away

I had an interesting call yesterday regarding a situation facing many people in today's real estate market. This person has been trying to sell his home for over a year with no bites. I'm sure that sounds familiar to many. Because he needs things in a home that he didn't when he purchased his present home he wants to buy something bigger. The prices are so good in some areas he can get a bigger home for less than he spent to buy the one he's in now. So he came up with a plan. Purchase the bigger home then walk away from the old one. Now, because I have know idea of his financial situation I don't know if he'll even qualify. He is current on his present home and has excellent credit but no money down (I'm assuming).

He'll present his present home as a rental and once the new home has closed escrow he'll simply let the old one go back to the bank. But can he do this and what are the ramifications?

I hate questions like this because things are not always as they are represented to you...but in California when a home is foreclosed on the bank sells and has not recourse to approach the borrower for any differences in price between what the borrower owed and what the home sold for. This situation however, is different from many and to be honest I don't know if the situation changes the rules. One thing I do know is his credit will be ruined for years. But with the current state of many peoples finances, bad credit is going to be present everywhere and may start to be viewed differently with credit scores below 600 becoming a more acceptable score . Who knows?

Personally I think this is a moral dilemma rather than a financial one. After all, he can obviously afford his current payments, he just wants a bigger house at a better price and who doesn't? But most of us won't attempt this route in order to get what we want.

Buying Temecula Real Estate: Foreclosure or Short Sale

It's a buyers market and you're a buyer. You want the very best deal you can get. There are loads of homes for sale; over 1000 in Temecula alone. So where do you start? That question is easy. Find a good buyers agent and tell them what you're looking for. Let them do the work and present you with their findings. Chances are some of the homes they find will be bank owned homes and these are usually among the lowest priced. There will probably be a few short sales on the list also and they may see like a good deal also. But each of these presents their own set of problems.

Foreclosures

Bank owned homes are homes that have already gone through the foreclosure process and now the bank wants to get rid of them. The bank has contacted one of their agents, received a brokers price opinion and now the home is for sale. If you put in an offer on this house, make sure you have a buyers agent, never use the listing agent. The listing agent usually has an ongoing relationship with the bank and may not be completely committed to you as the buyer. So don't sell yourself short, get a good agent to represent only you.

Bank owned homes will be sold AS IS which means you can do a home inspection but the bank will not do any repairs. Most banks will have very strict time lines as to how soon you need to have your home inspection in order to back out of the deal and not forfeit your deposit. So 5 days for inspections is not unusual. The bank will want proof of funds upfront and will not approve the offer until they've seen this information. They can take several days to accept an offer so be prepared for a wait. As part of their acceptance the bank will have it's own addendum, that the buyer will need to sign. One of the conditions in the addendum will be a late fee accesses on escrows that close after the closing date. These fees can range from $100 and up and have additional per day charges as well. These can add up quickly, so get a 45 day escrow if possible with the intentions of closing in 30. This will give you sway time for unexpected delays.

Short Sales

Short sales can be deceptive. Often a short sale will read contingent on bank approval This means that what ever is in the MLS as far as price may not necessarily be what the bank is willing to accept. A short sale is where the owner still lives in the home, he may or may not be making payments, he needs to sell his house but will not be able to sell for what he owes. In a short sale the bank has final approval not the owner. The listing agent most often has arbitrarily put a sale prices (often low) in the MLS, hoping to attract a buyer and this usually works. The problem arises when the bank doesn't want to sell that low and negotiations start between the buyer and the bank. This can be a very lengthy process and the end result can often be weeks of wasted time. If you want to attempt to purchase a short sale the key is understanding it can be a very lengthy process with an outcome that is not what you were hoping for.

Whether you buy a short sale, a pre-foreclosure home, a bank owned home, or a seller owned home, make sure you have a knowledgeable agent that can work with any of these scenarios. The more complicated the transaction the more things can go wrong and the more the transaction can cost the buyer time and money. So do yourself a big favor and get a good buyers agent.