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.

Temecula Real Estate vs. Murrieta Real Estate

There's always a comparison between Temecula and Murrieta...Who's better? Who's nicer? Who has the best prices? And so on. So I did a little comparison of my own.

TEMECULA

In Temecula this morning there were 1,372 active listings. So far for the month of October 46 listings have sold.

• 26 Sales for Owner/Sellers


• 12 Bank Owned


• 2 Shortsales


• 6 new homes listed in MLS

The average sale in Temecula had an asking price of $559,671 and had a sold price of $528,123 This average sale was for a home with 4 bedrooms 3 baths 2400 Sq Ft built in 1996.

The foreclosures in Temecula that sold had an asking price of $344,077 with a sold price of $337,062. for a home that had 4 bedrooms 2.75 baths with 2027 Sq Ft built in 1994

If you notice the numbers, that's almost $200,000 difference with only a minimum of Sq Ft difference. I'm surprised any owners are selling their homes with a price difference like that.

MURRIETA

In Murrieta this morning there were 1,879 active listings and so far for October there have been 50 sales.

• 24 Owner/Seller


• 20 Bank Owned


• 3 Shortsales


• 3 New Homes in MLS

The ratios in Murrieta are a little different with more foreclosures sold. The average sale in Murrieta has an asking price of $419,112 with a selling price of $408,098 for a home with 4 Bedrooms 2.75 Baths has 2499 Sq Ft built in 1996.

The average foreclosure sale was $371,675 and sold for $374,455 for a home with 4 bedrooms 2.75 baths with 2301 sq ft built in 1999.

Looks like overall Murrieta is lower in price and the sellers seem to have a better handle on pricing .

Murrieta has many more homes for sale than Temecula, though only 4 more homes sold in the same time period with more foreclosures sold in Murrieta than Temecula, with Temecula getting higher prices.

Temecula is a nice town but so is Murrieta. They are very comparable in many areas, so why is Temecula selling their homes for more? Maybe November will tell a different story.

Temecula Foreclosure Auction

A Foreclosure auction of astronomical proportions will be held November 6th at 7pm at the Temecula Creek Inn. The website shows 80 homes in and around the Temecula Valley and feature modest Sun City retirement homes to upscale Murrieta and Temecula locations. These homes are currently listed for sale with various real estate agents and are also available for bid now via the website at

http://www.hudsonandmarshall.com/listings.asp?subsaleID=2385&auctionId=379&display=Sale+Number+3%26nbsp%3B%2D%26nbsp%3BTemecula%2C+California%26nbsp%3B%2D%26nbsp%3BProperties++501+%2D+580

The big question on everyones mind is can a real estate deal be had? Well the answer is probably not, after all if any of these homes were a deal they'd have already sold. Lenders like some sellers still don't get the idea that the only way to sell a home these days is to offer an awesome deal.

The way these auctions work is by trying to create a buying frenzy. Hopefully buyers are smarter than to fall for this. The homes may start at seeming very low prices but the fine print often reveals the snag. The seller is not obligated to accept a final bid lower than a pre-determined price that is often not revealed until the auction is over. Very deceptive if you ask me and an insult to intelligent buyers.

When considering a foreclosure as a potential purchase consider these important factors. First, the listing agent has a fiduciary duty to the seller and probably an ongoing relationship. Most lenders discourage their agents from representing the buyer as well...for obvious reasons. NEVER NEVER use the listing agent on a short sale or foreclosure as the buyers agent. Instead find a buyers agent well versed in these two fields of real estate and let that agent negotiate the deal. PLEASE make sure the buyers agent you pick knows what they're doing and you stand a good chance of getting a good price on a nice home. If you use an inexperienced agent then you really have little hope of getting a decent deal. The buyers agent needs to do some hard negotiating and the buyer should be willing to walk away rather than except less than favorable terms. After all THIS IS A BUYERS MARKET!!!!

Tenants in Trouble

Foreclosure reality is not only affecting homeowners but renters as well. High mortgage payments are not always realistic rental payments and many homeowners who can't sell their home because of the market drop, are renting these homes. These new landlords are taking a loss every month. A loss many cannot absorb.

As the noose tightens around strapped homeowners necks, many are letting their rental properties go into foreclosure. In some cases, homeowners continue accepting rent while discontinuing mortgage payments.

Now renters are feeling the foreclosure pinch as homes are being foreclosed out from under them. A recent renter in Corona found this out the hard way when he was forced to move from his rental home because the home had been foreclosed by the bank. Mr Renter had not only made his payments on time but had provided a hefty security deposit he most likely won't get back. The homeowner purchased with 100% financing, then pocketed the security deposit and several months of rent payments while never contributing anything to the mortgage payment.

Temecula Foreclosures

Temecula, like so many other cities, has been hit hard due to the housing slump, and a drop in real estate market prices. A look at the map and you can get a good picture of Temecula's short term outlook. For sellers this represents a discouraging picture. As more REO's hit the market, undercutting prices to get rid of these bank owned properties, private sellers have less chance of getting a decent price for their home. REO's are driving market prices lower. And with many more homes on their way to becoming REO's the future seems to hold more of the same.

On the other hand buyers can reap the benefits of these lower prices and the smart buyers are. Understand that buying an REO property is more of a hassle since banks are notorious for driving a hard bargain as far as contingencies and closing, often these homes are sold as is so no repairs will be made, you better not close late or you'll incur steep fines and other fee's and don't expect the bank to be as diligent about paperwork as they expect you the buyer to be. All in all though buying an REO property is a great way to get a great deal.