The Inland Empire is seeing real estate activity like we have not seen since 2005.  There are more homes in escrow at this point then there are homes on the market for sale in almost all cities.  The other rare statistic at this time is that every city is experiencing more leases on the market than homes for sale. Will the investors get wind of this and back off?  I hope so!  Leases are staying on the market longer and we are seeing the rents going down.

The city of gracious living, Upland, has 76 homes for sale today.  Back in January 2009 there were almost 300.  Rancho Cucamonga has 140 homes for sale today compared to 4 years ago when there were about 450.  And Fontana has 146 total homes for sale today compared with almost 1400 in early 2009 – that is amazing.  Some people are thinking that we are going to get in to trouble like we did 6-7 years ago but I don’t think so.  Homes are being bought with all cash or 20% or more down payment now.  There is equity in these sold homes.  Builders are scrambling to get up and running this year.  They thought they would wait until 2014 to ramp up their stock but they are seeing the demand every weekend when the new home models are being visited by hundreds of buyers.

It is an exciting time if you are a Seller.

Upland has 127 total homes for sale – 101 standard, 2 REO and 24 short sales

Rancho Cucamonga has 189 homes for sale – 144 standard,12 REO and 33 short sales

Ontario has 116 total homes for sale – 76 standard, 15 REO and 35 short sales

Montclair has 31 total homes for sale – 17 standard, 5 REO and 9 short sales

Claremont has 54 total homes for sale – 52 standard, 2 REO and 0 short sales

Pomona has 104 total homes for sale – 76 standard, 16 REO and 12 short sales

Fontana has 179 total homes for sale – 113 standard, 12 REO and 54 short sales

Wow – A grand total of 800 homes for sale in these 7 cities!  Compared with three months ago when I looked at the numbers, there were 1091 and 3 months before that there were 1463 total homes.  We are down by 55% in the last 6 months!

Yes, interest rates are at an all-time historical low and rumors have it that they will go up next year after the election.  Who knows?  I heard Target sold out their inventory of crystal balls.

Ok, maybe it makes sense to overbid on a home that used to cost $450,000 a little over 5 years ago and can now be sold for $100,000 less.  If you can get a 3.5% fixed rate interest loan for 30 years on that, then you are set!

Real estate is supply and demand.  The other factor driving up home prices is the lack of available homes for sale.  If you have 10 homes in the best school district for sale and you have 100+ buyers wanting to buy it, well need I say more?

If you are in the market this summer, I think my best advice is to not get discouraged and be prepared with your loan approval in hand.

Recently I wrote an offer on a Standard Sale for a very well qualified Buyer.  I already knew that there were multiple offers on the property.  2 offers were all cash, 3 were FHA offers and 2 were offers using conventional financing with 20% down payment.  So how did I get my offer accepted over all the others?

The Buyer’s Love Letter!

Sounds corny?  Well, it works!  I asked my Buyers to write a letter to the Seller describing who they are and why they wanted to purchase the Home.  In this case, the Buyer included pictures of themselves and their dog.  They explained how they fell in love with the house when they walked through the door.  They also went on to say that they were expecting in the Fall and could see themselves raising a family in the Home.

It turns out the Sellers had in mind their idea of perfect Buyers for their beautiful Home and guess what?  The Buyers matched the profile completely!

Now without the letter, the Sellers would have just seen another offer on their dining room table.  The Buyer’s Love Letter put a “face” on the offer.  We had our offer accepted right away and closed escrow with both parties feeling extremely good about the sale.

Real estate over the last 5 years has been a drag.  Smelly, trashed bank owned houses and “drive by only” short sales have made Buyers and Realtors crazy.  It’s about time that the market gets back to a more realistic place where there are “real” Sellers that care about their Home and neighborhood, not just the bottom line on a bank statement.

If you are a Buyer writing many offers on many houses, you just might want to use this technique.  Like I tell my Buyers, “There is a Home for everyone” but sometimes you need a little edge over the competition.

The purpose of the final inspection is to satisfy the Buyers regarding the condition of the property.  The final inspection form that is signed by the Buyers and Sellers states:  Buyer and Seller understand and agree that unless otherwise agreed in the prior contractual agreement between Buyer and Seller, a final inspection is not a contingency of the purchase/sale.

Furthermore, the form states that the Buyer acknowledges that: (1) Property is in substantially the same condition as on the date of acceptance of the offer to purchase/sell and (2) Seller has completed any repairs, alterations, replacements or modifications as agreed to by Buyer and Seller.

The final inspection is also a great time for Buyers and Sellers to talk about things like: how to operate the sprinkler system, what day is trash picked up and what are the neighbors like?

Upland has 139 total homes for sale – 116 standard, 19 short sales and 4 REO

Rancho Cucamonga has 252 total homes for sale – 153 are standard, 82 short sales,17  REO.

Pomona has 137 homes for sale – 73 standard, 52 short sales and 12 REO.

Ontario has 164 homes for sale – 84 standard, 66 short sales and 14 REO.

Fontana has 260 homes for sale – 134 standard, 96 short sales and 30 REO.

Claremont has 100 homes for sale – 86 standard, 10 short sales and 4 REO.

Montclair has 39 homes for sale – 24 standard, 11 short sales and 4 REO.

That gives us a grand total of 1091 homes in 7 cities in the Inland Empire.  2 months ago there were 1463.  That is 372 fewer homes for sale!

The number that sticks out is the total REO (bank owned) homes for sale is only 85 in all 7 cities.  Going back to my January 19, 2012 post there were 268.  So in 5 months the bank owned homes inventory has shrunk!  What does that mean?  I don’t think the banks are holding on to them.  Maybe the REO Speedwagon (to quote a lender friend) is coming to an end?

1.  Offer more than the list price.  What?  That’s not a secret!  What I’m talking about here is not $10,000 more just try $500-1000 more.  It is worth a try and should make the Seller happy.  After all, your mortgage lender will send out an appraiser on your behalf and that small increase in price could be justified with today’s rising prices.

2.  Work with a well respected Buyer’s Agent and Mortgage lender.  When thinking of hiring a Buyer’s Agent, check with sites like www.Redfin.com to read reviews of local agents.  Interview several agents and don’t forget to “google” them.  An agent with a good reputation in the real estate community will be one that writes a strong offer and is known for closing escrows.   I have a local lender that I have used for about 10 years.  He is pro-active and will actually call the listing agent shortly after the offer is made and verify that the Buyer is well qualified and that he is available to answer any questions during the escrow process.  What a breath of fresh air when many times the lender cannot be reached.

3.  With all the short sales and bank owned homes on the market in recent years, it  has lead to a market place that was not personalized.  Offers have been emailed or faxed off to listing agents with little regard as to who the Buyer is.  With more standard Sellers coming in to the market, I think the time is back when a previously well used tool can be used again- the Buyer’s Love Letter.   I ask my Buyer to write a brief letter to the standard Seller telling them about who they are and why they want to buy their home.  If nothing else, it will usually produce a counter offer and maybe a sale!

1.  The Buyer has been told that they qualify for purchasing a home but the lender might have used overtime wages to put the Buyer in a higher price range or maybe the Buyer went out and bought a new car which affected their ability to purchase a house.  I encourage a Buyer to shop around for a loan.  That way you will know if you have the best lender to help you in this big ticket purchase.  Overall, your FICO score might be slightly affected but it will be an easy thing to explain.

2.  The house does not appraise.  Home prices are going up.  They are not skyrocketing like back in 2005 -06 but the “experts” say that home prices are up 2-3% over last year.  The comparable recent sales might not show the increase in home prices.  If the Buyer and Seller can’t agree to compromise on the price – then your escrow will fall out – fail.

3.  Short sale cannot be approved.  This can include anything from the seller not having a hardship to the lender cannot agree on the sale price.

4.  House in poor condition – the home inspection reveals a leaky roof or extensive termite work that needs to be done.  As a Buyer, you will need to pay for a home inspection in order to find out if the home is in poor condition but the $250-300 you pay is well worth it if you find out the house is a “money pit”.

5.   There is a lien on the house that the Seller thought was taken care of.  Sometimes there are liens on a house from a contractor that didn’t get paid for work done on the property.  Maybe there is an IRS lien from back income taxes that have not been paid.  If there is not sufficient equity in the home to pay off the liens, then escrow fails – falls out.

Myth – Many all cash offers now are low offers.  Investors are usually the all cash buyers and they are still looking for a “deal”.  In my opinion, an offer from a First Time FHA Buyer should be given first consideration.

Myth or Fact?  If my offer is in backup position, I will never get the house.

Myth – There are always reasons that an accepted offer can quickly go sour.  The appraisal might come in low, financing for the buyer might not work out or the first buyer can get cold feet.  Be happy to be in backup position, you might get a call from your agent with good news that the first buyer’s offer didn’t work out.

Myth or Fact?  I don’t want to look at short sale homes for sale – it will take forever to close escrow.

Myth – As of June 1st, there are new rules in place that require the lender(s) involved in a short sale to act promptly – within 30 days.  Of course, your agent should still be diligent in asking the right questions of the short sale listing agent such as:  How many loans on this home and who are the lenders, also does the seller have a hardship and have you started the short sale process?

Myth or Fact?  I have a letter of approval from a direct lender and my money is in the bank, will I be able to compete in the real estate market for a home?

Fact – You are in the best position because you are fully prepared – Congratulations!

Buyers are getting the message, no more hesitation.  If you like it, write an offer.  And make it a good one, Sellers don’t want to see low offers this summer.  This week has been incredible so far and its only Thursday.  Every home I have shown to my Buyers in the last three days has 4-5 offers on it and was just listed for only a day or two!  Wow – that’s a wake up call!

Timing is everything, they say.  The best prepared Buyers – the ones with an approved loan letter in their hand and their deposit and closing costs money in the bank are gobbling up the best homes on the market.  And why not?  In my lifetime, I don’t remember interest rates below 4%.  I do remember re-financing my first home in the early 80′s and being so overjoyed to bring my interest rate down from 18% to 13%!  We were ecstatic!

This movement in the real estate market this summer will no doubt help the economy but there are still the “Dark Shadows”  lurking in the background and putting a damper on all the fun.

You’ve heard about the Shadow Inventory.  That is referring to the homes that are in distress,  being in some phase of the foreclosure process.  A notice of default is filed on a home by the lender that is at least 90 days late on their mortgage payments. In Rancho Cucamonga, there are 291 notices of default on homes today.  111 is the number of notices of default on homes in the City of Gracious Living – Upland.  And yes, Claremont, there are 37 in your city.  Grand total = 439 homes in these 3 cities alone that are in some stage of the foreclosure process.  Only a fraction, maybe less than 10% are listed for sale.  So what about the rest of the almost 400 homes?