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Posts Tagged ‘bank owned homes’

The Counter Offer

17 Oct

Step 9

Expect to receive a counter offer from the Seller. In 15 years of writing offers for Buyers, I have only had maybe a dozen original offers accepted as written.

The most common thing that is countered by the Seller is the price.

Some of the other terms of the contract that can be countered is the amount of time for escrow. 30 days is the most common escrow length but sometimes the Seller wants to close escrow on a specific date. The Seller will also counter the escrow and title company that they will want to use. It is customary in this area for Sellers to use the escrow and title company of the listing agent.

If you have written an offer on a bank owned home – REO – then the bank will send you a counter offer that looks like an offer and can be 15-20 pages long. Don’t be alarmed, this is the way they do things. If you have written an offer for a short sale then be prepared to wait as the bank will want to do an appraisal before issuing a counter offer. If you have written an offer on a standard sale home then the Seller will most likely respond within the 3 day time limit that is stated in the contract.

Something that has been happening in the last year or more with REO’s and short sales is that they will counter back that they do not want to pay for any termite work or home warranty. Again, the banks are trying to increase their bottom line any way they can. So buying a bank owned home or short sale places more responsibility on the Buyer because the Buyer will need to pick up these fees.

Next blog post: Multiple Offers

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

Making an Offer on a House

04 Oct

Step 8

It’s not all about price.

The terms of the contract are very important. The main term of the contract that all listing agent’s eyes go directly to is the type of financing. Financing is the type of loan you are using. Are you an FHA Buyer? A conventional Buyer with 20% of your own money to put towards the purchase? A VA Buyer who can use the Veteran benefit that has been awarded to you by being a Veteran? Or a cash Buyer?

At this moment in the San Bernardino/Riverside areas, the conventional Buyer and cash Buyer are King! Sorry to break this to you. Yes, the bottom line is all the Seller is looking at. No, it is not fair. The American Dream of home ownership is being beat to pieces! The investor/buyer that has all cash or the conventional buyer have a definite advantage. An FHA buyer most times is hoping that the seller won’t “mind” paying some of the closing costs but the truth is – they do “mind”. The VA Buyer is at the bottom of the heap and it breaks my heart to say this. The Veteran should have first “dibs” but in this still extremely greedy society, sellers don’t care. Whether the seller is the owner or the dreaded “bank”, they want all the money they can drag out of a buyer.

For a while now, the banks have started saying they will not supply a buyer with a termite inspection or termite repairs, so don’t ask. The banks also will not pay for a one year home warranty which is about $350. So what do you do? You as the buyer pay for these items. Yes, this is a messy time to buy a home but if you get lucky and get your offer accepted, then it is the best of times to buy a home!

 
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House Hunting – Short Sales

23 Sep

Step 6

The market in the Inland Empire is about 45% short sale listings at this time. If you have unlimited time on your hands and don’t mind waiting and waiting and waiting some more – then a short sale is for you!

I’ve been on both sides of a short sale. I have listed short sales and actually sold them! My hairdresser thanks me for that as I needed lots of touch-ups to hide the gray hairs that started sprouting when I was worried that the bank would foreclose before I could get a short sale approved for sale. At this time, a short sale listing is just that – a listing for sale. There is no guarantee that the house OR the seller will qualify for a short sale with the bank. So let’s back up, the short sale listing might not be able to be sold?

Yes, that is the truth! The owner/seller of the home has to qualify for a short sale of their home. A short sale means that the bank will sell the home for LESS than the current mortgage amount. But, in order for the bank to agree to selling the house as a short sale there MUST be a hardship. A hardship is a loss of job, death, divorce or illness. A hardship is not a loss of equity in the house. In other words if the seller bought the home 4 years ago at the top of the market and they owe more on the mortgage than what the house is worth then unless you have a hardship, there will be no short sale. I get calls daily from distressed sellers about this but if you remember back in the 90′s when we first experienced short sales, these rules were not in place. An owner back then could short sell their home and go right across the street and buy another home for less and many did. The rules are pretty strict this time around. In fact, do you know that the bank asks the seller for 2 years of tax returns, current bank statements and pay stubs? The reason they do is so they can look for assets. If the seller has assets, the bank wants them and they are not shy about asking for them! After all the seller signed on the dotted line for the mortgage and they promised to make the payments.

Ok, so how does this affect a Buyer, well like I said in a previous post – don’t fall in love with the house – because the bank might not grant a short sale. As a Buyer, find an experienced Buyer’s agent that knows the right questions to ask of a short sale listing agent. It takes more research to determine if the house you are interested in is able to be sold. Another thing to remember, the short sale owner because of their hardship is usually not in a good frame of mind. They are sad, depressed and can have no motivation to cooperate. That leads to not wanting to show the house to prospective Buyers. It is very common to hear that there are no showings on short sale listings or even that it is available to view at restricted times. Some sellers decide to rent their home out and then there are tenants to deal with – messy! My all time favorite showing restriction – the house is drive by only – meaning you buy it without seeing it until the bank approves the sale!

I’m sure you have friends and family that have bought short sales and can tell you all the horror stories they went through. Trust me, they are true. According to today’s newspaper, our area will not return to normal for another 5 years. So call me if you want more information about short sales, they can be negotiated and you shouldn’t be afraid of them just educate yourself and decide if you are willing to wait.

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

House Hunting – REO’s

20 Sep

Step 5

I would like to discuss bank owned homes with you. At this time about 13% of the homes on the market are bank owned. You’ve seen REO (real estate owned) on many homes in the last couple of years. These homes have been repossessed from the owner by the bank. Sometimes these homes were on the market previously as a short sale but didn’t sell for whatever reason. So now the bank owns the home.

Many banks will go thru an extensive renovation of a home before putting it on the market. Because of either bad treatment by the previous owners or vandalism while the home sits vacant for months, the bank needs to “fix it up”. Please remember, no one from the bank has ever lived in this home. The bank is relying most times on the REO listing agent to be in charge of the rehab work. Tip #1 – always hire the best home inspector you can find to inspect this home. Sometimes you will need to hire other service providers to inspect things like the roof, plumbing and air conditioner. This can be very costly. Once you are in escrow and you are conducting these inspections, you must understand these inspections are for your knowledge only. The bank has already done all the improvements they intend to do. You are buying the house “as-is” so unless there is something majorly wrong with the house – the bank won’t take care of it. In fact, many times you won’t even get a termite report from the bank. Oh and by the way, some of these REO homes do not have stoves, dishwashers and other appliances – that’s for you to buy.

Another thing to keep in mind, and I’m focusing on the Inland Empire when I say this. In almost all cases of bank owned homes, the bank has lost money, somewhere in the range of 50-60% of the amount of the loan. Well I’m sure you don’t feel sorry for them but it does affect you if you want to buy a bank owned home. Let’s say a 3 bedroom home is foreclosed on in Rancho Cucamonga. The loan on it was $450,000. In today’s market the house is now worth $250,000. That’s a $200,000 loss for the bank. And for this case we aren’t going to figure how much money it takes to fix up the house for sale. So one night you can’t sleep and you stay up watching TV. There is a show on how to buy bank foreclosures at 20% off the list price. Can it be true? No. Maybe you can do this in Barstow but not in Rancho Cucamonga. There are way too many Buyers in today’s market and many are cash buyers. This bank owned home will sell for market value.

I can’t finish this post until I talk about my all time favorite Buyer, the Flipper. Lately busloads of “Flippers” have been roaming the streets of the IE looking at REO and foreclosed homes to buy, fix up and sell – Flip! The only people making money here are the ones conducting the tours and the bus drivers. If you want to “flip” a house, go buy one for all cash on the courthouse steps and rehab it, then sell it. If you buy a bank owned home at market value and expect to fix it up and sell it, well my advice is forget about it…. It sounds like a fun way to make money but in the long run this is not an amateur sport. There are large corporations out there buying up homes in bulk on the court house steps and flipping them, this is their business not a weekend project.

 
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Posted in FHA, Homes For Sale, Real Estate Update, Uncategorized

 

House Hunting – Standard Sales

16 Sep

Step 4

You know the area you want to buy and the price and size of home that is comfortable for you but now the big question.

Do you want to buy a standard sale home, short sale or bank owned home?

The standard sale home seems like the easy route. However, a large majority of the standard sellers in today’s market think they are “losing money” by selling their home. They could have sold for much more years ago but they didn’t and now life changes are prompting them to sell. Be careful because sometimes these sellers over price a home just to see if they will get a bite. Have your agent “run the comps” which is Realtor talk for – what is the home worth according to recent sales? If you find that the house is overpriced but you want to make an offer then write a good clean offer at market value. All houses sell for market value so the Sellers will need to come to grips with that at some point. Be prepared for a counter offer, 99% of all offers will get a counter offer. If the Sellers are reasonable, you will have bought a house. Don’t feel bad if they don’t take your offer. Many Sellers reject the first offer and then their homes sit on the market and at the time I am writing this, it’s almost guaranteed that their house will go down in value by waiting. Move on to another house for sale.
In the Inland Empire there is a “Perfect Storm” at this moment. Interest rates are amazingly low, you can buy a house and make mortgage payments that are close to what you are paying for rent. And there are many homes for sale. Inventory is good in this area and more homes are coming on the market all the time so don’t worry, your dream home could be just around the corner!

 
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House Hunting

09 Sep

Step 3: It’s time for House Hunting!

You have a letter from a lender promising you a loan. You have met with an experienced Buyer’s Agent and committed to working with them. Have your Realtor arrange a tour of homes for you – you are in the market!

Always keep these things in mind:
1. Buy a house in the best school district you can afford – a good school district will help your new home retain its value. This is true even if you don’t have children yet or you are older and your kids are adults.

2. Think about the day in the future that you will be selling – sounds weird but some day you will sell your new home and you want to buy it thinking about the future value.

3. Don’t compromise – if the home has some quirks like being on a busy street or has additions that have not been permitted these are things that will come up over and over again and could turn your dream house into a nightmare.

Next Week: More House Hunting

 
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I Want to buy a House with the Listing Agent.

16 Aug

Really?? Really! Are you sure?

I hear this statement several times a week, as I’m sure most Buyer’s agents do. Do you know what you are giving up?

The Seller has already signed a contract with the Listing Agent to have exclusive representation by the Listing Agent. If a Buyer wants to buy a home with the Listing Agent, then a conflict of interests arises. This is called Dual Agency and it must be disclosed. Dual agency is such a bad idea that it has been outlawed in other states, yet it is still legal in California. Some of the information you may want to know would be illegal or unethical for a dual agent to disclose because of their fiduciary responsibility to the Seller. Just because the seller “has” to use their Cousin George as their agent, doesn’t mean YOU have to.

A fiduciary responsibility requires that every action the agent performs must be in the best interest of their client. This is above and beyond “Honest and Fair”. This responsibility goes so far as to require that even if a particular course of action is NOT the most advantageous action for the agent, but IS in the best interests of the client, the agent must act for the benefit of the client.

In every real estate transaction I have been involved in, I have found at least a dozen things the other agent wanted to do, but were not the best path for my client. Dual Agency is just as crazy as having the same lawyer represent both sides in the same lawsuit.

Wow, buying a home is a “Big Deal”. Why would you want a conflict of interest?

Call me if you want to work with a Buyer’s Agent!

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

New Video

10 Aug

I am so proud to make this post to my blog.  I have made a video that introduces me and my area to prospective clients.

For my friends, family and past clients, it will give you an insight into my real estate career.

I hope you enjoy it and please give me feedback, I’d love to know what you think!

 
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Half Yearly Report

03 Jul

Half way into 2010!  Short sales are still the name of the game.  Numbers have changed quite a bit in the last 3 months.

Upland has 185 listings,  47 are short sales and 14 are Bank owned.

Rancho Cucamonga has 424 listings – up 61.  176 are short sales and 53 are bank owned.

Claremont has 114 listings compared to 96 -3 months ago.  10 are short sales and 11 are bank owned.

Ontario has 358 listings up 46.  172 are short sales and 67 are bank owned.

Good old Fontana has 658 listings – 3 months ago they had 498 – that’s 160 more listings!  289 are short sales – 71 more than the last report and 84 Bank owned down 44.

So there you have the half yearly report – good news!  More homes for sale, and super low interest rates -  it’s still a Seller’s market here in the Inland Empire.  Buyers are still hungry for more – so let’s watch how the summer of 2010 heats up!

 
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April Stats

05 Apr

Wow, the first 3 months of the year are over!  This month  I want to add in Sales in the last 30 days.

How are the local cities doing as we enter the second quarter?

Upland has 183 listings, 47 are short sales and 14 are bank owned.  March sales 59

Rancho Cucamonga has 363 listings, 175 are short sales and 53 are bank owned.  March Sales 171

Ontario has 312 listings, 151 are short sales and 69 are bank owned.  March sales 139

Claremont has 96 listings, 10 are short sales and 11 are bank owned.  March sales 25

Fontana has 498 listings, 289 are short sales and 84 are bank owned.  March sales 278

Let’s start looking at Montclair – 56 listings, 29 are short sales and 7 are bank owned.  March sales 20

With all the First-time Buyers rushing to meet the April 30 tax credit deadline, it’s good to see that we have more listings to choose from!

My take on these stats are that we look at the ratio of listed homes to sold homes to see how many months of inventory we have available thus showing us if the market is a buyer’s or seller’s market.  Overall, we have 2-3 months inventory in the 6 cities highlighted.  That my friends, is a Seller’s Market!  More demand for homes than homes available on the market.

 
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