Viki Benbow - The Real Estate Huntress: March 2008

Yesterday, the California Association of Realtors came out with new numbers on existing home sales in the Greater Sacramento Area. Sales for February compared with February 07 were up 11%. However, the prices were down about 30%. The news focused on the negative part of the drop in prices, however, I think it is truly the silver lining to this horrible crises we are in. With interest rates still down below 6%, a home that sold last year around $350,000. is now priced in the $245,000 range. The payment for that same home also has gone way down from approx. $2500. to around $1700. If you then add in the tax benefits, that exampled $1700. payment actually computes out to an after tax housing cost of about $1400. per month. What are you paying in rent? Also, if history repeats itself, and it has as long as we have been keeping records in the real estate industry, eventually those prices will go back up. Can you honestly say that you can save $100,000 in the next ten years? If you can, way to go! But imagine that if you combine that disciplined savings ethic with the appreciation by buying now, you can double your potential net worth.

Today, I checked the numbers on active listings….the available inventory is down in all 4 counties about 10%. Hmmm..... amazing! Sales went up, inventory went down. In our meeting this morning, agents were complaining that they are facing competition among buyers with multiple offers (as many as 8 to 10 offers) on many of the homes their clients seek to purchase.

I am constantly hearing from buyers that they are waiting for the bottom… Folks, take stock in what's happening, prices are down, interest rates are down, inventory is starting to go down, activity is up….. feels like changes are in the wind to me… the bottom? You’ll only know for sure when it is too late and prices are soaring back up.

If you’re thinking about either buying a home or an investment property, don’t wait…. Give me a call at 973-4532. Remember, my 39 years of experience includes several markets just like this! You know what I say, experience is not expensive, it is priceless!

I wanted to clarify some facts vs. fiction. I received a call from an investor who is interested in buying homes for investment. He said he that he knew he could buy houses in good areas between $40,000 and $100,000. My response was “Really!” Where are they, I will buy them.

The facts are that home prices in Elk Grove, Natomas, Lincoln and other hard areas hit that have hundreds of bank owned homes on the market have prices as low as $100 to $115. per square foot. Many of those homes are getting multiple offers. I personally wrote several offers on homes in that range for investors paying all cash with quick closes and we did not get them. In every case, the investors were sure that their all cash offers would sway the banks to accept a slightly lower price. Wrong!!!! In following up, I found the successful buyers were other investors who had lost out on their first attempts and stepped up to the plate and paid full asking price and got the homes. In the last couple of weeks, we are seeing multiple offers on properties up to $150. per square foot.

I closed on a home last Friday with 1100 sf for $116,000. ($105 per sf) That home needed a new roof, carpet, paint, new windows and new fences. The bids for those repairs were $15,600. So the acquisition cost of this home came out at $119. per sf. The buyer was a savvy investor. He paid cash and closed in 15 days.
Contrarily to the hundreds of bank owned properties in the aforementioned areas, there are currently 11 Bank owned homes in Roseville/Rocklin between 2000 and 2400 sf. They are priced between $300k and $360k. that is about $150. per sf. While $115. a square foot sounds better than $150. per square foot, if the potential growth of the investment is better in Roseville than Elk Grove, which is the better investment? One of the ways to determine the upswing is to look at what the home you're looking at sold for at the top of the market. That is a likely indicator of where it will go again in the future.

The other thing to keep in mind is if this is your personal residence, where do you want to live? How much is that worth to you?

Those are facts, if you want more information about a specific area or situation, give me a call at 973-4532.

There is a saying goes, one man’s loss is another man’s opportunity. How true that is in today’s real estate market. As tragic as this whole loan debacle is for so many of our neighbors, if you’re in the market to buy, you should be licking your chops.

Let me give you some examples from the elk Grove area. There is currently a home listed at $190k that sold in. 06 for $377k. It's a nice 3 bedroom, 2 bath home and with 100% financing (FHA with seller concessions) you can have it for about $1400. per month. My guess, is that you probably would be paying that in rent in today's market. And if you're an investor, with a modest down payment, you would be in a pre-tax break even situation in most cases with these prices. As always, run the numbers by your accountant or tax professional to make sure they apply to your particular situation.

There is a pending sale with a list price of $269,000 that sold in 05 for $455k. That home with 3% down would have a monthly payment of approximately $1900. per month including 6% interest.

I am putting a home on the market for $275k next week that sold brand new in early 04 for $336,000. The seller added thousands of dollars in improvements to the home on top of that. Again, with today's fully amortized loans and modest down payments, you can own a home for pretty close to what you are paying in rent. These values are repeated all over Sacramento.

Add to that interest rates in the high 5’s and low 6’s what are you waiting for? Call me at 973-4532. I would like to discuss what you are looking for and what kind of investment and monthly payments would be involved in either buying a home for you to enjoy or adding to your investment portfolio.

Eric Hogue will tell you, when you sit down with me, my main focus is you & what’s best for you. Let me put my years of experience to work for you and prove that experience is not expensive, it is priceless! Again, my number is 973-4532.

NBC news did piece this weekend on the latest foreclosure scam? I heard about this a few weeks back, so it’s great that it’s getting national exposure. Companies are popping up all over soliciting homeowners who are behind on their mortgage with a walk away service. They have a large package of paper work that the homeowner must complete; in some cases they actually have the homeowner deed the property over to the company and they charge the homeowner fees of between $900. and $1500. They promise to handle the paperwork to allow the homeowner to walk away with minimal hassle and get a fresh start. Keep in mind, if you do a deed in lieu of foreclosure with your lender, you can walk away with about the same amount of hassle and damage to your credit report and it costs you nothing.
Once the homeowner moves out, they rent out the properties pocketing the rent. At the same time they often work on selling the property with a short sale, but if that’s not successful, they do nothing to negotiate any form of settlement on the loans. That means that the homeowner is often at risk of having a deficiency judgment show up within the next 4 years against them. These judgments start the agony of paying for the house they walked away from all over again.
Many of these companies are making millions and providing no real additional benefit to the homeowner. Sadly, NBC reported that what these companies are doing is not necessary illegal because of the disclosures hidden in the paperwork the homeowner completes. It reaks of more of the same smoke and mirrors that got unsuspecting homeowners in trouble in the first place.

Folks, you need to work with someone you know. Coldwell Banker is a name you can trust & I have been with them for over 22 years and in the real estate business for 39 years. I have been associated with Eric Hogue for 5 years. So give me a call at 973-4532 and let me put a real plan of action to work for you. In my plan, we guide you to explore all your options so you can choose the one that's right for you. Working with a mortgage resolution specialist, we provide you with a full package which includes allowing us to negotiate a short sale with your lender. However, you remain the owner and in full control of your ultimate destiny. We provide a referral to legal and tax experts to make sure you consider the option of bankruptcy. Additionally, we guide you to negotiate with your lender in an attempt to get your lender to rewrite your loan and stay in your home. We do this for no money up front.

So, again, give me a call at 973-4532. Remember, experience is not expensive, it is priceless!

The number one course that most homeowners who are in trouble are taking is foreclosure. Up until recently it was considered not much different than a short sale in how it would affect your future credit worthiness. However, that is now changing.

Lenders have recently issued a change in the direct underwriting guidelines making a negotiated short sale far less damaging than foreclosure. They are also rating foreclosure by whether or not it is due to mismanagement of funds or if the borrower has documented extenuating circumstances. Not only will it take longer to get a home loan approval if you have a foreclosure, but it will also require a substantially larger down payment.

There are other dirty little secrets that most homeowners are not aware of when they just give up and walk away are:

1) Many times they really are candidates for Bankruptcy due to the total debt they are carrying. If they allow the foreclosure without getting sound advice from a legal expert, they may limit or eliminate their ability to file for the much needed debt relief that bankruptcy was designed for and offers to help them get a truly clean start.
2) The homeowner or property owner also needs to have good legal and accounting advice to determine how their debt forgiveness which is determined by how large a loss the bank takes will play into the taxes they may owe as a result of the foreclosure. If the loan they have is a purchase money loan (the loan used to purchase the home), then the new law that was recently passed may exempt that tax penalty. However, if the property owner refinanced the property, then the debt forgiveness is likely to be taxed unless the property owner can prove insolvency. You really need to have a good tax accountant look at your situation before you start down that path. It might be far cheaper to bite the bullet and continue to make those payments if the property owner has other assets.
3) If your loans are in the form of a first and a second and they are not considered purchase money, when the foreclosure takes place what normally happens is that the holder of the first mortgage forecloses wiping out the second lien holder. That second lien holder doesn't just go away under most circumstance. They actually have 4 years from the last payment to file a new judgment against the borrower. We are finding that several things are taking place in real life with regards to these loans. The lien holder is not filing right away. The theory is that if they do, the property owner may then file bankruptcy which would eliminate that judgment. They are instead waiting about 3 years watching the borrower's credit and debt situation and when that borrower has worked their debt level down they file the judgment. It makes for a very unpleasant surprise. And, if that is not bad enough, in many cases, those loans are actually sold to collection companies for a significant discount and the debt collectors are pretty ruthless.

So what is the answer? Get good legal and accounting advice the minute you know you are heading towards trouble. I have said many times there is no easy way out of this mess. But if you are going to take a hit, possibly lose your home and damage your future credit, have a plan that is the lesser of all the evils.

As stated in yesterday's Real Estate Minute and the corresponding post, I have teamed with a mitigation specialist. Together we will work to help you talk to the right experts, negotiate with your lender and find the best solution possible for your set of circumstance.

If you are one of those who are in trouble, make the no obligation call to me right away. Your call will be treated with compasion, dignity and in confidence. The number is (916) 973-4532. Don't risk this very important matter to anyone but a pro! Remember, experience is not expensive, it is priceless!

This week we have been talking about the crises in the real estate market. One of the options for those who find themselves either upside down or unable to make their payments or both is to sell their home on a short sale. A short sale is when the net proceeds from the sale of a home fall short of paying off the loans against that property.

It requires the co-operation and approval of the lender and up until recently they have been very difficult if not impossible to deal with. Many sellers have found that the process is painfully slow and frustrating. Lenders will not commit to an approved short sale until the seller submits a full package and an accepted offer. Then it still often takes months to get an approval. It has not been uncommon for a buyer to get tired of waiting and to withdraw before the lender renders a decision. And, in many cases, if the seller has stopped making payments, the property ends up being foreclosed on in the middle of the short sale attempt. However, with foreclosure and bank losses on the rise, the lending industry is now more receptive and is looking at short sales as a smarter business decision.

However, it's not a free lunch. You must qualify for the debt forgiveness by proving a hardship. What is a hardship you might ask. It means you for whatever the reason, do not have the means to either continue making the payments or paying the difference between the net proceeds and the loan balance. In some cases, the lender after reviewing the seller's financials will require a partial contribution from the seller in order to approve the short sale.

It is a complicated process and requires a real pro to pull it off. That's why I have partnered with one of the best loss mitigators in the business to make sure my clients have a real shot at a successful outcome. Together we approach the short sale on a multi-pronged attack.

1) We help you by providing an initial package that is pretty universal as far as obtaining and meeting the information required by most lenders. With that information and your release to work directly with your lender's "work-out" department we put together a package that has a far better chance of being approved once we get an offer.
2) We price your home very competitively. Lenders will not even discuss a short sale in terms of acceptable numbers until they see an offer.
3) At the same time we are working on the short sale, we guide you to help you negotiate with your lender to see if they will re-negotiate your loan and stay in your home should that be your desire.
4) We give you a referral to a bankruptcy attorney for a consultation to determine if filing bankruptcy would be a better alternative for you. Also, should we not be successful in getting your home sold with a short sale and you are facing foreclosure, bankruptcy may be an important consideration. It all depends on the loans you have that are subject to a foreclosure.

Don't trust this very delicate process to just anyone. Give me a call at 973-4532 and let me show you that with 39 years in the business, experience is not expensive, it is priceless.

If you cannot continue to make your payments or feel your situation is hopeless, do not put your head in the sand. There are some real remedies that I can help you with. And the consequences of not acting are substantially worse than if we get working for a solution right away. What are those solutions; that depends on what out come you are hoping for.

Do you want to try and stay in your home? Are you trying to sell but are upside down? Are you behind on your payments and are in fear of losing your home? The solutions to all of these questions really starts with that call. So pick up the phone and call me at 973-4532.

We will discuss where you are in your situation, and identify your goal. Then we will discuss realistic options and the consequences. In most cases, it is in a client's best interest to approach their situation with a multi-prong plan of action. We start with a mitigation application package. I have partnered with a very experience mitigation company. We have the package to complete to present to your lender to start working on that mitigation. Our goal will be succeed with your desires. But a lot depends on the type of loan you have and your personal scenario. I am not promising that I can undo all that has been done, but our goal will be to get you the best possible resolution given your individual set of circumstances.

If you give me the opportunity, I promise you that I do care about you, your money and your dignity as much as you do and will put my 39 years of experience to work for you and prove Experience is not expensive, it is priceless.

Okay, you have one of those loans……your payment’s gone up……your loan balance is higher than your house is worth…..what do you do? Where do you turn?

A lot depends of the type of loan you have. If it’s the loan you used to buy your home, (Called a purchase money loan) it usually makes a real difference. However, if that loan is actually two loans in the form of a first and a second, then a lot depends on what type of loan that second is. Is it really a line of credit secured with a deed of trust to your property? If so, they have different rules for debt collection than a true second. It the loans that are causing you this heartburn were placed by refinancing, it can really complicate things even more. Are you really confused and overwhelmed? You’re not alone. Again, where do you turn?

It's really important that before you make any decisions you truly know what you are dealing with. It is also important to know what outcome you would really like to have. If you could waive a magic wand and fix the loan, would you like to stay in your house? Or because you feel you are so far upside, you just want out? Or, are you needing to move for work or other reasons, but find yourself not able to sell? Are you thinking about just walking away out of frustration? Are you considering selling with a short sale? Are you aware of the possible tax and credit consequences of either move? And have you considered whether or not your best course of action would be bankruptcy?

I am here to offer you a trusted haven to sort things out. Eric Hogue will tell you, before I make any recommendations, I’ll counsel with you, asses your situation, and offer suggestions that I feel are in your best interest. Point in fact, during the last year I have actually helped dozens of clients find solutions without selling. I am willing to spend some time with you with no strings attached to help you find the right solution for you. So give me a call at 973-4532. Let me put my 39 years of experience to work for you and prove “experience is not expensive, it is priceless!”

Greetings!

I want to tell you how excited I am to have Eric Hogue back doing what he does best and how honored I was to be asked by Eric personally to bring the Real Estate Minute back to his show!

In speaking with Eric this morning, he confirmed that one of the hottest political issues as we enter into this President Election year is the economy and the housing crises. Eric and I would like to work together to bring you information in the Real Estate Minute and this blog to address issues and concerns, answer your questions and hopefully guide you to real solutions.

We will be thoroughly discussing what to do if you are one of the many who find yourselves in a pickle with your home value vs. loan balance and loan payment. So, if you're one of the 7% of homeowners who fall in this category, what do you do? Do you feel overwhelmed? Are you considering just walking away, or do you want to explore your options? We will explore short sales and what their benefits might be. We will discuss the truth about foreclosure as an option and the ugly secret the banks do not want you to know that can rear it's ugly head again down the road. We will offer you help in negotiating with your lender to work with you to stay in your home. And we will also discuss the consideration of bankruptcy as a solution to your loan and housing woes. Now keep in mind that I am not an attorney or an accountant so I will not be giving you such advice. However, I will be pointing out all the options that I know of and offering you the resources to get sound advice from experts, not well-meaning friends or co-workers around the water cooler.

And then, we will explore the silver lining this dark cloud has. For some of our listeners, we will be discussing if this is the right time to sell. While most of the press has been devoted to the "mortgage meltdown" a market like this often times offers the perfect opportunity for the move up buyer and the investor looking to add more real estate to their investment portfolio. We will explore some of the unbelievable opportunities out there for consideration!

But, what we really want is to hear from you and your input as to what you would like us to cover in the weeks and months to come. So take a minute to give us some feed back.

And, as always, if you're looking for an agent who cares as much about you and your money as you do, give me a call at 973-4532. Let me put my 39 years of experience to work for you and prove, Experience is not expensive, it is priceless!