131 Millrich Dr.  this Los Gatos house sold for nearly 1% less than the asking and 411 Clearview Dr., a townhome, sold for nearly 5% over the listing price !

A reminder that ‘sweet spotting’ your asking price will always pay off.

The good news….neither property was a short sale.

2 Los Gatos Houses sold this week,

131 MILLRICH DR, Los Gatos 95030 (Los Gatos)Single Family Home 3 bed(s) Baths: 4|1 bath(s)   SqFt: 2,593  Lot: 9,100 sq ft

List Price: $1,449,000     Sold Price $1,332,000.00

______________________________________________________

411 CLEARVIEW DR, Los Gatos 95032 (Los Gatos)Townhouse  3 Beds, 2|1 Baths:  SqFt: 2,122 Lot: 2,220 sq ft

List Price: $749,000 Sale Price: $780,000

Assoc. Fee: $428

We see a crossroads ahead…one where the buyers in the Los Gatos Real Estate Market aren’t in the driver’s seat.    Could this mean the homes for sale are in a Seller’s market?

Remember…

Spring is coming and the end of the $8000 First time buyer’s credit is there waiting.   I wonder if will  lead to more vigorous sales?…bidding?

Rismedia reported this weekend…

The Department of Housing and Urban Development (HUD) said it’s taking a closer look at 15 mortgage companies to determine why they had such high rates of problems with FHA insured mortgages.

Can I answer that?  Lending to anyone who could fog a mirror tends to do that.    I told you Fannie Mae was getting a spanking before this new investigation.

“Each loan on this list will be thoroughly examined and we will track down the reasons why it failed. Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted, we are watching very carefully and that we are poised to take action against bad performers,” Donohue said.

I wonder if this has anything to do with the fact Fannie Mae is approving foreclosure without notifying banks.

I don’t think Ken Donahue has tried to actually apply for a Home Purchase loan lately.  In our local Los Gatos and Santa Clara County Real Estate market it is very difficult.  The symptoms have passed.

I am glad to see someone is checking up, but if it does not relieve distressed markets,  DON’T BOTHER!  It’s  glaringly obvious focus on future Real Estate recovery measures, rather than looking back,  is the best medicine.

Below are the companies that received subpoenas from HUD’s Office of Inspector General:

-First Tennessee Bank N.A., Memphis, Tenn.
-Alethes LLC, Lakeway, Texas
-Security Atlantic Mortgage Co., Edison, N.J.
-Pine State Mortgage Corporation, Atlanta.
-Birmingham Bancorp Mortgage Corporation, West Bloomfield, Mich.
-Alacrity Financial Services, LLC, Southlake, Texas
-Assurity Financial Services, LLC, Englewood, Colo.
-D and R Mortgage Corporation, Farmington, Mich.
-Webster Bank, Cheshire, Conn.
-Mac-Clair Mortgage Corporation, Flint, Mich.
-Americare Investment Group, Inc., Arlington, Texas
-1st Advantage Mortgage, Lombard, Ill.
-American Sterling Bank, Independence, Mo.
-Sterling National Mortgage Company Inc., Great Neck, N.Y.
-Dell Franklin Financial LLC, Columbia, Md.

I bet these companies end up walking away from the testimony with more bailout money.  Want to bet?

The new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period.

what you can and cannot deduct as a homeowner

Get your taxes done FREE

Great short Video Explanation of Credit

Loan servicers may be required to reimburse Fannie Mae for a loss if it turns out the original mortgage on the home did not meet its eligibility or underwriting requirements.

Fannie Mae previously allowed servicers 15 days to turn over loan files for review if there was a question over whether a mortgage on a repossessed property met Fannie Mae’s requirements. Loan servicers then had the option of trying to find a better offer for the property or buy it themselves rather than reimburse Fannie Mae for any loss.

To speed up sales of foreclosed properties, Fannie Mae says after beginning the property disposition process by obtaining opinions on the market value of a repossessed home and listing it with a real estate broker, it may now accept a purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review.

“If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the lender will be required to fully reimburse Fannie Mae for its loss,” the company said in a bulletin to loan servicers.

In its most recent quarterly report, Fannie Mae said it had 72,275 REO properties on its books at the end of September, up 7 percent from a year ago. The company acquired 98,428 homes through foreclosure during first nine months of 2009 — 40,959 in the third quarter alone — and sold 89,691.

Fannie Mae’s sister company, Freddie Mac, reported REO inventory totalling 41,140 homes at end of September, up 46 percent from a year ago. The company acquired 24,375 home during the quarter, and sold 17,941.

In its most recent monthly summary, Fannie Mae said the serious delinquency rate (loans three or more months behind in payments or in the foreclosure process) on single family home loans it owns or guarantees jumped to 4.98 percent in October, up from 1.89 percent the same time a year ago.

Additionally, Freddie Mac’s single-family portfolio delinquency rate rose to 3.72 percent in November, up from 1.52 percent in November, 2008.

This may increase foreclosure activity in the near term and help get this housing issue off the news block.

A) We all know that pricing is the most important part of marketing your home for sale.

B) A willing buyer and seller are key to executing a sale and buyers set market price for everything.

Right? Not so fast.  We have experienced a climate change in the entire real estate market specifically, Los Gatos and comparable San Jose neighborhoods.

Today, the appraisal has become a problem for some.  Just look at Los Gatos  homes for sale they are like a floating iceburgs…. some underwater.  The appraisal issue has created some warming and chilling.  Why appraisals? It’s called HVCC (Home Valuation Code of Conduct).   Basically, it means a buyer’s lender will have little, if any, persuasion in the appraiser’s valuation.   Cooling home prices and heating up debate.

When the Poole family wanted to make an offer on a home recently they were surprised I suggested a number much lower than the listed price.  It was obvious to me the home was poorly priced.   Due to the HVCC issue the appraisal came back even lower!  This was great news for us and terrible news for the seller.

Appraisals are now ordered and obtained through appraisal firms who then distribute the appraisal orders to their list of appraisers. The chosen appraiser may not be familiar with the Los Gatos Real Estate market, the surrounding neighborhoods in Cambrian or the broader San Jose Real Estate Market that they are being asked to evaluate.  Real climate change.

Should you ask your Real Estate Agent to provide a market analysis to help set a Los Gatos ‘market price’ for you?  Yes, but not any “agent” will do anymore.

In the end the appraisal will make or break the pending sale.

A market analysis report provided by an agent is derived from the MLS and misses a few appraisal factors as part of the equation.  Alternatively, an agent who provides BPO (broker price opinion) to lenders will have experience using a more accurate formula as opposed to an ordinary agent’s market analysis.

Lenders order BPOs from qualified Broker/Agents, as an analysis tool,  for refinancing, loan modifications, short sale approvals and foreclosure pricing.   Using a Broker/Agent, who is qualified to provide lenders this kind of  information is a better choice.

So what do you do?

• Interview several Realtors to help you ‘range’ your price.
• Request contact information from their past clientele.  Not simple ‘textimonials’.
• Choose one who provides 3rd party resource material as part of their pricing quote.
• Try to find a Realtor who is a BPO provider and request their BPO documentation that supports their familiarity with your neighborhood.

Using these simple tips alongside a common sense marketing approach will help you price your home realistically.  Remember,  the appraisal will ultimately define the selling price and it is of enormous importance to get it right from the start.

How would you feel if you accepted a “pie in the sky offer” to only have the buyer’s lender not grant loan approval?  You would probably go off like Mt. Vesuvius and that won’t help the climate change debate.

I can give you a value

23 mistakes you better avoid

Realtors Lie?

I don’t know how sexy insulation is, but with tax season coming it is a very good time to plan ahead for spring.  If you do it right you could get a few ‘sexy’ bucks from Uncle Sam.

If you are planning to do a remodel project take time to plan.  I know, how else would you do it?   I am talking about planning what materials and products you and your contractor are going to use.  Don’t forget to get a permit if the cost of improvement  exceeds $1000.

The San Jose Planning Dept. has reduced staff, so start the process early.

If someone offered you free money wouldn’t you take it?  Well, the IRS is here to do just that.   When choosing your materials and products be sure they qualify for a the  new energy rebates.

With all the short sales and foreclosures it has become fashionable to remodel your existing home rather than try to sell and move up.  This is the case in Los Gatos and most of Santa Clara County, lately, and will likely increase over the coming Spring months.

The product specs here are what you’ll need when shopping.   Remember to take it with you they are technical and easily forgotten.  Especially, if you are easily distracted by power tools and paint sample displays.

realted articles

Remodel advice/opinion

sell or remodel  hmm.

why wallpaper?

The median price of a home sold in the county rose 9.9 percent compared to a year ago to $494,400 in November, according to MDA Dataquick, the second straight month of year-to-year increases.

The number of homes sold also rose 47.2 percent to 1,649 in Santa Clara County.

“The latest stats show just how much the Bay Area market has changed in a year,” said John Walsh, MDA DataQuick president.

The question I hear most is…”Has the market bottomed out?”

If this price trend continues for another quarter I will answer with a firm, yes.   For now,  let’s agree that the prices are not falling and the inventory is very low especially,  in the Los Gatos Real Estate Market.  This usually means higher prices, not to mention, the low 4.8% 30 year fixed mortgage rates available.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,639 last month, down from $1,665 the previous month, and down from $1,695 a year ago reports Dataquick.

That’s 52.2 percent below the current cycle’s peak in July 2007.   What a steep slide.  It’s true that more streamlined Short Sale process will balance the severely discounted REO closings to help further the trend too.

Looking forward to 2010?

related stories

Fannie Mae needs help

2008-2009 chart

Fixer Upper Fix

Selling your home because it’s a non performing asset?

Zillow is here to help.

I often compare the short selling of homes to the selling of stocks that are not delivering a fair dividend.   How does that cause a rental market you ask?

This is what’s happening…

The surge of interest in rental properties is due to the decline in housing values.  This is causing so many homeowners to walk away or to attempt a short sale of their homes.   The Los Gatos  Rental market is a glaring example.  Have you tried to find a rental here?    Those upside down sellers need housing and are searching for rentals in large numbers

It is fair to say Zillow has found a new product to peddle.

We can only hope that the lease prices are more accurate than the terrible performance of their “Zestimate” which, arguably,  has not shown to be very accurate.

Their rental zite (yes zite as a play on their ‘z’ nomenclature) provides mapping too.  If you have any experience with the search engine or results I am interested in hearing your opinion.

The rumor several banks have agreed to streamline short sales is true and will certainly make the spanking a light one.  How do I know?  When I inquired why my calls were not being returned, for a few days in October, contacts at BofA told me they were being trained for a new program to expedite…something.

This ‘something’ has something to do with…

• What affect Loan Modifications have on Fannie Mae
• How does streamlining  Short Sales make any sense
• What is a  Shadow Inventory?
• How does Macro Economics play a roll?

Foreclosures are Down

From RealtyTrac.…“November was the fourth straight month that U.S. foreclosure activity has declined after hitting an all-time high for our report in July, and November foreclosure activity was at the lowest level we’ve seen since February,” says James J. Saccacio, CEO of RealtyTrac. “Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded home-buyer tax credit, are keeping a lid on the most visible symptoms of the nation’s ailing housing market — foreclosures and home value depreciation.”

But!  Loan Modifications are Failing

True, the temporary loan modification program just ended…opening the door for permanent modifications.   That is if the temporary loan mod payment schedules were met by applicants,  Right?   Yes.  That is not what is happening though.   After the inexcusable delays, lost documents and lack of communication borrowers are giving up on this failed theory.   Fannie Mae (may) be looking at a nasty spanking through increased foreclosures if alternatives aren’t implemented.

Shadow Inventory Myth or Fact

Have you heard the term  ‘Shadow Inventory’ (SI)?  The belief that banks have tons of foreclosures?  Keeping them in the ‘shadows’ as inventory?   It’s true but, not the conspiracy many have theorized.  I know of several cases where people are several months past the default deadlines and still have not heard from the Sheriff (meaning they have not been officially foreclosed on in practice).  This is one way a  shadow inventory is created.

Taking into consideration that modifying loans will not help those who can’t afford their payments, unemployment numbers comes to mind,  it makes perfect sense that an expedited short sale process is the best solution.

Short Sales -  The Next Best Thing to a Spanking

Since Short Sales net more money than REOs (foreclosures) it is reasonable to expect banks to promote them by doing… something like this.

Fannie Mae insures many mortgages and subsequently gets spanked for the losses following low net REO sales.

note: Watch for legislation changes next year.   Fannie Mae holds an enormous amount of political  leverage and the mid term elections are coming!

Removing the stigma that foreclosures place on the market, through short selling,  stabilizes prices, reduces shadow inventory and improves the outlook as a whole.   Perfect!  download FHA short Sale Guidlines PDF

Macro Economics…my tiny brain version

Since you have read this far let me create a ‘big picture’ with my tiny brain.    Banks are myopic to the degree that they are in the business to make money.    Looking at Real Estate as being a single issue for the banks,  makes us myopic.

A Real Estate investment is the single largest investment a person will make. When it fails to produce dividends (equity) it affects ones entire financial situation. This is no less true for banks.

Think about it..not only mortgages…they are battling delinquent credit cards, bad car loans, signature loans etc..  All leading to huge losses and fewer potential investors.  The banks see what is on their horizon and are working to prevent it at all ‘cost’ (or loan from the taxpayer).  Better save that for another time, so…

Fannie Mae (may) get a spanking, but it may be one of affection rather than discipline if the foreclosure fears are relieved.  This can ONLY be done through the streamlining of short sales.  Think I am wrong?  Don’t bet on it.

related articles

Only 4% get long term help

Mortgage help coming slow to many

Back taxes Plague Loan Mods

No Jobs!  No Deal!

The purchase of a fixer-upper house is often a catch-22 situation, because the bank won’t lend the money to buy the house until the repairs are complete, and the repairs can’t be done until the house has been purchased. Fixing up your new house is a costly idea in Los Gatos, San Jose and the whole Bay Area, really.

HUD’s 203(k) program can help you overcome this cost obstacle by enabling you to purchase or refinance a property plus the cost of making the repairs and improvements in one mortgage.

Dian Hymer of Inman News suggests “design your offer with a 60 day close and a 45 day finance contingency.”

The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to persons wanting to occupy the home

The 203(k) loan includes the following steps:

1. A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with his/her real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
2. The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.
3. The appraisal is performed to determine the value of the property after renovation.
4. If the borrower passes the lender’s credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.
5. At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
6. The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.
7. Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property.

Dian Hymer of Inman News suggests “design your offer with a 60 day close and a 45 day finance contingency.”

Now,  what are you waiting for?   Call your Realtor and find a fixer..Quick!