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

The Haitian earthquake reminded me of the 1989 Loma Prieta earthquake and how hard it hit Los Gatos.    I was lucky no one I knew was hurt.   I only had to fix a cracked coupling on my grandmothers gas pipe in the Carlton Meadows neighborhood where she lived.

Think ahead!

I added a couple of links below this post to help you obtain the items discussed here.

‘Safe Up’ your home by addressing these 10 things.

1. Make sure shelves are fastened securely to the walls.
2. Place large, heavy objects on lower shelves or on the floor. They might fall. You can also screw them onto things, such as on desks.
3. Place breakable items (bottles, glass, china, etc.) in closed cabinets that have latches. Make sure to board them up so that the cabinet doors won’t fly open.
4. Heavy pictures and mirrors should be hung away from beds, couches, and anywhere that someone might sit.
5. Overhead light fixtures should be braced to prevent falling.
6. Evaluate your electrical wiring and gas connections and repair if needed. During an earthquake, these can become potential fire hazards. Additionally, turn them off and unplug them, so the outlet is not neat the metal part of the cord.
7. Secure your water heater by strapping it to wall studs (not just the drywall) and bolting it to the floor.
8. If you have any deep cracks in the ceiling or foundations, repair these immediately. You might need to consult an expert if there are signs of structural weakness.
9. Store flammable products in closed cabinets with latches on the bottom shelf.
10. Prepare a Grab Bag

Have you ever watched a spy movie or the TV series “24″?

Every good spy has what is called a ‘Grab Bag’.  This is a bag you can grab on the run in an emergency.  Your Grab Bag should have these items in it.  If one bag is too heavy have 2 or put heavy stuff in your car trunk.

Gather these  disaster supplies to place in your ‘Grab Bag’.

1. Flashlight light with extra batteries (preferably one for each individual)Portable, battery-operated radio with extra batteries
2. Purchase and use “Self Powered Radios” and “Self Powered Flashlights”. Batteries will be hard to find, if you can find them. Some models will charge cell phones, but the cell phone towers may be damaged, even destroyed.
3. Purchase and use “Glow Sticks”. These are SAFER than candles, since you will be dealing with ruptured gas lines, flammable, explosive gas.
4. First aid kit and manual
5. Emergency food and water (some sources say you should have up to 2 weeks worth of extra food on hand in case rescue workers cannot reach your location)
6. Nonelectric can opener
7. Essential medicines
8. Cash and credit cards
9. Sturdy shoes for each family member

Home Survival kits

Car Earthquake kits

If you have been reading my Los Gatos Real Estate musings you already know that since the program was announced in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people, but has largely failed to provide lasting relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

This fact that credit scores are affected by modifications boils my brain!  The program was meant to help!   In fact, it is hurting too many people.   How are you going to rent or lease a new home if your credit is injured?

How does renting become a component of the problem?   Selling the subject property will become the only option if the modification does not become permanent.   Where is one supposed to live?

In a rental probably.

This introduces a troubling fact of reality for troubled homeowners.  Having to sell their home.  Most will find they are going to have to apply for a short sale approval, some will be confronted with foreclosure or submitting a deed in lieu of foreclosure.   All very unattractive options and all very real.

To those of you in the midst of this debacle I would suggest you speak with a Realtor or a Property Manager as soon as possible and make inquiries as to how you may secure a property before this ridiculous negative credit reporting causes a new layer of frustration for you.

related article…

Loan modification document links

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.

The median price of a home in California experienced its first year-to-year gain in over two years during the month of November, as the California housing market continued recent trends in terms of prices, supply, and sales. The monthly median price crossed the $300,000 threshold in November with a median of $304,520, up 2.4 percent from the October median price of $297,500 and up 5.8 percent from $287,880 a year earlier. The situation has improved greatly from a year ago during the worst of the financial crisis, when the median price had registered 41.3 percent year-to-year decline.

This supports the conclusion

After a 59 percent peak-to-trough decline, the California median price has increased 24.1 percent from a trough of $245,170 that occurred in February 2009.  The increase in price has been sustained by a combination of lean supply and high demand, the latter triggered by historically high affordability (See November article). By comparison, the NAR national median price for existing single family homes, which experienced a 29 percent peak-to-trough decline, has increased by 4.7 percent from its trough of $164,200 in January 2009 to $171,900 in November 2009.

This has been obvious in the Bay Area market, especially affluent areas such as Los Gatos and Cupertino.

Nine consecutive month-to-month increases in the California median price have been the result of the lean inventory conditions throughout the year. The MLS-based unsold inventory index for California has averaged 4.8 months since the start of the year, well below the 7 month long run average. (See the October article for an analysis of the relationship between MLS-based unsold inventory, defaults, and foreclosures). By comparison, the national unsold inventory index for single family homes has averaged 8.4 months over the year. Inventory levels in both California and the US have trended down for most of the year.

As for sales, California returned to pre-peak levels of sales in late 2008 and sustained them throughout 2009. With sales of 536,720 homes in November, the market was 4.6 percent lower than the October sales figure of 562,400, but 4.7 percent above the November 2008 figure of 512,840. Sales throughout the year have averaged 545,600, compared with the pre-peak monthly average over the 2000-2002 period of 537,300 homes. Over the 2000-2002 period, US sales of existing homes averaged 4.8 million homes, compared with the low- to mid-4 million range of sales that the national market experienced from late 2007 until late this year when sales

The year-to-year increase in the California median price is the latest sign of turnaround from the dire circumstances facing the statewide housing market a year ago. Its foreclosure problems notwithstanding, California’s housing market appears to be ahead of the national market, both in terms of hitting bottom and in demonstrating important signs of market stability and improvement.

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?

In Real Estate we call it a Short Sale.   Alternatives are bankruptcy, foreclosure or granting a deed in lieu of foreclosure. I prefer a mortgage short sale.

Does your home resemble a non-performing asset?

The Basic steps you will need to accomplish The Short Sale process Start here.  Execute these simple steps and successful negotiations will follow.

First what is a short sale?  Here is the short sale definition:

In ”short”, a shortsale is when the lender agrees to settle the debt owed on the property for less than the full amount of the debt. In most cases “Settled” means the lender writes off the debt. You usually will receive a 1099 after a short sale for the amount of debt forgiven. The bank is agreeing not to go after you for the money they lost by filing a deficiency judgment in the future. The exception is the HELOC loan where they reserve the right to file a default judgment.

Step 1

Contact your mortgage lender. Don’t just call or email customer service or the “loan work out” department. You need to speak with the manager of the problem loan department or another individual who has the authority to approve a short sale request.

While mortgage lenders can be sympathetic to these problems, they are never anxious to allow a short sale. If you are uncomfortable in this role, let your lawyer or Realtor negotiate with your lender.   This article clarifies the latest trends.

Step 2

Write a letter authorizing your mortgage lender to disclose your loan information to real estate agents, lawyers, title companies, or other interested parties. Your loan information is subject to privacy laws so your lender needs your written authorization to release this data to anyone.

At a minimum, this letter should include the property address, your name, your loan number (or other identifying data), and, if appropriate, a list of the parties for whom you wish this information to be given.

Step 3

Compile some preliminary financial information (sometimes called a “Net Sheet”) about your prospective short sale. A HUD 1 can be produced by your local  Title Company. It should include the expected sales price and all costs that might be attached to the sale, including your current unpaid loan balance, payments due, real estate commissions, and loan or other fees expected to be payable.

If you’re unsure how to create this document, your real estate agent, lawyer or advisor should be able to produce it for you in collaboration with a local Title Company at no expense to you.

Step 4

Write a serious “hardship letter“, detailing all the surrounding events that have occurred to cause you to arrive in this financial situation. Explain your economic problems honestly and directly ask your mortgage lender to accept a less than full balance payment. While the more dire your circumstances, the better the chance your request will be granted, you should resist the temptation to over dramatize your situation. A concise explanation will be most acceptable.

Step 5

Write up a statement of your current income and all of your other assets for your mortgage lender to evaluate.   This step is usually helps the Lender identify assets to help pay down their loss.

List your other assets, including bank accounts, stocks or other investments, additional real estate, and anything else of value. This information should support your assertion  that you have neither the income nor the assets to repay your mortgage loan in full.

You will often be asked to submit the last 3 to 6 months’ bank statements, also. Your mortgage lender will examine these to learn if there are recent large cash withdrawals or high numbers of checks clearing your accounts. Lenders want some assurance that you haven’t been hiding or diverting funds that might go to them.

Step 6

Compile a current market analysis of real estate sales in your area to emphasize the wisdom of your request for a short sale. This document should show the selling prices of similar homes in your area for the past 3 to 6 months.  In rural areas, with little or no sales activity, a 1 year history will be acceptable. You should also include some similar properties currently for sale in your area.

During times of market value declines, short sales become more “popular” and this comparative analysis again reinforces the need for you to request this consideration. If you’re unsure how to create this analysis, your real estate agent can prepare this document for you.

Step 7

Next?   An interested (patient) buyer is all you need. After you reach common ground with a potential buyer, deliver a copy of your proposed Letter of Hardship Letter, Authorization to Communicate with Third Party, Purchase Agreement, Listing Agreement, MLS Property Report, Hud 1, to your mortgage lender.

Your Realtor should assist you at a very  high level here. They will want to examine the price, terms, and other conditions in the document.  Don’t be surprised if your lender attempts to renegotiate (downward, of course) some features, like real estate commissions or other financial considerations you’ve made.

Assuming your lender accepts the agreement, you can then proceed to bring your short sale to fruition. This is a test of patience for many. If you have hired a Realtor experienced in Short Sale transactions this process will go more smoothly.

download new FHA short sale guidelines

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