Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

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part 2

cont. – Start out on right foot. Trust begets trust. Only hire a Realtor you have every confidence is representing your best interests.  Be realistic and above all forthright.  Remember trust is earned.  The agent with the nice personality or “my friend’s friend”  isn’t the answer.   Every person who has been taken by a schiester says “…but they were such nice people.” Well, of course they were!  You wouldn’t give your money to an obvious ‘Vampire’ would you?

That darn Barry Madoff comes to mind.  Yuk!

Don’t run out and buy a box of  rope of garlic!

Note; refer to this list when considering who you should work with:

• Are they easy to contact?  Are their responses timely?
• Do they provide a list of past clients?
• Can I access a 3^rd party source where I can learn more about them?
• Do they possess the skills and principals required to work for me?
• Does their track record support their claims of success? …more

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Have you noticed?   Most markets are experiencing a price stabilization, however there are price reductions being made even as late as October.    43% of homes listed in 27 major markets saw price reductions of  $24,781 dollars.

From Rismedia:

Other highlights of the brokerage’s monthly survey of price reduction data include:
-Miami-area (Ft. Lauderdale/Palm Beach) homeowners reduced list prices by the largest percentage at 15.7% or $40,000 on average
-Homeowners in Raleigh-Durham reduced prices by the smallest percentage at 4.6% or $11,000 on average
-Of the markets studied, those with the highest percentage of price-reduced homes are Jacksonville (50.9%), Orlando (50.1%) and Chicago (50.1%)
-Markets with the lowest percentage of price-reduced homes are Denver (31.1%), Los Angeles (33.6%), Sacramento (36.4%) and San Diego (35.7%)
-Markets where sellers have cut the most in absolute dollars are: San Diego ($54,000 median price reduction), Orange County, Calif. ($51, 000 median price reduction), San Francisco ($50,500 median price reduction) and Los Angeles ($43,000 median price reduction).
-As in September, Orange County had the highest median list price at $624,900. Jacksonville, Fla. has the lowest median list price at $172,000.

I love this video series…California from 1939

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jump to Part 2 of the series

If you have to ask that question then the answer is ‘yes’ your agent is probably lying to you. Notice I use the active ‘probably’?

In this series of articles you will learn:

• How to identify what is most important when choosing a Realtor.
• Why do I feel like a Deer in headlights?
• Learn if you chose a ‘Realtor’ or a’ Salesperson’
• What does Market price really mean to me?

There is a question every Realtor has been trained to use as an example to sell their service to a potential client. It goes something like this…

Seller/Buyer : “What is your commission on the sale?”

Realtor: “Well, my commission is one half of the whole – 6 or 7%”

Seller/Buyer: “Oh really? We only want to pay 5%”

Realtor: “If I were willing to give up MY money would you trust me with YOURS?  I am not willing to negotiate my commission”

Wow! The Seller/Buyer answer is a given.   “No  I wouldn’t trust you with my money”.  In sales you are supposed to get ‘yes’ answers… the psychological affect of this ‘no’ is actually an affirmation.  Makes sense, but doesn’t it make you want to grab the Pepto?

Let’s analyze the basis for the above exchange. The Seller/Buyer (S/B) is trying to get something from the Realtor and immediately the Realtor is trying to protect himself from them.  Could it be the S/B is trying to protect their self from the Realtor? Both are true and both are a natural human reaction when something is missing from the relationship. Trust.

This is a salesperson tactic using the ‘common sense approach’.  Politicians use it all the time.  When you are asked a question that you naturally say yes to, be cautious, you are working with a salesperson.   This should perk up your ears.  A salesperson wants yes answers for the psychological affect it will have in persuading you to make a decision that benefits them.  A Realtor will ask you questions that require more thoughtful answers.   Your thoughtful answers will create a working strategy the Realtor can use to help you get what you want.

If a Realtor feels it necessary to sell their services using psychological affirmation tactics, beware.   It is highly probable they have no inclination to do what it is you are hiring them to do.  That is…sell your home, strongly negotiating the price and terms that best suit your financial future and professionally manage the process the entire way.  This is not to mention the investment of time and resources the Realtor should be investing in marketing your home…not selling themselves!   Would you want someone that only focuses on themselves or someone who makes you their priority?

In a relationship where the Realtor is representing a Buyer there is no question of commission and the above scenario mentioned in Part 1 is meaningless. The Seller pays commission to both the selling agent and the listing agent 99.9% of the time

There are other Buyer:Realtor scenarios I will share in Parts 2 and 3.  Part 4 of this series is for experienced Sellers.   For now, I want to remind you that trust is the most important factor in the equation.

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650,000

That number represents 20% of eligible homeowners at least 60 days behind in their payments, according to the Treasury report. This is up from 16% a month earlier.

Despite the progress, housing counselors say the number of people falling into foreclosure vastly exceeds the ranks getting assistance. The number of filings hit a record high of 937,840 in the third quarter, according to RealtyTrac, an online marketer of foreclosed homes. That’s a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

The $75 billion Obama plan is “lagging behind the massive number of foreclosures that continue to pile up,” said John Taylor, head of the National Community Reinvestment Coalition.

But administration officials have said that the program, which was projected to help up to 4 million homeowners, is on track.  On Track?  Which track?  Becsude, if it’’s the ‘railroad’ track..we are in REAL trouble.

The above excerpt is from CNNMoney’s reporting and I have to say I don’t believe the Loan Mod scammers are going to go away soon enough for this to get markedly different anytime soon.

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By signing the new bill, President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion ..You may HAVE to pay it back!  Read On.

Who is Eligible

-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

-For married couples filing a joint return, the combined income limit is $225,000.

-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, Short Sale and foreclosures provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).

-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).

-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

So remember,  This is not for the short term buyer looking to make a buck.  It will be need to be repaid, upon the sale or transfer of title, at any time during the first 3 years.

Have you ever heard the term ‘a wet signature’?

Banks often want to see documents with the original signature called ‘a wet signature’  Often asked for when a notary was not required to witness the signature.    I have been using the Uniball 207 Gel Pen for over 5 years just for the slightly different color of the “ink”.  I had no idea it held a secrtet!!!!

The bank where you have a checking account..LOVES… this video.

Disappearing Ink Video

I usually go through several bubble packs a year.  You can probably get by with just a couple of these beauties!

I have no connection with the manufacturer or distributors..just wanted to give a consumer tip!

via Getty Images

Short Sales with Countrywide B of A WaMu JPMorgan Chase are going to become more relevant in the coming year. I just got off the phone with Bof A regarding a short sale I am working to a close.  Word has it the short sale departments, at many mortgage lenders, are expanding and preparing for a bumpy 2-3 years.

UPDATE: 12/09 Changes are being implemented, on-line submission is one interesting change.

It may change the outlook in the foreclosure market as these institutions become more aware of their losses with REO’s.  It is obvious they are learning that the Short Sale option is the better answer.

This B of A employee was quite talkative and shared a few things we all need to know.  Fannie Mae (the government agency)  is causing the most trouble for everyone.   I  do not want to absolve all short sale departments from some responsibility here, yet.   Similar to trying to open a bank safe without a combo the banks have seen massive delays and required information changes coming from Fannie Mae in the form of more…..’forms’.

Have you ever been flustered by those pesky government forms?  You may be sympathetic to the bank….I am not!  I want to call a department speak to a ‘person’ and get the business done…Do you agree?

I have read tons of material from people who claim to have the golden key to helping people with short sales.  The problem is that each and every bank and each and every home/seller is different.  There is no one golden key.

Short Sale departments receive over 100000 faxes a day and most of the specialists have  well over a thousand files each.  Hire more specialists ever occur to anyone?  Each person considering a short sale option has very different financial needs, assets and goals.  Not to mention, different mortgage companies.

It is important to know where and how to make your short sale more visible with the mortgage servicer and understand how people work.  Hiring a short sale professional is strongly recommended one with experience and a temperament to fit.

Do banks lie?  Yes and No. The contact numbers are constantly changed, staff is moved around and responsibilities are adjusted all the time from the client bank (the one who hired the servicer i.e. Wells Fargo).  The client bank delegates directives to the servicer to create guidelines used to gain their short sale approval.  Changing the rules of the game.  Is that lying?

This link takes you to my FOX News Interview broadcast Video

Being prepared for these guideline changes, before they are implemented,  will reduce the anxiety in this very frustrating process.  Your chosen professional should have a strategy to employ.

When you are willing to change, bend, search, use good practices and LISTEN the ordeal will come to an acceptable close.

Find a professional to represent you, employ them and prepare for a few bumps.

Hold on turbulence are ahead as change is sometimes not easy.  I am preparing everyday for the next bump.   I have my seatbelt drawn tight.

Update 12/22/2009 New FHA lender rules for short sales

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It’s a no brainer that housing and jobs are interrelated.  Fix housing and jobs will follow in service sectors and and the manufacturing of products we need at home.

I believe only one thing is going to get our  economy moving again..Housing. We got here because Real Estate based derivatives failed to produce gains. Right?  No money, no growth and no jobs.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September 2009, rose 6.1% to 110.1 from a reading of 103.8 in August, and is 21.2% higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

We got here because Real Estate based derivatives failed to produce gains.   Well, then why doesn’t the government focus more on housing strategies? Obviously, it has been very effective!

This quote proves my point…

Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

What if  the Obama administration created another tax benefit for ALL buyers?  Better yet,  produce better guidelines that all banks must use to implement procedures that fast track short sales.  Oh, Oh, Oh I know!   LOAN MODS!!!!!  What happened to all the promises there?    Fix Housing-Fix America!

Even renters could see a benefit.   Consider an apartment owner who would not feel the need to raise rents to their max if he could only get a small loan mod.   Do you think you would be a ‘consumer’ again if you could get a loan mod?   I bet your answer is ” YEP”!  That new TV or new Dining Room table would become affordable for you and that only creates more jobs! Right?

So many sectors of the economy are dependent on housing that it is a big ‘no brainer’  that housing should be the focus.

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You want the Short Sale approved by the Jr. Lien Holder?  It can be like a Birthday Party!

Invite the Jr. Lien Holder to the Birthday Party if you want the Short Sale approved.

Remember when you were a kid and went to  birthday parties and the Cake never seemed to be divided exactly even?    If you saw Johnny get a bigger piece you wanted a bigger piece.  The Jr. Lien Holder has the same reaction.

The Jr. Lien Holder knows  the HUD1 only allocates to them what the First Lien Holder is willing to serve.   All the so called ‘experts’ say they have no recourse.    This is wrong in many cases!  You must persuade them to accept what the First is offering or find alternatives.  They may want the corner piece.  Not only is this important to know and execute, there is the question of the second position.  Is it a purchase money loan or HELOC (Home Equity Line of Credit)?

If the second mortgage is a purchase money loan, loan used as purchase money at the time of the purchase, then there really is no recourse… IF you do not fall prey to their tactics.    But Wait! Is the Second mortgage a HELOC?

In the case of a HELOC their recourse is to leave open the option of  a Deficiency Judgement against you.  It is important to know the law in your State regarding DJs.  Your Realtor and Attorney will know this.

I recently found one of my clients was being led into foreclosure by the HELOC second holder.     Not only was there a so called  “Short Sale Expediting Company” involved there were 2 different lending institutions involved and the cake was not going to be divided evenly.   Birthday parties are always more fun if everyone feels they are getting their fair share of the Birthday Cake.  Actually, the SSEC was not doing anything for my new client.   They had not even tried to cut the cake.    I became involved and quickly learned the Jr. Lien Holder wanted MORE ( Really?) and was not going to settle for what the First was willing to offer.  I found that the Jr. Lien Holder would allow items to paid outside of escrow (POC).   It became obvious they only wanted to see contributions.  They were not necessarily concerned with the size of their slice of cake anymore.  The were more interested in the size of the other pieces.   Guess they didn’t like butter cream either.

Short Sales with 2 or 3 different lenders, in most cases, have a HELOC  in Santa Clara County.  How can you convince them that their piece of cake is satisfactory?    Talk with an accomplished Realtor and an Attorney if you find this is your situation.   Often, you can find a Realtor and Attorney who have a successful record of executed Short Sales and negotiated strongly with HELOC lenders.

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You always thought that over time your home would be worth it’s weight in gold  right?   Well,  maybe not exactly.   Now you are feeling like you are paying for a bottomless pit.   Many homeowners are considering alternatives to paying for their ‘non performing asset’ and Short Selling seems to have become the option of choice.

VIDEO

There are a number of other reasons you may need to consider the short sale option too.  Health, Job loss, divorce, relocation or a mortgage reset are hardships that your mortgage lender will agree are reason enough to allow a short sale if your assets are outweighed by your heavy mortgage burden.

There is some sunlight shining in your bottomless pit.

Your home is gold and there are miners digging for it right now.   If after consulting with your bank and finding your best option is selling then you will need to consult with the experts.  Your list should include your CPA, attorney and a Realtor experienced in navigating the short sale process.  These professionals will provide advice at little or no expense until the home is sold.

There are pitfalls to selling your home for less than you owe.   Your CPA can determine the tax implications, your Attorney; the legal ramifications and your Realtor will share the market opportunities,  strategies and process.

Al and Erin, homeowners in Sunnyvale, CA., say  “Be cautious in hiring  ’so called’ short sale expiditer companies”.    Al and Erin hired one and learned the hard way that they were sold a load of gold colored rocks.  Not gold.    The company they hired took a fee at the front end and had no motivation to complete the process.  They already earned money.

Consulting with your team of professionals will save time and money.  Your mortgage lender will consider a short sale more readily when confronted with the alternatives this team will present to them and you will not be burdened with undo out of pocket expense.