Putting my money where my mouth is

As interest rates have continued to tick down, down, down, scraping the bottom and hitting 1950’s era lows,  I have been encouraging all my clients to take advantage of this golden opportunity to lock in rates either with refinancing or making new real estate investments.

The other night my husband and I looked at each other and said, “Ok, what about us?  Why all this talk – why not take some of our own medicine and do what it takes to refinance our home?”  We are currently in an interest-only 10 year ARM at 6%.  Plus a HELOC second.  Our goal is to get that down to ONE 4.85% 30 year fixed loan.  We want to hold on to this house and eventually rent it out.

Here’s what we had to do:

1) Assess the approximate value of the home.  I told my husband that I could certainly sell the house for more than a refinance appraiser would give us, but there just weren’t enough good comparable sales from the last 3 months.  So we had to come up with a realistic number, which happened to be about $30-40k less than I would have liked.

2) Talk to my mortgage broker.  I told her about our plans and what our house would appraise for, and she told me how much money we’d have to throw at our current loans to qualify.  (You must have 20% equity in the house.)  Then she told us what our payments would be if we did this.  Turns out, we will have to pay off our entire 2nd loan, plus pay the closing costs involved with the transaction.  But, as a result, we will have our 30 year fixed loan at a great price per month – similar to what we pay now, except that we’ll be putting money toward principle each month, and our loan won’t get reset in 5 years.  We decided it was worth it to spend this much money, based on our optimism of the real estate market now and the fact that we want to hold on to the house.  It will be a good investment.

3) Come up with all the paperwork.  W-2s, 1099s, tax returns, investment accounts, pay stubs, bank accounts, etc.  WAAAYYY more paperwork than it took us to buy the house!!  (I think we just had to give a social security number and a handshake to get it done before. Yikes!)

4) Wait for our loan to get processed.  Our turn-around time will be about 30 days now.  Toward the end of escrow, the bank will give us the exact amount to pay off on the house to meet the 20% equity rule.  So, we’ll just pay that through escrow at the time of closing.

Ok guys, you heard it here – I am officially walking the walk.  So if you want to join me in making some possibly hard but SMART moves, let me know and I can point you in the right direction. 

Here’s to wealth building in 2010!!

Buyer dishonesty on the rise

We have an interesting tactic going on right now in certain areas that are experiencing multiple offers on homes.  I’ve had a feeling that this tactic was actually taking place for some time, but I just heard a talk from RPM Appraisal Service’s Director of Appraisals, Gary Voyavich, which confirmed it:

Gary says that in multiple offer situations, buyers are bidding far higher than they believe the house will appraise, just to beat out the competition and lock the seller into escrow.  Then, when the appraisal comes in low, the buyer demands that the price be renegotiated down to market value.  Did this buyer ever have any intention of paying the price he wrote on his purchase contract?  Not a chance.  He was betting on the appraisal coming in low, and he knew that in order to put himself ahead of the 18 other offers, all he could do was to put in a high puchase price and hope the seller and the listing agent would bite out of greed or ignorance.

Besides being shady and dishonest, this method can be risky and a waste of time for everyone.  According to our company attorney, Mark Strombotne, “the contract is designed to give an automatic cancellation right to the seller if the house doesn’t appraise for the purchase price.”  Should the Seller or their agent catch a hint that this buyer was being dishonest and offering a bogus offer, they may just kick them out of contract and move on to another buyer who was more realistic in their approach.  In the mean time, all the high bidder has done is to waste everyone’s time.

Killer interest rates – but who qualifies?

We are seeing wonderful interest rates as we head into Christmas 2009.  Can they go lower?  Many say this is it and next year we will see rises.  So you know you want to take advantage of it, but will you qualify for the lowest rates out there?  The answer is probably yes if:

1) you have a credit score of 720 or higher

2) you can put 20% down

3) you have 3 months reserves of your calculated PITI in the bank or your 401k.

[Note:  People who are self-employeed are still having issues getting financing, because many of us make good income, but have great CPAs who hide our income with write-offs.]

Fresh new optimism in the Realtor community

Finally!  It seems Realtors have stopped moping around complaining about the market.  I keep running into people who are genuinely excited about what next year holds.  Sheesh – we need it!  It’s been tough to be a Realtor these past couple years.  All the stats are lining up and pointing toward a strong 2010 housing market in the Bay Area.  Inventory is getting steadily lower, buyers are still out in big numbers, and we’re seeing the median price continue to increase, which means that more expensive homes are starting to sell in greater numbers.  When the stats look like this going into the holidays, it usually means a strong Spring market.  (Quick! Knock on some wood!)  For awhile, it seemed that the only homes selling were the super-cheap REOs and short sales, so this trend is exciting to watch.

We have a market brief with october stats on the company blog I manage and write:  www.serenogroupblog.com

Cheers!  Definitely a reason to be thankful this Thanksgiving.

When buying a house, use your nose

I recently sold a condo to a wonderful family and we just closed escrow last week.  The place seemed to be in fair condition and the sellers advertised that they had just put in carpet a year ago.  During our home inspection, which happened to be on an unusually warm day, we noticed how horrible the place smelled in the heat!  We knew they had two dogs, and so after the inspection was over, I talked to the listing agent about it.  I asked him to please have his sellers update their disclosures with additional information about dog accidents on the carpet in the last year (it had been quite awhile since they filled out their disclosures).  The seller responded with a statement that there had been one small accident near the sliding door and that the blanket in the kennel smelled bad and that was probably what we had noticed.  My response to the listing agent was that if that was true, the problem was much deeper than the carpets – it must be an issue with the subflooring. 

He offered to do a steam cleaning.  We demanded that they give us a credit for all new carpet.  They agreed.

Immediately after closing escrow, my clients started ripping out the carpets.   As you can see below, the problem was much worse than the seller disclosed to us.  In fact, the only place that wasn’t pee stained was under the furniture, where the dogs couldn’t reach.  So, when you are buying a house, use your nose!  If something smells off, it probably is!!

Pregnant and Kicking Butt

 

 

It happened with my first pregnancy and it’s happening now: when I am expecting, I get more business than I know what to do with! I have a wonderful pipeline right now, filled with great clients who are fun to work with, super eager, and very appreciative.

I wonder what the secret is… I have a few theories:

1) My “mommy glow” is attracting new clients in a similar way that a moths are drawn to a flame.
2) Clients are super nice and appreciate because you can’t be mean to a pregnant lady. Bad Karma.
3) Current clients realize they must get their act together and buy something or sell their house because there is a 9 month deadline (now more like 6 months!)
4) My superior negotiating skills are now razor sharp because no one can say “No” to a girl that might go into early labor.

What do you think – do you agree with my theories?? Whatever the reason for this apparent phenomenon, it works for me. The plan was to stop after 2 kids, but if we hit another round of the housing crisis, you never know!  You may just be able to map out the history of bay area housing slumps by looking at the age of my children.

Amazing Luck with a Short Sale

This post will be a partial story, because I’m currently in the middle of the transaction.  I have the most wonderful couple as clients.  Unfortunately bad circumstances combined with incompetent Loan Modifiers lead to the need for a short sale on their home.  However, I recently encountered some tremendous luck and have been able to pass it along to them:

First of all, I happened to get an email from a stager I had met at a networking event asking if I had any properties that I needed to have staged for free.  Yes, for FREE!  She teaches a class and was looking for a subject property to include in her course.  So immediately I had her come over to this couple’s home and do her magic.  It came out beautifully.  Of course, I should mention that my clients also worked tirelessly to tidy up, move furniture around, and paint the home up until the very minute buyers were walking through the door.

Secondly, in talking to a fellow agent who is the “short sale expert” in our office, it turns out that my cient’s bank had just agreed to start a brand new “fast track” program in which they’d approve our top offer on the listing within 5-7 days.  In case you’re not familiar with the housing market right now, short sales are typically HORRIBLE.  You submit your offer and then wait, wait, wait, for months, to get a response from the bank.  By then your buyer is no longer interested.  Failed short sales have lead thousands of homes into foreclosure.  It’s sickening.

So free staging and this miricle fast track program – what are the chances??  So, after a whirlwind weekend of showings, we ended up with 12 offers, 4 counter offers, and 1 winning bid at he end of today that is very strong both in price and terms (and buyer motivation).  I am exhausted! 

Now, let’s see how fast this Fast Track program really is!

Balance Fail

I think this topic is appropriate since I’ve been pulled in every direction except TOWARD my blog lately!  My apologies for the hiatus.  My priorities have shifted lately, in a good way, but I need to find my balance again.  I am totally guilty of having a very well scheduled day and then getting derailed by everyday distractions.  Working out, however has been something that I’ve been prioritizing lately.  If I don’t wake up early enough (6am at the latest), I will make time over the lunch hour, or during my two year old’s nap around lunch time if I am at home with him that day.  I saw this photo today in another blog and I stole it because it’s really appropriate.  It reminds me that I should never have an excuse to not take care of myself.

With work getting busier by the day, spending a good hour per day exercising, and taking on new responsibilities (creating my corporate blog) I am going to have to as hard core about my schedule as a: 

Go Grasshopper, GO! (ok, I just wanted an excuse to post this wacky ninja photo.)

Good News: Housing inventory decreasing in Bay Area

The San Jose Mercury News published some interesting statistics regarding the (South) Bay Area housing market and thought I’d share them with you:

1.  As of Friday, May 1st,  5112 single family homes/condos/townhomes were for sale in Santa Clara County (San Jose area).  That is down from 5979 on March 20th.

3.  A year ago in early May of 2008, there were 7,340 for sale in the same category.  That was UP from 6,900 six weeks earlier.

 What does this tell us?  First of all, the market is heating up and more homes are selling than last year.  This is excellent news, because our supply of homes was far too large to really support a housing recovery.  Now that inventory is declining, supply and demand are moving closer to being in balance.  This is a crucial factor in the recovery of housing prices. 

Here is the article:  San Jose Mercury Article

And here’s more good news about the US housing market and economy in general: Bloomberg

Pricing Strategies – Part II

Let’s pick up where we left off and discuss a few more strategies involved with selecting a price for your home:

1) Pricing low.  When is it appropriate?  Yes, it is possible to price too low, although I’ve met multiple agents who would argue against that.  To clarify, let’s say that all recent comps point to your home selling at $775,000.  You are wondering if you should price it at $799,000 and leave room for negotiation, or if you should price at $750,000 and get multiple offers.  Ask yourself the following questions:

     a) Is my competition priced high? 

     b) Are there a good number of pending sales relative to active listings in this price range?

     c) Are the current pending sales selling in under 3 weeks?

If your answer to all of these is ‘yes,’ then it is probably safe to list at $775,000.  After doing so, if you wait a few weeks, get a good number of showings, and then receive an offer at $770,000, you will know that your home was actually priced at value, not under value like you thought.  If it had really been priced low, you would have seen a much different response.

2) Positioning yourself against the competition.  It is always important to look at your current competition when you are pricing a home.  I like to go see properties, since it is hard to tell anything about a home from the photos online.  Once you are familiar with the quality of the competition, you need to see how long they’ve been on the market and if they have had any price reductions already.  Talk to the listing agents of each home and see if there is currently any interest on each home and if they are getting showings.  With all this knowledge, you can write in the “actual” price that each will probably sell for.  (Many might be over priced, a few might be priced low).  Use these numbers, NOT their list price, as comparisons and benchmarks when pricing your home and you will get much better results.

3) Timing based on neighborhood competition.  This is a very tricky subject. On several occasions I have had my Sellers inform me that another house on their street, or in their neighborhood is about to go on the market.  They want to know whether they should wait to list their house until after that home goes on, or if they should beat them to the punch.  It’s hard to prevent a neighbor’s listing from affecting your home sale in some way.  If you list first, they may come on the market right after you and price just a hair lower than you.  If this happens, I would advise you NOT to do a quick price reduction because this will seem desperate.  Most buyers will still come see your home, especially if it looks good in the photos and is fairly similar in price. 

On the other hand, the other house might come on the market first and sell right away, leading you to wonder if you should have acted more quickly while the buyers were hot.  Or, worse, they might price way too low for the neighborhood and affect your ability to sell at a higher price.

I think the best thing to do is see if there is any way you or your agent can find out how much they intend to list for, and what condition the home is in.  With this knowledge, you can decide if it’s even worth worrying over.  Perhaps you can convince them to list higher! Most of the time, I have found it is best to take your time getting the house to “show quality” with all your marketing done beautifully.  You will almost always have competition, so just try to make sure your home looks just as good or better than the rest!