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!

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

4 ways to get into a bigger home

Your family needs a bigger home, but you feel stuck.  You have a great income, but due to the reduced equity in your current home and the demand for a higher down payment on your next purchase, moving up seems impossible.  Here are 4 possible solutions that could help, depending on your situation:

1) Assume the seller’s loan (take over their terms and payments and put into your name).

pros:  Most traditional home loans are unassumable, but these days banks are more willing than ever to avoid foreclosing on additional homes.   If the home is in risk of default or is already on the path toward foreclosure, they MAY be willing to have you assume the loan, even if your down payment is smaller.  This could allow you to get a great price on a home and possibly avoid a 20% down payment.

cons:  Could take some time to put this deal together, or you may do a lot of work and find out it’s not possible.  Therefore, you will more than likely have to sell your place and move into a rental as a temporary solution while you secure your next property.  The seller’s loan may have a higher interest rate than a new loan would have and you might not be able to refinance until you have increased your equity in the home.

 

 2) Buy a fixer upper, negotiate as many repairs as possible, and get a seller buy-down on your interest rate.

pros:  You could potentially buy a bigger home for the same price as your current home.  The seller buy-down will reduce your interest rate so that it’s easier to save for larger improvements and remodeling.

cons:  Not everyone is cut out to do a remodel.  It is time-consuming and there can be hidden pitfalls and problems that end up costing you more money than you thought.  Always get the opinion of a contractor you trust before making an offer (or removing contingencies) on a fixer upper.

 

3) Borrow from your 401k. (Note: consult with HR and your tax advisor prior to making this decision)

pros:  Provides you with extra cash, and you pay yourself interest, not your bank!

cons:  If you get laid off or change jobs, you may have to pay back your loan in full or suffer tax consequences.  Make sure you consult with your HR department to be clear on the rules before you take money out of your 401k.

 

4) Purchase a lease-option to buy

pros: Purchasing an option to buy the home at a future date for an agreed-upon price and then leasing it could be one way to get into your new home while you work on building the down payment to buy it.  Many owners will put a portion of your rent toward the down-payment later.  This all needs to be spelled out in the agreement.

cons:  Many people get into lease-options with the best of intentions, but never end up being able to buy the home because they couldn’t save enough money or repair their credit enough to make it possible.  You need to be VERY CLEAR about what you will have to do in order to buy this home.  Speak to a good financial planner about monthly goals that will be required to execute the purchase.  Otherwise, you will have been paying really high rent for no good reason.

Please note that these are all non-standard methods of home purchase (especially numbers 1, 3, and 4) and you must do your homework.  I cannot guarantee that these techniques will work in every situation or be financially advisable given your unique financial situation, so consult with your Realtor, CPA, Real Estate Attorney as appropriate before making any decisions.

 

 

 

 

 

 

To-do lists as therapy

I’ve started to realize that I’m not alone in my obsession with to-do lists.  And while some people talk through their stress, and others absorb it (not healthy), I chose to make lists and clear my brain of whatever mess is occupying it.

I don’t have a favorite style – I’ve done graphic flow charts, project plans, outlines, bullet points.  I recently did a fairly complex “network diagram” to describe my life.  I told you, I’m obsessed.

This weekend a few unfortunate miscommunications occurred and had me running in circles – worn out and frustrated.  So here I am at Barnes and Noble, drinking a coffee and making my newest list, designed to create more order and efficiency in my head.  Since we bloggers are simply exhibitionists behind computers, I’ll share it with you:

————————————-

Things I have to accomplish on a daily basis

·         Make Lunches for daycare/work

·         Dishes

·         Laundry – at least one load and put away dry stuff

·         Plan Dinner (or delegate)

·         Fun outdoor activity with Grant (walk, park, etc)

·         Work – lead followup, twitter, blog, check in on 10 members of my network and introduce self to 5 new people I’ve never talked to before.

Be more efficient: Only clean up toys twice: At lunch and bedtime.  Plan dinner the night before.  Make lunches while grant is having breakfast.  Do dishes while Seth gives grant a bath (or vice versa)

Things I have to accomplish on a weekly basis

·         Cleaning the floors

·         Cleaning the bathrooms

·         Cleaning the stove, microwave and fridge

·         Grocery shopping

·         Weeding

Be more efficient:   Choose one big chore per day that I’m home with Grant: Tuesday – floors, Friday bathrooms, Saturday – Stove, Microwave and fridge, Sunday – weeding.

Menu planning on Friday night for weekend grocery shopping at swap meet, costco, etc.

Things I would really like to accomplish that aren’t in the normal routine:

1.       Update website

2.       Custom Blog background

3.       Matching custom twitter background

4.       Paint master bedroom and bathroom

5.       Get a new rug for Grant’s room

6.       Steam clean carpets

7.       Plan an outdoor toddler party to celebrate the new picket fence being completed

8.       Finish “Daddy and Me” Scrapbook (in time for fathers day)

House projects (in order of priority)

1.       Picket fence (in progress)

2.       Attic vent

3.       Paint house and plant front yard tree (non-fruiting plum? NF Olive?)

Avoid Loan Modification Scams

Loan modification is legitimate and you could qualify if you have had a decrease in income and you are still current on the mortgage for your primary residence.  To find out if you can qualify go to this website.  They will tell you exactly what to do.

However, there is no need to go to a company to have them do this for you.  Do it yourself by calling your bank directly.

The fundamentals of business development

Seth Godin hit the nail on the head today with his blog post.

Any time you decide to expand a business or create a new one, ask yourself if you have the following:

1. A group of possible customers you can identify and reach.
2. A group with a problem they want to solve using your solution.
3. A group with the desire and ability to spend money to solve that problem.

This is very basic stuff, but it’s amazing how few of us really think about these simple necessities.  Probably a good exercise to go through any time you are trying to expand your business to reach another group of people.  If I decided, for example, to launch a marketing campaign aimed at landlords, my answers would be:

1) Can I locate my audience?  Yes, find non-owner occupied homes via title records.

2) Solve their problem:

• Group A) People who are having to pay money each month to keep their rentals and who want out from under the investment. 
• Group B) Non-local landlords who find it a hassle to manage their properties and want to be done with it. 
• Group C) People who want to liquidate one of their real estate assets.  Perhaps they have a lot of equity tied up in houses, but would like to use the funds for living expenses or increase the cash reserves they have in the bank (very smart to do right now).

3) Does each of these groups have the ability to hire a Realtor and sell?  Group A might not.  Groups B and C would be better targets, especially if I can identify the people who have owned their properties for quite awhile.

See?  That’s how it’s done.  Now, should I put this campaign in place??

Sellers, your Realtor may be afraid to tell you this but…

So you need to put your house on the market.  Maybe you just want to liquidate, maybe you want to make the jump to a bigger home while the rates are so good and the prices are low.  So here are a few pieces of advice based on what I know buyers love (even though they swear it doesn’t matter – I know the truth).

1) Get your tenants out first.  Here’s the thing… your tenants do not love your home the way you do.  They, quite possibly, are ticked off that they have to move, and even though they may SAY they’re ok with helping you show your home to prospective buyers, after a couple weeks they won’t be.  Trust me, they won’t care if the dishes are done in the sink, they won’t work to put away toys before people arrive, and they (most likely) will not leave the property when someone is viewing it.  This is a recipe for disaster and translates into a horrible showing experience for a buyer.  If you ever do get an offer, it will be a rock bottom low-ball.  Trust me.

2) Your house may smell funky and you many not know it!  Most people don’t.  Look – I know my house probably smells to other people – I have a toddler, and two dogs, who am I kidding?  When you go to sell your house, you have to be absolutely paranoid about weird smells.  First of all, clean the whole house thoroughly and use a good disinfectant.  Then, keep your windows open as much as possible when you’re home, avoid cooking greasy food, fish, or frying anything.  Also, spicy food and curry smells linger longer than others.  Take steps to air out the house and change your cooking habits temporarily.  It’s worth it.  Do not, I repeat, do NOT use heavy air freshener or perfumes.  One other strong suggestion: Some of you are extra fond of moth balls.  You know who you are.  Put your moth ball soaked sweaters in a box in the garage and air out your closets please!

Also, invest in new paint and carpet.  Not expensive compared to the massive transformation they can create and subsequent increase in sale price.  Paint the outside too, and please get your pest inspection first.  If there is any wood damage, fix it first and then paint after.  The other benefit of carpet and paint is that “new house smell” similar to the allure of new car smell.  Probably toxic fumes but hey – it sells.

3) Don’t let your lawn die or look sickly.  Reseed the lawn, edge it, and give it some fertilizer.  Water it a little more often than normal (Yes, we’re in a draught, but this is temporary!). Eliminate weeds and put new bark down.  Trim hedges and low branches from the underside of trees.  BANISH ALL GARDEN DECOR.  Garden gnomes, buddhas, windchimes, etc.  They may have a special place in your heart but the have to go.  I’ll also add movable fountains and makeshift ponds to that list.  Buyers just don’t dig that stuff.  They wonder… “what’s growing in there that I’ll have to clean out?”

4) Also, put away the following miscellanious decor:

• Anything religious (I mean no offense here – I’m just trying to help)
• At least half of the books on your book shelves – especially any self help or relationship books.
• Any knick nacks smaller than a football. (this is just good common sense for security purposes anyway)
• Creepy collections (call me unappreciative, but Action Figures, Beany Babies, Barbies, Knives, Disney stuff, etc.  Pack it.)
• Any “Adult” art.  I’ve seen some really graphic offenders.  I won’t go into details.
• Any front door mats that say “My Cat Owns This House”, or “Labrador Territory”.  (basically no one should be able to tell if you are a “cat person” or a “dog person”.)
• Shag toilet rugs and matching seat covers.  Just plain wrong.

Well, I hope this is helpful.  Obviously I could go on quite a bit longer about all the DON’TS.  I’ve seen some doozies out there, believe me.  The important thing is to remember that you probably don’t see your home the way someone new sees it.  It’s always a good idea to invite over a group of friends to give you some hard core honesty over a glass of wine when you are getting ready to market your home.  Just remember – it may ruin your pride temporarily, but it will save your equity!!

How To: Listen.

Don’t you hate it when you’re explaining something important to someone and you can tell that they’ve mentally checked out?  They get that glazed over look that tells you they are no longer with you.  Makes you want to add something really crazy to your story like, “and did I tell you about the monkey that jumped on my head last week?” just to see if they’re paying attention.

The other irritating example is when you are in the middle of a sentence, and you know that they have already planned what they want to say next.  They’ll start saying “Right…right…. yeah… and…”  It’s like SHUT UP! I’m not finished talking yet!

When you are in any service related business – finance, real estate, consulting, etc – it is so IMPARATIVE that you have good listening skills.  And it really is a skill!  It’s not as easy as being quiet or maintaining eye contact.  You must really be present and be thinking about what they are saying and putting yourselves in their shoes while you do so.  When you do that, you can then ask good follow-up questions that allow you to really understand what they are saying and why.  When someone is stressed out (and many of us are these days) there is no bigger turn-off than a non-listener with his own agenda. 

Have you ever made the mistake of saying “I agree with you, but…”  or “That’s true, but…”?  The minute you add “BUT” in there, you are discrediting everything they just said.  Isn’t it better to ask a follow up question: “I see your point. Do you think there are ever any exceptions to that rule?”  or “I see where you’re coming from. What would happen if …”

Certainly, I have committed all the offences I mention here.  No one is perfect.  But we can certainly try!  I think we’ll all end up gaining more loyal clients and fans if we do.  Here is an article I found that really explains the concept of effective listening very well:  “Tips on Effective Listening” by Larry Alan Nadig, Ph.D

Presenting home offers in a volatile market

In my last blog post, I expressed concern about how we (Realtors) can legally protect our clients during this volatile time in the mortgage market (where underwriting rules change unexpectedly), while still meeting the goals of our clients who are anxious to make purchases during this exceptional buyer’s market. 

 

The thoughts and solutions below come from the combined effort of several brokers and top agents in my area.  I’m happy to pass them along to my readers and hope that you find this as helpful and encouraging as I do.

 

1) It will be important to try to extend the financing contingency for as long as possible, and possibly even have it in place until funding. 

 

This strategy may likely become a more viable option in the coming months, but it will probably be met with resistance until word spreads through the Realtor/Broker community and we all reach an understanding of why this needs to be done.  Listing Agents in the area have become focused on tightening the contingencies to alleviate the uncertainty of the escrow and to “tie” the Buyer into the deal.  In today’s market that actually might not be the best strategy for the Seller as the process for disputing a deposit can be long and arduous. 

 

2. If you can present the offer in person, bring your lender to discuss a)your clients’ qualifications and b) the present lending situation.  Getting everyone in the know is much better than not. 

 

Escrows are still closing daily, and the situations where the lender has changed the conditions at the last moment have happened but NOT in high frequency.  Any home buyer should be made aware so they can be diligent in their financial responsibility and also make the best decisions.  

 

And for all other Realtors out there, move forward while aware of the possibilities, but don’t let them keep you from supporting your clients and doing your business well. 

 

 

Starbucks Viral Marketing Campaign

Starbucks has launched a viral marketing campaign focused on having Americans pledge 5 hours of community service in exchange for a free tall coffee. The result is some great PR and potentially lots of new Starbucks fans.

Pledge Five web site

In addition, Starbucks has introduced their partnership with the Red campaign, and every time a customer uses their card, five cents will go to the Global Fund to help save lives in Africa. 

Red Card info