Chico Short Sale and Foreclosure Madness
September 5th, 2008categories: Chico CA Real Estate News
by Mike Wiegert
The two really hot topics in the Chico real estate world today are “short sales” and foreclosure sales. “Short sales” are pre-foreclosures.
Usually, the beleaguered homeowner still resides in his or her home and is several months in arrears in the mortgage payments. Unable to see an exit strategy from this disastrous situation, the desperate homeowner lists his or her home well below what is currently owed to the bank. Both the homeowner and the agent hope that in the event of an offer, the bank will approve the offer by offering a discount of the amount owed by the mortgagee and also approve associated costs of the transaction.
This hope is sometimes just wishful thinking as banks do not approve all “short sale” offers that are sent to them.
In fact, nationwide, the frenzy to buy homes is at such a great profusion that banks and asset manager’s desks are literally clogged with offers, many of which are well below what the mortgage holder would be willing to accept as a payoff. Buyers that are understandably frustrated by submitting offers with no response or faced with an everlasting wait period are really just victims of the unrefined system many banks use to handle the excessive numbers of offers they receive. Many of these offers are frivolous attempts to buy real estate by investors seeking an unrealistically low price.
A common problem with submitting a “short sale” offer is simply just the manner of how it is presented to the bank holding the mortgage. Even fair market offers are difficult for the mortgage holder or asset manager to come to a decision on without the necessary tools to evaluate the offer and subsequent sale of the property. Many agents make the mistake of submitting the standard California Association of Realtors Purchase Agreement and nothing more. Big mistake! The banking powers that be have nothing to work with. Important attachments to this offer begin with a hardship letter from the Seller explaining in plain language why they are unable to continue to make their payments and as a result feel forced to sell their home. This letter in itself is not enough. The desperate Seller must prove to the mortgagor that the content of the letter is true. Financial statements, full tax returns, pay stubs, bank statements and any available creditor letters included with the letter will definitely influence a banker or asset manager struggling whether or not to approve your offer. Additionally, the person handling your case may live in Baltimore, MD and have no idea what a 3 bedroom, 2 bath, 1,500 square foot house in Chico, CA is worth. Minimally, a BPO (Broker’s Opinion of Value) if not a certified fee appraisal should be included in the package that accompanies your offer. The point is, you don’t see your attorney going into court without substantiating evidence to plead your case.
If you want a successful short sale, you need to also plead your case with any documentation you can provide that will support your argument in favor of a mortgage discount.
Much of what I’ve said here applies to foreclosure sales also. Many lenders and the asset managers that represent mortgage holders just don’t care about the “time is of the essence” clause or expiration date in your offer. In fact, many mortgage representatives purposely price foreclosed homes well below market value and wait for a flood of offers. Banks know that if you have several would be homeowners waiting to get a response to their offers, this creates desire and there is a tendency for at least one of the more emotional buyers to raise their offer above what they may think the other buyers have offered. Unfortunately for all, this really does happen a lot of the time.
My advice: In a “short sale” or foreclosure transaction, don’t play around. Offer the most that you are willing to pay for the home.
If you don’t get a response in a reasonable amount of time, go on to another property and make a bona fide, realistic offer. Otherwise you may find yourself competing over and over with little or no results.
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Chico Real Estate: Temperatures Rising
August 13th, 2008categories: Chico CA Real Estate News
by Mike Wiegert
Chico Real Estate: Temperatures Rising, And That’s Not All
A recent forecast by the National Association of Realtors projects significant gains in future months as early as the fourth quarter of 2008 into the first quarter of 2009. This newfound optimism is spurred by an encouraging movement by buyers to avail themselves of provisions of newly passed housing stimulus legislation, the Housing Act of 2008. I’ve been talking about this new legislation for weeks and again recommend anyone seeking advice and counseling, particularly in matters pertaining to foreclosure to visit the Housing and Urban Development website.
The Pending Homes Sales Index, used by Realtors and Economists to predict the forward movement of the market rose 5.3 percent in June over May. In recent months homes sales have been rising and falling within a modest level. Lawrence Yun, NAR chief economist explains, “The vacillation of data from one month to the next indicates a housing market in transition. The rise in pending home sales was broadbased with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for and overall housing recovery.
With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.” The profound element of this statement is that we are seeing recovery in all four national regions. Heretofore, market recovery appeared to be segregated to certain geographic areas. It may be a bit premature, but it appears despite all our economic woes, oil prices are finally dropping, the dollar finally rising and the real estate market as a whole is showing signs of regaining some of it’s former esteem.
Regionally, PHSI figures appear as follows: In the West the index rose 4.6 percent, understandable given the continuation of an active foreclosure market caused by the abundance of subprime lending two and three years ago. In the South the index leaped a whopping 9.3 percent, the largest gain of all four regions. The Northwest rose a soft 3.4 percent. Lagging behind at last was the Midwest with a meager 1.3 percent. But again, all regions are moving in the same upward direction.
Want to hear something really earth shattering? Our neighbor to the south, Sacramento/Roseville is reporting a flurry of new sales in June and July where buyers appear to be unwilling to wait any longer and are taking advantage of the glut of affordable housing. Other areas similarly experiencing strong increases in sales activity are Las Vegas, NV and Ft. Meyers, FL. NAR President Richard F. Gaylord applauds the newly passed legislation and predicts long term benefits as a result. ”
Provisions to stem foreclosures are helpful, but a greater lift to the economy should come from higher mortgage limits, enhancements to the FHA loan program and the first-time home buyer tax credit. These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future,” Gaylord said. Additionally comments by Lawrence Yun jibe with Gaylord: “Buyers entering the hardest-hit markets, in some cases with multiple-bid offers, may have put a floor on prices,” he said. “In addition, rising commodity prices and higher construction costs have resulted in a very unusual market today with existing-home prices being less than replacement building costs in some areas. Home prices are projected to increase 3 to 6 percent in 2009.”
Now may be the time for the prudent investor to pay close attention to the transitioning real estate market.
It certainly sounds self-serving for a Realtor to suggest an early jumping on the band wagon, but with historically low interest rates expected to stay below 6.5 percent well into 2009, present market conditions appear to be one of the great periods of opportunity that we only get to see a few times in a lifetime.
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Chico Housing Market: Blue Skies Ahead!
July 25th, 2008categories: Chico CA Real Estate Market Stats
by Mike Wiegert
A survey and report by the Leading Real Estate Companies of the World, a conglomerate of brokers in early July points to some easing of adverse conditions in the housing market.
Fifty-nine percent of those surveyed believe there will be a strong housing market over the next sixty days. An overly abundant supply of residential units is the foremost concern among those respondents surveyed with many seeing a decline in inventory from a year ago.
While eighty-two percent agree that prices are down, seventy-five percent indicated that such a decline is less than ten percent and thirty-three percent believe that prices have only dropped five percent in their communities. A statement issued by Leading RE, “We believe our affiliates represent a good cross-section of the U.S. brokerage community because many of these firms are the market leaders in their areas and encompass a large number of transactions.
The findings from this month’s ‘Housing Beat’ survey mirror what others in the industry are reporting - that we are not out of the woods yet, but that inventory is beginning to be absorbed, financing difficulties have eased, sellers are more realistic about pricing and buyers are growing impatient with waiting to purchase their next home.”
For questions specific to the Chico Housing Market, call Chico Homes 530-895-9378.
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Sellers: Please LEAVE So That I Can Sell Your House!
July 5th, 2008categories: Busy Girls Guide, Chico Sellers, My Opinion on Things
Despite the fact that most sellers have undoubtedly been counseled by their Realtors to leave during showings, a large number of sellers choose to remain.
After a recent, painful, house-viewing excursion with some home buyers on a search for Chico CA real estate, I feel the need to approach the situation head-on.
You seem, Mr. and Mrs. Home Seller, to not comprehend how detrimental your very presence is to the sale of your property. If you fully understood the repercussions, I am certain that you would work with the Realtors, not against them.
For most home buyers, your being in the house makes for an uncomfortable showing. It’s hard for a buyer to freely explore a property and excitedly converse with family members when you are hanging on their every word and following their every move. Buyers may not feel that they can discuss the negatives of the house, for fear of insulting you. Similarly, they may not want to display too much enthusiasm, because a poker face is an important aspect when negotiating, and they don’t want you to think they LOVE your house. Lastly, they don’t feel they can roam at will to discover all the house has to offer. Many buyers are so conscientious about your overhearing them, they refuse to discuss their thoughts until we have made it safely into the car!
Although you think you’re being helpful by providing us with a running commentary and guided tour, you are shooting yourself in the foot! More often than not, the things you find fascinating and important hold very little interest to the buyer. They don’t want to hear about how your mother’s uncle suggested you put the laundry room near the kitchen, but you, in your infinite wisdom opted to put it near the bedrooms instead. They also don’t want to hear about your special tupperware drawer, your cat’s litter box problem, or your weight issues after switching your thyroid medication. As a seller, you might be saying to yourself, I NEVER get in the way… I only point out the positive factors that will help sell my house! Yeah… ok. I have endured endless “showings” of Chico property performed by well-meaning sellers and it’s a rare situation indeed that a seller doesn’t deter from the task at hand.
Keep in mind that the buyer is trying to picture himself in the house, along with his furniture, his family, and his activities. Professional home stagers will encourage a seller to remove all items such as family photos, excess furniture, and clutter to facilitate the buyer’s bonding with the property. The goal is to remove the distractions so that the buyer can figure out how he can make the space his own. The focus should be the bones of the house, not on YOU! By attending the showing, you defeat the very purpose of “staging” the house for sale, and many buyers will resent the disruption.
Real life examples!
1. I recently accompanied a buyer on a showing in which the seller was the tour guide. The woman was bright, bubbly, and extraordinarily full of personality– a true pleasure to meet. We got to hear all about her children, her cooking abilities, her extended family, the history of the building of the house, and her hobbies. When we finally made it back to the car, both the buyer and myself were at a complete loss as to the details of the house. Did it have granite? Where was the 3rd bathroom? Did we actually see the bonus room?? We had no idea, but we could tell you how many kids she had, and what her husband did for a living.
2. A home was advertised as being a 4 bedroom, 3 bath property. After nearly an hour listening to the seller expound on the virtues of the home, we were finally shown the “4th bedroom” which was actually a room so small that you couldn’t fit a twin size bed in there. Considering the buyer had a very strict need for 4 functional bedrooms, the house wasn’t appropriate. Instead of discovering the flaw within the first 2 minutes, we were forced to endure an hour of meaningless banter. The buyer was so infuriated that she refused to even consider the minor remodel possibilities of the home which would have rendered the house functional for her family.
3. I once showed a house during which time the sellers planted themselves on the porch with cocktails and appetizers. The home was so small they were able to monitor our visit every step of the way. Upon exiting the house, they cleverly (or so they thought) addressed every concern the buyer had mentioned while in the house. The problem was that my buyer was extraordinarily unusual in every sense of the word. He had very eccentric views on relationships, politics, and day to day living. The sellers managed to offend him several times over as they chattered on thinking that they were coming across as charming and informative. Despite the fact that the house was a perfect fit for him, he left the property focused instead on how much he disliked the current owners. Shortsighted, on the buyer’s part, I know. However, having spent an inordinate amount of time with that particular buyer, I had learned to avoid his hot spots and feel strongly that I could have sold him that house had the sellers not unwittingly killed the deal for themselves.
Sellers, please keep in mind that you chose to list your home with a professional Realtor rather than trying to sell the house yourself. You must allow the Realtor to do the job! Try to remember that most of us sell properties full time, to earn a living. We put a great deal of time and effort into learning the art of marketing and negotiating real estate. We want to sell your house!
Most importantly, as the buyer’s agent, we have the advantage of knowing the client’s particular interests, needs, and deficiencies, and can therefore appeal to them more effectively than you can.
If you have important details that the average Realtor or buyer will not recognize upon viewing the property, there are very effective ways to provide the information without being intrusive or distracting.
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Leave photographs of your home taken throughout the seasons. Is your home breathtaking in the fall or spring? Do you have an amazing garden? SHOW US with pictures.
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Leave notecards or flyers on pedastals or attached to doorways to explain special features, materials, warranties, or interesting history about the room or area.
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Work with your listing agent to compile a binder with all sorts of interesting facts, inspections, pictures of floor plans, or anything else that you would like to share. Leave it in a place that invites the visitors to peruse it.
If only, Mr. and Mrs. Seller, you could please LEAVE, we could do a better job of selling your house!
P.S. That doesn’t mean exiting the house as we are trying to enter. I know you’re dying to see what the new buyers look like, and you just want to say “hi”, and you just have a couple of things you want to share with us that are really important, and you just want to offer us iced tea and cookies, and you’re just trying to be welcoming… but please leave BEFORE we get there!!
P.S.S. If you don’t want to give your potential buyers the heebie-jeebies, don’t sit in the car or across the street in your neighbor’s living room watching us with binoculars. You might think you’re being sneaky, but we can see or feel you there, and the overall effect is not a good one!
This particular post sparked quite a reaction from my fellow Real Estate Professionals. SELLERS, if you weren’t already buying my opinion, please peruse the thoughts of over 70 other Realtors by clicking here!
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Chico Home Buyers Get Off The Fence and Into the Real Estate Market
June 27th, 2008categories: Chico Buyers, Chico CA Real Estate Market Stats, Chico CA Real Estate News
by Mike Wiegert
On a national level, existing home sales increased in May as buyers are reacting to lower home prices according to the National Association of Realtors (NAR). May figures indicate 4.99 million existing home units sold, up two percent from April’s sales of 4.89 million sold units. This number is still a far cry from May 2007 sales at 5.93 million units. The reason for the latest increase in national home sales was summed up by NAR President Richard F. Gaylor, “Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages,” he said. “Today’s buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth.”
NAR Chief economist, Lawrence Yun, indicated last week that there is a significant inventory of homes. “The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down,” he said. “Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices.”
So what do the statistics mean to homebuyers in the Butte County area? At 472 active residential listings in the Chico area market, our local inventory is significantly lower than the national average per capita.
With an urban area population of 106,000 residents, the number of available homes compared to the number of residents is substantially less than most cities across the nation. In a nutshell, although the Chico real estate market is a “buyer’s market“, a less than generous selection of listings in our area diminishes the possibility of buyers coercing sellers into accepting cut-rate offers.
Local homeowners have indisputably seen their home prices drop over the past year. With a median sales price of $308,750 in June 2007 compared to $272,000 in June of 2008, year over year statistics appear to indicate almost a 12 percent decrease in median home prices sold for our area. And with the subsequent losses of equities following these price drops, many sellers are not in the position to accept bargain prices on homes that they owe more on than these proposed offers. I can’t really count the numbers of sellers who have expressed an unwillingness to go out of pocket to sell their homes. Instead, they are bunkering down and waiting for the market and prices to stabilize. Is this a good or bad strategy? You’ve heard it before, “real estate is a long term investment.” For many, it might be prudent to wait out bad times. For others that need to sell to relocate, hopefully many redeeming real estate opportunities exist in their new location.
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