Chico CA Real Estate News
Chico CA Foreclosures
September 11th, 2008 categories: Chico CA Foreclosure Listings, Chico CA Real Estate News
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Chico Short Sale and Foreclosure Madness
September 5th, 2008 categories: 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, 2008 categories: 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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Foreclosure Property Listings in Butte County
July 3rd, 2008 categories: Chico CA Foreclosure Listings, Chico CA Real Estate News
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Chico Home Buyers Get Off The Fence and Into the Real Estate Market
June 27th, 2008 categories: 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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FHA Announces Changes to Lending Guidelines Effective July 14, 2008!!
June 16th, 2008 categories: Chico Buyers, Chico CA Real Estate News, Chico Financing
by Ken Phillips
For the first time in history, FHA will begin using borrowers credit scores to determine risk based pricing and mortgage insurance premiums.
Up until now credit scores were not really a factor used in FHA risked based pricing. With FHA relaxing some of their strict requirements recently it was easier to qualify buyers with credit scores low enough to prevent them from qualifying for “conventional” financing. As a matter of fact, with 100% financing a thing of the past basically, FHA financing has become very popular among lenders looking for high loan-to-value loans as FHA financing, which can cover up to 97.75% of the purchase price if a buyer is paying their own closing costs on a purchase, still carries low interest rates compared to high loan-to value conventional financing. FHA is a great loan for first time Chico home buyers with little money to put down and/or with low credit scores that prevent them from qualifying for a conventional loan. On July 14, 2008 FHA will begin implementing these changes and it will affect qualifying for many of borrowers.
Here’s a look at the ten major changes to the FHA guidelines:
1. Borrowers with either no score or at least a 500 score may get an LTV >90%.
2. Borrowers with a score less than 500 get a maximum LTV of 90%.
3. Borrowers without scores will require manual underwriting. What this means is no automated underwriting is available i.e. DU, LP, or DO and will require more time to give the realtors/agents a TRUE pre-approval letter.
4. Upfront Mortgage Insurance Premiums will range from 1.25% to 2.25%, depending on score. These upfront MI premiums will still be allowed to financed into the loan.
5. The Monthly Mortgage Insurance will range from .50% to .55% depending on the borrower’s credit score.
6. The premium is based on the borrower with the lowest score.
7. If one of the borrowers has no score, then the Non-Traditional credit grade is used. Non traditional credit is having trade or credit lines added to the borrowers credit report and obtaining a credit rating. These non-traditional trade/credit lines can be utility bills such as water, cable, electric, gas, phone, etc., cellular phone service, and rental history to name a few.
8. Credit rescoring is allowed to improve a borrower’s credit score. There are fees associated with credit rescoring and each bureau charges fees for each tradeline disputed.
9. All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
10. Along with purchases, these changes will apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.
Feel free to call Ken 865-769-6420 if you have any questions regarding FHA financing or any of Countrywide’s many loan programs .
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Chico Fire June 11, 2008.
June 11th, 2008 categories: California Park Neighborhood, Chico CA Real Estate News
On a normal day, I will always choose to work at home, rather than at my office. I just get more done that way.
Serene though it may seem, I only use my office when I have to meet clients. There’s just too much going on to get anything done! In addition to my own phone ringing off the hook, there are several other lines jangling along with the fax machine. The front door is constantly beeping from people coming and going, and someone always wants to come in, sit down, and chat. (Love it… I just have work to do!) Alternatively, when no one else is in the office, I find myself gazing out at the lake instead of tackling my to-do list.
Today the distractions were so unbelievable I couldn’t wait to run home. Work was all but abandoned as I sat at my desk with my jaw dropped. My reasons for wanting to get home, however, were not for the petty reason of wanting to get more work done. Phone calls, faxes, files and foreclosures suddenly became the least important thing in the world.
I wanted to get home to hold my family close, and ensure their safety.
Fire season hit the greater Chico area hard today.
The noise from the winds, sirens, and aircraft was unreal in the California Park neighborhood. The helicopters were using the reserves from the lakes to help squelch the rapidly progressing “Humboldt Fire.” Needless to say, I was not battling the normal distractions today. Because my office sits just feet from the lake, I had a front row view of the incredible job the pilots were performing.
The following photos were taken from my desk. To give you an idea of how close the helicopter was… my zoom lens is only 105mm! (Not very good!) The pilots swooped in on the left side of the building, dunked the bucket, and turned around to leave on the right side of the building.
As of this writing, the Humboldt Fire is said to have burned about 3500 acres since 12:00 today, and forced 1000 people to evacuate their homes. The fire began somewhere between Hwy 32 and East 20th, and is now being battled near Neal Road and Skyway in lower Paradise, CA. Click for a map of the fire, burned area, and evacuated areas.
Governor Schwartzenegger has declared a state of emergency for Butte County.
View the most up-to-the-minute news on the Chico Enterprise Record site.
My prayers and thanks go out to the many men and women out fighting the fire for the sake of the Chico and Paradise communities. I have only the highest regard for the unbelievably difficult and treacherous job they face. After watching them in action today, I have a whole new appreciation for the reality of their “work day.”
Likewise, my heart goes out to the families that have been forced from their homes.
At the end of a day like this, we are reminded of the things that are really important.
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Chico CA Real Estate: On the Sunny Side!
May 24th, 2008 categories: Chico CA Real Estate News
by Mike Wiegert
Last week at the National Association of Realtors (NAR) Midyear Legislative Meetings and Trade Expo, chief economist Lawrence Yun stated that home sales and prices throughout most of the country are poised for improvement in the second half of 2008 and that recovery will vary by market. Yun went on to blame the softening of the housing market last year on the “subprime mess”. Unqualified borrowers with scanty credit were given access to subprime financing with little or no equities. As these adjustable rate loans are being reset, borrowers find themselves unable to make the adjusted payments on the loans and subsequent foreclosures result. “In fact, if you look at where home prices fell the most, it’s the markets where subprime loans were prevalent,” Yun said. Cities with a high percentage of subprime lending are where the markets suffered the biggest downturns, he explained.
With these foreclosure sales thrown into the mix or data used to determine comparable sales in the market, the apparent market value of homes is pushed downward. An interesting twist to that situation is we’re now starting to see Chico homebuyers and investors competing for foreclosed homes. As a result, a sharp decrease in the margin between asking price and actual sales price is becoming evident.
Mmmm… let’s do the math: increased demand for foreclosure sales + increasing sales prices on foreclosure sales + market stabilization in the non-foreclosure market = market prices beginning to rise.
Is this all poppycock? Not at all! Many areas around the country are recently posting modest increases in sales prices. These areas include many portions of New York State, North Carolina, Washington State, Oregon, Wyoming and Utah. In fact, according to the Office of Federal Housing Enterprise Oversight (OFHEO) from January 2008 and February 2008 (month over month reports) overall U.S. prices were up 0.6 percent and 77 percent of the Metropolitan Statistical Areas in the U.S. reported price increases. Several markets that have seen price declines of 20 percent or so are turning around, Yun said, pointing to San Diego, Detroit and Fort Myers, Fla. Yun continued by forecasting that many mid-America cities such as Cincinnati, Milwaukee and Kansas City, MO are likely to experience home price gains in the 20 to 30 percent range over the next five years. Active markets like Miami, Las Vegas and Phoenix could go up as much as 50 percent in that time period.
Although the negative news-bearers continue to report what seems to be the overdone and worn-out stories of declining prices, there definitely appears to be a new day dawning.
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Chico Homes Foreclosure Listings
May 20th, 2008 categories: Chico CA Foreclosure Listings, Chico CA Real Estate News
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Chico Homes Foreclosure Properties
May 19th, 2008 categories: Chico CA Foreclosure Listings, Chico CA Real Estate News
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