I came across an article in the OC Register of a lawyer that has been advising clients to break in to their foreclosed homes, change the locks and take them back from the bank…. are you kidding me? Yes, this is a true story!

Needless to say, a whole bunch of charges were filed against him and the California Bar suspended his license to practice law. The court handling the case ordered him for psychiatric evaluation (you think?). 

This economic climate pushes people to their limits and makes them do things that leaves you scratching your head. It is a sign of the times and until this economy turns around, we will continue to see and hear about off the wall things that people are doing. It is sad and we hope that things will get better. What are your thoughts?

It appears that the House of Representatives will not be extending the expiration of the high balance loan limits beyond the 9/30/2011 expiration date. What does that mean to the home buyer?? let me first start by saying that the government implemented a program to try to stimulate the housing market when the market had collapsed. The decision was made to create a “High Balance Conforming Loan Limit” which would help extend loans to buyers looking in higher priced areas without having to worry about the strict guidelines and higher rates of Jumbo financing. Furthermore, the increase in balances meant that FANNIE MAE and FREDDIE MAC would be involved in purchasing the loans from the banks issuing them. FANNIE and FREDDIE do not purchase jumbo loans. The high balance loans were increased from $417,000 to the $729,750 mark. The FHA loans were also increased in Orange County to the same loan levels and only requires buyers to put 3.5% down. What does the expiration on September 30, 2011 mean to you? It could mean thousands of dollars!

After the expiration date, the high conforming loan balance will be rolled back to $625,000 from the $729,750 number. Once expired, say you buy a home and your loan is $650,000. Instead of getting the High Conforming loan pricing, which is typically alot lower than the Jumbo pricing, not only will you be required to put 20% down, but most likely you will be paying about .5% higher in rate.

If you are in the market for a home, this is important information that you must factor into your decision. If you would like further information or would like to discuss, feel free to give us a call.
Jose & Chris

The Chairman of The Federal Reserve, Ben Bernanke said in a rare news conference today that the 600 Billion Bond-Buying program will end in June. As mentioned in previous posts, the Fed has been trying to keep Mortgage Rates artificially low by buying enormous amounts of mortgage backed securities.

Mr. Bernanke felt this aggressive program would also give investor confidence to purchase the mortgage backed securities. According to a Wall Street Journal article I came across, investors are starting to come back into the picture and have started to buy the mortgage backed securities. This as a whole is a great sign for the markets.

The question is, how is this going to affect mortgage rates? this is a tough question to answer. My personal opinion is that rates have been at all time lows and will most likely go up in the near future. We are seeing some inflation in the horizon and the Fed will be using rates to combat this issue. Bernanke might not do it now. But rest assured he will pull the trigger, when we least expect it.

For now, it will be interesting to see what happens with mortgage rates once the Fed exits in June. What do you think? I would love to hear from you.

Jose

We recently were selected to Orange Coast Magazine’s elite list of Realtor’s with the highest customer satisfaction. They hired an independent firm to conduct surveys and we are happy to report we made this coveted list.

If you been waiting for mortgage rates to hit bottom and have been holding off from purchasing that great home you been dreaming about, or refinancing your current mortgage, THE TRAIN HAS LEFT THE STATION!

In the past two weeks, interest rates have been on the move. They have inched up almost .5%.

Chris and I just sold a property to a couple that are getting a VA loan. When we started the offer process, the rate quoted to them was 4.25%. By the time negotiations were done, the rate had gone up to 4.75%.

We are all guilty of trying to time the market or think that if I wait the rates or prices will go even lower. That is human nature. However, as I have stated in several of my posts, timing a market or trying to guess if rates will go even lower, even though we were at all time lows, is basically impossible. One has to look at the big picture and history. At all time low levels, there is a higher probability of rates shooting upward than to keep going down. Also, think about this, if you buy a home today, in general, you are purchasing the home at a 40% to 50% discount off the highs in 2006.

Another trend that we have seen from the rates going higher is sales. When buyers of homes are siting on the fence thinking rates will go lower and all of a sudden they shoot up, buyers panic and they jump right into that purchase. So we have seen a flurry of sales activity in our local market as a result.

The moral of the story, look at the big picture and weigh the risk. But ultimately, history repeats itself. Buy a home or refinance your mortgage now before rates and prices go higher.

I know this goes against everything you are reading in the media. However, we are the ones in the front lines and are the first to see the trends, well ahead of our doom and gloom friends in the media.

Drop me a line and give me your thoughts.
Jose

For those of you lucky people that have not had the pleasure to try to purchase a short sale, I thought of an analogy that would express the pain a buyer feels while waiting for an answer from the bank. So I came up with this. If you are a traveler, you will be able to relate. When you check in for a flight and you learn the news from the lovely lady behind the counter that your flight was over sold, that it is having mechanical problems and the weather is not cooperating for an on time departure, you think to yourself “hmmmm, I might be here for the next few hours waiting”.

So you decide to go to the bar, get yourself a few drinks, then you decide to check back in with the lovely lady at the counter for an update. No new news! So you decide to go have something to eat. Then you go to the restroom, then on to the book store to pick an overpriced Daniel Steel novel for the wife. You come back to check in with the agent an hour later, no new news! Frustrating, absolutely! So now you sit down in a very uncomfortable chair at the gate amongst the rest of your fellow passengers wondering when in God’s Earth you will be able to get on with your trip.

About an hour later, the lovely lady behind the check in desk decides to update the passengers and lets them know that they are getting a different plane that has to be flown in in from a different airport, which happens to be 34 seats smaller than the prior plane. So, they start asking for volunteers to continue to wait and spend a day at the airport. Sound familiar? well, the pain that you feel during this episode is the same pain a buyer of a short sale feels while the waiting game is going on. They wait with excitement for any sort of good news and they wait and they wait and they wait.

Finally they reach a boiling point where the excitement is gone and frustration has taken over, green horns come out, smoke expels from their noses and ears and the transaction is history.  It is a nightmare everyone involved wants to forget.

If you are the listing agent of the short sale, it is imperative you keep the buyer and the buyer’s agent informed and communicate any activity on the file, good or bad. Silence and lack of communication keeps a buyer in the dark and frustration sets in. However, if you are the buyer’s agent, you have to keep your buyer engaged in the transaction.

The Short Sale process is not for everyone. It is for the brave of heart. However, patience and persistency could lead you to a tremendous buy.

Your thoguhts?

We recently had a client ask us some questions pertaining to the sale of their home and we felt that everyone could benefit from our answers. This is a copy of an actual email from our client and our response. Hope you all learn something from it:

Hi Chris!  Hope all is well with you!
 We are really gearing up for the sale of our house.  We have a few questions :
 a) Is now a good time?
b) Is it worth it to get new appliances for the kitchen?c) Is it worth it to repaint the kitchen and give a neutral tone (if you remember our kitchen is painted a really bright yellow)?
d) Anything need to be done to the cabinets in the kitchen (other than cleaning them)?
 

We look forward to hearing from you and working with you!

Here is our answer:

Hi guys,
 
Here are a few of my thoughts.
 
Timing:
 
Homes are sold in this area throughout the year.  Typically, the home selling season runs aggressively from Feb 15 through May 30.  June and July is good but it slows down some during the summer from the peak months of Feb thru May.  August is generally the second slowest month of the year next to December (although we have been busy this month) and then around Sept 15 through Nov. 10 the market generally has a second wind and these months are similar in activity to June and July.  Nov 15 through Feb 1 is usually a bad time to sell your home.
 
Now that I have said all this…keep in mind that the above is a very general time sequence.  In the 25 years that I have been doing this, the market has generally follows this above pattern.  There have been times however, where there are aberration’s to the general pattern.  I’ve seen some December’s rock because of “end of year tax issues” and I have seen August month’s where the market has been very good.  So you should take the above time frame as only a general guide.  Homes sell all year long…homes sell everyday!
 
This year, the market for homes of your exact type was going bonkers from March thru May.  This was stimulated by the tax credit offered by the government.  Once this tax credit ended, the activity slowed some.  BUT, the market is still very good for single family detached homes below $700,000.  The market did follow the above pattern this year.  Feb thru May were excellent (except for the real high value homes above $1.2 mil.) June and July were good but there was a slight slow down and August activity has backed off a bit.  But homes are selling.  My business partner Jose, just showed a home in Laguna Hills in the high $500’s that sold in 1 day.  I think the best advice I could give you in timing for your home is as follows:
1.  Don’t worry so much about the time of year
2.  Remember the three most important factors in selling your home
            A)  It is all about price…price it right and you will sell
            B)  Condition of the home.  If the home is priced right and shows like a model home, or at the very least like a home that has been taken care of and the buyer has to do very little once they move in (move in ready) then a home will sell in this market.
            C)  Make it easy to show….in another word, allow a lock box on the property without restrictions.  In this way an agent will call the owner, check to see if the time works out for the seller and then goes to the property.  If the agent cannot get in touch with the seller, then they leave a message as to the time they will be there and they proceed with their schedule.  If the seller is not home, then the agent uses the lock box.  This is considered as the definition of an  “easy to show” house.
 
The above is our mantra to our sellers…price it right, make it nice and make it easy.  This usually get the home sold regardless of the time of year you market your home.
 
The answer to B,C, and D of your email was really addressed above but let me be more specific.  The kitchen and the bathrooms are to two areas of your house that are most important in regards to the interior of your house. If you spend money on upgrading a home for sale, the kitchen and bathrooms are where you get the best return on your “upgrading” investment.  Most buyers want to see the granite counters, stainless steal appliances, new fixtures and sink, new cabinets and nice floors in a kitchen.  The bathrooms also follow this “want” list by most buyers.  Granite counters in the bathrooms, new fixtures and stone showers and baths.  BUT, this is not always possible.  My general advise to sellers is to clean up the house in the best possible way without having to spend a lot of money.  Spend hours doing work…not money.  Clean up the yards, plant some flowers, manicure the grass (or re- sod), paint some rooms, touch up the walls, move around some furniture to open up rooms, GET RID OF THE CLUTTER that life requires us to live with.  These are the most important things.  If a client does want to upgrade in more elaborate ways, then the kitchen and bathrooms are the place to do it because that gives the best return in dollars.  Stainless steal appliances are a good addition but they really make a difference when combined with granite counters, new cabinets (or repainted or restained old cabinets) and upgraded floors.  The cabinets and the flooring is not as important but the appliances in combination with the granite counters seem to be the big item buyers are looking for.  Appliances by themselves are always welcomed by buyers but it might not make your house more valuable in equity terms…only easier to sell because it just eliminates a buyers objection in having to buy new ones.  If you are going to upgraded your appliances, then do it in stainless steal and match ALL the appliances in stainless steal.  I do not think you get the pop with buyers on new appliances if they are white or black as you do with stainless steal.
 
As far as painting the kitchen, this is always good and a neutral color is always more desirable.  Cleaning the cabinets, or repainting them or re-staining them is always a good thing to do and fairly inexpensive.  Any improvement to your house that is relatively inexpensive is ALWAYS a good thing to do.  It is the small things that add up to make a house nice.  General overall cleanliness and exactness in look, both inside and outside,  is the highest priority.  Curb appeal is VERY important.  What a buyer views from the front as they drive up to the house, often times sets the buyers attitude towards the property.
 
If you want Jose and myself to come over to your house to give you our opinions, we would be happy to do so.  We both have been in the business a long time and Jose is good at this stuff too.  We sometimes disagree on our opinions…so this could give you the full range of input.  Just let us know if we can help.  I also have a client who is an interior decorator who has given me a couple of free evaluation cards to hand out to client.  She will come over to your home and advise you as to setting up your house to sell…for free.  She does this in hopes of obtaining new clients but there is no obligations on your part.  If you want me to call her and talk to her about your home I will be happy to do so.
 
That’s about all I got.
 
Chris

How would you like to own a slice of Presidential history? The Western White House, President Nixon’s San Clemente estate is on the market. Originally priced for a cool $15,000,000 and just reduced to $8,995,000, this Spanish Style Hacienda Residence boasts over 13,000 Sqft. with 7 bedrooms, 9 bathrooms, a gym, a media room and a home theater. If you are ever at the San Clemente Pier, and you look south down the coast, you can see this magnificent estate perched on the point adjacent to Cypress Cove.

How about a private tour of history? Click on this link….  http://addressadvertising.net/lite/mls/4070calleisabella/2/

For a private showing of this estate, give us a call and be prepared to provide evidence of your $9M in the bank to the listing agent.

Jose

We recently ran into a situation that we thought we would pass along to our faithful blog readers concerning an incident, whereby a fellow Realtor, through a lack of details and knowledge, was hurting her ”selling client” who was employing her to market and sell their property.  Let me fill you in on all the grizzly details. 

 Jose and myself were sitting an open house at one of our listings and a potential buyer came into the open house and expressed a desire to locate a  5 bedroom home with a pool within the area.  We were set up at our open house with all the technological necessities that are needed in order to convert the open house into an “office on the go” and as such, we had Internet access and a computer to access the Multiple Listing Service, a data bank of properties that Realtors use to search for properties.  I immediately cranked up the system and plugged into the MLS search engine … 5 bedroom homes with a private pool.   Under this search criterion there were 2 properties found.    We gave the information to the potential buyers and asked them if they wanted to see the properties.  Upon their acknowledgement, Jose put them into his car and went out to show the properties. 

In the meantime, I had a brief lull in the open house activity and had time to do a slower more methodical search of the properties on the market.  I was rechecking the properties  in an effort to find a pool home that I might have missed, for one reason or another, on my initial brief search.  Sure enough, I found one that did not come up in my initial search.  I was somewhat baffled why this pool home did not appear on my initial search for pool homes.  I looked over the listing information and …bam…there it was, an error made by the listing agent when she imputed the listing into the MLS.

Let me give you some background.  When an agent takes a listing, one of the most important aspect of their job is to make sure that the information  imputed into the MLS data bank is correct and up to date.  When an agent is searching for a home with a pool, a differentiation needs to be made between a private pool and a community pool.  Clients with a pool in their back yard are labeled, for MLS input purposes, as “private pool” owners.  Properties with community pools, do not get this “private pool” designation unless they also have a private pool in their backyard.  When an agent is searching for a pool home on the MLS, 99.9% of the agent will code in the “private pool” designation in an effort to find the homes with the pool in the backyard.  This is exactly what I did when I quickly looked for that special pool home for our open house client.

The pool home I found in my second, more mythodical search, was only found because I had the time to look at all the pictures of the listed properties and saw a home, not on my initial list, that had a private pool.  Why hadn’t this home come up on my “private pool” search?  Well,  the reason was an error we see far too often.  When the listing agent coded information into the MLS  on this particular pool home she did not imput the “private pool”  label.  She did input the following:  community pool, heated and filtered, and gunite….but she did not input”private pool”.  As a result, when someone is looking for a “private pool” within this community/area, this property will not appear.  It is a simple error that the listing agent made… but a egregious one.  This is a prime example of how an agent can hurt the prospects of a seller in marketing the home.

When Jose and myself advise clients on selling their homes we often give them a detailed description of all the steps needed in order to place the property on the market.  We always sum up by telling the prospective sellers that the most important ingredients are 1.  PRICE, 2. EASE OF ACCESS INTO THE PROPERTY, and 3. NO ERRORS BY THE LISTING AGENT.  Above is a perfect example of a violation of principle #3.  The agent made a mistake when she imputed the listing into the MLS and that error will continue to affect the property until it is discovered by the listing agent.  This error is not fatal, but it is a big one and another reason why the public must exercise their due diligence when picking the right Broker to list and sell their home.  It’s all in the details.

The most asked question I get from people is “When do you think the Real Estate Market will be coming back?”.  There are many theories and people’s opinions when the housing market will be coming out of this recession. Let me just say this. Every recession is different. Some are more severe than others. There are also numerous causes. One thing is for certain, the recession of 2007-2009 was pretty severe.

We all want to forget about the hard times we have battled the past few years. However, the cure does not happen overnight.  We have seen some improvement in the local Southern California market. Some say the increase in sale activity was due to the First Time Home Buyer Credit of $8,000 expired at the end of April, so there was a rush to purchase homes in the first quarter of the year. Home Builders are seeing some success. Especially in the Irvine area where the Irvine Company has sold out phase after phase of their new homes in Woodbury. Emile Haddad, president and CEO of Aliso Viejo-based Five Point Communities, which manages several housing developments for Lennar Corporation says the market will start improving in 2012 and according to Mr. Haddad, it will come back quicker than anyone is anticipating.

The inventory levels continue to be low and this has given a boost to the market. We are seeing inventory levels go up in the past 30 days. For example, in April, Ladera Ranch had less than a month of inventory of homes on the market. Today, the number has inched up to 3 months. Keep in mind that when the bubble burst, inventory levels were off the charts. We saw these levels hit 15 to 18 months of unsold inventory.

One thing I have learned through time and by going through my second recession while in the Real Estate business, the local markets are cyclical. They typically cycle through in 7 to 10 year increments. The beginning of the great recession started in 2006. Based on history and the past cycles, I would think it is safe to say we are going to continue to struggle, especially in the higher end of the market until 2012-2013. In the mean time, we will see a volatile market that is trying to build a foundation to spring into the next up turn.

I would love to hear your take. Drop us a line.

Jose