A Buyer Wanting A Bargain

Q: Right now we are in bay area and planning to move to elk grove area in 3 months. We are looking for Single Floor ~2300 Sq feet in Gated Community. This home you have listed seems to fit for us. Ideally, we are looking for $275K house, If we really like it can you give us an idea how much we could bargain. We have the preapproved letter for 285K. We are working with an agent who is planning to show us few houses in Elk Grove area. We will most likely come in couple of weeks. Do you know if you are going to show this place till then?

A: Hello, this home is a 4 bedroom 2 bath. The market price in the area for those parameters at 2300+ sq ft begins at $290-295K in the gated communities, and I've also seen a few outside the gated communities that are still selling at that price.

Has your agent shown you comps so that you know what type of home you can get for your loan amount? Unfortunately $285K will not be enough for this area, prices are actually going up in certain pockets within this area and there is alot of competition out there for these homes. This home will likely sell for a little over $300K.

I just sold another home in the area for $285K and we had five offers on the home and continued getting calls and info requests on the home throughout the entire transaction.

At your current price range you should probably be looking at homes no more than $280K so that you have negotiation room. Unfortunately and contrary to what you might be hearing, this is not a "bargain" market. The banks are in no hurry to let the inventory go for less than fair market value because they have already lost so much in the decline. The banks take great care in using various methods (quarterly appraisals/BPOs) to ensure they are getting the most for the homes that they sell whether in short sales or as foreclosures.

This is not a buyers market, it's a bank's market. The banks call the shots. If it is a short sale, the bank determines the price and the terms of the sale, and will change the terms of the sale if they desire, and not negotiate those terms, if they desire. If it is an REO sale, same deal. Then there is the buyer's lender. You may qualify for the loan, but once that loan starts processing, they will ask you for things you nver even knew you had. Tightening of rules and regulations are the cause of the extra hoops and last minute funding conditions causing buyer's last minute headaches.

On average, it is taking a buyer 6 months to get into a home. Partly because many buyers come into the process uninformed and blame the lack of getting an accepted offer on their agent when the truth is the buyer had unrealistic expectations. Sadly, as a result, it isn't until months later (and 2 to 3 agents later) that the buyer finally learns the market and conforms, and regroups, comes with a new strategy, and gets an accepted offer.

This is a tough market and it will take some time and some rejection. So listen to your agent, make sure that he/she is well experienced in this market and in the area in which you plan to purchase, and you will do well. Don't look for a bargain, look for a home you can afford and enjoy for years to come.

We just filed bakruptcy, can we get a loan to buy a house?

The answer is no.

It will take either a bad hard-money loan with lots of cash down and horribly high interest rates or to wait three to five years based on the loan type you apply for.

I am just sorry that it sounds like you were not advised of that reality prior to filing.

Many people are opting for bankruptcy by default or upon bad recommendation by others because it appears to be a quick fix to a tough dilemma. However, bankruptcy is viewed by most financial advisers as a last resort when all else - credit counseling, budgeting and other efforts have failed.

Bankruptcy has far reaching consequences which make every day life very difficult for many years. Over the next few years you will find that it will impact your credit, finding employment, impact every day tasks like renting a car, and other necessities of life. Notwithstanding the fact that whether you are allowed a loan in a few years or not, your credit report will still wear the bankruptcy label for the next seven to 10 years depending on how you filed.

Why am I going on about this? Because you are now in a position to tell someone how to avoid what has happened to you. I am certain that if those who have had to file could do it again, with better counsel, they would not file or would not place themselves in a position to have to file.

Now that you have some time on your hands while you await the bankruptcy discharge, there are great free online tools to help you in beginning again and staying on track in preparation not only to purchase but to also establish spending disciplines that lead toward a healthier financial future.

I personally recommend sites such as http://www.mint.com and http://www.crown.org - wonderful and easy to understand tools that I use myself and have referred to family and friends.

Also, please don't go the hard money route. There is no guarantee of what the market will do and you are in no position to take such a financial risk.

My best to you,

Keisha Mathews, REALTOR
Century 21 Landmark Network

What happens to my second lien if both my wife and i are on the second lien and she filed for chapter 7 bankruptcy?

Q: what happens to my second lien if both my wife and i are on the second lien and she filed for chapter 7 bankruptcy? will they go after me now? My wife was laid off last year and was living on unemployment for while. now there is no more unemployment money. the mortgage and second lien depended on both me and my wife to pay. now its all on me and we are in trouble. i have wife and child with another baby on the way due beginning next year in addition with another family member living with us. i am sole provider. The second lien was not part of a typical 80/20 loan instead we used second lien money towards house improvements since it was crappy house. we cannot afford attorney to give us any legal advice. we got loan modification for second lien and they are pressuring to sign that before we are even approve to loan modification on first lien. what if we decide to short-sale or foreclosure, will they go after me due to second lien? HUD counselors are useless and bank is all about taking all they can. thank you, Mike



A: Mike, your question is "what if we decide to short-sale or foreclosure, will they go after me due to second lien?" The answer is, it depends.

If you decide to short sale, the second lien will require some type of payment towards allowing the short sale. The second lien holder will decide what their terms are. Sometimes they want as little as 10% of the balance owed and sometimes as much as 3% of the purchase price. What you can also definitely count on is that they will continue to pursue you for the deficiency.

If you foreclose, the second lien goes away, however the senior does not.

Your initial question re bankruptcy sounds like she may not have filed yet, and that you are investigating your options. May I suggest Norm Schriever, a debt counselor, with Unity Financial Solutions. Tell him I referred you and he will give you a free one hour consultation.

He is also affiliated with the Law Office of Kristin Marshall who is a real estate attorney. Unity Financial specializes in Credit Card Settlement, Debt Management and Bankruptcy. Most recently they have been assisting homeowners who have concerns with their mortgages and need options on what to do. The company will review your loan documents free of charge and advise you free of charge. Their goal is to help individuals in the long run to clear up their debt and begin again as quickly as possible.

They work in conjunction with the law office should the need arise for bankruptcy or court matters. They are also members of the BBB and have been featured on msNBC, CNNMoney.com, New 10, SacBee and are on Facebook.

Norms contact info is below:

Unity Financial Solutions
Norm Schriever
(916) 548-6350
norm@unityfs.com

Let me know how it goes.

I rented a home in July of this year and learned recently that is in foreclosure.

Just answered this question on Trulia:

Q.:I rented a home in July of this year and learned recently that is in foreclosure. The owner wants me to assume the loan and pay him off $20,000.

Is this a difficult process? The home is perfect for me, but I filed chapter 7 this year and don't think I will qualify for much of anything at this point. Can you give me feedback on this?

A.:

1. Assumable loans are rare these days, so verify that the loan is indeed assumable.
2. With your recent BK filing, you more than likely will not qualify for a loan for another few years, possibly 3 to 5 years. Meet with a reputable lender to see when you will qualify again. Since you are in Rio Linda, I recommend Eddie Fairchild of Summit Funding at (916) 504-9636.
3. Do not sign any paperwork without professional representation from a REALTOR and reputable ttle company.
4. DO NOT give up any money with the intention of potentially owning the home.
5. Divorce the property. Be prepared to leave the property. From a professional vantagepoint, and based upon the information you have provided, the circumstance is not leaning in your favor.

With the holidays upon us, you may want to think about being settled and look ahead. Start looking for another property to rent, and cut your loses now rather than allow any more time to go buy and watch your hard earned money go down the drain on a property that has no interest in you. Sorry to deliver the message so hard, but I'm just the messenger, by profession I might add! :)

My best to you!

How Do You Value A Property?

This question was recently asked and here is how I answered:

If you are asking how to determine a property's value, there are various ways to assist in detemining a property's value. Ultimately the worth is determined by what was paid for it. How you gather information on what to pay for it depends on what you require the value for. The value of the property, no matter how the info is gathered, should be at or near the same price, no matter which tools you use.

There are currently three acceptable and most common tools of "gathering" that information:

1. CMA (Comparable Market Analysis) - Completed by a licensed real estate agent. When completing a CMA, agents should keep in mind three crucial factors,
a) Only use comps within a half mile radius of your subject property, this helps ensure you are using properties that actually fall within the same parameters (builder, style, year built, etc) of your subject property. It isn't fool proof, but that's where your knowledge of the area and market should kick in and adjust for any discrepancies.
b) Keep your filters (min/max sq ft, year, bed/ba, etc) as close as possible to the subject property for the best determination. For example, If your subject property is 1400 sq ft you would be doing an injustice to set your filters at min1000 sq ft and max 1800 sq ft because once you add or subtract 200 or more sq ft to a home (the size of another room), the case could be made that that home now is automtically valued less than or more than your subject property. In the event you need to contest a value determination by a lender (in the case of a short sale), you will be able to make a better case when you use "cleaner" filters.
c) Never tweak your CMA. In this current market, the decision makers are the lenders, not the sellers. All lenders have recruited the assistance of other agents (BPO agents, such as myself ) to ensure they are either getting the correct value to help mitigate their loses, or in the case of a buyer, are making the loan at the appropriate risk value. The bank that I do BPOs for is Bank of America (Landsafe Appraisals), and they have tightened down on their BPO agents so much so that they have actually let some agents go, and they monitor your BPO results on a regular basis to ensure you are being consistent in your formula, as well as share best practices for determining value.

2. Appraisal - These are completed by a licensed appraisal professional and the results are much more detailed than in a CMA and as a result can be used to contest a CMA or BPO if necessary.

3. BPO (Broker Priced Opinion) - Typically requested by Senior lienholders, these reports are usually completed using the senior lienholder's BPO company's form (usually electronic and online). A pretty detailed report, asking for info such as can you determine if the property is vacant or occupied, most recent comparable three "solds", most recent comparable three "listeds" - dates listed/sold, year of build, beds/baths, sq ft, miles from subject property, etc), and normally includes pictures of the subject property, and sometimes pictures of the comparables.

Here is a short sale negotiating tip on BPOs: Currently, these reports are updated normally every three months. That is good information to know when you are negotiating and come to a bump over price. Sometimes a three month old report can mean the difference between a denial (if the buyer's offer is too low), and an approval (if an updated BPO is completed and comes back slightly lower).

Just to reiterate, whether you are on the REO side, short sale side, or buyer side, the lender has the final say, and they are scrutinizing values more now than before - and rightly so. So just remember to keep your value determinations above board and you will be making the best decision for all involved.

Keisha Mathews
"The Short Sale Lady" TM

More Evidence That the Housing Market May Be Recovering

On May 3, PMI Mortgage Insurance Co., a provider of residential mortgage insurance, released its second quarter U.S. Market Risk Index.

The Index uses economic data--home price appreciation, employment, affordability, excess housing supply, interest rates and foreclosures—to determine the risk of price declines in the nation's MSAs (metropolitan areas). These risk scores indicate the probability whether home prices in a given MSA will be lower at the end of the next two years.

According to PMI, the Index shows fresh evidence of a greater probability of a recovering national housing market—and the likely prospect of higher housing prices in many markets in two years.

Key findings include:

• Of the nation’s 384 MSAs, 356 had a declining Risk Score, meaning the projected risk of prices falling is reduced.

• The number of MSAs with a Risk Score of less than 50--suggesting better than even odds of higher housing prices in certain markets in two years--increased 26.5%.

• The 10 most improved MSAs (where the risk of price declines is now lower) are Columbus, Ohio; Pittsburgh, Pa.; Memphis, Tenn.; Charlotte, N.C.; St. Louis, Mo.; San Antonio, Texas; Kansas City, Mo.; Nashville, Tenn.; Chicago-Naperville, Ill.; and Indianapolis, Ind.

• The 10 least improved MSAs (where future price declines are expected) are Phoenix-Scottsdale, Ariz.; Santa Ana-Irvine, Calif.; Orlando-Kissimmee, Fla.; Jacksonville, Fla.; Los Angeles-Long Beach, Calif.; Tampa-St. Petersburg, Fla.; Riverside-San Bernardino, Calif.; Las Vegas, Nev.; Fort Lauderdale, Fla.; and Miami-Miami Beach, Fla.


If you’re considering buying a home in one of the most-improved MSAs, now is a good time to act, as prices may be on the upswing, according to the Index.

To learn more about the PMI Index and prices in the Sacramento area, give me a call today.

Our landlord is facing foreclosure and is short selling...

...I want to accomodate but I don't want it to become invasive. Can I put a limit to the number of daily showings? What kind of notice am I entitled to move out?

Hi Mary

As a short sale listing agent I can tell you that your situation is not at all uncommon.

Overall it appears that you were not in receipt of all information; only as it unfolded, which is not your fault. You are to be commended for accomodating your landlord because many tenants make it difficult for the landlords to smoothly close the sales under these conditions.

Notice I say "smoothly". The reason is this, although you can make it difficult, California tenant/landlord law states that once the property goes into escrow to exchange ownership, you can then be given a 30 day notice to vacate. The outcome of fighting that is just futile.

You are doing the best thing for your family by cooperating. As far as showings, you can use your one good card and let the listing agent know what is more comfortable for you. Keeping in mind of course that the goal is to be able to have the property shown.

I usually work with the tenant and offer them showing options:
1. Call tenant to schedule appointment, allow min 24 hr/ 2 hrs/etc
2. Showing only on ____ from __ to __
3. Make offer contingent upon showing (if tenant is irrate and not cooperating)

You can hold your landlord to this because, afterall, they want the property shown and you hold that power.

Below is the link to the CA tenant/landord publication I referenced earlier.
http://www.dca.ca.gov/publications/landlordbook/catenant.pdf

In addition, when looking for a new property, to assist in avoiding renting from someone in possible foreclosure trouble, ask the owner when was the last time they refinanced and how much do they owe on the property. If they say they refied within the past five years, that could spell trouble. Most people who have refied/purchased in the past five years are now upside down and facing foreclosure. Stick with homes that are older than five years, or recently purchased (within the past few months). These homes, where the loan is affordable, are a safer rental bet. No guarantee, but some guidelines that may save you from a repeated occurance.

Let me know if I can be of further assistance!

Keisha a.k.a. "The Short Sale Lady"(tm)