In my past 2 postings I've gone over in fine detail the short sale process. The REO (or foreclosure) process of purchasing a home is the Readers' Digest version and typically with a much better outcome. The foreclosure begins with a Notice of Default. After missing a couple of payments (sometimes as many as 6 months worth) the lender will file and record this official notice. From that point the lender can take back the home in 3 months and 3 weeks. The weeks stems from the publishing of their intent in a newspaper for 3 consequetive weeks after the 3 month period. At any time after that, the bank can reposses the home. They will typically offer it for sale at a "Trustee's Sale" on the courthouse steps. They will place a "reserve" on it (or lowest amount they will accept for the property). Should that reserve not be met, the bank then decides to include the property in their "Real Estate Owned" (REO) inventory. They will market the property as any seller would by having it appraised, selecting a Realtor, listing it for sale and negotiating the terms. And that's where this whole process becomes interesting.
Prior to relinquishing the home, the previous owner may choose any number of avenues to vacate the premises. They may leave in anger and trash it on the way out or as they carefully maintain the home until their last day and regretfully leave with probably a bitter taste in their mouth from the bank's lack of response or misinformation. I've seen holes in the floor where toilets once stood, carpet so soiled I believe they disassembled their motorcycle on it, topless cabinets with their granite slabs long since removed and floor tiles broken methodically one by one. Whatever the condition, the home needs to be sold. And that, my friend, can be an exhilerating experience for any bargain hunter. But beware...this environment is not for the faint hearted...and NOT for the do-it-yourselfer. I'm speaking of the armchair investors who want the hot deal but don't want to be tied down to one Realtor. I'm speaking of those that want to "keep their options open". I've said this before... a qualified Realtor is worth their weight in gold in this volatile market. It's fine to surf the internet and look, but let your Realtor take you on tours, give you direction and help you wade through the mountains of paperwork. No two banks have the same procedure. Your Realtor will ascertain whether the lender has other offers, what type of financing or closing costs will be offered, whether the lender will consider repairs or a termite inspection. In short, your Realtor is your attorney, your psychologist and your guide.
When you offer on an REO property you will likely have competition. In my most recent open house for one of my REO properties, there was a deluge of buyers (many side by side with their Realtor) who flew the property to determine in a matter of minutes whether this should be their conquest. They were poised with lender letter in hand determining to be the first offer in if this was "IT". By day three of this new REO listing I had 27 showings and 6 offers. Only 2 of the offers were complete. That is, the real estate agents did not read the instructions on the packets provided and their offers are not submitted to the bank. The banks are very specific about the terms and process they follow. As they create a purchase addendum that will be their used throughout the country, the agent needs to be familiar with this document. It will supercede the standard California Purchase Agreement. So choose your agent wisely. I recommend someone who is a FULL-TIME Realtor and one who studies and knows this market...not a lender who happens to be a Realtor. I may offend a few people with my opinion but honestly I don't want a dentist who happens to sell cars also. I want a professional. In this market, you need to stay on top of things and one career is enough. So off my soapbox and on to the REOs again.
Banks who own property today are anxious to dump their housing inventory and your response time will typically be less than seven days. So with your agent selected, find a great lender and get that lender letter in hand. My recommendation? Jim Auten, American Capital Home Loans at (760) 975-0255, jim@achlinc.com or www.americancapitalhomeloansinc.com. Be prepared for multiple offers. I am typically seeing offers $20,000 to $30,000 over the asking price. The stronger you make your offer, the better your chances. The strength of your offer comes from the amount down, your credit score, whether you need closing costs paid, and closing timeframes. Banks can and do pay closing costs (typically up to 3%). If you need the assistance well, then you need it. But if you can keep your offer clean, your chance increases dramatically. A bank looks at the net amount to them plus the ability to close. They will rarely look at a contingent offer so sell your home first, rent something temporarily and strengthen your buying position.
Once your offer is selected, you will begin your inspection period. Rely heavily on your home inspector as the lender will not be able to give you the history of the property. Their disclosures are minimal at best. Your agent will help you go over your Natural Hazard Disclosures, escrow instructions, Homeowners Association CC&Rs, etc. All of these reports should be given to you in the early stages of your escrow to help you decide if this is the home for you. Typically your contingency period is a "passive removal" which means you must put any issues in writing by a certain time period (typically 7 days). If you don't notify the seller in writing, the addendum usually states that you have checked out the property and have AGREED to the current condition. So watch your time frames and read your addendums!
Hopefully, your escrow will be a smooth transaction as the REOs for each bank are handled by the same escrow companies. Your Realtor will assist you along the way and most interaction will be via email to keep you updated. My experience as an REO agent has been a great one. I pride myself in responding to agents as quickly as possible. The process can be frustrating if the banks give too many assets to any one agent. That agent can't possibly handle the load and their response time and service is deplorable. I am always happy to receive new REO assets and look forward to closing a transaction with you in the very near future!
Visit my website at www.ViewKimsHomes.com and click on featured properties for my current list of REOS, short sales and equity listings along with details and photos. Email or call today. I would love to help you through this exhilarating process and hand you the keys to YOUR dream home AT AN INCREDIBLE PRICE next month!!
Tuesday, September 9, 2008
Saturday, July 26, 2008
Short Sales vs. Foreclosures in San Diego County
Well I apologize for the lengthy delay in this second installment. The market has actually heated up way more than I anticipated; and I have been scrambling to assist buyers score some of these incredible deals that we are currently seeing here in San Diego County. I got a call from an investor from New York telling me he wanted a "hot deal" as he heard San Diego was "on sale". I replied that just about everything is a "hot deal" here in San Diego! Even some of the areas that appear to be "bullet proof" (like La Jolla and other coastal cities) are on sale. While you would be hard pressed to find many short sales or REO listings there, the rest of the county has some incredible values. It's hard to turn down 4,000 sq. ft., built 2003 on 1/3 acre (listed at $522,000) inland...and some coastal die hards are actually saying good bye to their beloved ocean breezes and moving inland and into North County to take advantage of the absolutely incredible buys. It is a life style change for sure. But when you are "roughing it" in a 3,500 sq. ft. home built 2006 on 2 acres with an entertainer's backyard to die for, some adjustments can be made. So while homeowners are expanding their scope of acceptable living quarters, this forces "bullet proof" communities to adjust somewhat in their pricing as well. So, yes, all of San Diego County is on sale!
Now on to the fine print. The "sales" I'm speaking of are typically short sales and REO properties. So strap in and I will give you a little Short Sale and REO 101 class so you can start scooping up those bargains like a pro. First of all, a short sale is when a homeowner needs to sell his home because they can no longer keep up with payments. Perhaps they got caught in an interest rate adjustment or maybe a personal set-back (job loss, illness, etc.) They list their property with a Realtor, garner an offer, and then the Realtor negotiates with the bank to try to get them to accept this reduced amount and wipe out the loan they have with that bank. Simple enough, right? If only it were. First the banks need to establish two factors: what is their hardship (the reason they can no longer keep up with the payments) and will the market allow them to sell their home for a value large enough to cover the entire loan debt. The answer to the second question is always NO in San Diego County at this time. Our peek pricing hit 2005/2006 and we've been losing ground since that point. Prime example. A client of mine purchased a new construction property for $550,000 in 2005. Nine months later I sold it for him for $860,000. Now granted that's an extreme case, but we did have this swift upswing in home value that was obviously not sustainable in any economy. And since then, we are adjusting to a more balanced market. If you think about it, home prices have never NOT returned to where they once were...and so, too, will we hit that high point again...and even surpass it. Speculation has it we are looking at 5-7 years for recuperation and the beginning of another upswing. But ask 100 people and you will get 100 answers. We just know it's not happening in the near future. And so there are some fabulous deals in this lull.
Back to my first point. Now the borrower needs to prove a hardship. They submit a letter to the bank stating their case. Usually it is a viable reason and the bank accepts it. Prior to that time the lender works consistently in the hopes the borrower can create a little magic and make up the lost payments and get back on track. Some banks have all but wiped out the second loan to reduce the monthly debt. Some have stretched the payments to a longer time period to ease the burden. But typically, this is a lost cause and the borrower is left with a short sale option only. One of the biggest problems blocking "restructuring" the loan is that the borrower needs to requalify for the new loan structure. Many times their savings and even retirement have been tapped to keep up with the payments thus far, and they have no reserves left. Additionally, their credit score has dipped considerably due to the credit card debt that tends to mount when used for daily purchases and not just occassional luxuries. In my experience with my clients, the bank's position is that they are no longer credit worthy, have no money down and (by the way) you've already proven you are willing to walk away from your responsibilities by contacting us and asking for a short sale, so the bank would rather take their chances on a new buyer. One with better credit and money to invest in the property which makes it a little more difficult to walk away from than those that used 100% financing and nothing invested in the home. (This is the transparent problem that began this entire mess. Why, in God's name, would a bank loan money at sometimes 105% of the purchase price, with no money down, stated income, stated assets when a market is on a huge unsustainable upswing? The minute the market falls $5, the bank is in the hole...but then you know what they say about hind sight).
Onward through the short sale process. The bank will require tax returns, pay stubs, bank statements, monthly expenditure list, etc. to create a "packet". Some banks will take this up front, others want it when there is an offer. Once the Realtor has attained an offer, the fun begins. Since the banks won't typically talk with the Realtor until there is an offer, the Realtor needs to place a hot price on the property to bring in lots of showings and multiple offers. This is why the market is a bit tainted right now. The prices you see on homes are not to be in any way suggestive of an actual purchase price. When the rock bottom prices are listed, the feeding frenzy begins. Multiple offers are absolutely essential to keep this circus going. The reason is simple, those that have the bucks to play this crazy game, don't necessarily have the patience. They write offers on every property they feel might suit their needs. With 17,000 homes and condos on the market in San Diego County, they DO have options! They see which offer gets results first. And to make matters worse, even while they are in escrow another one of their offers gets accepted and they jump ship mid escrow chasing their new rainbow. As a Realtor, I don't have any choice BUT to continue to garner interest in my listings and continue to take offers. Each listing is just one giant revolving door of offers. When the bank finally gets around to taking a look at our file, it's usually a game of last man standing. He who still has an offer in play usually wins. The bank's (and I mean ALL banks) response time is usually initiall 60+ days before it is in the hands of the negotiator. I've had offers in for at least 4 months with no response from the bank. I call twice weekly and can pretty much recite the response verbatum. "Your file has not yet been assigned to a negotiator, call back in another week". The negotiator is nearly the last step in the short sale lottery. They then have to open your file (the magic words) look through the entire packet and then decide to accept or reject the offers-or counter them. The negotiator usually has the file for an additional month before it is magically opened. After negotiating the final terms they will accept, the Realtor crosses their fingers and HOPES they have made a deal. Now the "deal" is then presented to the final decision maker-the invester (dun dun dunnnnnnnnnn). They can choose to accept, reject or counter or decide to pass on everything and take their chances with foreclosing on the property. So let's examine the time frames...they process start to finish is typically 3-5 months long. The delay is specifically that the lenders all state they are back logged and don't have the staff. After all, it's been since 1991 that we had the last short sale market, so these departments had to be restaffed and retrained and most of the last group probably isn't around to do it. So they've been learning on the fly. Frustrating? Oh my God, yes. Exhausting? Unbelievably...for all parties concerned. Humorous? Hardly (although sometimes we just have to laugh at how freaking ridiculous this all is. If there were just a SYSTEM...and they would all follow it...there are more than enough buyers for these properties. The sickening thing is after all this work, many homes are just sent through to foreclosure...even with offers waiting to be accepted. "We just didn't have enough time" cries the bank. I could fill a thousand blogs with the horror stories, the lack of communication between bank departments, the tears from agents, sellers and buyers alike. Everyone outside of the bank just wants to put the deal together and have another good soul profit from this lending fiasco and get on with their lives. But the lack of organization within the bank's infrastructure prevents that from happening. In my opinion, that's where the government's intervention is warranted...make these damn banks straighten up, create a 30 day system and let the buyers get a deal, and let the homeowner get on with rebuilding their life and finances. And that's my only political comment!)
To further compound the situation, many homes have a second mortgage on them. So even though the Realtor gets a thumbs up from the first lender, the second still has to agree or the deal is off. The catch? If the second does agree, they will typically walk away with $1,000-$5,000 for their total pay-off. And the loan balance is usually $60,000+. If the second doesn't agree, all of that effort is wasted. And honestly, I understand their position. If they don't agree to the short sale and the home is foreclosed upon, they can still go after the borrower for their payment. California is a "one action" state. If their one action is to accept the short sale, they give up their other options. Now is it likely the borrower has much to even go after at this point? Probably not. So many short sales are actually accepted by the second lender and the deal is done.
I have to say in the bank's defense, some of them are stepping up their process a little AND they are getting flexible with the offers they accept. I've seen them offer buyer's incentives, pay closing costs and accept VA and FHA financing conditions. We just need more of that. ALOT more of that. I'm just not sure the cure will come in time. The short sale market was created mainly by the adjustable mortgages (many with teaser rates) that began in July 2005. They mainly began to adjust in July of 2007. That creative financing arena (100% financing, stated income & assets) began to slow in the fall of 2007 and was all but gone by the beginning of 2008. So by my calculations, we should be done with those adjustable mortgages around the beginning of 2010. There will still be short sales that need to shake out after that. Hopefully by the end of 2010 this will all be in our rear view mirror and we can get on the road to recovery.
So have I totally turned you off to short sales? I really hope not. But more than anything you deserve the truth. If you are a seller and need to do a short sale then it is what it is. Your credit will be dinged on average 75-150 points. For a foreclosure: 200-300 points. A short sale seller can typically rebuy in another 3 years if they keep up their credit and payments (although they will likely pay a premium in interest rates). For a foreclosure the consequences are much more dire. I believe they both stay on your credit for ten years. Obviously, list your house a.s.a.p. with a Realtor experienced in short sales. Your Realtor really is the key. They must possess the knowledge to push through the convaluted lending sytem, negotiate all points of the transactions and be organized with the mountain of paperwork they need to wade through. Give them a fighting chance by calling them in the early stages. You can do this simultaneously while trying to work out a loan restructure with the bank. That way if you hear the bad news from the bank that it just isn't possible, you won't have lost any valuable market time. Knowing that it takes 3-5 months for all of this, calling a Realtor after you've missed 6 payments is a bad idea. The timing of the process is that once you've missed a couple of payments, the bank will file a notice of default. This is a matter of public record and starts the foreclosure clock. From the filing of your "N.O.D." it takes 3 months and 3 weeks before they can legally take your home. Your Realtor will need every day they can get to try to get your offers accepted by the bank before your foreclosure.
From a buyer's perspective, the biggest benefit to purchasing a short sale is the tremendous value you will realize from your home buying dollar. These homes are lived in and still typically cared for by the seller. You will get the benefit of all of the disclosures the state requires a seller to provide once in escrow. You will know the history of the home and it's ins and outs. You just need to pack your patience. The perfect short sale purchaser already has a comfortable place to reside (a rental) does not have a home to sell first (no contracts contingent on your own home selling allowed) and has time to spare. You will likely be involved in multiple offers on the property you choose. Make your offer as attractive and strong as possible. It won't help to stomp and demand a response, either. You will get your response when the bank is ready to give it. As one lender put it, this whole environment is like finding a hot special at Walmart...stand in line and wait your turn. If you want better service and are willing to spend the much bigger bucks, then go shop at Nordstroms.
Next time I will discuss foreclosures and REOs!
As alway, choose a savvy, full-time, professional Realtor. For more San Diego County information, visit my website at www.ViewKimsHomes.com. For excellence in lending, call my choice, Jim Auten with American Capital Home Loans. (760) 975-0255. jim@achlinc.com If I can further assist you, don't hesitate to call me: (760) 580-9195. Let me be your last stop before home.
Now on to the fine print. The "sales" I'm speaking of are typically short sales and REO properties. So strap in and I will give you a little Short Sale and REO 101 class so you can start scooping up those bargains like a pro. First of all, a short sale is when a homeowner needs to sell his home because they can no longer keep up with payments. Perhaps they got caught in an interest rate adjustment or maybe a personal set-back (job loss, illness, etc.) They list their property with a Realtor, garner an offer, and then the Realtor negotiates with the bank to try to get them to accept this reduced amount and wipe out the loan they have with that bank. Simple enough, right? If only it were. First the banks need to establish two factors: what is their hardship (the reason they can no longer keep up with the payments) and will the market allow them to sell their home for a value large enough to cover the entire loan debt. The answer to the second question is always NO in San Diego County at this time. Our peek pricing hit 2005/2006 and we've been losing ground since that point. Prime example. A client of mine purchased a new construction property for $550,000 in 2005. Nine months later I sold it for him for $860,000. Now granted that's an extreme case, but we did have this swift upswing in home value that was obviously not sustainable in any economy. And since then, we are adjusting to a more balanced market. If you think about it, home prices have never NOT returned to where they once were...and so, too, will we hit that high point again...and even surpass it. Speculation has it we are looking at 5-7 years for recuperation and the beginning of another upswing. But ask 100 people and you will get 100 answers. We just know it's not happening in the near future. And so there are some fabulous deals in this lull.
Back to my first point. Now the borrower needs to prove a hardship. They submit a letter to the bank stating their case. Usually it is a viable reason and the bank accepts it. Prior to that time the lender works consistently in the hopes the borrower can create a little magic and make up the lost payments and get back on track. Some banks have all but wiped out the second loan to reduce the monthly debt. Some have stretched the payments to a longer time period to ease the burden. But typically, this is a lost cause and the borrower is left with a short sale option only. One of the biggest problems blocking "restructuring" the loan is that the borrower needs to requalify for the new loan structure. Many times their savings and even retirement have been tapped to keep up with the payments thus far, and they have no reserves left. Additionally, their credit score has dipped considerably due to the credit card debt that tends to mount when used for daily purchases and not just occassional luxuries. In my experience with my clients, the bank's position is that they are no longer credit worthy, have no money down and (by the way) you've already proven you are willing to walk away from your responsibilities by contacting us and asking for a short sale, so the bank would rather take their chances on a new buyer. One with better credit and money to invest in the property which makes it a little more difficult to walk away from than those that used 100% financing and nothing invested in the home. (This is the transparent problem that began this entire mess. Why, in God's name, would a bank loan money at sometimes 105% of the purchase price, with no money down, stated income, stated assets when a market is on a huge unsustainable upswing? The minute the market falls $5, the bank is in the hole...but then you know what they say about hind sight).
Onward through the short sale process. The bank will require tax returns, pay stubs, bank statements, monthly expenditure list, etc. to create a "packet". Some banks will take this up front, others want it when there is an offer. Once the Realtor has attained an offer, the fun begins. Since the banks won't typically talk with the Realtor until there is an offer, the Realtor needs to place a hot price on the property to bring in lots of showings and multiple offers. This is why the market is a bit tainted right now. The prices you see on homes are not to be in any way suggestive of an actual purchase price. When the rock bottom prices are listed, the feeding frenzy begins. Multiple offers are absolutely essential to keep this circus going. The reason is simple, those that have the bucks to play this crazy game, don't necessarily have the patience. They write offers on every property they feel might suit their needs. With 17,000 homes and condos on the market in San Diego County, they DO have options! They see which offer gets results first. And to make matters worse, even while they are in escrow another one of their offers gets accepted and they jump ship mid escrow chasing their new rainbow. As a Realtor, I don't have any choice BUT to continue to garner interest in my listings and continue to take offers. Each listing is just one giant revolving door of offers. When the bank finally gets around to taking a look at our file, it's usually a game of last man standing. He who still has an offer in play usually wins. The bank's (and I mean ALL banks) response time is usually initiall 60+ days before it is in the hands of the negotiator. I've had offers in for at least 4 months with no response from the bank. I call twice weekly and can pretty much recite the response verbatum. "Your file has not yet been assigned to a negotiator, call back in another week". The negotiator is nearly the last step in the short sale lottery. They then have to open your file (the magic words) look through the entire packet and then decide to accept or reject the offers-or counter them. The negotiator usually has the file for an additional month before it is magically opened. After negotiating the final terms they will accept, the Realtor crosses their fingers and HOPES they have made a deal. Now the "deal" is then presented to the final decision maker-the invester (dun dun dunnnnnnnnnn). They can choose to accept, reject or counter or decide to pass on everything and take their chances with foreclosing on the property. So let's examine the time frames...they process start to finish is typically 3-5 months long. The delay is specifically that the lenders all state they are back logged and don't have the staff. After all, it's been since 1991 that we had the last short sale market, so these departments had to be restaffed and retrained and most of the last group probably isn't around to do it. So they've been learning on the fly. Frustrating? Oh my God, yes. Exhausting? Unbelievably...for all parties concerned. Humorous? Hardly (although sometimes we just have to laugh at how freaking ridiculous this all is. If there were just a SYSTEM...and they would all follow it...there are more than enough buyers for these properties. The sickening thing is after all this work, many homes are just sent through to foreclosure...even with offers waiting to be accepted. "We just didn't have enough time" cries the bank. I could fill a thousand blogs with the horror stories, the lack of communication between bank departments, the tears from agents, sellers and buyers alike. Everyone outside of the bank just wants to put the deal together and have another good soul profit from this lending fiasco and get on with their lives. But the lack of organization within the bank's infrastructure prevents that from happening. In my opinion, that's where the government's intervention is warranted...make these damn banks straighten up, create a 30 day system and let the buyers get a deal, and let the homeowner get on with rebuilding their life and finances. And that's my only political comment!)
To further compound the situation, many homes have a second mortgage on them. So even though the Realtor gets a thumbs up from the first lender, the second still has to agree or the deal is off. The catch? If the second does agree, they will typically walk away with $1,000-$5,000 for their total pay-off. And the loan balance is usually $60,000+. If the second doesn't agree, all of that effort is wasted. And honestly, I understand their position. If they don't agree to the short sale and the home is foreclosed upon, they can still go after the borrower for their payment. California is a "one action" state. If their one action is to accept the short sale, they give up their other options. Now is it likely the borrower has much to even go after at this point? Probably not. So many short sales are actually accepted by the second lender and the deal is done.
I have to say in the bank's defense, some of them are stepping up their process a little AND they are getting flexible with the offers they accept. I've seen them offer buyer's incentives, pay closing costs and accept VA and FHA financing conditions. We just need more of that. ALOT more of that. I'm just not sure the cure will come in time. The short sale market was created mainly by the adjustable mortgages (many with teaser rates) that began in July 2005. They mainly began to adjust in July of 2007. That creative financing arena (100% financing, stated income & assets) began to slow in the fall of 2007 and was all but gone by the beginning of 2008. So by my calculations, we should be done with those adjustable mortgages around the beginning of 2010. There will still be short sales that need to shake out after that. Hopefully by the end of 2010 this will all be in our rear view mirror and we can get on the road to recovery.
So have I totally turned you off to short sales? I really hope not. But more than anything you deserve the truth. If you are a seller and need to do a short sale then it is what it is. Your credit will be dinged on average 75-150 points. For a foreclosure: 200-300 points. A short sale seller can typically rebuy in another 3 years if they keep up their credit and payments (although they will likely pay a premium in interest rates). For a foreclosure the consequences are much more dire. I believe they both stay on your credit for ten years. Obviously, list your house a.s.a.p. with a Realtor experienced in short sales. Your Realtor really is the key. They must possess the knowledge to push through the convaluted lending sytem, negotiate all points of the transactions and be organized with the mountain of paperwork they need to wade through. Give them a fighting chance by calling them in the early stages. You can do this simultaneously while trying to work out a loan restructure with the bank. That way if you hear the bad news from the bank that it just isn't possible, you won't have lost any valuable market time. Knowing that it takes 3-5 months for all of this, calling a Realtor after you've missed 6 payments is a bad idea. The timing of the process is that once you've missed a couple of payments, the bank will file a notice of default. This is a matter of public record and starts the foreclosure clock. From the filing of your "N.O.D." it takes 3 months and 3 weeks before they can legally take your home. Your Realtor will need every day they can get to try to get your offers accepted by the bank before your foreclosure.
From a buyer's perspective, the biggest benefit to purchasing a short sale is the tremendous value you will realize from your home buying dollar. These homes are lived in and still typically cared for by the seller. You will get the benefit of all of the disclosures the state requires a seller to provide once in escrow. You will know the history of the home and it's ins and outs. You just need to pack your patience. The perfect short sale purchaser already has a comfortable place to reside (a rental) does not have a home to sell first (no contracts contingent on your own home selling allowed) and has time to spare. You will likely be involved in multiple offers on the property you choose. Make your offer as attractive and strong as possible. It won't help to stomp and demand a response, either. You will get your response when the bank is ready to give it. As one lender put it, this whole environment is like finding a hot special at Walmart...stand in line and wait your turn. If you want better service and are willing to spend the much bigger bucks, then go shop at Nordstroms.
Next time I will discuss foreclosures and REOs!
As alway, choose a savvy, full-time, professional Realtor. For more San Diego County information, visit my website at www.ViewKimsHomes.com. For excellence in lending, call my choice, Jim Auten with American Capital Home Loans. (760) 975-0255. jim@achlinc.com If I can further assist you, don't hesitate to call me: (760) 580-9195. Let me be your last stop before home.
Wednesday, April 30, 2008
San Diego Real Estate Market
As this is my very first blog posting, I'm going to start with the most critical component of purchasing a home in this "hot buyers' market" right here in paradise...the home loan. As you may know, the loan climate has changed dramatically, and I actually got a call today from a savvy builder who feels it is probably more cost effective to buy a home than build with today's prices...but the state of the market was so daunting he didn't know where to begin. Wading through the muck of short sales, foreclosures & REOs was just more than he bargained for. Get thee to a Realtor! Check that. Get thee to a skilled, educated, full-time, professional Realtor! Don't attempt to be an expert in this field. As they say...Don't try this at home. You CAN and may get burned.
So as this blogging unfolds, follow my direction; and I will take you through the ABCs of home buying in San Diego County. I will be discussing the short sale vs. foreclosure market and telling you what the banks may not want you to hear....the truth! I will discuss the most effective process for finding the hot deal, qualifying for the loan, timing (which is critical), disclosures & contracts (boring but necessary), negotiating (Deal...or no deal), and ultimately the escrow process. I will be addressing the first time home buyer, newly divorced with kiddos, downsizer, investor, buying a condo while your child is in school, trust sale and the move-up purchaser. I will discuss benefits of home ownership vs. renting and I will touch on any real estate topic that is suggested to me. If you want to jump the gun and I'm not at your topic yet, call me. I am available seven days a week 7 am to 7 pm. I am never to busy to talk with you. If you find this information helpful and feel we might be a business match, all I ask is that you consider me your Realtor and let me place you in your dream home at a HOT price...it's that simple. Put me in your cell phone. Kim Drusch, Realtor (760) 580-9195. www.ViewKimsHomes.com
So to bring me to my first point...the loan. It takes a little more today to qualify for a loan other than simply stating that I'm a pool cleaner, I make $400,000 a year and oh yeah, I can't document my income. (And by the way, I'm a little short on cash so I have nothing down...but I'm good for it.) That ship has sailed...and thank God! We're returning to the days of when our parents purchased homes and they actually saved for it...and it WAS the American dream. Realistically, you can still get financed with possibly 5% down with great credit (FICOs over 700), but to expand your options and get a more flexible interest rate, 10% down would do it. Be aware that loan programs are changing (and disappearing) on a daily basis, so it is absolutely in your best interest to hook up with a great lender. And coincidentally, I know of one. He works a lot like I do-straight talker and 20+ years experience. In 10 minutes over the phone he can determine the best loan program for you and help you decide on a monthly payment that you are comfortable. After all, you will probably qualify for a lot more than you actually want to pay. Your financial comfort zone is critical. One last comment on home loans, there seems to be this "sick pit" in the stomach of the average consumer whenever the mention of discussing finances with a banker. It really isn't just you...it's everyone. Universally I find that when my clients take the first step and call the lender, their angst is relieved, it's no where near the embarassing process they imagine and there is a reasonable attainable outcome. With that process over with (and pre-approval letter in hand) my clients then confidently walk into homes they can afford and THEY are in the driver's seat. I confess that I did it backwards in my younger days. I found the perfect home and then set out to see how I could afford it. The days of waiting to qualify were actually gut-wrenching. Don't do it backwards. Call a lender first...a great lender and relax! THEN you select your dream home in peace and with confidence!
By the way, the lender I prefer is Jim Auten with American Capital Home Loans. He can be reached at (760) 975-0255. Tell him I sent you. Following is an article that Jim sent to me today. Take a moment and read it. Just as I will keep you up to speed with real estate, Jim will do the same with loans, the economy and all things financial.
So as this blogging unfolds, follow my direction; and I will take you through the ABCs of home buying in San Diego County. I will be discussing the short sale vs. foreclosure market and telling you what the banks may not want you to hear....the truth! I will discuss the most effective process for finding the hot deal, qualifying for the loan, timing (which is critical), disclosures & contracts (boring but necessary), negotiating (Deal...or no deal), and ultimately the escrow process. I will be addressing the first time home buyer, newly divorced with kiddos, downsizer, investor, buying a condo while your child is in school, trust sale and the move-up purchaser. I will discuss benefits of home ownership vs. renting and I will touch on any real estate topic that is suggested to me. If you want to jump the gun and I'm not at your topic yet, call me. I am available seven days a week 7 am to 7 pm. I am never to busy to talk with you. If you find this information helpful and feel we might be a business match, all I ask is that you consider me your Realtor and let me place you in your dream home at a HOT price...it's that simple. Put me in your cell phone. Kim Drusch, Realtor (760) 580-9195. www.ViewKimsHomes.com
So to bring me to my first point...the loan. It takes a little more today to qualify for a loan other than simply stating that I'm a pool cleaner, I make $400,000 a year and oh yeah, I can't document my income. (And by the way, I'm a little short on cash so I have nothing down...but I'm good for it.) That ship has sailed...and thank God! We're returning to the days of when our parents purchased homes and they actually saved for it...and it WAS the American dream. Realistically, you can still get financed with possibly 5% down with great credit (FICOs over 700), but to expand your options and get a more flexible interest rate, 10% down would do it. Be aware that loan programs are changing (and disappearing) on a daily basis, so it is absolutely in your best interest to hook up with a great lender. And coincidentally, I know of one. He works a lot like I do-straight talker and 20+ years experience. In 10 minutes over the phone he can determine the best loan program for you and help you decide on a monthly payment that you are comfortable. After all, you will probably qualify for a lot more than you actually want to pay. Your financial comfort zone is critical. One last comment on home loans, there seems to be this "sick pit" in the stomach of the average consumer whenever the mention of discussing finances with a banker. It really isn't just you...it's everyone. Universally I find that when my clients take the first step and call the lender, their angst is relieved, it's no where near the embarassing process they imagine and there is a reasonable attainable outcome. With that process over with (and pre-approval letter in hand) my clients then confidently walk into homes they can afford and THEY are in the driver's seat. I confess that I did it backwards in my younger days. I found the perfect home and then set out to see how I could afford it. The days of waiting to qualify were actually gut-wrenching. Don't do it backwards. Call a lender first...a great lender and relax! THEN you select your dream home in peace and with confidence!
By the way, the lender I prefer is Jim Auten with American Capital Home Loans. He can be reached at (760) 975-0255. Tell him I sent you. Following is an article that Jim sent to me today. Take a moment and read it. Just as I will keep you up to speed with real estate, Jim will do the same with loans, the economy and all things financial.
Fed cuts again - future unclear. What does it mean to you?
The Federal Reserve cut interest rates today for the seventh straight time since September of last year. Many experts believe that the Fed is done cutting interest rates and will begin a new watch-and-wait policy. This new policy is due – in part – to the fact that the first Stimulus Act rebate checks are hitting millions of mailboxes this week. The Fed hopes this money gives a boost in the arm to the economy.
If you've been taking a watch-and-wait approach with your own finances, now is the time to call and review your options.
Consider this: the Federal Reserve Board meets 11 times this year to review the health of the US economy and make adjustments if needed. Don't you think you owe it to yourself to take just a few minutes and do the same with your own financial goals?
I want to ensure that you're taking advantage of this unique market and not letting it pass you by. Here are just a few things to consider:
· Today's tougher housing market means there are some great buys to be had if you're looking to purchase. This is an especially friendly market for first-time home buyers.
· The government has temporarily increased FHA loan limits in many areas across the US. These government-insured loans are not FICO-score driven and require little to no down payment. Here's the catch: these new limits expire at the end of the year, so you must act now.
· You really don't want to play the waiting game if you are holding an adjustable rate mortgage (ARM). That's because there is nowhere for the rates to go but up from here, if we are truly at the end of the Fed's cutting cycle.
Invest 10 minutes in your financial future. Call me today. Together we'll review your situation. While the Fed takes a quick break from cutting to plan its next move, take advantage of the opportunity to do the same for yourself. I look forward to hearing from you!
Thank you and I hope to hear from you soon,
Jim Auten
Senior Loan Officer
1525 S. Escondido Blvd, Ste. A
Escondido, CA 92025
760.975.0255 Office
760.908.9161 Cell
760.975.0257 Fax
The Federal Reserve cut interest rates today for the seventh straight time since September of last year. Many experts believe that the Fed is done cutting interest rates and will begin a new watch-and-wait policy. This new policy is due – in part – to the fact that the first Stimulus Act rebate checks are hitting millions of mailboxes this week. The Fed hopes this money gives a boost in the arm to the economy.
If you've been taking a watch-and-wait approach with your own finances, now is the time to call and review your options.
Consider this: the Federal Reserve Board meets 11 times this year to review the health of the US economy and make adjustments if needed. Don't you think you owe it to yourself to take just a few minutes and do the same with your own financial goals?
I want to ensure that you're taking advantage of this unique market and not letting it pass you by. Here are just a few things to consider:
· Today's tougher housing market means there are some great buys to be had if you're looking to purchase. This is an especially friendly market for first-time home buyers.
· The government has temporarily increased FHA loan limits in many areas across the US. These government-insured loans are not FICO-score driven and require little to no down payment. Here's the catch: these new limits expire at the end of the year, so you must act now.
· You really don't want to play the waiting game if you are holding an adjustable rate mortgage (ARM). That's because there is nowhere for the rates to go but up from here, if we are truly at the end of the Fed's cutting cycle.
Invest 10 minutes in your financial future. Call me today. Together we'll review your situation. While the Fed takes a quick break from cutting to plan its next move, take advantage of the opportunity to do the same for yourself. I look forward to hearing from you!
Thank you and I hope to hear from you soon,
Jim Auten
Senior Loan Officer
1525 S. Escondido Blvd, Ste. A
Escondido, CA 92025
760.975.0255 Office
760.908.9161 Cell
760.975.0257 Fax
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