Posts Tagged 'distressed property'

Real Estate Market in Sonoma County – Many Offers and Cash is King

On October 1 I entered 152 Firethorn Drive, Rohnert Park into the MLS.  After a week of constant showings and a well attended open house, I received 10 offers on October 8.  We accepted a full cash offer from a party that was willing to do inspections during the period of review for a preapproved short sale with Bank of America.  The sale closed on October 30 with no hitches.  This home was a fixer but was in a great location and had good “bones”.

Yesterday I learned that an offer we submitted on a major fixer in the Rincon Valley area of Santa Rosa was not the winning bid.  They received 17 all cash offers and ours was the only one for an owner occupant.  The asking price was $229,000.  I believe that the final contract price was around $255,000.  We will not know until the property closes.  What is a “major fixer”?  The roof was caved in at one spot and the floor boards underneath were rotted through.  Read the article below and you will learn that this is not an unusual scenerio.

Realtors’ 2012 Housing Survey:

Competition Is the Name of the Game in California

A highly competitive market pushed California’s housing recovery into high gear in 2012, forcing homebuyers into bidding wars for available homes and rewarding sellers with the strongest prices seen in years.

A new report — the California Association of Realtors’ annual Housing Market Survey — helps explain the dynamics of today’s market.

The survey found that 57 percent of home sales received multiple offers in 2012, the highest in at least the past 12 years, with each home receiving an average of 4.2 offers, up from 3.5 in 2011. Lower-priced homes – typically short sales and bank-owned properties known as REOs – attracted more offers than equity sales. Seven of 10 short sales and REO sales received multiple offers, while only half of equity sales received more than one offer.

Such a competitive housing environment has led to more properties selling at or above the list price, with 41 percent of homes selling without a markdown from the asking price, the highest since 2005 and up from a long-running average of 32 percent.

Additionally, homes sold faster in 2012, with equity sales selling in 32 days compared with 67 days in 2011. REOs took 30 days to sell compared with 50 days in 2011, while short sales took 90 days compared with 141 days in 2011, reflecting the still-difficult process.

Many regions in the Bay Area saw even tighter markets.

“San Francisco saw a higher percentage of multiple bids than the statewide average,” said Patrick Barber, president of Pacific Union International’s San Francisco region. “A solid majority of homes here are selling at or above the asking price.”

Chart showing the share of home sales with multiple offers.

The share of California home sales with multiple offers is the highest in at least 12 years.

In the East Bay, nearly 70 percent of home sales received multiple offers in the third quarter, and many homes went into contract within two weeks of coming on the market.

Across the state, the competitive market is being fueled by favorable home prices and record-low interest rates combined with pent-up demand and a severe shortage of available housing.

“Well-qualified buyers are recognizing the once-in-a-generation opportunity to purchase a home in California and are jumping into the market,” C.A.R. President LeFrancis Arnold said in a statement accompanying the survey. “However, the fierce market conditions have forced many buyers to compete with all-cash offers and investors, setting off multiple offers and bidding wars, making it even more difficult for first-time buyers to become homeowners.”

Other findings from the survey:

  • The percentage of homebuyers making all-cash purchases has more than tripled in the past 11 years, from 9 percent in 2001 to 30 percent in 2012.
  • Demand for investment properties and second homes remained strong in 2012, with investors accounting for 16 percent of sales and second-home buyers for 7 percent. The remaining 77 percent purchased homes as a primary residence.
  • International buyers accounted for 5.8 percent of sales in 2012, relatively unchanged from 5.7 percent in 2011. Buyers from China, Canada, India, and Mexico made up the vast majority of international buyers at 39.1 percent, 13 percent, 8.7 percent, and 8.7 percent, respectively.
  • Reflecting tighter lending standards, very few homebuyers have a second mortgage. The share of home sales with a second mortgage has fallen dramatically from a high of 43.4 percent in 2006 to 1.8 percent in 2012.

The C.A.R. report was based on a questionnaire sent to a random sample of 15,000 real estate agents  throughout the state.

 

Open Houses in Sonoma County

417 N Main Street, Sebastopol

Tomorrow (yes, that is a Wednesday) 417 N Main Street in Sebastopol will be open from 9:30 AM until noon.  Agents and individuals are welcome to visit.  There is no sign outside this home and it is not listed in the MLS – but it is for sale with an asking price of $450,000.  This sale is not a short sale or a bank owned property.  Real people are selling their home of many years.  Specifics on the home are:

Modern bathroom has vintage style

  • Built in 1903 and many original details are still intact
  • Addition which includes Family Room with gas fireplace, bathroom, laundry area and two bedrooms was completed with permits in 2005.
  • 4 bedrooms with 2 baths
  • Granite countertops in Kitchen
  • Hardwood floors in Living and Dining Rooms
  • Ceramic Tile in Kitchen and Family Room
  • Parking in Back with Alley Access

New ceramic tile floor in kitchen

The updates to this home have been done with attention to the style of the era in which it was built.   The latest improvement to the home is a new ceramic tile floor in the kitchen.  It was much needed and makes the kitchen shine.  When you visit, you will see pictures of this home when horses and buggies were the mode of transportation.  Today it is tucked back from Main Street but clearly across the street from Safeway.  While many folks comment on the busy street, my clients have loved sitting on the porch sipping coffee and watching the hustle and bustle of Sebastopol life.  There isn’t a better location to watch the Apple Blossom parade and no excuse to not have all the ingredients for a spur of the moment special meal or dessert.

I have no expectation for the open house tomorrow.  It is on a Wednesday – it is not advertised in the MLS.  I am prepared for whatever comes.

152 Firethorn Drive, Rohnert Park

This weekend I held an open house at my listing in Rohnert Park.  152 Firethorn Drive is a 4 bedroom single level home in need of much tender loving care.  The list price is $299,000 which is within range of many buyers.  I knew that I would have a good turn out.  The crowd was amazing – at least 40 people visited – I could not keep up my count and answer questions both.  Yesterday I received 8 offers.  Today we will compare the submissions and chose a buyer.  The market is HOT!   Buyers who are trying to do it on their own without an agent, are at a disadvantage.   Even with the internet, they do not have access to everything on the market or all of the details that are in agent’s comments on the MLS.  Of course, I would love to work with  more buyers and sellers.  If you know anyone, have them contact me.

Open  houses are a great way to see how the market is.  As one person put it to me at the open house, “This is a real wake up call.  I thought we were in a buyer’s market.”  Prices are still affordable but not as low as last year.  Interest rates are at an all time low – FHA is at 3.25% with a 3.5% down payment.  If a home is priced well, it will have offers in a few days.  Short sales are getting more reasonable in timing.

What a great time to be in real estate!

Short Sale Senario in March 2012

It is mid-March and I am thinking, “Where did February go?”  I only managed to get three posts written and the last one was mid month.  I have not been vacationing or slacking – the real estate market in Sonoma County is on fire.

A great deal of my time these days is handling short sales – both as a buying agent and as a listing agent.  I get many questions about short sales and think it is time to write a primer for the uninitiated.

What is a short sale?   A short sale occurs when a home is sold that the sales price of the home is lower than the loans secured by that home.  In most cases today, the lien holders, usually banks, agree to take less money than they are owed instead of foreclosing on the home.  But the banks will do this only if they cannot get all of the money from the borrower.  The banks require a hardship and proof that the borrower cannot pay the loan amount.  If the borrower has sufficient assets to pay the loan down to where the sale will cover the loan, the bank will require payment in full.

How long does it take to get a short sale approved?  That depends.  And I really cannot tell you what it depends upon.  I have had a short sale approved in days and I have had one take over a year.  I recently heard that the average time for approval by the lenders on a short sale is three months.

Why does it take so long?   To the best of my knowledge, the process for a short sale starts either when the property is listed for sale or when an offer is accepted.  Different lenders have different guidelines as to if an offer is needed before they will accept a file.  If they do not accept files prior to receiving an offer, the process just starts later.  Once there is a file, it is put in a pile to be assigned to a loss mitigation officer.  This can take weeks.  Once it is assigned,  the loss mitigation officer examines the seller’s financial information and reviews the “hardship” letter.  Add at least a few more weeks for this to happen.  Most of these folks have hundreds of files on their desks so the first one in is the one they are working on.  If the seller is accepted as a short sale candidate, the file is passed on to someone else in the bank.  Again, it goes to the bottom of the pile.  When the file surfaces to the top, an appraisal is ordered which can take another few weeks.  The bank determines what they are willing to accept (this seems to go rather quickly) if it is the same person but if it goes to another department, it can take time to get to the top of the pile.  At some point during this process, the listing agent works with the escrow company to determine what the net proceeds will be based upon the offer accepted by the seller.  The document the escrow officer prepares is called a HUD-1.  The listing agent then prepares a package that includes the offer, the HUD-1, the seller’s financial information (updated), the buyer’s proof of funds to purchase and whatever specialized forms that lender may use including some government forms.  At this point, an acceptance can be issued.  After all of this waiting, the lender asks that closing happen in 30 to 40 days.  If there is a second lien, the whole process may need to be repeated with the second lender.

Why would I want to do this?  Good question.  With short sales becoming the preference over foreclosures, more and more homes are being sold short.  You may not be able to find the home you desire without considering a short sale property.  One benefit of purchases from an owner (other than from a bank after foreclosure) is that the seller must provide information on the home i.e. repairs made, nuisances in the neighborhood.  Banks are not required to provide this information.  There was a time that short sales were considerably lower priced than other sales but that differentiation has gone away.  Today the varying factor is the condition of the property.  Some short sale properties have not been maintained due to the financial hardship of the seller.  In those cases, you will find that the lower price is often below the amount it would cost to bring the property up to good condition.  This is why there is an active business of purchasing and remodeling homes – flipping is what it is called.

Who is the best buyer for a short sale?  The ideal short sale buyer is patient, can move quickly when the bank says to move and can is comfortable with not knowing what is going on.  If you are that person, you can have a great transaction.

Setting the Value of a Property

A Distressed Property that Looks Great

This last week has been a busy one in Real Estate.  I am asked many questions about the process of buying or selling short sales and bank owned properties (REOs).   I just listed a great home in Santa Rosa that is not a “distressed” property.   The question came up as to what is the pricing difference between “distressed” properties and those that are not.  I always respond that the prices are about the same for the same condition.  But often distressed homes are not in as good a condition as those regular sales.  Below is an article on appraisals that was sent to me by Ron Shaw of Paramont Equity.  I think that it gives a good description of the values given to different sales conditions.  Hope you enjoy it.

The Appraisal Institute recently released guidelines to instruct its members on how to deal with distressed sales and foreclosures when seeking comparables.
According to the Institute, some homeowners claim appraisers have undervalued their homes by relying on nearby foreclosed homes and distressed sales as comparables to their properties.
In a recent announcement about the new guidance, the Appraisal Institute states that qualified appraisers “know what adjustments to make, if any, when using distressed sales as comparables, for such methods are taught in basic coursework and updated seminar materials available to professional appraisers.”
Regardless, because the issue is “particularly crucial” in the current market where distressed sales are common, the Institute is offering additional guidance.
The new guide instructs appraisers to rely on less recent sales and broaden their geographic parameters when they cannot find an appropriate comparable within the traditional boundaries.
In general, “foreclosures and short sales usually do not meet the conditions outlined in the definition of market value,” the Institute says.
Short sales may involve “atypical seller motivations,” and foreclosed properties may be damaged or deteriorating. However, “appraisers cannot categorically discount foreclosures and short sales as potential comps in the sales comparison approach,” the institute states.
“As is always the case in selecting sales to use as comparables, appraisers must investigate the circumstances of each transaction, including whether atypical motivations were involved, sales concessions were involved, the property was exposed on the market for a typical amount of time, the marketing program was typical, or the property condition was compromised,” the guidelines state.
When using distressed sales as comps, appraisers must assess all aspects of the sale and decide whether it is appropriate to make an adjustment due to uncommon conditions.
 

So when you are deciding what to offer on the property, the condition is what is paramount – not the type of sale.

 

How’s the Real Estate market in Sonoma County?

One of my goals this year is to post something about real estate once a week – and sprinkle in some Sonoma County lifestyle blurbs along the way.  All I can say is that I did not anticipate the rapid succession of events in the first month of the year.  The market is hot!  What do I mean by that comment?  I have been showing property and going on listing appointments ever since I returned from Hawaii.  Last week we had some much needed rain which did not slow things down.  On Sunday, January 22 with a playoff football game as competition, I had seven groups come through an open house in the pouring rain.  That may not seem like much but I did not advertise, put 4 signs out on the road and was out in Freestone.  This is remarkable.  Three years ago, I sat in an open house on beautiful days with 12 signs and never had a looker.

Enough of the excuses.  Here are the statistics for the last half of January (16 – 31).  228 single family homes went on the market.  75 were short sales and 69 were bank owned properties.  139 homes came back on the market.  This means that 139 contracts were cancelled – the buyers walked away.  Why?  It could be that they found something wrong in the inspection that they could not live with.  It could be that the 54 short sales that were cancelled was due to the bank taking so long to approve the sale or the property could have been foreclosed upon while waiting for short sale approval.  37 bank owned properties didn’t go on to close.  Maybe the buyers could not qualify for the loan.  Whatever the case, this is a significant number of buyers not continuing with the sale.

On the other end of the spectrum is the 522 properties that went into contract.  172 were short sales and 88 were bank owned.  That is a lot of properties (359) that are regular sales where people have equity in their homes.  That is almost 70% of the properties going into contract are not short sales or bank owned properties.  This is a wonderful statistic to me.  Buyers are making offers on homes that do are not in distress.  The bad news is that for sellers, there is no longer a premium in price for these sales.  The good news is that these properties are selling.

Speaking of sales, 228 properties sold during this time.  88 of these sales are regular (not short sales or bank owned).  75 are short sales and 69 are bank owned.

For those properties that are sold in the first 30 days of being on the market, the sales price is very close to the asking price.  Non-stressed properties sell at about 96% of the asking price.  Short sales are sold at 98.6%  of the asking prices.  Bank owned properties that sold in the first 30 days sold at 104.7% of the listing price.  All this says to me is that property owners that are not under stress ask more than the sellers with properties that are under stress.  Banks price to sell and short sales go for a bit under the market value.

The bottom line is that there is a small margin on price for a short sale.  The cost is the time of uncertainty that goes with a short sale.  I attended a seminar on short sales this last Monday.  The one real takeaway was “Don’t confuse a bank with logic.”  Everyone asked why the banks do not respond or make decisions more quickly.   The answer had to do with the large number of files each negotiator handles.  I get a bit frazzled when I handle more than four files.  They were talking about ninety files for each negotiator.  That is staggering.

We are dealing with a very complex real estate market.  There are many buyers and sellers but all are looking for a great deal.  This is a great market.  If you are a buyer you will get a great deal.  If you are a seller, there are buyers out there.    Patience on both sides are what is needed to make a transaction happen.

2012 Has Started with a Splash

510 Bohemian Highway, Freestone, CA

January is half over and I am only on my first blog of the year.  I plan to write weekly but things keep taking my time.  I returned home from Hawaii on January 10 at midnight and was answering text message at 8 AM.  There has hardly been an hour that I have not been scheduled in the last 8 days.  I don’t bring this up because I need to act busy and important.  No – I bring this up because real estate is very busy.

Kitchen of 510 Bohemian Hwy

Statistics of Single Family Homes for the first two weeks of the year in Sonoma County are:

237 New Listings of which 71 are short sales and 52 are bank owned.

314 Properties went into contract of which 143 are short sales and 72 are bank owned.

176 Homes sold with 34 being short sales and 49 being bank owned.

Notice something here?  Short sales are going into contract a lot faster than they are closing.  There are plenty of “regular” or “equity” sales – sales where the sellers have equity in the home and the sale is not due to a distress situation.   If you are looking for a great price on a new home and do not mind the uncertainty of a closing date, a short sale may be the answer to your dreams.

View from the Living Room

This week I listed 510 Bohemian Highway.  The address is officially Sebastopol but most people refer to it as Freestone.  Freestone is a very small town that is home to Wildflower Bakery and Osmosis Day Spa.  It is a wonderful place.

The home at 510 Bohemian Way is situated on 5 acres with a panoramic view of the Freestone Valley.  The land is a gentle down slope that holds a garden full of exotic and fragrant plants.  The house is 3 bedrooms and 2 baths.  The floors are wide planks and the counters are concrete.  This home must be sold in the next three weeks.  While this is a beautiful home much loved by the current owners, it is a distressed property that will soon be foreclosed by the bank holding the note.  My expectation is that the property will sell for around $700,000.  It is a steal at this price.  If you have any interest in living in lovely Freestone, please send me a message or give me a call.

Garden View

2011 Has Been A Wonderful Year

Happy American Canyon Buyers and Los Altos Sellers!

The last day of 2011 and what a year it has been.  When January 2011 came around, I had no idea where I was going or what the year was going to bring.  My first post was about the increased and difficult business of real estate.  Thankfully the volume continued and I am pleased to report that I closed more transactions than I have in any other year of my real estate career.  The year finished as it had begun with a flurry of activity.  Alas, the difficultly continues as sales are plagued with late appraisals, slow loan approvals and the hurry-up-and-wait process of short sales and bank-owned properties.  Home values have continued to decline except in those few areas where the prices fell so precipitously that there is nowhere to go but up – specifically Rohnert Park has seen some price increases in single family homes.  This December was a very busy month.  Not only was I working on Sonoma County real estate but I closed transactions in American Canyon (Napa County), Los Altos (Santa Clara County) and Lakehead (Shasta County).  These put a few miles on my car but I love working with great folks and these buyers and sellers were top-notch in my book.  I would go anywhere in the State of California for people like them.  And speaking of going – I only attended 8 parties in 14 days during this frenzy of work.  I needed a rest week after Christmas.

View from a Bedroom Window - No difference which one - they are all fantastic!

I am starting 2012 with a listing that I expect to be of great interest to anyone looking for a luxury weekend getaway.  Privacy, space and up-to-the-minute elegance is the best description.  This modern tree house is in a wonderfully sunny spot on Green Valley Road.  It will hit the market late January and you can be certain that you will see it on this blog.  There are many people looking for bargains in real estate and I am working to serve them.  But enough about 2012.  This post is about 2011!

The statistics for this blog were sent to me today.  Around 5,300 hits in 2011 with 35 posts.  I have made a New Year’s resolution that you will get a weekly update on Sonoma real estate.  This is something I follow and I should be sharing the information.  I was surprised to learn that my most read post in 2011 was the one I wrote in May of 2009 on our Redwood Empire Rose Show.  I guess that tells me that I should be more diligent about reporting on the Rose Society.   And, of course, I will continue sharing events around Sonoma County and my travels.  I don’t expect much traveling this year but then, one never knows.

Just a quick report on the Sonoma County real estate numbers.  Here are some numbers comparing November 2010 to November 2011.  The months of inventory (meaning – at the rate houses are selling, how many months would it take to sell all the houses on the market if no new ones were added for sale) has dropped significantly from 5.9 months to 3.3 months.  This is an indicator that buyers are taking advantage of these great prices and low interest rates.  Another interesting fact is that while the average list price has increased from $616,000 to $773,000 (about a 25% increase), the averages sales price has only increased from $374,000 to $386,000 (only a 3% increase).  This tells us that more expensive houses are coming onto the market as owners realize that holding out for better prices may not be a good idea.  The lower priced homes are not getting any lower and the higher priced homes are seeing a price compression.

Maike in Kauai

This last week I have spent on Kauai with my granddaughter – oh, and her parents and my friend, Katy.  What a great way to spend Christmas – no hassle, no clean up, no expectations.  We have had a wonderful time and I may get to reporting on our activities here.  But now it is New Year’s Eve and I wish the very best of 2012 to all my readers, colleagues and friends.

View of Bali Hai from the St. Regis Beach

Missing a Mortgage Payment?

One of the many benefits of being a real estate professional is the abundance of information that passes to me.  The article below is from the Wall Street Journal and answers a question that I am often asked.  “Why should I not just walk away from my house and let the bank foreclose?”  There is not a simple answer to this question.  The discussion has to include hardships  that impact the person’s ability to pay and the impact on their ability to recover from the loss of good credit.   I have helped homeowners gracefully exit from a mortgage that is beyond their means.  It is not pleasant but it is less painful than a foreclosure.  Read on.

GETTING GOING: HOW TO WRECK YOUR CREDIT – WSJ.COM

Don’t underestimate the harm that even one missed mortgage payment can do to your credit score—especially if you had good credit to begin with.

The severe consequences underscore that you shouldn’t shrug off even an accidentally missed payment. Instead, you should pay it and call the lender right away, begging for forgiveness before it mars your credit record.

In an unusually specific commentary to lenders, Fair Isaac, the creator of the FICO score, recently spelled out the severe consequences to the credit scores of borrowers who are 30 days late on their mortgages—as well as the long-term impact of failing to repay the whole mortgage.

It isn’t a pretty picture.

Being 30 days late on a house payment—even if it is an accident—can knock 100 points off a pristine 780 credit score, moving you from qualifying for the very best interest rates to the edge of subprime territory.

The actual numerical drop is less severe if your starting credit score is 720 or 680, but the impact is greater, since your new score is likely to sink to a level where new credit is hard to get and very expensive.

The FICO score ranges from a low of 300 to 850, with scores of about 750 or higher generally qualifying for the best loan terms.

The details provide a warning for anyone whose home is way underwater and is tempted to simply walk away, or considering a “short sale.” That is when the sale price is less than the amount you owe and the borrower doesn’t make up the difference. More than 350,000 homes have been sold this way since 2008, according to the Office of the Comptroller of the Currency.

FICO officials usually dodge questions about the specific impact of actions on scores. But Joanne Gaskin, director of FICO mortgage markets, compiled the data partly to counter incorrect information, such as recommendations that people stop paying their mortgages so they can negotiate with a lender, she says.

FICO says a foreclosure or short sale where the size of the unpaid balance is reported are equally devastating to a good or excellent credit score, reducing it by as much as 150 points, to the high 500s or low 600s. A rarer “deed in lieu of foreclosure”—in which the borrower voluntarily transfers ownership of the home to the lender—may have less impact on an excellent score.

Recovering your original score takes about seven years. That also is how long the information stays on your credit report, where insurers and potential employers can see it. Returning to a mediocre 680 score may take only three years.

Here are some other lessons from the data:

GETGO

Your past behavior counts, but your current behavior matters more.

Credit scores are intended to measure the risk that you won’t repay a current or future debt. So your careful payments over many years translate into a higher starting score.

But your score takes the biggest hit of all when you are 30 days late on a payment, falling 70 to 100 points in the FICO example. It drops less when you are 90 days late and if you default. The reason? The first missed payment “captures a good deal of the risk of the consumer,” Ms. Gaskin says.

The best way to rebuild a damaged credit score, ironically, is to use credit.

Avoiding borrowing altogether means “you’ve frozen your credit history in a negative state,” says Maxine Sweet, vice president of public education for credit bureau Experian. You will be better off using a credit card judiciously and paying it off promptly, adding good-behavior points to your record.

A rotten score hurts more than you think.

A person with a 620 score would pay almost 12% interest on a four-year $25,000 car loan, compared with less than 5% for someone with a 780 score—a difference of almost $4,000 over the life of the loan. On a 30-year fixed-rate $250,000 mortgage, a person with a 620 score might qualify for a 6% rate, but probably wouldn’t be able to get mortgage insurance, which is required if your down payment less than 20%. A person with excellent credit might land a rate less than 5% and pay about $3,000 a year less

Written by karen.blumenthal@wsj.com

What is Happening in Sonoma County Real Estate?

Amazingly I realize that it has been almost two months since I have posted.  It is not that I have not thought about it – it all has to do with timing.

December was filled with getting myself situated at RE/MAX PROs in Rohnert Park.  Yes, it is the same office as CPS Property Advocates which I joined in November.  Four affiliations in the span of six weeks is quite an undertaking.   Fortunately during this time, I have been able to get some business transacted.

Last week the little cabin in Maribel Heights of Forestville closed.  Two days prior to the close, the short sale on Gamay Street in Santa Rosa was approved and inspections were completed.  Early last week, we opened escrow on a bank owned condominium on Racquet Club Circle in Rohnert Park.  I would say that business is picking up in Sonoma County.

But none of these escrows are straight forward or “easy.”  What is a “straight forward” escrow?  Straight forward is where the seller agrees to an offer, the inspections are completed to everyone’s satisfaction, the appraisal is submitted and accepted by the bank, the escrow company draws up the papers, the buyers and sellers sign the documents, the bank funds the loan and the sale closes.  There are many steps but everything goes in a smooth order.  This does not seem to happen often these days.

8190 Knoll Drive, Forestville

The sale in Forestville was the perfect opportunity for a regular, straight forward transaction.  It is a cute, clean cabin – built in the 50’s (maybe – who knows when the county did not keep records at the time) and with a second lot next door.  First problem was that many did not believe that the lot was buildable (i.e. that the county would allow a residence to be built upon it).   We finally (okay, it was only a couple of weeks) got an offer that seemed to be acceptable to all parties and opened escrow.  Second problem was that while there were other homes sold in the last three months in the neighborhood, none were with post and pier foundations or with a lot as large.  Then the appraisal came in $40K less than the agreed upon price – not much value for the extra lot and no comps in the same area.  When the bank reviewed the appraisal, they decided that errors were made and took another $20K+ off of the value.  So now we have a buyer who was willing to pay more and a seller who was expecting more.  After much back and forth, it was agreed that the house would sell for some over the appraisal (based upon what extra cash the buyer could pull together) and after the first of the year to allow time for the sellers to find a property to exchange into.  Everything was set – and then the interest rates began rising.  The property finally closed but it was nail biting down to the end.

1623 Gamay Street

The home on Gamay Street is a short sale.  What that means is that the bank is owed more money than the house will bring in a sale.  Wachovia is the bank who holds the note and they have been proactive in addressing the issues.  My client was qualified for HAFA (Home Affordable Foreclosure Alternatives) which is a very good program for people who are losing their homes due to financial circumstances beyond their control.  The two major benefits of HAFA for the seller are that the loan is forgiven (meaning that the bank cannot come after the seller in the future to pay off the remainder of the loan) and the seller is given $3000 to cover moving expenses.  All was going well and then the appraiser climbed under the house and said that he observed a leak in the plumbing.  The bank said that there needed to be a licensed plumber called to remedy the leak.  Two inspectors had been under the house and did not observe a leak.  The plumber did not observe a leak.  We are awaiting a resolution from the bank.

The condo in Rohnert Park is in escrow with a bank.  Fortunately (based upon the two earlier examples) there is no loan and, therefore, no appraisal.  The challenge is that the bank wants everything done yesterday but seems to be taking their own sweet time about getting their end of the deal done.  I am sure that it will work out well but I expect that something out of the ordinary will happen.

This is real estate today.  Deals are getting done.  Nothing is easy.  Most buyers and sellers are stressed.   But the bottom line is:  When you need to sell, sell.  When you need to buy, buy.  There is no better time to do it.

When I return to Sonoma County from my vacation, I will be holding the home on N. Main Street in Sebastopol open and I will be listing a horse property on Sonoma Highway.  Watch here for details in early February.

417 N Main Street, Sebastopol - OPEN FEB. 13, 2011 1 to 4

The Changes Keep Coming

The Real Estate business has become a continual field of change over the last few years.  The market numbers no longer tell the same story of years past and the processes of buying and selling have changed significantly.  On top of that, there is a considerable consolidation and movement amongst the brokerages.  It is hard to keep up and difficult to interpret the meaning behind the statistics.

417 N Main Street, Sebastopol

Third quarter results are out and the numbers show an increase in the average price with a decline in the number of homes sold.  This might give an encouraging sign to home sellers – but don’t jump to conclusions.  Sales have declined because there are fewer homes on the market.  Over the last few months, foreclosures have slowed and, therefore, fewer homes are on the market.  There is a great deal of talk about the shadow market – homes that are either foreclosed and not on the market or homes that are to be foreclosed soon.  This shadow market continues to discourage investment buyers who are waiting for a greater selection and lower prices.  In the meantime, people who need to buy homes to live in are out looking for the great deal on their dream home.  Some of these folks are buying and they are buying higher priced homes at a significant discount from previous years.   Home seekers buying higher priced homes and investors sitting on the sidelines result in a higher average selling price without an increase in the price of any individual home.

More loan programs have been introduced that will allow first time home buyers to purchase a home with little to nothing down.  The programs differ from the exuberant past in the guidelines for qualification for these loans.  Interest rates are incredibly low which makes this a great time to buy if one is qualified – read this as a steady job, with a paycheck, good credit and little debt.   The all cash offer is still the trump card on well priced real estate.  Multiple offers make it difficult for first time home buyers to be successful in the low end of the market.

Barbara Ellis - Realtor

On the business side of real estate, there is a great deal of movement in the brokerages and their affiliations.  I do not want to add to the rumor mill so I will focus on just my changes.  A couple of weeks ago, I moved from Better Homes and Gardens Real Estate – MasonMcDuffie (which was Prudential Real Estate a week before) to join CPS Property Advocates in Rohnert Park.  My reasons were many but the compelling motivations were to more centrally locate along the 101 corridor and work with a locally owned brokerage. CPS Property Advocates is an independently owned and operated office led by Spence and Ann Hiatt – skilled, established professionals with sound reputations within the community.  I am delighted that they have recently announced their change in affiliation to ReMax, one of the largest and most successful real estate companies in the world.  So in a couple of weeks, I will have yet another new set of business cards and will be sending out announcements of my change.  I think that this is the last change for quite a while.  I am ready for some stability and selling some homes.  You know that I am available to provide the very best in service for you and your friends and family.


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