Life Goes On!

Much Ado About Nothing - at the Apple Blossom Parade, Sebastopol

  

Where have my days gone?  About three and a half weeks since I last posted here.  What is happening?  I have experienced the Apple Blossom Parade (of which I have about 100 pictures) – I have driven to Los Angeles for a Beachbody Summit (where I discovered a new workout that I am about to start, RevAbs) – I have officially christened my new home with a house-warming party (I must write thank you notes to all those who wished me well by helping me celebrate).  On top of that, I have been holding together 3 escrows which is a time consuming activity in this challenging economic environment.  What is quite interesting to me is that the number of visits to this blog has continued to grow even though there is no new content.  Very interesting – at least to me.  In response to those interested readers, I am inserting some new comments on life and real estate.  

I have received some “constructive” feedback that I seem to only talk about things that are good, positive and in some way uplifting.  I guess that is my nature.  But in response to this comment and in full disclosure, I must say that I am completely disgusted with the state of our banking industry.   

Two of my open escrows are short sales.  One is waiting on a response from the lien holder on a price increase that they requested.  Yes – they requested a $2000 price increase which we responded to in short order and now we are a week later and have not gotten their acceptance.  Why does this take so long?  Believe me, this is a rhetorical question.  I have learned to not expect answers.  The other of my short sale escrows is about to fall apart.  The lien holder is unwilling to wait a few extra weeks for my client to get his loan together.  Here is a deal that would definitely close with FHA financing in another four weeks and the Chase short sale negotiator is willing to nix the whole thing because they have decided that it must close in May.  No, there is not another buyer in the wings – No, they do not think they will get more money if they put it back on the market.  They will probably foreclose on the property and lose another $50K to $100K in the process – but they do not want to wait for my client’s loan to be funded.  Tell me why this is good business?  Oh!  I don’t expect an answer to that question either.  

Loans are taking inordinately longer times to get approval and then to fund.  The one normal (I use that term with trepidation!) transaction that I have in the works is teetering on a loan approval on the house that must be sold before my escrow can proceed.  Nothing big in the way of approval but time consuming anyway.  The bank does not seem to understand the term “time is of the essence.”  

Moving On - Apple Blossom Parade, Sebastopol

  

So I have expressed my angst.  It is a reflection of our current economic situation.  It is something to consider if you are contemplating a home purchase or sale.  I don’t know if my venting on banks is refreshingly different than my usual posts.  I do feel a bit of relief from stating my frustrations.  

My own home is now in escrow and we are waiting for the inspections to be done and the loan to be approved.  I hope that it closes in the time stated in the contract but I know that there will be issues.  I just want it to be sold, a week or two will not make much difference.  

In the next week or so, I will update on RevAbs and Moving Vol. 3.  Life does go on and I am trying to make the most of it.

What is happening in Real Estate?

The last few months I have been talking about moving and vacation and tsunami warning but not much about real estate.  The appearance is that nothing is happening in real estate or I am just not participating.  Appearances can be misleading!  I haven’t been writing about it but real estate is consuming most of my time – which is only fitting since it is the business I am in!

The sales of foreclosure properties is going to be with us for a long time.  Many homes that have reverted to bank ownership are still to hit the market.   Banks are continuing to hold back putting homes on the market that will flood neighborhoods with inventory and therefore drive the prices lower than they are today.  The low end (under $300,000 here in Northern California) had shown signs of firming but there are properties still coming on the market that are indications that we may see another price reduction.   The heavy rains of 2010 have had an impact on buyers willingness to go out looking but even with the inclimate weather, homes are selling.

Last week clients closed on a three bedroom/ two bath home in American Canyon for $325,000.

Over the last nine months, I have been working with 2 sets of buyers who could not get their offers accepted due to the multiple offers for lower priced homes in San Jose.  Today both are in escrow.  This came about through dedication to finding a way to make things happen and creativity in financing. 

One buyer is looking for either a home or condo under $200,000.  This was unheard of just two years ago but today there are many.  The difficulty for my client is one of beating out the cash investor.  With 60% down payment, he could still not get an offer accepted.  The first hurdle was that he did not have a credit rating.  You heard correctly – he did NOT have a credit rating!  Here is a person with no debt and a good chunk of change but no bank would lend to him.  Working with an ethical and hard working mortgage broker, he was able to establish a credit rating by the use of past rent and utility payments, making routine charges and payments to a credit card and being added as an account holder on one of his parents credit cards.  The first is a pretty safe and straight forward action but is not always successful in getting the credit established.  The second is simply a demonstration to the credit watching services that if he charges something, he will pay for it.  The third is a bit touchy as there needs to be a balance  maintained between income and debt.   To establish or improve a credit rating (called a FICO score) you should follow the advice of your mortgage broker carefully.

The second buyer was in a very different situation.  They each have steady jobs with regular paychecks and excellent credit.  But they have a modest nestegg to use as a downpayment and for closing costs.  FHA financing is their only option with the 3.5% downpayment.  With a maximum purchase price of $280,000, many homes are listed on the market but homes in this price range receive multiple offers from all cash investors.   Agents are writing all cash offers for much higher prices than the home will appraise knowing that when the appraisal comes in, they can lower the price.  This totally takes the first time homebuyer out of the market.  The approach we took to get into contract was to locate a home that was in need of major repair in a very good neighborhood and make the offer contingent upon getting an FHA 203K rehabilitation loan.  We located a home that was built in 1901 and has been “improved” over the last century.  Specifically, there are two small additions without foundations.  This “feature” makes the home unattractive to either a buyer who wants to immediately begin cash flow by renting or a buyer who is getting a conventional or normal FHA loan. 

The FHA203K loan program provides purchase money for the buyer plus the needed funds for making repairs and upgrades so that it qualifies for an FHA regular loan.  A licensed contractor must provide a bid for the work and the payments to the contractor are administered by the lender and a 203K consultant to insure that the work is satisfactory to the buyer and that the contractor is paid.  Yes, it is a lot of work beyond a normal purchase – but the homebuyer will have a home that is safe, not in need of repairs and meets their living needs.  It is a great program that is being utilized more than in previous decades.

Putting an FHA 203K deal together is not for the faint of heart.  In preparation for this approach, I became certified as a 203K Specialist by RE-Build USA.  This is a training on the FHA process and an introduction to the people who can make it happen.  I am pleased to  partner with Pollie Barnes of Prospect Mortgage and Wells Fargo Bank in this endeavour.    Feel free to ask if this loan program can be a way for you to get your dream home.

Getting the House Ready to Sell

In my business, I am constantly letting people know what they need to do to get their home sold.  Have good curb appeal, pare down the possessions, take the family pictures off the wall, stow away valuables….  The list goes on.  Then there are the disclosures that need to be completed.  In a turn around of roles, I am dealing with these issues from the other side.   My home should be on the market within a week or so.  I have gotten most of the interior ready to show.  The front yard has a new cover of mulch.  The patio is neater than usual.  When did we put down those limestone floors?  Does the doorway into the master closet really need to be repainted?  Pity the poor Realtor who has a Realtor for a client! 

The peaceful red living room

I will keep in my bank of memories the many hours of peacefully reading in the living room with the shade of the oak tree adding a serenity to my day.  Red is not known as a soothing color but in this particular application, it envelopes instead of excites.   The beiges and warmth of the dark wood must be a huge contributor to this overall feeling because the dining room is the same color of red but with the inclusion of the blues from the oriental carpet and the large carborundum print, the dining room is stimulating and energetic. 

Dining Room during packing

Many a lively dinner party was held in this dining room.  The table would be set either formally with china or elegantly with pottery.  No matter what the dishes were, most every open space would have an array of  wine glasses filled with the best of California and French wines.   Friends and family would feast on terrific meals and the conversations would last for hours.  Thankfully the chairs are very comfortable. 

Those wonderful meals were prepared in the carefully planned kitchen.  The Dacor cooktop has handled multiple tasks simultaneously with the ability to provide raging fires and very controlled simmering.  The ease of cleaning is very important to me as that is the task that often fell to me.  The double electric ovens are great for baking as well as roasting the perfect turkey or pork loin.  A great deal of love went into the selection of every aspect of this culinary center. 

Cook Area of Kitchen

My favorite element of the kitchen is the granite backsplash behind the cooktop.  The flow of water from the flow of textural veining seemed a necessary complement.  Of course, the custom stainless steel hood and the pull out pantry between the ovens and wall are also favorites.  Then there are the sectioned drawers and the pull out seasoning shelves and the recessed glass shelves for spices.  I am quite pleased with the overall efficiency. 

The family room is just the other end of the kitchen.  The full kitchen/family room is the hub of the house.   The thermostatically controlled fireplace welcomes early morning risers to a warm and glowing sanctuary.  Well it is a sanctuary until the surround sound is activiated and the TV gets going!  I must admit that watching a golf tournament on the large screen TV is much more  entertaining than trying to see what is happening on a small one.  The living room and patio are wired to pipe music throughout the home and garden.   No matter how enticing I make the living room, guests and family alike seem to gather in the kitchen.  It is comfortable, in the middle of everything and has a great view of the garden. 

Family Room from the Kitchen Sink

If you know of anyone who is in need of a 4 bedroom home with a great garden, send me a message or comment.  It should be on the MLS tomorrow.  Our listing price is $724,500.  

I miss this home and everything that it stood for.  I will replace it with another – very different – but equally as welcoming.  I certainly hope that as many friends will visit me in my new place – where ever it turns out to be.

The Q3 Real Estate Report is Out

Every quarter we wait for the quarterly report to see if the numbers agree with how the market seems to be from an activity perspective.  It is always interesting to read how the number crunchers interpret the data.  For Q3 there is a mixed bag for Sonoma County.  As a whole, year to year comparisons are that the prices are down and the activity is slightly down.  But that is only part of the picture.  For Sebastopol, Forestville and Guerneville, the volume is up 38% from Q3-08 to Q3-09.  2008 was a very slow year in Forestville but 20 homes were sold in the last 3 months.

The buzz in the news is that there is not going to be that huge glut of foreclosures this next year.  The number of foreclosures in California have leveled off instead of escalating as predicted earlier in the year.  According to information on California released by MDA DataQuick on Tuesday, 50,013 homes were foreclosed upon in the three months ended Sept. 30, down from 79,511 for the same period in 2008.  They report an increase in default notices but the banks are attempting to keep people in their homes if at all possible. 
 The bottom of the market is being bought up by investors and first time home buyers as quickly as it enters the market.  While looking at properties in San Jose yesterday, we had to juggle around other Realtors and their clients while looking at homes priced for multiple offers.  This is happening throughout Northern California.  This is making the purchase of a home for first time buyers difficult as any reasonably nice single family dwelling is receiving cash offers.  An FHA borrower cannot compete against all cash.  The strategies to get into contract are more than price and it takes real perseverance to be successful.

Meanwhile, we are seeing a renewed interest in higher end properties.  This is good news for everyone as it signals an increase in comsumer confidence.  I am certainly feeling more confident about the real estate market – but that could pass!

Look for the Q3 Market Report for Sonoma County within the next week.  If you do not receive one, email me with your current address.  If you would like to get the Q3 Market Report for another Northern California area (like San Francisco, Contra Costa or Santa Clara counties), just ask.  I am happy to send them along.

What about those Foreclosures?

Last night I was chatting with my son and daughter-in-law over the best chili relleno in San Jose about the current reality of getting into contract on a less than $250,000 priced home.  My son quoted a news story that 13% of all mortgages in the USA were either in foreclosure or had been foreclosed on.  I found this statistic unbelievable.  I stated that I just didn’t see how that could be.  Foreclosures are a huge part of our real estate business right now but to say that 13% of all mortgages were in foreclosure seemed excessive.  When I got to my Google page, I saw the real story – 13% OF ALL MORTGAGES HAVE MISSED A PAYMENT.  Okay, that seems a bit more realistic but didn’t feel real.  The article broke down the numbers as 9% had missed payments and 4% were in foreclosure proceedings.  That still seems to be way off from my experience.  Another statistic which I found on the fdic.gov website was that 1 in every 200 homes will be foreclosed. While that is huge if you are the 1, that is no where near 13%.  This would calculate to more than 85% of the homes in USA not having mortgages.  That doesn’t seem realistic either.   What is it that Mark Twain said?  “There are lies, damned lies and statistics.”  I don’t know how to reconcile these statistics but I can look at this from a different approach.   I decided to examine some sales figures to work with facts instead of feelings.

Closest to home is Sebastopol.  In the last six months 109 homes have sold in the “Sebastopol” area.  That area includes Freestone, Occidental, Graton and the lands around them.  Of those sales, 22 were bank owned properties referred to as REOs and 5 were short sales.  A short sale is when the sales price does not cover all of the liens.  These are short on funds but not in time.  A short sale can take up to a year to complete depending on the bank and circumstances.  Either an REO or a short sale is considered a “distressed” property.  That makes 25% of the sales being destressed properties.  This is higher than I had expected because of the 119 currently active listings only 6 are REOs and 3 short sales.  The REOs are all under $500,000 list price and the short sales are all under $800,000.  Of the 37 homes in escrow, 6 are REOs and 12 are short sales.  My interpretation of this data is  that while there are many homes on the market that are not distressed, the ones most likely to sell are the distressed properties. 

In Sonoma County, Sebeastopol is one of the less distressed markets and Rohnert Park is one of the most distressed markets.  There are only 37 properties active in Rohnert Park.  11 of these are REOs and 14 are short sales.  The highest asking price is $625,ooo.  In the same 6 month period as quoted for Sebastopol, 238 sales have closed in Rohnert Park.  Of those 238 sales, 114 were REOs and 55 were short sales.  105 homes are in escrow with 75 being short sales waiting for bank approval.  I wrote an offer for a client in February and we are one of those 75 still waiting for an answer.  The stark difference between these two markets is why national statistics are so difficult to decipher.  

Bottom line on all of this is that there are a great many distressed properties on the market and they are the ones that are selling.  Short sales are closing behind REOs due to the long approval process with lien holders.  It is a sad time for homeowners who are losing their homes with the counterside of first time home buyers bringing their dreams to fruition.   The high percentage of distressed property sales has impacted the selling prices for those homes that are not distressed.  This is good news for the conventional homebuyer.   Economic forecasts are positive this week but I don’t know what statistics are being used for that prediction.  In my mind, this is a wait and see environment.

How is the economy in Sonoma County?

Friday night Tom and I went to the Sonoma County Fair and attended the Youth Livestock Auction.  Our first observation was that there were many regular vendors that we just could not find.  For many years we had stopped at the Tuff Shed display and looked into the cost and discount that was available for Fair attendees.  We could not find them this year.  There wasn’t even an unmanned display.  No Tuff Shed booth means no discount for us and we thought that this might be the year to get a shed and close out or storage unit where we store Christmas decorations and staging materials.  The busiest booth was the Clover Dairy booth that was giving away ice cream cones.  Few people were buying.  Next on our agenda was the dinner for the Youth Livestock Auction.  This dinner is a thank you to the previous year’s buyers and bidders.  Last year we purchased a lamb.  Previous years we have purchased either a lamb, steer or hog – sometimes we bought two animals – so we are invited and we take our daughter and her husband so that they too can enjoy the experience of the fair.  This is always our favorite part of the Fair.  There is a great meal of steak, baked beens and Ceasar Salad topped of with cheesecake.  Wine flows freely and a good time is had by all.  The tables have historically been topped with promotional gifts from local businesses that prove to be useful throughout the year.  This year there was no check-in table.  There was nothing on the tables but the plastic table clothes.  Less than half of the people that usually attend were there.  There was plenty of tritip but the kids serving the pre-dinner sausage were clear that filling everyone up with sausage was part of the plan.  It was less than usual all the way around.  The auction was painful.  The bidders’ arena was less than a third full.  The grand champion went for $7.50 a pound and the next champion went for $2.50 a pound.  These are very low numbers.  While the Press Democrat stated that the tears were for the loss of the animal, I can assure you there were tears for the lack of income.  Many of these teens look to the profits on their steers to bolster their college funds or buy a car.  They love these animals while they are raising them but after the first year, they know that this is a business proposition.   There were no smiles amongst the students and their parents who have seen the hard work that they put in all year.  It was a sobering event.

The economic news in the papers is on the upside.  Thankfully, houses are beginning to sell more quickly.  The unemployment numbers are going down but that could be people giving up on looking.  The stock market is recovering but we all know how fickle the market it. 

I am a bottom line kind of person and looking around the Fair, economic recovery is still in the future.

Market Statistics for Sonoma County

Yesterday we got our Q2 statistics newsletter into the mail.  It was a struggle with paper jams with both printers but getting this information out to our sphere is an important part of our service.   We want everyone to be aware of what is going on in Sonoma County Real Estate.  The year to year median sales price in Q2 dropped 23% for all of Sonoma County with Sebastopol falling only 10% over the same time period.  Remember that the median represents that point where half of the houses sold for less and half sold for more.  Many people read this number and think that each house dropped in value by this percentage which is a misconception.  Yes, prices have gone down but more importantly, lower priced homes are selling more quickly than higher priced homes.

As mentioned in the New York Times today, people who never thought that they would own a home are purchasing their dream properties.  The $8,000 incentive for first time home buyers has spurred on the homes under $350,000.  This segment of the market is seeing multiple offers on well priced homes.  It is rare to see a sale without the inclusion of a bank on the selling side – whether the property is bank owned or selling for less than the current indebtedness.  That appears to be a continuing fact as we look to the future.

The good news in the statistics is that on a month to month basis things seem to be improving with both greater numbers of properties selling with a higher median sales price.  That has led some economists to optimistically say that we are past the bottom of the market.  I say that we are in a wait and see period.  With many notices of default still being recorded at the county and jobs still being lost, it is unclear as to how prices can recover quickly.  Fewer homes are on the market right now and that does create a demand.  As more properties go into foreclosure, the banks can control the number of properties on the market which helps keep the prices up.  This winter will be critical for the real estate recovery.  If sales falter, we could be in another downward trend.  Based upon the current activity with buyers, my prediction is that we will see sales increase in West Sonoma County as the year draws to an end. 

If you are not on our mailing list for the Quarterly Sonoma County Real Estate Statistics, drop me an email with you address and I will make sure that you get them.  My CA DRE# is 01359647.

Divorcing Homeowners Beware – What You Don’t Know During Your Divorce Will Hurt You More, Long After.

The family home is usually the most valuable asset in divorce. However, when dividing your marital property, appraisal minus mortgage does NOT equal equity. This incomplete equation leaves your house over-valued and that works against you.  In addition to the inaccurate and unfair division of your property, you risk damaged credit, default, foreclosure or even bankruptcy without more real estate due diligence much earlier in your divorce process. 

Barbara Shula, real estate sales associate with Prudential California Realty have completed course work to earn the RCS-D^TM designation as Real Estate Collaborative Specialists – Divorce™.   

An RCS-D™ REALTOR® ,Barbara are professionally trained to neutralize divorce real estate as a business transaction in the best interest of the house – and each divorcing spouse.  Leading your divorce real estate team, Barbara also serves as project manager working with you and your lawyers and can refer real estate and financial professionals specializing in divorce to assist with essential evidence of your house value.  Such additional evidence is needed during your divorce process, especially before any property negotiation or mediation. 

 This course is approved for continuing education credit by the California Department of Real Estate.  This course was written and taught by Kelly Lise Murray, J.D. & Wendy Waselle.  Professor Murray earned her J.D. cum laude from Harvard Law School & currently teaches Legal Writing & Research at Vanderbilt Law School.  Co-Instructor Wendy Waselle has a Masters Degree in Education & created the Fix’n 2 Stay or Sell^TM   home staging program.  Professor Murray & Ms. Waselle co-created Divorce This House™ TV on Nashville’s ABC station, Channel 2, providing FREE expert advice to divorcing homeowners.

 You may contact Barbara @ bshula@comcast.net or 707 824-4574 to discuss how you can protect one of your most valuable financial assets during the stressful time of divorce. Whether your divorce is completed, just beginning or somewhere in between, Tom and Barbara can help you determine your best options now for a stronger financial future.

Properties on the Market on Bohemian Hwy

I took a few videos of homes on the market for a client.   There are three videos.  Two videos are for the same property which is a cute cabin on about an acre outside of Monte Rio.  There are two buildings – one is an updated cabin and the other a garage with an efficiency unit above.  The third video is of a bank owned property outside of Occidental.  Both properties are creek frontage  and on Bohemian Hwy.  The videos are uploaded to YouTube and can be reached through these links.  http://www.youtube.com/watch?v=VtWeQqojhpE  (Grounds of Monte Rio property) http://www.youtube.com/watch?v=eECEDb2lAgg (Interior of Monte Rio property)  http://www.youtube.com/watch?v=Ioo7dicOEfM (Property outside of Occidental).  Lydia, these are for you.  Enjoy the views.

Activity is at a 2 year high

It may be hard to believe that some part of the economy is picking up.  But it is true.  Sonoma County properties are going into contract like the good old days.  The difference from the “good old days” is that these days are good for buyers.  They are also good for sellers if the property is priced right.  Multiple offers are coming in on those homes that seen as a good buy.    No more sitting on the market for months without an offer.  All a seller needs to do is get the price to where the market things it is a good idea.  Presto – offers come from everywhere. 

If you are selling your property, get this price down to something that is considered a bargain.  You can get more than the asking price in this market. 

If you are buying a property, be prepared to compete for a property.  Know the value of the property based upon what is going on in the market.  If a comparable home sold three months ago, the house today will sell for less.  Don’t think that a low ball offer will get accepted without a lot of time on the market and hard negotiations.