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TRULIA 2012 PREDICTIONS:
The conclusions of this article are based on several cause-effect fallacies:
1. that economic recovery will lead to house price increases
2. that lower home prices hurt seller motivation
3. that economic recovery will bring construction jobs
Each of the above “causes” may affect the “results” in a minor way.
But none of these causes are the major reason leading to the stated results.
1. House prices are based on supply compared to demand. Period. House prices will recover when there are more buyers and fewer homes for sale.
2. In many cases, lower home prices make a house worth less than the debt against it so the sale must be a short sale. As prices continue to decline, more and more homes go underwater motivating more and more sellers to sell short or walk from their homes. This increases inventory, continuing the price decline which in turn pushes more home loans underwater motivating more sellers to default. That almost every seller now knows of other families living for free in their homes over a year, defaulting seems less onerous, perpetuating a vicious downward cycle.
3. home construction jobs have to compete with home sales. Home construction cannot compete, regardless of the economic job environment, at much less than $150-$200/sf. When homes are selling for $78/sf, as they are in Rochester, NY, it is highly unlikely construction will expand until home prices have risen high enough for new construction to compete. This will most likely take several more years.
Article Fact Correction: Loan delinquencies are down 16%, not 25%, from their peak in first quarter 2010. (7.35M down to 6.15M) That means over 6M loans are still in the delinquent pipeline. And this number does not include the underwater loans that are still performing (borrowers making their payments).
Missing Article Fact: The downward price pressure of distressed properties has now pushed 11M loans UNDERWATER, 25% of US loan inventory. This is seriously bad news. With 25% of the country’s loans secured by property valued at less than the loan, it is more likely than ever greater numbers of sellers will strategically default. This will lead to even more motivated short sellers furthering the collapse of real estate prices.
Missing Article Fact: Foreclosures and short sales have locked out 6 months to 3 years’ worth of buyers in many markets. This is why the omnipresent low mortgage rates have not and CANNOT motivate these buyers to buy. These buyers can’t get loans, regardless of the interest rate. Markets simply can’t and won’t recover until these buyers can buy again.
Hot Cities Fallacy: connecting home prices and new construction to a smart workforce and high-tech industry is a complete fallacy. These items have almost nothing to do with each other. But unless you really understand real estate, it sounds good, at least at first.
What this means for Agents: ignore this article’s conclusions. Work with me to keep sellers in their homes, bring buyers back to the market and make every city a “Hot City”. (http://occupy-our-homes.info/) A stable real estate market will lead to more buyer confidence, more lender confidence, more property tax revenues, and increased home prices. That will lead to more construction jobs and economic improvement. And that will improve every agent’s bottom line.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to markets nationwide. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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STRATEGIC DEFAULT FACTS
-Strategic defaults are the natural and logical consequence of severe price decline in the value of someone's property.
-As severe decline happens ‘right next door’, Sellers will decide that strategic default is their only choice.
-Severe decline is caused by 3 Bank/Lender Rules that keep markets out of balance and forcing prices down.
Modifying these 3 Bank/Lender Rules will stop price decline. We MUST do this for decimated markets. We must do this NOW.
If out of balance markets are not helped, they will continue to decline. Resulting drops in tax revenue could bankrupt governments and end up ruining most property owners.
Even the Banks/Lenders don’t know how to stop market prices from falling. They need our help.
HOW TO STOP HOME PRICE DECLINE
Modifying (1-2 yrs) these 3 Lender Rules specifically for markets in distress will immediately stop prices from declining and return these markets to balance.
We ignore this to our peril.
LENDER RULE 1 - locks Sellers into short sales: ‘Mark to Market’ Appraisals
REOs or shorts often sell for a price far lower than current market value, which ‘marks to market’ this lower price on the entire neighborhood.
This lower price crushes more equity out of every home, pushes more loans upside-down, and locks in a whole new set of Sellers that now have to keep paying on upside-down loans, sell short, or lose homes to foreclosure.
From then on, no matter what price a Buyer is willing to pay for a home in that neighborhood, the Buyer’s Lender insists on an appraisal that is required to take this new lower price into account, driving prices down. New REOs and short sales are sold for ever lower prices to snag buyers. Round and round, the cycle goes down. This self-reinforcing price-destruction downward spiral is the LEADING CAUSE of strategic defaults.
Paying on a $350,000 debt when the house next door just sold for $200,000 causes most owners to seriously consider their options.
What options? There aren’t any. There are NO OTHER OPTIONS AVAILABLE for Owners other than to sell short or go to foreclosure.
Loan modification attempts have proven futile. And with an upside-down home loan, that Owner cannot qualify for a new loan to buy something else without paying off the entire shortfall. Who has hundreds of thousands of dollars to pay off an upside-down loan? Nobody.
What else can the Owner do? Just keep paying on an upside-down mortgage for 30 years? Never move? Never sell?
As Owners in many markets since 2007 watch prices decline year after year with no end in sight, they eventually become convinced that continuing to pay the mortgage will just expose them to losses unrecoverable in the future.
Enter strategic default.
LENDER RULE 2 - locks Home Buyers out: No Loans for 3 years to Buyers with short sale/foreclosure on record
This Rule has decimated Home Buyer demand. No government incentives to Buyers can ever compensate for this loss.
In the 9 counties of the San Francisco Bay market, over 83,000 families are now locked out of buying for 3 years due to home loss. This equals almost 1.5 YEARS’ WORTH OF ANNUAL SALES for this market (approx 50,000 sales per year). This is ‘where the buyers went,’ sidelined by this Lender Rule.
In the meantime, homes for sale (supply) continues apace as more and more Owners give up trying to hang on (due to job/income loss or strategic default) and decide to sell their homes short or foreclose. More and more short sales exacerbate the downward spiral locking out more and more future Buyers.
A scary fact is, that overall, so far in 2011, more families per month are losing their homes to short/foreclosure than in 2010. (entire SF Bay Area)
LENDER RULE 3 - locks Investors out of loans: Major Restrictions against Investors
These Lender restrictions against Investors have been instituted over the last 2-3 years and are taking their toll on the market.
- - REO Cash Purchase Deed Restrictions – cash buyers cannot re-sell or refinance over 120% of purchase price for 60 days
- - Maximum 4 loans per investor – no loans available after the first 4 properties
- - No refinancing allowed for 6 months (sometimes 12 months) for a cash purchase
- - No Investor sales to Home Buyers for at least 91 days, with huge restrictions if sale price is over 120% of purchase price, regardless of repair costs
These Lender Restrictions discourage investors and have greatly reduced investor purchases, directly contributing to price declines.
STABLE PRICES:
Stable home prices require balanced supply and demand.
When Rule 1 locks more Sellers into short sales, Rule 2 locks out more Home Buyers, and Rule 3 severely restricts Investors, how can prices be expected to rise?? They can’t.
Once markets are seriously out of balance, these 3 Lender Rules ensure prices will continue to decline for the foreseeable future unless drastic changes are made.
OCCUPY OUR HOMES is an effort for all owners to join together and demand changes from the Banks to keep owners in their homes. Join us.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to markets nationwide. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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Listen up! This announcement applies to every California upside-down homeowner that refinanced since they purchased their home, and every upside-down investor that purchased or refinanced a home or 1-4 units.
It used to be: If the owner refinanced his home, or the property was an investment (1-4 units), the owners were on the hook to pay the deficiency if the lender decided to sue them for it. (deficiency: the difference between what is owed on the loan(s) and what the lender(s) receive(s) as payoff).
NOW: On July 15, 2011, CA legislature enacted a new law protecting homeowners and investors against deficiency liability after a short sale in California. Note that this law applies only to single family homes and 1-4 units. And this law does NOT change the deficiency liability of owners if the property goes to foreclosure. The old rules still apply.
So in general (please call us for exceptions), homeowners that refinanced and INVESTORS that bought or refinanced after purchase are now NOT liable for deficiency IF they sell the property short. They can still be liable for deficiency if they go through foreclosure as they were before.
Prediction: Watch the for the coming boom in short sales! If you thought 35% short sale market share was high (Jan 2011), short sale market share will probably skyrocket before this mess is over
Please contact us to help determine your specific situation. We care about you and want to be sure you’re off the hook. We also provide very private solutions to short sales, and do everything we can to reduce your stress and even keep you in your home if possible.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to markets nationwide. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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The best investors in real estate always work the deal backwards. That may sound rather strange, but if you don't know where you want to end up, how can you start doing something and be sure you'll end up there?
I call it the "Exit Plan": figuring out first what results are desired, and when are they desired, and what it will take to get them.
Before a smart investor buys a property, the following questions are carefully considered and reliably answered ideally mirroring reality as close as possible. Only then is it likely the investment will achieve the desired results.
Below are some key questions necessary for a solid Exit Plan:
1. What final results are desired?
2. How long will it take to get these results?
3. What will it cost to get these results?
4. What is a reasonable exit price?
Unrealistic answers to these questions have tripped up lots of investors, causing losses instead of the desired gains. It is imperative investors work closely with those experienced in each aspect of investing, to get as reliable answers as possible to each of these questions.
After the answers are determined, then an investor will better know what the property must be purchased for to achieve the desired results.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to markets nationwide. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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I've finally figured out the ONE INTERVIEW QUESTION to ask an agent/realtor/broker that will immediately demonstrate if you, the buyer, will be well represented.
Interestingly, you, the buyer, don't even need to know the answer to quickly determine if the licensee knows the answer. And if you can't remember this question, please write it down and start your interview with this. Why waste time?
Here is the $15,000 question: "Can you explain liquidated damages to me and how that can be used as a buying strategy?"
If the licensee looks like a deer caught in the headlights, run. Your money is at great risk.
If the answer seems like gobblety-goo to you, it is. Run.
You deserve smart, experienced representation that will not ignorantly risk your money.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to markets nationwide. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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With many home prices now at 50% of what they were just a few years ago, how can prices still be falling? And where will it end?
Home prices are always the result of supply versus demand. And markets have typical annual sales volumes based on population. So if supply somehow doubles, can that market double its buyers? No. Doubling supply without doubling buyers forces price declines, just as sidelining half the buyers with normal supply forces price declines.
Our markets now have an Extreme Over-Supply of homes for sale exacerbated by this year’s boom in short sales. Shorts now double or triple foreclosure listings. In some markets, over half the listings or more are distressed homes. Three years of price declines have pushed more and more owners upside down, who now have to sell short just to move. Or they worry their home will never again be worth the debt against it and have been given no reasonable method of keeping it. It’s hard to keep paying a $500,000 mortgage when the house just like it next door sold for $250,000 or less.
At the same time, our markets now have an Extreme Under-Demand of buyers. When sellers lose their homes to foreclosure or short sale, bank lending rules prohibit them from obtaining loans to buy other homes for three years. This artificially reduces the number of buyers available to purchase homes. For example, from 2008-2010, 81,408 sellers lost their homes in the San Francisco Bay area (9 counties), almost half of the 166,667 homes sold. That’s a huge number of sidelined buyers.
Every short sale and foreclosure forces Mark to Market on all comparable homes, systematically decimating equity. This increases the number of distressed owners losing their homes, adding to supply, and locks them out of buying for years, lowering demand.
This vicious cycle will not end until either most homes with loans have gone through foreclosure or short sale, or something is done to stop the cycle. If nothing is done to stop price declines, it is very likely banks will make loans even harder to get, further reducing available buyers and compounding price declines. Some homes have already gone through foreclosure once and are now again in short sale. This is devastating to bank loan portfolios. The longer we wait, the more drag falling prices will have on our economy, our morale, and our future.
The first step to stopping the cycle could be as simple and straight-forward as getting the banks to allow distressed sellers to get a mortgage again after one year instead of waiting for three years. In the Bay Area, that one rule change would allow over 57,000 buyers back into a market that currently has 30,024 active listings. All those additional buyers would quickly push the supply-demand ratio back into balance, stabilizing the market. This would begin to reverse the downward cycle the market is currently in.
This is a First Step Solution worth championing.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to every market nationwide. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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The scare of another drop in real estate prices is distracting buyers from what is really important. Affordability.
Everyone needs to live somewhere, choosing to either rent or own. Now, with many homes actually priced below their rental value, owning the home costs less than renting it. And that’s not counting ownership tax advantages.
Rental demand is growing, increasing rents. So why be subject to a landlord and increasing rents, when by purchasing, the loan payments will be the same for the next 30 years?
Besides affordable home prices, loans are still very inexpensive and have easy, 3.5% minimum down payments. Higher down payments, up to 20%, are being pushed by both banks and the government. This means that for a $300,000 home, the down payment would increase from $10,500 to $60,000!
That’s a lot of saving up for any renter to get into home ownership. There is no final decision yet about increasing the minimum down payment to 20%. But without a doubt, down payment increases will make it increasingly harder in the future for renters to step into home ownership.
With both affordable home prices AND affordable down payments, now is definitely the time to buy.
Look smart tomorrow and be glad you bought today.
CJ
Holmes, real estate investor since 1977, broker since 2005, and market analyst
since 2007, has personally handled hundreds of transactions, viewed thousands
of properties, and dealt with countless agents. She also owns a
portfolio of income producing properties, and has developed unique market analyses
to determine and predict price trends, which principles apply to every market
nationwide. The buyer-seller motivations, the lender-bank restrictions, and the
market dynamics are universal. She can be contacted at (707) 578-5727,
cjholmes@cjholmes.com,
or www.cjholmes.com
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If just one of our political leaders grasped the enormity of this issue and how it could establish them politically with us "masses", they would jump on it, I swear.
Imagine all the "bank corruption articles and issues" over and done with. All the "foreclosure accidents" gone. No more "extend and pretend" with inflated values in Bank loan portfolios. Those million empty homes in California filled with owners. No more homes foreclosed on by the thousands. No more owners crying over losing their homes.
Market values stabilized. The construction industry back on its feet, alive and well. Public confidence restored. Millions of jobs created. Tax coffers filling back up. Retirement portfolios getting back to normal.
It is a reality that we CAN bring into being. Help me make it actuality.
United we Stand, Divided we'll keep Falling.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to every market nationwide. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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Somebody just wrote on a blog that a buyer should dump a Loan Officer that doesn’t respond within 3 hours to write up the buyer’s loan approval letter, calling that loan officer playing “hard to get”.
In my experience, particularly lately, the best Loan Officers I know are extremely busy and I highly recommend my clients give my Loan Officer referrals at least 1-2 days to respond back to them. It is far better for my Buyers to wait a couple days to get into these Loan Officer's "queue" than to try to work with someone who responds quickly but doesn't know what they're doing. That can boomerang in the worst way, and usually just before close of escrow, blowing up the deal.
The best thing Buyers Agents can do for their clients is to ensure they are working with a Loan Officer who really knows what he/she is doing. These Loan Officers may take longer than 3 hours to respond to an initial buyer’s inquiry, but once they do respond, they can IMMEDIATELY (in 5 minutes or less) tell the buyers what they may need to do to get qualified for a loan. Many buyers these days need to work on their credit or other documentation before their application can be submitted to a lender for pre-approval.
Don't forget, just because some loan officer writes up a letter, doesn't mean that's all it takes to actually get a loan funded for a buyer. There is so much more involved. Buyers would be well advised to make loan qualification and pre-approval their highest priority, before jumping into offers unprepared.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to every market nationwide. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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It is not only the competition of cheaper foreclosures that are hurting builders. Builders are continuing to hurt themselves by doing business in such a way as to cut out buyers’ agents, seemingly to increase builder profits and more easily manipulate buyers.
Bad news travels like the wind, and by now most agents probably know how a builder may demand the buyer’s agent pay for the buyer’s concessions out of the agent’s commission. This is one way builders shoot themselves in the foot.
Another builder policy is to immediately inform buyers that show up without an agent, that the house will cost them more if they use an “outside” agent. So most buyers use the builder’s agent, not understanding the lack of representation may cost them far more in the long run.
Builders also demand offers be written on the builder’s contract, which conveniently sidestep many buyer protections written into standard CAR contracts. Typical builder terms may include insisting the buyer use the builder’s lender, and that the buyer give the 3% earnest deposit directly to the builder, without recourse.
Considering how many builders have gone bankrupt these days, it’s hard to imagine this industry even being allowed to use these contracts, or that any sane buyer would ever agree to give money directly to a builder before the house was done.
In my opinion, Builders should revisit their business model with an eye to partnering with agents instead of pushing them away, and recognize they need to provide more buyer protections.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to every market nationwide. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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Here is a nasty natural and logical consequence of falling real estate values: Your home may never again, in your lifetime, be worth what you currently owe.
Everyone has been hoping like crazy the market would stop falling and their home would again be worth at least the mortgage on it, ideally sometime soon. But now, prices are slipping again, due to an overload of short sales and a shortage of buyers, many locked out of buying because they recently lost a home.
With prices continuing to fall, you may have to sell short just to move. Unless we fix this problem now, it’s not hard to imagine eventually more homes having to be sold short.
This problem can be fixed. Changing two bank rules would work wonders:
1) allow buyers that lost a home in 2008-2009 buy now instead of waiting, and
2) let short sellers buy their homes from the banks instead of being forced to sell to someone else.
These two changes would increase buyers and buyer demand, while reducing the flood of homes for sale.
PLEASE forward this category of articles to your banker (other articles I’ve written have more details about these fixes).
We need to help the banks comprehend that this plan is good for everyone – us, our property values, and the lending industry, as these fixes will stop home prices from sliding. Then confidence will grow, prices will normalize, the construction industry will get back on its feet, and jobs will come back.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to every market nationwide. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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I just did. On 3 different sites. Guess what? The values were $300,500, $366,180, and $399,000. That's 33% and almost $100,000 difference from one site to another.
Then I looked at the market and found two comparables at $650,000 and $815,000! Now we're talking real money.
So much for algorithms. In my experience, this fuzzy math is inconsistently inconsistent. In other words, the property price generated by a website formula is randomly too high or too low, and there’s no way to know which it is.
These formulas seem to ignore:
1. Lot size
2. Lot location – math doesn't care but buyers do!
3. Non-sale “sales” – like when a family member buys out another member for half price – “oops” goes the value, and the neighborhood!
4. Condition of the property – math considers it the same whether fabulous or torn up
It can be fun to see what a property is “worth” using these websites, but don’t believe their gospel. Get a real valuation from an Expert before you lose out.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends, which principles apply to every market nationwide. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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I hear this question almost daily from clients or other agents (opposite me in the transaction) that don’t do much business. It is exactly as it sounds: the Lender will not fund the buyer’s FHA loan unless, and until, the house meets certain condition requirements.
Here’s the link to bookmark for FHA property condition requirements: http://www.fha-mortgageunderwriters.com/fha_appraisal_guidelines.htm.
Let me assure you that all FHA lenders will require the same property condition, no matter which loan officer or Lender you use. And Lenders are demanding these property conditions be met for any and all FHA loans they do. These are not really new guidelines, but in the boom days, very little FHA lending was done. Now, a huge portion of loans are FHA.
Most of the time the sellers will be expected to do these repairs/improvements to the property so the buyer can get the loan. So sellers, be sure you hire a listing agent that understands these guidelines, and will get both you and your property best prepared for this market and its more stringent sale conditions.
And buyers, be sure you hire a buyer’s agent that understands these conditions to better guide you in making offers appropriately with strategies in place for issues that may arise. Please be sure you use a loan officer that is experienced and successful in getting loans approved. Some properties will be denied by a Lender for what would seem to be obscure reasons to the parties involved, making working with a very experienced loan professional all the more important to a successful purchase.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses principles apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com
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Blog Category: Real Estate Nitty Gritty
There are two types of lies: commission - where something said is untrue, and omission - where a material fact is intentionally left out.
In the last 30 days, my clients and I have been the brunt of a rash of lies - omission and commission of property facts and tenant rights by sellers and their agents, and commission of agent exaggerated claims.
Everyone understands mistakes, but when agents brag in blogs about sales they never did, or sellers and their agents insist on lying about property or loan facts, or lenders write approval letters for buyers that don’t really qualify, the rest of us honest and hard-working participants must take a stand.
Agent claims can be independently verified. If an agent makes a claim, like how many transactions they’ve done, demand proof, or contact us to help you get that proof. Did you know, that according to the California DRE, 85% of agents do one deal or less per year?
Sellers should remember they are liable in a court of law for the actions of the agents they hire. And it’s fraud to intentionally withhold material facts from or lie to the buyer about a property you’re selling.
Loan officers should not give approval letters without verifying the buyer actually qualifies for the loan. Doing so causes great harm to the buyer, the seller, and both agents involved in a transaction with that buyer. Everyone is depending on you to get that loan for the buyer.
And especially these days, Buyers better ensure they are working with team of knowledgeable experts and advocates, that can and will perform as expected. To do otherwise could jeopardize their purchase plans.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends which apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com.
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In case you haven’t seen this yet, California has published an Energy Booklet, stuffed full of specific ways you can reduce your home energy costs, and increase its energy efficiency. From simple yet powerful ideas like keeping out drafts, replacing nightlights and holiday lights with LEDs, and adding insulation, it clearly lists specific ways to improve your “energy wise habits”.
Bookmark this link as your resource: http://www.energy.ca.gov/HERS/booklet.html
See page 9 – did you know that “A $100/m reduction in your utility bills frees up enough cash to pay an additional $17,000 increase in your mortgage?” Thinking energy smart is definitely thinking money smart.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses principles apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com.
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Blog Category: Superior Investing Mentoring & Guidance
It’s always been of utmost importance that your “exit plan” reflect reality to ensure your real estate investment profits. Whether the investment is designed to generate gains (build/flip), or a monthly income (rental), accurately predicting the “end price” of your project is paramount to your success.
This pressure has motivated me to develop price trending analyses designed to predict future prices, whether by county, city, zip code, property type, or price point. Now it is possible to “see into the future” with greatly increased confidence, like turning on the light at night.
If you need this type of guidance, please don’t hesitate to contact me, particularly when evaluating your next investment project. This guidance could help you identify projects to cancel and those to pursue, and make the difference in your success or disappointing failure.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses principles apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com.
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Blog Category: Real Estate Nitty Gritty
Too many sellers seem to assume all agents have similar knowledge and experience, work equally hard, know everything there is to know about selling property, have the resources necessary to mount a good campaign that will attract as many buyers as any other agent would, and will then be a superb negotiator when an offer comes in.
Is it any wonder a seller feels cheated when it turns out their agent didn’t understand the market, took horrible pictures, didn’t have a good online presence, never got showing feedback, and ended up losing them months of time sitting on the market with no action.
Unfortunately, this happens all too frequently. Now, more than ever before, excellent results require excellent and experienced representation.
Want to save yourself heartache when selling your home and maximize your seller net proceeds, too? Interview before you hire. Ask to see the agent’s current listings, ask about their agent feedback program. Ask how many sellers they’ve represented, and how many in the last two years. Ask them what their signage looks like, and exactly how they attract buyers. Ask them pointedly how they negotiate offers.
At the very least, insist your agent know which buyers are likely to be interested in your home and if your property will qualify for a buyer’s home loan. If an agent seems confused or upset by any of these questions, please move on. You owe it to yourself and your net proceeds to find an agent that knows these answers, and cares about your results for you.
The first step to “selling your property right” is to hire the best seller’s agent you can find.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses principles apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com.
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Blog Category: Real Estate Nitty Gritty
Too many buyers seem to assume all agents have similar knowledge and experience, work equally hard, know everything there is to know about buying property, know all the intricacies of ever-changing lending criteria, and will be able to refer them to reliable service providers like lenders, inspectors, and escrow officers.
Is it any wonder a buyer feels cheated when it turns out their agent led them astray by allowing them to make an offer on a property that couldn’t be bought, or spent money on inspections and appraisals before learning they actually didn’t qualify for the loan?
Unfortunately, this happens all too frequently.Now, more than ever before, excellent results require excellent and experienced representation.
Want to save yourself heartache down the road and thousands of dollars?Interview before you hire. At the least, insist your agent know about property loan criteria (many properties are now un-financeable), what the foreclosure status is of a short sale, what a property is really worth regardless of list price, and if you actually qualify for the loan before you waste your money.
The first step to “shopping right” for your next home is to shop for the best buyer’s agent you can find.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses principles apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com.
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If you don’t already know, the Government has strengthened the rules, regulations, testing and other requirements for loan officers. Now they are required to be a member of Nationwide Mortgage Licensing System & Registry.Bookmark this site, so you can verify anyone discussing your loan with you is licensed and registered: http://nmlsconsumeraccess.org/.
Other lending changes have been implemented, and more are to come.Subscribe to this blog to stay in the loop.
CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has personally handled hundreds of transactions, viewed thousands of properties, and dealt with countless agents. She also owns a portfolio of income producing properties, and has developed unique market analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses principles apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal. She can be contacted at (707) 578-5727, cjholmes@cjholmes.com, or www.cjholmes.com.
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Please Help Me Stop This Ruination of our Real Estate Market
By CJ Holmes, Independent Real Estate Broker
To date, the disaster of falling home prices has ruined the dream of home ownership for thousands, badly battered our real estate market, eliminated countless jobs in our construction industry, depleted our property taxes and property tax base, and ravaged the returns of our pension funds which invested in these now soured notes.
And now, according to all indications, the 9-County-wide San Francisco Bay Area price trend for the rest of this year is DOWN, unless we work together to stop the slide of values (solution below). Certain sub-areas and price points buck this overall trend.
Last year, in all 9 Counties except San Francisco, low prices hit bottom and are now rising. Certain subarea minimums are not yet rising, and higher price points are falling almost everywhere.
Last year, Sonoma, Solano, and Alameda had stable values, Contra Costa and Santa Clara declined 2%, and Marin, San Francisco, and San Mateo counties declined 5%.
From Jan 2008 to Dec 2010, the ‘9-County Buyer Pool’ lost 81,408 buyers, due to foreclosure or short sellers not being able to borrow to buy a home for the next 3 years (lender rule). That equals 48.8% of ALL home sales these past three years and is 23 months worth of 9-County future sales using February’s sales volume. This is why government buyer incentive programs will not generate the buying activity expected. (per county lost buyers ranged from 966 to 24,551 and 9 to 40 months worth of future sales)
In February 2011, the 9-County sales volume was 88% of the highest sales volume ever experienced, yet the average supply-demand ratio dropped 10 points, from strong to weak. (per county sales volumes ranged from 57% to 102%, ratio drops ranged from 4 to 19 points)
Why? A FLOOD of new inventory. Where is this inventory coming from? SHORT SALES, not REOs.
The 9-County REO sales, as percent of all sales, were 37% in 08, 42% in 09, 25% in 10, and 15% in Feb 2011. Banks are holding back inventory trying to keep the market stable. (per county REOs in Feb 2011 ranged from 8% to 27%)
The 9-County Short sales, as percent of all sales, were 8% in 2008, 14% in 09, 19% in 10, and 40% in Feb 2011. This new flood of inventory will once again drag down prices. We must stop this flood, as soon as possible, before it does even more damage to our markets, our economy, and our future. (per county shorts in Feb 2011 ranged from 21% to 48%)
With almost half of the original owners locked out of buying for years, and current sales volume already close to historically peak sales, where will even more buyers come from to buy enough more homes to keep prices stable?
Answer: unknown. Many renters that could buy already have. Population growth? Far too slow to be of real help.
OUR PLAN CAN STOP SHORT SALES NOW
Implementing these 4 steps below would stop the flood of short sale inventory, which would help stop prices from sliding, enable new construction to again compete, bring back confidence and jobs, help restore our property tax base, and begin to rescue pension funds and others that invested in these soured notes. What more can we ask for?
1. Lender Rule Change: For the next 2 years, eliminate the ‘3-year wait rule’ that keeps otherwise qualified buyers who lost their homes from immediately buying again. This would quickly increase the buyer pool.
2. Bank Rule Change: Require banks to ‘short sell’ homes to the owner or the owner’s family if possible. This immediately eliminates shorts from the market which will help balance supply-demand. If the owner or family cannot buy, then let them sell the house in the open market at a bank pre-approved price.
3. Short Sale Plan – For Owners: Owner ‘buys back’ home at 110% of current market value, with a 30yr fixed, 5.5% interest financing from the same lender(s) (loan is rewritten; no need for new funds)
a. These price and terms to the owner are reasonable for the benefit of keeping the house
b. Payments immediately begin flowing to the note holders (pension funds and investors)
c. First and second note holders take prorated positions in the new loan, payments, and silent lien (share the wealth, lien explained in #4)
4. Short Sale Plan - For Banks: When the home is sold short to the owner or family, the balance of the initial debt not covered by the new loan becomes a silent lien (no payments) on the property
a. Bank(s) will be allowed to keep the whole original debt on their books for cash reserves
b. Bank(s) will write down this silent lien over the next 10 years (prorated between first/second)
c. IF property is sold within 10 years, any equity gain is split 50/50 between the owner and the banks (50% bank share is prorated between first/second)
Whether you want to keep your home, get construction back on its feet, restore our property tax base, help restore our pension funds, or get our real estate market back to normal, please join me now to insist this plan be implemented to rescue our market, our economy, and our future. United we’ll be able to start standing, divided we’ll continue falling.
www.cjholmes.com, Save Our Homes page. CJ Holmes, real estate investor since 1977, broker since 2005, and market analyst since 2007, has developed unique analyses to determine and predict price trends. She can be contacted at (707) 578-5727, or cjholmes@cjholmes.com.
Over the past 3 years, CJ has developed unique analyses to determine and predict price trends. Her focus has been the 9 Bay Area Counties, but the analyses apply to EVERY MARKET NATIONWIDE. The buyer-seller motivations, the lender-bank restrictions, and the market dynamics are universal.
