Inside San Diego Short Sales

Check out the latest San Diego County home sale and value statistics. How well has your neighborhood fared in 2011? Just give me a call for specific information about your home.

Thanks to my wonderful and talented video producer husband, I’ve just launched the first in a series of short videos designed to help educate consumers on a variety of real estate topics.

The first in the series discusses your 8 options if you can’t pay your mortgage. Would love to hear your comments!

And please don’t hesitate to contact me for a free, confidential consultation. 619-846-9249.

Yippee! We finally have an offer that looks like it will stick. So on Monday I submitted the offer to B of A and a complete short sale package to the new servicer for the 2nd lien holder. As you may remember, the borrower had already started the process for the Bank of America Cooperative short sale before we even put the home on the market, so at this time the only items requested by B of A include the offer and an estimated settlement statement.

So the clock started ticking on Monday, October 17. Let’s see how long this process really takes. Bank of America of course advertises that their cooperative program is executed more quickly than a traditional short sale….

Yesterday, I received an email from B of A notifying me that the original negotiator to whom I had emailed the offer and HUD statement had been promoted and she would no longer be my contact. A new negotiator has been assigned and I was assured that the file would be passed to her and that I could expect to hear from her shortly. Nothing so far today….

As I’ve mentioned more than once, I’m no Economics genius. So I was pleasantly surprised to read the October 12th NY Times article by Martin S Feldstein, a Harvard professor of Economics and former chairman of the Council of Economic Advisors. It appears that Professor Feldstein and I agree that the only way to stop the drop in home values is by principal reduction.

The professor points out that for most Americans, their homes are their primary source of wealth. Since the housing bubble burst in 2006, Americans have lost $9 trillion or 40% of their wealth. This sharp decline in wealth means less consumer spending, fewer jobs and a stalled economic recovery.

Today, nearly 15 million homeowners owe more than their homes are worth and of this group about half of the mortgages exceed the value by more than 30%. The professor maintains that housing prices continue to fall because millions of homeowners are defaulting on their mortgages and the sale of the foreclosed properties drive down prices. Because most mortgages are non recourse loans, underwater borrowers have a strong incentive to simply walk away.

Professor Feldstein suggests that instead of throwing tax dollars at ineffective programs aimed at reducing interest rates, the government should address the real problem which is that the amount of the mortgage debt exceeds the value of the home.

Here is a summary of his idea: The government would reduce mortgage principal to 110% of the home value. The cost for doing this would be split between the government and the banks. This would help about 11 million of the 15 million underwater homes at a cost of under $350 billion. Considering the millions of mortgages held by Fannie and Freddie, the government would in essence be paying itself.

This would of course be a voluntary program. In exchange for the principal write-down, the borrower would agree that the new mortgage was a full recourse loan and the government could go after other assets if he defaulted on the loan.

I think it sounds fair, as everyone makes a sacrifice and we put the brakes on strategic default. It is a huge one-time cost, but continuing to allow housing prices to fall could risk another, even more costly recession. And speaking for my short sale clients, I know that most would have gladly signed up for a principal reduction if it meant saving their home.

What do you think?

Freddie Mac announced yesterday that for the first time in history, the average interest rate for a 30-year fixed rate mortgage has dropped below 4.00%  to 3.94%.  Rates for 15-year fixed rate mortgages are even lower, at 3.26%.  Last year at this time the 30-year rate was 4.27%  and the 15-year at 3.72%.

When you combine the low rates with prices that have generally declined throughout the county you have a great opportunity to buy more home for less money.   On a $300,000 mortgage the principal and interest payment at 4.27%  is $1479 per month.  At 3.94%  the monthly payment is $1421 per month.   That is a savings of $58 per month which may not sound like much, but over the length of the mortgage, that is a savings of over $20,880.

So whether you’re looking for your first home, a move-up, or an investment property, now is a great time to buy!  Curious about what’s available?  Give me a call and I’ll be happy to send you some listings of homes and investment opportunities throughout San Diego County.

I’m currently working with a sweet young couple looking to buy their first home here in San Diego.  Yesterday we found one that seems to have most everything they’re looking for, so we sat down to talk about writing an offer.  Prior to showing them homes of course, I made sure they were pre-approved at the price point of our search.

Discussing the offer and reviewing the confidential remarks on the MLS listing sheet, I ran into the words that make my blood boil, “Offer MUST include a pre-approval by Bank of America loan officer Bill Jones.”  This makes me crazy!  Here in San Diego it appears that Bank of America and Chase require a pre-approval by one of their assigned loan officers on all of their REOs.

My buyer looked at me like I was nuts.  “Why do they need another pre-approval when I just went through the whole process at my credit union?”  He is a VA buyer and has a perfectly good pre-approval from Navy Federal Credit Union, so why in the world does he need one from B of A?  I didn’t have a very good answer for him.

I also handle some REO listings and I understand that the banks don’t want to waste time with an unqualified buyer, and that they are trying to build loan business.  But, rather than create obstacles to offers, wouldn’t it make more sense for the listing agent to request an additional pre-approval ONLY if the original one seemed a bit sketchy?  Or, if they really want the business, how about offering an incentive like a free appraisal or point reduction?

When it’s time to write an offer, I want to move quickly – not waste a couple of days chasing down more paperwork!

Termites are a fact of life in California.  Nearly every home I sell, when inspected, shows evidence of some form of termite damage or active infestation – no matter how new the home might be. 

In a traditional sale, the buyer generally requests that the seller pay for the inspection and any necessary repairs.  In a short sale however, the seller, who doesn’t have enough money to pay his mortgage, is generally not in a position to pay for any repairs, and I have yet to see a bank pick-up the cost.  So who pays?

Generally, it is the buyer who is responsible for paying for any termite damage, which could mean thousands of dollars.  The cost to tent and fumigate a 3 bdrm/2 bath home is roughly $1300, plus the cost to repair or replace any damaged wood.  It is not uncommon for total costs to exceed $5000.  This unexpected expense can cause a real problem in the transaction, and often the buyer simply has no choice but to walk away.

So how can a seller avoid losing buyers over termite issues?  Start by selecting an experienced short sale agent to list your home!  An experienced agent will have the inspection done prior to putting the home on the MLS and will make the report available to any agent and buyer writing an offer.  The agent should also make it clear in the listing that any repair costs will be the responsibility of the buyer.   In this way, the buyer knows what costs will be involved, and the offer price can reflect the anticipated expenses.  The report should also be submitted to the lender so that they understand the costs that the buyer will incur to purchase the property and will (hopefully) take that into consideration in the approval process.

Buying or selling a home “As Is”, whether it’s a short sale or foreclosure raises many disclosure issues.  If you have questions, please don’t hesitate to contact me.