San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

http://www.mercurynews.com/breaking-news/ci_14524392

Unfortunately we set a 30 year record in January 2010: more people are out of jobs than they have in 30 years up  from 12.3% in December 2009, but there seems to be an upswing  as 32,500 people gained employment in the same month.  A mixed message.

Regardless of how we interpret the data, one thing is very clear: there is a direct correlation to reduction in home buying behavior and unemployment. Regardless of what people may say about homes being more affordable now than ever before, if there is no sense of security in employment front, there will be no home purchases!

So what does this mean?  All this effort in providing tax credit incentives is great, but unless and until there is a concerted effort by the State and  Federal Governments to tackle the issue of unemployment and more importantly, to improve this number, there will be no increase in home purchasing activity.

In fact, as long as more people are losing jobs, they will start or continue to fall behind in making their mortgage payments, which will increase  the activities in the distressed properties market, which will result in home prices falling, which then will continue this drag on the economy as industries related to real estate continue to suffer and lay off more employees.  Truly a vicious circle.  Right now, 1 out of 6 home owners is behind in their mortgage payments.

So we all should pressure our politicians in D.C. to stop playing politics and get at the job for which they were elected: improve the economy by creating more jobs.  Everything else is secondary.

I get testimonials from my clients here and there.  But this one touched me, because we did have to go through a lot with Bank of America and for a very long time, but in the end it came out all right.  I was very happy that she and her family could go on without having to look over their shoulders and just go on with their lives since they had moved.  Truly, this is what I mean by trying to help the foreclosure crisis, one family at a time.  Helping people like Becky makes me feel like I am contributing in my own way.

As everyone knows, the volume of FHA loans funding first time home purchases has increased dramatically in the past two years.  It went from 3% to about 50% of the mortgage market today.  It is a great product for first time home buyers who want to capitalize on the current first time homeowner tax credit offered by the government.

However, because the down payment requirment is 3.5% of the purchase price, many buyers who use this product often have limited access to additional cash that may be required to address some of those unforeseen situations that sometimes arise when purchasing a home.  This is especially true when they are trying to compete on multiple offer situations and they need additional funds to later for repair work.    From my own experience, most FHA buyers walk away from certain homes they like because they simply do not have funds for repair work.

However, this does not necessarily have to happen.  What their agents are failing to inform them is, there is something called a FHA 203(k) loan which was designed specifically with this type of need in mind.   The 203(k) is a repair program which can be rolled into one single loan.  It is the lifesaver for those who want to buy a home that may require repair work.

I am a real estate expert, so I will not get into the specifics of this loan product, but a good loan agent should be able to explain thing in detail about this wonderful product which escapes the radar of many home buyers.  If you are in Silicon Valley and don’t know a good loan agent who can explain this useful product to  you, then contact me and I can set up introductions.

http://www.mercurynews.com/breaking-news/ci_12277251

“California’s WARN law requires certain companies with more than 75 employees to provide 60 days advance notice of a plant closing or mass layoff involving 50 or more employees.”

Go to the link above and type in your company’s name and city to see if there is a planned layoff.  I think it is better to have a bit of advance notice rather than be  taken by surprise.

Until January 31, 2010, it is forbidden for a property to be purchased using an FHA loan if the property had been owned by the seller for less than 90 days (unless you are a bank trying to unload an REO property).  In a nutshell, it was very difficult for buyers to purchase a home which was remodeled for a flip by an investor; or simply from an investor who just purchased it with the intention of re-selling it quickly.    (We won’t get into the rationale behind the prohibition here today.)

Given the amount of interest in the marketplace for first time homebuyers trying to use the tax credit incentive to finance their first purchase, it was quite challenging to find good properties for buyers to purchase here in Silicon Valley.  This also contributed to lots of properties receiving multiple offers.

As of February 1, 2010, that prohibition will be lifted for one year.  (Click here for the specifics).    Now buyers using FHA loans (which according to some stats say represents up to 40% of all financing) can have access to a source of properties which was not available until now.

This change should: 1) encourage investors to purchase more properties from distressed markets knowing they can turn around and sell them immediately without incurring additional carrying costs and/or 2) encourage FHA buyers to purchase more properties from these investors.

Either way, this act along with other proposals should help deplete the inventory of distressed properties out there, so we can more quickly lead back into a normal housing market.

In less than a week 2009 will leave us behind and we will greet the new decade by welcoming 2010.   In the last 3 years of the past decade, we have seen a dramatic shift in the real estate market place.  A shift that most of us could not fathom in the beginning of the passing decade; yet reality bit us hard and we got to live through an epic correction in the real estate market place.

Are we out of it yet?  Of course not. Have we by-passed the worst of it?  Probably.

However, as long as Silicon Valley’s unemployment rate remains above 11% and the dreaded shadow inventory along with the toxic option ARM fiasco about to recast in the coming couple of years, things will not be back to normal and we will not be completely out of the woods for a few more years until the market fully corrects itself by ridding itself of the excess capacity of distressed properties.

But, I don’t want to imply that there is only gloom in the horizon.  According to newly released sales data from CAR (California Association of Realtors), we here in Santa Clara County did fairly well in the past 12 months: the median price of our homes increased by 17%! I am quite certain that increase was largely fueled by the First Time Home Buyer Tax Credit Incentive program.

We went from $515,000 in November 2008 to $605,000 in November 2009. (Chart A)  That is certainly a step in the right direction towards price stabilization on the one hand, but a bit disconcerting because the affordability index has now fallen for two consecutive quarters and is now on a declining slope.   (Chart B)

I personally don’t believe it is in our best interest to get back to the peak prices of April 2007 when the median home price reached $868,410 (Chart C) and only about 25% of the first time homebuyers in California could afford to buy a median priced home (keep in mind that the median price in California is significantly less than Santa Clara County).  As the data in Chart C demonstrates, the median home price is inversely proportionate to the Affordability Index.   It is better for us to have lower prices so more people can afford to become home owners.  But regardless of what I think, the market will dictate prices.   We will see next year how the market reacts to the changing economic factors.

There has been quite the debate as to whether the Federal Government’s credit to first time home buyers actually helped stimulate purchasing activity or not.  The premise was based on the notion that in order to stimulate the depressed housing sector, an $8,000 credit towards first time home buyers would give incentive to those who otherwise would be renters into taking the dive into the world of home ownership.

The argument on the opposing side was that the program was merely wasted stimulus money because those first time home buyers who were going to buy were going to buy anyway because bargains could be had, so giving them a tax credit did nothing but throw money at people who were going to buy anyway.

Which side was correct?

Some recent sales data may shed some light into whether the Federal Incentive was a success or failure.

http://www.google.com/hostednews/ap/article/ALeqM5hnu6sB3PemlhadTaizNLLJMgRONAD9COFKEO0

According to the article above, November pre-owned home sales increased 7.4% over the previous year and translated into 6.54 Million homes sold.  The surge is the highest in the past 3 years.  Much of that activity was attributed to the tax credit.

“About 2 million homebuyers have taken advantage of the credit so far, the National Association of Realtors said Tuesday. The group forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year’s levels, a record jump.”

The results of a Campbell Survey which is conducted on Real Estate Agents nationwide on a monthly basis reveal an interesting side effect to the extended tax credit.  The extended tax credit also permitted existing home owners to participate in the program by permitting them a $6,500 tax incentive.

Rather than seeing a lot of activity by the first time home buyers as anticipated, there was, instead, a dramatic spike in current home owners participating in purchasing activities.

“The first-time homebuyers started to lose interest in October when it appeared that Congress wouldn’t extend the credit. When the credit was finally extended in early November, current homeowners jumped at the new opportunity for a tax credit on their home purchases.”   Said Thomas Popik of Campbell Surveys, explaining the results.

Regardless of whether it was the first time homebuyers or current home buyers, what is clear is that there was a dramatic increase in sales activity as a direct result of those tax credits, which means the program was successful in getting people to buy homes.  And that is a good thing for everyone.   What is clear is when homes are sold, that leads to jobs in ancillary industries like mortgage brokers, home inspectors, Title and escrow professionals, handymen and contractors, hazard insurance sales professionals, lawn care professionals, etc……

As consumers of a particular type of service, you have the right to and should do your own due diligence before hiring someone to sell your home. I, like most consumers, am a firm believer in getting the most for my money.  That is why I advocate that home sellers ask the relevant questions which get to the heart of the matter.   Don’t be shy.

Ask performance related questions, you are not imposing or digging too deeply if you inquire about data to support an agent’s assertions, especially if they are claiming to be experts or are other wise claiming to be better than their competition.  The details of their marketing plan and what they are going to do to bring a tremendous amount of buyers through the door, or to have your house listed on all the different real estate related websites with videos and nice music, etc…, and how they are going to stage your home to make sure it looks the best that it possibly can becomes secondary to the two most important questions for most sellers: how quick and for how much?

Don’t get me wrong, it is important to understand how your property will be marketed and what amount of resources of the commission being paid will be applied towards the marketing efforts of your home.  After all, you want to see where your commission money is going.  However, from my own experience at listing presentations, for most sellers, those types of details become far less important than those two simple questions.

If a Realtor cannot answer those two questions for you, then there is something wrong.  Trust me when I tell you that any Realtor worth their weight in salt knows or should know these performance data.  These numbers are tracked by the MLS and are referred to as DOM (days on market) and percentage to list price.  Because this data can measure our efficacy, many of us use these numbers in our marketing material aimed at home sellers.  And as it is also the end of the year, many of us are reviewing our performance numbers anyway.   To give you an example, my numbers are 34 days and 102%.  This means on average my listing takes 34 days before a house is taken off market and it will bring in 2% over the list price.

Finding a good Realtor to sell your home should be an interactive experience with the sellers asking relevant questions as a part of their due diligence as much as the Realtor’s claims about how they can sell your home better than their competitor.  If they do not provide data, ask for them.  The decision to engage should not be based solely on receiving pretty post cards or receiving nice little writing pads with the Realtor’s pretty mug staring back at you; it should be all about how they can bring  value to your  transaction.

Hope we all have many things for which to be Thankful this Holiday Season.

I am amazed by how surprised prospects are when I advise them I will provide references from past clients who have used my services, particularly, short sale clients.  Yes, in the case of short sale clients, it is understandable that clients do not want to bring up and discuss the unpleasant hardships of  the past with complete strangers.  But as consumers of services you should have the right to see what you agree to buy.

Unfortunately in our changing business environment, there are too many people out there claiming to be “experts” in certain areas of our profession without providing any proof of their adequacy, let alone expertise.  One simply is not an expert because one declares oneself as such.

Under normal circumstances, selling a house is important but does not have long term implications if the house cannot be sold.   It simply means the homeowners stay in the house until a better time to sell comes along.  However, in a foreclosure situation, if the house cannot be sold or if the terms cannot be negotiated with the lenders to get the approval for the sale, people not only lose houses, but they lose that important sense of “home” and go through an emotional roller coaster ride that comes along with being foreclosed.  Houses can be replaced, but the emotional scars can remain for a long time……

Ask for references. When you are talking to a Realtor, you are essentially interviewing him/her for a job.  And what job interview does not involve providing references from past employers?   If a Realtor does a good job for their clients, it is not difficult to get the latter to share their experiences with potential clients; as a matter of facts some become your evangelists if they had a good experience with you.

Some Realtors belong to an organization that rates the service via independent surveys and post those scores on the web.  I belong to the QSC organization  because I believe in its philosophy and strive to provide the best service I am able to provide and believe if I were on the opposite side, I would want to know how that person’s past clients rated their service before engaging them.   These are difficult times and you should get the best quality service available  out there.   After all, don’t you deserve it?