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Seller Incentives: Your Bank May Pay You to Sell Your House

  Banks have discovered that it is better to give than to receive. Receiving a home through foreclosure has proven expensive for the lender. According to Freddie Mac, an average foreclosure costs a bank $60,000. Instead, bottom-line sensitive institutions are giving cash incentives to encourage homeowners to cooperate with a short sale. A short sale is a sale in which the bank agrees to let a house sell for less than the amount of their outstanding loan. Bank of America is offering 5k-30k Chase is offering 10k-55k on their older WAMU products. Wachovia and Wells Fargo Financial: 5-15k In addition, the Home Affordable Foreclosure Alternatives (HAFA) program provides $3,000 in relocation assistance at the close of an FHA short sale. Don’t Sell Yourself Short The summer market has been sizzling and one surprising beneficiary has been sellers who had assumed they were in for a short sale. Some recently listed “short sales” have received multiple offers. Through the miracle of competition, the price has been driven up enough in some instances to bridge the loan gap and turn the short sale into a traditional sale. This is great news for sellers’ resulting credit. Don’t assume your house is underwater. The tides are turning. Read More

A passed bill Before the House, May Make Homes Harder to Afford

From my in-box today: “A draft bill to be discussed at a House subcommittee hearing today would raise the minimum down payment to 5% and would also make a significant cut to the maximum size of loans backed by FHA in many parts of the country. The maximum FHA loan size in expensive parts of the country is already scheduled to go to $625,500 from $729,750 on Oct. 1. However, in areas where home prices are more modest, that limit is scheduled to fall as low as $271,050. The bill would allow those limits to fall even more—to 125% of a county’s median home price.” -Russell Doi, RPA Mortgage These changes will be a hurdle for many buyers. Buyers with great cash flow but low assets may find themselves pushed out of the market. Buyers basing their price range on the current $729,750 loan limit may have to lower their sights by more than $100,000. Buyers searching in the $800,000 price range and looking to use the maximum loan, your window of opportunity is closing. All buyers with low down payments should consider buying now. With buyer-friendly legislation, interest rates below 5% and home prices relatively low, now could be the best time to make the move. This may also create a temporary market surge for sellers who can come quickly to the market, as buyers look to capitalize on the existing rules. Particularly if your home is in a price range that benefits from the large conforming loan limit (usually properties over $800,000) and for homes in the “starter” price range (under $500,000 in this area) where down payments tend to by lowest. Houses sell for the highest dollar amount when they appeal to the largest amount of buyers. The proposed changes are enough to restrict affordability and move some currently active buyers to the sidelines. Read More

Make your Home Buyer AND Lender Friendly!

The mortgage world has changed. Just as buyers have discovered new hoops to jump through, Sellers are also finding that their properties are under greater scrutiny. Making your property match lender expectations can help increase your pool of potential buyers and ultimately ensure that your home sells for the highest amount possible. The following checklist is Courtesy of Monica C. Di Perna, Guarantee Mortgage, NMLS #116494/DRE #01244107 A. Ready the Property for an Appraisal (Eyes of the Lender) Chipped paint must be repaired Roof or other useful component/mechanical system (appliance etc.) must have 2 years useful life No Broken windows/No sign of mold (An appraiser can suspect it and state a suspicion on the appraisal) Health and Safety Hazards will be disclosed Large holes must be repaired Safety rails where needed Inoperable Plumbing must be repaired Structural/Foundation problems must be repaired (many 100 year old homes still have existing foundation-big red flag) Water Heaters Any sign of water damage/stains will be addressed If appraiser suspects termite infestation, lender can require Termite Inspection and Termite Clearance of Section 1 items. B. Permit History: Any additions need permits or will not count as value List of recent improvements from owner so you can match up permits Pull the list of permits if client doesn’t have them to make sure they match improvements Special Agreements with Neighbor that may not show up Best place to go is City’s building & Planning Department. Permits and Property conditions can be viewed online for the City of Berkeley. C. How does an appraiser determine Value for Lending Purposes? Price Vs. Lender Valuea. Sales within past 90 days No more than 20% difference in square footage/parcel size No more than 1 mile in urban area and 5 miles away in rural market *****Always have ready to give to Appraiser: List of improvements, permits, special agreements, and Condo Packet (CCR’s, Budget, Bylaws, Articles, Master Insurance Policy, HOA Cert) Read More

To Buy or Not to Buy: Condo Realities

by Tom Knight So many clients have recently called me regarding the possible purchase of a condo that I thought it might be helpful to share my thoughts on the subject, particularly since I live in one. Most condos are significantly less expensive to purchase than houses in the same area, so it’s easy to understand their appeal. However, the old adage “caveat emptor” (buyer beware) applies even more to condos than to single family homes. That is because a condo is like an iceberg: there’s a lot more beneath the surface that you can’t see. Proceeding slowly is the best course of action, lest one encounter a collision of titanic proportions with possibly damaging condo realities. Just what are some of those hidden hazards? When you purchase a condo you are actually buying the air space between the walls, floor and ceiling, and a fractional proportion of the entire “common area.” There are many rules about what you can and cannot do to alter your home, and indeed, rules about how you can even LIVE within it. The first rule of thumb is to become familiar with Homeowners Association (HOA), the quality of management, the financials of the association, and any history of litigation or special assessments. Then there is the question of monthly dues. How much are they, what do you get for your money, how often are the dues increased and by what percentage. Check out the rule book while you’re at it. If you are rock drummer, a condo is probably not your best bet. Here are some general observations: very small condos, such as those found in large homes which have been divided into just a few living units, carry the greatest risk for special assessments and higher maintenance costs, while providing the fewest, if any, amenities. Old estate homes made into condos may seem incredibly charming and located in upscale neighborhoods, but keep in mind: that old plumbing, wiring, roof and foundation may need major renovations soon which could cost a bundle. Condos quite recently built can be highly attractive. They seduce the young buyer with sparkling stainless steel kitchens, gleaming granite baths, and dramatic two-story vaulted living spaces. The architecturally designed abundant glass and steel features reflect the best of HGTV. They’re hip and cool and all that jazz. But beware, beneath the flash is often found a troubled HOA groaning under the weight of delinquencies and foreclosures. That’s because new complexes just sold a few years ago at the peak of the market are now worth only half as much, so expected contributions to the Reserve Fund do not meet projections. Down the road the money may not be there to do needed maintenance, and essential repairs might then be funded by special assessments. Not every new condo is in this financial bind, but many are. Detailed study of the HOA financials is required before purchase. One other thing about the newer condos: they are almost always multi-level homes, certainly not the best for young toddlers or seniors tilting towards the geriatrics ward. Really large condos come in two flavors: high rise and sprawling. High rises can have spectacular views, but quite often the windows won’t open. That’s a no-no for my wife. And do you really want to haul your groceries up an elevator every time you go shopping? The sprawling complexes are often older, built when land was still cheap. Such places may seem more like apartments, and in fact, many were first constructed as such and subsequently converted to condos. If you remember your college apartment, didn’t you have to take your dirty clothes down the hall to the laundry room? Older condos may not have washer/dryer hookups in the units, truly a pain in the booty for many. Sound proofing in older buildings can be far below current standards, meaning you may be hearing more of the neighbors’ activities than you would care to (TMI). Older condos can be noisy. One advantage larger complexes have over smaller: the amenities are usually far superior. I live in a larger condo with 1246 homes. It has four swimming pools, multiple tennis courts with lighting at night, a gym, racquetball courts, a sauna, a steam room, pool tables and a very comfy clubhouse with a commercial kitchen you can use for those huge family reunions. I don’t think you’ll find those benefits in your 20 unit condo. You’ll be paying a club membership off campus for many such perks. When it comes to financial risk, there is one really good thing about the big places: the financial burden is shared by many, so there is less risk of a catastrophic assessment. Another important consideration in this day and age: Our condo is large enough to provide full time security service, 24/7/365. I appreciate that when my wife is coming home from an evening meeting. Actually, there are quite a few reasons why I enjoy living in our condo. Convenience is a big one. We can walk to many shops, including Trader Joe’s (good turkey meatballs) and Trader Vic’s (home of the original Mai Tai). Starbucks and Chevy’s are next door too, providing appropriate beverages depending on where you are in your day. We are located on the shores of the Bay. The Boardwalk affords a lovely area to stroll and bird watch simultaneously. I never have to mow the grass or do any yard work, but the 26 acre campus looks like a park. I can come and go as I please and don’t worry about a thing. Included in our dues is water, garbage, cable TV, insurance on the building, even free current movies at the Clubhouse, as well as the many other amenities I have already mentioned. We are at the foot of the Bay Bridge and can see the Toll Plaza from our balcony. If the traffic’s not bad we can be in downtown San Francisco in 15 minutes. It’s true that we hate to do laundry in […] Read More

How Financial Reform Effects Home Ownership

If you plan to buy a home, consider how your home loan impacts your financial position. If you have no home loan, It may be wise to wait out the market until you perceive a “bottom.” On the otherhand, if you are obtaining a loan to complete the purchase, that loan will influence the true cost of your investment. Therefore, the positive influence of a low interest rate needs careful consideration. Currently we are experiencing historically low interest rates. To simplify the math: In order to keep monthly principle and interest payments the same, with every 1% increase in interest rate, loan affordability goes down by 10%. This means that if interer Read More

California Legislature approves tax break for people in foreclosures, short sales – latimes.com

California Legislature approves tax break for people in foreclosures, short sales – latimes.com Posted using ShareThis Read More

The Daily Californian: Berkeley’s Housing Market Faces Foreclosures

The Daily Californian :: Berkeley’s Housing Market Faces Foreclosures By Leah Moskovic Foreclosure rarely occurs at the top of the housing market, but on Monday a revamped North Berkeley Mediterranean-style home priced at over $2 million in 2008 will be headed to foreclosure auction. Although Berkeley’s high-end real estate market has been resistant to symptoms of the national housing slump since 2005, sales at a loss for the lender and foreclosures such as this one are now slightly more prevalent, even as buyers have been creeping cautiously back into the market as of late 2009 and the Bay Area is expected to slowly stabilize. “We’ll see a little bit of both-stabilization and foreclosures,” said Anne Van Dyke, a broker associate with The Grubb Company, an EastBay real estate agency. “Some people are coming onto the market while others can’t afford to stay in their houses. People are feeling a little tenuous.” Since 2008, instances in which a borrower cannot pay the mortgage loan on his or her property and a lender sells the property at a moderate loss have increased in Berkeley as a final effort to avoid foreclosure, according to Bill McDowell, co-owner of Berkeley Hills Realty. Property values in the Berkeley, Albany and Rockridge housing markets-which are the strongest in Alameda County-have declined 5 percent per year from their highest point in 2005, McDowell said. “Since the market has gone down, people are reluctant to sell for less than what they think their house is worth,” McDowell said, adding that because of this, it is difficult for buyers to purchase better homes, when five years ago they could put a down payment on a new house using a type of interim financing that is no longer available. The federal reserve has kept interest rates “extremeley low” in an effort to support housing credits for first-time buyers and foster housing stability, according to Robert Helsley, UC Berkeley Professor and Chair in Real Estate Development at the Haas School of Business. “We expect to see the markets stabilize, the foreclosures to go down, the real estate owned by banks to go down, and for prices to slowly firm up,” Helsley said. “But we don’t expect dramatic returns. Activity will remain pretty low-particularly price appreciation-for the next while.” Barbara Norkus, broker and owner of Capri Real Estate Services, said the entry-level, first-time buyer market in Berkeley has been bouncing back slowly since January. At the bottom of the market, the Berkeley Housing Authority-a rental assistance program-has been met with more demand for services to low-income families since the beginning of the economic crisis in 2008, according to Rachel Gonzales-Levine, a management analyst for the authority. “Anecdotally, we have more and more families that are housed in properties facing foreclosure calling us with lots of questions,” Gonzales-Levine said. “They want to know if they have to move and what laws are applicable to them.” Read More

New Legislation provides Golden Tax Credit for California Buyers

A piece of legislation was signed on March 25th that should be a tremendous incentive for home buyers in California to take action, and soon! AB132 provides $200 million for home buyer tax credits, dividing the money equally between purchasers of new (previously unoccupied) homes, and first-time buyers of existing construction. Beginning with purchases closing escrow on or after May 1 until the end of 2010, eligible purchasers of a personal residence will be able to take a tax credit equal to the lesser of 5% of the purchase price or $10,000, in equal installments over three consecutive years. A requirement of the bill is that purchasers live in the home for at least two years, or else they forfeit the credit. Those rules will apply from January 1 through July 31, 2011 as well, if funds remain. C.A.R., the California Association of REALTORS, reported that nearly 40% of first time buyers last years indicated that they would not have purchased a home had the federal tax credit for first-time buyers not been offered. That program is still in effect, and first-time buyers who manage to get into contract by the end of April could qualify for an $8,000 Federal Credit in addition to the new $10K credit from the state. The previous California program was supposed to have continued into the first months of 2011. However, the popularity of that program was so great that all funds were used by June 2009. That program applied only to buyers of new-construction. Some analysts calculate that the new California program funds will only last for one month or so before first-time buyers of existing homes snap them all up. Time is of the essence! How does a homebuyer qualify? The state’s Franchise Tax Board (FTB) allocates the credits on a first-come, first-served basis. The homebuyer must submit a properly executed settlement statement to the FTB within two weeks of close of escrow, which can occur no sooner than May 1, 2010. In order to receive the tax credit, escrow must close no later than Dec. 31, 2010, unless a credit has been reserved prior to that date, in which case the home must close escrow before Aug. 1, 2011. For these purposes a “first-time buyer” is defined as any individual who did not have an ownership interest in a principal residence for the three years preceeding the close of escrow date of this qualifying purchase. Homebuyers can check to see more details by checking the Franchise tax board website. That is where they also will need to check once the program has begun to see if funds are remaining. Between this new text credit, the possibility of still taking advantage of the Federal credit through April 30th, and the current low mortgage interest rates that have been bobbing upwards lately, one would hope there would be great incentive for buyers to be willing to compromise a bit on their list of requirements, in trade for some handsome financial advantages! Read More

Fourth quarter housing affordability

C.A.R. reports entry-level housing affordability remained at 64 percent in the fourth quarter of 2009 Quick Facts: . C.A.R. First-time Buyer Housing Affordability Index stood at 64 percent in the fourth quarter of 2009 compared with 61 percent (revised) in the fourth quarter of 2008 . The median price of an entry-level home in California was $257,940 in the fourth quarter of 2009 . The estimated monthly payment including taxes and insurance was $1,470 in the fourth quarter of 2009 . The minimum household income needed to purchase an entry-level home in California in the fourth quarter of 2009 was $44,100. LOS ANGELES (Feb. 12) The percentage of households that could afford to buy an entry-level home in California remained at 64 percent in the fourth quarter of 2009, compared with 61 percent (revised) for the same period a year ago, according to a report released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state. The minimum household income needed to purchase an entry-level home at $257,940 in California in the fourth quarter of 2009 was $44,100, based on an adjustable interest rate of 4.5 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $1,470 for the fourth quarter of 2009. At $44,100, the minimum qualifying income was 4 percent lower than a year earlier when households needed $45,900 to qualify for a loan on an entry-level home. Home prices remained below peak levels, resulting in an improvement in housing affordability compared with the previous year. At 84 percent, the High Desert region was the most affordable area in the state. The San Luis Obispo County region was the least affordable in the state at 48 percent, followed by the San Francisco Bay region and Santa Barbara area both at 50 percent. Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 167,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles. Source: CALIFORNIA ASSOCIATION OF REALTORS®   Berkeley Hills Realty notes: Our market is highly localized. For East Bay specific data, contact your Berkeley Hills Realty agent.       Read More
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