Tips when buying a bank owned home

If you’re a buyer who has purchased before, or if you’ve sold a home, or if you’re getting advice from your office mate who just bought a home through a standard sale, your experience purchasing a bank owned home may be very different from what you might expect.

First off, know that EVERY real estate transaction is different AND every bank is different in what they demand, will negotiate, in paperwork they need, etc.  Below are some other tips and heads up:

• MOST banks will have you sign their own Addendum.  Each bank’s addendum is different. READ THIS ADDENDUM CAREFULLY.  It outlines the bank’s terms, will contain verbiage in which they basically waive any responsibility for the condition of the home and may include information as to what they will and will not pay.  This addendum may prevail over the State Purchase Contract should there be any discrepancies/differences of terms between the two.  It may be prudent to see if the listing agent can provide a copy of the bank’s addendum BEFORE submitting your offer.
• MANY banks (especially a Fannie Mae owned home) will NOT do any repairs. Assume they won’t. This doesn’t mean you can’t request those repairs once you’ve done your inspection. Just don’t expect they’ll do those repairs.  Generally when a banks says “sold as is”, they really mean it.
• CLOSING costs on a bank owned home may be higher for the buyer as the bank may not pay certain items that are typically paid by the seller (in your area).  Many banks won’t pay Real Estate transfer fees, the cost for local/state required reports or the cost to bring any items into compliance with any state/local statutes, termite report. They may not pay to obtain HOA documents on a condo/townhome.
• MOST banks will demand a shorter inspection period.  Expect it to be 10 days.
• When submitting an offer, EXPECT the bank to make you wait and wait for a response and then when they do respond they demand a response from you in a very short period of time.
• Do as much due diligence as possible while the offer is being considered.  If possible, don’t wait for the results of the physical inspection to bring in other appropriate professionals.  Take a good look at the house. Does it appear you might want a roof inspector?  Foundation? What about the main line (sewer line house to street). If so, and your offer is accepted, you should schedule all of these inspections as early as possible.
• KEEP IN MIND that the bank NEVER lived in this home and has no information as to the history of the home nor are they obligated in any way to provide you this information.  

The above is a guideline.  Again every situation, every bank is different. Embarking on the process with realistic expectations helps reduce possible stress, frustration and disappointment.

What exactly is a “back up” offer?

First, a back up offer can exist only if there is a current accepted offer – meaning a sale is currently pending.

Often a seller will seek out back up offers on their home.  They may have received multiple offers and end up accepting one or more of those as back up, or they may continue to review offers and accept one or more of those as back up.

There can be several back up offers, but only one will be in “position #1”, meaning this is the offer that the seller have agreed to work with IF the current buyers back out of their contract.  All back up offers are “subject to” the cancellation of the current escrow/contract.

Even after accepting an offer, the sellers can still negotiate with buyers on back up offers.  Then, once buyer and seller have come to agreement on terms, and the offer is accepted as back up – it will be in 1st, 2nd, 3rd position depending on if any and how many back up offers exist.

What does this mean?

If your offer is in back up position #1, then the seller has accepted your offer and agreed that IF the current escrow is cancelled, your offer is the next one that they will work with.  Even if someone subsequently comes in with a better offer (say back up offer #2), with your offer in back up position #1 the seller is obligated to move forward with your offer.

These days it is not uncommon for transactions to fall out of escrow (transaction is cancelled) so if you’re really interested in the home, put in a back up offer.

Below is an excerpt from the C.A.R. addendum used to officially put your offer in back up position.

 

So you’ve been approved for an FHA Loan?

Great! Congratulations!  There are many homes out there that are FHA eligible, HOWEVER, not ALL homes will be eligible for an FHA loan.

It often comes as a big surprise to Homebuyers when they learn that they won’t be allowed to purchase a particular property because it doesn’t meet FHA requirements.  For instance, a “major fixer” will not qualify for an FHA loan.

So what should you look for and expect?

The FHA does NOT require the repair of cosmetic or minor defects, deferred maintenance and normal wear IF they do not affect the safety, security or soundness.

Some examples of potential problems are:

• Missing handrails
• Cracked or damaged exit doors that are otherwise operable
• Cracked window glass
• Defective paint surfaces in homes constructed post-1978
• Minor plumbing leaks (such as leaky faucets)
• Defective floor finish or covering (worn through the finish, badly soiled carpeting)
• Evidence of previous (non-active) wood destroying insect /organism damage where there is no evidence of unrepaired structural damage
• Rotten or worn out counter tops
• Damaged plaster, sheetrock or other wall and ceiling materials in homes constructed post-1978
• Poor workmanship
• Trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting)
• Crawl space with debris and trash
• Lack of an all weather driveway surface

 There are many areas where the FHA does require problems to be remedied in order for the sale to close.

Electrical and Heating

• The electrical box should not have any frayed or exposed wires.
• All habitable rooms must have a functioning heat source (except in a few select cities with mild winters).

Roofs and Attics

• The roofing must keep moisture out.
• The roofing must be expected to last for at least two more years.
• The appraiser must inspect the attic for evidence of possible roof problems.
• The roof cannot have more than three layers of roofing.
• If the inspection reveals the need for roof repairs and the roof already has three or more layers of roofing, the FHA requires a new roof.

Water Heaters
The water heater must meet local building codes, and must convey with the property.

Hazards and Nuisances
A number of conditions fall under this category. They include, but are not limited to, the following:

• Contaminated soil
• Proximity to a hazardous waste site
• Oil and gas wells located on the property
• Heavy traffic
• Airport noise and hazards
• Other sources of excessive noise
• Proximity to something that could explode, like a high-pressure petroleum line
• Proximity to high-voltage power lines
• Proximity to a radio or TV transmission tower

Property Access
The property must provide safe and adequate access for pedestrians and vehicles, and the street must have an all-weather surface so that emergency vehicles can access the property under any weather conditions.

Structural Soundness
Any defective structural conditions and any other conditions that could lead to future structural damage must be remedied before the property can be sold. These include defective construction, excessive dampness, leakage, decay, termite damage and continuing settlement.

Asbestos
If an area of the home contains asbestos that appears to be damaged or deteriorating, the FHA requires further inspection by an asbestos professional.

Bathrooms

The home must have a toilet, sink and shower. (This might sound silly, but you’d be surprised what people will take with them when they’re foreclosed on.)

This is not an exhaustive list. For additional information, consult the Department of Housing and Urban Development’s Homeownership Center Reference Guide.

WHAT IF I FALL IN LOVE WITH THE PROPERTY that does not meet FHA standards?

There are potential options and strategies to move forward with the purchase even if there are FHA issues.  You may be able to work things out so that the seller pays for the repairs, or a different type of FHA loan may be suitable, such as an FHA 203K loan.  Speak to your lender about the loan options.  Consult with your Realtor as to strategies that could be negotiated with the seller.

Keep in mind you may have to keep looking until you find a suitable property and you may want to restrict your search to homes that are most suitable for an FHA loan.

Source: Investopedia.com

How long is the wait to purchase a home after BK, Short Sale, Foreclosure?

Here’s a breakdown of wait times
FHA:

Chapter 7: 2 yrs.

Chapter 13: 2 yrs.

Foreclosure: 3 yrs.

Short Sale: 3 yrs.* Unless borrower was not late prior to short sale (on ANY obligation) and was not trying to take advantage of the market. 

 VA:

Chapter 7:  2 yrs.

Chapter 13: 2 yrs.

Foreclosure: 3 yrs.

Short Sale: 3 yrs.

Conventional:

Chapter 7: 4 yrs.*

Chapter 13:  2 yrs. from discharge date or 4 yrs. from dismissal date*

Foreclosure:   7 yrs.*

Deed in Lieu:  2 yrs. if subject loan is 80% ltv or less

4 yrs. if subject loan is 90% ltv or less

7 yrs. if subject loan is over 90%ltv

Short Sale: 2 yrs. if subject loan is 80% ltv or less; 4 yrs. if subject loan is 90% ltv or less; 7 yrs. if subject loan is over 90% ltv

BK Chapter 7: a four year waiting period is required measured from the discharge date or dismissal date of the BK.  A 2 yr. waiting period is permitted if extenuating circumstances can be documented.

BK Chapter 13:  a four year waiting period is required for a Chapter 13 dismissal.  A 2yr. waiting period will be permitted with extenuating circumstances.

Multiple BK filings:for a borrower with more than one BK filing in the last 7 years, a 5 yr. waiting period is required.

Foreclosure: a 7 year waiting period is required, and is measured from the completion date of the foreclosure sale date.

A 3 yr. waiting period is permitted if extenuating circumstances can be documented and the ltv rules are applied, MUST to be a purchase of a principle residence or a limited cash out refi on an owner occupied, second home or non-owner.

*What are extenuating circumstances:  they are non-recurring events that are beyond the borrower’s control that result in a sudden, significant and prolonged reduction in income or a catastrophic increase in financial obligations. 

There are specific nuances that apply in each situations.

It is imperative the borrowers begin the loan application process at least 60 days before writing offers on property in order to avoid any last minute surprises.

For details and/or more info consult a lender.  A few are listed under LENDERS on the right side of the HOME page.

10 Reasons to Own vs. Rent

1. You own it: With no Landlord, you make the decisions

2. You deduct it:  Mortgage interest, property taxes and some costs involved with buying a home can be deducted from federal income tax

3. Interest Rates: The cost to borrow mortgage money is at an all-time low.  If you’re going to buy, this is the time to jump into the market.

4. You invest in it: Rent money is gone forever.  Mortgage payments build home equity ownership interests.

5. You save for the future: Home equity is a ready-made savings plan.  Sell it and you can make up to $250,000 cash without owing any federal income tax on the profit.

6. You can predict expenses:  Unlike rent, a fixed mortgage payment doesn’t get more expensive over time.

7. You pick it:  Choose from different neighborhoods, styles and price ranges

8. You create it:  Decorate, renovate, get a pet or paint the walls whatever color you want – it belongs to you.

9. You live in a neighborhood:  You and your neighbors take pride in the local schools, roads and more – and you work together to build a friendly community.

10. You spend money on yourself:  When you buy a chandelier or hardwood floor or kitchen cabinet, you’re spending hard-earned money on yourself and building equity at the same time.

On the Fence About Buying A Home?

I speak with many people who are on the fence about buying a home. Two of the most common reasons for this hesitation are:

1. Economic insecurity – translates to “What if I lose my job?”

2. Fear the market will decline and therefore their home value will decline.

And another excuse I hear from time to time is:

3. I’m waiting until the big crash of ’12/’13.

Let’s address item number 1.

If you rent and you lose your job and you don’t get another job for 3 months do you know where you’re likely to be living at the end of those 3 months? Probably NOT in that same apartment or house. Your landlord will most likely initiate eviction procedures as soon as possible. Contrary to what some people seem to think, it is not difficult to evict a tenant who is behind in rent payments. I have a friend who fell on hard times. He couldn’t pay his rent for 2 months. He rented from a friend. His friend evicted him. It was a business decision.

If you own your house, you’re likely to be able to work something out with the lender and just working that out could take 3 – 6 months in which time you’ve probably already found a job. There are many options to modify your loan if you hit hard times. You just need to take action the moment you hit a bump in the road.

You’re living arrangement is more secure if you own the home.

No. 2 – What if the home value goes down? Consider this:

Just about any investment (stocks, bonds, mutual funds) fluctuate in value. To reap the greatest rewards you must consider these long-term investments. You have little to no control over the value of those investments. Not so with Real Estate. With Real Estate you have some control over the value because you can maintain the home and even improve it thereby protecting and likey  increasing it’s value. Try doing that with a stock (you’d have to buy boat loads of coca-cola to have an impact on the value of that stock). Now I’m not a financial analyst or planner or anything like that so consult with them (I bet they have investments in Real Estate).

No. 3 – I’m waiting until the crash of 2012/2013

Folks, interest rates are at historic lows; housing prices are lower than they’ve been in years. Even a small 1/4% increase in interest rates will diminish your purchasing power significantly.

It’s unlikely, especially in the Los Angeles area, that housing prices will plunge much lower. By waiting, you risk being subject to higher interest rates. This means you will get less house for your money. It can make a huge difference.

The point is, IF you are able to buy now, and you WANT to buy, you may want to re-assess your reasons for not taking advantage of the set of conditions that exist in today’s Real Estate market.

3 Things Homebuyers Should Do

With all the technology and internet sites out there, it seems buyers can practically pick their home out of a catalog of websites and even mobile apps, and get all the data they need from various sites.    The fact is the more information out there, the more misinformation you get hit with.

For instance, if you plug in data on a particular home on various valuation sites such as Trulia, Zillow, Cyberhomes or Realtor.com, you get as many valuation results.  These sites simply lack the “real-life” facts that go into valuing a home.  They’re great for a “ball-park” figure, however for more accuracy you need to get out of the virtual world.  If you’re selling, invite several Realtors to walk through your home and analyze its value based on recent comparable sales.  If you’re buying, hire an agent who has worked in the area.

Be careful with your money. Make sure you do these three things:

Pencil out your purchase at interest rates 3/4 of percentage point higher than they are now. If your mortgage lender is quoting you 4.25 percent, run the numbers at 5  percent. No one has a crystal ball as far as interest rates, but there’s a risk that they could begin to creep up while you’re shopping. Better to think through your budget before you fall in love with that target property.

Get a sense of prices in your area —  sold prices. The biggest mistake buyers make is to take list price seriously.  List price may be a number that the seller made up, don’t invest it with too much power at your peril. On the other hand, if you want a three-bedroom house, and you know what three-bedroom houses in the area have recently sold for, that’s valuable pricing information.

Go see a home that’s different from what you think you will like. Try a different target area, or maybe just a different style of house: If you’re crazy about Colonials, go to an open house for a raised ranch. Being open to new ideas may help you find your dream home in a place you never thought possible. If not, it will help you confirm your existing biases — in which case you can purchase with a light heart.

If your Realtor ask for a Pre-Approval Letter and Verification of Assets – Thank them.

Attention Buyers: Be Prepared before begin your search

As a full time Realtor, I  with loads of buyers many whom are first-time buyers. I’m always willing to offer tips, suggestions and advice whether they use my services or not. I’m also very curious as to their home searching experience, how long they’ve looking, has it been what they expected, how and where do they search for homes, etc.

Whenever I hear a buyer say “We just started looking”, my first question is “Have you spoken with a lender” and their answer is typically “No”.

I tell them this is the first thing they should do before anything else. Think about it. How can you go looking for a home if you don’t know how much home you can afford? Have you checked your credit lately? How do you know some mistaken item has not been recorded on your credit history? Even if you were pre-approved six months ago, heck even three months ago, lending requirements are continually changing and may have an impact on your purchasing power. Besides, these days sellers require a pre-approval letter AND proof of funds to be submitted with the offer. In today’s competitive market, scrambling around to get the pre-approval letter AFTER you’ve found a home you love may cause you to miss out on that opportunity.

Now I advise buyers to go even further than getting a pre-approval before beginning their home search.

Recently I began working with a new, first-time buyer. She provided me a recent pre-approval letter from her lender that stated her income and assets had been verified and she was approved for a particular loan amount. I contacted her loan officer personally to find out if there were any particular requirements I should be aware of with the loan program she would be getting. There was nothing of significance and we started going out looking at homes. We found a perfect place, a great deal only 2 weeks into the search. She was excited. I was excited for her.  Believe me, great deals don’t come by too often even in this market. This was a great deal.

We met to write up the offer with a purchase price that was less than the amount for which she was approved. As we were doing that she revealed to me what she had in cash assets. It wasn’t enough to close the deal.  She didn’t quite have the cash assets herself to close the deal without a seller extending a significant credit – which we would of course ask for but if not agreed upon she would have no choice but to back out of the transaction. Not a good position to be in especially in the competitive entry-level market.

Furthermore, while I was meeting with her she called her lender to clarify a few things on his “worksheet”. While she was on the phone with her lender I advised her to ask if she would be required to have reserves after closing. The lender’s response was “Oh yes, you will need a minimum of two months reserves”. In this case that meant close to an extra $4000. Most lenders these days require a buyer to have some amount of reserves (savings) after closing – usually enough to cover a minimum of 2 months mortgage payment. Unfortunately, in my experience, many loan consultants forget to advise their clients of this requirement.

We began to go over her budget to see if she could afford the monthly payment even if she had sufficient assets. She had nothing in her budget for savings or car maintenance.  I asked her to think of other expenses she may incur, subscriptions required for her profession, necessary business trips, travel. She added where necessary and cut back where she could. I advised her to really think if she wanted to do this on her own.  If had she proceeded with and closed on this particular purchase in her current situation, she would have had to live extremely frugally with little wiggle room in her budget, little room for emergencies.

Now don’t get me wrong. If you really want to own a home some re-assessing of your spending habits, some re-prioritizing may be required. However in most cases what you gain in homeownership is well worth the temporary sacrifices – or at least that’s the way it should be. Still, sacrificing your health, living on a shoestring budget, giving up all amenities, probably isn’t something you’re going to be able to happily sustain for very long. If you’re crossing out healthy food and replacing it with McDonald’s in order to purchase a home – perhaps you’re not quite ready to make that move. On the other hand, you don’t need to go to Starbucks daily, you can forego manicures and pedicures for a while, cut back on eating out, honestly there are many easy, non-compromising, painless ways to save.

The process my client and I went through with her budget was revealing. First it showed that even though you’re pre-approved, doesn’t mean you’re ready to purchase. Lenders  look at your debt from your credit report, your income and (hopefully) your cash assets. They don’t consider that you may want to (and absolutely should) save SOME money each month (even if only $25), may want to put money aside to travel, may need to go on business trips, will probably need to fix your car at some point, may have a pet and pet medical bills, must pay utilities, put gas in your car, etc.

The good thing is it showed my client exactly what she had to do to be ready. She now knew where she stood, and what her options were to be able to achieve her goal. We’re still looking. She now has ample assets via equity sharing and with the  support of family members who see the value of investing at this time, will be able to proceed with a purchase.

So, if your Realtor asks you for a pre-approval letter and verification of assets – thank them!

If you’re thinking of buying a home, come see me. I’d be happy to go over your budget, assure your loan officer or consultant has given you all the facts, and if needed, refer you to loan consultants I know and trust. I’ll help you be sure you are truly ready to embark on the home buying process, purchase a home, and make the monthly payments without compromising vital areas of your life and your future.

Adeline Ramirez
Keller Williams
BZPros@gmail.com

Californian Home Buyers – Brief Window for up to $18,000 in tax credits

$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME FOR FIRST TIME HOME BUYERS

If you’re a first time home buyer and you enter into a purchase contract before May 1, 2010 and close by June 30, 2010 you could be eligible for up to $18000 in Federal ($8000) and State ($10000) tax credits.

Not a first time home buyer?  You too can take advantage of tax credits up to $16,500 in the same time frame (up to $6500 Federal and $10000 State).

See more details below and always consult with a qualified tax advisor regarding any and all tax matters.

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

Dave Ramsey says “It’s a GREAT time to buy” and tax prep tips

Dave Ramsey, a popular financial guru who preaches debt free living, offers some great insights on home buying and some on tax prep tips too!

View Video

Tax Credit Extended – Repeat Buyers Eligible

Congress passed the Homebuyer Tax Credit Extension. Here are the main facts that you should know:

* The tax credit has been extended to April 30, 2010.

* Repeat buyers who have owned their homes for at least 5 years are now also eligible for a credit of up to $6,500 from the government.

* If you’re a first-time homebuyer you may be eligible for a credit up to $8,000.

* To qualify, buyers have to sign purchase agreements by April 30, 2010 and have 60 days to close by June 30, 2010.

* The credit is available for the purchase of principal homes costing $800,000 or less.

* The new tax credit has increased income limits.

* Individuals with annual incomes up to $125,000 and up to $250,000 for joint filers are now eligible before the credit begins to phase out.

* The credit is equal to 10 percent of the purchase price of a primary residence.

* Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment.

* Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.

* Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

* You must be at least 18 year of old to claim the credit.

5 Questions to Ask When Looking for a Loan Officer

It really isn’t all about rates.  No matter what lender you go to you’ll likely get similar rates.

When looking for help in getting a mortgage loan, interview multiple loan officers, don’t just go with the first one you talk with! If you talk to more than one, you usually will find one that just seems to be “right” for the job. Finding the “right” loan officer can possibly save you money, but almost certainly will save you time and effort in the qualification process and once you’ve found a home and are in escrow.

Here are 5 simple questions that you can ask loan officers when interviewing them:

How many loans have you closed that are for people in my situation?
In the answer for this question, look for a specific number and listen to the *types* of loans that he/she has experience in. Refinance transactions are different than purchase transactions. Conventional loans are different than FHA loans. To increase the chance that your loan officer will be able to handle your loan smoothly, look for how many similar loans he has personally closed.

Are you a mortgage broker or a mortgage banker?
There are pros and cons for consumers when working with each type. Mortgage brokers often blame the lenders underwriters because they don’t have direct control of the underwriting department. Mortgage bankers often have slower turn times and don’t do as many different types of loans. Neither one is necessarily bad – but it is good to know what you are dealing with up front.

Can you walk me through the steps of the loan process?
A good loan officer should be able to detail out each step of the loan process and give you a good idea of the time frames for each step that you can expect. Pay particular attention to the time frames the loan officer gives because this is where they set your first expectations. If they say that they can get a loan closed in 10 days in this market… be careful. I am not saying that it can’t be done, but that is a sign that the loan officer likes to over-promise and under-deliver.

What problems can you see potentially arising in my situation?
A good loan officer should be able to give you at least 3 things to watch out for in your situation. Even if you have perfect credit and millions of dollars – there are still things that could potentially slow your loan down in the process and a good loan officer knows where the potential problems are for your situation.

Do you offer a float-down option?
Note: this is particularly important when interest rates are falling. A float down option is where after you have locked your loan, if rates go lower, they can “float down” the rate for you at no charge. Few mortgage professionals offer this option, but this is a question that you should ask up front.

If you ask these 5 questions during your first interview of a loan officer, you have a much better chance of “finding good help”.  It will be well worth your up-front investment.

Wait.

Did you notice that one of the questions is not “how much do you charge and what are your rates like?” No, I didn’t forget it. All of the great loan officers will probably talk about that before you even get a chance to ask the question.

HOW TO BUY AN REO

Many entry level buyers are finding it quite a challenge out there…click here for some comic relief

Homes selling for closer to list price

U.S. homebuyers paid 3.3 percent less than listing price, on average, during July — a smaller discount than the 3.5 percent average in June and 4.6 percent in January, listing and valuation site Zillow.com said.

At the market level, Zillow’s July Real Estate Market Reports shows buyers paid the asking price or more in some California markets where sales are heating up.

In the El Centro metropolitan statistical area (MSA), one of 161 tracked by Zillow’s report, buyers paid 1.8 percent more than listing price. In seven California markets — Sacramento, Merced, Modesto, Riverside, Stockton, Yuba City and Fresno — the asking price and sale price were the same, on average.

Zillow attributed declining discounts from listing price to increased sales and a high proportion of foreclosures resales, which are already priced relatively low.

Homebuyers in Florida had the most negotiating power in July, Zillow said. Buyers in the Vero Beach metro area paid 10.2 percent less than the last listing price, on average.

Other Florida cities ranking in the top 25 markets for discounts from list price were Sarasota (8.2 percent discount), Naples (7.8 percent), Daytona Beach (7.5 percent), Miami-Fort Lauderdale (7.5 percent), Panama City (7.1 percent), Punta Gorda (7 percent), Melbourne (6.6 percent), Ocala (6.4 percent), Tampa (6.1 percent), Jacksonville (6 percent), Port St. Lucie (5.7 percent), Gainesville (5.5 percent) and Lakeland (5.5 percent).

Zillow reported that 22.8 percent of homes listed for sale on Zillow.com had at least one listing-price reduction as of Sept. 1, with a median reduction of 6.5 percent from the original listing price. Homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.

Source: Inman News

NY Time Touts Highland Park as new LA Cultural District

HIGHLAND PARK in northeast Los Angeles holds many honors: the first town to be annexed by Los Angeles (in 1895), the backdrop for Quentin Tarantino’s “Reservoir Dogs” and a historic trust of Craftsman and Victorian-style homes.

But few would ever confuse Highland Park for a cultural district. Until now. What was once a sleepy strip of garish 99-cent stores and auto parts shops is turning into a thriving neighborhood of cool restaurants and boutiques that draw young trendsetters in skinny jeans, flannel shirts and Converse high tops.

The turnaround started a few years ago, when real estate prices in nearby Silver Lake and Echo Park increased significantly. Priced-out artists, actors and writers were drawn to Highland Park’s walkable streets and its glut of handsome old homes. Not only was it aesthetically appealing, but the area also had parks, hills and a hushed, small-town feel.

Much of the flurry is clustered along a five-block stretch of York Boulevard, the main drag. “It’s an odd mix of artists, young families and traditional Latino culture,” said Matt Schodorf, who recently opened Café de Leche (5000 York Boulevard; 323-551-6828; http://www.cafedeleche.net), a Latin-style cafe, with his wife, Anya. “The landscape has changed significantly. Now, everything is centered on one street. It’s rare to find a walking culture in L.A.”

A prime example of the area’s youthful do-it-yourself spirit is Orecul77 (5159 York Boulevard; 323-254-2600; http://www.orecul77.com), a kind of hipster tailor shop where the owner, Tawni Lucero, renovates old dresses into “one-of-a-kind wearable pieces of art.” The funky brightly colored store, which opened last November, charges $55 to $75 for each dress.

Highland Park feels particularly alive at night, when young arrivals gather at places like the York (5018 York Boulevard; 323-255-9675; http://www.theyorkonyork.com), a stylish gastropub with brick walls and chalkboard menus. On weekends, the L-shaped bar is often five deep with floppy-haired students from Occidental College nearby, local women in short skirts and high heels and artist types from Silver Lake with shaggy beards and trucker hats.

A few doors down is Johnny’s (5006 York Boulevard; 323-551-6959), a dimly lighted bar with a “Cheers”-like vibe and a jukebox that bounces from Iggy and the Stooges to Led Zeppelin. The pool and foosball tables are a major draw, as are the chilled Jägermeister shots ($6). A favorite among York Street business owners, the bar often blurs into unofficial town hall meetings.

“We’re in a city of nearly four million people, but here it feels like a small town,” said Amy O’Connell, an owner of Society of the Spectacle (4563 York Boulevard; 323-255-4300; http://www.societyspectacle.com), a fashionable eyewear boutique in a converted 1920s bungalow. “I mean, where else in L.A. do people honk as they drive past?”

By JAMIE BRISICK, NY Times Travel Section July 2009

Pending Home Sales On the Rise

Pending sales are a great indicator of activity in a market.  According to the National Association of Realtors, it’s Pending Home Sale Index, a foward looking indicator based on contracts signed in May,  pending sales in May of 2009 were 6.7% higher than May of 2008.  This marks the 4th straight monthly gain – the last time there were 4 consecutive monthly gains was in October of 2004.  The pronounced increase in April and the fact that May sustained this rise does indicate that number of home sales are poised to rise in the coming month or two.

Appraisal Check List

Here are some of the factors that appraisers Joni L. Herndon of Real Property Analysts/Gulf Coast in Tampa, Fla., and John A. Hillas of Hulbert & Associates Inc. in Modesto, Calif., say they consider when determining value.

Seller Incentives and concessions. Most of today’s buyers expect to pay the lowest possible price and still get some extras. Sellers and home builders are offering money toward closing costs, remodeling and decorating, upgrades, and association dues. The price set initially may not be the final price once concessions are factored out. Appraisers care about that final number.

Closing date. Forget what comparable neighborhood houses sold for a few months back. Appraisers want prices from the most recently closed transactions. “If a sale was more than 45 days ago, even 35, the price may be irrelevant,” Hillas says.

Condition and curb appeal. Appraisers typically find several properties with similar interior and exterior features to determine value. When markets are healthy, blemishes matter less, but when markets soften, problems—a dated kitchen or barren lawn—can reduce prices and deter buyers. “The difference in value is not just the repair costs but the time and hassle to make them. It’s better for sellers to do work in advance,” Hillas says.

Foreclosures. Appraisers technically shouldn’t consider neighborhood foreclosures when valuing a home, since foreclosures don’t meet the Appraisal Institute’s definition of a property reasonably exposed in a competitive market, says Herndon. “But when several neighborhood homes are abandoned, it’s hard not to caution sellers that this is a troubling trend and may affect home values,” she says.

Changing demographics. If a house is in an up-and-coming area, the value can be expected to rise. A location that’s perceived as safe also may help attract the increasing number of single female buyers.

Economic clouds. If there’s an oversupply of comparable homes for sale, or if the local job market is suffering, buyers may be hesitant to invest. Hillas advises setting prices aggressively from the get-go.

Chemistry. It’s hard to account for those times when buyers fall in love with a house, despite a high price, poor condition, or tough economy. “Emotional attachment is a factor that can’t be predicted,” says Herndon. Hillas agrees, “It’s what makes it harder to appraise homes versus commercial buildings, where buyers care more about the bottom line.”

10 Popular Kitchen and Bath Trends

See what David Alderman, vice president of the National Kitchen & Bath Association, discovered in touring the floor at NKBA’s recent annual convention.

Green. With the green wave spreading, manufacturers are bringing out more products like stainless steel and glass that can be reused when life cycles are up. Plus, growing in popularity are more products that save energy, conserve water, and are made locally.

Beyond granite. Granite countertops may still reign because they’re practical, but glass, stainless steel, and mahogany are gaining a foothold.

Black and white kitchens. The all-white kitchen is being tweaked with crisp black. One example: white cabinets on the perimeter, black on the island.

Faster, healthier. Steam ovens will captivate health-conscious buyers who also desire moist food cooked quickly.

Less space. With many people now opting to downsize, manufacturers are debuting smaller 15” refrigerators and 18” dishwashers. Less space also means fewer multiples—one instead of two sinks. Mirrored backsplashes and higher vaulted ceilings also help to magnify space.

Greater value. To keep prices down for cost-conscious, value-oriented home owners, manufacturers are limiting selections but maintaining quality.

Multiple levels. The two-tiered island in multiple colors has gained ground to provide an upper-level eating and serving ledge that conceals dishes in the sink on the lower level. Wine coolers are often built in for entertaining pleasure.

Less maintenance. Since saving time and expense are on home owners’ minds, manufacturers now deliver longer warranties on everything from equipment to hinges and finishes.

More modern. Simple, straight contemporary lines, floating cabinets, and no toe kicks offer the hot contemporary look.

Dual, more private. Toilets with dual flushes are catching on, as is placing a toilet in its own private cubicle.

For more information, go to www.NKBA.org.

$8000 Tax Credit – get it upfront and use for down payment or closing costs

Potential first-time buyers have yet another reason to consider purchasing a home: the monetization of the $8000 tax credit. This article outlines four ways First Time Home buyers can get access to those funds for upfront costs such as down payment and closing costs.  Click here to read the full article.

Estimates indicate most homes are undervalued by 12.2%

10 Most Undervalued U.S. Cities

Housing research organization IHS Global Insight estimates that the average U.S. home is undervalued by 12.2 percent, and many previously pricey communities are undervalued by considerably more.

A recent study released by IHS used home prices, interest rates, area incomes, population density, and historic premiums and discounts to analyze housing values. It examined 330 markets and found homes are underpriced in 248 of them.

Despite the high percentage of undervalued areas, IHS says “it is too early to call a bottoming,” as “job losses continue, housing inventories remain elevated, and consumers remain wary in light of economic uncertainty.”

Here are the 10 most undervalued areas:

1. Vero Beach, Fla., -42.5 percent
2. Houma, La., -41.4 percent
3. Las Vegas, -40.9 percent
4. Merced, Calif., -40.1 percent
5. Cape Coral, Fla., -39.1 percent
6. Houston, -36.9 percent
7. Midland, Texas, -34.8 percent
8. Lafayette, La., -34.4 percent
9. Vallejo, Calif., -34.3 percent
10. Stockton, Calif., -34.3 percent

Source: CNNMoney.com, Les Christie (06/04/2009)