CNN MONEY: "The Best Moves for Home Buyers and Sellers"

Los Angeles Real Estate Advice: Plenty of forces, from overly cautious lenders to inaccurate appraisals, are wrecking real estate deals right now. But one of the biggest roadblocks to getting a house sold these days is the disconnect between buyers and sellers.

In general, sellers have gotten more realistic in pricing their homes than they were right after the housing bubble burst, but agents say that many still don’t grasp how much they must concede to close a deal. And buyers are still spraying lowball offers around in hopes that sellers will be desperate enough to bite.

Take such unreasonable expectations, multiply by two, and what do you get? “A standoff,” says Glenn Kelman, CEO of real estate brokerage Redfin.

With the busy summer home-sale season drawing to a close, there’s little time to waste. Whether you’re trying to unload your place or land a new one, follow these dos and don’ts to negotiate the best deal — fast.

If you’re buying

Don’t say: “I’ll pay 85% of your asking price and not a penny more.”

Instead: Look for homes that are fairly priced and make a reasonable offer. “Coming in about 10% below list is a good starting place for negotiations now,” says Denver real estate broker Jeff Fogler. Yes, you have the upper hand in most markets, but the average homebuyer is paying only 2.7% below list price (see the chart). Set your expectations accordingly. You can always ask if the seller is willing to bridge a price gap in other ways — for example, by picking up your closing costs (which can run $7,500 on a $300,000 house).

Don’t say: “I haven’t put my own place on the market yet.”

Instead: List your current home before you start shopping seriously for the next one. Because it takes almost three months to move a house these days, sellers are loath to write home-sales contingencies into purchase contracts. You’ll have far more leverage if you’ve gotten rid of your house before you start negotiating: Sellers know there’s less chance of the deal falling apart. (Prequalifying for a mortgage helps too.) What’s more, you’ll know exactly how much money you can put into your new digs.

Don’t say: “This is my dream house.”

Instead: Stop imagining the great parties you’ll throw there and gird yourself to walk away if the seller won’t make reasonable concessions. Your ability to abandon negotiations is your most powerful bargaining chip. Given that plenty of other homes are on the market now, finding another place to love shouldn’t be too hard. You might let the seller know that. Nicely.

If you’re selling

Don’t say: “You’re offering how much? Forget you!”

Instead: When bidders lob low-balls at you, thank them for their interest — and ask that they come back with earnest offers. “If you become offended, enraged, or unreasonable, you’ve blown any chance at negotiation,” says Warwick, R.I., real estate agent Ron Phipps. These days many buyers are just testing you to see how big a discount they can get. Point the bidder to comparable recent sales that support your list price. (Received several super-low offers? Check the comps to make sure your price isn’t too high.)

Don’t say: “I didn’t know the deck was rotting.”

Instead: Pay a few hundred dollars to get your house inspected before you put it on the market. Then arrange to make any necessary repairs yourself. (In most states the law requires you to disclose to potential buyers any defects of which you’re aware.) “Taking care of any inspection issues upfront helps sellers limit the points that buyers can negotiate on,” says Pat Lashinsky, CEO of the national brokerage ZipRealty.

Don’t say: “It might take us a while to move out.”

Instead: Make sure to tell buyers — especially those who might have children starting school this month — that you’re willing to scram pronto, if possible. That will help you stand out from any short sales in your area, which may have lower list prices but can take months to close. “If the buyers have a strict time limit, they’re going to pay more money to get into a house quickly,” says Ellen Klein, a realtor in Rockaway, N.J. More money plus more speed: That’s what it’s all about.

Source: CNNMoney.com

Bank-owned Inventory Shrinks in California

More borrowers negotiating loan mods, short sales

By Inman News, Thursday, August 12, 2010.

Inman News

Inventories of bank-owned properties in California registered double-digit declines in July compared to a year ago, according to the latest numbers from data aggregator ForeclosureRadar.

Lenders took back 11,934 homes in July, an 18 percent decline from a year ago. That left them with an estimated 81,536 homes in their "real estate owned," or REO, inventories in July -- 19 percent less than a year ago.

About three times that many homes are still working their way through the foreclosure process in California. But Sean O'Toole, ForeclosureRadar's founder and CEO, said he sees "no evidence of a foreclosure wave anytime soon."

Lenders and government intervention continue to delay foreclosures, O'Toole said. Although that doesn't provide a long-term solution for homeowners who owe more than their homes are worth, it does push back the day of reckoning.

"We continue to hear a lot of concern about a double dip for housing, combined with increasing concern that another wave of foreclosures is coming as well," O'Toole said. "While there is clearly a huge 'shadow inventory' of homes that are delinquent in their mortgage payments, those homes still have to go through the entire foreclosure process before hitting the market as REO listings."

In California, the foreclosure process takes a minimum of 120 days, and the average is currently about 226 days, up 20 percent from a year ago, O'Toole said. After repossessing a home, it takes lenders another 269 days on average to resell it, compared with 238 days a year ago, he said.

Foreclosure cancellations were up 75 percent in July from a year ago, to 18,942, as more borrowers were able to negotiate loan modifications or short sales. Lenders are also demonstrating an increasing willingness to sell properties on the courthouse steps instead of repossessing them.

While O'Toole said he's not ruling out a double dip for housing, "at least in California it certainly won't be caused by an excess supply of foreclosures anytime soon."

California and other "sand states" that experienced rapid price appreciation during the boom -- including Florida, Arizona and Nevada -- could lead a housing recovery, because they saw foreclosures surge before Rust Belt states like Michigan, Illinois and Ohio that are now being hit hard by both unemployment and foreclosures.

The latest national numbers from RealtyTrac, released today, showed bank repossessions at near record levels in July, even as the number of homes entering the foreclosure process declines.

ForeclosureRadar estimates that in California, 25,148 homes were subjected to a notice of default in July -- down 47 percent from a year ago.

That left the inventory of what O'Toole calls "preforeclosure homes" -- properties that have been hit with a notice of default filing, but not yet scheduled for auction -- at 125,223, down 29 percent from a year ago.

Auction notices were served on 28,310 homes, a 30 percent decline from a year ago. That brought the total number of homes scheduled for auction in California at the end of July to 125,559 -- roughly the same number as a year ago.

Even after a home has been scheduled for auction, the sale can still be canceled if the owner is able to negotiate a loan modification or short sale.

If a home does make it all the way to auction, the bank will place the opening bid. If a third party puts in a higher bid, the bank will sell them the house. If not, the house goes back to the bank and is added to its REO inventory.

Although banks were still taking back three out of four properties that went to auction in July, auction sales to third parties were up 29 percent from a year ago, to 3,483. Banks elected to repossess 11,934 homes, down 18 percent from a year ago.

When the bank took back properties, its opening bid was 26 percent less than the outstanding loan amount, on average, but 21 percent higher than estimated market value.

When properties were auctioned to third-party investors, the bid amount was typically 39 percent less than the loan amount, and 22 percent below market value.

Investors who plan to resell those properties will often have to deal with a home's current occupant, past-due property taxes, outstanding liens, repairs, and resale expenses including commissions to real estate brokers.

Competition between bidders was fiercest in Orange County, with discounts from market value of only 15 percent. The best deals were in California's Central Valley, where investors averaged discounts of 30 percent in Fresno County and 29 percent in Kern County.

But lenders repossessed eight out of 10 homes that went to auction in Fresno and Kern counties in July rather than sell them on the courthouse steps, completing only 190 third-party sales -- 95 in each county.

Sales to third parties were still up 116 percent in Fresno County compared to a year ago, while bank repossessions were essentially flat at 396 homes. In Kern County, third-party sales were up 36 percent while bank repossessions declined 4 percent, to 500 homes.

Other hot spots for auction sales in July included Los Angeles County, where 643 homes were sold to investors and other third parties, a 50 percent increase from a year ago. Bank repossessions were down 28 percent, to 1,847.

Riverside County also saw double-digit growth in July, with third-party sales up 28 percent from a year ago to 428 homes. As was the case in Riverside County, bank repossessions were down from a year ago, falling 27 percent to 1,434.

Source: Inman News

"Foreclosure activity in U.S. falls in July" - from LA TIMES

Although default notices, scheduled auctions and bank repossessions dropped 10% compared with a year earlier, the number of filings rose 4% from June.

By Tiffany Hsu, Los Angeles Times

August 12, 2010

Foreclosure activity in July was down, especially in California, compared with last year, according to data released Thursday. But nationwide it was up slightly from June.

Default notices, scheduled auctions and bank repossessions were reported for 325,229 properties in the U.S. in July, according to Irvine research firm RealtyTrac. Compared with the same month last year, that was down 10%.

"It's not so much a sign that the housing market is righting itself as a sign that the various foreclosure prevention efforts, including government-sponsored loan modification, refinance and short sale programs, are being implemented more aggressively by lenders," said Daren Blomquist, a spokesman for the company.

But things are still shaky, with total foreclosure filings jumping 4% from June. Although the number of default notices compared with year-earlier numbers have been slipping for six months, bank repossessions have been booming for eight months to near record levels.

And the volatility will continue as lenders try to push distressed properties into foreclosure prevention programs, according to RealtyTrac.

"Those alternatives will not work in every case, resulting in a bit of a rollercoaster ride in the foreclosure numbers over the next several months," Blomquist said."

California still has the most filings of any state, with 21% of the national total and the fourth-highest foreclosure rate in the country. July's total of 66,910 affected properties, however, is 38% lower than a year earlier.

Six of the top 10 metropolitan areas with the highest foreclosure rates are in California: Modesto, Merced, the Riverside- San Bernardino- Ontario region, Stockton, Bakersfield and the Vallejo and Fairfield pocket.

For the 43rd straight month, Nevada had the highest rate among states, with 1 in every 82 homes hit with a foreclosure filing. At 13,727 properties, that was still 30% lower than July 2009. The Las Vegas and Paradise area's foreclosure rate — five times the national average at 1 in every 71 housing units — was the highest among major population centers.

tiffany.hsu@latimes.com

Copyright © 2010, Los Angeles Times

Picfair Village/Faircrest Heights Home Sales Update - July 2010

Hi All-

Here is the full list of homes sold and new on market for July 2010 in Picfair Village/Faircrest Heights:

New Listings
1606 Spaulding Ave - $699,000
6101 Pickford Place - $525,000
1800 S. Hayworth Ave - $899,000
1623 S. Curson Ave - $569,000


In Escrow
1501 Stearns Drive - $695,000
1815 Stearns Drive - $799,000
1768 S. Hayworth Ave - $345,000
1523 S. Curson Ave - $599,000
5995 Saturn St - $699,000


SOLD
1647 S. Orange Grove - $725,000
1569 S. Hayworth Ave - $480,000
1523 S. Curson Ave - $420,000
1533 S. Point View St - $890,000
1504 S. Curson Ave - $633,033
1829 Stearns Drive - $900,000
1776 S. Orange Grove Ave - $569,000
6075 Pickford Place - $523,000


For further details about any of these properties or for a free market evaluation of your own home, feel free to call me anytime on my cell at 310-228-8856.

-Jerry

"Top Seven Reasons Banks are Denying Home Loan Requests" from RISMedia

The lending landscape has changed quite drastically over the past several years. Practices, approvals and standards that were once widely accepted have either vanished or transformed beyond the point of recognition. Many banks, which were once extremely careless with their loan underwriting techniques and approvals, have dug themselves into a significant hole that will take many years to climb out of. Promotions such as “100% Financing” and “No Doc Loans” were both major contributors to the financial crisis banks and consumers are facing today.

Today, banks are making sure they don’t make the same mistakes again, so loan underwriting standards have become more stringent than ever before.

According to a recent Federal Reserve survey, it was found that about 75% of the banks surveyed indicated they had tightened their lending standards for prime, subprime and commercial mortgages. That was up from about 60% in the previous survey. With this sharp increase in lending standards, borrowers are being turned down for real estate loans at an alarming rate.

Here are the top seven reasons banks are denying home loan requests:
1. Poor credit: The borrower may have a heavy down payment or excellent equity built-up in their house, but if their credit score is under a certain threshold, obtaining a new loan or refinance from a traditional bank is challenging. Even FHA (Federal Housing Administration) loans, which have traditionally catered to borrowers with lower FICO scores, have an average borrower credit score of 693, according to CNN Money, which is above the national average.

2. Insufficient liquidity: If the borrower doesn’t have a heavy down payment (20%-30% for most banks) and strong excess liquidity, banks don’t want to take the risk on funding their loan.

3. Lack of income: The borrower doesn’t have consistent proof of income for the last two to five years. Regardless of how good their credit score is or how much equity they have in their home, if they can’t show the bank proof of income, loan approval will be tough. This can be a big hurdle in the loan process, particularly for retired borrowers.

4. Lying on the application: Banks have learned their lesson and are no longer putting up with borrowers stretching the truth on their applications.

5. Debt: Borrower has excessive debt and their debt-to-income ratio exceeds the bank’s guidelines.

6. Unemployment: Most lenders will like to see at least two years of stable work to issue loan approval.

7. Self employment: Lenders are looking at self-employed applicants with a lot more scrutiny these days, making it very tough for these borrowers to get approved.

Obviously some of these newly structured standards are for the betterment of the industry, and our overall economy, but at the same time, home buyers across the country are realizing quickly that reputable credit and stable income aren’t always enough in qualifying for a loan through a traditional bank.

This predicament is not only affecting potential home buyers, but also the real estate professionals who represent them. Real estate professionals nationwide have expressed that this has become a challenging part of the transaction.

According to Monique Bryher (http://www.californiarealestatefraudreport.com/), a broker associate at Keller Williams Realty, “Home buyers are definitely having a harder time in being qualified. Several of the loan officers with whom I work have complained that loans that would have been approved 6 months ago are being denied now. What’s interesting is that loan applications in terms of volume are up, lenders are busy processing them, but it’s harder to get them approved and it’s taking longer to close even simple, straight-forward transactions.”

Once the traditional lending route has been exhausted, both Realtors and potential buyers are often times at a loss of what to do as a backup plan. Private lending has been around for many years, but most borrowers and brokers have no idea that it’s even an option.

“With the strict underwriting guidelines banks are governed by these days, private lending is the wave of the future for getting real estate loans funded,” explains Eric Wohl, president of NoteFlo, an online private lending marketplace launching today. NoteFlo’s unique service allows borrowers to post loan funding requests for free, which will be broadcast out to thousands of private lenders that will bid for the opportunity to fund their loan. “Our goal is to make sure borrowers know that they have plenty of other options if their loan application is denied by a traditional bank,” says Wohl.

Source: RISMedia