Nancy's Blog

Congress has extended and expanded the homebuyer tax credit

Nancy Moeller (Seven Gables Real Estate) — Fri, 06 Nov 2009 13:08:30 -0600

Good news for buyers and the housing market. These changes are effective when the President signs the bill. The credit offers several new features, including a $6500 credit for people who are not "first time" homeowners and a binding contract rule which will take away some of the pressure in April, 2010 when the credits are scheduled to expire. See the chart below for a summary:

How to buy a bank owned property

Nancy Moeller (Seven Gables Real Estate) — Sat, 17 Oct 2009 09:25:29 -0500

This video had me laughing and crying at the same time.

As agents who list REO properties and also represent entry level buyers who are frustrated by the system, this video sums it all up and hopefully will remind all REO listing agents that we must rise above the insanity and do things right - every time, with every offer ... or simply say "no" to more listings.

We're still in "yes" mode, but if this is ever us, we're done!

http://www.youtube.com/watch?v=SM7oWKgCVo4

Nancy Moeller, CPA, Real Estate Broker

www.SevenGablesREO.com

www.TheOCExperts.com

www.OCBankDeals.com

Direct: 714 276-7006

From REO Broker to REO Brokers

Nancy Moeller (Seven Gables Real Estate) — Thu, 01 Oct 2009 10:43:43 -0500

I was reading a blog this morning by an REO listing agent who was baffled (and very upset) by the number of calls she gets for status on her REO listings, despite her warnings not to do so in the MLS. She promises that her listings are kept current daily and goes on to say that a property is always "active" until the seller executes final documents. That is absolutely true and also the problem.

This process from the seller selecting an offer to final seller acceptance can take 3 - 7 days. In the meantime, all other offers are effectively ignored, rejected or "held in back up".

As an REO listing agent, we update our listings daily, but and this is the key - we provide the information that buyer's agents are calling about so they don't have to call. Here's an example:

10/01/09 - Multiple offer situation. Highest and best were due yesterday. Bank has countered one offer and rejected all others. Paperwork is with buyer. Property will remain "active" until both buyer and seller execute. We welcome your offers and if this working offer is not executed, we will contact all agents who submitted an offer to confirm your buyer's commitment to their originally submitted offer.

And while we still get calls, we don't get nearly as many because we give them the information they are calling about, and as such - we are able to return our calls and maintain our relationships with our valued realtor partners.

Another tip - we used to get calls asking us "How many offers do you have ... where do we need to be?" Now, we answer in the MLS.

10/01/09 - Property is active - please show and submit offers. We welcome your calls, but we will not disclose the number of offers or offer amounts we have received. Please do not submit any offers without first showing the interior of the property to your client.

We must realize that we are all in this together and help make each other's jobs easier so we can serve our buyer and seller clients more effectively.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

Direct: 714 276-7006

Fax: 714 917-2293

Loan Modifications - Is the glass half empty or half full ... you decide

Nancy Moeller (Seven Gables Real Estate) — Wed, 30 Sep 2009 16:20:59 -0500

A report released by the Office of the Controller today, lenders are worker harder than ever to help homeowners avoid foreclosure with loan modifications. However, they report that more than 50% of homeowners who completed loan modifications in the first half of 2008 had fallen behind on their payments again.

Is the glass half empty or half full?

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

Loan Modification Scams

Nancy Moeller (Seven Gables Real Estate) — Tue, 29 Sep 2009 14:07:46 -0500

For homeowners facing foreclosures and considering a loan modification, diligence is key.

This month, the State Bar of California launched a number of investigations into misconduct related to loan modifications. Some unscrupulous attorneys have allegedly taken fees, but failed to perform the services they promised.

According the State Bar of California website, about one-quarter - almost 800 cases - of the active investigations in the Office of Chief Trial Counsel (OTC) are related to foreclosure complaints.

The State Bar has even released the names of 16 attorneys under investigation. The list of attorneys currently under investigation is available at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10144&n=96395

Be careful out there - many scam artists and others simply out to make a quick buck without the proper expertise, are affiliating with attorneys in order to collect advanced fees and seem more credible to the public.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.ZeroShort.com

Direct: 714 276-7006

Fax: 714 917-2293

7%

Nancy Moeller (Seven Gables Real Estate) — Fri, 18 Sep 2009 14:01:54 -0500

No, I'm not talking about real estate commissions, but rather a great article a friend emailed me this morning and asked me to forward. Since I don't like forwarding email, I thought it best to share in my blog. Here it is:

Written By Regina Brett, 90 years old, of The Plain Dealer, Cleveland, Ohio:

"To celebrate growing older, I once wrote the 45 lessons life taught me. It is the most-requested column I've ever written. My odometer rolled over to 90 in August, so here is the column once more."

1. Life isn't fair, but it's still good.
2. When in doubt, just take the next small step.
3. Life is too short to waste time hating anyone.
4. Your job won't take care of you when you are sick. Your friends and parents will. Stay in touch.
5. Pay off your credit cards every month.
6. You don't have to win every argument. Agree to disagree.
7. Cry with someone. It's more healing than crying alone.
8. It's OK to get angry with God. He can take it.
9. Save for retirement starting with your first paycheck.
10. When it comes to chocolate, resistance is futile.
11. Make peace with your past so it won't screw up the present.
12. It's OK to let your children see you cry.
13. Don't compare your life to others. You have no idea what their journey is all about.
14. If a relationship has to be a secret, you shouldn't be in it.
15. Everything can change in the blink of an eye. But don't worry; God never blinks.
16. Take a deep breath. It calms the mind.
17. Get rid of anything that isn't useful, beautiful or joyful.
18. Whatever doesn't kill you really does make you stronger.
19. It's never too late to have a happy childhood. But the second one is up to you and no one else.
20. When it comes to going after what you love in life, don't take no for an answer.
21. Burn the candles, use the nice sheets, wear the fancy lingerie. Don't save it for a special occasion. Today is special.
22. Over prepare, then go with the flow.
23. Be eccentric now. Don't wait for old age to wear purple.
24. The most important sex organ is the brain.
25. No one is in charge of your happiness but you.
26. Frame every so-called disaster with these words ''In five years, will this matter?".
27. Always choose life.
28. Forgive everyone everything.
29. What other people think of you is none of your business.
30. Time heals almost everything. Give time, time.
31. However good or bad a situation is, it will change.
32. Don't take yourself so seriously. No one else does.
33. Believe in miracles.
34. God loves you because of who God is, not because of anything you did or didn't do.
35. Don't audit life. Show up and make the most of it now.
36. Growing old beats the alternative -- dying young.
37. Your children get only one childhood.
38. All that truly matters in the end is that you loved.
39. Get outside every day. Miracles are waiting everywhere.
40. If we all threw our problems in a pile and saw everyone else's, we'd grab ours back.
41. Envy is a waste of time. You already have all you need.
42. The best is yet to come.
43. No matter how you feel, get up, dress up and show up.
44. Yield.
45. Life isn't tied with a bow, but it's still a gift.

It's estimated 93% won't share this. If you are one of the 7% who will, forward this with the title '7%'.
I'm in the 7%. Remember that I will always share my spoon with you! Friends are the family that we choose for ourselves

Insanity - All or nothing (nothing about real estate in this post)

Nancy Moeller (Seven Gables Real Estate) — Thu, 17 Sep 2009 20:34:44 -0500

I have a personality flaw. Actually, I have many ... but this one I will admit.

I am an "all or nothing" person. In life, like in poker, I find myself either "all in" or "completely out". And when there is an exception to this rule (when I find myself in the middle of in and out) ... I take on incredible stress.

Understanding this personality flaw, I am able to control (control is another personality flaw for another blog) some outcomes.

In work, I'm usually "all in" ... but again, this is not a post about real estate or work ... so enough of that.

This blog is about fitness. Celebrating my 40^th this month reminded me that while I still "feel" 21, my body is most certainly feeling 40.

So for my birthday present to myself, I bought the home fitness series, "Insanity" by Shaun T. What appealed to me when I bought it was that it did not require any equipment - no weights, pull up bar, etc. I also liked the challenging element and intensity of it.

The best surprise so far is that I enjoy the workouts. I'm on Day 17 and haven't missed a beat. I actually look forward to the work out because it's short (about 40 minutes), intense and the stretches are a welcome, relaxing break from the bursts of insanity between them. And because I look forward to them, I'm "all in" and that's a good thing for exercise.

Do I have weight loss or other goals tied to all of this? For a change, no. I decided just to enjoy the process, exercise every day and see what happens.

So why did I write a blog on this topic? Mostly as a testimonial for a great workout series that appeals to someone with an "all or nothing" personality type. Secondly, as a personal commitment to keep it. And lastly, to remind myself that when I feel stress, the root is probably lack of commitment or being in a state of limbo.

Enough of that for now,

Nancy

Multiple Offers – Tips To Compete Against 20 Other Buyers

Nancy Moeller (Seven Gables Real Estate) — Tue, 15 Sep 2009 12:01:56 -0500

With so many properties getting multiple offers in the first few days - many from cash investors, how can a traditional buyer with a conventional or FHA loan compete?

First, be patient and don't get attached to any one house. The chances are you will be outbid.

However, if you want to increase your chances, here are some tips. As REO agents who get a lot of calls, emails and offers on our own listings, these are the things that make a buyer and their agent stand out.

1. Make contact. Ask your agent to make a personal contact with the listing agent. This is not always possible, as many busy REO agents don't return calls or emails, but it's always worth a shot to build rapport and try to gain insight into the number and strength of other offers.

2. Be concise. Ask your agent to prepare a short, concise email with their offer that conveys the following:

a. Amount of offer

b. Pre-approval with a direct lender

c. Buyer has seen house and is committed to the purchase

3. Send a complete package. Put together a complete offer package, typed with the listing agent's information filled out on the forms. Be sure all initials, dates and signatures are complete. Be sure to include your pre-approval letter and proof of funds required to close.

4. Follow up. Be sure to follow up the same day to make sure your offer was received. So many times, email and faxes are unreliable ... not to mention the human element of processing so many offers.

5. Stay in the game. Even if you don't get the property, don't give up. Ask your agent to follow up with the listing agent, just in case it falls out of escrow. Sometimes it's the "last buyer standing" who gets the property when it falls out of the first escrow.

And most importantly, find a good buyer's agent and stick with them. Don't try to work with 20 different listings agents, hoping that will give you an advantage. Ethical listing agents present all offers and the best offer wins. We often submit offers for our buyers on our own REO listings that are beat out by stronger offers. The advantages of working with the listing agent are easily resolved by following the tips in this article. And the advantages of having your own advocate and agent working for you on ALL properties are far too numerous to list in this article.

Good success to you,

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

New FHA Approval Process - Delayed to November 2, 2009

Nancy Moeller (Seven Gables Real Estate) — Sat, 12 Sep 2009 09:21:01 -0500

Delayed until November 2, 2009, FHA is changing the way condo projects will be approved. Under the new rules, there will still be an "FHA Approved" list, however all prior approvals will be invalid unless approved on or after October 1, 2008. For condo projects not on this list, FHA will start from scratch approving a condo by one of the following two methods:

Note: The "Spot Approval" process will be eliminated and replaced by these two methods.

DELRAP (Direct Endorsement Lender Review and Approval Process) gives an Underwriter the power to approve a condo locally. The approved lender provides HOA documentation (CCRs, Budget, HOA Management Company Questionnaire, Insurance, Reserves, etc.). The Underwriter reviews the documents and makes a decision. The lending community is hopeful that this process may be easier than in the past.

HRAP (HUD Review and Approval Process) utilities the same documentation as DELRAP but puts the approval process on HUD (Department of Housing and Urban Development). This may prove to be very time consuming.

Once a unit is approved in the project, we believe the project will be added to the FHA approved list. Going forward, all projects will require recertification every two years.

In order for a project to be approved, the following guidelines (among others) must be met:

1. At least 50% must be owner-occupied
2. No more than 10% can be owned by a single investor
3. No more than 25% of the total floor space can be "commercial"
4. No more than 15% of the units can be more than 30 days behind on their association dues
5. Project must be covered by hazard and liability insurance
6. There must be adequate "reserves" to cover contingencies

If you can't sleep tonight, you can download the entire Mortgage Letter 2009-19 document from the HUD site at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-19ml.doc

Make it a great day!

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

1st Time Buyer Credit ... Set to Expire Soon

Nancy Moeller (Seven Gables Real Estate) — Tue, 01 Sep 2009 16:49:49 -0500

As a first time home buyer counting on using the $8,000 credit, it's time to act. The tax credit is due to expire on November 30, 2009. Unless the credit is extended, escrows closed after November 30, 2009 will not qualify.

In other words, a buyer would need to be in contract soon since only 90 days remain. Will Congress extend it? Maybe, but if you're counting on the credit, I wouldn't mess around and I would certainly stay away from short sales if you hope to close on time.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

Sound Investments in Orange County

Nancy Moeller (Seven Gables Real Estate) — Thu, 27 Aug 2009 11:42:17 -0500

Just a few years ago during the "Bigger Fool" era of 2005/2006 ... do-it-yourself investors were picking up condos for $400,000 and renting them for $1,650 a month. We call it the "Bigger Fool" strategy because it only makes sense if some other "Bigger Fool" will pay you more than $400,000 you paid for a bad cash flow deal.

But finally, the numbers work in Orange County and its the reason investors are scooping up all the properties, while the first time homebuyer wonders why they can't get a house despite placing 10 full price offers.

Here's a great example. The Hills complex of Yorba Linda has about a dozen short sale listings. Despite the headache, short sales are a great option for the patient buyer.

The median price for a 2 bedroom condo is $230,000. The median rents for the same condo this year are $1,650. The tax rate is 1.3%, HOA dues are $305. Based on my calculations, this investment not only positive cash flows, but also has a return on investment of 8.1% BEFORE appreciation.

Let's assume a 3% annual appreciation rate ... in 20 years, this investment will be worth $415,406. Not interested in paying taxes on your gain? Keep it, exchange it or move into it for 2 years ... there are many tax savings strategies.

If you've been thinking about investing, it's time.

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCBankDeals.com

Direct: 714 276-7006

Fax: 714 917-2293

Fannie Mae First Look Initiative

Nancy Moeller (Seven Gables Real Estate) — Mon, 10 Aug 2009 15:14:36 -0500

If you a buyer frustrated because your offers are routinely dismissed in favor of cash offers from investors, relief is here on Fannie Mae bank owned properties.

Effective immediately, during the first 15 days a property is in the MLS, investor offers will not be considered! This program is called the First Look Initiative and it's imperative that buyers act on these properties quickly during the first few days to keep this new competive advantage.

To register to see this properties as soon as they are available, go to www.OCBankDeals.com (for Orange County) or www.BankDealsNow.com for any other area.

Nancy Moeller, CPA, Real Estate Broker, REO Specialist

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

Direct: 714 276-7006

Fax: 714 917-2293

The bottom of the market can only been sign in the rearview mirror

Nancy Moeller (Seven Gables Real Estate) — Tue, 04 Aug 2009 13:21:39 -0500

As the debate continues whether certain markets in Orange and Riverside counties have "bottomed", the usually gloomy Case-Shiller index reports that home prices have reversed course and that the bottom has passed.

Please find a link to this interesting article http://realtytimes.com/rtpages/20090804_realestateoutlook.htm from Realty Times.

For our clients in Orange County, we maintain that the market under $500,000 has reached a bottom. In Riverside County, we see this level at $350,000 and below. If you are a buyer in these markets, you are likely writting offers on multiple properties, competiting against at least a dozen other buyers and wondering why some people still believe that we're in a "buyer's market" and should expect greater price declines.

Have a great day!

Nancy Moeller, CPA, Real Estate Broker

www.TheOCExperts.com

Seven Gables Real Estate

Todd Direct: 714 404-9540

License #01762788

Nancy Direct: 714 276-7006

License #01727426

June 27, 2009 Market Update

Nancy Moeller (Seven Gables Real Estate) — Sat, 27 Jun 2009 13:33:22 -0500

ORANGE COUNTY - OVERALL

Supply is low. There are currently 9,184 homes on the market in Orange County. This is the lowest we've seen since early 2006. Two years ago, inventory was nearly 17,000 and cobwebs were forming on for sale signs across the county. The reduction of inventory is the result of an incredible increase in demand - both first time home buyers and investors.

Demand is high. There are currently 6,449 properties in escrow or awaiting short sale approval. This number represents the total of pending and back up status listings. In addition, 2,611 homes sold in the last 30 days. In total, we have nearly as many homes sold or in escrow in the last 30 days as homes on the market. While actual inventory supply time is 3.5 months based on closed sales, we have just over a month's supply of inventory when you combine sold, back up and pending sales.

It's a SELLER's market. This means we are in a pronounced seller's market in Orange County. As a buyer, you can expect to pay listing price or above and be competing against 10 - 20 other buyers for each property that is priced correctly.

ORANGE COUNTY - FORECLOSURES

Bank owned foreclosures. If you are a buyer or investor hoping to pick up foreclosures for pennies on the dollar, the time has passed. Today, you need to place your offer quickly and strongly to even have a shot. Check out the market snapshot for bank owned foreclosures:

Supply - 402 homes (compared with almost 5,000 in mid-2008)

Demand - 218 in back up status, 807 pending, 677 closed in the last 30 days = 1,702 properties are pending or closed in the last 30 days.

In other words, REAL demand for bank owned foreclosures are 4X the level of current supply.

ORANGE COUNTY - $750,000

Due to the concentration of investors and first time home buyers in mainly the sub-$500K market, the market over $750,000 is dramatically different.

Supply - 3,841 properties

Demand - 490 in back up, 287 pending, 408 closed in the last 30 days = 611 properties are pending or closed in the last 30 days

We have a 9.4 month supply of inventory based on closed sales and 4.9 month supply based on pending and back up sales for properties over $750,000. These price ranges are still in a buyer's market, and the numbers shift more toward a buyer's market over $1M.

For specific information on the cities and price range you are most interested in, please give us a call and we'll create a custom market snapshot for you.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCBankDeals.com

Direct: 714 276-7006

Did you know ... 82.5% of all statistics are made up on the spot?

Nancy Moeller (Seven Gables Real Estate) — Fri, 26 Jun 2009 20:16:58 -0500

Did you know ... 82.5% of all statistics are made up on the spot?

Don't worry about remembering the number, because there is 93.2% chance I will change it next time.

In our industry, numbers and statistics help us understand our market, project sales and make educated predictions about the future. However, like the glass that is half full or half empty, the same number can easily mean different things to different people.

One of the most quoted real estate statistics is the median price of homes. Most cite median price to show market increases or decreases. In fact, median prices have very little to do with prices, and more to do with the concentration of demand. The median is simply the middle point of demand - half the houses sold for less than the median price and half of the houses sold for more than the median price.

In today's Orange County market, demand is concentrated in the sub-$500,000 and even more in the sub-$300,000 price range. In fact, it's a hot SELLER's market in these ranges. For homes priced over $700,000 - the story is dramatically different with demand at a virtual standstill. The higher the price, the lower the demand.

As such, the median price of homes in Orange County is continuing to fall, reflecting the higher concentration of demand in the lower price ranges. The key is to STOP there. Do not further assume that prices are declining.

To determine if prices are declining, level or increasing, you must narrow your focus to 1) a specific price range, 2) a specific city or neighborhood and 3) a specific time frame. The more general the statistic, the more skewed the interpretation.

Whenever someone asks about the Orange County market, the first question we ask is the price range and area they are referring to, because unlike most markets, our current market is divided and there are no universal truths or predictions that would be accurate for the entire Orange County real estate market in general.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct (714) 276-7006

Nancy@TheOCExperts.com

www.TheOCExperts.com for Orange County Real Estate

www.OCBankDeals.com for Orange County Foreclosures

www.ZeroShort.com for options available to avoid foreclosure

For us, this is what it's all about - thank you for the letter Tom and Michelle

Nancy Moeller (Seven Gables Real Estate) — Thu, 25 Jun 2009 09:09:16 -0500

Dear Nancy and Todd,

We wanted to express our thanks for assisting us in finding our new home. Being first-time buyers, we were searching for a realtor who was able to guide us through the process of home buying and financing.

We were initially impressed with your down to earth nature, your knowledge, and honest presentation. Thankfully, Nancy, you were able to put the numbers down on paper, helping us see exactly how much house was right for us. Todd, as we searched for homes, you did not pressure us, nor did you show us homes that were out of our range. You made it a fun experience with your sense of humor and knowledge of the area.

When we finally found our home, you both hit the ground running and acted as our advocate throughout the entire escrow process - even after we moved in and the escrow period was over! As you know, we hit some major bumps in the road during escrow. I am certain that if it wasn't for your perseverance with the lender, escrow company, and homeowner's association, we wouldn't have been able to move in on time - which would have resulted in utter chaos, including putting our belongings in storage and moving into a motel.

We cannot thank you enough for your services. We will happily refer you to everyone we know who is selling or buying a home.

With thanks,

Tom and Michelle Fox

How to Serve Humans

Nancy Moeller (Seven Gables Real Estate) — Wed, 24 Jun 2009 12:16:45 -0500

I can't remember the details of the episode, but I'm often reminded of the title and point of an old Twilight Zone episode titled, "How to Serve Humans". In the story, the main character believes that aliens refer to the manual, "How to Serve Humans" to learn how to be of better service to humans. Later, he understands that the manual is actually a recipe book and he is about to be cooked - literally.

In real estate, we often find ourselves with a similar misconception. While we all believe that our purpose is to be of service to our clients, our industry and our families ... too often, agents and other real estate service providers are just trying to figure out how to cook a deal and sell a house.

Today, I'm sitting another open house for a rental property. We held it open last weekend. I arrived early to place advertisements on cars at the local shopping center to drive traffic to the open house. We advertise it daily and created a website to promote the listing. By the way - if you know anyone in the market for a terrific, upgraded home in Corona, please send them to www.7576WalnutGrove.info ... as of this post we have not found the right tenant for our client.

Here's the point. While our commission will be less than $300, we are giving it as much as much attention as our $1.9 million listing. Why? Because this is a good client who was originally referred to us by another good client. We helped them find this investment property and offered to help them find a tenant. It's really that simple. Our job of serving our client is not over.

At the same time, our team still must reach our goals, focus our attention and support our families. And this means we must sell houses. The key is to balance service with sales. While the idealists among us will argue they are the same, the honest understand the difference.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct (714) 276-7006

Nancy@TheOCExperts.com

www.TheOCExperts.com for Orange County Real Estate

www.OCBankDeals.com for Orange County Foreclosures

www.ZeroShort.com for options available to avoid foreclosure

New Ad Campaign

Nancy Moeller (Seven Gables Real Estate) — Fri, 19 Jun 2009 09:36:39 -0500

For our clients and friends who urged us to design an ad that did not look like a standard "Realtor Ad", we thank you for your encouragement and hope you like the new concept. Our slogal is "It takes more than a sign in the yard to sell real estate", and as always, we welcome your input. It is scheduled to launch in the community based @In Home Magazine Anaheim Hills / Yorba Linda next month.

Todd and Nancy Moeller

Seven Gables Real Estate

www.TheOCExperts.com

Direct: 714 276-7006

Who exactly is making these insane decisions?

Nancy Moeller (Seven Gables Real Estate) — Sun, 14 Jun 2009 11:16:18 -0500

California - No wonder we're bankrupt ...

In Orange County this morning, there are 410 bank owned properties on the market, 998 in escrow and 675 closed in the last 30 days.

Our buyer clients are making offers at or above list price and competing against an overwhelming wave of demand for foreclosure properties.

In other words, demand is off the charts and we are running out of inventory. So what does California do?

California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday. The law is another attempt to force lenders to try and modify loans and keep people in their homes. When will government learn that more time creates greater inefficiencies? Now lenders have another 90 days to allow files to gather dust on someone's overworked, underpaid desk.

Seriously, how long should it really take to review someone's income, assets and liabilities to determine if they can afford a modified payment? Minutes, not months.

And if that doesn't work out, how long should it really take to determine an approved short sale price after appraising the property? Minutes, not months.

If we really want to stop foreclosures, give lenders less time, have them order real appraisals (not broker price opinions) and require faster decisions. If a loan modification is not feasible, provide an approved short sale price, and reduce it every 14 days until it sells.

And if we really want to keep people in their homes, lenders should be required to allow investor short sale - lease backs. In this simple strategy, an investor buys the property at current market value and leases it back to the homeowner. This strategy would stop embarrassing evictions, traumatic relocations and family uprooting.

The net result is the same - homeowner loses their home and must rent instead. The process is far more efficient, keeps people in their homes, creates a more attractive scenario for investors likely willing to pay a premium for the property with no vacancy or tenant placement expenses.

For too long we have been approaching the problem with band aids, instead of looking at the big pictures and implementing a clear, efficient process that looks at the end of the problem, instead of the middle.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

www.TheOCExperts.com

www.ZeroShort.com

www.OCBankDeals.com

Direct: 714 276-7006

A False Bottom? Nope - It's Real

Nancy Moeller (Seven Gables Real Estate) — Sat, 06 Jun 2009 10:16:31 -0500

For homes under $500,000 in Orange County, we have experienced a market shift. Demand is up 45% over last year and at levels not seen since 2005, supply is shrinking and buyers are competing for the same properties. In addition, interest rates are low, tax credits are still in place and prices seem to be stabilizing as multiple offers are creating a 98 - 100% ratios of sold price to list price. In short, it appears we are hovering at the market bottom in this price range.

But is the bottom real? Some industry professionals believe we're experiencing a false bottom. They expect a new wave of foreclosures that will once again force prices to spiral further downward. We don't agree.

Yes, we can expect a wave of new foreclosures - probably several waves throughout 2009 and 2010. However, we say - bring it on! Unlike 2008, we have the demand to quickly absorb this inventory. As an industry, we define demand as either properties sold or properties entering escrow. However, this is merely a snapshot of historical demand, and further, only represents the small portion of buyers who were successful with their offers.

Real, current demand is nearly impossible to quantify, but is what we call "pent up demand". These are the buyers that have been sitting on the fence and are now in bidding wars, trying to buy a property in Orange County. To date, they are been unsuccessful. With less than a three week supply of foreclosure inventory, there is not enough supply to absorb the pent up demand. They will either continue trying or sit back on the fence waiting for more inventory and less competition.

When the new wave of foreclosures hit the market, we should expect to see a demand increase even higher as "pent up demand" translates to trackable demand and more sales. Can we provide quantitative support of our "pent up" demand theory? Only from the trenches. As listing agents, our bank owned properties get an average of 16 offers each. As buyers agents, our averages are better, but only because we provide our clients the right information to make strong offers that get to the top of the stack.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct (714) 276-7006

www.TheOCExperts.com (About Our Team)

www.OCMarketUpdate.com (Real Estate Blog)

www.ZeroShort.com (No Cost Short Sales)

www.OCBankDeals.com (Search Foreclosures)

1st Time Buyer Credit Used As Downpayment!

Nancy Moeller (Seven Gables Real Estate) — Wed, 03 Jun 2009 15:46:09 -0500

They have been going back and forth on this issue, and now we have some good news for first time homebuyers:

On May 29, 2009, HUD announced that the $8000 tax credit for 1st time homebuyers CAN be used to offset down payment and/or closing costs on FHA insured mortgages. "FHA will permit entities covered by Section 528 of the National Housing Act to offer tax credit advances with second liens" was the exact language.

In other words, it will work like a "payday" loan. A second mortgage for the $8000 will be used to "advance" the expected $8000 credit to the borrower so they can use it now.

So far, we don't know how this will work and we'll have to trust our lending professionals to quickly respond to this terrific news.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

(714) 276-7006

FAX (714) 917-2293

www.TheOCExperts.com

Moving on up ...

Nancy Moeller (Seven Gables Real Estate) — Tue, 02 Jun 2009 10:19:16 -0500

Every market shift creates new opportunities for different people. In today's market and in this article, the group is "move up" home buyers. These are people with growing families or growing dreams who would like to sell their home valued under $500,000 and buy a property priced over $500,000.

In Orange County, properties under $500,000 are in a deep seller's market. Demand is at its 2009 high, reaching levels not seen since 2005 and pending sales are 45% higher than the same month last year. High demand, coupled with shrinking inventory have resulted in properties selling within weeks, with multiple offers at or above listing price. Surprised? Despite what the news is reporting, the real estate market is in high gear in these price ranges. In Riverside county, the story is the same, but the price range point is $300,000, instead of $500,000.

On the other side of the market are homes priced over $500,000 and especially over $700,000. Properties over $1 Million account for only 5% of Orange County demand, but nearly 25% of supply. The higher the price, the deeper the buyer's market. Demand is low, supply is high and sellers are motivated. It's a great time to get a killer deal in this price range.

In short, it's the perfect scenario for move-up buyers. You get to sell in a seller's market and buy in a buyer's market. And if good planning and good luck have enabled you to rent your current home, instead of selling - you're even better off. The market contradiction of low prices, low interest rates, high demand and shrinking supply cannot last, and historically signals a clear market bottom.

If you're ready to start exploring your options, give us a call. As market analysts and real estate professionals, we use real market data, crunch your specific numbers, consider your unique goals and help you make well-informed real estate decisions.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct (714) 276-7006

www.TheOCExperts.com (About Our Team)

www.OCMarketUpdate.com (Real Estate Blog)

www.ZeroShort.com (No Cost Short Sales)

Are you a frustrated buyer?

Nancy Moeller (Seven Gables Real Estate) — Mon, 01 Jun 2009 19:55:14 -0500

This morning (Saturday) I am writing during a rental open house. We hold rental open houses for our investor clients to help them find tenants for their newly purchased investment properties. Unlike open houses for sale properties, we find that rental open houses are highly effective for finding tenants. (This is not the point of my blog today, just an interesting bit of real estate marketing trivia.)

This morning a young lady came to the open house looking for a rental because she was frustrated with the buying process. She had been searching since December for a home priced under $400,000 in Orange or Riverside county. Despite what she was hearing on the news and around the office water cooler, picking up properties for 20% below list price or "pennies on the dollar" was simply not the reality. In fact, after placing four offers over list price, only to get outbid on every one, she finally throw in the towel.

Was it really time to through in the towel? Heck no - it's time to use the towel to wipe off the misconceptions and approach the market correctly.

If you are frustrated buyer trying to buy property under $500,000, here are five rules in this market.

Rule #1 - Understand that the list price is meaningless. Most properties on the market today under $500,000 in Orange County are either bank owned foreclosures or distressed short sales. Both types of properties are typically priced incorrectly - either too high, or more often - too low. In fact, I dare say that "Zestimates" are more accurate that the actual listing price, and that's not saying much! So the first rule is simply to ignore the list price. Don't get attached to the number. Don't think about how much lower you can get it under list price. Don't even worry about what nearby properties are listed for, because those prices are probably incorrect, too.

Rule #2 - Focus on current market value. Current market value has nothing to do with prices, and everything to do with recently sold properties. Have your agent pull sold comparables and pending comparables to determine the current value of the property. Here's the interesting thing - an overpriced house is more likely to sell for a discount than an underpriced house. That's right - if you are looking for a good deal, focus on the overpriced properties, not the underpriced properties. Here's why. Underpriced properties get all the attention. And when demand is high and supply is low like it is right now, a bidding war commences and the momentum tends to drive offers over market value. Overpriced properties get no attention. With no traffic, a seller will have to consider any offer, even if that offer is lower than market value.

Rule #3 - Don't be afraid to overbid a property. Despite Rule #2, don't be afraid to overbid a property. I'm a poker player and the most important lesson I learned in poker is that only aggressive players win. Your first goal in purchasing property is to be get your offer accepted. When you are competing against 20 other bidders, your goal is to present the cleanest, strongest offer with the best terms and conditions for the seller. Once you enter escrow, now it's just you and the seller - no other bidders. Now you can perform your inspections and appraisal. In this tight lending market, appraisers are very conservative about value. In fact, it's nearly impossible to overpay for a property because the appraisal will protect you. If your purchase price is $300,000 and the appraisal comes back at $290,000 - simply go back to the seller and ask for a price reduction. In our experience, you'll usually get it. Remember, you are now the only buyer at the table and the seller recognizes that any other buyer is going to have the same issue.

Rule #4 - Don't let "as is" fool you. Yes, I know the scary language in the bank addendum tells us that the bank will not make any repairs, so don't even bother asking. Wrong - huge myth. We represent banks and buyers and have found that they are even more open to repair credits than our regular equity sellers. Do some sellers responds with something like, "No way, read the addendum, absolutely not, how dare you even ask, are you new, what's wrong with you?" Sure, but it's not like they can back out of the deal because you dared to ask! I'm willing to ask scary questions all day long to save our clients a few thousand dollars here and there.

Rule #5 - Get the inside scoop. In the private remarks of our MLS, some very busy agents write very professional notes to other agents like, "MLS updated daily. Don't call for availability. Your calls will not be returned." However, despite their good intentions, they do not update the MLS daily and properties showing "active" are not, or there are already 20 other offers over listing price, or the property is hours away from final bank approval and your chances are at the needle in the haystack level. As professional agents, working for our buyers, we ignore these threats and call anyway. Why would we want to waste our client's afternoon looking at properties that are not really available?

Actually, we email, text and then call. We find that busy agents, are more than happy to send a quick email or text. In addition, by developing good industry relationships, we can usually find out whether there are already offers and if they are over listing price. While agents typically will not disclose actual offer amounts, they tend to come pretty close because they really don't want to process another 25 page offer package that doesn't have a chance.

The Biggest Rule - Work with a professional Realtor who understands the current market, isn't afraid to call agents, ask tough questions, thoroughly researches the comparables and is able to get your offer at the top of the stack for the best properties in the market.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct (714) 276-7006

www.TheOCExperts.com (About Our Team)

www.OCMarketUpdate.com (Real Estate Blog)

www.ZeroShort.com (No Cost Short Sales)

www.OCBankDeals.com (Search Foreclosures)

Taxable Forgiveness of Debt / Deficiency Judgments / Short Sale vs. Foreclosure / Taxable Gain

Nancy Moeller (Seven Gables Real Estate) — Fri, 01 May 2009 15:28:47 -0500

Every day, our team addresses questions related to the following the title of this article which include:

1. What are the benefits of a Short Sale vs. Foreclosure?

2. Can I short sale an investment property? (Yes)

3. Can the debt forgiven on a short sale or foreclosure be taxable income? (Yes)

4. Is it possible to have a taxable gain after a short sale or foreclosure? (Yes)

5. Can the lender come after me for a deficiency judgment after a short sale or foreclosure? (Yes)

This article is intended to provide general information to provide general guidance and dispel many myths on the topics of taxability and personal liability after a short sale or foreclosure. While I am a Real Estate Broker and Certified Public Accountant, this is not intended to be tax advice and you should always consult with your own CPA, attorney and trusted advisors to discuss your specific situation, goals, rights and options.

That said, grab a cup of coffee and hang on tight ...

Definition - Short Sale

A "short sale" is selling a property you own for less than the combined loans on the property, and getting the lender(s) and other lien holders to accept less than they are owed. This is accomplished with a seasoned real estate broker and top notch negotiation team. This can be accomplished at no cost to the homeowner (reference www.ZeroShort.com).

Definition - Recourse vs. Nonrecourse Loans

In California, most mortgages that are used to purchase a owner occupied residence are nonrecourse, but mortgages from refinancing a previous mortgage, equity loans and lines of credit are usually recourse. A recourse loan means that the debtor may remain personally liable for the debt even after a short sale or foreclosure. (see DEFICIENCY JUDGMENTS below)

DEFICIENCY JUDGMENTS

If you have a recourse loan, the lender may still come after you for the balance of your loan even after a foreclosure or short sale. If possible, attempt to get the bank to accept "payment in full without pursuit of any deficiency judgment" during your short sale negotation.

Often, a recourse lender will issue a 1099 for the difference between what they were owed, and what, if anything, they collected. This may create taxable cancelation of debt income. However, there are many exceptions which would preclude a taxpayer from owing this tax. (see TAXABLE CANCELLATION OF DEBT INCOME below)

It's important for you to know that the lender cannot pursue a deficiency judgment and issue a 1099. They can only do one or the other, not both. In other words - you either have to worry about a deficiency judgment or taxable cancellation of debt income, but not both.

If it turns out that your worry is a deficiency judgment, bankruptcy may be an option to explore with your attorney to discharge the judgment. And there are certainly other options to consider including negotiating payments, a reduced amount or some other arrangement.

Taxable cancellation of debt income from a foreclosure or short sale:

In a foreclosure, the amount of "cancelled debt" is generally taxable unless an exemption applies.

Here's the formula:

1. Enter the total amount of the debt immediately prior to the foreclosure.___________

2. Enter the fair market value of the property from Form 1099-C, box 7. ___________

3. Subtract line 2 from line 1.If less than zero, enter zero.___________

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions below.

Here are the exceptions: (Call your CPA to discuss your specific situation)

Mortgage Forgiveness Debt Relief Act of 2007 - Amends the Internal Revenue Code to exclude from gross income amounts attributable to a discharge in the years 2007 - 2012, of indebtedness incurred to acquire a principal residence. Limits to $2 million the excludable amount of such indebtedness. Note: The California version has lower limits and EXPIRED on January 1, 2009, making the entire amount subjec to California Tax unless another exception applies. Check out the details at http://www.ftb.ca.gov/aboutftb/newsroom/mortgage_debt_relief_law.shtml
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets. Insolvency can be fairly complex to determine - be sure to contact your CPA.
Non-recourse loans: A non-recourse loan is a loan for which the lender's only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.

Taxable GAIN from a foreclosure or SHORT SALE.

Yes, at first it seems crazy, but you could likely have a taxable gain on a foreclosure or short sale.

For a recourse loan, the property is treated as being sold for its fair market value on the date of foreclosure. (For a short sale, FMV is the actual net sales proceeds). For a non-recourse loan, the property is treated as being sold for the balance of the mortgage.

In other words, the debt cancellation of a non-recourse loan is included in the sale proceeds or added to the FMV. This means, that while there is no taxable cancellation of debt income, there is a higher taxable gain on the sale.

Here's the formula to calculate the gain:

1. Enter the fair market value of the property foreclosed (or net sales proceeds from a short sale). For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __________

2. Enter your adjusted tax basis in the property. (Usually your purchase price plus the cost of any major improvements.) ____________

3. Subtract line 2 from line 1. If less than zero, enter zero. __________

The amount on line 3 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income.

For non-recourse debt short sales when the seller and buyer require the cancellation of the debt by the lender as a condition of the sale, the debt cancellation is included in the sale proceeds, like for a foreclosure.

SHORT SALE vS. FORECLOSURE

What will be the effects on my future loans?

Fannie Mae backed mortgages will be available to you following a short sale after two years. Fannie Mae backed mortgages will not be available to you for at least five years if you have lost your home due to a foreclosure.

Future Loan with any mortgage company

On any future 1003 Application (Standard Loan Application), a prospective borrower will have to answer YES to question C, in Section VIII, that asks, "Have you had property foreclosed upon, or given title or deed in lieu thereof?" This will affect all future credit rates. There is no similar question regarding short sales.

Credit History

Foreclosures will remain on your credit history for 10 years. A short sale is not report on a credit history. However, both will impact your credit score.

Does it affect my employment opportunities?

A short sale does not appear on a credit report and will not challenge your current employment status. In comparison, if you have a foreclosure on your credit report, some employers consider it a reason for termination or reassignment since many run credit checks on employees for certain positions. A foreclosure can be extremely harmful to your chance of being selected for a new job if your credit report is taken into consideration.

We hope you find this summary useful, concise and worthwhile. Feel free to bookmark the article for future reference as it's a complicated subject that rarely sinks in during the first read. Most importantly, before making a decision regarding real estate, including a short sale or foreclosure - consult with your trusted tax, legal and real estate advisors.

My best,

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

www.ZeroShort.com

www.OrangeCountyBlogging.com

www.TheOCExperts.com

Direct: 714 276-7006

Anaheim Hills Market Update

Nancy Moeller (Seven Gables Real Estate) — Thu, 30 Apr 2009 20:27:45 -0500

Demand has heated up in Anaheim Hills. We currently have 134 properties on the market, 95 in escrow and 26 closed last month. While prices are down 20% over last year, the market is shifting as demand is starting to outpace supply. Coupled with low interest rates and tax breaks, it's now the right time to buy.

# Active Listings - 134

5 Bank Owned
33 Short Sales

# Closed in April - 26

7 Bank Owned
4 Short Sales

# in Escrow - 95

15 Bank Owned
34 Short Sales

# Supply of Inventory - 5 months

Supply of Bank Owned - 3 weeks
Supply of Short Sales - 8 months

Median Price - $538,000 (down 20% from last year)

For information on buying or selling property in Anaheim Hills, visit us at www.TheOCExperts.com

Nancy Moeller, CPA, Broker

Seven Gables Real Estate

Direct: 714 276-7006