Lee's Blog

Are They Comaring Apples to Apples

Lee Ginsburg (Prudential Ca. Realty) — Wed, 19 Aug 2009 23:50:02 -0500

When you and I purchase a new computer we compare the memory, the speed, the screen size: does it come with a camera, DVD player/recorder and more. A home the largest purchase most of us will ever make often is not reviewed with such detail by the people doing the lending and sometimes by the people doing the spending. Yes, they look at the square footage, the general condition, and the location. Appraisers often do not have any idea of the cost of section one termite repairs. The differential in repair costs could be 3%, 5% even 10% of the purchase price. Roofs costs could range between $5000 to $25,000. A home with a two year old roof should be valued higher than one with a 25 year old roof. Appraisers know roughly how old the roof is on the subject property but they don't know the age of the comparables. Same with double paned windows and furnaces. A home with copper piping through out or or with upgraded electric needs to have additional value added to it. All this information does not show up in the MLS. The MLS shows if the kitchen or baths have been cosmetically remodeled but does not go into detail if the cabinets, floors, lighting was all upgraded and how much they were upgraded. Is the home landscaped and does it have automatic sprinklers? This could add $5000, $10,000 up to $50,000 or $60,000. So.. What am I saying. The government has put in all of these new laws to make appraisals non biased but we as an industry have to work together and help them compare apples to apples.

We need to add more info to our MLS data reports. Even comparing selling prices is not a fair comparison if you don't have all of the information. So many purchases have a credit for closing costs and or repair costs. Whole neighborhoods will be overpriced real quick when just a few homes were compared to homes with 3% credit backs. I realize some MLS's are more progressive than others and include some of this information now. Some appraisers call and get this information. We as agents, could make this a very simple process. I suggest we add the following categories to the MLS data: age of roof, furnace, type of plumbing and electric, Cost of section one termite repairs if not completed, Amount of credit back, type of financing. If we put this in an area only available to agents we will be more valuable to our clients and help the appraisers compare apples to apples.

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Buyer's Market???

Lee Ginsburg (Prudential Ca. Realty) — Mon, 20 Jul 2009 00:45:00 -0500

Buyer's Market? You bet it is. I will be speaking about the low end of each market area. On the Peninsula and San Francisco we talk about Single Family homes priced under $700,000. In the East Bay it is below $400,000. Buyer's Market yes but not in the traditional way. Today's buyer cannot expect to purchase a home for 20% off the list price, but they can expect to purchase a home 30-60% off of 2004 prices. Today's buyer cannot expect the seller to take care of all necessary repairs, but the buyer can expect to receive an $8000 Federal Tax Credit and an extra $10,000 State Tax Credit if they are purchasing a brand new home. Today's first time buyer cannot expect to be the only offer, but they can expect to receive the lowest interest rates in 40 years. I think it is just in a different way.

The Real Estate Market in San Bruno, South San Francisco, Daly City, San Mateo is hot just like the weather. Prices are based on supply and demand. Demand is strong as all smart people want to take advantage of the buyers market. By the way the $8000 Federal Tax Credit terminates Nov. 30 of this year. many people do not understand this credit. It is a true gift. When this concept was originally introduced the credit was really a loan and needed to be paid back. In 2009 it became a true credit. You could just amend your 2008 taxes and receive your check in less than 2 months is what many buyers have seen. Other are choosing to claim it when they file 2009 taxes. Inventory is drying up. Please look at the chart. We are seeing less homes for sale today than we had last month or last year. If you remove the short sales that have received offers (maybe 25% of the homes available we are probably close to the inventory of the hot market in 2005. Please not the difference in the higher end and lower end of the markets.

	Belmont	Bur.	D.C.	F.C.	Mill.	S.Bruno	S.Carlos	S.F.	S.Mateo	S.S.F.	S.M. Cty.
Jun. 09 Inv.	62	70	92	34	31	57	73	140	175	89	1554
May 09 Inv.	62	65	100	42	27	65	73	179	178	95	1619
Jan. 09 Inv	41	39	170	26	43	65	64	210	134	109	1452
Jun. 08 Inv	61	63	213	32	52	122	71	184	193	170	1957
Jun. 05 Inv.	36	41	84	15	26	46	42	372	96	61	1013
Jun. 09 Sales	20	18	37	13	12	18	25	178	50	36	420
May 09 Sales	14	14	31	9	8	14	16	139	41	24	321
Jan. 09 Sales	3	6	31	6	2	13	5	81	24	12	163
Jun. 08 Sales	20	21	31	11	18	21	29	275	40	18	376
Jun. 05 Sales	36	32	43	26	19	37	32	211	87	37
Jun. 09 Av. Pr	888,175	1416438	506,145	955,541	910,308	530,588	963,773	995,024	950,807	559,887	945,717
May 09 Av. Pr.	831,250	1164000	493,419	1,004,555	944,875	525,142	963,509	973,483	877,318	933,698	933,698
Jan. 09 Av. Pr	813,333	1,330,208	510459	1,008,000	925,000	580,134	1,122,200	747000	778,124	526,416	683,900
Jun. 08 Av. Pr.	854,318	1,386,086	580,088	1,149,626	1,114,216	637,140	1,123,682	1,248,334	933,032	628,833	1,157,966
Jun. 05 Av. Pr.	987,373	1362750	751,485	1,104,995	981,107	749,864	1,059,218	1,210,739	985,005	756,017

Information deemed reliable but not guaranteed.

What Shall it Be? Loan Modificaiton? Short Sale? Foreclosure?

Lee Ginsburg (Prudential Ca. Realty) — Tue, 16 Jun 2009 02:27:48 -0500

You are among the millions underwater and over stressed. What shall you do.

Your credit will be most negatively affected with a Foreclosure, then a short sale. As long as you stay current on your loan, loan modification should not affect your credit. Your credit score weather it is right or wrong is used by potential employers before hiring, landlords before renting, insurance companies before granting insurance and etc. Depending on your individual situation maybe credit is not important.

My client's father nearing retirement age could live in his son's rental unit and will not be looking for another job said he might pass away before his home in Las Vegas is worth as much as as his loan. He opted for foreclosure.

I had another client, a family with parents and adult children living at home. They came to me for a discussion on their options. They are still working and acquiring things so their credit score is important to them. Being an immigrant family losing their home, the "American Dream", would be extremely emotional and their image amongst friends and family here and back home would be devastated. They struggled making payments, but after family members lost two part time jobs they couldn't do it any more and came to me for help. They pondered the situation. Should they continue making payments on a home that they owe $250,000 more than it is worth. They purchased this home with no money down and realized they would probably never be able to save the 10-20% now required down payment to purchase another home. They opted for a loan modification. They were hoping for some debt forgiveness.

Their bank would not hear from that. But with persistence similar to a short sale approval I was able to get the bank to modify their 6.5% fixed interest only loan to a Principal and Interest loan starting at 3% for five years, 4% for 1 year and 5% for the next 34 years. Before that, the second lender agreed easily to modify their 8.5% loan to .31% yes .31% not 3.15 but only for 1 year. We will follow up with them in a few months. With home ownership tax benefits their new payments are now about the same as rent would be. They are thrilled, knowing they will now be able to afford the "American Dream". During these negotiations I had them apply and they were approved for a property tax reduction with annual savings of almost $3,000.

I was told during this process that each loan holder not necessarily the servicing bank has their own set of ratios and criteria for loan modification. This worked out to be win-win situation. Their lender will receive their full payment over a longer period of time rather than losing several hundred thousand dollars during a short sale or incur thousands of dollars for foreclosure expenses.

We have all read that more than 50% of loan modifications are defaulting. Maybe it depends on the modification. I recently reviewed a loan modification for a client that was in default. In November her loan was modified from 8.4% to 7.9%. Maybe $100 reduction and then they had the nerve to add on another $550.00 per month to bring her current. Her payments were $400.00 more than before the modification. If I did not see it myself I would not believe it. What were they thinking? It is no surprise she is in default again only 4 months later.

www.leesellsmore.com

Old School Pricing Is Out and Price It Right Is In

Lee Ginsburg (Prudential Ca. Realty) — Mon, 25 May 2009 00:38:38 -0500

Many sellers are determined to set their listing price higher than they are willing to accept so they have room to negotiate. With the New Millennium buyers they unfortunately will not get any offers. Today's buyers are more educated than any others. The internet gives the buyers the opportunity to research all public records. They know the price of all the homes in the area that sold recently and are on the market. They know the trends, the cost per square foot; they know what the seller paid for the home and how much they owe and sometimes the improvements the owner has completed. If a home is over-priced the "New" buyer is almost offended that someone would expect them to purchase it at the "Over Valued List Price" so they don't even make an offer. Many don't even waste their time to view the home. That is the old school pricing method. My parents would have done that. Back then information was not so accessible. With today's buyer's research and knowledge they are willing to pay over the list price because they realize they are not paying over the market price. They are just paying over the list price. The old school seller does not understand this new Price it Right philosophy. It is the responsibility and ethical obligation of the professional honest agent to advise the old school seller that their price is too high and to educate them to the New Pricing Philosophy. If not, the seller will not get maximum value. Although the Old School Seller will reluctantly reduce the price after a few weeks it is too late. That property is now stale. It quickly gets a reputation that something must be wrong with it mentality by the buyers and some agents. This property may not deserve the reputation but it sticks. When an offer does come in it will be less than the reduced price and less than the market value. If it was priced right at the beginning most likely they would have received several offers within a week.

Buyers are out there. Homes in San Bruno and South San Francisco priced right are having 75-100 potential buyers view their home during the Sunday Open Houses. Homes not priced right get less than half that. I personally know of eight homes in San Bruno and South San Francisco that went on the market priced right and within the first week received multiple offers and sold at above the Listed Price. Not by much but they sold while others not priced right are still on the market. Sellers must understand that for every week their home does not sell it is costing them .25% or more.

www.leesellsmore.com

One Buyer's Loss is Another Buyer's Second Chance

Lee Ginsburg (Prudential Ca. Realty) — Wed, 06 May 2009 14:01:55 -0500

30% of Real Estate Deals Don't Go Thru. Maybe it is more, maybe it is less, but that is a pretty good estimate. So what does that mean to buyers and their agents? It means the property you lost out to in multiple offers or just because someone was faster than you does not mean it is gone forever. We all know that a ratified offer on a short sale means nothing until the lien holders agree. Many REO's and individual sales are falling through today. Many buyers, especially first time buyers get concerned when a property falls out of contract. They think there is something majorly wrong with the property. Properties fall out for various reasons today, some for financing issues, property condition issues and just plain "Cold Feet". One property that fell out and I was able to get into contract for my client was across the street from a school. An elderly couple's offer was originally accepted on it and upon more thought and said at their age they preferred not to be across from the school and cancelled the contract. For my clients being across the street from a school was a benefit. So you never know. Keeping in touch with the listing agent is not enough. It is important to watch the MLS I have found busy listing agents change the status in the MLS and do not call the previously interested agents. I made an offer on an REO. It fell out; I contacted the agent immediately and requested she submit my original offer. She said she had no record of my previous offer and please resubmit. It leads to wonder if my original offer was ever submitted. That is another subject.

In the past, after the two week contingency period is over we would consider it a solid deal. Not in today's market. Banks are forever requesting more information, buyers continuously get nervous, lose their job or have an accident. One quick story: Two days before closing, loan docs signed and ready to fund the buyer gets a DUI, loses his license and cannot purchase the home because it was too far from his job. I felt like an ambulance chaser but my client jumped at the opportunity to purchase the property he thought was gone. Originally they were upset they lost this home and couldn't get it out of their mind. They compared everything we looked at to that. When I called them with the news they were thrilled and couldn't write the check fast enough. Inspections went smoothly also. I was a hero.

What to do as a listing agent to prevent deals falling out? Keep a record of every agent or buyer that makes contact with you concerning the property and contact them immediately after a deal falls through (maybe even when you get that feeling). When accepting an offer request to see proof of the down payment, question the lender how thorough they were in qualifying the buyer, question the agent as to how serious, motivated and experienced their client is. Have they made other offers? Are they homeowners? How long were they looking for? A listing agent can do and must do the above when they have multiple offers. Price is important but should not be the deciding factor. If you have no other offers ask some questions and keep your fingers crossed.

Every Negative Has a Positive!!!

Lee Ginsburg (Prudential Ca. Realty) — Thu, 26 Mar 2009 21:15:34 -0500

Every Negative Has a Positive
Positives of This Economy

•1. Bay Area Housing Affordability has gone from 16% to 38%

•2. Debt of Americans is Decreasing.

•3. A Large Increase in People Volunteering.

•4. A Large increase in Military Enrollment.

•5. First Time Home Buyers can get an $8000 Tax Credit.

•6. Buyers of California New Homes can get a $10,000 State Tax Credit.

•7. People are able to modify or refinance their loans to an affordable payment.

•8. Businesses have the opportunity to clean up their books and start fresh.

•9. Great Opportunity to Purchase a new car or any other major purchase.

•10. Tax on Debt Forgiveness is waived.

And one of my favorites; you can Buy any Foot Long Sub for only $5.00

Please add to this list of Positives
www.leesellsmore.com

Top 10 Reasons to Purchase Bay Area Real Estate in Today's Market

Lee Ginsburg (Prudential Ca. Realty) — Thu, 26 Mar 2009 20:59:27 -0500

Top 10 Reasons to Purchase Bay Area Real Estate in Today's Market

•1. Interest Rates are near 40 year lows. You can lock in your housing costs for the next 30 years if you buy not if you rent.

•2. Property Values are at 5 year lows. Some areas have declined in value as much as 60%. Bay Area Real Estate has a long history of recovering and appreciating.

•3. There is a large inventory of homes to choose from with Motivated Sellers. Individual owners and banks selling today must sell.

•4. Getting a loan today is not difficult. It is easy. Just show you can make the payments.

•5. Conforming Loan Limits have been increased to $729,750 allowing for low interest rates on these loans.

•6. FHA has loan programs with a minimum of only 3.5% down. Veterans can take advantage of VA loans with no money down.

•7. First time Home Owners will receive an $8000 Federal Tax Credit. (First time is considered not owning a home in the previous 3 years.) Income restrictions apply.

•8. Any buyer regardless of income or ownership type will receive a $10,000 California State Tax Credit when purchasing a new home or condo. It is suggested to use a Real Estate Agent to assist you in negotiating even more with new home builders. First time New Home Buyers can combine both Federal and State credits for a total of $18,000.

•9. Investors can obtain a positive cash flow in some areas with 25% -30% down.

•10. You will be respected as a good and smart American doing your part to help our economy. You will receive a personalized Thank You note from Pres. Obama, Gov. Schwarzenegger, your Realtor and Lender. Oh! In 5 years you will take me for dinner thanking me for helping you make so much money. It is a Window of Opportunity. This is the Bay Area Real Estate's "Perfect Storm". It will not last forever!!! Don't let it pass you by!!!

"It Is Better To Own Real Estate and Wait, Than Wait to Own Real Estate"

www.leesellsmore.com

Top 10 Reasons to Purchase Bay Area Real Estate

Lee Ginsburg (Prudential Ca. Realty) — Mon, 02 Mar 2009 00:39:01 -0600