Maureen Kennedy, Piedmont CA Broker

I've Moved!

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Thu, 27 Aug 2009 21:15:56 -0500

After more than three years here, you can now find my blog at

Hope to see you there!

How to Green Up your Real Estate Practice

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 25 Aug 2009 23:06:37 -0500

I've been doing some file clean up and came across a Google doc I put together last year as part of a panel on Green Real Estate Strategies at the Institute for Luxury Home Marketing last October. Here's the URL to my factsheet on steps you can take to "green" your practice:

http://tinyurl.com/GreenREPractice

New Buyer Resources

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 25 Aug 2009 19:06:58 -0500

If you're a new buyer in this market, you'll want to be prepared, now more than ever! I can offer you:

· A free, comprehensive list of all open houses in the East Bay (not just those in the Chronicle, etc.), sent to your email box before noon each Saturday;

· Free email updates sent to your email box the moment a new home meeting your criteria hits the market or sees a price change;

· A free, no-obligation 1-2 hour tour of any neighborhood you think might meet your needs (or a referral to a deeply experienced agent who covers that area, if I don't), stopping into a couple representative homes;

· Access to a website that includes:

-a review of typical buyer costs for homes at various price points;

-a list of strategies you can use to increase the chances your offer will be accepted, beyond just offering more money;

-a table identifying East Bay schools with high API scores, with click-thrus to sites with more information about those neighborhoods;

-a list of five deeply experienced lenders you might call for ideas and insight on the market and your situation; and

-a free package of buyer factsheets from the National Association of Realtors.

Just give me your email address and I'll get it to you!

A Good Time to Sell?

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Sat, 22 Aug 2009 13:15:53 -0500

You know me well enough to know that I'm a straight shooter, more interested in making sure you have the right advice and insight than in getting a check in my pocket. My reputation depends on that. And it's important to know when market trends are counterintuitive. "Everyone knows" that now's a bad time to sell, if you can avoid it, right? Wrong.

Here's a scenario for you: Assume a household in a great house in Crocker Highlands. They've always wanted to move to Piedmont when their children get to school age. Prices have dropped 15% since the peak, though they are way ahead since they bought in 2001. They really need that fourth bedroom.

If they sold the Crocker house and bought a more expensive home in Piedmont in 2006, they would have sold high and bought high--but they were fully prepared to do it. If they sold today, they would sell "low" and buy "low." The key takeaway is that the dollar price discount on the more expensive Piedmont home is larger than the price discount they'll see when selling the Crocker home [assuming a 15% lower price in both cases].

Let's say the Crocker house will sell for $725,000 (was worth $850,000 at the peak). Including lower brokerage fees and transfer taxes, they'll net about $120,000 less than if they'd sold in 2006. But if they buy a home in Piedmont for $1.5 million (was worth $1.750 million at the peak), reflecting the lower fees and transfer taxes, they'll save about $265,000, compared to a 2006 purchase. Between the two homes, then, they are about $150,000 ahead of where they would be had both transactions closed in 2006.

And don't forget ongoing mortgage and insurance costs. That less expensive Piedmont home translates into about a $15,000 a year savings compared to the carrying costs of that more expensive home not bought in 2006. Email me for a copy of the spreadsheet.

How smart is that?

An even more attractive scenario is moving down-Piedmont homes have held their value quite well through the downturn. The same cannot be said about the condo market in general, nor homes in much of the rest of the country, and particularly in typical retirement areas like Arizona, San Diego and Florida. Unless you're planning to retire anywhere in Texas, in Denver, Detroit, Charlotte, Salt Lake or Philly (according to today's Wall Street Journal), you'll likely be selling "low" and buying "super low"!

Nagging Items Bogging You Down?

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Fri, 21 Aug 2009 18:01:01 -0500

OK-here's a bit of a diversion. Did you hear knowing moans around you when you saw Julie and Julia--the part when the four friends are out for drinks and one says something like "I asked my personal assistant to go to Safeway and buy pancetta for my big dinner tomorrow, and when I got home she said, ‘Oh, Safeway didn't have pancetta... ‘ I asked her ‘well, did you go to Piedmont Grocery????'"

I so get that "I want you to take care of it and not make me take care of it" feeling.

And Winans Construction gets it too, when it comes to home maintenance. They've just set up a handyperson service to complement their remodeling business (see www.winconinc.com for a portfolio), so make your list, check it twice, and then contact them at 510-653-7288 or info@winconinc.com and they'll take care of it.

Mention my name and they'll take 10% off your gutter cleaning bill through September 30^th. You know that deferred home maintenance can be the definition of penny-wise and pound-foolish, right?

The Buy vs. Rent Choice

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Thu, 20 Aug 2009 18:18:23 -0500

Recently, a client I'd been working with for quite a while mentioned that he was thinking that he'd stay here in the Bay Area for 2-3 years, and then move away. Always paying attention to serve my clients' best interests, I said, "hey; we should rethink this home purchase gameplan, then."

We talked about what is known (and NOT known) about market trends for the next couple of years, for his locations and for his price point, because these can be very different than for other locations and price points. We talked about transaction costs--he had already seen my buyer's costs spreadsheet each time we've made an offer, unique for his city and purchase price, estimating escrow fees, city transaction fees, inspection fees, and homeowner insurance fees, among others.

But he wasn't thinking about these as transaction costs to be recouped, and definitely wasn't thinking about what the "seller net proceeds" sheet would look like when he went to sell--the brokerage fee, staging fees, and recordation costs. That is, between the 2% of costs to buy and 6.25% of costs to sell, excluding loan fees, and any surprise repairs and staging, he needs about 10% appreciation in the coming three years to make buying pan out.

While he hasn't yet made a final decision, I suggested that he take a look at two sites:

http://realestate.yahoo.com/calculators/rent_vs_own.html includes an NPV analysis, allows you to enter inflation and discount rates, clearly reflects interest rate deductibility, and allows you to do the math over a range of periods ("what if we move in x years? y years?"). But doesn't seem to reflect transaction costs--the not-insignificant costs of actually buying, and then selling, the house.

The New York Times has a nice tool which DOES allow you to including these figures if you go to the "advanced" menu (and who wouldn't, given that the basic menu leaves so much of the analysis out??). See http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html#

I can't tell if the New York Times site reflects the deductibility of your mortgage payments--it references "owner fee" deductibility, just under the HOA fee field, leading to confusion. While there are many who would argue that one shouldn't make choices based on tax effects ("I'll buy lunch for everyone because I can claim it as a business expense!" Not!) there's no doubt that the net cash flows change depending on your tax bracket and so on.

So if you're on the fence about buying vs. renting, take a look at these buy vs. rent calculators!

What I've Been Up To--

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Wed, 01 Jul 2009 21:19:36 -0500

This quarter, I've closed all my transactions (it's not uncommon for deals to fall through these days!), assembled market info for clients trying to decide how best to meet their real estate goals (should we sell now or later? Buy first and sell second?), wrote ''green real estate'' stories and the quarterly market update for the Piedmont Post, pulled together comparative market analyses for clients seeing reductions in home equity lines, advised clients thinking about large or small renovations, provided on-the-ground insight to national housing advocates regarding how efforts to moderate the financial crisis were really working, was a guest speaker on a national ''webinar'' on upscale marketing strategies for the Institute for Luxury Home Marketing, helped the friend of a friend buy a home, notarized documents for clients, brought coffee to the monthly Piedmont High School Parents Club meetings, gave neighbors my list of five excellent mortgage professionals, and provided the champagne for the PAINTS Birdhouse Gala.

The job of a realtor has changed dramatically in the last year. We need to be up on new regs from Fannie Mae, Freddie Mac and FHA; we need to keep a calm head, comfort our clients, and work well with our seller side-colleague when the lender asks for another appraisal the day we're supposed to remove our contingency; we need to cajole homeowner association managers to fill out forms they've never been asked to fill out before, and probably research title records for the answers so the transaction will continue forward; and we need to help our clients get beyond the emotion of the moment and agree to make one more counter offer hoping to get an agreement.

So don't be shocked if your broker's jaw drops if you ask about reducing a brokerage fee down to 4%, arguing that there are so many licensed agents out there and so few sales to be had.

The workload is heavier, the requests for ''free'' help are more numerous, and solicitations for community donations more important than ever.

(But remember that for the last several years at our price point, the vast majority of sales involved a 5% brokerage fee, rather than 6%, unless your representative pays for staging.)

Non-Profit Plant Sales!!

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Wed, 01 Jul 2009 21:17:59 -0500

I missed the great article in Bay Nature magazine recently about area plant sales. They have a great web resource with links to the non-profit organizers, however, and most organize several sales per year. So click through and see who's got a sale this weekend!

Home Price Declines Moderating--NYT--It Must Be True!

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Wed, 01 Jul 2009 21:15:48 -0500

Click here for the cool graphic I've been including in the last few updates of home price trends in 20 metro areas, based on the Case-Shiller Index. Those curves are pretty consistently trending up--roughly what I'm seeing on the ground in this market. And these figures are through the end of April. They buttress a piece on price trends in yesterday's New York Times.

Repaint the House

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Wed, 01 Jul 2009 21:09:58 -0500

We repainted our trim in Piedmont not long ago (now have a Warm Brick thing going rather than Forest Service Green). The brown paint for some trim and the gate has a touch of red in there, which feels like Mexican mole sauce if you stare at it long enough. Yum!!

If a paint job is in your future, read this story from HGTV, and think about calling Angelisse Karol for consulting (ask me for her contact info) or maybe stop by Scout Hardware in Temescal near Donya Tomas. Scott Silvera held an evening info session a few months ago on the topic, and sells zero VOC paints for exterior applications.

Put September 15th on Your Calendar Today!

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Wed, 01 Jul 2009 21:05:35 -0500

That's the deadline for submitting an application for a downward adjustment in your property assessment (resulting in a reduction in property taxes). Two great resources are:

--the county assessor's site, which includes all the forms and deadlines, and

--this video</a> from the state Board of Equalization, which walks through the process piece by piece.

Remember that only your ''Prop 13'' property tax will be affected by a reassessment; the other charges on your bill (for instance, city and school parcel taxes; and 911, East Bay parks, library bond payments) won't decline. And if you, like we, bought your home a dozen years ago, your assessment is unlikely to have increased in the intervening years to current market value, much less to higher-than-current value.

I'm happy to run comparables for you to build your case, or to see if an appeal is worth it; just ask.

This is likely to be the first year that Piedmonters have a prayer of arguing for a tax reduction, given that prices had not yet dipped by January 2008 (this year's assessment is based on Jan. '09 value). Let me know if you were successful last year!

Market Downturn Hits Piedmont Market

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Wed, 01 Jul 2009 20:58:06 -0500

2Q09 Market Update

After several years of steady prices (sales prices had been quite flat at around $600/sf since our market peak in November of 2005), and a winter and spring of very few sales and prices all over the place, this spring market makes the market direction clear: Prices are down as much as 16-18 percent compared to a year ago (see detailed spreadsheet at the bottom of the page).

I think our market has been affected by several factors unique to our high-end market. First, market distress has been focused below our price range, but those sellers are our move-up buyers. If they are having trouble selling, they have trouble turning around and buying. This pattern applies to less-expensive homes in Piedmont as well--their owners were very frequently the buyers of more-expensive homes in town.

Second, Piedmont buyers are often in law, finance, and corporate management, and each of these sectors is under great stress in today's economy. If high-income colleagues are being laid off, is now the time to commit to a Piedmont home and a hefty mortgage?

And third, Piedmont homes typically involve large mortgages, which are much more difficult to secure these days. Even if a buyer had a 50% downpayment for a $2 million home, securing that million dollar mortgage is not a piece of cake (but definitely can be done!).

There are plenty of reasons to buy in Piedmont, however, and these are arguments I lay out every time I market or hold open a Piedmont home:

--Props B+E passed, securing funding for our great schools and insulating them to a large degree from the state's budget woes;

--our free public schools offer great alternatives to private schools and their perennial inflation increases;

--our 911 services are exclusive and just a few blocks away, so no need to worry how long an ambulance will take to respond to a heart attack;

--our ''it takes a village'' lifestyle is very comforting to many; and

--our Census-tracked demographic mix (everything from typical commute times, to proportion of working moms, to ethnic and racial diversity) is more attractive to many households than similarly high-end communities through the tunnel, for instance.

Clearly, these arguments have traction. Our home prices have fared well by comparison (meaning in part, that if you purchased last summer, your investment here did better than your old home elsewhere would have). Average prices for homes in Alamo and Blackhawk sit at $376/sf for 2Q09 (a 34% decline from 2Q06), compared to $509/sf for all of Piedmont's market this past quarter. And the number of successful sales is down 55% in those towns, compared to our sales, which are down only 25% compared to 2Q06.

Looking only at Piedmont, the average home price was $1.401 million this past quarter, compared to $1.714 million for 2Q08 (based on data from the MLS). On a per square foot basis, the average, as noted, is $509/sf for 2Q09, compared to $605/sf in 2Q08. Homes are selling in an average 38 days, and a few more homes sold this last quarter, compared to the second quarter of last year.

Not too bad when placed in national context (see next post) and in light of the highest unemployment rate in a generation. Looking regionally, prices in Oakland were up 14.1% in May compared to April (but down 63.6% compared to May '08 [we saw a sneak preview of May data recently at the Oakland Assoc. of Realtors]); those in Alameda County more broadly were up 6.1% in April over March (but down 25.1% compared to April '08); and those in San Francisco were up 7.7% in April over March (but again down 23.2% compared to April '08).

Overall homeowner affordability is up dramatically in California compared to the recent past--moving from a point where only 25% of homes were affordable to someone with a median income in the state, to very near the national average of 70% affordability.

For information about reassessments and property tax reductions, read on-----

How 'Bout those Water and Energy Savings?

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:59:03 -0500

Recall that we've installed a number of energy- and water-saving devices in the last year or so (I write as the floor refinishers are getting to work--the end is in sight!).

The tankless water heater went in a couple of years ago, and the attic insulation was installed almost exactly a year ago. But the low-flow shower heads and faucets, and two-flush toilets; the auto-on and auto-off light switches and the LED or flourescent lights; the gas fireplace replacing one of the wood-fired ones; the low-VOC paints and high recylcable-content tile--that's all in and the asbestos is out. The utility rebates are in the bank, or, in the case of EBMUD, sitting as a big credit in our account.

The bottom line on the water and energy bills: Since mid-January, our water consumption is down 25% compared to a year ago, and for the first three months of this year, our PG&E bill was $650 less. We're still working on unplugging those computers!

Call or email if you'd like referrals for great color and design advisors, woodwork strippers, cabinet refinishers, painters, countertop installers, floor refinishers, plumbers, tilers, dry rot repairers, window replacers, asbestos removers and heating installers.

The team, led by contractor Bruce Paoli, did really wonderful work. And because we used scrip to pay for much of the materials, the Piedmont schools benefited as well. Ask me how to do that!

Think College Now.

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:57:44 -0500

If you haven't given to the Piedmont Annual Fund or the Piedmont Ed. Foundation, now's a great time to do it (and while you're on the Ed Foundation site, sign up for the Docter family special preview of Pixar's new film Up on May 2nd). If you want more info on Piedmont school funding, click here.

And if you want to help compensate for cuts in state funding in communities that don't have parcel tax funds and major donations to turn to, consider a donation to Think College Now.

TCN is a public elementary school in Oakland’s Fruitvale district with a focus on college prep. Both Pacific Union and I have been major donors for the last couple of years. Beginning in the kindergarten classroom, TCN is determined to give its students – 91 percent of whom are low-income – the same opportunities available to kids in communities like Piedmont. The school is succeeding – it was one of three Oakland schools to win a California Distinguished School Award in 2008 – but doing so against great odds. Faced with severe state cuts, TCN's already tight budget stands to take a $150,000 hit next year--for that single school alone. These cuts endanger the very things that distinguish this amazing school: dynamic after-school music and art programs, field trips, and small, personalized class sizes.

If you'd like to attend the auction/fundraiser this year, scheduled for Thursday May 7th at the Piedmont Community Center, email me. If you'd like to make a donation, click here. The teaching team, and the kids, really need our support.

Another Cool NYT Housing Graphic

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:53:09 -0500

The Spouse saw this one--it tracks the rate of increase in housing prices over time on a national map in a red-for-hot and blue-for-cold fashion. See it here.

Case-Shiller Indices for Top-20 Cities

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:50:01 -0500

Here's the link--

Some MLS Insights

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:49:09 -0500

No brokerage represented more sides in the Piedmont market last quarter than Pacific Union. When representing sellers, we offered accurate pricing advice and strong negotiating skills--our sellers garnered sales prices very close to their original asking prices, and sold in about half the time compared to the competition. That's what you pay your brokerage firm for.

Houses that stayed on the market for more than three months sold for an average 20% off the asking price. If you have all the time in the world, go to the competition. If you want to sell your house, come to me and the Pacific Union team!

Need Notarization? Save the Date--April 29th

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:47:50 -0500

Well, the kids are going overseas for break with The Spouse, so I need to get one of those permission letters notarized. For the godmother of a friend last week, I went down to Hayward and notarized documents that had originally been drawn up in 2004--and were just waiting for a notary (we hope before the serious life event). You've got some of these hidden away? Bring them out and come over to my house on April 29th starting at 7 pm for free notarization. Email me to let me know you're coming.

How Much is the Piedmont Location Worth?

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:45:17 -0500

Buyers love Piedmont for a variety of reasons: its great schools (#68 in the nation according to US News and World Report!), close-knit and diverse community, easy commutes, proximity to all the City and East Bay have to offer, our locally controlled and delivered city services.

In fact, for an average 3-bedroom/2-bath home, buyers were willing to pay $324K more to live in Piedmont in 2008 than just over the border in Oakland 94610,11, and 18. This figure has varied between $350K and $320K over the last several years, even as home prices rocketed up. Lots of clients ask me how they should think about the extra price, relative to Piedmont's great schools.

Buying a Piedmont house involves an investment; buying private school in Oakland is an expenditure: You get the Piedmont investment back when you sell the house. Buyers pay $324K more, but in exchange, they break even on a nominal basis in the second year with one child in school (that is, added mortgage and taxes on an after-tax basis are less than the cost of typical tuition, with inflation, in year 2. And this excludes the fact that you'll eventually sell and get your investment back too).

Families gain $727,000 in net present value terms over a 12-year residency with three kids, including the eventual sale, compared to living in Oakland and paying for private schools (as I always note in discussions of this issue, thousands of families don’t have that choice. But for those for whom that is the choice, those are the numbers).

With drastic budget cuts facing neighboring school districts and the price of private school marching relentlessly upward even as Piedmont home prices drift down, now may be a great time for friends and family to consider a purchase here in Piedmont. Feel free to email me for a copy of the spreadsheet, and for access to my Piedmont Info website.

Annual Get Outdoors Plug---

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:43:34 -0500

Sibley's gorgeous right now (well, as soon as the rain lets up). Up Snake, left on Skyline about a mile. Bring the dog and follow other hikers. On a foggy day, it's just like Lord of the Rings.

The Oakland Rose Garden. Bring the computer and the kids to get work done while they nose around or look for frogs. Grand to Jean St. Then stop in at Ace Garden and ask Kevin Numoto (my landscape stager) or Wyatt Alt (my son) for help.

The Point Reyes Peninsula. Stop by the Inverness house on your way out for a nice hike and great views of the Pacific Ocean. We're there most weekends---

Piedmont Update, and About those Appraisals-----

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 14 Apr 2009 19:42:20 -0500

Ten homes sold in the first three months of 2009 in Piedmont in an average 65 days, compared to 16 last quarter and 11 in the first quarter of 2008 (see details at the page bottom). The average price of a home was $1.867 million ($570/sf), a dramatic rise from last quarter's figure of just over a million. In contrast to then, nearly half of this quarter's homes sold for over $2 million. Two of the sales were REO or bank-owned properties, and most of the high-end homes had been on the market for several months.

Let's get real, though--it's folly to base conclusions on so few sales in such a small town. These homes included some that offered much more square footage than the tax record reflected, one whose buyers paid nearly $100,000 of the sellers' costs (I've adjusted that effective sales price in the attached spreadsheet), and several with fabulous grounds or major structural issues. What does average mean in that context?

Of more interest to me have been new developments on the appraisal front. A number of you have received notes from your home equity line lender reducing, freezing or even eliminating your line of credit. Our neighbors in the surrounding communities have been seeing these notes for the last several months.

In some cases, lenders are trying to get out of this market. In others, lenders happily go back to thestatus quo ante when you push back a bit with thoughtful comparables from your deeply experienced local realtor. In others, your current lender, or perhaps a new lender you choose, wants an appraisal before they'll up your limit again (and if you're right and the value is there, ask in advance that the lender pay for the appraisal).

On the appraisal front, beginning around April 1st, new rules went into effect strengthening the arms-length relationship among lenders, mortgage brokers, and appraisers. Among the myriad effects and implications is that appraisals for Piedmont homes are increasingly done by out-of-area appraisers.

I saw an appraisal last week that included a Piedmont-Side-of-Montclair (i.e. Oakland) home among the comps. A deeply experienced local appraiser says that with so few homes closing in Piedmont, and with lenders understandably super-sensitive about value, they are willing to trade off ''true'' comparability for recency. Thus, a '20s stucco home with lots of traditional detail in a great central location was compared exclusively with recently closed homes that all happened to be ranch style, and most were located up in the Montclair-Side-of-Piedmont area (i.e. Piedmont). One recently closed home in a great location across from a park in town did not ''appraise'' for its contract price, even though the highest of the three offers garnered with just one open house was (drumroll please....) at asking price.

Maybe the differentials among prices for older homes vs. newer homes, and homes on wide streets vs. homes on narrow windy streets, and homes with Bay views vs. homes without Bay views, and homes with easy walks to all schools vs. homes that require a carpool are just over the top. Maybe it is more about square footage. But these factors have formed the warp and weft of the Piedmont real estate market for generations. We may be at a flexion point in property valuation and things may go back to a new normal shortly, but for those purchasing now, refinancing to today's great rates, or trying to protect a home equity line, the situation is clearly driving many crazy.

I'll never forget talking to the mother of a parent at our child care center in Washington DC a dozen years ago. She'd grown up in Piedmont and raised here children here. We mentioned where we lived and she said, ''ah, that's a good street'' and went on to clarify why she thought that was the case, with remarkable specificity. She was thinking back to 1979.

One final note--our MLS has signed on for detailed market analysis from Clarus Market Metrics--email me if you'd like the Piedmont-wide trend graphics over the past two years and I'll send you the multi-page pdf document. If you get ready to buy or sell, we'll narrow down the analysis to your portion of the market to help in pricing or development of the offer.

Feds Create Two Mortgage Aid Programs

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Fri, 13 Mar 2009 12:15:37 -0500

Ten days ago, the Treasury Department announced two housing programs for households having difficulty paying their mortgages. The programs target two different groups:

--those who could handle payments if only they could refinance to today's low interest rates, but can't because their first mortgage is more than 80% of the current value of their home, and

--those who need more drastic action--a modification to their loan terms--to stay in place.

The refi program is called Making Home Affordable and the loan modification program is called (drumroll) the Home Affordable Modification program. Both help only owner-occupants; neither will help those who realistically can't afford the house they own, even with near-term assistance.

The Making Home Affordable Program

To qualify for the refi program, owner-occupants must:

--owe no more than $729,750 in a first mortgage on the home;
--that loan must be owned by Fannie Mae or Freddie Mac (see this site and this site to see if Fannie or Freddie owns your mortgage);
--that first mortgage must be no more than 105% of the current value of the home (for instance, it might be $105,000, on a home now worth $100,000--until 3/4, your loan amount could be no more than $80,000 on a home now worth $100,000. That change in policy is huge.).

Because lenders already have most of the info they'll need to review a refinance request, it's assumed that the refi program will go into production very quickly.

A client told me recently that Countrywide offered a similar interest rate reduction after just a brief, proactive ''I don't have a problem now but may have one in the future; what should I do?'' call. And that was a month ago. I've heard estimates that a short sale or default typically costs a lender a minimum of $50,000, so a judicious refinance may create big savings over that possibility.

The program currently is scheduled to lapse in June, 2010.

The starting point is a nice step-by-step eligibilty tree here.

Home Affordable Modification Program

This is a bigger deal--the lender and the federal government together will split the cost of reducing the interest rate or the principal on a loan until payments represent no more than 31% of an owner's total income.

To qualify, owners must:
--be having difficulties meeting their mortgage payments (but don't have to be delinquent);
--must have a first mortgage under $729,750.

How it works:

If you qualify and can demonstrate hardship (through bills, tax returns, pay stubs with declining income, layoff notices, etc.), your lender will reduce your mortgage payment down to 38% of your total income. In turn, the federal government will further reduce it to 31% of total income. This lower payment will stay in place for 5 years, after which your interest rate will creep back up at 1% increase per year to today's rates (as if you refinanced today). The payment reductions are achieved through a combination of interest rate reductions, and, if necessary, amortizing the loan over a 40-year period rather than the usual 30 years.

Both the lender and the homeowner would get incentive payments if the modification takes place before the homeowner misses a payment, and if the loan, after modification, stays current. You may wonder about your second mortgage; you're eligible for either of these programs even if you have a second mortgage; lenders in the loan modification program get incentives for convincing the second mortgage holders to remove their lien (that is, forget the loan. Without this program, the argument goes, the second mortgage lender would lose everything anyway if there were a foreclosure).

Here is the Treasury summary of the program, and here is a step-by-step eligiblity tree.

Borrowers with high debt loans may be required to undergo credit counseling.

This program is scheduled to lapse in December, 2012.

The government factsheets are emphatic that borrowers should NOT need to pay for consultant help for either of these programs. A list of Oakland area HUD-approved housing counseling agencies can be found here. The feds urge that you be patient in pursuing either of these remedies--they estimate 10 million households will be helped by the two, but I imagine many more households will be applying, asking questions, and tying up the line.

If you think neither of these programs is likely to be helpful for your circumstances, call me (and then call your accountant or tax professional) to discuss the idea of a short sale. In a short sale, we assemble a detailed package of material for your lender, put your home on the market for its current market value, sign a contract at close to that price, and then work to convince your lender(s) to absorb at least a big chunk of the amount outstanding on your loan(s). This is an instance where all my experience running federal mortgage programs in the Clinton Administration comes in very handy!

It's a complicated process, particularly if you have both a first and a second loan (and thus two lenders to negotiate with). However, we've heard of short sales involving hundreds of thousands of dollars in concessions on the part of lenders in the East Bay Hills.

I probably sound like your mother when I say it may make more sense to get going on the process rather than avoid it for a few more months, and live with the stress.

As always, let me know if I can help, or if you want to talk through some options!

And What'ya Gonna Do in that Remodel?

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 10 Feb 2009 15:29:04 -0600

Here's a list of lists from Realtor magazine, based on input from industry and trends specialists:

Rehab Must-Dos--

     -Universal bath design--roll-in showers and decorative grab bars;
     -A storage-rich kitchen island;
     -A sealed shower with multiple shower heads;
     -Stainless steel appliances.

Kitchen and Bath Features Buyers Want--

     -Separate shower enclosure in the master bath;
     -Eat-in Kitchen;
     -High-end appliances;
     -Granite countertops;
     -Kitchen island.

Retrofits Buyers Love--

     -Tile a backspash;
     -Add undercounter lighting;
     -Paint upper kitchen cabinets;
     -Add glass doors to some upper cabinets;
     -Change out cabinet hardware (Expo's having a 30% off sale now!).

All that News Make You Want to Scrub the Floor?

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 10 Feb 2009 15:27:38 -0600

Check out this month-by-month list of home-maintenance items from Real Simple magazine. They have two different lists of lists here and here including a cute Periodic Table for household cleaning.

Well, Then; Save Money on Taxes

Maureen Kennedy (Pacific Union Real Estate-GMAC) — Tue, 06 Jan 2009 01:20:21 -0600

A nice little reminder of new credits (including the first-time homebuyer tax credit) and tax-saving opportunities is at this IRS site---