South Bay-Beach Cities Real Estate: Short Sales Suck

I had dinner with two very savvy real estate agents last night. These agents have been in the business for a long time and know their way around a short sale. They have listed and sold short sale properties. Neither of them will deal with short sales again.

I sympathize with them.  I don't want to deal with short sales either. Banks have no idea how to process these types of sales. Nor do they have the staff to deal with them even if they knew what they were doing. It's a joke. I did a number of short sales in the 90's so this is familiar territory. Last month I closed a short sale after an arduous escrow that saw my buyers ready to bail. The lender would only communicate via fax and refused to take calls even from escrow.

Lenders are just plain stupid at this point. They will not talk to a listing agent who might be able to expedite the situation. They don't use e-mail. Many will only communicate by fax. They change personnel and phone numbers and don't give out new information. They will approve a sale and then change their mind two weeks later. They will try to stiff an agent on commission after they have approved the fee. I know of agents who wound up receiving no money after working for 2-6 months on one of these sales. They believe we should work for free because they made poor choices. Then they wonder why good agents will not work these types of sales. They have no clue about local real estate markets. Yesterday one of the agents had a bank suddenly decide to go to sale rather then approve the short sale because they "knew someone would buy the property at auction for more then the short sale".... talk about out of touch.  <<CONTINUE>>

Closing Escrows.. Making Active Rain Work for You

There are a number of reasons to like Active Rain.   One of the perks of membership for me has been the relationships I've formed with other AR bloggers.  A few weeks ago I finally closed an escrow on townhome in  Redondo Beach, CA.  I worked with the buyers for 9 months by the time the escrow closed.  The buyers had found me through my blog.  We had e-mailed a few times and I answered their questions about the South Bay real estate market.  We started looking at property in May 2007.  We looked at every property in their price range over the next 6 months to the point that even they began to question whether or not they were being too picky.  The answer of course was Yes... but they had just gotten married and were still learning the art of marital compromise.   During the 6 months of our property search I sent them the names of a number of lenders I was comfortable working with in my area.  One of those names was Brian Brady... America's#1 Mortgage Broker. 

The clients were very nice people but boy were they tough. They typified the "new" generation of buyer.  Internet savvy and computer literate. They wanted information and answers immediately.  There were no givens on this deal.  They had both owned property in other parts of the country and the hardest thing for them was finding that real estate is local.  It didn't matter how deals were done in other places.. what mattered was how they were done in CA.  This is a very difficult concept for a lot of buyers who have purchased in other states.  They were experienced homeowners... just not in California. 

They found searching for a lender was as difficult as searching for a home.  They had financed their other homes through their credit unions and didn't understand  that using a credit union from another state was probably not a wise choice let alone a very practical one.  They tried Internet brokers and traditional bank sites.  Ultimately they kept coming back to Brian Brady's blog as the best source for the information they were seeking.  About three weeks before they found the right property I managed to convince them they needed to be totally pre-approved to make an offer.  They finally chose Brian as their lender.

In November of 2007 they found a great property in South Redondo about 3 blocks to the water.  The property was a short sale that appeared to be a slam dunk until we got into the transaction.  The seller was a former lender who thought he had the deal wired.. he didn't.  There were a number of hurdles we had to cross to get this one closed.

Fortunately Brian was on top of things.  We were able to submit the offer to the lender with full approval for the buyers subject to the appraisal and lender acceptance of the short sale.  We waited and heard nothing for about three weeks when the lender suddenly demanded  an appraisal within a few days.    Brian decided to call on  Mike Tarabotto of California Appraisal Solutions Corp as Mike was an AR guy and close to Redondo Beach.   Mike scheduled an appraisal immediately.   I can truthfully say that Mike submitted one of the best appraisals I have seen in many years.  In fact the appraisal was so well done it included the name of the HOA president.  I'm guessing that Mike's appraiser gave her my name and phone number at some point which proved to be of major importance later in the transaction.

After being in escrow for over 2 months with almost no communication from the lender and a seller who really didn't know what he was doing it was time for our side to get tough.  After threatening to walk from the transaction after a seller bluff I  managed to get the number for the person who was in charge of the file.  I passed the information along to Brian who began calling them every few hours.   I won't be able to "prove" Brian's calls were the catalyst to get this sale moving but about three days after he started calling we suddenly received a demand from the lender and could proceed.

I was incredibly impressed with Brian throughout the entire transaction.. he is a pro.  However my approval became complete adoration when Brian drove from San Diego to Redondo Beach to sign the loan docs with the Buyers.   WOW.... I haven't had a lender do that in 20 years.  As it turned out there was a glitch in the paperwork and we would have been in real trouble if Brian had not been at the signing.  As Brian and I were talking with the Buyers while waiting for paperwork... they told us that the reason they picked both of us was our blogs.  They were very impressed with the information we offered and how quickly we responded to their questions.

Brian's latest blog on AR is about Justifying Your Fees .  I can guarantee that after you work with Brian Brady  he doesn't have to "justify" anything.. he earns every cent of his fee.   Thanks Brian... I couldn't have done it without you!       

100 years later ..J.P Morgan Saves the Day... Again

Yesterday JP Morgan Chase literally pulled the rabbit out of the hat and picked up Bear Stearns for $2 a share and a little help from the FED. While it may be too soon to tell.. the hope is that keeping Bear Stearns out of bankruptcy may also keep the financial markets from collapsing.  However like teenage boys with fast cars.. credit markets and banks just seem to keep making the same mistakes over and over.


This is not the first time J.P. Morgan and friends have bailed out the economy. Around the turn of the 20th Century John Pierpoint Morgan was the man who saved the US economy not once but twice in a manner very similar to yesterday's scenario.

In 1895 during the Panic of 1893 the economy was in big trouble. At the time we were a gold based monetary system and a run on gold certificates led to banks closing their doors when they ran out of gold. The US Treasury was in no better shape as it too was about out of gold. The country was facing bankruptcy. JP Morgan and a few friends stepped in and managed to get loans equalling $65 million in gold to save the country from bankruptcy and economic chaos.

The Panic of 1907 was also known as the Bank Panic as banks were failing on a daily basis after the Stock market tanked almost 50% due to over-expansion and speculation that led to a stock market crash in the spring of 1907. Money was tight with little liquidity in the market as credit markets panicked. Hmmmmm sounds very familiar... In October 1907 the market crashed again. This time the crash was because of the shenanigans of one company, the Knickerbocker Trust. The ripple effect from the crash of the Knickbocker Trust failure spread panic to most of the major banks in New York.

Once again , this time at the behest of the Treasury Secretary, J.P. Morgan stepped up to help resolve the crisis. Morgan organized a team to help redirect money between banks, obtain credit and he even bought stock of corporations he thought were sound to stop the panic. Within a few weeks the panic passed and the country averted another major crisis that may well have destroyed the country.

One of the major outcomes of the steps taken by J.P. Morgan was to establish the Federal Reserve Act of 1913 which created the Federal Reserve system that we know today. While I'm often critical of some of the FED policies I think the move they made yesterday with JPMorgan Chase about Bear Stearns was probably the right one. What I find interesting is how similar the situation was in 1907.. then it was one company, the Knickerbocker Trust, that precipitated a massive panic. Yesterday it could have been Bear Stearns that started a total panic. Maybe we do learn a few things from our past mistakes.

California Foreclosures: Send in the Clowns

On the front page of the LA Times there is a story by Jonathan Peterson titled Aid on Home Loans Sought...that should scare every potential buyer along with every homeowner. If the Boys in Washington DC have their way they are going to bring the mortgage market to a grinding halt. These clowns want to pass a bill that would allow bankruptcy Judges to not only alter the interest rate and payment on a mortgage but the amount of the loan itself in an effort to "save" homeowners. What a bunch of garbage! While I feel for those who have lost their jobs, had medical problems or faced a death or divorce.. the fact is they are in the minority.

Most of the helpless homeowners the government wants to save never should have been allowed to buy a home in the first place. They had rotten credit and no financial resources. The house payment isn't their only debt problem. Most have huge credit card debt. They can't afford the payment and upkeep on a home with all their other debt. 90% of them will still lose the house no matter what the government does as they have little sense of financial responsibility. The only thing this little bill will do is make most lenders back out of the market. The few who stay will push up rates by 1.5-2% or more to cover future losses.

Think about it... who in their right mind would make a loan to anyone if it could be altered or foregiven by filing bankruptcy. The courts would be clogged by people filing bankruptcy to have their rates lowered and or the amount of the loan discharged. The only thing I have to say about Sen. Richard Durbin ( D-Ill.) and Majority Leader Henry Reid(D-Nev) is what a couple of twits.

The mortgage market isn't in enough of an uproar. Nope.. so these two have come up with a little program to literally destroy the entire industry. Makes you wonder if they ever get outside and see what is really happening in the world. It also makes you wonder just what those guys are smoking in the back room.

I know when Stephen Sondheim wrote A Little Night Music .. he probable didn't have these guys in mind... nevertheless the lyrics sure seem to fit.....Where are the clowns?...Quick, send in the clowns....Don't bother, they're here....


I don't know about you but I'll be firing off a letter to my representatives in both the House and Senate

California South Bay- Beach-Beach Cities: What's Up With Interest Rates

If you are looking for a new loan to purchase a home in Manhattan Beach or one of the Beach Cities or if you want to refinance your existing loan; you may be wondering where rates are going in the next few weeks. If you have been hoping to get a little insight from the "experts" in the field you may be disappointed.

I just received Dan Green's The Mortgage Reports where he has posted a link to Bank Rate's Trend Report. I love it.. even the "experts" are uncertain about where rates are going...

Bank Rate Panel Views on Where Rates are Headed:
Up:38%

Down:31%

Unchanged:31%

In my Post wondering on is it time to buy I received the following comment from a reader...

Now why would anyone buy in this market that is clearly coming down, just because of interest rates? Interest rates always adjust, cost of houses are fixed.

It's a reasonable question and in a normal market, where nothing except price changes, it makes sense. However I knew from the comment that the person didn't understand my premise. The low rates over the last few years have been because of the FED slashing rates to banks. This is going to change. Inflation, not recession, may soon be the item of concern. Inflation means higher interest rates. The current market is similar to the market of the late 70's and early 80's not that of the 90's... a war that may be winding down, high energy prices, a credit market concerned with liquidity... all of these items shot interest rates up to 17%. Don't think it can't happen again.. it can.    <<<CONTINUE>>>

It's Tuesday February 5, 2008...VOTE!

If you are in one of the Super Tuesday states today is the day you get to exercise your right to vote. There are hundreds of countries all over the world where people are literally dying in order to vote. We are very fortunate to have a process that while driving most of us nuts actually works.

It doesn't matter what your preference for President.. what matters is that you have a choice. Headlines scream everyday about those who have no choice... or are dying because they made a choice.

In CA we have a few propositions that also need to be voted on. How you vote on these will determine some important issues... like term limits, community college fees and extending Indian gambling. In Redondo there is a huge school bond issue. These are all issues that deserve our attention. Your vote does matter.. remember when you lost the class election by one vote?

So just do it.... VOTE!

California South Bay-Beach Cities: Cramer Says It's Time to Buy a House

Redondo Beach Homes under $800,000

Why are you waiting... Jim Cramer says it's time to buy a house ....so it must be time to buy!

Looks as if the recent FED cuts have really stirred the pot. Jim Cramer, who just a few months ago, was telling anyone within shouting distance that buying a house was a stupid move and everyone who owned one should sell.. fast.. has had a change of heart. Not only does Cramer think it might be a good time for the general public to buy a home but he may even do it himself... WOW!

For a change,  Cramer may be on the right track... If you need to buy then now might be a good time. It is definitely the time to refinance if you have a loan that will reset within 2 years. OK..so just take a deep breath and  wait a minute before you start to beat up on me... If you need or want to buy a home within the next six months you should really do some homework. There are more properties available in the entry level in the Beach Cities then at any time in the last few years.

Manhattan Beach:
There are 17 properties under $1,000,000... 9 homes and 8 townhomes/condos.

Hermosa Beach:
There are 20 properties under $1,000,000...10 homes and 10 townhomes/condos

Redondo Beach:

North Redondo:
There are 54 properties under $700,000...22 homes and 32 townhomes

South Redondo:
There are 49 properties under $800,000.. 7 homes, 22 townhomes and 20 condos

El Segundo:
There are 27 properties under $800,000... 9 homes and 18 townhomes/condos.


These are much higher numbers for affordable properties then we have seen in a long time. No these are not 3000 sq ft less then 10 years old but they are the types of properties that most buyers used to buy as a first home. They are starter homes.. homes that start you on the way to your dream home. It made a lot of sense then and it still does... buyers need to get away from the idea that their first home should be bigger and better then the one that was the dream home of their parents. This is what got a lot of people into a lot of trouble.

So why does Jim Cramer think this might be a good time to buy then wait for the mythical 50% decline in price.

 <<<<CONTINUE>>>>

Manhattan Beach, CA: Price Reduced..3612 Poinsettia Open House Friday 12-2

Manhattan Beach Trees: Broker and Public Open House 12-2pm Friday

Big Price Reduction......now $849,000

3612 Poinsettia.. Manhattan Beach California


Join me Friday February 1, 2008 at 3612 Poinsettia, Manhattan Beach from 12:00-2:00 pm . This is one of the lowest priced homes in the Tree section of Manhattan Beach. The home has been maintained and is in average plus shape but is original with no major upgrades. It is a sweet little home... 2 bedrooms, 1 bath 865 sqft on a 4640 sqft lot with a tree view. The home is priced at $929,500. 3612 Poinsettia.. Manhattan Beach California

Call me at (310) 721-7438 or e-mail me for more information on this home or others in the neighborhood.

Southern California Real Estate: Walking Away is Stupid

Last week was quite a week with mortgages bouncing up and down in a matter of days while Wall Street and the financial community tried to decide if the FED move was good, bad or mediocre. All of us in the South Bay-Beach Cities were also trying to decide how this cut and further cuts would affect our local real estate market.

Amid all the breaking news there have been a couple of related stories that tell a lot about the current housing crisis and the mindset of many consumers. Peter Viles who writes the The LATimes real estate blog LALand posted an article about people who were just walking away from their homes. One comment from a person who labeled herself as Condoblue wound up as another post. It seems that Condoblue has a mortgage that is getting ready to go up and her property has lost value.. so instead of making her payment ( which she can do) she plans to buy another home and walk away from her current home because it's good business.

Meanwhile over at CBS ....60 Minutes offered a report Sunday titled House of Cards:The Mortgage Mess. After all the requisite chat about rotten loan brokers and poor helpless buyers Steve Kroft talked to Matt and Stephanie Valdez, who bought a condo that went down in value. Although they too can make the payments they are contemplating walking away from the property... because it doesn't make sense to them to make the payment when prices are going down.

To Condoblue and Mr and Mrs Valdez I have three words... Shame on you! Didn't your parents teach you anything about ethics and values. You made a deal with the bank.. they would give you the money and you would pay them back. I don't believe the bank held a gun to your head or threatened to break your kneecaps if you didn't sign on the dotted line. However Condoblue and Mr and Mrs Valdez believe that only means something if prices are going up. If prices go down it seems that all bets are off. It appears that the only time someone has to honor a commitment or a contract is when it suits them.

What I found even more appalling was the number of people who seem to agree with them. Of the 69 comments about Condoblue most didn't find anything wrong with her stance to skip out on the old lender while she lied to the new lender. On the 60 Minutes site there were over 200 responses to the story. Those who found walking away offensive and wrong are barely in the majority.

It may seem to many that walking away is a no- brainer.. like returning a shirt to Nordstrom or a TV to Costco. But while Nordstrom will still take just about anything back... Costco had to change their policy on electronic items as consumers took advantage of them.

Those of you who say Banks are rotten and justify not honoring a contract by saying the principle is different are not getting the big picture. If you can afford to make your payments and choose to walk away you are taking advantage of not only the lender but all of us. In the case of Condoblue you are also committing loan fraud on your future purchase. For those of you who agree with this I have one word... DUMB!

Do any of you really believe that banks are going to let a bunch of people who can afford their payments walk away from their obligations without a consequence. They may not pay that consequence but I guarantee you will. You think the liquidity problem is tough now.. just wait. Banks make loans and charge for them based on risk. As more people who are not in dire straights walk from their obligations the banks are going to charge those looking for a loan a hefty premium to make up for their losses.

In addition to the costs of borrowing there is another little matter that may have escaped all of you who think that massive foreclosures are peachy because you will be able to buy a house cheap. You might want to rethink that if you work as a teacher, civil servant or for any state or government agency because you like their retirement benefits. If you have a company pension plan or use your 401K to buy stocks it might be a good idea to not be so gleeful. Most pension funds and mutual stock funds have part of their portfolios in financial stocks. B of A and WAMU are publicly traded companies.. if they tank so does any of the stock held by investors. Your pension fund or mutual fund could be one of those investors. That just might affect your benefits.

It's one thing when a little kid does something bad and tries to blame his imaginary friend. It's quite another when an adult decides to take no responsibility for their actions and skip out on their obligations. Frankly I have zip, zero, nada sympathy for Condoblue, Mr and Mrs Valdez or any of the others who are financially capable of making their payments but believe that walking out on a contract is OK. Aside from the fact that you are incredibly immature... you are also twits.


I bought my current home in 1991 at the top of the market. I watched the price go down and down. Yet it never occurred to me to walk away from my home or stiff the lender. It was not an option for me or any of the rest of us who hung on to our homes during some very bad times. I signed a contract and made a commitment. I stuck to that commitment.

That's not to say I didn't believe that ultimately my home would be worth more then I had paid for it... I knew that even as the market was tanking. I knew values would come back. I had a down payment to protect and I wasn't going to walk away from that. Also my parents taught me to honor an obligation. If I gave my word I stood by that. I still believe that is the way to handle any situation business or personal.

So to all of you who are walking away from your homes because you think you only need to honor an obligation when it suits you... Bad behavior is bad behavior no matter how you try to justify it...

South Bay-Beach Cities: Conforming Loan Limits to Increase

The House Republicans and Democrats with the approval of the Treasury have tentatively agreed to increase conforming loan limits to $625,000 from the current level of $417,000 as part of their economic stimulous package. The bill must still be approved by the Senate ans the White House before it becomes law. Speculation is that the bill will be signed and could impact loans as soon as February 15, 2008.

If the package goes through it would be a boost for the jumbo loan market and our South Bay-Beach Cities real estate market. The increase would be great for those who need to refinance and for many buying property at $900,000 or less. Loans up to $729,750 would get the same treatment as conforming loans of $417,000 or less now receive.. that is lower rates.

Brian Brady in a post this morning before the news from Washington hit the headlines thinks that rates may be headed higher instead of lower after The FED meets next week. He may be right.. if the markets don't like the FED cuts in the discount rates.. either too much or too little then the Bond market will be dicey.. and mortgage rates will be up for grabs. I know it's crazy but it's the market.

**** Looks as if the deal has been done and we can expect the president to sign as soon as it officially clears the Senate. BE AWARE.... These rates are only good for one year.. so if you need to refinance now is the time to do so... at least that's the story now...