Archive for April, 2008
California Median Price down 29% in March, down 20.9% in Santa Cruz
April 30, 2008
This news is a few days old, so maybe you heard about it. Somehow, I missed this one, I’m a few days behind in reading the real estate news. But check out this news from C.A.R., the California Association of Realtors:
[From the California Association of Realtors - median home price fell 29 percent in March ]
Home sales decreased 24.5 percent in March in California compared with the same period a year ago, while the median price of an existing home fell 29 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
It’s a pretty interesting article, with lots of numbers to pick apart. Some areas are actually seeing median price increases - they provide a separate link with March 2008 home prices for various California cities and counties. According to C.A.R., home prices are down in Santa Cruz county by 20.9% And I know what you’re thinking - blame Watsonville. My broker did, at our weekly office meeting. The C.A.R. data says otherwise - the only city it breaks out in Santa Cruz county is the City of Santa Cruz, where it reports that median home prices have dropped 17.9% since March 2007.
I prefer to look at this as a good-news, bad-news kind of thing. The bad news is that if you need or want to sell your house, C.A.R. has just provided ample proof (again) of what you might have maybe thought: now is not the time to sell your home. Also, you might want to make sure your home equity line is still available, because your lender may get wise to the fact that you probably have a lot less home equity than you thought you did.
The good news, of course, is that lower prices creates a lot of buying opportunity that simply hasn’t been around for years and years. Many people who have been shut out of the market or who have been sitting on the sidelines are now seeing that their day may come. The Center for the Continuing Study of the California Economy put out a report in February 2008 about rising affordability of California homes. According to that report, we are still far away from being an “affordable” place to live, but that’s the price of Paradise.
Posted by SantaCruzBroker at 8:29am
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Real estate lawsuits - your ticket to real estate riches
April 26, 2008
I just closed escrow as the buyer’s agent on a REO property - that is, the house had been foreclosed on, and the bank owned it. When a bank is selling a property (or, typically, it’s an asset management company that sells the property for the investor, marketed on the MLS using the services of a Realtor), there are few disclosures made about the property - because, of course, the owner of the property is an investment firm in Abu Dhabi or the pension fund for a plastic toy factory in Shenzhen, China - and what, really, could such an owner know about the property?
Exactly. So when you’re buying a property from the bank, you really have to be extra diligent in your investigations of the property. In this particular case, we stumbled onto some significant material facts that had not been disclosed to us by the seller - which is not surprising, because I’m sure the seller didn’t know. The buyer and I were at the property measuring the rooms or something, and one of the neighbors came over to have a chat. “Do you know about the lawsuit?” she asked.
“Lawsuit? What lawsuit?” I replied. That is what you really like when you are starting to wrap up your investigation of a property - to hear that there had been a lawsuit. “Oh, don’t worry,” she said, “it’s all been settled now.” She went on to say that there had been, in effect, a property line adjustment, and the subject property (the one I was helping my client to buy) had relinquished some “useless” land behind the garage in exchange for some use of some of the neighboring ’s land, which was a non-exclusive easement benefiting the subject property but had been used for years and years exclusively by the former owners.
Fair enough, and any such lot line adjustment would, naturally, appear on the title report. The problem was, we had not been given a title report yet, although I had requested a copy about a week prior. As often happens with the purchase of an REO property, the title & escrow company is some out-of-town outfit, often from L.A. I immediately contacted them, and said, hey, we really really need our title report, now. It took them several days before they actually coughed up a title report.
I forgot to mention - this neighboring parcel - it’s a vacant lot, and it’s for sale. At some point during all this, I had talked to the listing agent for this parcel, and he said he’d heard about the lawsuit, and said he heard that there were some un-recorded grant deeds lying around, but didn’t really know much about it and would check with the owner and get back to me.
I didn’t sit idly by, though. I went on to the county recorder’s office and looked to see if I could find any grant deeds and such that would be required in the event of a lot line adjustment. I couldn’t find any - but then, I’m not a professional title researcher. After a few days, the title report showed up, and…
No mention of any lot line adjustment. The property lines matched precisely the tax assessor’s map which I had already downloaded from First American Title’s beloved Fastweb system. Hmmm. So where, then, was this supposed land swap? What had the neighbor been talking about?
In a burst of inspired genius, I found my way on to the superior court’s web site - it turns out, you can search the case history index on-line. Ahh, voila. I did in fact find that there had been a court case between the former owner of the subject property and the current owner of the vacant lot. Unfortunately, you can’t actually view the case records on-line, you need to schlep yourself over to the courthouse and ask to see the records in person.
So I did. A pretty thick file, actually - two volumes, one of which they had to dredge up from the basement. The lawsuit was brought by the owners of the vacant lot, suing the owners of the subject property (again, the one I was helping my client to buy) for encroaching upon their land, using the non-exclusive easement in an exclusive manner. The judge never made a ruling, but rather, it was settled in a conference.
The result of the settlement was that this lot-line adjustment was to be drawn up, deeds signed, a new fence to be built, etc. The new fence had been built, actually. But where were those pesky deeds?
I contacted the vacant parcel’s listing agent again and told him what I had found down at the courthouse, and he said, “Well, I talked to the seller, and she invites you to call her, she’ll explain everything.” He gave me her number, so I gave her a ring. She’s a very nice lady, and even though this lawsuit and lot-line imbroglio had been hugely taxing for her, she was as pleasant as can be and very helpful.
She explained that yes, per the settlement, she had hired a land-user planner, had surveys done, grant deeds drawn up, got all the signatures in place, had done everything you’d need to do to get a lot-line adjustment done and then, supposedly…the city lost the application to do the lot line adjustment. It just vanished, and the process died. She kindly gave me copies of all the deeds and surveys and everything, and wished me well.
Upon keen examination of the provided documents, my client noted a salient detail: the land behind the garage was being given to the neighbor’s parcel, but the easement that was being encroached on was not being grated to the subject property - it was changing from a non-exclusive easement to an exclusive easement. That’s not the same thing as being granted - in effect, then, the subject’s lot size would be decreasing by about 10%.
To make a long story short, after a week or so of hemming and hawing and talking it over with various parties concerned, we made a devil’s pact with the bank - we would take the property as-is, and proceed to close immediately, if the seller (”the bank”) would drop the price by about 10%. The bank took this offer, and my client proceeded to swiftly close on the purchase of the property - the catch is, this lot line adjustment is now in his hands.
There are all kinds of interesting angels to explore here, like those grant deeds - so far as I know (and of course, I’m not a lawyer!) a signed and notarized grant deed is legal, even if it is never recorded. That’s one big reason why you have title insurance, in case someone shows up down the road with a legal, un-recorded grant deed and says “Hey, uh, actually, your house? That’s mine.”
Another legal angle is the addendum I had the buyer sign where the agrees not to sue anybody (like me, or the seller, or the seller’s agent) for any reason related to boundaries and easements and adjusting or failing to adjust the lot lines. How would that one hold up in court? Hopefully I’ll never need to find out.
My client ended up buying this property at a very good price, thanks to a hard-fought, bitter lawsuit. There are many paths to real estate riches, and this particular bath was bumpy and winding, but my client is going to get there, just the same.
Posted by SantaCruzBroker at 10:32am
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Santa Cruz Foreclosure Presentation Video
April 24, 2008
It’s getting pretty late and I still have tons of work to do, but for some reason, I couldn’t help myself. I just had to put up the video of the presentation that I did the weekend before last at the Santa Cruz County 2008 Housing Expo.
The presentation was scheduled to last 30 minutes - about 20 minutes of me yakking to some PowerPoint slides, and about 5-10 minutes of follow-up questions. As luck would have it, my presentation lasted closer to 25 minutes, and the Question and Answer session which followed lasted about the same. Even after the session ended, I stayed and answered questions on a one-on-one basis for another half hour after that.
The room was pretty full - granted, it was not a big room, but there were 40-50 people in there, I’d say. It was a lot of fun and many people told me they really got a lot out of it.
I wrote e-mails to a bunch of people telling them about the presentation, and more than one person replied (OK, two people) and said that they were sorry they couldn’t make it, but would a video be posted on-line?
Fabulous idea, I thought. So I hired a videographer to come and do the video. I was going to cut the video myself using iMovie from Apple, using up some of the copious amounts of spare time that I have (ha ha, did I mention it’s nigh on 1 AM and I’m still slaving away?). However, after thinking it over for about 20 seconds, I realized that there was no way I was going to be able to cut the video and do a halfway decent job and get it posted on-line while this foreclosure wave is still upon us. So, I shelled out the big bucks and had it professionally edited by your friends and mine at Visual Poetry.
I hope you enjoy my video presentation! Please pass around the link to my Opportunities in the Santa Cruz Foreclosure Market video presentation.
Posted by SantaCruzBroker at 1:07am
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Santa Cruz Real Estate - What’s In, What’s Out
April 22, 2008
This morning I was frantically running off a few flyers for one of my listings in Watsonville (a great mobile home in an awesome park - check it out). I needed to do a few errands down in Watsonville before my weekly office meeting, and loading up the flyer box at this listing was one important thing on my list. As I was standing by the printer waiting for the job to complete, the managing broker of Thunderbird comes up to me and asks if I’d like to participate on a panel.
“Panel?” I said, “Sure! What panel?” You know me, I never look a gift horse in the mouth - if the boss is going to give me an opportunity to be in front of a bunch of potential real estate buyers, I’m there! She explained: “We’re putting on a discussion about what’s in, what’s out in today’s Santa Cruz real estate market. We’re getting a few lenders together and some of the agents in the office to do a public event. I’d like to invite you to come along and talk about foreclosures in Santa Cruz, because that’s what everybody is probably going to want to know about.”
Hey, sounds good. I know about all kinds of real estate aside from foreclosures, but I imagine they’ll let me chime in if I have something I feel needs to be said on another topic. Here are the topics slated for discussion:
- What is the current state of the mortgage industry?
- What loan programs work best in the current market?
- What strategies can buyers use to best position themselves to buy?
- What is the prognosis for interest rates in 2008?
- What do home prices look like now?
- What is a short sale and how do I buy a home through a short sale?
- Why is now a good time to buy?
- What are some ideas to help me sell my house now?
- How can I use the Internet to help me buy or sell a home?
You, dear reader, may have noticed that there’s no topic about buying foreclosure real real estate. Presumably that topic will be added to the next version of the flyer they are handing out.
The panel discussion will be held on Thursday, May 8th at 6:00 PM at Santa Cruz Title Company in Capitola - 1955 41st Avenue, just three doors down from Starbucks (behind the Burger King, Citibank, and various other corporate logos).
If you are interested in going, please call my office to sign up: (831) 475-8400. Or, just contact me and I’ll put you on the list. They say “Space is Limited, Call now to Reserve a Seat” - but I don’t imagine the fire marshall will be on-hand to shut us down if we should exceed the rated capacity from the room. But if you do register ahead of time, we’ll probably make sure there are enough cookies for everyone (no promises).
Posted by SantaCruzBroker at 8:50pm
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Pre-Qualification, Pre-Approval - what’s the difference?
April 19, 2008
To be, or not to be, that’s is the question. To pre-qualify, or get pre-approved, what’s the difference? There’s a big difference, and if you are looking to scoop up some real estate in today’s rocky credit market, it’s important to know the two apart.
This is something I hear all the time: “Getting a loan won’t be a problem for me.” Or, how about, “I have a friend who is a mortgage broker, and he says based on my income and credit score, it will be easy to get a loan.” Talk about famous last words before your financing never materializes!
So here’s the the skinny. Pre-Qualification is basically what happens when your buddy the mortgage broker asks you how much money you make, and how much your expenses are, maybe he runs a credit report,and then issues you a spiffy letter saying “Based on So-and-So’s income, credit score, and blah blah, I have pre-qualified So-and-So for a purchase price not to exceed $XXX,XXX.”
Granted, this is better than a poke in the eye with a sharp stick. When you are going out to buy some real estate, leave the sharp stick at home and if you don’t have anything else, bring your pre-qualification letter with you. OK, not really, you can leave that behind when you’re actually out looking at properties, but you’ll want to have it handy for when you want to write up an offer.
Here’s where it gets a little rough: sometimes, even though a mortgage broker will pre-qualify you, he will write on the letter, “So-and-so is pre-approved to buy…” when in fact, they are not pre-approved to buy anything. So what’s the difference?
You’ll know the difference when you actually go to get pre-approved. Here’s how to tell if you are pre-approved:
1) It took at least several days of work to get pre-approved
2) Your mortgage broker kept asking you for lots and lots of documentation
3) You have an actual loan number from an actual lender (e.g. Wells Fargo, Chase, Washington Mutual).
The difference for pre-approval is that the lender, not the mortgage broker, has actually approved you for the purchase of a house. You have supplied the requisite documentation (and there’s a lot of it, usually) and you have passed through the lender’s underwriting process. At this point, the only missing part of the equation is the collateral - that is, the property you are going to buy. The lender needs to appraise it and make sure it meets the other guidelines for the loan.
Even if you think that you won’t have any trouble getting a loan, even if you have all the assurances in the world from your friends in the mortgage business - get pre-approved by a lender, not a mortgage broker very early in the home-buying process. This will likely save you much wailing and gnashing of teeth down the road.
Another benefit of pre-approval is that you will know what actual loan you will be getting. You’ll know the interest rate (although it may fluctuate), any points, any special features of your loan, etc. You will also at this point should be able to get from the mortgage broker a good faith estimate of closing costs, so you will know how much actual cash you will need to close the loan - and loans don’t come cheap! Of course, you may be able to get the seller to pay for your closing costs - in a market like this, it isn’t too tough.
If you are thinking of buying a house in the next several months, do yourself a favor: get pre-approved, now. The process may take longer than you think, and it will be very beneficial to know what your actual payments and closing costs will be long before you actually incur them.
Posted by SantaCruzBroker at 7:55am
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