Deb Espinoza's Real Estate BLOG

Pre-foreclosure Period

Court foreclosures only occur if a lender desires a deficiency judgment. This process gives a borrower up to one year to redeem the property after the foreclosure sale.

In almost all cases, foreclosures are handled out of court. The process begins when a lender file a notice of default with the county recorder identifying the default amount and the date the borrower must pay off the default. The notice is mailed to the borrower and other affected parties.

Up to five business days before the trustee sale, the borrower may pay off the default plus any applicable costs of foreclosure and stop the foreclosure process. Three months after the notice of default is filed, the lender can schedule a trustee's sale of the property.

Notice Of Sale/Auction

At least 20 days before the trustee's sale, the notice of sale must be posted on the property and in one local public location. The notice is also published once a week for three weeks in a local newspaper, starting at least 20 days before the sale date. The notice is mailed to the borrower at least 20 days before the sale and to anyone who requests the notice. The notice must contain the date, time, and location of the sale, the property address, and the trustee's contact information. In addition, the notice of sale must be recorded with the county recorder at least 14 days before the sale.

The trustee's sale is a public auction and the property is sold to the winning bidder. The trustee may require bidders to pay the full bid amount in cash or cashier's check. Anyone may bid at the sale, including the lender and any junior lien holders. A trustee's sale may be postponed by announcement at the sale. If a sale is postponed more than three times, a new notice of sale must be issued.

After the sale is complete, the trustee transfers ownership to the winning bidder. The borrower does not have the right to redeem the property after the sale.

Contact me at Stage Presence Homes for a list of homes in forclosure in your area.

Click here to see statistics on California forclosures.

California housing affordability improves in Q3
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California rose to 52 percent in the third quarter of 2011, up from 51 percent in second-quarter 2011 and was up from 46 percent in the third quarter of 2010, according to C.A.R.’s Traditional Housing Affordability Index (HAI). 

Home buyers needed to earn a minimum annual income of $61,530 to qualify for the purchase of a $292,120 statewide median-priced, existing single-family home in the third quarter of 2011.  The monthly payment, including taxes and insurance, would be $1,540, assuming a 20 percent down payment and an effective composite interest rate of 4.63 percent.  The effective composite interest rate in second-quarter 2011 was 4.85 percent and 4.78 percent in the third quarter of 2010.

From California Association of Realtors Newsline

Kitchen Remodeling on a Budget: Tips & Ideas

Invest in the most popular room of your home - the kitchen. Whether you’re selling or simply want to upgrade, here are some simple tips and ideas to get you started without breaking the bank:

1. Set a budget! Know what upgrades will give you the most value for your money and do your best to stick with your budget.
2. Plan ahead. Find patterns, colors and textures that you like from magazines, home improvement stores and the Internet. Put them in a folder for quick reference.
3. Tackle one project at a time to insure you don’t get overwhelmed or over-your-head.

Step-by-Step Guide on Kitchen Remodeling on a Budget:

Cabinets
One of the easiest on most cost effective ways to upgrade is to paint or stain your cabinet doors and add new hardware. This will make one of the biggest impacts since cabinets usually compose the greatest surface area of a kitchen.  Take a door into your local home improvement store and ask for professional advice if you aren’t comfortable making the choice on your own.

Kitchen Counter Tops
Granite isn’t always the best investment for every home, not to mention it can be expensive. You can opt for concrete or granite overlay. Do your research to find what suits your budget, best style, and greatest return on investment.

Kitchen Floor
Bring home samples of flooring based on your style and budget before making a final decision. Keep in mind that many real estate professionals agree that a kitchen remodel splurge should be saved for the countertops and not the floors. You want to make sure you get great value from any upgrades you do.

Saving Money on Kitchen Appliances
Big box stores have great deals on appliances that are gently scratched or dented. Only buy if the appliances aren’t working correctly or completely throw off the other upgrades. If your appliances are in good working order and match in color and style, save your budget for more beneficial upgrades. You can also give your appliances a new, fresh look with paint. Look into having it done professionally or purchase appliance paint at your local home improvement store.

Kitchen Lighting
Lighting can be a simple and cost effective way to completely upgrade the kitchen. With most kitchens wired for overhead lighting, a new chandelier can make a big difference. There are options for less than $150! To make an even bigger impact, be sure to install a dimmer switch. You’ll be surprised what a difference a little “mood lighting” can make.

The options are endless for remodeling your kitchen on a budget. The hardest part is deciding which upgrades will make the biggest difference on the smallest budget. Just be sure to do your research and to set realistic goals. When its all done, step back, and enjoy your style and budget savvy results!

National Association of Realtors (NAR)  has just confirmed that short sales are still anything but 'short', stating an average time frame for a short sale taking 16.6 weeks!  This fact on top of the startling statistic that less than 3 of 5 short sale transactions are ever coming to completion makes it crystal clear why most buyers and buyer agents steer clear of short sales.

Another thing that buyers need to take into account when making an offer on a short sale is that a large percentage of sellers do not cooperate and have an attitude in which they think they've lost everything anyway and why should they care?? Many times the seller won't provide documentation that the lender wants in a 'timely manner' thus stalling the short sale process, and then there is also the possibility that the seller decides to work on a last ditch effort to get a few more free months in their house by filing bankruptcy. When the seller files a BK, the entire short sale is void and all the work and wait is for nothing.

I currently have a short sale that was approved by the lender and upon walking my buyer back through after receiving the approval letter we discovered a few disturbing things. The seller had starting removing items that he apparently felt were his to take. The entire designer custom fireplace mantle and surround were ripped from the wall, the vanities were removed from the bathrooms and the water lines capped, and the surround speakers were removed from each room and plastic wrap taped over the gapping holes in the ceilings. The pool that was so beautifully maintained a month ago now looks like a green swamp- Never mind the fact that before we viewed the property in the first place the seller had already removed the entire kitchen!

So, now what do you do? The listing agent was informed and she called the seller to tell them to stop trashing the house and removing items that are not theirs to take, but they told her that they will not return the missing items. Never mind the fact that my buyer LOVED the fireplace, that now isn't so pretty, and the pool will take time and money to clean up, the holes in the ceilings will have to be repaired and new vanities will need to be purchased and installed.

So now as a buyer representive I realize that I must include another item in with an offer on a short sale. An addendum that explains that the buyer expects the house to be in the same condition as when the offer was made and that photos have been taken and that 'built-in' items will NOT be removed by the seller because they are considered part of the property. All this because you can't expect that the listing agent informed the seller of what their duties are as a cooperating seller in a short sale.

So my advice to buyers will still be to steer away from short sales unless you have the patience of Job, and are prepared to have the deal fall apart after 4 or more months of waiting, or prepared to find a shell of the house you thought you had made an offer on.  The possibility of getting a 'good deal' on a distress sale, short sale, just may not be worth it to many buyers.

I guess I can start this post with the age old question: I've got good news and bad news, which do you want first??

In California,effective immediately, lenders cannot pursue deficiency against the borrower in a short sale of one to four units, whether or not it is a senior or jonior lienholder. Senate Bill 458 was signed by the Governor and from this day forward no senior or junior lienholder can require a borrower to pay or owe any deficiency resulting from a short sale.

The law does not apply to corporations, LLCs or partnerships. The law does allow for the lender to negotiate for a contribution from someone other than the borrower, such as agents, lenders or relatives. The law also does not prohibit the borrower from 'offering' to pay any additional compensation to the lender 'in hopes of obtaining a short sale'.

So, on the one hand California is protecting homeowners who must short sale from being pursued for deficiency after a short sale; on the other hand the law still gives lenders the right to hold hostage other parties or the seller by requesting contribution from agent commissions or accepting the seller's generous 'gift' of additional monies to sweet talk the lender in cooperating in allowing for the short sale in the first place.

What WAS I thinking? That a law would actually be drawn just to protect a homeowner in distress without a gimme to lenders and investors who had a huge hand in creating this fiasco in the first place? Quelle suprise...

As an ABR, Accredited Buyer Representative, in San Diego County I am learning that in the current market we need to have a few more tools in our tool kit in order to provide care and service for our clients. In the past 6 months I have had to become very diligent when researching listings for my buyers. Here are some items that I feel are imperative in order to do the best job possible for buyer clients.

Is it a short sale? We must find out who is the lender(s), has an initial package been submitted to them, is the seller cooperating with a short sale or are they still trying to hang on and get a loan modification, is the seller cooperative? will they be caring for the home until it's sold? if vacant are they keeping the utilities on, yard maintained, pool cleaned? If HOA are the dues current and will they be kept current? What is the past history of the deal if it's been on the market for awhile.?  On top of this, we need to do our own market analysis because some inexperienced agents are far underpricing the properties and chances would be high that the lender would not accept that value and we would need to council our buyer of a probable counter by the bank and find out if they are willing to go up before wasting everyone's time.

Will the property qualify for financing that the buyer is approved for?  I spent 4 hours attending a VA Seminar put on by local brokerage Military Home Loans & Ken Bates, who went over all the details of a VA transaction. Requirements of old are not the same today- we must know what these requirements are for condition, termite, costs that can't be paid by the vet...etc. etc. There is A LOT to know and you need to have a good mortgage company working with you that doesn't put extra underwriting guidelines on TOP of what VA or FHA or FNMA or FDMC require.

If it's a condo and the buyer is FHA or VA, do you know where to find out if the property is approved? Many FHA approved complexes in San Diego County have expired or are nearing expiration. Many listing agents have no idea that properties must be approved for certain financing or the listings may have been on the market for awhile and the approvals have expired. It's our job to check out the reliability of the comments in the MLS that say a property is or is not approved for FHA or VA financing. Know where to go to find out and what the options are to get the property approved so your buyer can make the call if they want to work on getting the property approved.

This last point is pretty important. Do you assist your buyer to check out a property thoroughly when they are ready to make an offer so that you can include repairs, upgrades, etc in your initial offer, or price according to estimated costs to take care of problems you see UPFRONT on a house? BEFORE you go into escrow and come upon costs for inspections and requests for repairs?? I know that we are not, nor should we claim to be contractors or inspectors, but in California we are required to provide agent visual inspection disclosures (AVID) on all our transactions. We don't make "assumptions' on things we know nothing about (if we see staining on a ceiling , for example, we are told just to say that and don't call it 'roof leak' because we don't know for sure.) However, in California when making an offer on a property, the contract is AS-IS. When it comes to inspections and request for repairs on a property it clearly states in our contract that a seller does not even have to RESPOND to the buyer's request. In doing our duty for a buyer client we should try to save them the cost and the heartache of a deal falling apart at this time in the transaction by pointing out items we see BEFORE making the offer so we can include them UP FRONT in the contract.

This item is especially important in San Diego County right now because of the high number of investor purchased properties and the many number of rehabs that are being done by unlicensed contractors and inexperienced agents that are listing them; sometimes the agents and rehabbers are part of the same company and the 'agent' just got a license for the purpose of not having to pay both sides of a listing commission. ALWAYS check the county records to see the bedroom and bath count and square footage that is recorded on the property. These rehabbers may be creating un-permitted additions or they may be fixing up an un-permitted addition put on by the previous owner who lost the property to foreclosure. You buyer's appraiser will not be able to value the property based on un-permitted square footage or bedrooms and baths that are not on record. Make sure your buyer is not overpaying based on what the county records show and if there appears to be un-permitted work; ask the seller to correct that upfront in the initial offer. Really look at all the mechanical systems; is the electrical panel too small? plumbing leaks, old connections? look up at the roof, the eaves, is there evident termite damage? wood rot?  what is the age and condition of the water heater and furnace? I have seen PLENTY of rehabs that are done by a company that basically buys at auction, throws in new carpet, paint, and appliances and puts it on the market for sale. These are common things I see with this particular company: range hoods are hung but there is no venting out through the cabinet above or through the roof where it's supposed to go, if it's plugged in there is no electricity to the plug and or no wiring in the conduit leading to the unit to power it. A new gas heater was installed and vented right into the attic!  The buyer representative must protect their buyer by assisting them to really check the house first, then get a good licensed home inspector to do a thorough inspection AND always have a home warranty and to advise the buyer to renew it so that mechanical, plumbing, electrical systems and appliances will be covered if and when something goes wrong.

Being a REALTOR is an important job and representing our buyers and sellers to the best of our ability includes knowing our contracts, disclosures, laws, market trends and statistics AND a little about everyone else's job who makes a deal happen; escrow, title, inspectors, contractors, lenders... A lot of people seem to think that we make too much for what we do, well, maybe if you've never been represented by a REALTOR who doesn't really take their career seriously you may be correct; but for those of us who spend our time always learning and finding ways to better serve our clients, I have to say that we probably don't make enough for what we are required to know in order to do our fiduciary duty to our clients. So, when you get ready to buy or sell- do your homework and get the right agent. It will save you time, money and heartache in the end.

I was inspired to blog on this subject after reading a featured post by Margret Woda about getting an $850K listing from Zillow. Comments by agents went on to disparage Zillow and other sites like it. "Zestimates" were ridiculed and some agents claim to have taken a stand to stay clear of these sites. Well, let me tell you that you'd do yourself a better favor by learning to make what you think are sour lemons into lemonaid.

Fact: Consumers use the internet first and foremost for real estate. Most start their searches here before they walk into a real estate office or an open house looking to hire an agent.

Fact: These sites are generally not run by real estate agents, nor do they have the accurate information that a real estate agent has, thus the clients get a lot of inaccurate information; from too high or too low values, to listings that are not for sale.

Fact: These sites have the mega bucks to draw in HUGE amounts of buyer and seller prospects looking for information- way more than you and I will ever make in a lifetime.

Fact: These facts listed above are HUGE advantages to a smart agent. Let me tell you why.

Used to be that prospects had to come to us because we were the ONLY ones with the Listing Books that had all the information about houses for sale and sold. Now buyers can go online and search for homes, and sellers can get a Zestimate or value of their home from many web sites. So, they get the information and now what?

The smart agent uses these things to their advantage. The smart agent has a web presence to show they are the expert. The smart agent calls back leads from these web sites to say "gee, that house is already in escrow let me put you on my search system that pulls directly from the MLS so you see exactly what I see and that way you don't get excited about a house for sale that doesn't exist". A huge percentage of buyers are happy to have that kind of search and I am happy because I can now see what they are looking for and I can be proactive to send them properties that I find that I think they will like, I can send them helpful information and keep in touch while they are scouring the site for homes, and when they are ready to buy- guess who already has the relationship and gets the sale? ME!!

With sellers I use the printouts from at least three of those web sites to show them what their house is worth. "Oh look, Zillow says $327,000, Trulia says $412K, Homes.com says $380K, what do you think Mr Seller? This is what the buyer is seeing and this is why you need ME to help you to price and PRESENT the house properly in order to get your highest net profit quickly" This is my business, this is what I do all day long, I know the market.

These other agents can go ahead and keep singing the blues about Zillow and other sites. I prefer to use them AND pay to upgrade to get good, quality, buyers and sellers that need an area expert to take them on the next step in their real estate transaction, cause let me tell you- I am singing praises and doing the 'happy dance'. I am meeting the most amazing buyers and sellers and am busier that I have ever been!

Most buyers know that the new home buying experience needs to start with getting a loan approval letter from a lender. What most buyers don't know, and what some poor quality loan officers don't get into are the details of that approval. As a buyer's agent I have to know how my offer needs to be put together and presented. Here are just some of the items that we must know in order to do our job effectively:

• Does the buyer need seller credit to cover closing costs & how much?
• If the buyer really likes a property and we don't want to muck up the chance for approval with asking for seller credit, what are our options? Can they take a higher rate and get credit back on the loan side and if they do, what would be the approval amount at that higher interest rate?
• Is the buyer using gift funds for down payment and/or closing costs AND has this already been gifted and verified?
• Is the buyer using city or state money for down payment assistance and have they taken the required classes to receive the funds and do they have their eligibility certificate. (yes, there is a CLASS the buyer must take, some are online, and they need to PASS A TEST)
• Do we need longer than a 30 day escrow in order to get down payment assistance funds?
• Does the buyer still have outstanding credit issues that you are taking care of and what is the timing for having this completed?
• Are these buyers on the edge of qualification and is this loan going to take 'extra scrutiny' once it hits the underwriter? In other words, is this loan 'out of the box'? Do we need extra time for closing in order to push this deal through?
• For the Buyer's info: How much will the appraisal be and is it collected up front or rolled into the closing costs.  How much are the 'standard' closing costs for the loan they are approved for?
• If the buyer is looking at condos, how much can the HOA dues be for this loan amount?
• What is the annual homeowner's insurance that the loan was pre-approved at ? If the buyer is looking in a flood zone or high fire hazard area the rates will not be standard and we don't want to get to one day before close to find out that the insurance throws the ratios out of whack and the deal falls through.
• If the buyer is qualified for an FHA loan, do they also qualify for HomePath? or is their score too low?
• Finally- If the buyer does NOT qualify for a mortgage with your company is it because the lender's underwriting standards are tighter than the required terms? For VA buyers especially- the BIG BANKS require higher credit scores and have DTI ratios that other lenders don't have. Buyers and their agents should be working with lenders that use the standard rules for lending, enough with these big banks that took bail out funds and now make tighter standards for the borrower....

Obviously these items won't be put on the approval letter, but perhaps a dedicated, quality loan officer would provide the buyer with an initial information sheet to give to their REALTOR and/or make a phone call to the REALTOR to go over the details of the buyer's qualification.

Home sales are down year over year in San Diego County from May 2010, down 20.4 percent , while home prices declined by 4.6 percent, according to a real estate information service.

A total of 3,087 homes sold locally last month, compared to 3,879 in May last year, based on statistics from La Jolla-based MDA DataQuick. A slowing of sales by 800 per month will continue to increase inventory and drive prices down. All but the best homes priced properly will lanquish on the market waiting for a smaller and smaller pool of buyers. This pool of buyers could be made even smaller if the government and banks continue to tighten lending standards by requiring higher down payments and hanging onto their funds with the 'death grip' that most lenders seem to have these days.

The median price of a home in the county in May was $324,500, down from $340,000 in May 2010. I am already seeing evidence in the local San Diego market that prices are continuing to drop. I see investor 'flips' with already slim margins going for lower and lower prices. Bank owned REO's that need work and short sales sit longer and most REO's are getting a 'flurry' of offers when they first come on the MLS only to fall out of pending a few weeks later when 'sight unseen' investors realize that the price they bid just isn't going to work. So, hold on because I think we are in for another wild ride in the San Diego housing market.

I think our San Diego Housing Market is in the 'double dip'- Times are still great for buyers, for sellers- not so much.

Here are some local San Diego Housing Market Stats:  May 2011

Sales of existing detached homes are down 6.7% year to date

Median Price of detached homes in San Diego County down 2.5% YTD at $383,670

For Ramona, CA 92065 the housing prices are down from $307K in 05/2010 to $270K  12.4% YTD;Cardiff by the Sea, CA down 35.1% (from $770K to $500K); Carlsbad,CA holding steady down just 0.5% at $552,500;Escondido,CA (92025,92026,92027) are UP 5.1% YTD from $277,500 to $291,500;Fallbrook, 92028 also UP from 337,500 to 345,500; a 2.4% increase. Lakeside, CA 92040 is down 17.1% from $297,500 to $247,000; La Mesa, CA holding steady from $320K to $319K a marginal decrease of 0.3%; Oceanside, CA down 5.7% from $300K to $283K; Poway, CA 92064 down 11.6% from $487,500 to $431K; Rancho Santa Fe, CA down 12.5% $2,012,500 to $1,762,000; City of San Diego down 3.8% from $343K to $330K; Santee, CA 92071 down 6.7%  $300K to $280K; Spring Valley, CA 91977 down 4.7%  $241K to $229,750; Valley Center, CA 92082 slightly higher up .8% $431,500 to $435,000; Vista, CA down 5.4% from $285,000 to $269,500 and San Diego County numbers are $325K, down 1.5% from May 2010 of $330K.

So the good news is for buyers. Still lots of inventory with 6.8 months standing on the market as of May 2011. And if the lenders ever let go of the 'shadow inventory' and with the 2007 Option Arms coming due and many, many more failed modifications I think we are in for flooding the market with some more distressed inventory in the coming months that will take several more years to clear.

Currently average days on market is a little over 55 days- that will start to climb higher. Sellers need to get their homes on the market in 'ready' condition, easy to show, and priced correctly by their real estate professional.

Buyers, if you have a job and history at it, decent credit and are tired of renting. Time to go for it. Rates are still at an all time low this year, there are plenty of home buyer assistance programs available and rents are headed UP. Year to date they are already up 2% with an average rent of $1387.

Give us a call today if you are ready to stop renting and buy a home. We can assist with financing questions, areas of affordability, and the many questions you will have about purchasing a home.

Sellers, if you must sell because of distress or relocation. We know the San Diego market. We can help you prepare your house for sale and market it for the most cash to you, quickly and stress free. Ask about our Guaranteed Sale Program; we sell your house or pay you CASH!

Figures Courtesy of Fidelity Title; Kurt Stuber.