As the computer age has evolved, there are a lot of users who have decided to utilize websites such as Redfin and Trulia for getting information about comparables of what price their home is worth in today’s market. They are shocked to find that when they talk to a Realtor, the values are sometimes completely different from what the website information reports.

Real estate websites have transformed the whole experience for consumers and have made what used to be private information that was difficult to get, namely listing and sales data about homes across the county, easily accessible to the masses.

However, you have to remember, these are all computer programs, and there is nothing personalizing the data to determine the accurate value for your home.

What’s involved is a computer taking the location and description of your home (the number of bedrooms, baths and square footage), from public records from the county recorder’s office, or from a recent listing, and comparing it to others that have sold recently with similar data on record. But what if nothing has sold in your neighborhood for a while?

The computer cannot necessarily distinguish differences in a property’s condition or aesthetics, nor does it correct for whether the house two blocks over was a short sale or foreclosure.

Depending on where you live, how similar homes are to one another in your area, the level of sales activity and level of accuracy in the public records for your house, the “comparables” (or comps) really aren’t that comparable at all.

If you live in a subdivision where the homes are fairly cookie-cutter, such as in neighborhoods around Terra Linda and a few neighborhoods in Novato, then you are likely to get a good set of comparables, and a value estimate that’s at least in the ballpark. But in most areas of Marin, the homes vary pretty dramatically even within a neighborhood.

For some examples of what might skew the comps, please consider:

1. If your home is older and has had a lot of improvements or even additions that aren’t in the county records.
2. If your homes in your area are very different from one another, you might get bad comps.
3. If you live in a neighborhood very close to another neighborhood where homes have a much higher or lower value than your area. Maybe you live in a different school district or even the other side of the city limits. I live in Kentfield, which is among the better school districts in Marin. However if you go just over the hill a couple of blocks away, you are in the San Rafael school district that has good schools, but doesn’t score quite as well as Kentfield, so the property values are much lower.
4. If your home is in an area where homes are very dense, the algorithm might jump over many properties to get a relatively dissimilar one even a 1/2 mile away.
5. Finally, and most importantly, if your property has been well-maintained and in sparkling condition with all the great aesthetics a property can offer, but the comparable property that was recently sold was run down and in bad condition, you might get a lower comparable of what your property is really worth.

The data provided by these web sites can be very useful for trying to stay on top of home sale prices in your neighborhood or area. However, they are less useful, in my opinion, for placing values on a property.

When it’s time to sell your home, you really need a good Real Estate agent to come in and figure out what it’s worth. No computer is as accurate as a living, breathing local real estate professional who sees and sells all different types of homes in your area and knows what able and willing buyers will actually pay for them, especially in a wide a widely varying county such as Marin, where just about every property is different, even if they are next door to each other.

It’s important for sellers to interview a few listing agents to get their views on what the are properties are really worth, then to go with the agent they feel best about, not just the one who says their home is worth the most. In many cases it might not be, and the property could take a huge amount of time to sell or may not sell at all.

If you would like more information, please don’t hesitate to call me at 415-755-8919 or email me at for free advice on what your home may potentially be worth.

Posted by:  Rick Smith

Interest rates have fallen to record lows, and a lot of homeowners are taking advantage of the terrific savings, especially since some of the homes may be underwater, to at least reduce their house payments.

However, homeowners who anticipate that they will want to sell in the next couple of years need to understand what they may net if they re-finance right now. Some owners view re-financing as a way to save money on their current mortgage. Borrowers who do this often ignore the impact of the re-finance on the size of the loan balance that they will have to pay when they sell.

For example: Say the current balance on a 4.125% mortgage is $300,000, with a payment of $1,685 and 23 years remaining. The borrower expecting to sell in two years refinances into a new interest only adjustable rate loan at the same rate, reducing his house payment to $1,031 per month, $654 per month reduction. Sounds pretty good, right?

The closing costs are $6,000, but the borrower has reduced his payment $654, which over two years sums to $15,696. By logic, the owner thinks he is ahead by $9,986, which is the difference between the two sums.

What he has overlooked, however, is that if he would have stayed with his original loan, he had paid down the balance by $16,307, which would have resulted in the additional net proceeds going into his pocket at the time of sale. What he thought was a gain of $9,986, is actually a loss of $6,321. Of course, if the new loan has a significantly lower interest rate than the original loan, the refinance could result in a larger net proceeds at the time of sale.

Interest rates are definitely on the very low side right now, and if the rates are significantly lower than your original loan, it may be well worthwhile to lock in a new low rate. If you are planning on moving anytime soon, however, I would definitely make sure to talk to your accountant about it first, just to make sure you are getting the greatest savings possible, and you will be netting as much money as possible, at the time of sale.

If you would like to know more give a call at 415-755-8919 or email me at rsmith@fhallen.com

Posted by:  Rick Smith

Home ownership rates have dropped significantly since the 2009 recession, as many people lost jobs, and were underwater on their home values. Currently, the home ownership rate is around 59.2%, which is the lowest level since the Census Bureau began keeping quarterly records in 1965. Falling home prices along with reduced access to credit have kept may prospective buyers out of the market.

The top benefits for home ownership haven’t changed however. Here are five good reasons why you should buy:

1. Savings – You could be saving money by buying a home once you consider all the tax breaks; and once you build up equity, you could have an automatic savings account for retirement or for purchasing another home once it comes time to sell.

2. Tax Breaks – Home owners are able to take the mortgage interest as tax deductions each year, and also benefit from great rebates and credits associated with upgrades made to the home.

3. Equity – When you rent and pay a landlord, it’s basically money thrown away. When you are paying on a mortgage, you are paying towards owning something. You may still owe $200,000 but in time your home can be worth much more and you stand to make a large gain when it comes time to sell.

4. Budgeting – Unless you are living in a rent-controlled apartment, each lease renewal could mean an increase in the rent. As un-occupancy rates are at around 2%, rents have gone up an average of 6% this year, and it’s looking like they will go up again if the predicted un-occupancy rates remain low. If you were paying $3,000 a month to rent a home, that’s an average of an additional $180 per month or an extra $2,160 per year. With a fixed-rate mortgage you know what you are going to pay for the life of the loan, so you can budget your money more effectively.

5. Security – When you own, it’s yours. You can paint, improve, decorate, add landscaping – because it’s your investment for life.

Homeowners are in neighborhoods, giving an owner a chance to meet other people in the neighborhood to build friends and relationships. Studies have shown owners rank themselves much healthier that their renter counterparts, because of these relationships. Experts have recommended for years that if you are planning on staying in the same place for five or more years, then buying becomes a better deal. You will have time to recoup any extra expenses found in closing costs and you are now making an investment through price appreciation.

Home affordability is at near record highs. It is a great time to run the numbers to see if it makes good financial sense for you .

If it does, then you’re in store for a wealth of benefits that only homeowners can experience!

If you would like to know more, please give me a call at 415-755-8919 or email me at . I’d be happy to help.

Posted by:  Rick Smith

As the stock market has declined significantly over the last four weeks, there is a silver lining to an otherwise dark cloud for investors: as many people cashed in equities and moved money into bonds, interest rates have moved to historically low levels.

Based on these low rates, you may be considering refinancing your home to lower your house payments. Does this make sense? Aside from lowering your interest rate and house payment, let’s take a look at how much you can potentially save in the long run from going to a 15-year fixed rate.

Depending on when you bought your home and the rate at which it was financed, switching to a 15-year loan may result in a little bit of a higher monthly payment. For example, in my case, when I bought a property in 2005 I got a good interest rate at the time – 5.75% for a 30-year fixed loan. After refinancing, my new rate is 3.87% for 15-years and my total monthly house payment is about $50.00 a month higher than my 30-year payment.

You may be asking yourself, why would I want to pay more than my current loan? Isn’t the goal to pay less?

To answer the question, you have to look at how much you would be saving over the course of the loan. Assuming your current 30-year loan payment is $2,000 per month, you would be paying a total of $720,000 over the course of 30 years or 360 months. If you go with a 15-year loan at an increase of $50 per month, you will instead pay $2,050 per month, for a total of $369,000 over the course of 15 years or 180 months. A savings of $350,100!

Some people can’t afford a 15-year loan as their income can’t support the higher monthly bill. Those worried about job security or a business failure may opt to go with a 30-year loan to lower their monthly payments. It’s basically the cheapest way to borrow money. However, if you are pretty confident in your income being stable and you can afford a little bit extra going towards your monthly payment, then I say, “Go for it!”

When comparing the two types of loans, there are other things to consider as well. If you are currently stuck with a high mortgage payment and you can’t save any money for retirement or for your child’s education, you may want to opt for the lower 30-year house payment in order to sock the money into a savings account for those future expenses. You should also consider the tax break advantages in that a 30-year loan will provide a bigger tax savings at first, as you are paying mostly interest for the first 15 years, which is all tax deductible. However, Congress is currently considering measures to wipe out the current mortgage interest and fees as a tax deduction, so a 30-year loan then becomes less appealing. That’s a whole other story – and I would encourage you to write your congressperson a letter to share your disappointment if that happens, as it currently is a hot topic in Washington.

If you would like further explanation or more information, please don’t hesitate to call me at 415-755-8919 or email me at rsmith@fhallen. com for more details.

Posted by:  Rick Smith

As property and home values have declined over the last three years, there may be an opportunity for you to lower your property taxes as well.

Property values are back to 2002 to 2003 levels, or roughly down 30-40% from their peak in 2007, depending on the neighborhood and town you live in. If you bought your home between the years 2003 to 2008, you may have experienced a decline in your home value as well. There isn’t anything you can do to change the tax rate, which is roughly around 1.25% of your property value. (This can vary from town to town depending on the amount of school bonds, emergency services, library services, etc. that your community supports.)

It is currently estimated that over 50% of home owners are paying too much in property taxes today. What you can do is to file an appeal with the county. To do this you have to go to the tax assessor’s website and pull similar properties in your neighborhood that have sold in the last six months. You need to be sure they are similar in size, have the same square footage, number of bedrooms, bathrooms, garage, etc. Before you pull those numbers, it’s a good idea just to make sure the assessor has your own home recorded properly. If your records have been incorrectly overstated, then you want to get that corrected first.

Armed with this knowledge, and having printed out the neighbors’ lower assessments, you can file an appeal. About one fourth of these appeals result in a lower assessment.

Filing an appeal is pretty simple: just print out the form from your county tax assessor website and provide the information you have collected. The assessor will look at each of the comparable property sales and question homes that were foreclosed on or other distressed sales. Note that since the housing market has been weak, there may not be enough comparable sales to make a judgment. You may have to hire a professional appraiser to value your home, which can run between $400 to $500 for the assessment. You can also hire a tax lawyer or property tax consultant to do the leg work of the appeal, if you are willing to pay for it. A property tax lawyer can charge 30 to 50% of the tax savings for the year.

The effort could save you a lot of money not only for the current year but in years to come. According to California law, the most the state can raise your property value is a maximum of 2% per year.

Say you bought a home for $1.2M in the peak year of 2007, and your property taxes, without the local taxes included, were 1% of the property value, or $12,000. If your home value decreased by a minimum of 30%, your value could be $840,000 today; your property taxes would be 1% of the value or $8,400, for a savings of $3,600 a year!

While knowing your property value has declined stings, at least you can save a pretty substantial sum by getting it re-assessed. You should also check to see what interest rate you are paying on your current mortgage, as it could also make sense to get your home refinanced, since interest rates are at a 50-year low. Between refinancing and the re-assessment, you could save hundreds of dollars each month for just a little bit of effort.

If you need more information or have any questions, don’t hesitate to call me at 415-755-8919 or email me at .

Posted by:  Rick Smith

There was an interesting article on August 17 in the Housing Wire news publication that talks to the fact that mortgage applications increased at a rate of 4.1% for the week ending August 12.

I’ll give you a quick synopsis of what was said, and you can find the complete article here.

The article states that, as a result of the recent stock market plunge, interest rates fell to the lowest level since the 1950s as people pulled money out of equities and put them into bonds. Based on what happened last week, I too decided to refinance my home this week at a ridiculously low rate of 3.78%.

The significant drop allowed me to refinance my 30-year loan and convert it into a 15-year loan where I am basically paying about the same monthly amount, but now it will be paid off 10 years earlier. My total savings over the life of the loan will be a whopping $240,000!!!

These lower rates will also allow first-time buyers to qualify for a larger loan amount and buy a better house than what they may have been able to do just 30 days ago.

Home refinancing comprised of almost 79% of the loan applications last week; the average contract interest rate across the country fell to an average rate of 4.32% for a 30-year loan.

I would also suspect, that as a result of the stock market declines last week, home prices could dip, as an incentive for Buyers to buy now, rather than the seller risking a longer time on the market to sell their home.

July home sales dipped 3.4% in Marin. I have to add that July 2010 was one of the worst months we have in real estate, so the number of sales were already at a low basis to begin with. As sellers see lower activity in the market, they’re faced with having to reduce their prices to move homes that have been sitting on the market since spring.

If a buyer were thinking about selling versus renting, now would be a great time to buy. Rent prices in Marin have increased 6% over last year and the vacancy rates are at extremely low rate of about 2%. Rents will only continue to go up with these low vacancy rates, as it becomes a landlord’s market in getting higher lease rates.

Posted by:  Rick Smith

Before you put an offer in on a new home you need to find a Mortgage Broker or bank to prequalify you.

Here are five important questions you should ask your mortgage professional:

1. Are you working with a Bank or a Broker or both?

Mortgage lenders that are banks have more control over the appraisal process, which is helpful as they can find local appraisers who understand the neighborhood you are looking at and can better ensure the appraisal comes in at the stated value that you negotiated in the contract. Brokerages with their own in-house bank and a large list of lenders provide a larger range of fallback options than plain old banks, and that can be an advantage if you are having trouble acquiring a loan.

2. What are the charges on a Good Faith Estimate?

A Good Faith Estimate is a pretty clear description of all the costs associated with acquiring a loan, but you should still ask your broker to go through the costs to make sure you understand everything. While the estimate shows all the costs, it sometimes doesn’t show the actual amount of funds you’ll need to close the loan, so ask your representative to prepare a fee sheet or estimate of funds as early in the transaction as possible.

3. How long will it take to close my loan, and how much time do I need to release my loan and appraisal contingencies?

This is a very important question because there is no standard time period. Some lenders can get everything ready to lift contingencies in 10 days, while others need up to 30 days, depending on any complications on the loan. Whatever the time period is, that needs to be stated in the contract because you don’t want to have to extend your contingencies, as it may throw you out of the contract if the seller doesn’t want to extend.

4. Are there any fees for the loan application and approval process?

You should ask to see if there are any fees associated with the process and understand that there is always a fee for an appraisal. A Buyer will have to pay for the appraisal up front prior to the investigation whether the home appraises for the contract value or not.

5. How long have you been doing this?

Mortgage professionals that have been around a long time know how to troubleshoot and work around issues in advance, which is essential in hiring a lender. You can even ask the lender to provide references to check to see how efficient the lender has been in the past in closing loans. If you get a relatively “green” broker, they may not know all the ins and outs of handling issues when they arise, and you may not be able to close the loan on time…It’s a lot easier if you know the loan is in the hands of a seasoned professional who can be trusted with your largest asset and the largest financial obligation you may ever have.

Posted by:  Rick Smith

So you have put an offer on a home, the Seller has accepted it, you’ve done all your inspections and got the financing for the loan lined up – Hurray, you are ready to close escrow and are almost the proud owner of a new home! While you may be inclined to sit back and relax, this is still an important part of the buying process.

Here are four key things you need to know when getting ready to close escrow:

1. Don’t Make Any Large Purchases

Most people understand they shouldn’t go out and buy a new car when they are ready to buy a new home, but you would be surprised how many people don’t know you also shouldn’t open any new credit card accounts to buy new appliances or open up financing for the remodel of a kitchen or bathroom for your new home. New accounts can show up on the account endangering the deal, generating a surprise “no deal” at the time of closing. Lenders also check the funds on your bank account to make sure no unexplained large amounts of money have either appeared or disappeared. They know that sometimes borrowers are inclined to borrow money from friends and family just before closing to help pay for the close. The lender wants to make sure you don’t have any outstanding obligations to repay that may interfere with paying on their mortgage note.

2. Disclose Everything When You First Apply for the Loan

Today’s underwriters are real sticklers for reviewing and re-reviewing facts on your loan application. As the lending guidelines have toughened up, so have the underwriters and lenders. Sometimes you may have a chain of underwriters reviewing your loan in order to close the deal. Understandably, the underwriter is the one who is responsible for funding hundreds of thousands of dollars for the loan, so they want to make sure everything is totally buttoned up and there are no mistakes when they are responsible for making the loan.

3. Watch the Closing Dates

Once the closing dates have been established and you have locked in the interest rate, make sure you understand how long that rate is locked in for. Many times a Buyer can get an approval and lock a rate during a short sale, but since a short sale can take anywhere from 3 to 6 months, the rate that was locked can expire. Now you may be looking at a higher rate, which may knock you out of qualifying for the loan, as your income to debt ratio has changed. Make sure both your Real Estate Agent and Mortgage Broker are in tune with what’s going on with your loan at all times so you can avoid any surprises, and solve issues as quickly as possible when they come up. If you are buying a short sale property or REO, make sure the Mortgage Broker knows this up front, so they don’t lock in the interest rate too quickly, and they have plenty of time to close without endangering your loan rate lock. Also, on a short sale or REO, it is advised that you keep a little bit of a cushion of cash for any unexpected surprises in case the closing is delayed for reasons beyond your control.

4. Review Your Closing Documents In Advance

Buyers should work with the Title Company and Mortgage Brokers to review the closing documents at least one day in advance. If you have to review a ton of papers and you have already determined your move dates, you want to avoid any surprises that could delay the close of escrow and prevent you from moving into your new home as planned. The best thing is to get the documents in advance and review the interest rate, the loan amount, the monthly mortgage payment, and closing costs. If you have any questions, you can get clarification before the close date and surface and resolve any issues, without disrupting the close of escrow.

Avoiding surprises before the close of escrow can really prevent a great deal of frustration and worry at the time of closing. Pre-prepare for any issues that may arise, communicate daily with your Real Estate Agent and Mortgage Broker, and above all, move as quickly as possible when you are asked to provide additional documentation. This will keep you on track for the smooth close of escrow so you can get into your new home on time.

Questions? Leave them in the comments or contact me: 415-755-8919 or rsmith@fhallen.com.

Posted by:  Rick Smith

One of the most important aspects of buying a new home is the home inspection. If you aren’t familiar with a good inspector, your Real Estate Agent should know of a few good ones. After the home inspection you will usually get a 45 page report covering just about everything you can think of, including the plumbing, roof, water heater, and wiring, just to name a few items. The home will be compared to 2011 (or current) standards, so you will find a lot areas that may not be up to today’s standard but were standard when they built the home. These reports can become frightening to a prospective new Buyer if they have never seen them before. I always call it “45 Pages Of Why You Don’t Want To Buy A Home.”

The language used is pretty technical, and most of the time the reports need to be “decoded.” It’s really important for the Buyer to be present at the inspection so that the inspector can take you around the home and explain what they are speaking about in the written report.

There are several questions you should ask your inspector during the inspection to understand the gravity of the report:

Is it really that bad?
The best home inspectors are pretty unemotional and aren’t alarmist; they are all about facts. Sometimes their straightforwardness makes it hard to understand which issues are big and which are minor. You simply need to ask them if fixing is a big deal or not, and nine times out of ten you will be able to understand from them whether it’s a big issue or not by the way they express themselves.

Who should I have repair that?
I always ask this question because the response is important. If the inspector suggests a repairman or contractor, it could be a big deal. But, if he says you don’t need to hire someone, just to go down to Home Depot and pick a “whatever” to repair it yourself, that eliminates the question of whether it’s a big deal or not, especially if you can repair it yourself at a minimal cost. Even with larger repairs, you should be able to get referrals from your Real Estate Agent or Home Inspectors. Then you can have estimates done in order to negotiate a credit or reduction in the sales price with the Seller before the close of escrow.

If this were your house, would you fix this issue? And if so, when?
Many times the inspector will report that an item is “at the end of its serviceable life.” If this comes up, you should then ask them if it they would replace this item in their own home. You might be surprised to get an answer of, “I wouldn’t do a thing right now. It could break in 5 months or in the next 5 years.” Use the Home Inspector to help you prioritize the big issues and understand what needs to be repaired right away and what doesn’t. Get used to understanding that there IS constant home maintenance and it’s all part of owning a home.

Can You Show Me How This Works?
Most home inspectors are delighted to show or teach a new owner how to work things and where emergency shutoffs are for water, gas, and electricity. This one single thing is such a stress saver in the end and is worth missing a day of work to have someone explain where everything is and how it works.

The best idea is to make sure that if you don’t walk around with the inspector all day during the inspection, to at least have him walk you through everything during the last 20-30 minutes so you can go through everything on the report. It’s best if you have an inspector that takes digital pictures and includes them in the report, so that you can go back and understand what he is talking about when you receive the written report.

If you would like more information on home and pest inspection reports, I would be happy to answer them. To contact me: rsmith@fhallen.com,  415-755-8986 or leave a question in the comments.

Posted by:  Rick Smith

Sometimes there are complications when buying a home, especially if it’s an older home and there is a lot of deferred maintenance that needs to be performed.

For instance, you may love a home, its location, and the area schools, but once you have done your inspections, you find there is a bathroom floor that needs replacing or a shower that leaks, and it’s going to take $10,000 to correct the issues. In most cases the Sellers won’t want to do the work before the close of escrow, so they may want to reduce the selling price by $10,000 and sell the home “as is.” In the long run, if the Buyers have the additional cash to pay for the repairs after the close of escrow, it’s better to buy the home at a lower cost, as close to $100,000 in interest can be saved over the course of 30 years.

However, Buyers who don’t have the extra cash for repairs could ask for a price that doesn’t reflect a reduction in the sales price, but rather a credit of $10,000 at the close of escrow to take care of nonrecurring closing costs. Even though the Buyers pay a higher price, now they don’t have to bring $10,000 to closing and can instead use the money they had reserved for closing costs to make the repairs themselves after the escrow closes.

Generally, a Buyer will be able to get a few estimates and ensure that the work done is of good quality and to their specifications. A word of caution though: Buyers should always check with their lender to see how much is allowed for nonrecurring closing costs. It does no good to collect $20 to $30,000 to find out that only $10,000 can be applied to closing costs. The excess amount will simply have to be given away if it can’t be applied. In that case, a combination of a reduction in price and a credit at the time escrow closes may be the best bet.

Almost any home you buy will not be perfect and will need modifications to satisfy your taste. Perhaps the house needs to have a new backyard developed, or maybe a deck, or repainting in colors you prefer. Most people feel they should recoup investments they make when they sell their home. However, studies show that most remodel projects never pay back 100% of the amount invested. For this reason, always be selective in what projects you invest in and keep the resale value in mind.

Making changes to a home to reflect your taste improves the quality of your lifestyle while living there, and the longer you live in a home, the more valuable the enhancements will be to you.

If you would like further explanation on how all this works, don’t hesitate to call me: 415-755-8919, or email me: . I’ll be happy to give an in-depth explanation.

Posted by:  Rick Smith

Everyone agrees that to sell a home, you need a reputable real estate agent who will: advise you on how to prepare the house for market, hire a professional to take the photographs, and show the home as often as possible. Here are five more things that will help you get your home sold – that may not have occurred to you as a prospective seller.

1. Neighbors & curb appeal- Most homeowners know that they need to make their home as appealing as possible both inside and out. What they also need to understand is the importance of how the neighboring properties look. It’s in your best interest – and theirs – to inform the surrounding neighbors that you are trying to sell so that they might also put their best foot forward in attracting the right buyers. Furthermore, neighbors can help you sell your home because they may have friends or family looking to move into the neighborhood. For these reasons and more, it’s important that the realtor send “Just Listed” postcards to neighboring homes.
2. Sights, smells, and sounds – It’s no surprise that smelly foods or animal odors, or the sound of sirens from a fire station next door, can make selling a home a real challenge. What many don’t realize is that pleasant scents and sounds can truly help seal the sale of a home. A yard with jasmine or lavender can be attractive to even the allergy victims out there, but do refrain from artificial air fresheners as they can be a turn off. Of course, the wonderful aroma of baking bread always seems to do the trick for many homes. Although you may be desensitized to the views your home offers, always pull back the curtains and turn on every light in the house to make your home lighter and brighter. If you are thinking of doing some painting inside, refrain from using dark colors: the lighter and brighter the better as they make rooms appear larger and more appealing.
3. Your dog-  If you have a well-behaved dog, believe it or not, sometimes they can help in making the home feel more inviting to a family, just make sure it is clean and doesn’t smell. Ask your agent if you are not sure. Sometimes even showing pets in the listing photos can be an appealing idea to get the welcome message across.
4. Your happiness- Video and even letters that talk about all the virtues you love about your home, environment and neighbors are terrific to show prospective buyers. Wide open curtains that stream light and accentuate home features create the thought that people that live here seem very happy to live here. Of course, keeping the home in terrific condition, with the gardens well cared for and children’s rooms decorated in a customized fashion always helps, but make sure you don’t over do it. Having 20 posters of Justin Beiber carrying a theme for a child’s room may turn off many prospective buyers. Staging your home for a life well lived is the way to go. It’s not just about paint and carpet.
5. The freeway you think is too close- There is such a thing as having a train or freeway too close as to rattle the walls, but attitudes are changing as gas prices continue to rise. Being close to freeways and bus lines is starting to make a little more sense in cutting commute time. I’ve never heard so much talk about the environment and buyers looking to own homes that allow them to get rid of their cars entirely as I have in recent years. What might have been too close to the freeway before, may now have a new spin as a convenient commute to San Francisco!

These are only a few things to help benefit you as the Seller. If you would like more ways, don’t hesitate to call me at 415-755-8919 or visit my website.

Posted by:  Rick Smith

I get a lot of questions regarding the use of an owner’s home insurance for repairs. I ran across one recent home buyer who had purchased a home that was 10 years old; as the rainy Marin winter has now subsided, it appears that exterior paint is flaking off the house and they have noticed that the deck that was painted, is now rotting and lifting. If the home was staged or prepared for sale, chances are that the owner may have elected to use lower grade materials or didn’t prepare the surfaces properly at the time the paint was applied. That doesn’t mean they were trying to cover up defects, although I’ve seen that too. This point goes back to whoever did the home inspections prior to buying the home. A great home inspector uses a screwdriver to poke around the outside of the house and decks to see if there has been any dry rot, and may be able to tell you if there are issues prior to lifting your contingencies. At this point, prior to releasing contingencies, your buying agent should be able to go back and ask for a credit for repairs at the close of escrow, allowing you to take the money and enlist your own contractor to do the repairs with higher quality materials.

To answer the question of utilizing your home insurance to receive repair money, chances are the insurance company will tell you this is a routine maintenance issue that is not covered. A word of caution though, if the insurance company does cover the cost, please understand this may go on your insurance record and your insurance costs may go up. Furthermore, depending on the amount of the claim, they could cancel your policy. The second thing that might happen, if you try to change to another insurance company, is that you may be a high risk and could have problems getting the insurance, and if you do, it will be at a higher cost. It takes three years for a claim to come off your record, after which you start at ground zero again, and you could switch companies.

An important thing to do as you buy a home is to try to set up a home maintenance fund where you are saving each month to do the necessary repairs and maintenance when needed. The upside is that you will not only have the costs covered, but you will also be choosing top quality materials and thus you may not have to do these same repairs for a very, very long time.

If you have any other questions, don’t hesitate to call me at 415-755-8919.

Posted by:  Rick Smith

Recently I’ve had buyers frustrated over two common scenarios: 1) The buyers place a bid on a home that has been on the market for a long time without any other offers. However, once they put an offer on the property a ton of others come in right after it and they lose out to a higher bidder. 2) The other frustration has been with short sales, when a short offer is accepted by the seller, and the bank then comes back with a higher counter offer. Buyers get confused because there weren’t any other offers even being considered. You hear every day that it’s a buyer’s market and what great deals there are on short sales and foreclosures – and then this happens.

To address the first frustration, most listing agents with “normal” sales strive to get the highest possible price for their clients’ homes, so it’s common for them to call any past prospects who were interested in the property to let them know there is an offer on the table and they have 24 hours to make their own offer if they want. The psychology behind this is that it creates a frenzy, gets people excited that there is now action on the home, and makes other buyers want to bid on the property as well. The key here is for the buyers’ agent to write the offer with a tight time frame to respond, eliminating the window for other buyers to swoop in. The other thing to do is to have the buyers’ agent keep in close contact with the listing agent, even two or three times a day is not overkill, once the offer is submitted.

In the second situation, on the short sale offer, it’s important to realize that what a seller is willing to accept on a short sale could be totally different than what the bank will accept. If there is a huge shortfall on what is still owed on the mortgage by the seller, the Bank may not want to accept the offer as they think the home is worth more. The bank is ultimately in control of what they will sell the home for since they are going to take a hit, not the seller. The seller just wants to get out of the loan and move on. To deal with this frustration, the buyers’ agent needs to change the approach at formulating the price they are offering. The buyers’ agent needs to get an analysis of similar properties that have sold in the area. They should also look at the list-to-sale price ratio. If homes in the area are selling under or over their asking price, find out what by what percentage and consider putting an offer with the same percentage. Getting a great deal is not necessarily the same as paying at or below asking. It’s critical to rely heavily on the analysis of the comparable sales to drive the price you offer, and then take into consideration the amount of work that will need to be performed on the home, so you are not over paying.

Last of all, it’s not a good deal if you don’t get the home. Prices have rolled back to 2003 levels; you don’t really need to beat up a seller on a price, as they have already been reduced, and whatever a buyer pays with the current historically low interest rates, will be a great deal.

Posted by:  Rick Smith

The question of whether one should sell now or rent is a common one these days.  There really is no way to know whether selling later would ensure a higher sales price, especially in the near future. If you were planning to rent your home for 10 years and then sell, there’s a good chance it will go up in value, but will the value rise next year, or the year after? There is no telling.

At the recent Marin Association of Realtors (MAR) meeting that I attended this week, the forecast was not for home values to rise this year. There is apparently a string of foreclosures waiting in the wings as shadow inventory, and MAR was predicting the last of it will not be flushed out until 2013. As long as the distressed inventory is still hanging around, it is less likely home prices will go up, as the comps in the neighborhood will remain low.

There are strong indications that massive shifts in the mortgage market may happen, with the possible elimination of Fannie Mae and Freddie Mac. If this happens, it may narrow the availability of home ownership and then it will be even more difficult to sell your home.

There is belief that the first areas to recover will be the coastal cities, including the Bay Area, but timing the market accurately has been, and will still continue to be, manipulated by government forces.

The next real question you have to ask yourself is, do you want to be a landlord?

There are many factors to consider here. If you plan on living in another state or city, it will be more difficult as you have to be able to take care of tenant issues. What happens if a pipe breaks, the heating system goes out, or a window is broken? Dealing with these types of things becomes really difficult from a distance unless you pay a property management company. You also have to consider landscaping. What if the tenants don’t water or mow the grass and your lawn looks like a disaster area when you get ready to sell? Tenants don’t have pride of ownership, and they could damage the inside and outside of the home, including the carpeting. When you are ready to sell, you could face some huge costs of deferred maintenance in order to get your house ready again. The potential costs could be more than what your home value has increased over the time you rented, and yet you have had to deal with all the time and trouble of being a landlord.

I think the big incentive for a person to sell right now is the historical low interest rates that buyers are getting.  Why is that a big deal to sell? If home loans are more affordable, there is a larger pool of people that have the ability to buy a home in a higher priced area such as Marin. If the interest rates start creeping up, and fewer and fewer people can qualify for a loan, then not only will the values not rise, but there are fewer people to buy. It may take much longer to sell your home.

It’s actually a great time to buy or sell your home in Marin!

Posted by:  Rick Smith

There was another positive article in the Marin IJ newspaper last Friday, which really gave home owners a boost in how the Marin housing market is doing. This article can be found here if you would like to view it.

To summarize, there was an 11% increase in home sales in the month of March over last year. And even better news was that the median price of a home in Marin rose 2.4% to $779,000, according to the County Tax Assessor.

This was the first time in six months that both the sales volume and prices have increased at the same time. In the past we have seen the sales volume increase over the previous year, however, the sale prices were at a reduced level because of all the distressed property sales, which in reality, have also driven down the overall home prices.

The median sales price of $779,000 was up +28.2% over the previous month, which shows the number of distressed sales are slowing down and there is an improvement of non-distressed home sales. I know from my open house last weekend that the number of people visiting open homes is way up from what it was prior to March. Sales across the country are improving as well, and there is a lot of pent-up energy out there to buy homes that are driving the increases in sales.

One of the key factors that we have not seen in the last couple of years is the activity in the high-end of the market. 28% of the homes priced from $3 to $5 million were in contract last month, up from only 5% from the previous month. People with money are deciding that now is a good time to buy. Meanwhile, the more affordable range of under $500,000 has 49% of the homes in contract, and the price range of between $500,000 and one million now has 41% in contract. A balanced market is when about 30% are in contract at any given time, and 40-50% signals a seller’s market.

All in all, it’s a great time to buy. We are also starting to see interest rates increase, which will mean the affordability of house payments could force people to rethink what they can afford.

If you are thinking about buying, my advice is to go for it now before interest rates go up any higher!

What is your sentiment about the current spring market?

Posted by:  Rick Smith

When you are compemplating work to be done on your home, remember that many times you must have a permit. Basically a permit is the community’s legal permission to proceed with work done on a project, and your agreement to do the work in compliance with current codes.

Even if you plan on doing the work yourself, you have to have a permit. To get an exact answer as to whether you need a permit, you should first check with the building department. In general, you will need a permit if you expand or stucturally alter your home or any of its wiring, plumbing or mechanical systems.

Not all work requires a permit, such as many redecorating and repair jobs. This includes replacing cabinets, replacing floor coverings, painting and decorating, replacing roofs, replacing windows (if you are not altering the size of the openings), replacing plumbing fixtures (if you are not altering the plumbing), and replacing light fixtures and appliances (if you are not altering or replacing the wiring).

When your work does call for a permit, they are issued through the building department (may also be called “Community Development”) of your town, which you can find online. In Marin, the County website has some good basic information on their Building and Safety page. Generally the cost of the permit is based on the size of the project, the number of inspections required, and a variety of other factors. You should also call or visit the town building department ahead of time to see what you will need for the permit. For example, if it’s a wood stove, you might be required to get the name and model number of the stove.

If you decided to go ahead and do the work without a permit, and get caught, the first thing that will happen is that the building department will request you to stop work until you have obtained the necessary permits. Once you have the permits, the inspector will inspect the current work and if it has been done correctly, the inspector will allow the work to proceed. If there are errors, they will ask that those errors be corrected and then reinspected before proceeding with the work.

Another good reason to obtain permits is that it is your legal responsibility to disclose work that’s been done when selling your home. If you didn’t obtain the proper permits, you could at a minumum lose the sale of your home, and also you could have very costly liability issues. If your home is damaged, and you didn’t obtain the permits, the insurance company may deny coverage for the loss.

The best rule of thumb when is doubt is to simply call the building department and ask!

Posted by:  Rick Smith

Recently a Seller received two offers on their home in less than two weeks. The Seller accepted the offer from the Buyer who seemed the most committed to buying the house.

In less than three days, the Buyers backed out. Why?

The Buyers did their Home and Pest inspections, and found considerable termite issues with the decks and underneath the bathroom floors, and it was also revealed that the roof was nearing its life expectancy, so the Buyers decided it was too much to take on in buying the home.

If you have ever seen a Home or Pest inspection, they generally are a 45-60 page report that details every reason why you wouldn’t want to buy a home in California. These reports reveal just about everything wrong with a home, and give recommendations for work to get the house up to the 2011 standards, even if a home was built many years ago. They leave a lot of room for worry, and unless the Buyers really talk through the inspection with the inspectors, the reports can be frightening.

It’s my advice that a Seller should have both the inspections done before going on the market, with a minimum of at least a pest inspection for two reasons. First, if there are major problems, it gives the Seller the option to fix the issues prior to putting the home on the market, or to simply not do the repairs. Second, and more importantly, these inspections become Seller disclosures to potential Buyers, so before the Buyers make an offer, they are fully aware of all the uncovered issues. A lot of Sellers resist having the pre-sale inspections done because they don’t want Buyers to know too much until the Buyers fall in love with the home. Big mistake.

The reason being, is if the Buyers are fully aware of the issues, they knowingly are making an offer based on the knowledge of any issues that were identified. More importantly, now that the owner has disclosed what’s wrong with the home, the Buyer doesn’t have a lot of room for negotiation as they entered the contract knowing the issues. Unless the Buyers’ inspections reveal other damage not noted in the reports, they really can’t ask for additional money for repairs or price reductions, because the issues were revealed at the time they entered the contract. The Buyers made the offer “As Is.”

Take my advice, and unless your home is going into foreclosure or will be a “short sale” and you can’t afford the inspections, you should always try and do them. A Seller will get more qualified Buyers and have a much greater likelihood of the Buyers not asking for huge concessions off the price of the home when they are ready to close.

If you would like to know more, give me a call at 415-755-8919.

Posted by:  Rick Smith

A short sale has potential benefits for everyone: the homeowner, the lenders, the neighbors and the agent.

Before launching into the benefits, please remember: your thoughts, comments and stories are more than welcome … it feels like KPFA pledge time … this is your life and I appreciate having you share in this dialogue which will help you and your community.

The place to begin is with the homeowner …. the most impacted of all the parties in a short sale is the homeowner … often a family with multiple losses … job loss, life-style loss, the loss of the family home, an esteem loss, and on and on … health is an issue. Stress is an issue. Impatience is an issue.

Often the homeowner has been anxiously trying to get a loan modification for three or six months or even a year … or more … this is a stressful, consuming process, a time of frustration, of living with life on hold, no time off, phone calls tugging at your soul … and with this time of pressure it is also a time of self doubt and ugly thoughts and images (Will I be homeless, living under a freeway? Is this the end of my life? Will our marriage fail? Will we lose our community and friends? What about our children, senior year of high school, hormones rushing and homeless? Our grandchildren? Will I ride the rails?) … Frequently these emotional disruptions and physical stresses lead to serious physical, emotional and mental illness … I’ve seen it and it is not pretty …

There are more therapists in Marin than doctors …. and there’s the Academy of Intuition Medicine which has produced some marvelous, state-certified energy healers … Community Action Marin has support groups … the county has mental health resources … and yes, there’s Marin Suicide Prevention to call if you’re hurting or need helpful guidance for someone you know who’s hurting … so if you know someone on the edge, on the ledge or impacted … contact me and let’s get them some support, guidance and expert help.

The upside of a short sale, properly conducted, is that the homeowner has the opportunity to regain momentum in their life … no longer ‘life on hold’ or ‘at affect,’ they can make plans and progress with goals … the low energy language of ‘at affect’ first came to me from Elizabeth Kubler-Ross when we helped create Survivors of Sudden Death … in the 1970s … cold, cut-off, desolate, doomed, forgetful, hardened, humorless, inattentive, indecisive, indifferent, invisible, listless, lost, negative, numb, resigned, spaced out, tired, unfocused, vague, wasted ….

When the load is lifted and shared by professionals, your vocabulary has the space to become filled with alive words of energy … certain, eager, loving, lucid, positive, graceful, thankful, peaceful …

Another benefit is restoring wrecked credit. Whether the sale ends up with credit either fully or partially restored (reported to the credit agencies as paid as agreed, paid as negotiated or paid in full) … or whether the homeowner has to wait 3 years (7 years or more with a bankruptcy or foreclosure) to be eligible for a loan …

So much to say about the homeowner in a short sale … but there are still ten segments in this series, so COMMENT …. and stay tuned.

Comments, please … experiences, yes …. And thank you!

Next installment, Part IV: Why Lenders Cooperate

Part I of XV, Introduction
Part II of XV, I Believe in Laughter
Part III of XV: How Homeowners Benefit

For more information, please visit www.tomverkozen.com.

Posted by:  Tom Verkozen

Although the stock market seems to be in a Bull Market once again, many investors are still afraid to put their money back into equities for fear of what happened 2 1/2 years ago when everything crashed and people lost 30-40% of their wealth. This poses the question, “Should I pay off my home instead of investing in the market?”

A recent article at CNNMoney.com sheds light on what a person should do with any cash today. You can find the full article here.

The idea of cutting down your debt is a good sound strategy, but is a home loan the right place to cut? The biggest thing to think about is that the mortgage interest you are paying is tax deductible and if history continues to repeat itself, then it may be wiser to put money into the stock market.

Likewise, if you plan to trade up or downsize, it doesn’t make sense to put extra money into your mortgage: you don’t want to put more money in your home and not be able to sell it, if the market continues to be shaky.

What should be paid off is any credit card debt you may have, and if you aren’t maxing out your contributions to 401K and IRA accounts, you should definitely be putting money there as well. If you have already done that, and you are near retirement, then it would make sense before paying off your home to make sure you have enough cash left for unexpected medical or financial emergencies. You should definitely not pull money out of your IRA to pay off your home loan, since the IRA will be taxed at ordinary income tax rates.

If you are in the 28% tax bracket and you have a 5% home loan, the effective rate of return in paying off a home mortgage loan is 3.6%. By comparison, a 50/50 mix of stocks and bonds has historically returned an average of 8.2% in the long term, although today it might be wiser to anticipate around a 6% return.

Just some food for thought. You need to decide what’s best for any additional cash you may be saving.

If you have any questions, don’t hesitate to call me at 415-755-8919

Posted by:  Rick Smith

As the economy continues to show signs of improvement, the cost of getting a new home mortgage is rising and higher risk fees are starting to be passed along to the borrower.

An interesting article in USA Today discusses what is happening with the lending market and should be of interest to anyone considering buying a new home. 

Basically, the article notes that for the first time since 2009, Fannie Mae and Freddie Mac are raising the risk fees they charge lenders on loans they buy for resale to investors, even for people that have had stellar credit in the past. To avoid the fees, most borrowers will need a FICO score of 740 or better and down payments of 25% or better. Lenders could absorb the costs, but most are expected to add it onto the loan costs. The increases affect most loans with longer than 15-year terms sent to Freddie starting March 1, and to Fannie on April 1.

USA Today gives an example of a buyer who is buying a $200,000 house, who has a FICO score of 700 and a 20% down payment. This buyer will now be paying an additional $1600 for the Fannie risk fee vs. $1200 before, a 33% increase. If the score were 680, then the fee would be $2800 or over double the previous cost.

Risk fees hadn’t applied to borrowers of a score of 740 or above, but now they face the smallest fee of .25% of the loan amount. For the first time, these fees are applying to everyone. Freddie says the .25% fee would have a nominal effect to the monthly payment for a home with a loan value of $200,000 or less. But living in Northern California, where the home mortgages are triple in price, could make it harder for some consumers to qualify.

Interest rates are also starting to finally creep up as well from the record lows back in the fourth quarter of last year. The lender I spoke to felt they would be up a half a point by the end of the year from where they currently stand.

My advice is if you are remotely interested in buying a home, it might be wise to do it this spring, as you could save hundreds of thousands of dollars over the course of a 30-year loan.

If you need more information, please don’t hesitate to call me at 415-755-8919, and I’ll be happy to help!

Posted by:  Rick Smith

When buyers are looking to purchase a home, I am often asked, “What do you think the anticipated property tax bill will be?”

First of all, when you put a contract on a new home, you should always request last year’s property tax bill as a disclosure of the anticipated taxes. However, confusion sometimes happens when the buyers receive the report, as the taxes are based on what the seller originally paid as the price for the home. Property taxes are set according to value, which is a basic 1% tax on the price as sold, and then there are local taxes based on what is assessed from the local schools, hospitals, fire department, water department, paramedics, etc. So, if the seller bought during the mad home boom of 2003-2007, then the sale price is probably inflated over where homes are selling for now, and the actual tax bill could be significantly lower.

For example: If the house was bought in 2005 for $1.0M, and no improvements were made, the base tax is $10,000 plus the local taxes. Since property values have slipped between 30 to 40% over the last 3 years, the house may be selling for around $700,000 today. The 1% tax base on this home now would be $7,000 plus the local taxes, which is a big benefit to the new homebuyer, as they will save $3000 on an annual basis.

The opposite can also be true in the case where the seller has owned the home prior to 1996, when home prices were much lower. If the seller bought a home in 1996 for $500,000, then the 1% tax base would be $5,000 and the new buyer would have an increase over the reported tax reports that were given during the buyer disclosure period.

It’s hard to say what is included in the local taxes as they vary from town to town. School taxes seem to be the primary differential here. For Marin County, a general rule of thumb for local taxes is an additional .25%, so that the total estimated tax is around 1.25% annually.

For homeowners that bought during the peak period 2004-2007, it would be a great idea to call the Marin County tax assessor to understand how your home can be reassessed at the new lower value. Sometimes this means contacting your real estate agent to get a list of comparable properties that have sold within the last six months in your area at lower prices. Then you have a good case to contest the current valuation to lower your taxes.

These are fairly large generalities, so if you would like a further explanation, just give me a call at 415-755-8919 or post your questions in the comment section below.

Posted by:  Rick Smith

The economy continues to improve, and the stock market has defiantly turned around in a big way, but there seems to be a bit of uncertainty amongst the home buyers I deal with. There is always that one second thought surrounding the purchase of a new home…

“What if I get laid off and can’t make the payments?”

The good news is that the California Association of Realtors is now offering a program that pays the buyers’ mortgage if they are laid off. It’s called the Home Payment Protection Plan (HPPP) and is offered by REALTORS to sellers at the time of listing as an added incentive to prospective buyers. The insurance is paid by the seller and is completely optional. It covers both new and repeat buyers for 12 months from the close of escrow and provides up to six months of mortgage payments up to $1,500, depending on the coverage selected by the seller. A seller can pay $200 for six mortgage payments up to $1,000 or $275 for six mortgage payments up to $1,500.

Check it out when you get ready to sell. This could be a great incentive to a buyer who could be having second thoughts on a purchase and could help ensure that the seller gets his house sold and the escrow closed.

Posted by:  Rick Smith

I pride myself in having expertise in dealing with a lot of first-time homebuyers. After meeting them and striking up a working relationship, they often ask:

“I want to start looking at homes right away. How do we get started?”

Most new homebuyers want to immediately jump into looking at homes, which can be done early on by visiting open houses and using internet home searches to get a feel for what the current market holds. However, probably the single most important first step is to determine how much of a mortgage payment you can afford each month and how much of a down payment a lender will require. This can be accomplished through what is called a pre-approval.

The pre-approval process is typically a free service where a lender evaluates the borrower’s financial situation and credit rating and determines the loan type, down payment requirement, interest rates, monthly payments, closing costs, and other terms that the lender is prepared to offer. The lending broker business is a competitive one, so you should meet with at least three lenders to determine the best rates and who you feel works the best with you.

There are several reasons why most housing experts recommend that you get pre-approved before starting your search:

1. Before spending time and effort, you should know if you are qualified with the right down payment and credit scores to look for a home;
2. By getting pre-approved, you know what you can afford and won’t spend time looking for homes that are not in your price range;
3. And probably the most important reason in my mind is this: Say you have found your dream home and you are ready to write an offer. Unfortunately, in today’s market, I have not come across a single listing agent that will even accept an offer without a pre-approval letter because the sellers don’t want to get involved with unqualified buyers who can’t afford the home or get a loan. Once buyers have found the home of their dreams, it can be very devastating to them to find out that they can’t even make an offer.

Regarding down payments, it is important to know that many lenders require at least a 20% down payment or more these days. One benefit of a larger down payment is that the borrower can offer much better terms on the mortgage loan. If the down payment is less than 20%, most lenders will require the borrower to purchase private mortgage insurance (PMI), depending on the nature of the loan. The best thing that happened in the last two years because of the economic recovery is that the government changed its limits on how much you can borrow on a government backed FHA loan. In Marin County, you can now get an FHA loan for loan amounts of up to $729,750 (for a single-family home), which is almost double what it was a couple of years ago!

With this loan you can qualify for the “conforming jumbo loan,” which is a much better rate than the Jumbo. And the best news yet is that your down payment can be as little as 3.5%!

This is great news for the first-time homebuyer in Marin. With home prices down roughly 35% from where they were two years ago, interest rates at the lowest that they have been in 60 years, and a down payment at only 3.5%, it is probably one of the largest single opportunities a new homebuyer will have in many, many years. Don’t let the opportunity slip away from you!

Posted by:  Rick Smith

I work with a lot of buyers and I always get asked, “What are all these crazy foreclosure terms and what do they mean?”

To help make sense of all these terms, you can divide them up into three categories.

1. Pre-foreclosure
Pre-foreclosure homes are the ones in the process of foreclosure, but have not been auctioned off. Owners often try to sell the properties because they owe more on their mortgage than what the home is currently worth. This is called a ”Short Sale” although the process is far longer to undertake than what the term implies, as it is usually complicated and a slow process that can take anywhere from 3 months to a year to complete. However buyers are given the chance to inspect the home prior to purchasing, whereas it’s not always the case when buying in other stages of foreclosure.

2. Foreclosure
The second category is the public auction at a foreclosure sale. Homes in this stage are well-priced, but also come with a few challenges to buy. These homes are not available for inspection and buyers may later discover the property needs lots of repairs to make it suitable for living. Many of these homes are bought by investors who have experience working with these types of homes, or the home may be taken back as an REO by the foreclosing lender or bank.

3. Real Estate Owned
The third category is an REO or “Real Estate Owned” property that’s been taken over by the bank. Although homes in this stage sometimes do not offer buyers the best price, buyers can generally perform thorough inspections, and many times the banks have made some repairs before putting the property up for sale. The bank then sells the homes “as is” and will not pay for any cosmetic issues, although they will often pay for some repairs that are health or safety issues. One of the key issues here is reserving enough money as a cushion to pay for unexpected repairs.

This process can be very confusing and I hope this simple explanation helps.

Homebuyers, have you been hesitant to consider purchasing one of these types of homes? What are your biggest questions/concerns? Leave me a comment below and I’ll be glad to answer any question you may have.

Posted by:  Rick Smith

Short sales are useful, difficult, complex and, the good news, evolving: In Marin, from January through April 2010 there were 94% more closed short sales of single family homes than for the same time in 2009.

The homeowner’s perspective
When a property is upside down (the mortgage amount is greater than the value of the home) or the owners are in financial difficulties (job loss, income shrivel or medical bills) they have a variety of options. Identifying these options and helping the homeowner make the necessary choices is the bailiwick of the real estate agent, accountants and attorneys.

Short sales (where the lenders agree to lose money) can be a helpful tool for homeowners who want to get on with their lives and minimize damage to their credit. As my favorite uncle used to say, “Remember, when times get tough survivors hunker down and look ahead and victims look back.”

While short sales are difficult and complex, done with the requisite perseverance and attention to detail, they do go through.
More on the homeowner’s situation in Part II.

The bank’s perspective
First the government rolled out the unsuccessful Home Affordable Refinance Plan (HARP), then the Home Affordable Modification Plan (HAMP). Less than 10% of the estimated 4 to 5 million homeowners ‘under water’ were helped by these programs.

Banks are not very happy about losing money. Now, with the advent of the Home Affordable Foreclosure Alternative (HAFA) program, the banks are being encouraged to avoid the more costly foreclosures and participate in short sales.
More on the banks in Part III.

The buyer’s perspective
Buyers interested in taking advantage of the market opportunities in these trying times need to differentiate between the short sale (bank approval needed) and bank owned properties (called REO’s). The short sale properties often take many, many months from offer acceptance to close of escrow while REO properties may close escrow very quickly but are often offered at surprisingly pleasing prices.
More on the opportunities for buyers in Part IV

Recognizing that there is a huge amount left unsaid in this posting, please let me know what questions it raises for you, what you’d like to know and on what issues you’d like more information.

My questions for you: Are you reading this for edification? Are you personally in a position to consider a short sale? Do you have a friend or family member struggling with a loan modification who needs more information? Call me at (415) 257-2039 or email me at tverkozen@fhallen.com.

Successful Short Sales in Marin County
Part I – Overview
Part II – Short Sales from the Homeowner’s perspective
Part III – Short Sales from the Bank’s perspective
Part IV – Short Sales from the Buyer’s perspective

Posted by:  Tom Verkozen

Well it is a good time to be a first time home buyer in Marin and Sonoma Counties. The Obama Administration has announced financial incentives. The main one is the $8,000 federal tax credit is now going to be offered for a down payment according to the housing secretary for the Department of Housing and Urban Development (HUD); they will publish policy that will allow FHA approved lenders and some others to monetize the tax credit through short term bridge loans.

If you would like more information about this subject you are welcome to call me (415) 899-9221 or email pschardt@fhallen.com and I will be glad to help you and guide you to use this credit if you are a first time home buyer. Go out and enjoy our beautiful counties we live in and have a nice day!

Posted by:Peter Schardt