Q. I just purchased a 900 sq. ft. 2 bedroom, 1 bath home back in April near Los Angeles. I am considering either adding an additional full bathroom off the master bedroom and/or enclosing the patio to make a sun room. My questions are: 1. What is the better addition to make in terms of resale value, resale potential, return on investment? 2. Do you think the investment is worth it in terms of resale value, resale potential, and return on investment? I’m curious if a 2 BR, 2 BATH is much more marketable than a 2BR, 1BATH? I am also considering adding an entire master suite, complete with full bedroom and bath, making the home a 3+2 but not sure if the extra expense would be justified in terms of return on investment. If you had the money for any of these additions, which one(s) would you do? Or should I just leave the property as-is? First, your return is dependent on a several factors: 1.) Will adding rooms/bathrooms be consistent with neighborhood? In other words, if you build a mansion in the middle of 2BR/1BA bungalows, you will never get the return as if you were building a mansion along Bel Air Avenue. So make sure you have input from a local real estate agent in regards to the neighborhood consistency, value, and general appreciation predictions. Is this an up and coming neighborhood? Are other owners remodeling? etc. 2.) Additions should flow well with the rest of the house. Quirky add ons ( cramming a bath in a closet etc) do not get the return that a well planned, within flow of the current floor plan will. Make sure it can be done in a way that improves the floor plan and not hinders it. 3.) Bedrooms in…
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Q. How is the Brickyard Condo complex in San Jose area? I like this complex design a lot. The units have some unique features and different layouts, not so cookie cutter style. I think it is a great space with community rooms available for residents that promote the kind of “live/work” idea. It is a secured, gated garage, and internal entry so that certainly provides a level of security. The challenge to me is the economic issues have not allowed the neighborhood to change with the Brickyard and unfortunately, many of the units are under water. The last time I checked there were legal action being taken against the HOA and builder. Either one of these issues would prevent a loan being used to purchase unless it was a private lender (hard money lender). The REO lenders may provide financing. If you want to look at crime in the area and general downtown area – check out http://www.crimereports.com Got a real estate question? Talk to CJ! Tags: Talk to CJ
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Q. We’re buying a short sale. There have been differing points of view from the selling and buying agents, greatly impacting our contingency timeframe. If anyone can offer insight, that would be great. The California Association of Realtors Short Sale addendum form leaves some ambiguity in regards to “acceptance” of a short sale approval is conveyed. The short sale addendum simply states the approval letter needs to be delivered to the buyer. However, the listing agent sending you a copy is not confirmation of acceptance of the short sale terms by the seller unless it is signed by the seller. Different banks issue different letters. Some require a specific signature agreeing to the terms by the sellers and acknowledgement from the buyer. Some don’t have a signature and simply state the terms of the short sale acceptance. Unless your agent specified in your contract or the short sale addendum that the delivery required seller’s signature, it would not need to be signed by the seller to meet the standard wording in the short sale addendum. An attorney might argue why would the seller deliver the letter if they weren’t in agreement but many times it is the listing agent passing on the approval letter to get the timeline going. In your case, because the seller was obtaining counsel from their attorney, it appears they did not accept it until the 8th. The bottom line, unless the stipulation of seller signature upon short sale approval was included in the contract/addendum you may have a hard time enforcing the 8th. Ultimately, all want to close the deal. If you can convince the agent and seller that a longer contingency will not impact the actual closing (what most are worried about because of the approval date expiration) then you may very well be…
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Q. I am considering buying an REO foreclosure home. Do REO foreclosure homes sell for less than regular homes? The answer is YES, in general. Listing agents for banks tend to price aggressively and lower the price consistently until they find a solid offer. The more important strategy is how you and your agent will manage the offer if there are multiple offers. You have to be clear on what you see as the “value” of the home and set your limits clearly with the help of your agent. I have seen buyers get into bidding wars for many emotional reasons and end up paying more for the home then they might ought have. But if they are happy? Then does it matter? Whether it is a short sale or REO, patience and the clearest view of value wins out. The market is very dynamic and it takes homework, and a strong negotiator, on your behalf, from your agent. I would also add that if you find a private owner with equity, you can many times get a lot more for your dollar (repairs, closing cost paid, etc). One of the first priorities to establish – are you looking for a deal or a home? From there, go shopping. You may change your mind either way about what is ultimately important. I believe there is a lot of pressure on buyers when their friends ask about their recent home purchase. Everyone wants to be able to come off as a savvy purchaser, taking advantage of a down market, and reply, “Yeh, I got this great house for X dollars under market!” It is possible, but not always true. Got a real estate question? Talk to CJ! Tags: Talk to CJ
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The Wall Street Journal reports stronger lure for prospective home buyers with the monthly cost of owning a home more affordable now than at any point in the past 15 years, homeownership is becoming less expensive than renting in a growing number of cities. The Wall Street Journal’s third-quarter survey of housing-market conditions in 28 of the nation’s largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc. Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4 percent, are the lowest in six decades. As a result, monthly mortgage payments on the median priced home – including taxes and insurance – are lower than the average rent levels in 12 metro areas, according to data compiled by Marcus & Millichap. Homeownership also is looking more affordable because after several years of declines, apartment rents will rise approximately 4 percent this year, and rents are poised to pick up even more momentum across the country next year, according to Marcus & Millichap. Affordability could continue to improve as prices slide even lower in coming months. Price declines are likely because the share of “distressed” sales, including bank-owned foreclosures, tend to rise in the winter, when traditional sales activity cools. Tags: Market Information
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Q -So I just made an offer on a short sale where the seller received a NOD almost 60 days ago. The seller agreed to the terms, so my question is how long do I have to typically wait to see if the seller’s lender disapproves or approves the offer. Their lender is BofA and that is my lender as well does that help the process any. Answer: There is no way of predicting short sale timing. 1.) Is it HAFA pre-approved? With an agreed upon list price? Or was this the list price the agent/seller chose? 2.) Is it one lender or more? Are there other liens? (HOA, garbage, mechanics?) 3.) Is the loan(s) being short sold portfolio loans (owned by initiating bank) or by investors? Was it previously a CountryWide loan? 4.) Is there mortgage insurance attached to the loan? 5.) How does the offer price compare to other neighborhood sales? Will the bank believe the offer price is a fair price based on recent sales or will they counter at a higher price? 6.) How on top-of-it is the agent? Do they call weekly (sometimes more)? Is the file complete? Does the agent provide a weekly update to buyer’s agent? 7.) Did the seller provide all the appropriate paperwork? Are they working well with bank and agent to answer any request in a timely manner? I have had Bank of America short sales with two loans approved in less than 45 days – non HAFA. With HAFA 60-90 days. (Strange as HAFA was suppose to shorten timelines.). I would suggest you try to get some word on whether or not the NOD (Notice of Default) has been issued, whether or not the short sale negotiator has actually been assigned, and whether or not the foreclosure process is…
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Recent housing reporting has been all over the place. The price range between $300,000 – $600,000 is still very competitive with some listings going for 101% to 103% to list price. But there are strong indicators that the above $700,000 market is going to start feeling price pressure. Why? When the housing bust started, the government increased the high income area loan limit to $729,750. That meant that if you qualified you could place as little as 3.5% down on a home as long as your loan limit did not exceed $729,750. “The number of $500,000-plus homes sold dropped 25.4 percent month-to-month and 19.2 percent year-over-year, while sales below $500,000 fell 17.1 percent month-to-month and increased 3.5 percent from a year ago.” Data Quick But now, that has been reduced to $625,500. This means the buying pool for FHA loans will be reduced. In February 2010 nearly 20% of all loans were FHA in the San Jose/Silicon Valley area. Prior to 2009, the number of FHA loans were 0% because the conforming loan limit was $417,000. So, some are predicting a 3-5% reduction in buyers being able to afford over $700,000 for the remaining of 2011. There are movements in Congress to extend the higher limits but lenders have already stopped accepting applications. Active listings consist of Short sales, about 30% of the market while REO/bank owned homes are about 10%. Highest demand areas are currently good school areas which is driven by parents trying to find homes before the school year starts. As always, the best homes, in pristine move-in condition, in the best neighborhoods, i.e. schools, are selling first for the most money with multiple offers. But where are the deals? Talking with investors, even the court house steps are not providing many deals. An investor I spoke…
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Q. The buyer on my home asked to extend the removal of the loan contingency. What happens if we extend and they still don’t remove the contingency? A. In this lending market, it is not uncommon to have delays regarding loan approval. Sometimes, for no other reason than a back-up on the underwriting side or appraisal process that has nothing to do with the buyer’s ability to get a loan. As the seller, you have a couple of questions to ask before determining your next steps. 1.) Why is more time needed? What are the details? Are these resolvable issues or does it put the buyer at risk of not being able to obtain the loan? 2.) How much time is needed to get it all approved? Will this effect closing date or can close of escrow remain the same? Sit down with your agent and based on above questions decide if you would like to allow an extension or generate a “Notice to Buyer to Perform”. Which basically states,”release your contingencies or cancel the contract”. In my opinion and many years of real estate, I rarely have to have sellers issue a notice to perform. As agents it is our job to manage timelines and stay ahead of the dead lines not behind them. Find out the reasons for the delay, make decision on whether it is worth the wait, or have the buyer release the contract so that you may look for a new buyer. Tags: Talk to CJ
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The number of “notices of defaults” (NODs) are climbing and climbing. But the reality is the current home buyer is not the one being able to take advantage of these returned homes.
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The market barometer that indicates whether or not the Willow Glen area is in a buyer’s market or seller’s market. Currently, there is only about four months of inventory on hand which would lean toward a seller’s market.
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I have a friend who is a very intelligent person, highly organized, and very resourceful. He decided to purchase a short sale utilizing the listing agent of the home. He has been kind enough to detail out his experience and has allowed me to share step by step here. His experience is not unlike many short sales I have completed with clients. Whether I represent the buyer or the seller, I am always amazed at how each lender handles the short sale process. I have sat down with clients and went on and on about the process and how they should be prepared to wait for months for an outcome and low and behold, we receive approval in 10 days and close in 40 days. They are very unpredictable transactions. If you are considering buying a short sale, take a look at the step by step process this buyer went through to purchase his home. Knowing the pit falls may help you. 1. Made offer of $149K (2-26-2009) 2. Applied for FHA loan 3. Informed that property was going to auction. 4. Informed that property won’t go to auction; offer is being reviewed. 5. Wait for Aurora’s appraisal 6. Lender -Aurora counter offered $152,750.00 7. Counter offer accepted. 8. Rate lock on loan expires. Extension acquired. 9. Move out of apartment. Landlord illegally keeps deposit. 10. FHA loan denied based on insufficient HOA reserves. Tags: Buyers’ Tips, Short Sale, home purchase, mortgage insurance, short sale
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I am all for helping the consumer understand the complicated loan process connected to purchasing a home. In that light, I wanted to make sure everyone is aware of the changes to the Regulation Z requirements that went into affect on July 30th, 2009. These changes will definitely inform the consumer about changes in fees related to the loan they are receiving but also have the potential to delay closing on the purchase of their home. Loan officers, real estate agents, title companies, and consumers will need to be informed and prepared for how these regulations may impact the home purchase time line. If you want more details about this new change it is best to speak with a loan professional. Gabe Bodner with Bay Area Financing has written a great blog post with an over view of the changes. You can also check out the video below for an overview. HERA Is Not You’re HERO in RE – The most amazing videos are a click away Tags: Buyers’ Tips, APR, finance charges, home buying, reg z, truth and lending
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