1.) Who is the bank and/or lender?

Some banks are simply better at the short sale approval process than others.  Wells Fargo, Chase, and Bank of America have seemingly put the most effort into streamlining the process. Bank of America utilizes EQUATOR (an online transaction management system) and this has definitely helped in reducing the amount of duplicate requests for paperwork.  Wells Fargo and Chase have implemented fast track processes where they don’t require complete financial package documentation if the seller has already attempted a loan modification.

2.) Has the seller submitted all the paper work?

Some sellers are not at good at record keeping and many times, bank statements, pay stubs, and tax returns take time to locate and submit to the lender.  The lenders want all pages and sometimes sellers simply throw documents away.  Requesting back statements and copies of tax returns can take time.  Sellers may also have to provide copies of divorce decrees, alimony and child support statements and all of these documents must be updated at the time an offer is presented to the lender for approval and every 30 days after.

3.) How many loans and/or liens are there?

Every lien must be negotiated in a short sale.  This can be mortgages, HOA (Home Owner Association) dues, tax liens, personal tax liens, mechanics, and utility liens (like garbage or electric).  Liens are negotiated by position.  The senior lien holder gets to decide how much the junior lien holders will receive from the short sale.  This is where conflicts can arise.  Property tax liens take seniority over mortgages as do personal tax liens, child custody and the like.  Many lenders will not pay back HOA dues or penalties and attorney fees related to delinquent bills. The higher the number of liens, the harder and longer a short sale approval can be for all involved.

4.) Is/Are the mortgage(s) is a portfolio lien or an investor(s) held lien?

Many loans were made and then sold in bulk to 3rd party investors.  If the bank/lender actually kept the loan and did not sell it to another bank or investor, it is considered a portfolio loan.  If the loan is held by the lender you only need the lender management to agree to the short sale.  If there is an investor, state entity like Cal HFA, federal entities like Fannie Mae or Freddie Mac, or mortgage insurer involved, approvals can take longer.

5.) Has the lien been discharged?

If the lender or investor has already “written off” the loan as bad debt it is typically sold to a credit collection agency for pennies on the dollar.  Collection agencies are very common for HOA past due amounts.  Since the collection agency has paid for the debt based on a recovery amount in mind they can be challenging to negotiate with when it comes to short sales.

6.) Does the short sale seller qualify for HAFA?

HAFA is a great government program attempting to bring some standardization and incentive to the short sale process.  HAFA (Home Affordable Foreclosure Alternative) provides cash to the lender and the seller to complete a short sale but the program is voluntary.  Many of the big lenders like Bank of America have outsourced the HAFA files to third parties and unfortunately they are not always as organized and appropriately staffed to handle the volume.  Again, it is a voluntary program and investors do not have to accept the HAFA terms of a short sale.  Sometimes the question; Does it qualify as a HAFA short sale? – takes longer to obtain than the actual standard short sale approval.  However, it does provide a $3,000 relocation assistance to the seller and this can be very important to help sellers move out of the home they are losing.

7.) Are the real estate agents involved experienced, organized, diligent, communicative, and polite?

It is so very important the agents involved in a short sale are the very best professionals.  It takes solid experience to know which short sales are likely to succeed and which ones will not.  If the listing agent is not upfront about the sellers situation and poorly organized in the short sale package, the buyer can be waiting a long time simply to find out there is no deal.  Equally, if the buyer’s agent is encouraging buyers to write multiple offers with no real intent to work the deal, sellers can find themselves pulling all of it together for the lender only to find the buyer cancels before a short sale approval is issued.   The short sale process takes commitment from everyone involved to be successful.  Short sales make up nearly 30% of all homes for sale in the Bay Area and only 3 out of 10 actually close.  Ask your agent a lot of questions about their experience, their strategy, and their commitment to the short sale process before selling or buying a home.

8.) Is the buyer’s agent  setting proper expectations with AS IS, market value, and timeline?

Short sales are almost always AS IS.  Many buyers obviously do not want to invest in inspections before knowing their offer has been approved by the short sale lender.  However, an experienced real estate agent can help a buyer anticipate items like termite repairs, roof age, broken furnaces and the like before inspections are ever complete.  Do a thorough walk through of the home before writing an offer on a short sale and calculate a guesstimate on repairs.  Have a contractor walk through with you if possible.  Check light switches, flush toilets, turn on the furnace or AC, look for damaged wood and the like to get a good idea of repairs.  Make your offer based on the current market value minus repairs cost.  Take pictures, write it up and have the agent submit with your offer.  All good short sale agents should be supporting listing price/offer price with market activity, photos, and repair lists.   Nothing is more wasteful then to have a offer fall out because of repairs that could have been anticipated and written into the offer prior to submission to the lender for approval.

9.) How many humans are involved with the file?

People make mistakes, lose paperwork, make the wrong decisions and all can go to Hades in a hand basket. The volume of short sales is staggering with any of the major lenders.  Short sale agents that are good may have taken on too many short sales and can’t keep up with the volume of paper work and constant contact needed to take each sale to close. Fax machines are still in use by many of the lenders and we all know how it goes when faxing 25 pages and page 6 doesn’t make it.  Electronic faxes and files are helping but there are lost pages out there.  Departments don’t always talk to each other and I have seen homes foreclosed upon when the short sale approval was in process and even approved.  Short sale approval letters seem to come by slow boat and many times the anxiety of waiting can challenge the most zen-like person’s patience.  Some agents use 3rd party vendors to “manage” their short sales.  They charge the buyer or the buyer’s agent a fee to do this and I totally disagree with this practice.   A short sale listing agent can either pay the fee for shifting the work of phone calling everyday to someone else or handle the process themselves.  But charging the buyer or buyer’s agent is wrong in my book.  In my humble opinion, those who manage their own short sales are better and more motivated to make it happen and all incentives should be provided to keep the buyer committed to the process.

10.) How many months has the seller missed paying their mortgage?

This is a big one that is many times over looked.  Latest statistics tell us that the average home owner has lived in the home 375 days without making a payment before foreclosed upon.  The more payments missed, the less likely the short sale will be approved.  The more payments missed, the more steps are taken toward foreclosure.  Notice of Default and Notice of Trustee sales are legal actions taken against a homeowner in default.  Sometimes, the train has left the station and is there no way to stop the foreclosure.  Buyers and buyer’s agents should always find out which if any of these notices have been served and whether or not they have been placed on hold.  Some lenders will not approve a short sale within 20 days of a Trustee Sale.

There are many questions to ask when pursuing a short sale. Whether you are a buyer or seller considering a short sale, make sure your agent can give you the right information to make the right decision.  As a Certified Distressed Property Expert (CDPE), Certified Short Sale Negotiator (SSN), HAFA Certified Specialist (CHS), and an experienced, committed professional with success closing short sales transactions for sellers and buyers, I am here to answer any of your questions about the short sale process.  If you would like to talk about your options regarding the selling or purchasing of a short sale home, contact me for a no-obligation consultation.

But this is not simply an issue of value and square footage.  It can be a safety issue.  What may seem like simple updating regarding new electrical receptacles, newly re-plumbed baths with nice new tile, or more extravagant kitchen remodels can look good but have hidden issues.  I see this more and more with “flipped” foreclosures.  Investors comes in, applies granite to the kitchen, and new tile to the bath but disclosure indicate no permits and many times, no documentation the work was completed by a licensed contractor.

The debate goes on regarding the cost of permits for “simple” work but the rules are the rules and sometimes buyers are more concerned with “updated” than permitted work.  There are not enough inspectors to keep up with the number of foreclosed flips and many times non-permitted work has been a part of the house for several decades without any issues.  The obvious converted garage is not the only type of non-permitted work but commonly San Jose residents have made their homes larger without properly following easements, square footage to lot limitations, and many did not use licensed contractors.

If you are buying a house, you can find out about permits through the local municipalities building department.  Some cities in Santa Clara County have online searches and others require a written request.  Not all permits are online and sometimes you will need to go down to the building or planning office and request to see the plans or documents.  Plan to spend anywhere from 1 hour to a day depending on the nature of the building change.  Sometimes the online files are not clear on whether or not the permit was inspected and given final approval.  If it doesn’t have a final sign off, it is not a completed permit.  Ask questions and understand the impact to you as the new owner of the property.  Even if it didn’t effect value ten years ago, it may now, or may in the future.

Here is a list of links for permit searches in Santa Clara County. Also, don’t hesitate to ask your real estate agent to help you.

San Jose
Campbell
Santa Clara
Sunnyvale
Milpitas
Palo Alto
Los Gatos
Mountain View
Morgan Hill
Gilroy
Saratoga

It is now 2 ways past escrow. Since the neighbor does not want to sign the easement, the seller wants to move a portion of the driveway. This house is on a hill, with a steep driveway. We are concerned that if we move the driveway, then fire trucks or any delivery person will not be able to reach the house (the movers, with the existing curvature of the driveway could not reach the house). What are our options if we want to get out of this contract and still get our full deposit back? Thank you.

Answer:
1.) This issue is best resolved before close of escrow.  Understanding the cost, the implications, and possible solutions is critical to making a decision on whether or not to follow through with the purchase.  Since you have already move into the house and I assume some money has been exchanged it is best to resolve it instead of cancelling the deal.  Work it out with the seller to find an acceptable solution to all regarding the easement and/or the driveway.

2.) If a newly disclosed issue and its possible solutions effect the value perception of the property, this could be a solid enough reason to cancel and retain your deposit. However, the only way to be sure that you are not at risk for breach of contract is to consult with an attorney.

3.) If there may also be other methods of keeping the easement under adverse possession and certainly an attorney can help evaluation the situation to see if it applies in this case.  A true survey may be needed as well help from the chain of title via the title company used during the transaction to understand where exactly the property line resides and how it has transferred with either lot.

4.) If the previous owner wants to move drive way it would seem most appropriate to make sure it is a drive way that does not create safety hazards.

I would highly recommend you consult with a real estate attorney immediately before proceeding with close of escrow or canceling the contract.

How much are Santa Clara County transfer fees? There are fees related to the transfer the property and in Santa Clara County these are paid by the seller.  However San Jose, Mountain View, and Palo Alto also have a city transfer tax and this is typically split 50/50 by buyer and seller.  Other counties such as Santa Cruz, Contra Costa and Napa do not have city transfer fees.  Normally the transfer tax is calculated by multiplying the rate by sales price per $1000.

An example of  Transfer Tax:

A home with a $500,000 sales price in San Jose would have the seller paying $1.10 per $1000 or $550 for the county transfer tax.

The city transfer tax for this example would be split 50/50 by the buyer and seller and would be at a rate of $3.30 per $1,000 which would equal $825 each.

There are also document recording fees, courier fees, electronic copy fees and miscellaneous fees such as notary and FedEx normally adding up to less than $500.

Lender fees include the cost of completing the loan and can include points, processing, and document prep fees.  Extra fees paid can also include appraisal(s), credit reports, and certifications.   A point charged is normally considered an origination fee and represents 1% of the loan amount.  Buyers can pay points to help lower their annual percentage rate (APR).  Each lender and each type of loan can vary in cost and it is best to shop fees for different lenders.  However, the percentage rate of a loan varies mostly by point of time related to the “lock” and not the lender.  Why?  There are major players in the lending industry that set percentage rates for borrowing money.  These rates dictated by a point in time and for the most part, if there is a loan product out there offering 4.0% interest rate on any given hour of the day, almost any loan officer can obtain it.  So when trying to shop your loan product, shop the fees around that loan rate and the lenders services.  Do you want to compare loan products and fees? Here is a downloadable PDF to help you compare side by side loan products and related fees.

What is Mortgage Insurance? This is an insurance policy purchased by the lender on behalf of the borrower to protect the lender against a borrowers default.  This insurance typically has an upfront fee (which can be financed into the loan) and a monthly fee (charged as a part of the monthly house payment).  Mortgage insurance is in play for any home where the borrower is placing less than 20% down or utilizing an FHA loan.  Lenders consider any borrower placing less than 20% down a risk for default in a dynamic free market and therefore insure against default.  There are some lenders who will loan at 10% without a monthly MI but they charge an upfront MI.  Having to carry  mortgage insurance  is a common criticism of FHA loans.  All FHA loans, irregardless of the amount financed will require mortgage insurance; either upfront or monthly.  However, it makes logical sense if a borrower is only able to place 3.5% down it may very well be the only way to buy a home.  If you want to find out more about mortgage insurance check out local mortgage professional, Shashank Shekhar, blog posts on MI FAQs and FHA mortgage insurance qualifications.

Escrow fees charged by a neutral 3rd party to manage the transfer of title and money involved within the transaction.  In Santa Clara County , the seller pays for escrow fees and therefore reserves the right to choose with escrow company is used.  In contrast, Alameda County the buyer chooses and pays for escrow fees.  Most of the companies are only dollars off of each other on what they charge for services but buyer or seller can shop around if they want.   Escrow fees in general range from $800 – $1500 dollars per transaction.  It can vary depending on the sales price and type of sale involved.

Title fees charged to the buyer and seller to secure the title is free and clear of liens and is transferred with no other claims to the property.  This is an insurance policy to protect the seller in the transfer of title from seller to buyer.  A second policy is purchased by the buyer for the lender (unless the deal is all cash) to protect the lender’s collateral; the property.  Title insurance for the seller is paid by the seller and title insurance for the buyer or buyer’s lender is paid for by the buyer.  Policies are priced based on sales amount and loan amount.

HOA Fees can be charged when buying a condo, town home, or PUD (Planned Urban Development) home.  The Home Owner Association can charge for transfer fees, document preparation fees, and certifications.  A recent bill signed by Governor Jerry Brown limited the amount Home Owner Associations and related 3rd party vendors can charge buyers and sellers during the transfer of ownership.

Additional fees can come in form of repairs or inspections billed to escrow.  Some companies who complete inspections are willing to bill to escrow so that the seller pays out of proceeds or the buyer pays at closing.   For the most part the inspection companies will charge more to bill escrow and most real estate agents and loan officers prefer these fees stay out of the escrow to keep the purchase as clean as possible.  This is the same for repairs.  If the seller replaces the roof and doesn’t want to fork out cash until the deal closes, some companies will charge escrow and the seller can then pay out of the proceeds received from the sale at the time of closing.

It is important to understand your cost no matter which side of the deal you are on.  Commissions to the real estate agents are typically paid by the seller or in the case of a short sale the short sale lender(s).  Loan fees are based on your lender, if you don’t have one, find one and they can provide a good estimate on fees related to the loan you qualify for as a borrower. As a seller or buyer you can ask your real estate agent to prepare an estimated cost sheet.  Keep in mind, this is estimated.  Prorated items such as insurance, property taxes, and interest on the loan are determined by the closing date.  The buyer will initially pay a prorated property tax based on the seller’s rate and then receive a supplemental tax bill after the deal closes at the new rate.  For Santa Clara County we use 1.25% of sales price as an estimate for new property tax rates.

Buying a home can be a bit overwhelming to some and it is always best to consult with a professional in the local area to understand all your considerations.  If you have questions about closing costs or other real estate matters, contact me for a no-hassle, no-obligation consultation.

The HARP program has been around for awhile but one of the biggest limiting factors regarding its application is the loan to home value ratio could not be greater than 125%.  In other words as long as your home only lost 25% of its value in the last 4 years you could qualify.  Obviously, many home owners have lost more than 25% and some took out second mortgages that decreased their value up to 50%.  With the revised guidelines, there is no loan-to-value ratio limit.

To qualify for the program you must meet three basic requirements:

1. You must be current on your mortgage and have not been over 30 days late in the last year.
2. Your loan must have been initiated prior to May 31st, 2009
3. Your loan  must be backed by Fannie Mae or Freddie Mac

The biggest challenge to the program for Bay Area homeowners is few of the mortgages made prior to 2009 were backed by Fannie Mae and Freddie Mac.  You can determine whether or not your loan(s) is owned by Fannie Mae or owned by Freddie Mac by entering your loan account number on these web sites.  Also recognize this must be your primary residence and the program only replies to senior liens not home equity lines or second mortgages.  Also, recently maximum loan limits for the Bay Area were reduced from $729,750 to $629,500.  There are efforts to revert this back to the higher limits but the bill currently faces the House of Representatives and many do not believe it will pass.  This means your first loan can not exceed $629,500.  There are also alternative programs if your home is not owned by Fannie Mae or Freddie Mac to refinance or reduce your monthly house payments.

Also, items to consider when refinancing any loan.  You want to protect yourself by maintaining a non-recourse loan if possible.  Also make sure you understand the cost of refinancing any loan verses the benefit.  Finally, if you are behind on  your mortgage and have exhausted all possible solutions to refinancing  current loan(s) you may want to consider short selling the home to avoid foreclosure.  If you want to learn more about short sales or want to discuss your options with no obligation or cost contact me.

No wonder the consumer is confused about where our real estate market is heading.  One headline reads “More Foreclosure Activity”, another reads “Home sales up 19% year to year”, and don’t even bother listening to the news because everything is negative, negative, negative!
That is why you need local market information!  Thank goodness, you know me!

So here is the local scoop.

Out of 27 zip codes within San Jose:

SIX had an increase in price per square foot in July and August over 2010.

NINE had an increase in median sales price on average 15%! Highest increase by zip?  95112 – downtown with a nearly 23% increase over last year! (#2 Willow Glen, #3 Santa Teresa)

ELEVEN had an increase in volume of sales with 95130 increasing nearly 50% over last year.

Some of you have heard me say it but here it is again;  Investors are buying homes.  Willing to buy without leverage, all cash because they believe the potential upside is there.  With nearly 30% of them paying all cash, it is hard to believe this is the whim of speculators.  Consider the fact that your leveraged dollar is now at or below 4% because of interest rates, and that affordability is at a 30 year high for  San Jose. There are opportunities for those who truly want a home.  You will either be a home owner building equity or you are a renter building equity for these investors.

“Last month absentee buyers – mostly investors – purchased 21.3 percent of all Bay Area homes sold, up from 20.5 percent in July and 17.8 percent a year ago. The peak was 23.4 percent in February this year, while the monthly average since 2000 is 13.8 percent. Absentee buyers paid a median $242,818 in August, up from $240,000 in July but down from $260,000 a year ago.
Buyers who appeared to have paid all cash – meaning no corresponding purchase loan was found in the public record – accounted for 27.5 percent of sales in August, up from 26.3 percent in July and up from 25.6 percent a year ago. The record was 30.5 percent this February, while the monthly average is 11.9 percent since 1988. Cash buyers paid a median $245,000 in August, the same as in July but down from $272,727 a year earlier.  – DataQuick”
Here is the link to the August report.  Recognize, even a report on the BAY AREA is not a good local gauge.  If you have questions about specific neighborhoods, please let me know.  I am here to help!

Some more interesting charts for the San Jose area (Click on image to enlarge!)

Here is a step-by-step guide to how to replace a wax ring on a toilet.  Below you will also find a video from Joe Schmidt at the Home Remodel Workshop You Tube Channel  to help you walk through this simple home maintenance item.  There are great videos on this channel for home maintenance do-it-yourself tasks.

In the beginning
When short sales first returned to our housing market in 2008, the lenders were reluctant to approve and many times proceeded to foreclosure.  Over the last three years we have seen a change in the approval process and more short sales are being approved every day.  The second challenge to selling a short sale was the amount of time it took to process the short sale.  The banks were overwhelmed and simply did not have  the staff to keep up with volume of short sale requests.  Third, the banks did not really have a process in place for how to approve a short sale in this current market and arbitrary decisions were being made in regards to which seller/borrowers qualified.

The initial short sale packets required by the short sale lender included pretty much every piece of documentation they possibly think of from the seller/owner and all via fax. Pages were missed, packages were deemed incomplete, and the clock kept ticking along for months.  Now, the packages have been reduced and many banks allow for electronic uploads through systems like EQUATOR.  This has allowed the process of qualifying the seller quicker and the process of obtaining approval has been improving.   Further improvements come in the government program HAFA.  This program sets timelines for approval and provided incentives to the short sale lender and to the seller via $3000.00 for relocation.

Complicating the short sale process
The complications of short sales normally come in the manner of additional liens on the property.   If there is one loan and one bank to deal with, many times the approval process is fairly straightforward and reasonably quick.  The challenges to short sales come when there is more than one loan on the property, further exaggerated when it is a different lender than the first or senior lien holder, un-paid property taxes, and unpaid HOA (Home Owner Association) dues.  In this situation, instead of asking one lien holder to take less than what is owed, you are asking multiple lien holders to approve the short sale.  Multiple lien holders equals complexity around the approval and time.

Who gets paid?
Lien holders are ranked in order of pay off position.  Taxes are always first.  Therefore, back taxes must be paid prior to any other lien being satisfied.  The “first position” loan lien is normally called the senior lien holder and after taxes, they are paid first.  Lien holders after these two, are considered subordinate lien holders.  In a foreclosure, these subordinate liens will most likely receive nothing.  But their approval in a short sale is required.  The senior lien holder (1st position lien) will typically offer the subordinate lien holders a small pay off to obtain short sale approval.  The thinking is with a short sale they will receive something in comparison to a foreclosure subordinate liens will receive nothing.   It is fairly common to offer $3,000 to remaining lenders but more recently, subordinate lenders are requiring 10% of unpaid balance to approve a short sale.

Lenders are very reluctant to pay delinquent HOA dues in conjunction with a short sale.  From the lender’s perspective the  borrower may not have been able to pay the mortgage but surely they could pay the HOA fees as they are normally less than $500 per month.  Only in extreme circumstances do you see a lender include delinquent HOA dues in a short sale payoff.  The hardship must be clear and convincing.  Therefore it very important that as a seller, HOA dues are paid if a short sale approval is the goal.  From a buyer’s perspective, always know how delinquent the HOA dues are and who intends to pay for them.  It is not uncommon for the seller or short sale lender to come back and ask for someone else to pay the delinquent dues in order to approve the short sale.  Also included in the pay off are the seller’s closing costs.  This includes escrow fees, title fees, transfer taxes, and commissions.  The short sale lender must approved these charges as well.

How do know what liens are on the property?
Your agent should be able to obtain a preliminary title report which outlines all liens and balances as of the date the report is issued.  Make sure it is the most recent preliminary report.  Your agent can also request to see a HUD-1.  This is an estimate cost and proceeds sheet used by the short sale lender to approve the deal.  The agent can write this into the contract under “additional disclosures” .  This allows the buyer to understand during the contingency period whether or not all liens are included and can help prevent surprise seller or buyer contribution request late in the game.  It is great if your agent can get these items prior to writing an offer but sometimes it is difficult to do so.  Always worth asking.

Overcoming challenges to purchasing short sales:

1.) Know the lien holders involved.  How many? Same bank? Back taxes? Delinquent HOAs?   The fewer lien holders, the better chance of a straight forward approval.

2.) Patience is key but the file should be progressing or someone is not on top of it.  It takes constant communication with the lender to keep a file moving.  The listing agent should be providing your agent weekly updates. Your agent should be providing you weekly updates.

3.) Property is sold AS IS. Very, very rarely will banks consent to any repairs.  Only in extreme conditions will they allow a credit for repair.  Do not assume, as a buyer, anything will be fixed or credited.  If you find something you are not happy with during inspection you can ask for a repair/credit but don’t be surprised at all if the lender says no.   Sellers typically have no money or motivation to make repairs.

4.) Don’t become a landlord.  Your agent can write into the contract the property must be vacated 5 days prior to close of escrow with a 40 day close of escrow.  Sometimes short sale sellers have not been making payments for over a year.  With bad credit and no rent, they sometimes have a hard time find motivation to move out.  If they are there after close of escrow, you are now a landlord.  Eviction laws prevail and it can cost money to hire lawyers to facilitate the vacancy.

5.) Just because it is a short sale does not mean it is a deal.  The banks are becoming more and more savvy about market conditions and market value.  They are attempting to obtain as much of a repayment as possible.  The short sale lender will complete a BPO (Broker’s Price Opinion) or an appraisal to know whether or not the offer price is competitive for the market place.

More and more, we are seeing listing agents for short sales require a deposit from the buyer and they want the buyer to complete physical investigation prior to short sale approval.   In certain situations, this may be appropriate.  However, if the buyer signs a short sale addendum stating they will wait for 45 days for short sale approval and deposit money into escrow, it sets up for a challenge if you cancel early.  If money is spent on inspections prior to short sale approval and for some reason it is not approved, the buyer is out that money.  There are contractual ways to protect the buyer and the buyer’s agent should share these options with you.

In the San Jose market, nearly 35% of all sales are short sales.  With 1/3 of the market being short sales, your agent can not avoid showing you these homes.  Short sale knowledge helps the transaction go smoother and can help keep the stress down for all involved.  Understand with short sales, there are speed bumps.   Ask your agent about their experience and how they work to avoid the pitfalls of short sale purchases.  Experience, investigation of title, tenacity, patience, and contract management are keys to a successful short sale transaction.

For reference here is a short sale process flow chart.  If you have questions about short sales, contact me.

click to enlarge

When Robert and Anne bought their family home thirty years ago, their plan was to live through retirement in this home. They had furnished their home with refurbished antiques acquired from their many trips together. It was one of their cherished antique coffee tables that Robert tripped over, breaking his hip.  Now with his return from the hospital in a wheelchair, the overwhelming task of making their home accessible for Robert’s wheelchair and safe for both of them faced Anne.

Remodeling for wheelchair access, organizing home furnishings and daily living items or downsizing and relocating to a smaller living area are monumental tasks that are many times thrust on senior home owners.  Sometimes the need to do this is brought on by injury or age related illness. Home and yard maintenance can become a daunting chore for even the healthiest of seniors, requiring them to make a downsizing decision.

There is a large and growing industry of specialists who understand these challenges of elderly homeowners and are ready and willing to help with remodeling, organizing or the sale of the home and with the move to a new location.

A professional organizer provides skills in making the home safe and manageable. Relocating furniture, removing hazards such as electrical cords, throw rugs, heavy objects on shelves that might fall are some of the ways they make a home more senior friendly.  They specialize in helping seniors part with items that clutter or have no valued use, so to make rooms less crowded or to make ready for a move to a smaller living space.

Handicap remodeling services and senior safety services offer help in adding wheelchair ramps and widening doorways. Bathrooms are made more accessible and safe, with hand rails, walk-in bath facilities and easier access to toilets.

If moving to a smaller retirement home or care facility is the best solution there is another senior specialty provider to call on called a Seniors Real Estate Specialist.

The Senior Real Estate Specialist concentrates more on a complete service package for the sale of the property and/or the purchase of a new living arrangement. The specialist also arranges for the services of a relocation specialist or Senior Move Manager to provide a complete, stress-free package for the elderly homeowner.

A move often requires downsizing and getting rid of a tremendous number of acquired possessions. The relocation specialist or Senior Move Manager, as they are often called, will typically provide a turnkey operation that includes assessing and identifying items to keep, arranging for auction or other disposal, cleaning the home, moving the belongings and setting up the new residence. The manager may also work closely with a real estate agent to arrange for the sale of the home and may also be involved in the financial transactions necessary to move into a new living arrangement.

All the help available to seniors may in itself be overwhelming.  How do seniors choose the right service provider for their needs?  How do they know they will hire someone qualified, responsible and honest?  Area Agencies on Aging and State Better Business Bureaus are good resources to check out available service providers.

Family, friends and religious leaders can be valuable resources to seniors in referring service providers and helping to manage the hiring and supervision.

The National Care Planning Council’s website www.longtermcarelink.net provides educational articles and information on eldercare providers throughout the nation.

The program provides up to $25,000 in a 20 year note that can be utilized to make improvements of their choice, based on a list of DOE (Department of Energy) and FHA approved projects.  Energy efficient heating and air conditioners, water heaters, duct sealing, and solar panels are just a few of the approved items on the list.  It is recommended that the homeowner complete an energy audit that will allow them to choose the most appropriate items to include in the energy remodel/upgrade.

The interest rates are competitive but only certain lenders are approved to make these loans.  For a list of approved lender click here.  This loan will be a subordinate lien and can be just the right answer to homeowners looking to lower their energy bills.  These loans are backed by the government up to 90% and FHA has promised a stream-lined approval process for loan applications for this program.  The borrower must have a credit score of at least 660 and their total debt-to-income ratio can not exceed 45%.  The loan to value total can not exceed 100%.

1. Homeowner must qualify as a low-to-moderate income household, as follows:
   1. Low-to-moderate income of 120% or less of the HCD Area Median Income (as defined by the California State Department of Housing and Community Development), for a family of four, in the county where homeowner resides.  (For Santa Clara County, for a family of four HCD is $124,000)
   2. A loan financed in whole or in part by bonds that are tax-exempt under IRC section 143, the homeowner is presumed to satisfy income limits.
2. Homeowner must complete and sign a Hardship Affidavit / 3rd Party Authorization
   documenting the reason for the hardship.
3. Homeowners who have recently encountered a financial hardship due to
   underemployment or unemployment, including those whose financial hardship is related
   to their military service.
4. Homeowner must agree to provide all necessary documentation to satisfy program
   guidelines established by CalHFA MAC.
5. Homeowner must be currently eligible to receive unemployment benefits.
6. Mortgage loan is delinquent or at risk of imminent default as substantiated by
   homeowner’s hardship documentation. Loans in foreclosure are not eligible.
7. Homeowner in an “active” Chapter 7 or Chapter 13 bankruptcy is eligible for the program
   subject to the homeowner’s counsel or bankruptcy trustee approval in accordance with
   local court rules and procedures.
8. General program eligibility is determined by CalHFA MAC, the housing counselor or
   servicer based on information received from the homeowner. Program-specific eligibility
   is determined by CalHFA MAC on a first-come/first-approved basis until program funds
   and funding reserves have been exhausted. Loan servicer will implement the HHF
   program based on participation agreement terms and conditions.
9. Current unpaid principal balance (UPB) of the first lien mortgage loan is not greater than
   $729,750 (GSE conforming limit for a one-unit property).
10. The property securing the mortgage loan must not be abandoned, vacant or condemned.
11. The applicant must own and occupy the single family, 1-4 unit home (an attached
    or detached house or a condominium unit) located in California and it must be their
    primary residence.

The program provides “mortgage payment assistance equal to the lesser of $3,000 per month or 100% of the PITI (principal, interest, tax, insurance) and any escrowed homeowner’s association dues or assessments, for up to six (6) months, with the purpose of preventing avoidable foreclosures until such time that the homeowner retains employment sufficient to meet the demands of satisfying their regular mortgage payment.”

Program assistance limitation is “up to $18,000 per household total (average funding of $14,455.43), equaling the lesser of $3,000 per month or 100% of PITI and any escrowed homeowner’s association dues or assessments (and in all cases, subject to the HHF Program maximum benefit cap of $50,000 with respect to monies previously received under other HHF Programs, if any).”

The structure of the assistance is in the form of non-recourse, non-interest bearing, subordinate loan secured by CalHFA.  At the conclusion of 3 years, the subordinate loan will be released.  “Loan funds will only be repaid to Eligible Entity (CalHFA MAC) in the event of a sale or refinance with sufficient net equity proceeds prior to forgiveness. Recovered funds will be recycled in order to provide additional program assistance until December 31, 2017, at which time any recovered funds will be returned to Treasury.”

To read more or apply see the Keep Your Home California website.

• One company stole a family’s money and all their possessions.
• Another scam artist bid the job over the phone for a low hourly rate and then held the family’s belongings hostage until they paid a sum three times the original amount.
• One company just didn’t show up.

These stories are enough to make your hair turn gray. But you don’t need to be a victim.

Follow these tips to save yourself the high cost and heartache of dealing with a dishonest mover:

1. Deal only with a mover who has a local office. No local office, no deal.
2. Deal only with the actual van line or its authorized agent who can give a binding estimate on behalf of the national line. Never use brokers.
3. Get on-site estimates from at least three movers before deciding on a mover.
4. Check out the license and insurance status of all interstate carriers with the Federal Carrier Safety Administration Protect Your Move.
5. Ask for a binding estimate or a “not to exceed” estimate. A nonbinding estimate is never allowed to exceed the quoted price by more than 10 percent.
6. READ THE AGREEMENT the mover hands you. Make sure the mover will not be able to add on “incidental” or “additional services” without your permission.
7. Pay with a credit card. Never deal with a mover who expects to be paid in cash. Paying by credit card gives you the added protection of the card issuer’s dispute resolution if needed.
8. Make sure your estimate includes your initial deposit, not the balance due.
9. Make sure the mover actually has enough equipment to move your belongings. Otherwise, they may broker your move to someone else you know nothing about, putting your possessions at risk.
10. Never sign an “addendum” to your moving agreement after your move. This is most likely an attempt to get you to waive your rights to file a claim later if you discover you’ve been ripped off.

Don’t be the victim of an unscrupulous mover. Follow the tips above and protect yourself from the financial loss and hassle that come when you deal with a scam artist.

Brian Long is President and Founder of First Movers Advantage, LLC and Eureka! Quotes the international online directory of licensed, local movers. If you are looking for a mover, visit Eureka! Quotes to connect with professional movers in your area who are eager to provide moving services.

click image to go to site

Need Help with your Mortgage?

Santa Clara Association of REALTORS (R)  is pleased to announce a great program brought to us by the Department of Treasury and Housing & Urban Development to help at-risk homeowners in our community.

On February 24th, the ‘Help for Homeowners’ Community Event will be held from 11am to 730pm at the San Jose Convention Center

150 W. San Carlos Street, San Jose, 95113   Most importantly,  this event is absolutely free to attend!
For more information:

• Call the Homeowner’s HOPETM Hotline at 1-888-995-HOPE (4673).
• Visit MakingHomeAffordable.gov or HopeNow.com.
• To get tips to avoid scams, visit LoanScamAlert.org.

What you will need to bring:

• Monthly mortgage statement; Information about other mortgages on your home, if applicable;
• Two most recent pay stubs, documentation of income you receive from other sources or most recent quarterly profit and loss statement if self-employed;
• Two most recent bank statements;
• Account balances and monthly payments for credit cards and other debts;
• Estimates of other monthly expenditures (such as utilities, insurance and medical bills).
• The Request for Modification and Affidavit Form and the IRS Form 4506T-EZ will be available on site. You can also download and print the forms on MakingHomeAffordable.gov.

Here are the top 5 reasons why a seller will not get top dollar for their home.

#1 – If a buyer can’t see your home, they will not be able to make an offer; let alone top dollar. Yes, showing your home is an inconvenience but only investors make offers sight unseen.  Allow your agent to place a a lock box and provide a simple way for buyers and their agent to make an appointment.  A digital lock box is more secure than a combination lock box.  Consistent hours during the day, early evening, and on weekends can help agents schedule showings.  Open houses are great.  They don’t have to be both days, but one open house every other week is a minimum for the first month on the market.

In addition, if a buyer can’t see your home because they are obsessing over the mess in your home, they will not write a top dollar offer.  If they can tell you don’t care enough to clean up the kitchen, vacuum the floor, or clean the shower and toilet, they pretty much believe you have never taken care of the house since you owned it.  Pick up the dirty clothes, buy some cleaning supplies, and take some pride in your home if you want the buyer to offer you their best price.

#2 – If there is one photo of your home, the buyer might simply skip over your home’s listing and you will not get top dollar. Your agent should be taking a minimum of 6 well lit, clear photos of your home.   Those six photos should not be simply six photos of the front of the house. With over 80% of consumers starting their home search on line, this is your best chance to get a buyer to come see your home and make an offer.  At minimum there should be photos of the kitchen, main living area, master bedroom, all bathrooms, and back yard.   If you do not have a picture of your kitchen on line, buyers assume it is ugly.   If you don’t have a picture of the bathrooms, the buyer assumes they are out dated and dirty.  Before you hire your agent, have them show you listing photos of their current listings.  If the listing photos look like they took them with their cell phone in the dark; interview another agent.

#3 – If you want a buyer to offer top dollar on your home, give them a reason by preparing your home for the market. Complete a property inspection and termite inspection (at minimum) before placing the home on the market.  Many of the items called out will be minor and can be fixed immediately.  If there are major issues, know that your listing price will need to be adjusted.  If homes in your neighborhood sold for a great price, find out how your home can be like them.  Did they have kitchen upgrades?  Open floor plans? New roof? Best Schools?  The closer you are in comparison, the closer you can get to their price.  For everything you don’t have that they do/did, deduct from your asking price.  To be a top dollar home, the home has to look like it.  Pride of ownership, strong maintenance records, appropriate updates, clean, fresh, and good quality staging will help you meet your goal of highest sales price.

#4 – If you or your agent are mean, rude, or too busy; you may not get top dollar for your home. No kidding.  Who wants to spend hundreds of thousand of dollars buying something from rude people?  When prospective buyers come to see your home, leave politely and take a walk or drive around the block.  If you are going to stay at the home, be friendly, answer questions honestly, and then give them space to look without you hovering over them.  Your agent should be flexible, friendly, as responsive as possible to all inquiries from buyers and buyer agents.  If your agent is complaining about every buyer and every agent, they are hurting your chances for a top dollar offer.

#5 – If you think someone owes you something, you may not get top dollar for your home. Just because you bought the home in 2006 for top of the market price and now the market is back to 1998 prices, you can not expect current buyers to eat your loss by an over inflated sales price.   It is what it is. A bad turn of events.  If you think the bank will approve your short sale or not foreclose after you withdrew hundreds of thousand of dollars simply because it was their decision to approve those loans, you are wrong.  The banks are attempting to negate their loss, just like you.  The best thing you can do is try to make both situations better.  Work to get top dollar for your home so the amount short is reduced to bare minimum.  Ripping out the new stove, or bashing in walls to teach the bank a lesson is simply childish behavior.

Selling a home in a “buyer’s market” takes commitment, proper promotion, serious negotiating skills, and confident kindness.  If you are not getting top dollar offers on your home, there is a reason.  If you are not sure what those reasons are, your agent should.  If  your agent doesn’t know why, find another agent.  If you are considering selling your home, contact me for a no-obligation consultation.  I will present more than 5 ways you and I, working  together, can achieve top dollar on the selling of your home.

The title normally includes research related to the chain of title that demonstrates all the transfers of ownership from the originating owner to the current owner.  A title search is normally displayed in a preliminary title report which provides all parties involved a summary of the ownership and any liens against the property.  Realize the preliminary title report is only assumed accurate for the day it was dated.  Obviously, the next day, a new lien or issue can occur on the title.  This is particular importance for short sales and foreclosure properties.  It is not uncommon to see a garbage lien or HOA (home owners’ association) lien come up at the last minute.  That is why it is important the real estate agent and/or loan officer update the preliminary title report at the time of signing off closing documents.

Closing documents are normally prepared one to two weeks in advance of the closing date.  If the buyer is obtaining a loan for the purchase, once final loan approval is received from the underwriter most lenders can prepare documents for signing within a week.  Ideally, loan approval is no less than two weeks prior to the close of escrow date.  The escrow company as a part of the title company acts as a “clearing house” for money and title.  When the buyer or buyer’s lender wires the money to escrow, the escrow company then transfers title to the new owner and lender (collateral owner) via a deed of trust.  The escrow officer is considered a neutral third party making sure that the transfer of money and title occurs as it was agreed to in the purchase contract.

Once the final loan documents are received by the escrow officer, they will set up an appointment with the buyer to sign.  Again, this could be any time prior to close of escrow and ideally should be at least one week prior to the closing date.  The loan documents will include a HUD-1 closing statement that should reflect the same numbers as the buyer received on the GFE (Good Faith Estimate), the actual note related to the loan, and miscellaneous disclosures related to the transaction.  It is assumed that the manner in which the title will be held by the new buyer(s) has been determined and this should be communicated to the escrow officer.  How you hold title can have significant tax and legal implications.  To understand the various benefits/risk, consult with your tax professional, attorney, and or financial planner.

The seller can sign documents fairly early in the process.  I normally set up the sign off as soon as contingencies are released.  With FHA loans, signing may occur later simply because there are forms related to an FHA loan the that both the buyer and seller have to sign and are not available until loan documents are prepared.   The seller’s documents are fairly straight forward and most of the signatures are related to the transfer of title, tax implications, and where to send the money.  Whenever you come to closing (buyer or seller) have your photo ID and your check book.  For the seller, you may want the funds wired to your checking account so you will need a check that has been voided.  For the buyer, you most likely will need your down payment balance either in a certified check or account information from which the money will be transferred.

Signing documents ahead of time provides time for all involved to double check that all “i’s” are dotted and “t’s” crossed.   Any missed signatures will be caught in advance and reduce the chance of delaying closing.  Normally money is received from the buyer’s lender one day before closing.  The following day the title is transferred to the buyer.  Sometimes, this can happen on the same day under a “special recording”.  For Santa Clara County, new purchase titles are recorded first thing at 8am.  Special recordings are limited and occur in the afternoon.   Once recording in the county has occurred the real estate agent can provide keys to the home.

Signing ahead of the closing date provides more security that all will go smoothly.   If you  have other questions about the real estate transaction or closing process,  contact me or comment below.

I follow and participate on many public forums in regard to real estate (like TRULIA, ZILLOW, YAHOO, and ALLEXPERTS) and more and more I see questions from buyers and sellers about who deserves the earnest money deposit on a home purchase when things do not go according to plan.  There are several reasons why this has become a big issue in this housing market.

First, it seems like a long time ago but it was really only about three years ago when deposits were merely numbers on a page.   If a buyer canceled a purchase contract, many sellers did not want to pick up the rope and play tug-o-war over the deposit because they would simply be wasting time while new buyers were waiting at the door ready to write a higher offer.  It also meant sellers did not have much patience for late contingency releases and were quick to issue a notice to perform to any buyer that could not stay on time with their purchase.  The pressure was on the buyer to keep up or lose the deal.

That was also a time period when FHA loans did not exist in Northern California and unless you had a real loser for a loan officer, most buyers could obtain loan approvals quickly and close the deal within 30 days.  Not so much anymore,  underwriters are actually asking to see the proof of all those items written on a loan application and the scrutiny of facts has become more serious than a game of master chess.  FHA loans, in many ways, have saved our local housing market.  With nearly 25% of all loans completed in 2009 FHA loans and some predict that number is around 35% for 2010, FHA loans are critical to our housing recovery.  With that said, everyone knows any bus driven by the government is a slow one.  Approvals average 45 days unless you have a darn good FHA loan officer.   Slowest FHA approvals in my opinion come from the big banks.  Fastest approvals come from direct lenders, mortgage bankers that have FHA underwriting in-house.   Anyone working in this real estate market now understands that loan approval and time lines are absolutely without question one of biggest parts (if not THE biggest) of moving a transaction toward close of escrow.

Secondly, communication is more critical than ever in a real estate transaction.   I pride myself on being tech savvy and I have made deals over text that worked out.  But really, my best skills are face-to-face or at least phone-to-phone discussing the details of the offer and quite honestly, selling my client, myself, and my loan officer on our ability to close the deal and stay on time.   If you have an agent that doesn’t return calls promptly or for that matter simply doesn’t believe they need to talk to the other agent, find a new agent.  Seriously.   If they do not know how to communicate effectively with the other side, they will not be representing you  in the best possible way.  One more point regarding agent commitment, in this market every deal should be of up most importance.  If the agent is too busy, too popular, too naive, too arrogant, too… find another agent.  This is a profession that took a direct hit to the pay check when the market crashed.  If your agent is not working for you, if you can’t tell, find another one.  Equally, if you are the  buyer or seller that  does not take the whole transaction seriously, move on.  I am committed and work hard, I don’t have time to take you on a joy ride.

Third, read the contract.  Yes, seems like a huge NO-DUH but I can not tell you how many buyers and sellers do not read the contract and understand their obligations.  Ask questions, test “what-ifs”, ask your agent for examples of what happens when that happens and all the other stuff you don’t get or understand.   Be clear on the time lines.  If the buyer does not release contingencies when they said they would in the contract, understand your rights as a seller under the notice to perform clause.  This tells you what your rights are as a seller to “demand” the buyer perform or you will have the right to cancel the contract and find another buyer.   Understand as the contract as a  buyer.  Ask your agent about strategies if time lines fall behind and dates do not look like they will be on time.  Plan to request an extension before the due date, not after.  Sellers do not typically have a line of buyers waiting in this market and would prefer this deal  go through if possible.  But respect their situation as well and do not cause them extra stress by not communicating issues through your loan officer and real estate agent.  Make sure you read and understand the contract’s paragraph on deposits.  For the California Association of REALTOR®s contract, this is item 14, item F.   This paragraph stresses the “mutual agreement” of cancellation  before escrow can release deposited funds.

Finally, did I say do what you said you would do when you signed the contract?  The deposit is no different than any other deposit.  If you didn’t clean your apartment before you moved out, did you really expect to get your deposit back?  Who deserves a deposit when a deal goes bad is based on the legally defined term “breach of contract”.  It ask the question: “Who didn’t do what they said they would do as it is defined in the contract?”.  Breach of contact is also surrounded by the contractual concept of “time is of essence” .  The contract itself and specifically these two contractual components are the bottom line of any mediator’s, arbitrator’s, or court’s decision regarding who owes whom.  If  you are in doubt about your rights or position regarding breach of contract, consult a real estate attorney.

If you are wondering whether or not you will get your deposit back, you are probably behind on the contractual thought process.  Know in advance your obligations, your risk, and methods for protecting your earnest money deposit prior to ever writing the check and allowing it be deposited into escrow.  If you are not comfortable with the plan and the potential exit strategy,  don’t put your money on the line.   Best predictions are surrounded by protection.

If you are a buyer, do not lie on your loan application.  If you can not afford a house without deceiving the lender, simply do not buy a house.  I recently had a situation where the buyer forgot they had a bankruptcy on their credit history.  This was not, “I forgot to mention it.” because the loan application has a specific question about whether or not the applicant has ever had a bankruptcy.

When buyers find themselves in a pool of multiple offers, they seem to be willing to say anything.  I recently had a buyer state they had all cash to purchase.  And they did have all cash to purchase.  But once in contract decided they wanted to get a loan.  Then it was found out they were self-employed and actually could not qualify for the loan.  They canceled their contract because they did not want to use their cash.  Within their rights? Yes.  But that wasted nearly 3 weeks of time and placed a lot of stress on my client, the seller.

The purchase contract should represent your intentions, not simply what you think will get your offer accepted.  If there are going to be two borrowers, both borrowers need to sign the purchase offer and both names should be on the pre-approval letter.  This is particularly an issue on short sales.  If you change the borrower or add a borrower, the short sale lender has to be informed and can choose to deny the request if they believe a “straw” buyer is in place.  It is deceitful and a waste of time.  Not to mention the added stress on the seller who has no idea when they will actually have to move or whether or not a sheriff will show up on their door with a two hour notice to move out.

If you are a seller,  understand that anything you know about your home that worries you, will almost certainly worry the buyer.  If possible, fix it.  If you don’t fix it, be up front about it.  You want a buyer that knows the issue but still wants the home. Ordering inspections before going on the market provides the owner the opportunity to fix items before a buyer writes an offer.  It  can show a conscientious seller and build confidence with the buyer.  Recognize, that any issue called out on the inspection chips away at value.  Shore up as much value as you can.  Buyers in this market, need every penny for a down payment.  Having a list of repairs will be deducted off of the price no matter how minor, or how long the seller has lived with said issue.   Simple repairs that are not taken care of show to the buyer that the seller is “cheap” or “irresponsible” and will taint the entire transaction.

Non-permitted work is becoming a bigger and bigger deal.  No matter what was cool in the 1940′s when the valley was full of orchards and there was only one home inspector for the entire state, having non-permitted work will impact value.  There are many home owners that decided not to obtain a permit because they did not want their property taxes to increase.  So the obvious discussion the seller should have with themselves is how much money did they save in taxes over the years verses how much value will they lose when they go to sell the home?  Don’t forget, if the seller decides to permit work after the fact, penalties can be applied for all those years the work was not permitted.  Of course, an inspector can require non-permitted work to be “returned to its original state or use”.    Realize an inspector can not see how wiring was completed without opening the dry wall.  Add in repairs to the value or loss thereof.

If you are a seller who is not making mortgage payments on your home, yet charging tenants rent: Shame on you.  That is all I am going to say.

Of course, real estate agents sincerely need to help guide their clients in the most ethical and truthful way.  Don’t expect me to lie for you.  Don’t expect me to cover up the fact that you decided to do the loan for your buyer and showed up at the appraisal attempting to influence the appraiser to lower the value so you could come back on the seller and re-negotiate.  Don’t think I won’t call your lender and ask if the file is complete for the loan applicant and whether or not a credit report has been reviewed and employment confirmed.

If you are a listing agent and not returning calls on a short sale because you are simply stalling the lender in hopes they will not foreclose on your client, you are sacrificing your reputation.  Once I know your tactics, I share those with my buying clients and pretty soon, they won’t look at your listings.  Also, if you are not familiar with the MLS rules that state, accepting an offer and submitting the offer to the bank requires a status change to the listing on MLS to pending, catch up.  The days of saying, “The contract is not ratified and therefore we can keep it as an active listing” are long gone.  Seriously.

I pride myself on high ethics.  I pride myself on working with other agents, loan professionals, inspectors, and of course clients in the most upfront, win-win way.  The stress that comes from dealing with un-truths, deception, game playing, is simply not necessary.  What has happened in the real estate market within the last 10 years with sub prime lending, corporate fraud, false stated income applications, should have generated a new interest in truth and fair dealings.  It is a sad commentary that many have not realized the very point.   I am hoping this post, and the timing of this post, will  jostle the consciousness of everyone participating in the market place of real estate and 2011 will bring sunshine and butterflies to this industry and the world.  Happy Holidays.  Truthfully.

• FHA: An event that was out of the borrower’s control that made a significant impact on the borrower’s finances and led to bankruptcy or foreclosure.
• Fannie Mae: A nonrecurring event that’s beyond the borrower’s control that results in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.
• Freddie Mac: A nonrecurring or isolated circumstance, or set of circumstances, that was beyond the borrower’s control and that significantly reduced income and/or increased expenses and rendered the borrower unable to repay obligations as agreed, resulting in significant adverse or derogatory credit information.

Realize that every situation is different and how your specific financial situation is perceived by an underwriter is, well, up to the underwriter.  These are broad guidelines but are helpful to understanding the impact of a choice made in regards to your mortgage and total debt.

If you know that you owe more than your home is worth and you know that soon you will not be able to keep up on all of your bills, review this chart carefully and consult with a REALTOR®, accountant, and attorney.  Sit down with all three before making  a decision.  One of the best options may  be to short sale your home before you fall behind on your mortgage payments.  This will be best case for protecting your credit and therefore your best chance for renting a home or buying a home again.  The links in table provide definitions.  This information is sourced from the FHA Handbook, Fannie Mae Selling Guide, and Freddie Mac Selling Guide.

These days, real estate agents have a little more to contend with, what with the advent in hut design where there’s now different rooms used for different bodily functions; eating, sleeping, bathing, grunting, and that’s not including the room that the previous owners added on to store their yak butter which is a must-see if what you’re looking to buy is a yurt.   That’s why real estate agents came up with the concept of the “open house”.

For the uninitiated, let me explain how this works.  A person decides they want a new hut, um….house.  The real estate agent would like the house seen by as many people as it takes to pack a stadium that’s hosting the World Cup Soccer Finals to overflow capacity. The rationale being that the more people that see the house, the better chance there is for it to sell. Makes sense? Me too.

After being in the staging biz going on almost 12,000 years, I’ve compiled a list of do’s and don’ts for you to follow when your agent tells you they want to hold an open house. If you’ll be living in the house while it’s on the market, you will be visited by other agents bringing their potential buyers to have a look-see and this list applies then too.  Heads up…this list is not negotiable!!!!!  Okay, maybe it is…that is if you’ll be okay when, after your house has been on the market for 3 years,  the LONE offer you finally get wants to pay you in ground up yak horn powder (which is a sign of great wealth among the people that live….um….where yaks live) and is contingent upon selling their grandmother.  All seriousness aside… here’s the list.  Finally:

Do:

This tops the list: Your house needs to be clean, white glove clean. The kind of clean like when your mom comes to visit.  And it needs to stay like this ALL THE TIME.  Of course normal people will understand that your baby projectile vomits when someone rings your doorbell.  But they will not get past a floater in the toilet…which brings me to:

Do keep the toilet lid down. Nothing says “I wipe my nose on the wallpaper” quite like a raised toilet seat.

Do follow your real estate agent’s instructions regarding what you should do when an agent wants to bring prospective buyers over to see the house.  Image is everything, baby.

Do make all the beds in the house every day. I don’t care if you have to hire those birds from Cinderella to help you, because an unmade bed denotes overall sloppiness which is a HUGE turnoff to buyers. Kinda like glistening wallpaper.

Do keep your kitchen tidy and dirty dishes out of sight even if you have to hide them under the baby’s bed.

Do keep an empty laundry basket that you can use to scoop up anything that needs to be out of sight for the times when a  real estate agent calls you from their parked car down the street and wants to bring their buyers by in T minus 5 minutes and counting.

Do know that some people will look in your closets. Maybe now might be a good time to find a place to store those whips, chains, and handcuffs.  ( I have some room at my house…….)

Don’t:

Don’t cook foods that leave a lingering and…. um….distasteful smell in the air. Baking chocolate chip cookies will only go so far to mask a cooking odor that hangs in the air like…like…fill in the yuckiest smell you can image here.

Don’t leave things lying around that buyers can trip over like: hoses, wires, anacondas….. which brings me to:

Believe it or not, some people will not appreciate your Komodo dragon and won’t get your subtle humor when you tell them his name is “Flick”.  It’s really best to not to have any pets in the house.  There’s just no way to anticipate that somebody’s Aunt Janet was scarred for life by her run-in with a surly ant colony. Go figure.

DO NOT hang around during an open house. Prospective buyers get a little jangled when the owner follows them from room to room and that is a bad thing. And just in case you’re curious about the people who’ll be coming to see your house, stop it. Stop it right now. Your REALTOR will give you a rundown of who came by anyway.  So during the open house, go to a movie, try horse back riding for the first time,  go to one of those place where you can make your own pottery (Personally, the appeal of those places escapes me. Maybe they serve alcohol).  Please stay away during the open house and let your REALTOR do their magic.

Don’t forget that you can always hide stuff in your dryer and even in the trunk of your car. If there’s room and you have an inside release, you can hide in the trunk too.

Happy Open House !

Wanna be immortalized on this here “Talk to CJ” blog?  Got a burning staging question that most ointments can’t help?  Add your comment/question below! Or email your well thought out and grammatically-correct question to me and if it’s even somewhat relevant to staging, your question (and my response) could appear here. My cat, “Atomic Blast Fury” is staring at me as I write this while my other cat “Noodle Button” is stealing my good silver. Ha ha, I’m kidding. I don’t have any good silver.

This has been another message from Karen Negrete IRIS™, your friendly stager.

Karen and CJ have worked together for many years helping home owners prepare their home for sale.  If you would like to receive a no-obligation consultation on how to give your home that WOW factor before going on the market, contact CJ Brasiel .

There are things a home owner can do to help reduce the chance of having their home infested by termites and the like. The five most common maintenance issues that are neon welcome signs to pest are:

1.) Sprinklers spraying against the wood siding of a home. This creates a nice moist dinner of wood for termites to take hold.
2.) Water leaks around toilets and sinks. Wet wood = meal for wood hungry pest.
3.) Foliage and trees close to the house or laying on the roof. A perfect gateway for pest to enter roof rafters.
4.) Storing wood or paper products in or around the wood exterior of the home or garage.
5.) Improper drainage from gutters that allow for water to stand or collect underneath the home.

The hungry swarm of wood destroying pest can eat at a home for years and cause thousands of dollars in damage. Some surveys indicate termites cause up to $2 billion dollars in damage annually in the United States. The map shows which parts of the country are more at risk for termite infestation.

Will McCoy is a pest inspector with The Terminators. A locally owned and operated family business here in San Jose that I have worked with since I bought my first house in California nearly 18 years ago. (Which also had termites.)  Will is an expert at finding and treating wood destroying pest and on top of that a genuine, all-around nice guy. I briefly spoke with Will about how an inspector knows a house is infested with termites, and what it means to have a house fumigated.  If you need a pest inspection,  contact Lisa, Corky, or Will at The Terminators (408) 298-3930.  This is one of those situations where an ounce of a prevention can go a long way.