Realtors on Vacation - Anywhere but Hawaii

There's a curious fact I've noticed about Realtors and lenders - if they're going to Hawaii on vacation, they prefer not to say so. I thought it was odd until I spoke with some clients and it seems like going to Hawaii, especially in the middle of a listing or transaction is the kiss of death for Realtors.

The clients never forgive them for it.

Why do I bring this up? I'm planning on taking a few days off this weekend. No, I'm not going to Hawaii. I'll probably just be here among the trails in Pollock Pines without my cell phone. It just feels like everyone is on vacation these last few days and there's not that much going on.

But no Hawaii for me, thank you.

Should Real Estate Appraisers have Strong Opinions?

I had to open the door for an appraiser yesterday for a property where I represent the buyers in a purchase and he seemed a little opinionated. I know, appraisals are supposed to be “opinions based on market comparables” but he seemed a little too happy about the Sacramento housing market going down.

I kept thinking, Should I be worried for my buyers? The home is a cosmetic fixer and seems like someone’s failed flip, but perfect for my buyers that wish to put sweat equity into it and are first time buyers.

But the appraiser said he had no sympathy for investors because they drove prices through the roof and now we’re hurting because of them. And so, no - I did not mention that I was an investor and owned rental properties of my own. Why this hatred toward investors? At first, I thought I would put in my two cents and distinguish investors from flippers, but then I thought, Why bother?

I’m worried. I have a problem with passionate appraisers. And that worry happens to be in both directions, by the way. I would be concerned about someone being too optimistic as well.

Adding Value to Your Home Ragardless of the Sacramento Housing Market #4

Add a bedroom.

Yes, you read that right. If you have an area in your house that is a wasted space and would measure at the very least 10' by 10' it is perfect for a bedroom addition. Be sure to hire an interior designer to see a well drawn out plan and do get a few quotes from professionals to get an idea what such an endeavor would cost.

Last I checked (which was about October of 2006) an outside addition of about 150 square feet complete with matching stucco and a roof was approximately $25,000. An inside addition would cost less, but be sure to check how much.

Here's how it adds value - when you add a bedroom, an appraiser has to compare your home with the rest of the homes in the neighborhood with 3 bedrooms, say - or 4. This works better if the area you live in has mixed homes - that is, if all the homes in a one mile radius have 3 bedrooms, you would probably not add as much value with a fourth bedroom as in an area that provides comparable sales with 3 and 4 bedrooms and where the extra bedroom sells for a premium. Do your homework before you decide to invest in this one!

Oh, another little known fact - for a space to be referred to as a bedroom, it must have a built in closet. Without it, the area is just a den.

What is an REO? And is it better than a Short Sale?

I know I probably am repeating myself here, but a lot of my clients seem to want to know answers to these questions. Just yesterday, I met a wonderful couple looking for a home in Elk Grove and it seemed like every house we went to look at was either a short sale or an REO. I believe there's one home on our list which is owned by a private seller.

If you're looking specifically for bank-owned homes, look in Elk Grove.

Anyway, back to the question - REO stands for Real Estate Owned. By a lender. It is usually a home that has been foreclosed upon by the lender for nonpayment of the mortgage. It may have a sign that says "bank repo" - a term that annoys me, by the way. Cars get repossessed. Homes get forclosed. Just a pet peeve.

A short sale on the other hand is where the people selling the home have decided to get rid of it before it goes into foreclosure. They owe more than the market value, which means the difference between what a buyer will pay and what the seller owes will have to be forgiven by the seller's lender. This usually involves a lengthy process and there are quite a few short sales that never go through.

Biggest piece of advice I can give you: If you're looking for a short sale, be prepared to wait. If you're buying an REO, get all your inspections done by your own hired professionals.

First Time Home Buyers Activity Picks up in Sacramento!

This is a post by my guest mortgage professional, Huck Ferrill. He promises to write more and I will be introducing other professionals I work with on a continuous basis as well, so bookmark this site and check back often!

Meanwhile, here's what Huck had to say:

First time buyers are coming out of the woodwork in the last couple weeks. I did about 8 pre-qualifications last week and $700,000 (2) worth of live purchase applications yesterday alone. Most of them said that prices were low enough that it was time to try to buy something. One of yesterday's buyers is involved in multiple offers on a North Highlands house. That's been how recoveries have started in the past. Good sign.

Those of you waiting for good news on the real estate front, hope this helps!

Order Real Estate Signs Early and Other Lessons...

One of the things about being an independent Realtor and businessperson is that you have to be responsible about your own job. And at Elite Properties we're all pretty independent and John lets us do what we want as long as we have clients (and our files are in order!)

So as it turns out, I moved to Elite at the end of June and didn't order new signs. The listings I had still has Re/Max on them which didn't matter because at least they had the right phone number. It didn't occur to me until I realized (in the middle of the night while drifting off to sleep) that I was going to take a listing in Cameron Park and needed a sign!

So emails shot back and forth and all those horror stories came back about not seeming professional. I have heard the one about the paper sign with a scrawled name and number! Anyway, I was saved. John had an extra one. Whew! Close call.

And yes, I did order them. The very next day.

"Does it Save me Money to Rent or Buy Real Estate for the Same Monthly Amount?"

Someone asked me this question a week or so ago and I thought I'd try and answer it the best I can.

Let's say, for instance, that the amount we're talking about is $2000 for the sake of simplicity. Should you be spending $2000 on rent every month or should you be making monthly mortgage payments of $2000 every month?

My answer: you'd be better off buying a house and making mortgage payments, provided you plan on living in the home for at least five years and getting a fixed rate mortgage.

Amongst the biggest reasons for this are: the tax benefits of homeownership and protecting yourself against increases in rent.

All your mortgage interest payments are tax deductible if you itemize and most homeowners itemize on their tax returns. In fact, beginning this year, you can even itemize your Private Mortgage Insurance payments. (Private Mortgage Insurance is usually required by lenders if you have less than 20% down payment.) You have no such benefits from your rent payments. Sure, California gives you a rent credit of between $30 and $60 on your state return, but that is phased out at higher incomes, whereas for the most part you can claim your mortgage interest on your federal taxes.

Rent increases are all too common. The landlords usually increase the rent to keep up with inflation every year. And you could never convince someone like me to rent - because I consider it literally throwing money down the drain.

The only time it makes sense to rent a place is when you either cannot get qualified for a mortgage - in which case you would work to build your credit score while you rent - or if you're not sure how long you intend living in a certain area.

Hope that answers the question.

Short Sale Approved for First-Time Buyers!

I've been working with a really great couple recently on the purchase of their first home and am really excited to announce that the home they liked has been approved for a short sale. We've all (the lender, the buyers, me and the seller's agent) been waiting with bated breath for about a month now. No, I'm not kidding. The date on the contract says July 11th.

I met this couple while showing my listing on 7710 25th Avenue - which is still in the approval process for a short sale - and liked them instantly. For first-time buyers, they already know a lot about investing for the future, have experience maintaining property and are not afraid of the work owning a rental property involves. With the purchase of this home, which will be their primary, they will also be jumping into managing a rental for their relatives.

I see a bright future for them if they stick with it. And something tells me they will.

If You Spot This...

...Stop and say "hello!"

Section 1031 and the Sacramento Real Estate Market

I attended a seminar yesterday at the Roseville branch of Placer Title about 1031 Exchanges and came away with a few great strategies for using real estate to build wealth. The seminar was arranged by National Closing Solutions and had a wealth of information.

The presenter mentioned that they have actually been closing the same amount of 1031 exchanges even in this real estate market.

If you're wondering what a 1031 Exchange is, simply put it is a vehicle by which you defer paying capital gains tax (15% to the IRS and 9.3% to the Franchise Tax Board of California) on the sale of an investment property by exchanging it for another "like kind" property of equal or greater value.

Like kind can be any property - land, commercial, residential - as long as the intent is to hold it for investment.

So if you're interested in diversifying your investments or want to know more about the 1031 Exchange and how it could help you buy the home of your dreams to live in, please email me at purvabrown@msn.com. I am organizing another FREE seminar with National Closing Solutions soon for my clients.

A Post Completely Unrelated to Sacramento, Real Estate or Landlording

Well, maybe not completely. There's very little I do that's completely unrelated to all of the above. I share Cari McGee's reaction to "Under All is the Land."

But a phone call last week got me thinking. A telemarketer called me with something she said related to my real estate business. Now, I do listen before I dismiss them, especially if they begin like she did by asking me questions that related to my goals and accomplishments. Good beginning - a promise of something good, maybe.

But that promise was never kept. She did not keep a single word she said. I was supposed to get an email to confirm an appointment which I did not receive. The day we were supposed to have our "teleconference appointment," she called me twenty minutes before and said she had a training class she had forgotten about and would like to move our appointment to two p.m. that day.

Well, I did not keep that "appointment." And I did not return her call and hoped she got the message. Apparently not, because today I get a text message asking me to "forgive her" and asking permission to talk with me again.

Frankly, I could do without the drama.

But it made me seriously think about how often Realtors do this. And how the best and most successful Realtors and Brokers I have met do not. With them, there is no drama, no need to ask "forgiveness." There is only The Client and The Needs of The Client.

I was also having a discussion with my husband about salespeople yesterday and he said that although the company he works for has salespeople, the customers prefer the technicians. Why is that? It's obvious, of course. Salespeople make promises; technicians do the job.

The thing about being a Realtor is that I am both. The person who makes the promise and the person that gets the job done. Which means I must be extra careful not to promise more than I can deliver.

Fulfill the needs of the client. There's nothing more to it than that.

Cash Back Real Estate... Legal or not?

The short answer: It depends.

Grrr... doesn't that just drive you nuts? But let me give you an example to explain further. This is an important one because there are probably a lot of sellers out there right now that are getting offered these deals and without knowing any better might be tempted to accept them.

Example: The buyer makes an offer at way over asking price. The offer looks legitimate. The buyer has attached a copy of the check for a good faith deposit. 30 day close. Great! But then attached to the back of the offer is an addendum and this addendum states that the seller is to pay the buyer (or an appointed contractor) a certain amount of money to fix the bathroom, or repair the kitchen.

Seem harmless? Well, it shouldn't. And your Realtor will probably know. The problem is, the lender might never see the addendum. And the contractor might be getting paid for just the "service" of using his name.

So how do you combat this?

First of all, if the buyer is asking for anything more than 3 - 6% of the purchase price back, feel free to reject the offer because no lender will allow that.

Secondly, if the buyer still insists that the lender will accept the transaction this way, make sure you talk to the buyer's agent (or make sure your agent talks to the buyer's agent) and ensures that the addendum gets to the lender.

Another way you can do that is to have all parties sign a disclosure stating that the certain amount of money is exchanging hands and that the lender must approve the funds.

If the lender approves it, you're off the hook. (But chances are, he will not.)

If not, remember that you don't abdicate responsibility on the sale of your house just because you hired a Realtor, you just assume a little lesser of it. Pay attention when selling your home.

The most important piece of advice - make sure ALL amounts of money are disclosed on the first page of the Purchase Agreement. And don't allow any exceptions.

How Real Estate Deals Get Put Together #1

Well, not all of them of course. I'm just mentioning this one because it's interesting and a little different.

My listing on 25th Avenue (a short sale) generated quite an interest. With about five offers on the table, I was required to submit the best offer to the lender. And so I did.

This lender is in no hurry to approve the sale. And all timelines start with the lender's approval only.

The potential buyer has already given her 30 day notice and needs a place to stay.

So the buyer's agent asks me if we can let the buyer live in the home and pay the sellers rent. Of course, I had to check with the lender and sure enough the lender wants the rent at close since this is a short sale.

So we agree on a fair amount. No, we are not in escrow yet. And my clients never thought they would ever be landlords, but it was one way to secure the buyer.

I'm keeping my fingers crossed.

Where should I Look to Buy a Sacramento Home?

Good question.

First of all, I think first time homebuyers need to consider where they want to live. Is there a particular neighborhood that interests them? Do they have friends or family living in a certain area that they'd like to move closer to or (God forbid) away from? (Well, maybe just a pleasant drive away - like 30 minutes) The area you want to live in should take the most amount of your research.

Then, start browsing homes online for that area. You can go to www.sacramento-home.com for the most up to date search and also sign up for email alerts on new listings.

No, no call to the Realtors just yet. Do some math first. Look at your monthly budget and decide how much you can afford to pay in monthly payments toward your house. Once you are already in love with a house, it's difficult to get clarity, so do this step before you actually start shopping.

Once you have your total number in your head, then compare to see if the homes in your preferred neighborhood match the number in your head. This is when you call a Realtor. You might tell her "the magic number" and your preferred neighborhood and if the two don't match find a place a little farther away from your ideal place.

In other words, now you're seriously looking for a place. Oh, don't forget to get preapproved for a loan.

There you go, you've passed the first hurdle! Now for the fun part of finding a home!

July Resale Statistics for Sacramento, CA are Here!

Total number of homes for sale on or before July 31, 2007: 11,016 with a median price of $329,960

Total number of homes pending sale between July 1, 2007 and July 31, 2007: 1,038 with a median price of $315,000

Total number of homes sold between July 1, 2007 and July 31, 2007: 928 with a median price of $330,000.

The median price is up only $2,000 from last month and sales have fallen since June 2007. In June, Sacramento county recorded 1068 sales.

Average days on market remain between 50 - 60 days.

July Real Estate Resale Statistics Coming Tomorrow!

I will be updating this blog with the latest resale statistics tomorrow - stay tuned. I'm waiting until the third of the month for something I wanted to do on the first because the MLS allows Realtors three days to update information.

Come back tomorrow for the latest actives, solds and pendings hot off the MLS for July 2007.