Some (Real) Revelations

It's no secret now that I have been away for the last few days. I will continue the rest of this Thanksgiving "vacation" at home while I catch up on everything I missed while I was away, but I must say sometimes one needs to leave home to realize how much one takes it for granted.

On this last Thanksgiving family vacation, my husband and I drove to Washington to see my in-laws with the baby in the back of the car. The drive was beautiful. I-5 took us right through Oregon and then into Washington. 15 hours to get there and 12 hours to get back.

But I missed California almost immediately. It's almost like the clouds, gloom and fog hangs around at the border of Oregon. And almost immediately, we were enveloped by clouds and didn't see the sun for four days. Not until we crossed back into California anyway. And we felt like vampires then, cringing against the sunshine.

All in all, it was a good trip. The baby behaved, the family was thrilled, and I realized why California is among the most expensive real estate in the country. You can't beat sunshine. Or force it, apparently.

Happy Thanksgiving!

Couldn't resist putting up this video. That child has got the essence of Thanksgiving down, hasn't he?



Happy Holidays! Have fun!

Ten Things for Realtors to do this Holiday Season

With the holidays fast approaching, not too many minds are occupied by real estate. Sure, there are a few home buyers there thinking about buying a property because this is typically the time no one is interested in looking and it creates an increase in inventory, thus leading to reduced home prices. But Realtors, home sellers and home buyers - in general - around this time of year are busy with their families.

So, what can a Realtor do to brighten the holiday spirit?

1. Throw darts at the bubble blogs (ensure that you have printed out the names before. Do NOT throw darts at your laptop!)

2. Instead of turkey meat, how about some Chicken Little for a roast?

3. Serve up some Orples too, while you're at it. There's nothing tastier.

4. When your guests start talking about how horrible real estate is, walk up to them and start spouting local real estate statistics. You can read them here and here.

5. After they're staring at you shocked because you've been talking in numbers only for about a half hour, remember to stare back with a deadpan look in your eyes and say, "Blood, blood, blood..." for the bext five.

6. Ooops! Did I just say, "Blood, blood, blood?" Okay. No harm done. Follow it up with "Real Estate is local, you..."

7. If they've been shaken out of their reverie by your intended bad language, continue with more local real estate statistics.

8. ...and the fact that inventory is down.

9. When you send out Holiday cards, include your business card in them. On the back, say something like, "Unless you refer someone to me this year, I'm closing shop." Attach a picture of a child (yours, preferably) crying.

10. Lighten up! Write a post on your blog about Ten Fun Things for Realtors to do and send me the link.

Happy Holidays!

Real Estate Quote of the Month

I'm sharing with you one of my favorite poems today, and although it really has nothing to do with real estate per se, I think it is one of the most important messages of all time. This poem has always been close to my heart and it is something I have always tried to remember when things get tough. Here it is:

[IF]

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream--and not make dreams your master,
If you can think--and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
Or walk with kings--nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And--which is more--you'll be a Man, my son!

--Rudyard Kipling

Of course, the italics are mine. I've highlighted the parts I think relate to real estate today. The poem is terrific though. You might want to bookmark it and come back to it later when you need to. There is always something in it that will comfort and guide you in difficult times.

Home Sellers Take Heart

In my recent post on Sacramento Real Estate Gal, I mentioned that home sellers should remain stubborn if they are not desperate to sell their house right away and it looks like at least some real estate numbers agree with me.

Head on over to Dan Green's Mortgage Reports where he says that Sacramento inventory has dropped and how this bodes well for a real estate recovery.

And keep reading!

Condos: the New Real Estate? Part 2

Perhaps the single best reason for many first time homebuyers to buy a condo as their first real estate investment is that the cost for its maintenance is greatly reduced than, say, buying a single family residence and the regular upkeep is not as hands-on.

All condos have association dues. These range in cost - I have seen some condos like Crosswoods cost $260 a month and some others charge that for a whole year! Generally, the cost will give you an idea of what is included. Almost all condos will have insurance on the structure included in the association dues. So you only need to get home insurance to protect your valuables inside your unit. They also include regular lawn maintenance and, sometimes, a clubhouse which is a shared facility by everyone living in the condo development.

Contrast this with a single family residence where the homeowner is responsible for regular lawn care and repairs, not to mention home insurance on the entire structure of the house and it becomes pretty clear why today's busy first time home buyer might just opt for the condo.

Ask Sacramento Real Estate Gal

Sacramento Real Estate Gal,
I've never understood why a buyer needs an agent. Is it about making sure the escrow is handled correctly? The paper work? What would your fee be as a buyer's agent? - Steve E.

Answer:

Thanks for asking that question, Steve!

A home buyer doesn’t specifically “need” an Realtor, since you can just drive around and make sign calls to the agent who has listed the home for sale. However, it is a good idea for the home buyer to have his own agent so that the real estate transaction can run a little more smoothly. For example, you can view 5 – 6 different homes in one go rather than making multiple appointments with multiple Realtors. You just have the one. Also, lately, listing agents are hired by the bank to sell their REOs. These listing agents have anywhere from 10 – 100 listings active at any given time. From what some clients have told me, they don’t even get a return call from some. The listing agents count on you – the home buyer – having a buyer’s agent to show you the property. (We have e-keys that open the lockboxes you may have seen. The times the visits occurred are recorded and our keys are tracked.)

Besides getting escrow handled correctly, it’s also a good idea to have a buyer’s agent so you have representation during escrow. Especially if you are a first time buyer and have never bought or sold real estate before, chances are you don’t know what to ask for on the contract. The listing agent is first and foremost the seller’s agent. When he signs you on as well he becomes a dual agent with a duty of "fair honest dealing" (contract terms) to both the home seller and home buyer. Being a dual agent, while not illegal in California, still seems a little odd to some people and they want to ensure that they have their own Realtor looking out for their interests.

There is almost never a fee for a buyer’s agent. And that’s true for me as well. The buyer’s Realtor gets paid at close of escrow. Usually, the fee is split from the listing agent’s fee. So if the normal commission to sell a house is 6% of the sale price, the listing agent gets 3% and the buyer’s agent gets 3%. (If you were to buy the house directly from the listing agent, the “dual agent” gets to keep the entire 6% so it doesn’t really make a difference to the buyer on the fee side of things.)

Do you have a question for Sacramento Real Estate Gal? Submit it here!

Condos - the New Real Estate? Part 1

Many first-time homebuyers are attracted to the idea of buying a condo instead of a single family residence, so I want to take the time to go over some of the differences between a condo and a single family home so you can make an informed decision. Today, I'm discussing an important aspect of the price of a condominium.

First to Fall, Last to Rise?

It is a common real estate belief that condos are always the first to fall in value and the last to gain. There is some basis for this but you cannot use it as a blanket statement. Let me explain why this idea persists. At any given time, the value of a property is judged by the selling price (in the absence of sales, active listings are used) of similar properties around it. Most Realtors and appraisers use a one mile radius around the subject property. With condos, these comparables ("comps") are easy to find and there are usually many. More listings means more competition. An increased supply helps price drop.

But is it always True?

Simply put, no. Even with real estate prices lower than we have seen in a long time here in Sacramento, midtown and downtown condos are maintaining their value. So perhaps it's back to the basic real estate premise of location, location, location. It is also simple economics: demand for real estate in downtown Sacramento is high, so the condos don't sit on the market very long. There are rarely price reductions and the supply remains low thus leading to stable prices in certain areas. There are not a great number of units in downtown and that limits the supply side as well.

So if you are considering buying a condo, remember that you are also buying the neighborhood the condo is in, and it affects you more than a single family residence would. So be sure to look at the other active listings, even if it is just on the MLS, before you make a decision!

Are Home Sellers Really in Denial?

According to a recent story published on MSN, many homeowners believe their home has either held its value or gone up in price. Real estate agents in once-hot areas are having a hard time convincing sellers of what their homes are really worth. In my experience as a real estate professional, it is always hard to convince sellers of their home's value. Even during the real estate boom, most home owners priced their home above their neighbors' simply because it was theirs'. It's hard to put a price on something that close to one's perception.

But perhaps this denial is a good thing. Not for home sellers who must sell in this market (competing against foreclosures is pretty devastating to a home's value) but for homeowners. Why do I say that? I think although in this market the denial might be keeping homes from finding a bottom (I'm still not clear on what the writer means by that and how exactly that would work), in the long run stubborn homeowners will help the market recover.

It's said that the bull takes the stairs and the bear jumps out the window. Sorry, but perhaps this time the bull might use the elevator. Bank owned houses are priced at wholesale prices because many of them have deferred maintenance. What's more, the bank can afford to drop prices to rock bottom. Once the bank owned inventory is gone, non distressed houses set the price.

So, homeowners: If you simply don't have to sell, weather out this storm. Stay stubborn. Stay strong. You can thank me later.

American Real Estate...

... is what it is because of them & the sacrifices they made. Thank a Veteran today.

Building Green

Here's the rest of the post submitted by Jesse Herman of the Mesothelioma Cancer Center:

Building Green

Most individuals give little thought to what’s being consumed when they turn on their lights or fire up their furnace. Few workers pay attention to whether or not they’ve turned the air conditioning off when they leave their office building or whether they left the faucets dripping in the company washroom.

In a world where electricity is expected at the flick of a switch and where water rarely fails to flow from the bathtub or shower, the Green Building Resource Center estimates that in the U.S., buildings account for:
• 36% of total energy use
• 65% of electricity consumption
• 30% of greenhouse gas emissions
• 30% of raw materials use
• 30% of waste output (equal to 136 million tons annually)
• 12% of potable water consumption

So many buildings. So much waste. And with the building boom continuing, despite present economic hardships, adherence to construction practices other than what’s become known as “green building” will surely continue to increase the proverbial “carbon footprint.”

Benefits of Green Construction

Thankfully, however, the idea of “building green” is gradually becoming much more than a trend. Builders and investors are recognizing that eco-friendly construction provides not only long-term positive environmental benefits but also immediate financial payoffs as well.

Cities throughout the U.S. and the world are also slowly recognizing the necessity of green construction practices in the remodeling and renovating of older residential and commercial facilities, taking advantage of loans offered to them by various foundations, designated for the purpose of upgrading lighting and heating and cooling systems in aging buildings, where the most energy is consumed.

Such initiatives also prompt the need for healthier and more cost-efficient options in the world of building materials. Indeed, the United Nations Environmental Program says that the use of recycled building materials, like cotton fiber insulation, in addition to the installation of energy saving appliances and the maximization of natural lighting in a building, can reduce energy use energy use by 25 to 35 percent. In some best-case scenarios, they say, results have been as high as 80 percent.
The United States Green Building Council (USGBC), in a study conducted in 2003, estimated a savings of $50-$65 per square foot for well-constructed green buildings in the U.S. (see table below) during that year. The numbers continue to improve as more eco-friendly options become available, and those kinds of figures have finally begun to attract those who thought eco-friendly construction was just a bunch of hogwash.

Type of Benefit 20-year Net Present Value / sq. feet

Energy Savings $5.80
Emissions Savings $1.20
Water Savings $0.50
Operations and Maintenance Savings $8.50
Productivity and Health Benefits $36.90 - $55.30
Subtotal $52.90 - $71.30
Initial Investment in Green Building Practices $3.00 - $5.00
Total 20-year Net Benefit $50 - $65
Source: USGBC Capital E Analysis, 2003.

Green Remodeling

While the remodeling of existing older buildings to make them more energy efficient is certainly a necessity, it doesn’t come without its hazards. Remember, older homes and commercial buildings probably contain all sorts of toxins, most notably asbestos. The miracle of the 20th century building industry, touted for its amazing heat- and fire-resistant properties, this hazardous mineral can be found in attics, wrapped around pipes and furnaces, and even in walls, floors, and ceilings, especially in buildings constructed prior to 1980.

Once the asbestos is addressed and then removed by a licensed professional and disposed of properly, green insulation options should be given serious consideration. The Department of Energy says heating and cooling accounts for 50-70 percent of the energy used in the average American home so finding sound and healthy insulation options are a necessity. Today, these options can save natural resources as well. Eco-friendly insulations are often made of recycled materials and include cellulose (old shredded newspapers treated for fire resistance), cotton fiber (usually made of recycled batted denim), and spray polyurethane foam.

Statistics show that the foam, for example, can cut energy costs by about 35 percent annually, according to studies done by manufacturers. The other projects claim similar figures. And because these are recycled materials, less waste is going to the nation’s already crowded landfills.

Formal listing of Insulation Alternatives

•Cotton fiber – This has become the favored insulation of many green builders or remodelers. Made of recycled batted material, such as denim, this fiber insulation is then treated with a chemical to make it fireproof. However, cotton fiber insulation is non-toxic and produces no off-gasses, making it a healthy choice.
•Cellulose – Who would have believed that someday we’d be insulating our homes with recycled newsprint? Well, that’s exactly what cellulose is and it’s become one of the most popular new green insulating materials. Chemically treated to reduce mold and promote heat and fire resistance, figures show that cellulose can reduce air conditioning and heating bills up to about 20 percent each year.
•Icynene – This water-based spray polyurethane foam keeps a home very tight, allowing little opportunity for things like mold to form. This healthy insulation also contains no polybrominated diphenyl ethers (PBDE), which are often found in spray foam insulation products. PBDEs can be quite toxic and are already banned in some states. Icynene also contains no hydrochlorofluorocarbons, which are believed to prompt global warming.

Listing Landmine

You might be master brewer, but get the beer buckets out of your bathroom before you list your home!

Sacramento County Condo Update

This is a market update for October condo sales in Sacramento county. If you're looking for single family residences, go here.

These numbers are beginning to get pretty boring, aren't they? Nothing much changed, nothing's happened this month that's different from last month, blah, blah, blah. Well, unfortunately it's the same story this month as well. (An indication of bouncing around the bottom, perhaps? Guess we'll see.) 131 condos sold in the month of October and 114 went pending. September had been a strong month for house shopping and October seems to be the beginning of waning off for some people due to the holiday season approaching. Median price for condos is at $110,000. Inventory is at 4.4 months.

Sacramento County Market Update October

This is a market update for single family residences only. If you want to see a market update for condos in Sacramento county, please check back tomorrow.

First, the Stats

Median price for sold single family residences was slightly higher than last month's median at $192,000. This October, we saw the median price at $195,000. 1992 houses sold this month, again similar numbers to September. The disconnect between pending and sold homes month after month continues. While September's pending sales were at 3729, we only saw 1994 close escrow. If this trend continues, November will probably be a pretty lackadaisical month. Pendings in October are at 2054. Inventory is at 3.8 months again almost the same as last month.

Then the Opinion

On another note, I have been seeing more short sales sell. No telling when they went pending, however. I am also noticing the inventory of bank owned homes shrink to just 2 months or so. Based on these facts and other numbers I've been seeing, I think we could go two ways:

On the one hand, we seem to be bouncing around the bottom of the market. Many bank owned homes that sit on the market currently are not great deals without having to add quite a bit of sweat equity and are not potential homes to most buyers. These homes might get picked up or might continue to sit on the market with homebuyers migrating to other houses in better shape. Homes in better shape command more in price and so we might see a resurgence in home values by next fall.

On the other hand, there is a slight glitch. And this comes from the short sales. In the past, we have seen short sales completely mess up the numbers for everyone. Listing agents are not told the price at which they will sell by the bank upfront and that causes them to take a long time to sell or they sit in contingent (pending) status forever. Approvals take anywhere from weeks to months. These short sales could potentially become foreclosures. If that happens, the market might take longer to recover until all the inventory is absorbed by buyers.

So unfortunately, it comes down to what lenders might do. If they accept short sales now and get them sold, the market recovers faster. If not, we might have to wait awhile. The buyers are here. Now it's up to the sellers.

Market Updates & New Feature

Yes, it's that time again when we get to look at the real estate sales of last month. Now I've cheated already, since I have seen the numbers. You'll get to see them, get my take on them and a prediction - coming tomorrow.

Also, a new feature: Listing Landmines. Inspired by Landlord Landmines, this feature will be entirely in pictures, showing home sellers what not to do when they list their homes. Of course, identities and addresses will be kept confidential to protect sellers (and their Realtors!)

Remodeling your Home? Consider This!

Today's post is contributed by Jesse Herman, the Awareness Coordinator at the Mesothelioma Cancer Center. Read on!

Remodel Safely: Protect yourself & the Environment while saving Money

There are many things to consider when remodeling or buying an older home. Homes built before 1980 could easily contain asbestos. Of course, even homes build after 1980 still may contain products that are worth taking note of. As technology and long-terms cost efficiency is constantly evolving, so too is our need for environmentally and health safe building materials. If you are interested in remodeling, saving money and improving your environmental standing in the world, then here is some information to get a project started in the right direction.

In the Beginning

If you’ve thought about remodeling a home that was built before 1980, you’ll probably be faced with a number of toxic materials during the process, not the least of which will be asbestos. Asbestos insulation was used in millions of homes during the housing boom of the 20th century and though it’s safe to be around when it’s enclosed or in good condition, damaged asbestos can be a real problem. It can cause different types of mesothelioma, such as peritoneal mesothelioma and pericardial mesothelioma. In addition, removing asbestos in order to replace it with a healthy alternative can be a pain as well – it needs to be removed by a licensed professional – but the end result is well worth the time and expense.

Asbestos Removal

Non-regulated asbestos material can be legally performed by homeowners, regular contractors, or licensed asbestos abatement contractors as long as the National Emissions Standards for Hazardous Air Pollutants (NESHAP) are not violated.
The health risks involved in handling non regulated asbestos materials is small but the removal should be done in a manner that will minimize the release of fibers due to breakage. It is recommended, because breakage in inevitable, that one wears asbestos related safety equipment including a disposable tyvek suit, gloves and must be medically able to wear a half mask respirator with High Efficiency Particulate Air (HEPA) filters, and adhere to the principles of wet removal and without visible emissions.
Removal in workplaces, schools and public facilities must be done by a licensed asbestos abatement contractor.

Disposal

The best way to dispose of asbestos is to bury it or any way that will prevent it from becoming airborne.
Service area landfills will often accept large amounts of asbestos provided it is properly contained or shipped in bulk.

Next week: Building Green.

Mortgage Myth vs. Fact Part 6

Since the response I received to the mortgage myths vs facts series was so very good, I am extending it beyond the five part series I had initially conceived. Feel free to send in your questions and I will have Huck see if he can answer them and perhaps we can feature them here as well.

Here's the latest one:

MYTH: One needs a two year work history to get a loan.

FACT: Not necessarily! For example, a newly hired college graduate, working a job related to his/her major, will often get his/her time in college counted as "work history."

Contributed by Huck Ferrill, mortgage consultant. He can be reached at 916-788-9802.

Who? Me? A Monster?

In honor of Halloween, I offer my fellow Realtors and you - home buyers and home sellers - the common types of client monsters I come across in the business of real estate.

Fairies

From the Latin word for "fate," in folklore, fairies are supernatural beings who occupy a limbo between heaven and earth. As home buyers and sellers, fairies are the most easily recognized. They know a lot about real estate, have perhaps been brokers or salespeople in the past and have friends in real estate. They have been known to invite more than one Realtor to their weddings, their children's birthday parties and other social gatherings. But the Realtors don't mind. These fairies of real estate transition easily and smoothly between homes and when they do enter the lives of Realtors, we are much the happier for their presence. As with the mythical fairies indeed, these people (while sometimes seeming almost mythical themselves) control the destiny of many a Realtor.

Zombies

Zombies are the clients who, through some freak of nature are forced to either sell their home or buy a home. They are completely unprepared for the ordeal, having promised themselves never to undergo such torture. It has been almost a century since they have either bought or sold a house and they are almost mindless, confused with the volume of paperwork, have little reasoning power but can perform some of the "remembered behaviors" from their living existence. Realtors find zombies pretty willing to buy or sell their homes but are surprised by their lack of excitement at either multiple offers or a great bargain. Often, Realtors are left scratching their heads at these clients and the transaction with a zombie often ends with a shrug of the shoulders and no referrals.

Demons

Demons - divine beings that are now fallen - are often first confused with fairies. The fall happens somewhere in the six to twelve months that the Realtor works with these home buyers while interest rates rise, home prices fall, home prices rise, interest rates fall, the economy wavers, then recovers... somewhere around this time, the Realtor filling his hundredth tank of gas begins to wonder if indeed he misjudged this demon as a fairy. Of course, the demons never admit it. So it is up to the Realtor to decide. But usually by that time, it is too late.

Werewolves

The transition of normal happy home buyers and home sellers into werewolves - like the demons - can be missed. However, whereas demons become demons due to their own meanness, werewolves are often victims of situations. Today's market sees many werewolves - home sellers that have been lied to by corrupt individuals into losing their homes. When these sweet, innocent, almost-Caspers enter the market again to buy a home, Realtors beware! Any fluffing of the truth, anything besides just plain, simple facts will force them to bare their claws and turn into werewolves. And then, they might not be the only ones howling!

Vampires

Much like demons. But meaner. The less said about these the better. For they are neither home buyers nor sellers. Realtors would do well to stay away from them. Most are easily recognized by their vacant eyes and fangs. And even when they promise that they have cash in the bank to buy a home, please, run the other way. Vampires grow on your inability to turn away business and slowly suck you into their lives. Vampires have no friends, except other vampires. Now, really, do you want referrals? Back away from the door, my friend. No trick or treating at this casket!

Frankensteins

The Frankensteins in real estate might perhaps be my most favorite clients. These are the diamonds in the rough, surprising themselves constantly, which makes me feel a little bit like I have magical powers of my own! (Yes, yes, I know - that would make me a witch. So be it.) As home buyers, these Frankensteins are surprised to know that they have the ability to buy a home and get a great bargain and that they actually recognize one! As home sellers, their homes are prime candidates for staging. But the efforts on the part of these Frankensteins make you want to weep. These imperfect, sensitive clients are what Realtors live for. They make us feel like we have made a contribution to someone's life. Frankensteins, don't be afraid. We love you!

So there you have it! Some of the most common monsters we deal with. Of course, the biggest monster may well be the real estate market. Hey, no one said this list was exhaustive!

Mortgage Myths vs. Facts - Part 5

This is the last post in a five part series of Mortgage Myths vs. Facts put together for us by Huck Ferrill, mortgage consultant. If you are considering buying a home today's market offers you some excellent options. And here's the last one.

MYTH: "I can't find any jumbo financing without paying about 8% in rate."

FACT: We offer financing up to $5,000,000 on 3, 5, 7, and 10 year fixed product, 30 year amortized or a 40 year with interest only payments for the fixed period, at rates in the 6s. For example a 70% LTV $2,000,000 purchase loan utlizing a 5 year fixed product would be offered for 6.5% with one point origination fee (6.75% APR).

I hope this series has been helpful to those of you who would like to buy a home but are concerned about financing it. As always, if you have any questions about financing, this series or any other real estate related question, drop me a line. Don't listen to the hype. Get the facts.

Real Estate Article about Sacramento

In case you missed this, read it here. The Wall Street Journal reports that Sacramento's inventory is falling. Sales are up, so even if prices have fallen, take heart. This might be the first step toward a recovering Sacramento real estate market.

Mortgage Myths vs. Facts Part 4

I'm beginning to enjoy these little doses of information provided for us by Huck Ferrill, mortgage consultant. Today's myth is one that I have heard often from clients looking at homes. See if this is something you are concerned about as a home buyer in Sacramento.

MYTH: Stated income loans are no longer available.

FACT: With adequate verified liquid assets (typically 6 - 12 months PITI reserves) and at least a 680 FICO score, stated income loans are available up to $5,000,000 for purchase or refinance of a primary or second home. Rate for a $4,000,000 loan is as low as 6.5% for one point (6.75% APR) interest only, 40 year term for product fixed for 3 years.

Mortgage Myths vs. Facts Part 3

Ready for today's mortgage myth? Here it is!

MYTH: Financing is no longer available for construction of a custom home.

FACT: We offer construction only loans upwards of $2,000,000. Contruction to permanent loans are available up to $1,500,000.

This is part of a five part series on mortgage myths offered by Huck Ferrill at First Security Financial Group. He can be reached at 916-788-9802.

Mortgage Myths vs. Facts Part 2

Enjoyed the first one? Here's dose number two:

MYTH: "I want to buy an REO fixer that is currently unliveable (no plumbing fixtures, broken indows, leaky roof, no built in appliances). There is no financing available."

FACT: FHA 203KS loans allow an owner occupant buyer to finance 97% of a home purchase "as is" and provides up to $35,000 for refurbishment/repairs AFTER escrow closes.

This is a five part series provided by mortgage consultant Huck Ferrill. If you are thinking about buying an REO, give me a call! I will put you in touch with him!

Mortgage Myths vs. Facts Part 1

Our very own mortgage consultant Huck Ferrill has put together this concise yet revealing look at the state of lending today. If you are considering buying a home in the greater Sacramento area, but are concerned about getting a loan, give me a call and I will direct you to him and then into the house of your dreams! I will be covering this in a five part series. So read on and come back for more!

We think we're seeing way too much bad news in the real estate market, stock market and the economy. So today we're here to offer a few bright spots in the area of residential lending.

Myth: There is no longer financing available for investors in rental property if the investor owns four or more financed 1 - 4 residential family dwellings.

Fact: A very limited number of lenders don't care how many other financed properties an investor owns. They will make loans to rental properties upto 75% LTV, for rates as low as 6.5% with 1 point (6.75% APR) interest only.

How about that? Come back through the week for more busted mortgage myths!

The Problem with Foreclosures...

For those of you who know me it should come as no surprise that I like listening to talk radio when I'm in my car. The topic of real estate often comes up in these talk shows and one of the financial talk show hosts yesterday was asked about foreclosures and buying them. The caller was wondering if it was a good idea to buy an REO and if so what he should look for to get a good deal.

The host's answer perturbed me a little. Knowing the host to be extremely conservative when it comes to money, I loved that he said it was a very opportune time to buy real estate and that the caller would be pretty thrilled about his purchase in the future because bank owned homes are greatly discounted. However, he also told the caller to look for a foreclosed home that is 30% under fair market value. Usually, the host said, he recommends 20% under fair market value, but now he suggests going for the extra 10%

Great advice. But here's the chink in the armor - here's my point: What exactly is fair market value?

I know the definition of fair market value and I know how to get my clients a market analysis. But when every home is a foreclosure and already discounted and every sold comparative property in the neighborhood is also a foreclosure, just how is a buyer to figure out fair market value?

The value of a property falls or rises only in comparison to its neighbors'. The current market in Sacramento is replete with foreclosures. In fact, if you look at the real estate market statistics, almost 90% of the sales are foreclosed properties. So, in effect, foreclosures are making up the sold comps. To expect a property to be 30% under the recent foreclosures - already discounted - in the area would be to expect the economy to be in much worse shape than it is now. And if that happens, do we really think anyone would be buying a house?

The financial host's advice is (as in most other cases) pretty commonsensical, but only works in relatively stable markets and neighborhoods where you can compare a foreclosure to a non-distressed sale. In markets like we have today in Sacramento, that advice doesn't work as well. We need a new parameter to assess value in Sacramento REOs. Any guesses, Mr. Clark Howard?

Sacramento Rental Inspections - Still Mismanaged

First hand experience beats everything else. And lately, I have even more respect for the landlords in Sacramento that are holding on to their investment properties through the falling house values, increasing city and county utility bills and the general bad mood out there in the real estate market.

Why the new found respect? Well, I've been reporting the problems I've had communicating with the city of Sacramento regarding the new rental inspection program they have adopted and here's a new one.

I received a letter saying there would be a re-inspection. Now, a reinspection is only issued when there is something in the property not up to code. The landlord is required to fix whatever is not up to code before the reinspection. Great. Except no one told me what is wrong with the house. The last time I called I received no response. This time, someone answered. Thank God, I thought. Except nothing got resolved, because even the woman on the phone couldn't find any record of anything wrong with the property. She assured me she would look for it and mail it to me.

Somehow I doubt that record is ever going to get to me. Somehow I'm sure some more money is going to be wrangled out of my hands for no fault of mine.

Sacramento: Is Now the Time to Buy?

Now is always a good time to buy. Or so goes sales-speak. But perhaps there is a reason for it beyond just the job of sales? (Yes, it's a job... like any other!) But today I want to discuss with you why I say that about real estate in general and real estate in Sacramento in particular.

Time, not Timing

As you can probably tell, I'm not a big fan of timing the market - real estate or otherwise. True, some people can do it pretty well and profit from it, but I believe most people use market timing retrospectively to justify their own fears or expectations. In other words, when the market goes down, the fearful ones feel justified; when it house prices appreciate, the optimistic ones feel victorious. With all this tongue thrusting at one another, the reality of historical price appreciation, the inherent value in real estate and population growth gets ignored.

As someone pretty smart once said, "It's about time in the market, not about timing the market." I wish I could remember who said it. Real estate typically has cycles of about 7 - 10 years, with some pretty wide swings in between. One cannot look at the last two years or the two years that came before it as typical. How could you sleep at night if you did?

Wealth is Created Month by Month

I think there is a reason successful investors are older, quieter people. They are less prone to get carried away by every tick - up or down - of any index. They have learned to handle the two worst enemies of any successful venture: fear and greed. Unfortunately these two impostors run the market and the minds of most other people. So investing takes equal amounts of trust, research and guts. And of course, patience, something we 30 somethings need large heapings of, I guess.

Okay, I'll confess. The recent downturn hasn't been fun. It isn't easy to see one's net worth fall. My rentals have lost value. My own house has depreciated. The real estate business has suffered because the mood in the market is that of fear. And that leads to the overwhelming question: Did we buy our houses at the wrong time? And my answer is a resounding NO!

Before you think I'm insane, consider the fact that we used the equity from one house to buy another. Consider also that the tenants are paying most of the mortgages for us, thus reducing our liability every month. We get tax incentives. And we live in the home we always wanted. In today's market, we couldn't have bought this home, because there would have been no equity in the others. If you think about it, all things considered, we're in a pretty good place right now. And if you're a homeowner and can afford to keep it, unless you're retiring tomorrow, you're probably also not in as bad a shape as some might have you believe.

So is Now the Time to Buy?

If you are a first time buyer, the best time for you to buy has passed. It was last year. Yes, I know - home prices have fallen since then. But there are no zero down loans unless you are buying a home in a rural area. I can't tell you how many first time home buyers have been given this sad news. By the time zero down loans come back, the market will be far higher than today. So much for timing the market.

And what about mortgage rates? Just last week, they jumped higher than anyone could predict. For some home buyers, that was the end of their real estate purchase dream. In such a volatile time, mortgage rates can go anywhere and if you haven't locked your rate, a home purchase might need to get put off for a long time.

And then there are those that would like to buy a home with the equity in their current house. They would either like to move into a bigger home and hold the first as an investment rental or buy a rental. Lenders now require at least 20% down for an investment property, with 25% down getting better interest rates. If you didn't refinance last year, you can't buy that home now, seeing that prices have fallen farther. If you still can, do it, but know that mortgages have more fees attached today and - surprise, surprise - mortgage rates are higher.

So What's the Answer?

Simply this: No one can tell you when the right time is. Not the doomsdayers, not the news, not even me. When you look at your family budget, you'll know. Real estate is still one of the most solid investments you can make into your future, but it is not to be taken lightly. If you are one of those that sway with every breeze, it is perhaps best you stay away. No shame in that - you should always know how much risk you can handle. You don't want to be another Casey Serin.

Think Realtors can be Funny?

As if I didn't have enough to do, I just started two new blogs you have to read. Okay, you don't have to, but it would be nice if you read them. Buying and selling real estate doesn't offer much comic relief, so I've been forced to entertain myself and a few of my friends (few, very few - just a handful, really) with these.

Landlord Landmines

Mommy Wants Another Baby

Go ahead, click on the links. You know you want to.