Shokoofeh Nowbakht, Realtor
Prudential California Realty
www.shokoo.com

* Existing, single-family home sales increased 4.7 percent in November to a seasonally adjusted rate of 536,720 units on an annualized basis.
* The statewide median price of an existing single-family home increased 2.4 percent in November to $304,520 compared with October 2009.
* C.A.R.’s Unsold Inventory Index fell to 4.5 months in November, compared with 7.1 months in November 2008.

According to the C.A.R.’s President Steve Goddard: “First-time buyers continued to drive the market in November, as many opened escrow to take advantage of the federal tax credit prior to its original Nov. 30 expiration.  The extension and expansion of the tax credit until April 30, 2010, along with low interest rates, should continue to positively impact the market in coming months.       Efforts by lenders and the government to assist homeowners at risk of foreclosure have led to fewer homes available for sale, and an increase in the state’s median home price. California’s median home price increased year over year in November for the first time since August 2007.”

For the full article, see:  http://www.car.org/newsstand/newsreleases/novsalesandprice/

Along with others, I’m hopeful for the new year and have definitely seen an increase in interest among potential home buyers.  At the same time, however, I have to be a little hesitant in painting too rosy of a picture in the year to come.  In the past month alone, I’ve spoken with three families who are looking at the prospect of losing their homes in the near future due to either loss of employment, a resetting of their loans to higher interest rates and higher payments, the fact that their property is not worth the remaining balance of the loan, or a combination of these factors.  Loan modification is not a viable option for them, nor will any of the proposed or newly passed housing programs be of any help.  All three are actually continuing to make their payments on ethical principles, even if this means eating into their savings.  And I’m sure that their cases are not isolated ones. 

So while I hope for the best and want to believe that the economy is taking a turn for the better, it seems to me that we’re still not out of the woods yet.  I’d be interested to hear from other agents and homeowners as to what they’re seeing on a practical level.  In the meantime, here’s to hoping for a truly Happy New Year to all of us, and especially to those in difficult situations.

What should she do? Her only experience with loan mod has been a nightmare. Who has had a positive experience with a loan modification firm? Should one stop making payments in order to be considered for loan mod? How would you advise her?
Thank you.

Shokoofeh Nowbakht, Realtor
www.shokoo.com

The National Association of Realtors is urging Congress to extend this credit, which has been successful in encouraging home buyers to get off the fence, especially coupled with the still historically low interest rates and affordable home prices. 

I’ll have to admit, however, that there’s a part of me that doesn’t want it to be extended.  It’s not so much a matter of economic principles.  Quite simply, I’ve always been the kind of person who takes deadlines seriously and makes every effort to keep them.  I’m just not into extensions.  One semester at Cal, I had an experience in a chemistry course that I’ll never forget.  The weekly lab reports were due every Friday, and I remember staying up late to finish them, color-coding the different sections and re-writing whole pages when I made a mistake (this was before computers became commonplace).  Imagine my chagrin when, at the end of the semester, my classmate, realizing that he’d fail without turning them in, threw together a dozen late lab reports, submitted them to the TA, and got 100%…100%!…on every one of them because the TA didn’t want to bother looking over them!!!  Even though decades have passed since then, that sense of injustice still lingers.

But then again, I have clients who have been making a sincere effort to find and purchase a home, but for different reasons, have not been successful yet.  When I think of them, going through the preapproval process, responding promptly to my emails and calls, even submitting offers that were not accepted because of the increased influx of home buyers and the reduction in inventory in some areas – when I think of them, I have to think twice.  As much as my focus of business is on working with homeowners, I still have a soft spot for first time buyers and feel such happiness when handing them the keys to their new home.  So, for their sakes, I’ll join the throngs who are calling for an extension…but only this once…

Jean Joh

Meanwhile, Reuters reports that homebuyers are still negotiating good discounts based on data released in July’s Zillow Real Estate Market Report. Zillow notes that buyers paid 3.3%, or nearly $7,039, less than the last listing price on homes for sale during July. What’s more, 22.8% of all homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.

It sounds like the trend will remain the buyer’s friend through 2011 – until you dig a little deeper. Zillow also noted that the 3.3% discount is down from June’s 3.5% discount and substantially down from January’s 4.6% discount. It is also worth noting, yet again, that the usual hard-hit burgs in Nevada , Florida and California skew the data.
“Even if prices stabilize and rise, we can still finance at cheaper rates,” so the counter argument goes. Yes, that is the case today, but we think Goldman and others are underestimating how quickly an economy can turn and how quickly inflation can conflate. It is a buyers’ market today, so buyers should take advantage of it today. As for tomorrow? We are much less sure.

http://wwww.deanrizzi.com

It seems like the inventory is low and some listing agents take advantage of the situation and list the properties below market value. This becomes very difficult for the buyers. How high should they offer? How can a regular buyer who is using a conventional loan compete with an investor who is buying properties all cash and waiving all inspections and financing contingencies?

After having said all that, my advice to buyers is to have patience and keep making offers on properties of your choice. And, you go as high as you  believe the property is worth to you. Keep in the mind the absolute value at which you won’t feel bad if you didn’t get the house.

Now, Let’s go out there and write your BEST and HIGHEST offers! Good Luck to all.

Shokoofeh Nowbakht

Your credit will be most negatively affected with a Foreclosure, then a short sale. As long as you stay current on your loan, loan modification should not affect your credit.  Your credit score weather it is right or wrong is used by potential employers before hiring, landlords before renting, insurance companies before granting insurance and etc.  Depending on your individual situation maybe credit is not important. 

My client’s father nearing retirement age could live in his son’s rental unit and will not be looking for another job said he might pass away before his home in Las Vegas is worth as much as as his loan.  He opted for foreclosure.  

I had another client, a family with parents and adult children living at home.  They came to me for a discussion on their options. They are still working and acquiring things so their credit score is  important to them.  Being an immigrant family losing their home, the “American Dream”, would be extremely emotional and their image amongst friends and family here and back home would be devastated. They struggled making payments, but after family members lost two part time jobs they couldn’t do it any more and came to me for help. They pondered the situation. Should they continue making payments on a home that they owe $250,000 more than it is worth. They purchased this home with no money down and realized they would probably never be able to save the 10-20% now required down payment to purchase another home. They opted for a loan modification.  They were hoping for some debt forgiveness.

Their bank would not hear from that. But with persistence similar to a short sale approval I was able to get the bank to modify their 6.5% fixed interest only loan to a Principal and Interest loan starting at 3% for five years, 4% for 1 year and 5%  for the next 34 years. Before that, the second lender agreed easily to modify their 8.5% loan to .31% yes .31% not 3.15 but only for 1 year.  We will follow up with them in a few months.  With home ownership tax benefits their new payments are now about the same as rent would be.  They are thrilled, knowing they will now be able to afford the “American Dream”.   During these negotiations I had them apply and they were approved for a property tax reduction with annual savings of almost $3,000.  

I was told during this process that each loan holder not necessarily the servicing bank has their own set of ratios and criteria for loan modification.  This worked out to be win-win situation.    Their lender will receive their full payment over a longer period of time rather than losing several hundred thousand dollars during a short sale or incur thousands of dollars for foreclosure expenses. 

We have all read that more than 50% of loan modifications are defaulting.  Maybe it depends on the modification.  I recently reviewed a loan modification for a client that was in default.  In November her loan was modified from 8.4% to 7.9%.  Maybe $100 reduction and then they had the nerve to add on another $550.00 per month to bring her current.  Her payments were $400.00 more than before the modification.  If I did not see it myself I would not believe it.  What were they thinking? It is no surprise she is in default again only 4 months later.    

www.leesellsmore.com

Examine the leases carefully! Do the tenants have the option of renewing the lease? What is the increase in rent? Is there rent control enforced on the area? If the tenants have been there for a long time and the rents are lower than the comparable rents, and they have the option to renew the lease, then this may not be a good investment property.
Another important item on the lease is what is included in the rent. Most often the landlords pay for water, garbage and landscaping; and sometimes hot water, gas and basic cable may be included in rent as well.

Vigilantly studying the leases is only the first step to evaluating a property for investment. You would want to also calculate the annual income and expenses and time required of you, then decide whether this is something you would like to invest your time and money on.
                                                               Good Luck Investing!