Case Properties

We hear all of the time, ‘Buyers go to the Internet first when begining to look for a new home’. The National Association of Realtors claims that 90% of Home Buyers go to the Internet first. That may be true, but I must ask ‘Would you buy a home over the Internet without going to it first’?

We can buy lots of things on the web, books, home goods, toys, supplies, and loads of other things. But when it comes to making one of the most important purchases of you life, would you buy it over the web or would you use an experienced representative to ensure you are getting what you want at a fair price?

I think that an overwhelming number of you would choose to get a little help. Of course, the number one response I get to this is that many people would choose to use the Listing Agent to represent them, because after all, ‘he can get us the best deal…….’  To be honest, using the listing agent may be one of the worst ideas a Homebuyer can have. Of course, we will do it if the Homebuyer insists, but we recommend against it. We do this for one very simple reason; we have a contract with the Seller and we represent him. We are bound to get him the best price and terms, not the Buyer. We cannot disclose any of his private information but must relay to the Buyer his terms.

Getting back to the topic at hand. Prior to the Internet, there were the newspapers, prior to that you had to call a Realtor first, or you could cruise neighborhoods looking for open houses to visit. It was unlikely that the home you may have entered on a cold open home visit would meet your living requirements, price and budget, or other requirements. The Agent then could set you up to find a home that met your needs.

Many peole use the Internet the same way; they cruise the real estate websites looking for available homes (hence the claim that 90% of the buyers start with the internet). There is so much information on the web that it can (and does) overwhelm the average Buyer. Additionally, often the web is not up to date. Once in a while I look at listings on the web for the express purpose to find properties that have been off market for a while. It generally takes me about 2 minutes to find many homes advertised that have been sold or taken off market over 1 year in the past.

With todays gas prices, cruising neighborhoods is not the best use of  this precious resource.

Using the internet to find your new home is equally ineffective.

What is a Buyer to do?

Most real estate companies provide their agents a targeted search, often modifiable by the User. The best solution is to contact a Realtor and specify your search criteria; price, square footage, the number of beds and baths, location/neighborhood and lot size are common specifications but there are lots of others you can name. The tools then provide you an up to date list of homes available that meet the specification. After contacting your realtor, you can then get appointments to see the homes you are interested in.

The results? Lots of time and gas saved. You see homes, all of which may meet your needs. You may find that what you thought you wanted is not at all what you purchase (this happens all of the time). You are represented by someone who has your interests in mind.

All of this is the result of using the interent wisely. The web is not designed to be used like your car, idly meandering through the neighborhoods, wasting time and money. New tools means new approaches to accomplish old jobs.

After speaking with several escrow and title representatives recently and experiencing it ourselves, we have noticed new ways that some real estate agents are extracting fees from their clients.

The most popular one is the transaction coordination fee, which ranges from $200 to $450 dollars. Many agents use transaction coordinators to do the tons of paperwork required in every transaction, chase down and get return phone calls, status updates, and the like. These are all things that a competent real estate can do, but many times when they get busy and the help is beneficial to keep on top of the many transactions that successful realtors may have. These tasks are also ones that unsuccessful realtors may use in order to avoid doing the loads of work that can be overwhelming. Either of these is alright, as the paperwrok gets done, the transaction closes on time, and everyone is happy. However, the problem is when your agent charges you for the service. Most agents consider this as part of their service to you and pay for the coordination themselves. When you are charge as a Buyer or Seller, you should question that charge andwhy you should pay for it.

Other charges that have been popping up are $800 ‘escrow’ fees (escrow charges their own fees), paperwork costs, desk fees, etc.

When selecting an agent, ask them what fees they will be charging and question why. When selling your home, you will be charged the commission as that is how an agent makes their living. When purchasing, you agent normally will not charge you anything for their services.

For what its worth, we do not charge any ‘extra’ fees when working with our clients.

This morning as I was watching the news on the potential tsunami in the Pacific Rim, especially Hawaii, the main thrust for everyone was to collect survival items required to sustain the family for 5 to 7 days.

Although a tsunami is usually not a big worry for us here in the East County, we do have another potential disaster for us to consider. When the Big Earthquake hits, will you be prepared? It hit me pretty hard when I assessed my home and found that we fall short in survival supplies.

With a very little amount of searching, I found a resource that lines out what you (and I)  may need for an earthquake emergency here in Northern California. I highly recommend that you review this site, maybe even print it out (it has the facility to do it.

The URL for this website is: http://72hours.org/.

The site outlines the supplies that you will need to make ends meet for 72 house after the cessation of services after an earthquake, flood, terrorism attack, or other emergencies.

The contect of this site are now in FaceBook!

Just log in to Facebook (you must be a FaceBook member togetin, at no charge of course), and search for Case Team. You can comment, discuss, and much much more on the site there.

See you soon.

We just got the report from the NAR that existing home sales were down in December from November by 17 percent. Rather than react to the way the media and the NAR want to present it, blaming the end of the Homebuyer tax credit,  this decline is the result of the following factors:

1) Buyer uncertainty – December sales were probably entered into contract in October or November. During this time, unemployment was rising and there did not seem to be any end to it, just as today. People look at their finances and hold back during times of uncertainty. This especiallt applies to large purchases, including homes. Until such time as there is a little confidence built into the news, this will be aconstant issues.

2) Seasonal influences. Sale ALWAYS GO DOWN during the holidays. Last year was no different. While this decline was nearly a record decline, see reason #1.

3) Availability of credit - although interest rates are low, financial institutions have raised qualifications, added tone of new rules and paperwork and denied loans that have been approved in the past. This began at the start of the 4th quarter last year and finally evidenced itself in December. Lending institutions are trying to deal with ever changing rules laid down by the regulators as well. Until this confusion ends, it will be more difficult to obtain credit.

The media and the Treasury know all of this to be true, but will not print it. You need a source you can trust to give you the facts.

Also, we are on Facebook. Use this link to add to your pages for this article and much more!

http://www.facebook.com/photo.php?pid=884599&id=1423756938#/pages/Brentwood-CA/Case-Team-Intero-Real-Estate-Services/115017359897?ref=ts

If you know of anyone having problems with thier lender, please them know that there are options and we can help.

Short Sale Assistance

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472 Andrews, Livermore CA 94551

Mew Listing!

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Check out this prime property in Shadow Lakes. 4 Bedroom, 4 baths, 3288 square feet on a 6000 square foot lot. Spacious in every aspect, this home need little work to make it your new home. Price have just been reduced, a new sod lawn just installed. Price has just been reduced. Call us or your realtor to see it!

882 Inverness Ct., Brentwood CA 94513

It seems like every 6 months, the California Legislature must deal with a $20 billion plus deficit.

In the real estate business, we are concerned about it for a large number of reasons, but this time there is a real problem with the Section 8 part of real estate that we have not heard of for some time.

Section 8 Assistance has been part of the real estate mix for some time. 2 years ago (yes, it was that long ago) there was an uproar by many people in neighborhoods complaining about the number of Section 8 renters in thier neighborhood. While Section 8 was a part of the problem, the number of renters had gone up considerably over the past few years due to the number of investors purchasing properties and renting them out as values soared. Section 8 was a minor portion of the problem and it was an easy target for homeowners. Employees were also very close mouthed about the rental problem and added to the fervor.

All of this brouhaha has subsided as property values shrank, investors lost thier homes, and the renters had to leave, replaced in the main by new homeowners who have purchased these properties at a substantial discount to their original prices.

Section 8 is still a part of the rental picture, even more so than during the times mentioned above. Section 8 rental requests are at very high levels and properties thatg take Section 8 is limited.

There are new problems for Section 8 housing that impact everyone. With the California budget problems, the amount of money that will be available to Section 8 will probably by cut in the next budget year. While this does not mean that people will necessarily be removed from the program (this may also occur as well), it will mean that people who seek  Section 8 assistance will probably not have it av ailable to them. People who are removed from the program for violating terms will lose it as well.

This should free some housing for rental to those who are looking. It also may mean that the owners of these homes may not be able to keep them because the rental rates will also go down (Section 8 rental calculation methodology pays higher than market rents, this will be dealt with in another topic) and the rent is no longer guaranteed by the government.

The impact of this is that there may be more homes going on market, either as short sales but more probaly as foreclosures as the landlords can no longer afford the mortgage payments on properties that used to carry the mortgage.

The Governor has proposed a budget in the State for next year that hold the education budget steady but has an across the board cut of 10% in the remainder of the budget, this will include any mandated payments to the counties who need the money to operate the Section 8 programs. Additionally, property tax reduction over the past years has also reduced funds to the counties.

Section 8 Housing, a Federally mandated program, has some real challenges for the next budget year, none of which has an easy answer.

Each year we try to assess where the real estate market is headed for the coming year. Last year, we were way off the mark as there was no way for us to predict what would happen after the Treasury Department became more and more involved in the business due to their TARP involvement with the banking institutions. While the major players (Wells Fargo, Citibank, and most notably, Bank of America) have repaid their TARP funds, it does not mean that the governmet will continue to apply influence to real estate lending activities. In any case here we go:

Real Estate Supply

The market will probably have more supply of homes than last year, more than likely, a lot more. Banks have been trying with little success to stem the foreclosures through loan modifications in 2009. Despite all of the holdovers, approximately 31,000 modifications were done against over 4,000,000 loans in default. This low number of modifications is bad, but not as bad as it sounds. Many of the 4,000,000 homes in foreclosure were either 2nd homes, investments, already abandoned by the owners who may have alreay bought another, or brought the mortgage current prior to foreclosure without resorting to a loan modification.

Nonetheless, there will be a large number of homes available for sale in 2010 with the bulk of them to be foreclosed properties. This will put a lot of pressure on people who must short sell their homes this year. Buyers, when ready to buy, will look at foreclosures first, as they are much easier to close than short sales, which while easier than before, are still much harder to do. It will also put a large amount of pressure on investors who have been buying homes on the courthouse steps and reselling them at a profit. This practice has increased greatly over the past year but will be much harder to do with a large influx of foreclosed homes on market. We expect that by the end of the first quarter of 2010, the incresed supply will be noticable and that by the end of the year will may be at record levels.

The commercial real estate supply will also increase this year as many bad loans, many of which have already been negotiated have fallen into arrears. Until there are definite increases in business activity, this segment of the market will lag as well, perhaps worse than the residential market.

Real Estate Demand

In  the residential market this year, demand has outstripped the supply by numbers we have never seen. Choice properties in popular neighborhoods  have seen multiple offers for them (personally, we have had as many as 55 offers on 1 home and heard of properties that brought over 100 offers) throughout the year. This demand is pretty easy to see. Low prices, low interest rates, and a pent up demand due to low inventory is a recipe for prices to go up. This is what happened in 2009. Will it happen in 2010?

With the economy improving, but little improvement in the employment sector of it, demand would probably remain constant. There is promise of jobs in the ‘green’ economy, but many of them would be entry level jobs with low pay and benefits. If the health care plan passes in congress, taxes will go up by some amount. Prices on goods are projected to rise in 2010 due to higher taxes and the begining of inflation due to the excessive borrowing done by all levels of government. 

Even in the face of these things, if people are able to keep their jobs or find equivalent employment, the demand should remain constant.

The HomeBuyers Tax Credit, modified and extended through April 2010, allows for a $6,500 credit to homebuyers who have purchased a home and are ‘buying up’ and $8,00 to first time homebuyers. Both of these programs apply to owner occupied homes only. A recent survey of homebuyers who have purchased recently showed that nearly 70% of them would have bought a home whether the credit was there or not. We suspect the the expiration of this credit will have little impact on the demand for homes.

There is a lot to be considered when attempting to deal with all of the items that need to be taken into account with real estate demand, prices, interest rates, supply, employment, taxes; all are factors when making estimates into where the demand is coming from or going to. California added nearly 1/2 million people to the population this year. some of them will be buying homes, some will need rentals, purchased by investors.

Given everything, we expect that demand will remian fairly constant in 2010 unless there is a substantial shock to the system.

Interest Rates

Interest rate are today at near historic lows. Just on this basis, you should expect interest rates to rise. however, some people think we have created the ‘perfect storm’ for interest rates to rise. The federal government has borrowed so much that they have ’squeezed out’ all available funds for other borrowing. The State of California is in as bad a situation today as it was when they balanced the budget 6 months ago. There is such a demand for governmental credit that interest rates will have to be raised in order for people to buy government instruments, or the government will have to raise cash another way, that is, to print it.

In either case, with higher interest rates or inflation, impacts to the real estate market will be real.

Real Estate Prices

Recently (in fact for the past 6 months or so) real estate prices have been on an increase each month; the number of transactions has also increased. While geographically these increases were large or smaller, the result is the same, prices have increased as well as the number of transactions, indicating that there is a mini-boom in the real estate sector. New home starts also appear on the increase as well.

2010, unfortunately, does not look to hold the promise of an extended recovery. One factor, demand, looks steady at best and these increases are the result of demand outstripping supply. However, 2010 will see the following: increased supply, higher interest rates, continued high unemployment, and higher taxes. The impact of all of these factors can only mean one thing, lower real estate prices during the next calendar year.

Buyers will be looking for affordable payments. If interest rates go up, be sure that prices will decline.

We prefer a balanced market with prices remaining fairly constant in a quiet interest rate environment. This condition does not happen often. Real estate for the homebuyer, and for the investor as well, has historically on average been a 5 to 7 year hold. When people hold on longer (use the 1940s and 50s as a reference) prices tend to shrink, as there is little interest in moving. When people move more often as they have in the past 25 years, due to job requirements, larger and larger families, the demand for amenities, and other cultural changes, prices go up. When adding in the bubble environment that we had begining at the start of this millenium, the shcks to the system can be severe, as so many people in this country and around the world have seen and experienced firsthand.

Of course, we could be wrong (check our results from last year). Understandably, we hope we are and the real estate markets are strong and healthy for both buyers and sellers in 2010.