Case Properties

Recently we have had a rash of Buyers/Investors for our lower priced and condition distressed listings. These properties are prime targets as investment as long term rentals or as entry level homes for first time home purchasers.

First time buyers are having a hard time getting these properties for a few reasons.

1)      Banks prefer all cash offers. Closing costs are lower and timeframes for closing are shorter.

2)      Financing, while available, is more difficult to obtain for the first time home buyer. Agents need to make certain that the lender of choice is prepared to offer financing long before the property is identified. If the buyer finds a property available, there is no time to wait for an approval, as the cash buyer will get it long before the finance buyer can get their paperwork submitted.

3)      Due to the shortage of available properties, bidding wars are occurring on many properties, leaving the homebuyer priced out.

One trick that is ethically questionable by all cash buyers (and due to the shortage of properties, used more and more) is the tactic of making an offer on a property through a willing agent (who is probably hungry for a commission) prior to actually visiting the property (most times the agent has not seen it either). The offer is well over asking price and is generally accepted by the asset manager. The listing agent who receives the offer has little room to work in this situation. Even if the question is asked, the Buyers Agent can tell the Listing Agent that the Buyer has seen the property, regardless of the facts.

Once the contract is agreed to, the Buyer/investor goes to the property to investigate it. Usually, two responses are obtained:

1)      The ‘investor’ walks from the property (usually due to condition)

2)      He asks for a price reduction for ‘construction costs’ if he finds the property acceptable.

Terms of ‘as-is, where-is’ are ignored in this tactic. The Buyer is essentially getting an option to purchase the property without paying for one, costing the Seller holding and opportunity costs and as a result is paying the option cost for the buyer. 

It is the responsibility, however, of the listing agent to determine if the buyer has seen the subject property and communicate that to the Seller, so the Seller can make the appropriate determination as to whether or not to accept the offer. This is especially important in multiple offer scenarios, where selection of the optimum offer is dependent upon many factors

As we move into summer, we expect some changes that may have a noticeable effect upon the real estate market in Northern California and more specifically, the East County area.

Foreclosed homes will probably be on the rise, maybe by the time that this article is published. The larger banks, those that had TARP money infused into their systems, have had a moratorium upon foreclosing homes over the winter and spring. These properties, which number over 600,000 nationwide, will at some time have to be sold to willing buyers. A question remains as to how many buyers will there be during the summer.

Recent sales have shown a rise in prices, probably due to the limited inventory of homes available. Our experience has been that investors are scooping up the new homes on market, as the rental market continues to outpace the cost of homes. First time homebuyers are having problems with purchasing homes for a couple of reasons. First, if they find a home they like, they usually are competing with other people who also like the home, as well as investors. They must compete with everyone in order to obtain their property. The second problem homebuyers are experiencing is the amount of time required to obtain financing. We recommend to all of our clients to get qualified to purchase a home prior to looking for one. If they have their approval letter,, when they find their home, the offer can be submitted immediately. This is truly important in this market, as the time frames can go by so quickly. Many homes are now selling on the first day they hit the market.

Interest rates have begun to climb. They have risen on average, 1 full percentage point from the lows we saw in spring. While they have softened some in the past 2 weeks, we expect them to rise through the summer.

The State of California reports statewide unemployment at over 11%. Some analysts think it is much higher, as many have quit looking and do not factor into the unemployment count. The state also is running a much larger budget deficit than was projected at the end of the year and with the current budget adjustment and tax increases we have experienced. Both of these impacts are not good for the state or for the people who live here.

Predicting the future for real estate prices and transaction rates is difficult in normal times but almost impossible in confusing times like this. While we have a surplus of buyers today, it is lot likely to last us through the summer, as the interest rates and employment rates are negatives to Buyers. Along with the expected increases in number of properties available, it is likely that this will be another point of pressure of the price levels.

We expect prices to remain level for the summer. What will happen in the last quarter of the year will depend on how the economy fares through the summer.

If you have any questions or comments regarding our analysis, please contact us. We will be glad to assist you in any way we can.

Problems appear to be developing in the residential real estate market that will inpact it for the next few months or more, despite the increased number of sales in the past 6 months. Factors that influenced the rise in numbers of transaction will not be present forever. In fact, there will be a reversal in the conditions that made this market look like it as recovering. Here are the conditions for the future market

1)      Increased numbers of listings. The foreclosure moratorium will end someday, probably soon. The moratorium is over, according to many sources, but few of these foreclosed properties have come to market, especially from those financial institutions that have the largest number of properties already foreclosed upon. It is estimated, for example, that Bank of America has over 600,000 properties on the books, ready to sell. It would be in their interest to release some of them to market in order to gradually take them off (by the way, if they had sold them all, their capital requirements, as measured by the ‘stress tests’ would be well covered to the point of excess). It is also speculated that the federal government is interfering with the release of the properties with all of the rules changes, TARP issues, and other regulatory inconsistencies. At some point though, these properties must be sold, as the banks do not own real estate. It is a drag on their bottom line when it is important to have as much income as is possible.

2)      Interest Rates. The interest rates for mortgages of all types has risen nearly a point in the past 2 weeks. It is due to the disappointing results and Federal T-note auctions and the concurrent rise in interest that the government must pay in order to sell these notes. Notes of all types, 2, 3, 5, and 10 year bonds are approaching 52 week highs (in interest rates). It is these note that many mortgage indexes are based upon. 2 weeks ago, it was possible for a person with a good credit rating to lock in a mortgage around 4.5%. Today (June 3) the rate is closer to 5.5%. While these rates are historically low, at some point the interest will be too high for many people to qualify for a loan. Most importantly, the cost of a home is more heavily influenced by the interest rate on the mortgage, rather than the price. Cost, in this case, is the monthly payment, which is most important to the homeowner.         

3)      Removal of Buyers. Today, when a property is listed, there are usually many people interested. Recently, we listed a property in which we had over 30 offers that resulted from over 500 calls in 5 days. These people are looking for a home, investment, or 2^nd home. Interest rates are part of the reason but the combination of low prices and interest rates have brought many Buyers to the table. Removal of either of these conditions will also remove Buyers of all types.

Everyone gets hurt by the situations coming up. The financial institutions could have benefited by offering more homes for sale and capture the increased interest in real estate. Buyers would have benefited by having more choices, and lenders would have been able to make more loans. While it total recovery would not have been achieved, we would have been further along than we are today.

What is impending, however, is a possible step or two backward in this country’s recovery.

We are John, Diana, and Paul Case.

Together, we have over55 years experience in the real estate business. During this time, we have seen markets that are, up, down, uncertain, and everything else one can imagine. What we be bring to the table is a range of knowledge and experience that is difficult to beat!  Our primary focus is residential, but we also have experience in commercial, agricultural, business, and small industrial real estate. By choosing us, you choose an agent that is interested in seeing that your needs are met and that you are completely satisfied with your transaction.

Buying a home is perhaps the most important thing that you will do during your life. While we cannot remove all of the stress, we can reduce it to the lowest possible levels.

If you are interested in buying or selling real estate, we would appreciate the opportunity to represent your interests in any respect.

We offer free consultation on your real estate questions and welcome the difficult questions; believe us, we have seen them before.

Call us anytime at 925-308-7045.

This former model is pending sale. Click on the link below the photo.

Gold Poppy

With the passage of Proposition 8 a few years ago, you have the ability to have the property taxes lowered to reflect the current value of your home. Many of us purchased our homes within the past 5 years. current home values are now at pre-2000 levels. Contra Costa County has a form that can be used to document the property values in your area.

This document has been attached to this post and you can download it at any time you would like. If you would like assistance to complete the form, we offer it free of charge. Please call us at (925) 308-7045.

prop-8-tax-reduction-request

This property is now sold. 

Tremendous price for a Fabulous Estate Home ! Click on the link below for all of the particulars

1026-natwick-way1

Very nice 3 bedroom 2 bath home. Please check the link.

1677 Marigold

The National Association of Realtors has published a flyer explaining why it is a great time to get into the housing market.  Interest rates are low, as well as home prices, and the banks are under pressure to move houses and make loans.  With rents now exceeding the price of the mortgage in many cases, not moving now to move into a new home is just wasting money.

Take their word for it as well as ours.  Drop us a line here or give us a call and we can find you the perfect home at every price range.

Time to Buy