Case Properties

I don’t know about you, but I am very tired of the bad news I hear about real estate. Every day it seems that there is something new and it is not good. I think that there may be some good news out there and it relates to all of us. So here goes….

1) Buying now may be a very good investment. The rental market appears to be holding if you want to buy an investment property. In fact, where price are today, and you have the resources, small multiples (duplex, triplex, fourplex) may be something to consider. They are priced incredible well, usually there are already tenants in place that provide immediate income, and there are good management companies that are affordable given the excellent cash flow that these properties can provide. You can expect 10% return (or possibly more) on your investment or more when you select the right property after all of your expenses, including ther mortgage payment.

2) Interest rates are low. They look to stay low for some time. Those who have equity in their homes have a tremendous opportunity to reduce their mortgage payment significantly. The saving engendered can be used for other expenses, paying down debt, or accelerating your mortgage payment and pay off the home much much earlier. It is worth the time to contact a lender to find out if it makes sense for you. One thing to remember, though; you current lender will not be particularly excited about refinancing your mortgage if you are current in your payments. You may have to change lenders in order to get your new rate.

3) Homebuyers can now take advantage of some very attractive home prices if they are willing to do a little work or have it done prior to moving in. Some homes in very nice neighborhoods are in rough shape and have been discounted heavily by the Seller in order to get them sold. The FHA 203(K) program allows the Buyer to finance the needed repairs into the loan and get them done. It is a standard FHA loan that requires 3.5% down payment, but opens up a large number of homes that had not been available to other FHA programs.

Call us if you have any questions regarding these or any other Real Estate topics at 925-308-7045 ot via email at caseteam@interorealestate.com

I have seen a lot of activity over the years with people and agents making some big mistakes in dealing with their Real Estate transactions. In today’s markets, where we are dealing with new market conditions, new government rules and regulations, and other distractions, the mistakes are getting bigger and more expensive. Here are some bad ideas that I have seen in the past few months that are singularly wrong and cost the homeowner or homebuyer an exceptional amount of money and concurrent dissatisfaction.

1) When in a short sale, continue to pay the mortgage. There are no words to describe how wrong this idea is. The ‘theory’ behind this is that if you continue to pay your mortgage, the bank will want to work with you. Let me pose this idea, what incentive does the bank have to take less than what is owed on the mortgage when the mortgagee is paying it on time? Well, the answer is pretty simple, NONE. Anyone, including a financial institution will only work in this situation to limit the loss they are going to take. If you are paying your mortgage, they are not losing anything. The reason you have to sell your home short is because you cannot afford it. Paying the mortgage during the short sale process will delay and possibly deny the completion of the sale. This idea was proposed recently by a real estate agent. Be careful to listen to what even the ‘experts’ say.

2) It’s Okay to invest in properties and take a negative monthly income. This idea came about during the meteoric rise in Real Estate prices during the recent bubble. I have a better idea; give me the money you lose every month. Seriously, if you make an investment, you should expect a return on it. If you purchase a CD from a financial institution, do you not expect a monthly return? Real Estate investments should provide a return in line with the risk one takes for owning real estate. The risks include, damage, maintenance, loss of income on vacancies, and the like. Using this guideline, you should expect 13 to 15% return on your money invested. Using a spreadsheet that calculates your costs, income, etc., today’s market provides a large number of candidate properties that will give you this or a higher return.

3) Your home is your biggest investment. While there are a large number of financial and other benefits to owning a home, it fails horribly as an investment. Referring to the idea above, you must expect income from your investment. You get no income from your home. You may get some tax write-offs, the feeling that you own something of value, but it returns nothing on an investment basis. It is this idea that has put so many homeowners into the situation that we have today. As prices went up, many people treated their homes as a super sized credit card. The equity that they had gotten from the rise in prices generally (in fact, there is no real equity until such time as you sell the property) was used for purchases of home improvements, new cars, boats, vacations, and the like. Once the values declined, the property was well over-leveraged to its value. In other words, if it was and investment, it is now. Rental property is investment, your home is where you go at the end of the day to relax and raise your family, to redesign it into the environment that pleases you the most. It does not give you income until you move out.

4) You will be no better off due to a foreclosure than through a short sale. Many times you will hear this and I have no idea where this started. A foreclosure will tie up you credit for all things for a minimum of 7 years. If you short sell your home it will only be 2 to 3 years where your credit will be impacted. I cannot think of any situation where a foreclosure is the same or preferable.

5) Prices will recover quickly so you need to buy as soon as you can. There is a lot of hopeful or wishful thinking in this sentence and I would suspect that it was started by Realtors. However, there is no economic basis for this statement. As long as the economy continues as it is, there does not look like price advances are in the near term. What does need to be looked at when purchasing property, especially your home, is the interest rate on your mortgage. Right now, interest rates are as low as you may expect them to be for some time and into the foreseeable future. Out suggestion if you are looking to buy now is to select the property that best suits your lifestyle and budget. You cannot go wrong with that approach.

These are the bad ideas that look to be the most important to our clients, although there are probably hundreds more. If you have any questions, comments, or good ideas, please contact us at 925-308-7045.

This article was also posted in our monthly newsletter which is emailed to our subscription list on the first Monday of each month. To subscribe, please contact us at caseteam@interorealestate.com 

Thanks!

We have been selected by Wells Fargo to be one of their premier users of their customized short sale system, due to our success in completing short sales with them to the benefit of the bank, the Sellers, and the Buyers. We are honored to be recognized in the work we do and hope to help everyone, Wells Fargo client or not, with any of their Real Estate questions. Please call us @ 925-308-7045 for any of your Real Estate needs.

You’ve seen it before in so many words;…..

….and now for the ugly truth!…….

I have always felt that the truth was my friend, as it knew where I stood with the real world. We sometimes do not like to tell the truth as we may be afraid that it might hurt someone, or hide something from some that would be to our disadvantage. These are forms of lies, which hurt us so much more over time. As a real estate professional, I must tell the truth, whch includes not only those things that may not work to my advantage, but also to not answer things that I do not know, which is a lot, I must say.

This article is to tell the truth about the real estate market, which I do not think is ugly, although the wording sometimes does stop the bleeding, if only for a little while.

TRUTH 1 – WE ARE IN ONE OF THE BEST MARKETS FOR BUYING REAL ESTATE.

How can this be? With people losing their homes, taxes increasing, job losses that are real and may be worse? And you are telling me that this is a good time to buy?

Yes, this is true. Interest rates are low (as low as they have been in decades). Rates on borrowed money are the major component of mortgage cost and this is something the Buyer can control now. Home prices are at decade low prices and well. When this is combined with low interest rates the case for buying versus renting is made. In many cases, the mortgage payment is higher than the rent it would cost to lease.

TRUTH 2 – BUYING A HOME IS NOT AN INVESTMENT

When you buy an investment, such a a CD or mutual fund, you expect a return on your money in the form of a dividend or interest. Buying a home to live in provides neither. In fact, there are additional costs incurred such as taxes, maintenance, utilities, repairs, and the like. No rent is received, in fact if you have a mortgage, you are paying more and more and while the interest is deductible, only to your marginal tax bracket. However, it is your place in the sun, where you can go to at the end of the workday and relax knowing it is yours; your own personal paradise away from the workaday world. There is a lot of value in that and that is the American Dream.

However, purchasing real estate for investment; that is real estate in which you do not live, is an investment which right now is a potentially lucrative one. Rent will almost certainly be significant higher than the mortgage. Mortgage rates are low, as said above, and higher down payments make smaller loans. The maintenance and repair are tax deductible and the standard depreciation you can take on an investment property is also deducted each year, if you choose.

So despite the fact that your home is not an investment is not a reason not to buy. If you have questions on this, I’m always available to discuss.

TRUTH 3 – HOME PRICES MAY GO DOWN FURTHER

This truth is more of a prediction than a truth, but indication are that it may not be far off the mark. The actual thing that the property buyer should think about is what that may mean down the road. If you are a homebuyer, you may want to consider the risk of buying a home if there is fear that you may have to sell within 10 years. If you are happy with your property and can afford the payments, additionally if you have no reason to move, the value of your home in inconsequential. If you are an investor, the income you derive from the property is more important than the sales price, until it is time to make a change for tax reasons, or better opportunities.

TRUTH 4 – CREDIT AND LOANS ARE HARD TO GET

This truth is not a truth but common knowledge. It is true that credit is more difficult to get than 5 years ago, or even 2 years ago. In fact, the documentation required to obtain credit is more of a burden to the borrower, but it is similar to the process before the creative (stated income, variable rate, etc.) loan process began in the mid 90s.

Some banks have little incentive to loan today. They can get money at nearly 0% interest from the government and purchase treasuries at 3% with no risk. With the current conventional loan rate (30 year fixed loan with 20% down) near 4.65%, you must prove the fact that you are not a risky borrower.

The property buyer does have options, of course. Mortgage brokers have many investors that they deal wit (including the big banks) that have money to loan. While the process is more onerous than 5 years ago, you can get a loan at a great rate if you credit scores meet the needs of the lender.

Truth 5 – THIS IS A TERRIBLE TIME TO SELL

This truth may be ugly, if you are compelled to sell your home because you have lost a job, been transferred to another location, or other circumstances that force you to sell. However, the banks are incented to help you get out of your home with as much grace as is possible, first through the load modification process and if that does not work, the short sale process. Nobody likes to be forced to sell their home, but this is true in all markets. Today’s market allows a more graceful exit than one might think.

If you want to sell because you think you are paying too much given the value of the home, you are under the belief that your home is an investment and should reread the first two truths. When you entered into your purchase contract, you had the chance to ask any question about the loan you wanted. A good agent would have directed you to understand the terms of the loan. No one, unfortunately, has a crytal ball to look into the future to see how much value your home would gain in the future. This truth may be ugly, but it is the truth. So many people bought home during the meteorica rise of  2003 to 2006 for the capital appreciation rather than for homes or income, we all began to confuse what traditionally has been a long term capital asset into a short term trading asset. When we confuse an asset for something that it is not, disaster is the ultimate end.

These ugly truths are not all that ugly, I think. However, if you thin kthese truths are really ugly, please let me know. I always like to see a differing opinion, it may also change mine,…and that is the ugly truth.

We work with a number of banks for a number of reasons; loan modifications for our clients, short sales, and REO (bank owned)  properties. After 3 years of working with them, we have found one thing that is true.

The banks would prefer working with your agent or a lawyer than directly with you, on the loan modification or short sale. It is not because they do not respect you, far from it. They know that the realtor or lawyer has been through the process many times before and knows what to expect as you go through the process. Many of these banks give priority to their borrowers that employ their real estate agents or a lawyer to do the negotiations for them.

The big difference is that your real estate agent, whom you should have a close relationship with, must do this work for you without charge. A real estate agent is not allowed to charge for these types of negotiations. A lawyer, of course, does charge for these and may charge up front for services that may not come to success.

We, of course, think that your real estate agent is the best choice for assisting you in the negotiations for a loan modification or failing that, a  short sale.c Short sales are for the near term, the easiest way to shed yourself of difficult financial situations if you cannot successfully negotiate a loan modification. Successful short sales are very near penalty free with regard to your credit and tax liability. Just recently, the State of California signed into law the abolishment of tax on the short sale forgiveness of debt. Along with the Federal government, there is now no tax liability for short sale for the majority of cases.

In short, id you think you may need to try for a loan modification, using your real estate agent may be the best choice. If you have any questions, please contact us at 925-308-7045. We have had success in these efforts and can help you as well.

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

New Listing!

New Sod!

New Price!

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! 

The following news release is from the California State Bar. It shows the problem that people are having with potential theft by lawyers in the Loan Modification process. We recommend that you work with a realtor to help you intercede, as they know the process and do not charge a fee for the service. If you have any questions, please contact us at 925-308-7045.

Member Legal Services Tel 213.739.8200 Fax 213.480.7724 September 18, 2009

California State Bar News Release

The State Bar of California, alarmed by the number of lawyers preying on vulnerable homeowners, today identified 16 attorneys who are under investigation for misconduct related to loan modification. “In my 21 years in attorney discipline, I have not seen a crisis of this magnitude. It is truly unprecedented,” said Interim Chief Trial Counsel Russell Weiner, who is waiving investigation confidentiality in favor of public protection. The waiver, allowed by law, is used only occasionally, but Weiner said the seriousness of the problem demanded a strong reaction by the bar in order to protect consumers. This is the first time the names of more than a few lawyers being investigated have been made public. “The number of attorneys using their law licenses to essentially take money from unwary but trusting consumers is astounding,” Weiner added. “There are literally thousands of victims who have lost money they could not afford to lose. Under the circumstances, the need for public information and protection is paramount.” Those attorneys being named by the State Bar have allegedly taken fees for promised services and then failed to perform those services, communicate with their clients or return the unearned fees, Weiner said. Some attorneys misrepresented the services they could provide. “It appears these attorneys may have significantly harmed their clients who were already facing great financial pressure and the possible loss of their homes.” About one-quarter – almost 800 cases – of the active investigations in the Office of Chief Trial Counsel (OTC) are related to foreclosure complaints. The office has experienced a 58 percent increase in active investigations over 2008 due in large part to the huge increase in complaints against attorneys offering loan modification services. “Our office is aggressively investigating these cases and is working proactively with law enforcement,” said Weiner.

In March of 2009, the State Bar created a special team of investigators and lawyers to handle the growing number of complaints received about attorneys offering loan modification services. OTC found that many of the offending attorneys are associated with firms that use telemarketers or phone banks to sign up clients without regard to the facts of the individual case or whether or not the client can be helped, Weiner said. In many cases, the attorneys work with untrained non-attorney staff engaging in the unlawful practice of law by offering legal advice to prospective clients. OTC also is investigating the non-attorney staff for possible referral to law enforcement. In recent months, OTC has obtained the resignation of three attorneys who were offering loan modification services. Those attorneys chose to give up their licenses to practice law rather than face disciplinary charges and possible disbarment. In addition, OTC lawyers are preparing to put some attorneys on inactive status pending the filing of formal disciplinary charges Weiner warned consumers to take special caution when seeking legal representation related to loan modification. “Consumers should not be comforted by advertisements that claim the attorney is a member of the State Bar of California,” he said, noting that all attorneys practicing in California on a regular basis are members. “Such membership does not mean the attorney has any special knowledge, experience or expertise in the area of loan modification. In fact, it appears that many of the attorneys offering these services have little or no prior experience in the area of loan modification.” The following attorneys have received a significant number of complaints related to the loan modification services they were hired to perform. They are entitled to a full and fair hearing on any charges that may be filed in the future. No discipline may be imposed unless and until the State Bar proves allegations of misconduct by clear and convincing evidence.

-David Arase, Bar No. 233705, Arase Law Firm and National Housing Assistance

-Stephen Burns, Bar No. 113371, Legal Group Network

-Robert Buscho, Bar No. 122556, United Law Group

-Nicholas Chavarela, Bar No. 251632, Rodis Law Group and America’s Law Group

-Steven Feldman, Bar No. 103676, Feldman Law Center

-Eric Johnson, Bar No. 224065, Avantgarde Group

-Paul Lucas, Bar No. 163076, Lucas Law Center

-Brandon Moreno, Bar No. 233750, U. S. Foreclosure

-Jeffrey Nemerofsky, Bar No. 213014, U.S. Advocacy Law Group and U.S. Financial Products

-Gregory Paiva, Bar No. 207218, Law Offices of Gregory Paiva

-Adrian Pomery, Bar No. 249664, U.S. Foreclosure

-Ronald Rodis, Bar No. 181873, Rodis Law Group and America’s Law Group

-Mark Shoemaker, Bar No. 134828, Advocates for Fair Lending

-Marc Tow, Bar No. 78429, Marc Tow and Associates

-Michael Yellin, Bar No. 255050, A Fresh Start Loan Modification

-Sean Rutledge, Bar No. 255938, United Law Group

The State Bar suggests that consumers be wary of attorneys offering loan modification services under any of the following circumstances:

-Advertisements of the office do not expressly identify by name the attorney who is responsible for the business.

-Office staff will not readily identify by name the attorney responsible for oversight of the business.

-The attorney in charge of the office is too busy or not willing to meet personally with prospective clients.

-The firm advises a consumer to stop paying the existing mortgage.

-The business, through its advertisements or claims of its representatives, makes claims that sound too good to be true, such as claims of a 90 or 100 percent rate of success in obtaining loan modifications, or claims that a reduction in the mortgage principal is likely to be achieved.

-The business demands payment of a large fee, even before obtaining a prospective client’s basic income and expense information, and information about the existing mortgage and present home value.

-The attorney responsible for the business is not licensed to practice law in the state where the consumer resides.

 There are legitimate loan modification services and ethical attorneys that are providing the promised services for their clients. Two places to start in the search for loan modification assistance are: HUD Housing Counselors, 800-569-4287, http://www.hud.gov/counseling; and HOPE NOW, 888-995-HOPE, http://www.hopenow.com.

Consumers can also find qualified attorneys through a State Bar-certified lawyer referral service that can be found on the State Bar’s Web site (www.calbar.ca.gov), or by calling the State Bar’s Lawyer Referral Services Directory at 1-866-442-2529 (toll free in California) or 415-538-2250 (from outside California).

Consumers having a problem with the attorney handling their loan modification may contact the State Bar at 1-800-843-9053 or visit the State Bar’s Web site at www.calbar.ca.gov to find a complaint form. Founded in 1927 by the state legislature, the State Bar of California is an administrative arm of the California Supreme Court, serving the public and seeking to improve the justice system for more than 80 years.