Short Sale = not Bank Owned

Posted on January 22, 2012 by Mirjam

In general when you see overviews of Distressed Sales, REO/bank owned sales are put together with Short Sales. This might give the false impression that a Short Sale is a bank owned sale. However, a SHORT SALE IS NOT OWNED BY THE BANK!!!

Just to give a perspective: when a homeowner sells a home there may be several ‘contingencies’. Example: I’d like to sell my home but I need to find another home. In this case when an offer is accepted, the seller asks for some time to find an other home. This can be any amount of time agreed upon. When the seller finds the home they like, they release that contingency and the buyer can move forward with the purchase of the home. Another fairly common one is a builder who sells new homes: I am selling this home and you can buy it when it’s finished.

A short sale is similar: in this case a home owner likes to sell his home but the house is worth less than the mortgage amount. In case the seller is not able to come up with the difference (deficiency) he/she needs approval/agreement as to how the deficiency is handled. Once this approval is given, the contingency is removed and the buyer can move forward with the purchase.

Agreed, bank approval can be a little more complicated and yet that is not the point. In the case of a short sale, the seller is the legal owner of the property. Like a ‘regular’ sale, the seller provides all statutory disclosures as well as all other info pertinent to the house. Think for instance information about the trees in the yard, the history of the house/remodels, just name it.

So yes, a short sale is a distressed sale in the sense that seller is not able to keep their financial commitments. However if you talk about the house itself: any sale can be a distressed sale. I see short sales that have been very well maintained and show pride of ownership and I see regular sales that have been very poorly maintained.

So next time you see a short sale: it’s like a regular sale with a seller contingency.

Mirjam

 

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Million Dollar Views!

Posted on January 16, 2012 by Mirjam

Number one rule in Real Estate World Wide: Location, Location, Location. It’s all about the perfect location, either surrounded by trees, at the end of the cul-de-sac, next to a harbor or on top of a hill with the 180 degrees views. What is a view worth to you? When you buy a home, chances are that you will need a mortgage and thus an appraisal is involved. Recently I asked Eric Kirby, a local appraiser how much a view is worth. He explained that it is  about comparable properties,  maybe even in other neighborhoods,  calculate the difference – sometimes using a price per SqFt. But that it is not always easy to put a dollar value on a view.

A few years ago I sold a town home in Vista del Lago in Santa Rosa CA. It was the only one with the view. At that time, about $25,000 was given for the view. The town homes without the view sold for $400,000, the one I had listed ended up selling and appraising for about $425,000. Just asked the same question to a local mortgage broker (Seliga Financial), he mentioned a  sale in Marin County where about $200,000 was allowed for the views on a market value of $1,700,000. Both examples show that there is no set percentage, it’s all about the local market situation.

Sidenote: there are no guarantees that a view will stay the same: trees grow and might block a perfect view over time. And when these trees belong to your neighbor there is not a whole lot you can do. Something to keep in mind when you decide to buy a home, either on a bay/harbor in Zwartsluis, on a hill in Sonoma County or a hill in San Francisco.

How important is a view to you? And what would be your perfect view? I haven’t decided yet…

Mirjam

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The Roof over your Head

Posted on December 25, 2011 by Mirjam

Before I moved to California I was under the impression that roofs were either thatched or made of tile. My grandparents had a thatched roof made of reed. This was customary for the older farm houses. I had always lived in homes with tile roofs and these tiles usually last at least 50 years. My brother lives in a house that is over a 100 years old, he replaced the tiles on his roof about 6 years ago. The tile he replaced was the original…
Right now in Sonoma County roofs made of composition shingles are most common. The quality of the roof depends on the quality of the installation.
What I see is that cheaper is never better. Many roofers offer ‘deals’ on roofs: they offer the thinnest material available (lasting 15 years) and in order to work faster they quite often use stapes instead of nails.
Their ‘deals’ usually start having problems within 5 years… Shingles blow off during the stormy season causing leaks. Missing or improper installation of flashing will cause problems like for instance water intrusion in the walls…
And last but not least, there is a severe risk in using roofers who are not properly insured or don’t have a license. Should a roofer fall off the roof, the homeowner may be responsible. Depending on the insurance this may or may not be insured under your home owners insurance… You might want to talk to your insurance agent first before contacting a roofer. If you have been following my blog you know that I would recommend contacting Erin Temple with Vantreo Insurance – (707) 303-2574…

A good roof over your head is important if you need a referral to a reputable, local manufacturer certified roofer, just let me know.

Mirjam

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House on Fire!

Posted on December 13, 2011 by Mirjam

House on FireAs mentioned before, in Sonoma County, it is cheaper to buy than to rent. BUT there is a major difference between being the tenant vs being the OWNER… When renting, the landlord is ultimately responsible/liable for the house/asset. In the rush of buying, home owners insurance is often the forgotten stepchild. And after the home is bought and nothing happens, it’s something you pay for and never think about. See also a previous posting…

Home Owners insurance is quite often called fire insurance – insurance to rebuilt your house when there is a fire. I have written about this before. Important is for instance the type of roof. There is a surcharge for wood shake roofs vs composition shingle. Side note: many insurance companies are refusing to insure homes in a high fire hazard area.

Home owners insurance is also liability insurance: for instance when someone trips on your property and hurts himself, that is covered under your home owners insurance. Or the puppy that looks sooooo cute. Certain breeds can make you ineligible for Home Owners Insurance coverage. Others are acceptable only if the owners have taken the dog to a ‘Canine Good Citizen’ test through the AKC.

In our area  Animal RN (Robyn Kesnow) provides this service for a nominal fee.

Having a good insurance agent is crucial, for questions about Home Owners Insurance, I can highly recommend Erin Temple of Vantreo Insurance, she is my preferred insurance agent, she is extremely knowledgeable.

So when you decide to buy that cute puppy, call your insurance agent do this to when you are still renting, just to be safe.

Mirjam

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Foreclosures, is it that bad in Sonoma County?

Posted on December 4, 2011 by Mirjam

Foreclosure Netherlands - Sonoma CountyFollowing the news headlines might give you the impression that every home that is being sold right now is in foreclosure… As this might be the case in certain areas, this is not the case in Sonoma County. To give you an idea of this morning’s numbers in our local MLS:

As of 01/01/2011 up to12/04/2011 the total of all homes sold: 4949. Of these 1461 were bank owned and 1092 were short sales. This means that of the 4949 homes that were sold, 2396 were ‘regular’ sales. According to BofA, Sonoma County is fairly sheltered from the foreclosure crisis.

Every state has different laws as to foreclosures, the worst a home owner can do is to simply walk away from their house.  Right now as mentioned in my previous blog posting, a short sale is in general a much better option.

In the Netherlands, walking away from your house, will result in you having to pay all the remaining debt. There is an insurance you can buy for this purpose, yet you still have to contact your bank and take action.  This is a link to a great website about this subject in the Netherlands. Sorry the website is Dutch;)

By the way, because of these numbers in Sonoma Count, a foreclosure or a short sale is in general not sold below market value. The condition of the property is what determines the value. When you are looking to buy in Sonoma County, look at all the properties for sale not just the ‘distressed’ properties.

For those who want some more specific info/stats, please feel free to send me an email.

Mirjam

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Deficiency: shortage, deficit… or paying back what you owe…

Posted on November 27, 2011 by Mirjam

short-sales.jpgThe majority of people who buy a home need a mortgage or a loan. The home is yours, you pay the mortgage back over the life of the loan. When you sell the home you pay off the remainder of the loan… This is the case in about 50% of the sales in Sonoma County right now.

The remaining 50% is about 25% short sales and 25% foreclosures. The latter is quite often called ‘walking away’ from a home, the homeowner stops paying their mortgage and the bank forecloses… And in case when there are 2 mortgages against the home: the first ‘lien holder” (bank) forecloses, HOWEVER, the second ‘lien holder’ (bank) will pursue repayment…

This is the same in case of a short sale… A home owners sells their home, the bank agrees to take a loss. When there is a second loan, this bank needs to agree with the sale, and usually keeps the right to go after the difference… This CHANGED as of July 1st in CA… but ONLY for short sales. Per July 1st 2011, the 2nd lienholder cannot pursue the deficiency any more. This means, at time of closing you are  DONE. You walk away from a very difficult situation and can start over again. See my blog posting a few months ago.

Bottomline, right now in CA, there is a huge benefit in pursuing the short sale option. Rather than ‘walking away’ it behooves distressed home owners to take action, contact their banks, their trusted Realtor, mortgage advisor, CPA. Going through the short sale process is more work, but it’s worth it.

It is my experience that not enough home owners know about the benefits of pursuing a short sale. Please spread the word and also feel free to contact yours truly.

Mirjam

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Earthquake Fault Zones and due diligence…

Posted on November 6, 2011 by Mirjam

fault_types.pngLooking for the perfect home in the perfect neighborhood? There is a little secret I need to share: there is no such thing as the perfect home/perfect place … Ouch… The home might be a great match, the neighborhood might be just perfect but what about natural hazards? WHAT??? one might say…

220px-de_dijk_tussen_kesteren_en_opheusden_tijdens_extreem_hoogwater_van_de_neder_rijn_344320s.jpgYes, Natural Hazards…We are talking about Earthquakes, Flooding, Fires etc. These Hazards are different depending on an area. Living in the Netherlands and about 50% of the Netherlands below sea level, flooding is an important one. Living in Sonoma County, you can live right on an Earthquake Fault zone and in a High Fire Hazard zone (think for instance of Fountaingrove).

This does not mean that these neighborhoods or areas are unfit to live. It means that one has to be aware of these Hazards before the final decision to buy a home,the 3rd party Hazard Report is a report a seller has to provide to a buyer. It is part of the statutory disclosures a seller and their Real Estate agents has to provide. 

There are many 3rd party Hazard Disclosure companies to choose from, one is Property ID. Personally I like their reports since they are easy to read and understand. It is important to go over all the disclosures provided.

Example: living in an earth quake zone means that there are more stringent building codes. This might affect you when remodeling an older home: all of a sudden there are extra requirements adding up to the costs of remodeling. However, these more stringent building codes are for your protection: the likelyhood of your home to withstand an earthquake…

These Natural Hazards also affect your Home Owners Insurance: living in an area with higher risks to be affected by natural disasters results in higher premiums. Recently I sold a home right on the coast of Albion: magnificent location. Small detail: most insurance providers were not willing to insure the property. That is by the way why a good insurance agent/broker is key: my favorite insurance agent, Erin Temple of Vantreo Insurance, was able to find a good insurance company who was willing to insure the property for a reasonable rate… Also lenders require a property to be adequately insured by the way. This is important when buying and refinancing a property.

Moral of the story, is doesn’t matter where you live, it is important to be aware of all material facts affecting the property you decide to buy.

Mirjam

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Banks not supporting Energy Independence Program

Posted on October 23, 2011 by Mirjam

As Kermit in Sesame street sang: ‘It’s not easy being green’

new_kermit.pngSonoma County in general has been promoting lowering our dependence on fossil fuels for a while now. Not only in big things but also in small things like using the old fashioned clothes line for drying clothes. That’s how I grew up in the Netherlands.

A great program that was developed a few years ago is the Sonoma County Energy Independence program (SCEIP

With SCEIP, a home owner can apply for a loan against the property for energy efficient upgrades: Windows, water heater, furnace, solar panels etc. It is a loan against the property, to be paid back in 15 years via property taxes. The current interest rate is 7%. The idea was to encourage home owners to make older homes more energy efficient. And that when a home owner does the upgrades, sells the home that the next home owner can not only benefit from the savings but also help paying for it. Great idea…

However, lenders do not see the loan as part of  assessments on the property taxes. With property taxes generally one also pays for the school, fire department, road bonds… For instance the road bond used to build Fountain Grove Park way is being paid for by home owners as part of the property taxes. Some homeowners have paid it of. When a home is for sale in Fountain Grove it is part of the seller disclosures and a prospective buyer will also see it when he received a copy of the property tax bill.

Now we see homes coming on the market that have the energy efficient upgrades. When the first home went into escrow, it was interesting to see that the lender who was chosen to provide the mortgage for the buyer, did not accept the SCEIP assessment on the property and required that is was paid of before close of escrow. Reason: they see it as an other loan against the property, thus the SCEIP lien will become senior to theirs when they new loan gets recorded. This means that in case of default, they are not in first position and thus responsible for the SCEIP lien in case they foreclose on the property. Also the government loan programs FAFH – Fannie Freddie, do not recognize the program and require the SCEIP assessment to be paid of before they will put a loan on the property…

Extra note, the above is also the case when a home owner wants to refinance his/her property to take advantage of the current historic low interest rates…

Sonoma County is protesting this and has taken FHFA to court.The latest update is on the website.

While the above should not stop a home owner from taking advantage of this program, it is good to be aware of the above developments. AND when you buy a home ALWAYS read the preliminary title report as well as the copy of the tax bill.

Have a most wonderful day!

Mirjam

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To Buy or not to Buy…

Posted on October 16, 2011 by Mirjam

Operation Twist is the economic policy from the FED:  at their last official meeting in August, the policy making committee decided to keep interest rates low until 2013 …

This is good news for buyers… There is a time window to benefit from low interest rates… Time to get once’s financial house in order…

Some might think that waiting to buy is a better option, they decide to stay on the sideline… Smart idea???

Well depending on your situation: if you rent a home you pay for someone else’s  mortgage. Why rent when you can buy? All the first time home buyers I have been working with recently end up paying less in mortgage than in rent…

Will home prices go down further? All Real Estate is local. While the higher end in Santa Rosa/Sonoma County is expected to loose some more value in the coming time, the lower prices homes have been fairly stable in the last years.

screen-shot-2011-10-16-at-92020-am.png

But what if home prices are coming down a little further? You never know when the market has hit bottom until it goes up again. At that point there will be a lot more competition.In the mean time: you have to live somewhere, might as well pay your own mortgage and take advantage of the tax benefits when owning a home…

Bottom line: the current market in Sonoma is a great market for buyers: although the inventory is low, there are great homes coming on the market all the time. There is no such thing as the perfect home. But right now there is the luxury of not having to worry about interest rates going up dramatically.

Last note: in Netherlands most rental homes are owned by the government, our first home after we got married was government owned. Home ownership is becoming more common but not like in the USA. It’s called the American Dream for a reason.

Have a great weekend and enjoy harvest season in Sonoma County: the first weekend is the 13th Annual Wines and Food Affair

Mirjam

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Title Insurance: a Scam?

Posted on September 25, 2011 by Mirjam

When you buy a home and use a mortgage you pay for at least 3 insurance policies: Home Owners Insurance, Home Owners Title Insurance and Lenders Title Insurance. For an average home in Sonoma County, Title Insurance is around $1,800 for both policies. That is a lot of Peet’s Latte’s or paint, or carpet… And if you pay cash for a home, you can opt not to buy Title Insurance. A smart decision?

Last week I had an interesting conversation with Stewart Title, thanks to Jessica Smith, our Title rep. BTW, this was in preparation a presentation for the YPN Morning Buzz group They shared some interesting facts about Title Insurance. Side note : Title Insurance came into place because of inadequate US land record laws. When we moved from Netherlands to California, some friends where making jokes about us moving to the Wild West. When Paul started talking it made me smile, had to think of that.

• When the economy is bad there are more scams with Title/ownership. – One ‘popular’ scam in the Sacramento area has to do with home owners in distress who are upside down, not able to pay their mortgage. There is a company that promises to ‘take care of it’. In order to do this they have to take title to the house ;) . This is how:  a ‘fake’ document is recorded, showing that a new private lender has taken over the mortgage. This ‘private lender’ receives the money at closing . The ‘real’ lender receives nothing and eventually will foreclose on the property… Think about the innocent buyer, busf_transamerica_.jpgying this property without Title Insurance… will loose that house. An innocent buyer buying the house with Title Insurance can go back to the Title Company for help…

• Every one knows the Trans America Building in San Francisco… Remember these beautiful Redwood trees next to it? Well that is because of an overlooked PG&E easement that was right underneath the footprint of the building. Apparently when about to start breaking ground, the company hired to do that knew about the PG&E easement and suggested it would not be smart to start digging because of the PG&E lines… Long story short:  The Title Company who had insured the property/loan had missed that easement, they ended up buying the strip of land that is now a small park and paid to have the PG&E easement go around the Trans America Building… Next time you walk to that park, realized that that was paid for by a local Title Company…

There were more interesting stories about easements, deeds and scams. Bottom line when you buy property, always pay for Title Insurance. Chances something goes wrong are not that high but when there is a problem, it is extremely expensive.

Have a great weekend, it’s grape harvest time in Sonoma County, a lot of wineries have great events this special time of year.

Mirjam

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