Buyers Wonder, Are Short Sales Worth It?

You're all ready to househunt, and of course everyone is talking foreclosures being the way to go. Hard to avoid them really! But what about short sales. Are they worth the trouble? And what IS a short sale anyway?

Short sales - a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth.

These sales dominate the housing market. But they aren't for everyone. What you should know:

1. Typically the homeowner is underwater and has experienced a financial hardship such as a job loss. In order to limit the damage to his credit rating, the homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.

2. Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant - and sometimes vandalized - property, a short sale isn't a distressed home that will sell it at an extremely low price. According to the data from RealtyTrac, short sales typically sold for nearly 10% less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35%.

3. Home buyers wanting to purchase a short sale must have patience! In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.

4. Even with the challenges associated with short sales, buyers should not avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR can help buyers avoid frustration and surprises down the line.

I have been trained as a Certified Distressed Property Expert and have experience in both short sales and foreclosures. Let me know if you have any questions about purchasing short sales or foreclosures!

To read more about short sales:

http://realestate.aol.com/blog/2011/08/11/short-sales-are-they-worth-the-trouble/

FORECLOSURE MYTHS: WHAT'S TRUTH?

Although there are a number of programs available to help homeowners who have defaulted on their mortgages keep their home, the large amount of misinformation tends to result in troubled homeowners failing to contact their lender until it is too late.

• Some homeowners believe, incorrectly, that contacting their lender early in the process will draw attention to their situation and result in a quicker foreclosure. In reality, contacting the lender or servicer is an important first step, and the sooner, the better. Contacting the lender provides the homeowner with an opportunity to explain their situation and the steps necessary to deal with it.


• It is a common misconception that missing one mortgage payment will lead to foreclosure. However, the foreclosure process doesn't begin until payments are 90 days delinquent. Lenders generally have a financial interest in keeping homeowners in their homes, so making contact as early as possible could help lenders modify terms of the mortgage or devise a repayment plan.


• Once homeowners are behind on their mortgage payments, it becomes challenging to dig out of the hole. Some homeowners try to solve this by depeleting their savings or dipping into their retirement accounts to become current on the loan. Most financial experts advise against this.


• Delinquent homeowners may think they should stop making mortgage payments to get their lender's attention, which often isn't the case. When possible, homeowners should stay current on their mortgage payments and continue to contact their lender on a regular basis.


• Homeowners who have applied for assistance or loan modification programs in the past and were turned down are advised to reapply. Program parameters are constantly changing, so the rules might have been liberalized since the last time the borrower sought help.


• A number of free, government-sponsored housing services are available through the Dept. of Housing and Urban Development (HUD). A list of HUD-approved agencies can be found at http://www.hud.gov (Read the full story http://lat.ms/ihLJTs

Don't hesitate to contact me if you have questions about foreclosure and whether or not a short sale could help your situation. I am a Certified Distressed Property Expert and have had a lot of experience helping homeowners in these situations!

SELLERS! Don't Get Scammed!

Misfortune seems to bring out the good in most people; however, there are always some out there who wish to turn someone's misfortune into good for themselves alone!

A new study by CoreLogic shows banks and distressed home sellers will lose more than $375 million this year by selling undervalued houses to third-party buyers, which generally result in a quick sell and profit and tend to be fraudulent sales.

According to law enforcement and banking industry experts, the fraud works like this: Investor groups partner with local real estate agents whose job is to spot borrowers in financial distress and persuade the homeowners to sell to investors in a short sale at a low price. Then, the agent contacts the bank with the investors'
short-sale offer. So far so good. At least it appears so!

Meanwhile, the agent finds a buyer who wants to purchase the property for a higher price than that which the investor buyer is paying for the property, but the agent never presents this offer to the bank, nor does he tell the homeowner about this buyer. This new buyer knows nothing about the investor. To back up the investors' low offer - the only offer the bank is aware of - the agent produces an appraisal that confirms the low valuation. The bank then approves the sale and the investment group purchases the property. After the closing, the investors then sell the house to the other buyer at a higher price. The agent and investors then split the profits. The original homeowner never knows what hits them!

How do you keep this from happening to you? Or your friends who may be considering selling their home "short" in order to keep from foreclosure? Use a REALTOR you can trust. One who has experience in Distressed Property Sales. One who is looking out for the best interest of the seller.

I have had many years of experience in foreclosures, pre-foreclosures and short sales, on both the buyer side and the seller side. I am a Certified Distressed Property Expert. And most importantly, I can be trusted. Call me with any questions you have about your property - what it is worth, should you short sell or foreclose? Can you get a loan remodification? What options do you have? I would be glad to help you!

How-To Videos on YouTube About Homebuying

Especially in today’s housing market, the prospect of buying a home can seem overwhelming for many Americans who may not be aware of how to begin the process of shopping for a home or even a mortgage. To help navigate this process, the U.S. Department of Housing and Urban Development (HUD) and the National Association of Realtors® (NAR) unveiled three how-to videos to help prospective homeowners find a home they can afford, shop for a mortgage they can sustain, and what to expect when they go to closing.

“Educating consumers about the home buying process is at the heart of what Realtors® do,” said 2010 National Association of Realtors® President Vicki Cox Golder. “Informed home buyers create the conditions necessary for responsible, sustainable home ownership, and we’re very happy to be a part of this project.”

HUD’s videos are easily accessible from both HUD and NAR’s websites as well as from HUD’s YouTube channel. They include:

Shopping for your Home – The homebuying process obviously starts with finding a place you’ll want to call home. This short video will instruct viewers on assessing how much of a home you can afford, working with a real estate agent and what happens once you find the home you want to buy. Housing counselors can assist home buyers and home owners on issues such as home buying, fair housing, credit issues, and foreclosure prevention.

Shopping for your Loan – Once you’ve found the home of your dreams, the next step is to shop for a mortgage loan. This video will help prospective buyers use the good faith estimate (GFE), which is a form that spells out the terms of a loan offer, to shop for the best loan for them. Viewers will learn how to use the GFE to determine how long an interest rate is available for a particular loan and how to identify key loan terms and costs of a particular loan offer. HUD suggests buyers shop and compare GFEs from multiple mortgage brokers and/or lenders in order to get the best loan for their situation, and I heartily concur.

Closing the Deal – Finally, this video walks the viewers through the actual closing process including how to make sure the loan they were offered closely matches what they encounter at the settlement table. In particular, HUD will walk the viewer through the HUD-1 Settlement Statement and demonstrate ways buyers can compare their actual costs with those reflected on their Good Faith Estimate.

HUD partnered with NAR because a real estate agent is often the primary point of contact for homebuyers and HUD believes real estate agents are in a great position to provide these videos to their clients as they move through key areas in the homebuying process.

To view HUD’s new homebuyer education videos, visit HUD’s YouTube channel at www.youtube.com/HUDchannel.

As Your Personal REALTOR, I am here to answer any of your personal questions about homeownership, buying, selling and avoiding foreclosure. Don't hestitate to contact me!

Help for Troubled California Homeowners On Hold ... But Not For Long

California expects mortgage-aid program to begin in weeks.

The California Housing Finance Agency (CalHFA) reported this week that its “Keep Your Home California” program will be delayed because of logistical issues with the program. The program was scheduled to begin Monday, Nov. 1.

· The “Keep Your Home California” program is a $1.83 billion government aid program that will pay down loan balances and provide monthly cash assistance to struggling California homeowners.

· One of the logistical complications that has caused the delay is the fact that Fannie Mae and Freddie Mac last week instructed their loan servicers to participate in the program, dramatically increasing the number of potentially eligible homeowners.

· Funded with federal money, the program offers four different types of cash assistance for an estimated 100,000 low- to moderate-income California homeowners. Additionally, eligible borrowers must have endured some sort of loss of income.

· The two primary forms of aid include $875 million dedicated toward unemployed Californians who need help making their monthly payments, and $790 million to be used to directly reduce mortgage loan balances.

· Although the program has been delayed for several weeks, homeowners struggling to make their mortgage payments are advised to not wait for assistance programs to begin before contacting their servicer or lender. Instead, homeowners should begin working with their lender or servicer at the first sign of difficulty.

· More information about the “Keep Your Home California” program can be found at www.keepyourhomecalifornia.org. A toll-free hotline soon will be established.

As a Certified Distressed Property Expert, I can help you navigate your way through the maze of programs and what is available for you. Contact me for help today!

What the Foreclosure Freeze Means For You

Q: How have California mortgages been affected?

A: So far, BofA is the only lender with a moratorium that affects California. Other lenders, including Ally Financial and JP Morgan Chase, have halted foreclosures in the 23 states that require a court’s approval before a home can be seized. California is not one of those states. But Attorney General Brown has called for all banks to stop foreclosures until they can prove they’re complying with state law, which prohibits lenders from recording notices of default on any mortgages made from 2003 through 2007 unless the lender contacts or tries diligently to contact the borrowers to see if they qualify for a loan modification.

Q. What effect will this have on the housing market? And what does this mean to people who want to buy a foreclosed home?

A. Foreclosure sales currently account for 43 percent of the California market, according to RealtyTrac, a real estate data firm in Irvine. To the extent that these problems begin to show up in California, it could put a temporary roadblock in front of a sale. One problem: title insurance firms are shying away from any sale involving a questionable foreclosure. But real estate analysts say that as long as the problem is solved quickly - say, 60 to 90 days - it should have relatively little impact on the market. Rick Sharga, RealtyTrac's executive vice president, said he's noticed little impact from the moratoriums that have recently gone into effect.

For more information, please don't hesitate to shoot me an email or give me a quick call! I'll be happy to talk with you about what this means to you as a buyer, seller or distressed homeowner!

Scam or Savior? Short Sale Negotiators

When an agent lists a property as a short sale, it involves working many long hours on very thick files. Since many agents do not know the proper protocol for handling short sales, this need was filled with a middle man: enter the "short sale negotiator." If you don't know a Certified Distressed Property Expert, how do you weed out the good from the bad?

Licensing: All negotiators need to be licensed real estate agents and their license number should be displayed. Don't let them tell you that they don't need a license to negotiate debt forgiveness, or to process paperwork. That goes for any agent who is handling your short sale.

Compensation: Your agent or negotiator should not hit you up for money before performing any services. Real estate agents get paid when the deal is closed. No close; no paycheck. If you are a buyer and a negotiator asks for compensation, say no and go look for another house. Trust me, you don't want to get into a contract like this!

MLS Issues: If you are a buyer and the listing agent of the property you want asks you to pay for the short sale negotiator, that may even be against MLS rules. I would find another property if I were you.

Track Records: It's usually a good idea, right? In this case, the short sale negotiator scammer may be very good at making up what the bank wants to hear about the sellers they represent, so their record may look impressive. Sure, they've closed a lot of deals. But are they ethical?

Short Sale Flips: I'm not against flipping. I've done a few. Buyers are happy, the contractors I hire to do repairs, carpet and paint get work, and I make a small profit. However, some bad eggs are using short sales to make big bucks. They arrange to have a "buyer" bid on the property at a very low price and do not show the seller or the bank any other real offers. The "buyer" buys at that very low price, and the negotiator and his "buyer" partner turn around and sell the property for a higher price. That stinks.

A Final Word! If you are in the distressing predicament of having to unload your property for less than you owe, the only way to be sure you are being taken care of in an ethical and legal manner is to hire a REALTOR who is also a Certified Distressed Property Expert. These professionals, of which I am one, have gone through training on how to take a seller through the process of getting their home sold so they will not have to go through the devastating effects of a foreclosure. I have personally helped many sellers in this position. Is it a lot of work? You bet. However, as long as there are sellers who need my expertise in this area, it is my mission to help all I can, despite the thick files and long hours needed to get these escrows closed satisfactorily.

Before You Walk Away From Your Mortgage ...

Fannie Mae Increases Penalties for Borrowers Who Walk Away

Seven-Year Lockout Policy for Strategic Defaulters

Fannie Mae announced policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or who did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter time frame.

The purpose of this new policy is to highlight the importance of homeowners working with their mortgage company.

There is no doubt that walking away from a mortgage is bad for borrowers and bad for communities, not to mention the example that is being set for a whole generation watching mom and dad not do all they can to fulfill their responsibilities. Homeowners facing documentable hardship who make a good faith effort to resolve their situation with their mortgage provider will be able to preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.

Fannie Mae says that it will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments, something that could hang over the heads of those who walk away from their mortgages for years to come.

As a Certified Distressed Property Expert, I can relieve homeowners in these situations from the burden of communicating with their mortgage providers - something that discourages many borrowers as banks are famous for not answering phone calls or refusing to speak with borrowers until they are behind on their mortgages. At the very least, I have the experience to help navigate the waters one step at a time for you. One of my clients actually was able to negotiate with his lender to keep his home after he had almost given up hope and we had it up for a short sale (owed more on the home than we could sell it for)!

In these troubled times, I am happy to be able to use my skills to help upside down homeowners develop a plan of attack rather than giving up. It does pay you in the long run, credit-rating-wise, to work things out with your lender, even if it means you end up selling your home for less than you owe.

Call me if you or someone you know needs help.

These policy changes were announced in April, in Fannie Mae's Selling Guide Announcement SEL-2010-05.

Distressed Homeowners! RED ALERT!

The Big Banks are Still Opposing C.A.R.'s Bill to Protect Borrowers

The vote is TOMORROW! Please call TODAY!

Call Senator Dennis Hollingsworth Today!
Urge him to vote "Yes" on SB 1178.

Call 1-800-672-3135 and enter my PIN number -- 196519571 I just did and it took 1 minute!

This is an important vote for many homeowners who are not able to make their balloon payments or their mortgage is readjusting, making it impossible for them to continue to make their payments. These homeowners cannot sell the home for what they owe, and if they "walk away" or sell their home in a "short sale", they oftentimes will be held responsible to be taxed on the deficiency. The banks are digging in their heels about this legislation, even though they are getting bailouts by the Federal government to see them through.

Responsible homeowners who have gotten stuck in this bind could use some mercy from the government in the form of not having to pay the taxes on the amount of money they lost the banks on their mortgages. Please know that this legislation will only cover homeowners whose mortgage is strictly for their home and will not cover equity taken out of homes for other purchases!

Call Senator Dennis Hollingsworth Today!
Urge him to vote "Yes" on SB 1178.

Call 1-800-672-3135 and enter my PIN number -- 196519571 I just did and it took 1 minute!

Thousands of responsible homeowners need our help.

Call to Action! Enough is Enough!

California has protected borrowers from so-called "deficiency" liability on their home mortgages since the 1930s, but the evolution of mortgage finance requires that the statute be updated.

Current law says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner's liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers who are brought down by financial crisis to get back on their feet.

Unfortunately, the 1930s law does not extend the protection for purchase money mortgages to loans that re-finance the original purchase debt -- even if the re-finance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to refinance their mortgages, yet almost no one realized that by re-financing their mortgage to obtain a lower rate, they were forfeiting their protections. These borrowers became personally liable for the balance of the loan.

One can’t help but think, “When is enough, enough?” Banks have already foreclosed upon a family’s home and now lenders can continue to hound them for additional payment. How much more money can today’s families afford to pay when they’ve already lost their homes and most likely their jobs? Are they never to have the opportunity to begin again?

California Association of Realtors is sponsoring SB 1178 (Corbett) to extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and are now facing foreclosure. Most homeowners didn't know that when they refinanced they lost their legal protections, and now may be personally liable for the difference between the value of the foreclosed property and the amount owed to the lender. SB 1178 will be voted on soon by the entire Senate.

Action Items
Call Your Senator Today! Urge him or her to vote “Yes” on SB 1178.

Call 1-800-672-3135
Please see below for the PIN number to use for your state Senator:

East County & Temecula - Senator Hollingsworth 196519886

Carlsbad - Senator Wyland 205502883

San Diego - Senator Kehoe 177008152

Chula Vista - Senator Ducheny 187003870


(If your Senator isn't listed, that is because he/she is not involved in this vote.)

For more information http://www.car.org/governmentaffairs/getinvolved/redalertsb1178/

Revealed For the First Time: How Bad Foreclosure Hurts

I am often questioned about what a foreclosure would do to a credit rating. Not much has been made public concerning this issue and I have had to refer my clients to their tax professional for questions concerning foreclosing or declaring bankruptsy. And now for the first time, we are given a peek behind the financial curtain, thanks to CNN Money.

Here is a basic average hit your credit will take:

30 days late: 40 - 110 points

90 days late: 70 - 135 points

Foreclosure, short sale or deed-in-lieu: 85 - 160

Bankruptcy: 130 - 240

Mortgage borrowers can lose their homes three basic ways:

1. Foreclosure.

2. Short sale, where the home is sold for less than than is owed and the bank (generally) forgives the difference.

3. Deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance.

Some borrowers may think that because they never missed a payment, they can "walk away" from their homes with relatively little impact on scores. Not true. When a deed-in-lieu or short sale is reported as a partial payment, it's treated as a serious delinquency, just like a foreclosure.

Even if borrowers made payments faithfully for years before short selling or doing a deed-in-lieu, their credit score will still take a hit. The total decline will run about 85 points for the 680 score borrower to as much as 160 for the 780 score.

However, the worst thing that can happen to your credit score, according to the article, is bankruptcy because the effects are long-lasting. In a Chapter 13 bankruptcy, which involves partial repayment over several years, the stain will take seven years to remove. A Chapter 7 bankruptcy, which involves liquidation, takes 10 years to get over.

What Does It Matter If I Lost the House Anyway?

It matters! Absorbing a big credit-score hit can make many transactions more costly. It's not just paying more for credit card debt and auto loans, insurance can cost more as well.

The average savings for someone with a good versus mediocre credit score is about $115 a year for auto insurance and $60 for home, according to Loretta Sorters, of the Insurance Information Institute.

A low credit score can even make it harder to rent a home because landlords often use credit scores to weed out prospective renters. Ouch!

Despite the problems a poor credit score can cause, if you are in a totally unaffordable financial situation it's better to recognize that and cut your losses quickly; don't prolong the problem.

Although it certainly is easier to walk away, your credit score will certainly fare better if you sell your home before it forecloses. Banks have now come on board and are simplifying the process for sellers and agents. I have done many successful short sales for clients who have been underwater in their mortgage. If you believe you are headed for foreclosure, give me a call and I will help you determine if a short sale would be in your best interest.

http://money.cnn.com/2010/04/22/real_estate/foreclosure_credit_score/index.htm

No More CA State Tax on Forgiven Mortgage Debt

Can California afford this? Will it make "walking away" from a mortgage that much easier? Or is this a necessary exemption to get the economy going again?

Governor Schwarzenegger on Monday signed SB 401 (Wolk) into law providing distressed homeowners with state tax exemption on debt forgiven in a short sale, foreclosure, or loan modification. Effective immediately, this bill generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a qualified principal residence, borrowers now will be exempt both from federal and state income tax consequences.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified. If a homeowner used the equity in the home to purchase a boat, technically that would not qualify!

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

Would You Rather Rent or Own?

And the survey says ...

Americans prefer homeownership!

A new national survey gauging attitudes toward housing finds 2/3 of Americans (65%) still prefer owning a home, despite the challenging economic environment and the housing downturn. The Fannie Mae National Housing Survey, conducted between December 2009 and January 2010, polled homeowners and renters to assess their confidence in homeownership as an investment, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy.

Being More Careful!

The survey did reveal that homeowners and renters alike are taking a more cautious approach to homeownership. Nearly a quarter of renters polled (23%) said they will buy a home later than once planned. In addition, Americans with traditional, fixed-rate mortgages with predictable payments are significantly more satisfied than those with other types of mortgages.

Why Do We Want To Own? Getting Rich Quick Days Are Over!
Respondents cited non-financial reasons such as safety (43%) and quality of local schools (33%) as driving factors in wanting to own a home, ahead of financial considerations.

Should You Walk Away If You Can't Make Your Payments?
Most respondents (88%) believe that walking away from an underwater mortgage is NOT acceptable, but those who know someone who has defaulted are more than twice as likely to have seriously considered stopping payments on their mortgage.

How about you? Would you rather own or rent, and why? And how do you feel about walking away from a mortgage you can no longer afford?

Struggling Homeowner? Some Welcome News!

The Obama administration on Friday announced adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) program to assist homeowners struggling to meet their mortgage obligations. The program adjustments target three groups: Unemployed homeowners who are unable to make their mortgage payments; underwater homeowners; and homeowners behind on their payments and seeking loan modifications.

Unemployed Homeowners: You may qualify for three to six months of reduced payments while searching for new employment. During this time, payments will be reduced to 31 percent of their current gross monthly income. To qualify, borrowers must, among other things:
1. Be living in their homes.
2. Have loan balances less than $729,750.
3. Provide verification of unemployment benefits.
4. Request assistance within 90 days of delinquency on the mortgage.

Underwater homeowners— If you owe more than your home currently is worth and you are current on your mortgage payments, you may be eligible for a new FHA refinance option that will allow you to refinance your mortgages into new FHA-insured loans equal to no more than 115 percent of your home’s current value. The difference between the original loan balance and the new balance gradually will be forgiven if the homeowner remains current on payments for three years.

Homeowners Seeking Mortgage Modifications Under HAMP, you may be eligible for mortgage principal reductions. Although lenders always have had the option to do so, many have chosen instead to reduce interest rates. However, under the new guidelines, lenders reducing mortgage principal may receive higher financial incentives. The incentives will be paid jointly by the private sector and the federal government through a $50 billion allocation from the Troubled Asset Relief Program (TARP).

The program changes are expected to go into effect in the fall. However, a measure to offer larger incentives to lenders who facilitate short sales or deeds-in-lieu of foreclosure, as well as assistance for unemployed homeowners, will be in place within a few weeks or months, according to the administration.

I will keep you posted!

Taking Advantage of SHORT SALES

Short sales. We hear alot about them these days, but what are they again? It is something you need to know because short sale opportunities are on the rise. If you or someone you know is fearing forecloseure, encourage them to talk to their lender. Many lenders are realizing that they'll save money the sooner they can get a property off the books. So, when they fear a homeowner may be headed for floreclosure, they may fix a sales price lower than the mortgage balance and put the property on the market for a quick sale. That is what a "short sale" is: a property on the market that has a sales price lower than the mortgage balance.

I know you know someone who is losing their home. We all do. And we probably all know someone who has just "walked away." Two thirds of homeowners in default (so late on their payments and property taxes that the property is flagged for foreclosure) never even contact their lender!

What is in it for the homeowner? Well, if the lender does agree to a short sale, the homeowner avoids foreclosure, the lender avoids the carrying costs, and the neighborhood avoids another abandoned property on the block. We have done some successful short sales and had a few that the lender decided to let foreclose. In our success stories, our clients have appreciated the service we provided by doing all of the leg work with their lender(s).

This market is going to be with us for awhile and we have learned how to handle these sales and handle them professionally. Several of our buyers have put offers in on short sales, and they are in demand because of their attractive pricing. Multiple offers are the norm when the property is priced right and in good repair.

Please do not hesitate to call me with any questions about whether or not you or someone you know would benefit by selling short. It is just one more way that I enjoy being Your Personal Realtor!

(My thanks to Dave Liniger, RE/MAX, for the idea and some of the content of this post!)

Housing Affordability Best in Four Years!!*

Some brave financial analysts are coming out of the gloom closet. The chief economist for the Cleveland-based bank National City Corp (NCC, Fortune 500), Richard DeKaser, said that "housing valuations are almost back to long-term norms." 'Valuation' is defined as the difference between what a home should cost and its actual price. He said that current affordability is *"the best in the past four years." Three hundred and thirty housing markets were surveyed and showed price declines and improved affordability during the last three months of 2007.

DeKaser did caution that home prices could fall even further. Remember. this is nationwide, so price declines and hitting bottom will differ widely. As in all market fluctuations, more desirable areas will bottom out before the less desirable areas. In our San Diego market, it is even possible that we will see the bottom of the lower-priced market hit before the luxury market, which took longer to respond to the pricing adjustments.

Local agents are currently scrambling to field the multiple offers on the attractively priced and better-maintained short-sale and bank-owned properties. It is anybody's guess how long it will take to inch up to the properly priced, non-foreclosed homes in higher price ranges.

DeKaser points out that the biggest gains in affordability occurred in our own state of California (as well as Michigan and Florida). These areas have also been some of the hardest hit by foreclosures. The best bargains currently, according to the survey, are in Louisiana and Texas, where homes are undervalued by approximately 30%!

If you or anyone you know would like to look for investment property in these areas, we can connect you with a REALTOR you can trust who will know that market inside and out.

April Sales Highest In Eight Months!

What happened? While we were all reading and listening to the bad news, someone has been buying homes! Dataquick reported that Southern California homes sales in April are at the highest levels since August of 2007. The bulk of the sales have mainly been in homes under $500,000 as those looking for great deals took advantage of the price slump and foreclosures. Thirty-seven percent of the homes sold last month were foreclosures.

In San Diego County, Chula Vista is among the highest areas of sales activity in Southern California. We have been searching for property for a client around the $350,000 range in Chula Vista, and we are finding multiple offers being made on multiple properties of interest to our buyers. It is not only Chula Vista where we are experiencing the phenomenon of multiple offers, we are also encountering it in other areas of the county in properties under $400K. It very much feels like San Diego has decided to buy while the bargains are hot.

"Quite a few more buyers stepped off the sidelines last month to snap up homes at substantial discounts relative to the market's short-lived peak," said Marshall Prentice, DataQuick president. "It's no surprise, given the magnitude of the price declines in inland areas and the fact sales have been so amazingly low for so long. We continue to look for evidence of a sales bounce in the mid-priced and higher-end markets along the coast. If the higher conforming loan limits are making a difference in those areas it's certainly not a large one, at least not as of the end of April."

According to DataQuick, indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, and, understandably financing with adjustable-rate mortgages is way down. However, down payment sizes and flipping rates are stable, and, interestingly, non-owner occupied buying activity is increasing.

All we know is that we are happy to see our first-time buyer clients finally being able to shop for a HOME!

CNBC Reports: "S&P sees end to subprime mortgage writedowns"

Standard & Poor's said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.

What this means for the consumer:

• S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.
• The purging of bad loans in the subprime market through foreclosure or refinancing ultimately will strengthen everyone's ability to obtain mortgages.
• Fewer foreclosures mean fewer vacant homes, which may make a neighborhood a more desirable place in which to live. That, in turn, could increase the demand for housing.

Making sense of the news is another way I serve East County as Your Personal Realtor!

The Wilmers Jump In!

We decided to buy a house for an investment! Sure, prices may inch lower, but the buys out there appeared too good for us to pass up. We have been shopping homes for our children since January in the $300K to $400K range. There are a lot to choose from here in East County, most of which are short sales and a few which are bank owned (i.e., already foreclosed). What we found was that every house - without fail, that the four of us liked and decided to put in an offer to purchase, received multiple offers! Hmmm.... We thought no one was buying real estate? WRONG! The under $400K market is heating up, and the under $350K market is HOT. Now, not every home under $400K is getting snatched up. Buyers are definitely shopping location. If the home is in a good location and is priced below comparables, it is selling.

The catch, of course, is that these properties need help. We were looking for what we called a "screamin' deal." The screamin' deals are, well, messy! The homes need TLC. Paint, flooring and landscape are necessary to appeal to this market's pickier buyer or renter, depending on the investor's plan. We aren't positive what we will do with our investment yet. If we can make a profit, we will resell it after we get it spiffed up. If prices have dropped lower at that time, we know we can rent it and cover our costs because it is in a great neighborhood.

We are excited about this new venture for us! We have been wanting to invest in real estate for many years but prices have kept us from taking the plunge, other than owning our own home. We believe that now is the time. We'll keep you posted on the results.