A local San Diego brokerage, ARG has announced they are the first broker in San Diego to pull out of listing syndication.

I am not going to go into great detail on this site which is consumer orientated.  If you want to know more please visit an excellent article by Lily Leung with the San Diego Union Tribune.  She has also posted some consumer reaction to the announcement here.

Fred Glick makes several important points in the video below about ARG’s announcement which focus on Zillow, Trulia, and Realtor.com.

First, that the underlying message is to call the listing agent, no one else will know more about the property or represent you better.  Sounds like dual agency to me.

Second, that the seller should be concerned and not allow his or her listing to be syndicated on Zillow Trulia, or Realtor.com, the three largest consumer real estate sites on the Internet.

http://www.youtube.com/watch?v=WMQm3ZvVRl4

What are your thoughts?

Posted today on the California Association of REALTORS® blog is a discussion on what “as is” means in California.

A lot of REALTORS® have seller clients who want to sell a property “as- is.” In the current market where there are a lot of REO sales, most agents are familiar with REO addendums that state in some fashion that the property is sold “as-is” with no warranties. Some REALTORS® wonder why C.A.R. does not have an “as-is” addendum.

In a state like Alabama, saying a property is sold “as-is” has real meaning. If a seller sells a property “as-is ” it is like saying “buyer beware” and the seller then has very limited disclosure duties. This is NOT the way it is in California.

A property sold “as is” in California basically means that a seller will not be performing any repairs or improvements to the property being sold. “As-is” does not relieve the seller of having to perform his many disclosure duties under California law including the general duty to disclose in all real property transactions (not just residential 1-4) all known facts which materially affect the value or desirability of the property. This provision applies to all sellers including REOs.

A potential buyer of real estate in California should make an offer on the property in “as is” condition. Of course if something new happens to the property since the date of offer and the close of escrow, the seller would be obligated to repair the damage. The Residential Purchase Agreement is written with a paragraph that states the property is sold “in as” condition – or present condition.

This does not relieve the seller from making full disclosures on the Real Estate Transfer Disclosure Statement and hopefully the Seller Property Questionnaire of the properties condition.  Non-disclosed items that are not apparent almost always result in some re-negotiation of the purchase price.

The buyer will also have a right to present a Buyer’s Request for Repair during the inspection contingency period.  The Seller is not obligated to accept the requests or may choose to counter them.  The buyer will then have cancellation rights, accept the new terms, or can decide to move forward with the purchase.

Photo courtesy of Tom Hodgkinson via Flickr

Coutesy of Wikipedia

Mills Act Offers Tax Abatement.

I have an interest in historical homes and often run into property that is designated as being in the Mills Act.  Aside from what is commonly known about the property tax savings, I thought it might be useful to pull together some information on the Mills Act of this tax abatement program.

The Mills Act (copy) was enacted in 1972 by then Senator James R. Mills who was from Coronado.  The purpose of the act is the preservation and restoration of qualified homes and building owned by private parties.  In exchange the owner gets a tax abatement.  Each County establishes criteria for the Mills Act and how many contracts they will have.  Contracts are signed for 10 years initially and run with the property if ownership is transferred. Thereafter, contracts are renewed automatically on a yearly basis.

The new owner of a Mills Act home would be obligated during the remainder of the term of the contract, which could be up to 10 years according to the information on the California Office of Historical Preservation.

A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the local government and the property owner for a minimum ten-year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections by city or county officials ensure proper maintenance of the property. Local authorities may impose penalties for breach of contract or failure to protect the historic property. The contract is binding to all owners during the contract period.

The Mills Act is voluntary and saves an average of around 50% on accessed value of the property.  In 2008 under the City reform a $492.00 inspection fee was to be paid every 5 years.  There was much controversy on both sides with owners saying it less attractive financially, while proponents argued it would make sure the owners were preserving and/or restoring the home.

According to an article on SignOnSanDiego the City has approximately 1,005 homes have an agreement for the Mills Act.  The City started billing participants in 2009.  The inspection fee pays for City employees to determine if the owner is living up to the contract.

In 2009, the city’s historic homes division sent its first wave of bills to 200 of the 1,005 property owners in the Mills Act program. None were sent in 2010, but another 200 were sent in 2011 — likely explaining why some were confused to receive a request for payment this year. The department in charge of historic homes lost a senior planning position in 2010, which affected the process, said Cathy Winterrowd, principal planner and liaison to the city’s Historic Resources Board.

Contact information for the State of California can be found at this link including other communities in San Diego that participate in the Mills Act.

Established Historical Districts include:

• El Prado in Balboa Park.
• Old Town State Park.
• Theosophical Institute in Point Loma.
• El Pueblo Ribera in La Jolla
• Gaslamp Historical District.
• Greater Golden Hill Historical District.
• Chinese-Asian Thematic District.
• Sherman Heights Historical District.
• Grant Hill Park Historical District.
• Bishop’s School Historical District La Jolla.
• Auxiliary Navel Air Station Brown Field Historic District Otay Mesa.
• Talmadge Gates Historical District.
• Shirley Ann Place Historical District.
• Naval Training Station Historical District.
• Ocean Beach Cottage Emergine Historical District.
• Burlingame Voluntary/Traditional Historial District North Park.

Shame, sham, or both?

Reprinted from RealtyV2′s blog.

Prospect Mortgage to settle for 3.1 million dollars with HUD for alleged RESPA violations.

Seems that another affiliated business arrangements were caught by HUD.  Prospect Mortgage, LLC agrees to settle allegations that the lender created sham affiliated business arrangements for the purpose of paying improper kickbacks of referral fees, which is a violation of both FHA guidelines, and RESPA.  Here is what the recent press release said:

HUD claimed Prospect operated as a “series limited liability company,” a business structure unauthorized by FHA, and that Prospect used this business structure to create hundreds of sham joint ventures with real estate brokers, mortgage brokers, mortgage lenders, servicers and other settlement service providers and to share profits for the referral of real estate settlement services. Through these affiliated business arrangements, Prospect allowed non-approved branch offices to originate FHA-insured mortgages in violation of FHA’s guidelines.

FHA says a clear test to find out if an affilate business arrangement is it has sufficient capital and employees to stand on its own two feet.  In the case of Provident  Mortgage FHA said it was clear these sham companies had neither and were merely sharing profits for the referral of business.

At best, in my opinion, affiliated business arrangements are bad for the client.

Some like the Prospect Mortgage case which appears to be a clear violation of RESPA and FHA rules, while others steer Clients to overpriced services.

A referral to any settlement service from a REALTOR® should be based on past experience and reputation.  It should not be based on coffee cups, desk calendars, lunches, and kickbacks.

Bravo for HUD for going after instances like the Prospect Mortgage case and the recent Transaction Point scheme.

NOTE:  While this was written from the real estate industry side I think it is important for the real estate consumer to be aware of affiliated business arrangements.  Certainly not all of them are bad or overpriced, but make sure you do your homework and price around.  Ask your real estate agent why they are recommending the service – just because it’s good for the Company, or do they have personal experience and feel the service is competitive?

Read or download full press release by clicking image below:

Photo courtesy of James Lee via Flickr

In the last 10 years it has become common for real estate agents to use a Transaction Coordinator (TC).  This is someone that may or may not have a real estate license that is paid a fee to make sure that all the documents get out to all principles and are fully executed.  The fee for this can be anywhere from $300 to $500.00 and some real estate agents actually pass this cost to their Clients.

It makes some sense for volume driven real estate agents to use a transaction coordinator, but the majority of agents have plenty of time to manage the transaction and by doing so they are much more on top of what has been done, and what needs to be done.  A few paper challenged agents should clearly use a transaction coordinator.

From a real estate brokerage perspective the management wants to make sure that a certain standard of care is used across all transactions.  Many brokerages hire agents that are not experienced or don’t like to do paperwork.  In order to protect their company and E&O insurance many will require the associate agent to use the transaction coordinator.

In my practicle experiance of managing for many years and doing file reviews, too many times the transaction coordinators are asked to prepare contracts and addendums without the experiance or full knowledge of the complete transaction.  This is very dangerous and should be of concern for the Client that is paying the agent a great deal of money.

The more involved your real estate agent is in your transaction the better.  They should be preparing and reviewing all contracts, addendums, buyer request forms, and contingency releases.  With the advent of software to write the contracts, digital signatures, and cloud storage solutions there is no reason not to.

Photo courtesy of Rian Castillo via Flickr

Law enforcement officers, Pre-Kindergarten through 12 grade teachers, and firefighters/EMT’s Qualify.

A little known program is the Good Neighbor Next Door which can save 50% off the list price of a HUD owned home in revitalization areas.  You must live in the homes for at least 36 months as your sole residence.

To find a home that is qualified for the Good Neighbor Next Door program visit their website.  Before you get too excited there are not that many of these homes that qualify for the program and when I searched San Diego County today there were none.  My advice is to check daily as my understanding these only show up for the first 5 days and the properties change weekly.  You can also search for the entire nation here.

Here is a Q&A from HUD’s website on the program.  Please check with HUD for any changes but this information is current as the date this post was published.

Question: What Is the Good Neighbor Next Door (GNND) Sales Program?

Answer: HUD wants to strengthen America’s communities. The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount.

Question: Am I Eligible for the GNND Sales Program?

Answer: Law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program are eligible to purchase an available home.

Question: How Much of a Discount Can I Get?

Answer: You can get a 50 percent discount off the HUD appraised value. For example, if homes lists a home at $100,000, you can buy it for $50,000 provided, you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your downpayment is only $100 and you may finance closing costs.

Question: What Kind of Mortgage Financing Do I Need?

Answer: You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Second Mortgage and Note on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this “silent second” mortgage if you live in the home for the entire 36 month occupancy period. You may be required to pay a pro-rata portion of the discount should you fail to fulfill the three year occupancy requirement.

Question: What is the Occupancy Period?

You must live in the home as your sole residence for a full 36 months. The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters/emergency medical technicians to live in the community. You will have 30, 90 or 180 days to move into the home you purchase, depending on HUD’s determination of the condition of the home and the level of repairs that may be required, if any. The 30th, 90th or 180th day is the start date for the occupancy period. Your are released from all obligations under this program at the end of the 36th month following the start date. HUD views the occupancy obligation seriously and vigorously pursues violators to the fullest extent of the law.

Question: What Is an FHA Rehabilitation Mortgage and How Can It Help Me Buy a HUD Home?

Answer: The FHA 203(k) mortgage program helps homebuyers buy a home and have enough money to rehabilitate or repair it. Repairs must cost more than $5,000. The cost of the repairs and the mortgage are combined into a single monthly payment. Consider FHA?s 203(b) program if needed repairs are under $5,000. FHA also has a new Streamlined 203(k) program which may be useful.

Discuss these financing options with your lender!

Question: Can I Sell the GNND Home after 3-years and Keep the Profit?

Answer: Yes. After you live in the GNND home 3 years, you can sell the home and keep any equity and/or appreciation.

Question: Do I Have to Use a Real Estate Broker or Agent to Buy a GNND Home?

Answer: Yes.

Question: Do I Have to Be a First Time Homebuyer to Take Advantage of the Program?

Answer: No. However, you may not own any other residential real property at the time you submit your offer to purchase a home and for one year previous to that date. For example, if you submit an offer to purchase a home on August 1, 2007, you may not have owned a home during the period from July 31, 2006.

Question: Where Are These Homes Located?

Answer: The HUD homes are located in designated Revitalization Areas. There are hundreds of Revitalization Areas located in the United States.

Question: Does HUD Provide a Home Warranty?

Answer: No. All GNND homes are sold “as is,” without any kind of warranty.

Question: Can I Buy Multiple Unit Properties (E.g., Duplexes, Triplexes, Etc.) through the Officer Next Door Program?

Answer: No. You can only buy single unit homes, townhouses, and condominiums through the GNND Program.

Question: Do I Have to Pay Earnest Money or Other Deposits in Order to Submit a Contract for a GNND Home?

Answer: Yes. The amount of the earnest money deposit required is an amount equal to one percent of the list price, but no less than $500 and no more than $2,000. HUD considers all offers to be a commitment to purchase a home if you are awarded the sale. Therefore, please carefully consider your offer and be aware of HUD’s policy on earnest money as stated here: If an offer is accepted, the earnest money deposit will be credited to the purchaser at closing. If the offer is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total forfeiture for failure of the participant to close a sale.

Question: Can I Bargain with HUD on the Price of a GNND Property?

Answer: No. You must offer the exact HUD list price when bidding on any GNND property. Then you get a 50 percent discount off of that list price.

Question: What if I Leave the employment, that made me eligible, for Any Reason, during the Mandatory 3-year Residency Period?

Answer: Nothing happens, but you must continue to live in the home for the full 36-month mandatory occupancy period. If you move out of the GNND home, you will have to repay HUD on a prorated schedule. In addition, you must certify that it is your good faith intention to remain employed as a law enforcement officer, teacher or firefighter/emergency medical technician for one year beginning with your purchase. Do no attempt to participate in the program if you know in advance that you will not be employed as required for at least one year.

Question: Some Agencies Have Other Homebuying Programs. Can the GNND Program Work in Conjunction with These?

Answer: Yes, as long as you can meet all the GNND program rules while participating in these other programs.

Question: What Happens if a Participant Fails to Honor the 3-year Occupancy Requirement?

Answer: HUD can demand repayment of the discounted amount on a prorated basis. That means you would have to repay 1/36th of the discount you received for each month that you did not occupy the home. HUD also may initiate administrative sanctions including, but not limited to, barring the officer from participating in any HUD/FHA programs, as well as other federal programs. In any case of fraud or abuse, HUD will refer the case to HUD’s Office of the Inspector General for investigation and possible criminal prosecution. HUD may also notify the officer’s employing agency. Criminal prosecution and conviction for fraud and abuse concerning the GNND Program can result in a fine of up to $250,000 and/or two years in federal prison.

Question: How Does HUD Enforce the 3-year Residency Requirement?

Answer: The participant must certify he or she is living in the GNND home as a sole residence at the time of purchase and each year after that. HUD can conduct spot checks to make sure the GNND home is your sole residence at any time during the 3-year period. You also must sign a note and mortgage for the discount amount. HUD may foreclose this mortgage if you do not comply with the 36-month occupancy requirement.

I already purchased a home under the GNND Program. Where can I get information about my second mortgage?

Information is available on the Good Neighbor Next Door Loan Servicing page.

Where can I get additional information?

Please call the FHA Resource Center.

Here is a link for more information on Good Neighbor mortgages. Also more information on the FHA revitalization areas can be found here.

An article the other day on the California Association of Realtors (CAR) website says the next two years is prime time for real estate investors.

Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors. Data was weighted by age, sex, education, race and geographic region.

A third of real estate investors are planning to buy in the next 24 months, compared to 8.6 percent of typical homebuyers — those planning to purchase a primary residence, vacation home or retirement property. Another 9.1 percent of typical homebuyers, and 28 percent of investors, plan to purchase between two and five years from now.

Among the investors, half plan to hold their properties for five or more years while 11 percent expect to sell within a year of purchase, according to the survey.

Some 56.5 percent of investors said the repair and maintenance of their property has not been difficult, and 42 percent plan to spend their own time and energy for that upkeep going forward.

Among the rest, 29.5 percent said they would hire a contractor for repairs and 28 percent said they would purchase move-in-ready properties. About 65.7 percent don’t expect repair costs to surpass 20 percent of the property’s purchase price, the survey said.

“This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical deal-driven flippers who buy and sell properties quickly,” said Steve Berkowitz, Move CEO, in a statement.

The smart money is in the market right now recognizing the long term benefits of low mortgage rates and prices at or near the bottom.  Those buying now will have something to brag about to their grand children – “I remember back in 2011 when I borrowed a 3o year mortgage for…”.

Photo courtesy of Flickr

Opportunity knocks!

Downtown San Diego continues to offer some really good purchases for those looking under $300,000.  While many of them are “short sale” and require a lot of waiting, I have found 10 that are either Bank Owned (REO) or traditional sales.  These are updated from Sandicor MLS and if the listing information does not appear it is because it has gone sale pending.

1.  Gaslamp City Square is right in the Gaslamp district close to restaurants and entertainment.  Financing can be somewhat challenging but I really like these units plus the HOA fees are only $284.00.

We're sorry, but we couldn't find MLS # 110021276 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

2.  The Discovery Building built by Bosa Development is one of my favorites tucked away in the Cortez Hill District.

We're sorry, but we couldn't find MLS # 110026885 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

3.  Atria is one of my favorite low rise buildings right across the street from Ralphs Signature Market and in the heart of the Marina District.  HOA fees are $393.00 per month and you can’t beat the location.

We're sorry, but we couldn't find MLS # 110027407 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

4.  If you want more square feet and a low rise building Marina Park is defiantly one building you should look at.  It is close to one of my favorite coffee shops – The Brickyard and located in the Marina District.

We're sorry, but we couldn't find MLS # 110027329 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

5.  Another great location in the Marina District is Crown Bay located just out of the Gaslamp District in the Marina District.  This is a bank owned unit ready for sale.

We're sorry, but we couldn't find MLS # 110027446 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

6.  If you are looking for a brand new unit Breeza is one of the best for location located in the Columbia District close to Little Italy.

We're sorry, but we couldn't find MLS # 110001847 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

7.  Like The Discovery – The Loft is tucked away on Cortez Hill and has a few units that are being sold by the developer.  I often walk up to Cortez for exercise and it always reminds me a bit of San Francisco.  Right across the street is Tweet Park.

889 Date St 442, San Diego, CA 92101 (MLS # 100052704)

VA approved. Perched atop Cortez Hill, this loft community is close to everything - Gaslamp District, Petco Park, Balboa Park, Shopping, Dining and Entertainment. Interior floor plans boast well-appointed features, livable layouts, with granite counters, upgraded finishes, stainless appliances and color options to suit your preferences. 1 and 2br loft homes, some multi-level which cater to a myriad of preferences. Enjoy an onsite fitness center, pool and outdoor firepit!

Property Type(s): Residential / All Other Attached, Residential / All

Last Updated	1/30/2012	Tract	Cortez Hill
Year Built	2006	Community	Downtown
Garage Spaces	1.0	County	San Diego
Total Parking	1	Walk Score ®	92

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with The West Group, Inc.

(view all details for MLS #100052704)

8.  Tucked away between The Gaslamp District and East Village close to Petco park is another hidden treasure known as Trellis.  I really like this building and location and this is a traditional sale.

We're sorry, but we couldn't find MLS # 110019224 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

9.  When I first moved to Downtown I rented a place in Icon just across the street from Petco Park.  This property has “first look” initiative through 5/26/2011 and has incentives through Home Path.  The gym at Icon is one of the best and the building is very well managed and this unit is Bank Owned.

We're sorry, but we couldn't find MLS # 110027559 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

Finally one of my favorite buildings in East Village called M2i.  This is another traditional sale and is located only 2 blocks from Petco park.

We're sorry, but we couldn't find MLS # 100036326 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

The process of purchasing real estate is a complicated one.  Each transaction is different and requires full investigation during your inspection time to make sure you know what you are buying.  More questions will always follow, but here are 8 questions I think you should always ask when you first start the process.

1. How long has the property been listed in the Multiple Listing System?
2. Is this the first time on the market or was it listed with the same or another Broker?
3. Have there been any status changes like price changes or pending sales?
4. What was the original price of the home and when did the current owners purchase the property?
5. How many loans are against the property?
6. What is the foreclosure and pre-foreclosure rate of the neighborhood.
7. Are there any substantial disclosures on the Real Estate Transfer Disclosure Statement or Seller Property Questionnaire?
8. Are the property taxes current or any other liens showing up on the Property Profile or public data?

http://www.youtube.com/watch?v=KaRx-rWbx2k

Continuing on with our series on understanding the California Residential Purchase Agreement we look at page six.  Please understand this series was done for the State of California.  Residential Purchase Agreements are different in each state and I would encourage you to consult a REALTOR® licensed in your state.  I am not an attorney but a Real Estate Broker able to advise on real estate issues in the State of California.  This video is very general in nature and is in no way complete, so consult your REALTOR® for any specific questions.

Page six of the California Residential Purchase Agreement includes the following:

• Selection of service providers.
• Multiple Listing Service.
• Equal Housing Opportunity.
• Attorney fees.
• Definitions of acceptance, close of escrow, days, days after and before, delivery, electronic copy or signature, law, repair, and signed.
• Broker compensation.
• Joint escrow instructions to escrow holder.

If you have any questions or would like to speak with me personally just send me an e-mail or give me a call at 619-800-8312.  I hope this series gives you some education and the importance of understanding the Residential Purchase Agreement before writing an offer.

The California Residential Purchase Agreement is the kingpin of all contracts in residential real estate transactions.  Using a REALTOR® that has a full understanding and experience may result in a more successful transaction.  While the video may appear overall to be very simple, it is the experience of your REALTOR® to know what best to fill in for your unique situation.

View or download page six of the Residential Purchase Agreement by clicking image below: