Little boxes on the hillside,

Little boxes made of ticky tacky,

Little boxes on the hillside,

Little boxes all the same.

There’s a green one and a pink one

And a blue one and a yellow one,

And they’re all made out of ticky tacky

And they all look just the same.

- Malvina Reynolds

The latest Case-Shiller report was out yesterday and you can view or download it below.  For those in a hurry here is a headline for you…

San Diego Real Estate Down 5.3% From Last Year!

In America we seem to be addicted to statistics and percentages.  Headlines proclaim “prices crash” when the adjustment is .2%. Many don’t really want the facts, just a quick soundbite which they consider factual rather than sensationalism.

Looking at the report closer we can see that the San Diego Market went down .2% from the pervious report, while the national average was -4.1%.

At San Diego LIfestyle we prefer to look at the facts from multiple data sources rather than a headline.  We drill down to street level for our Clients to find out the real story.

General market conditions can be found with national reports, slightly better with country reports, and the best with communities.  To find out the real story in a particular market you’ll need to analyze and find the best comparables.

I call this what your neighbors have been up to – recent sales will establish future value trends.

It is important to remember that while real estate can be considered a commodity, each property is unique.  The price of a can of chocolate can go up and down and the statistics really mean something.

Even in communities of little boxes that all look the same, some will be more desirable, and some less depending on location, closeness to shopping, or located on a 12 lane freeway.  Yet they are all thrown into the mix and averaged out with a catchy headline to sum it all up.

Photo courtesy of Flickr

I often have people ask me if there is money to be made in flipping homes?

House flipping is the practice of buying a bank owned home from auction or a distressed property on the market, fixing it up, and selling it for a profit.  In the last year we have seen many of ameuter investors on the Courthouse steps, often driving prices up and leaving little to no room for profit on a flip.

This is really a serious business.  Risks include title issues, unknown property defects including structural, mold, or foundation issues, and an unstable real estate market.  According to Foreclosure Radar margins in San Diego County can be thin.

Rather than reinvent the wheel, Lily Leung wrote an excellent article on Sign On San Diego titled “Is There Money To Be Made In Home Flips?”

Investors who work in teams scout for bargains, close quickly with cash, gut and beautify, and market the homes to agents — all while the timer’s ticking. If everything goes right, their money and muscle will yield enough profit to keep that machine churning.

“It’s not for the weak of heart,” said Chief Denney, a Rancho Santa Fe investor whose company Compass Real Estate Capital will flip 100 homes this year. “It looks easy … but it could be disastrous for someone who doesn’t know what they’re doing.”

Read more…

 

There is another article on House Flipping For Beginners on SF Gate.  The article includes 8 steps for those considering house flipping.

The term “house flipping” refers to the act of purchasing a residential property, making necessary renovations and quickly selling the property for a profit. The idea is to invest in relatively inexpensive improvements that will generate a significant increase in potential market value. Time is an important element in house flipping. Ideally, a house flipper seeks to sell the home before a mortgage payment is due, in order to minimize monetary investment and maximize profit.

Photo courtesy of Flickr

California Association of REALTORS® Sends Letter To Major Lenders

The letter written by CAR President Beth L. Peerce was address to major top 4 lenders and services urging improvements in the short sale process.  They include Bank of America, JP Morgan Chase, Citigroup, and Wells Fargo.

In the letter, C.A.R. President Beth L. Peerce stated, “As public attention continues to be focused on the real estate industry in hopes of signs of a housing recovery, we trust you’ll agree that change in your short-sale process is critical.”

“We believe banks, investors, homeowners, and real estate professionals all have a common interest in conducting these transactions expeditiously and efficiently. The housing market recovery is in everyone’s best interests, and your urgent focus on these issues will help achieve that end,” Peerce continued in her letter.

Listed below are the suggestions to improve the short sale process.

• Provide realistic time frames and then meet those time frames.
• Provide a comprehensive list of information needed upfront.
• Provide approval requirements upfront that, if satisfied, would assure the borrower of a short sale approval.
• Disclose whether a loan you service is owned by you or if others own it. If others own it, provide time frames for approval. Be clear on who has final authority.
• Pre-approve the short sale and price upon request, prior to the property being listed.
• Review and respond with an approved offer to a borrower’s short-sale request within 30 days of receipt of the request. If rejected, be explicit on why, and how it can be corrected.
• Do not “restart” files from square one if something is missing. Allow the correction and continue, without bumping it to the back of the line.
• Have a person available who can inform the borrower about the file’s status and shortcomings, and who can assist in problem-solving.
• Increase the speed of processing files. Often, a single home goes through the process numerous times, resulting in months elapsing and buyers losing interest. The pre-approvals and cumulative files discussed above will dramatically assist this effort.
• Increase the amount junior lienholders receive. This is a common reason why short sales fail.
• When the property is cleared for sale, be explicit that there will be no recourse on the notes as required by SB 458, which now is in effect.

I believe these suggestions would go a long way in improving the short sale process. Most believe having a short sale is better on a neighborhood than a foreclosure.  The foreclosure process is taking way to long and the home sits empty and uncared for in the process.

SB-458 has taken away the risk for most homeowners of having a junior lender come back after them for recourse.  Improving the approval time frame and giving a green light early on in the process will keep buyers from having to write multiple offers in the hopes of finding one short sale that is approved.

Visit our short sale category for more details.

Photo courtesy of Flickr.

Photo courtesy of Flickr

Hat tip to Jacques Albrecht for sending me this article on The Street titled “A Huge Housing Bargain — But Not For You.”  I had seen the Request For Information (RFI) earlier in the month, and had not really struck home what direction the Government may be going in.  As you know I always try to be balanced in my perspective on San Diego Lifestyle and provide facts, not spin to my readership.  This however really stinks.

The source of this article was from Real Money in a column by Roger Arnold that suggests the Request For Information (RFI) is just a way for the Federal Government to get input from from the private sector to accomplish the goals set out in the RFI.  This is just a facade according to the article since the RFI was structured by the investors to begin with.

You can view or download a copy of the Request For Information below and judge for yourself from the link at the bottom of this post.

Here is what the article had to say Roger Arnold article had to say:

NEW YORK (RealMoney) — The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors — vulture funds.

These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.

You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs(GS_) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.

What can be done about this?  I will be keeping a close eye on this as it develops. If indeed, it goes in the direction that the article suggests, I will be very surprised if there won’t be heavy push back from the Taxpayers and from the National Association of REALTOR®.  Once again, in my mind the taxpayer is bailing out another special interest group and paying the bill.

Assuming taxpayers don’t push back, the next step will be to issue a Request for Proposals (RFP). The RFP will be the bid and plan for these homes by investors.

The way to keep taxpayers from pushing back is to structure the RFI so that the real intention, the bulk sales, is masked by feel-good goals, such as stabilizing neighborhoods and increasing the supply of rental properties.

Is the American taxpayer really that stupid?

View of download the RFI by clicking the image below.

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

San Diego Mortgage Brokers – Using Services.

The Department of Real Estate (DRE) has recently updated “Using The Services of a Loan Broker.”

A mortgage broker helps you obtain a home loan. A mortgage broker may be licensed by either the California Department of Corporations or the California Department of Real Estate. Mortgage brokers make or arrange first mortgages and junior (second) mortgages. A junior mortgage secures a loan which is secondary or junior to one or more other loans on the property. Some home loans arranged through brokers are very similar to a home loan you might obtain independently from a bank, savings and loan association (S&L), credit union, finance company, or other type of lender. Some brokers offer shorter loan terms and/or different repayment plans.

While many Mortgage Brokers are out of business for shady business practices, sometimes using one has advantages.  Just like real estate agents, attorney’s, and lenders there is always good, bad and mediocre. If you approach a bank for your Mortgage Loan they have one source of money, while a Mortgage Broker can shop around and place you with the lender that fits your needs and goals.

Recently I had the pleasure of meeting Michael Mekler, President of Liberty First Capital.  While I personally have not used his services, he comes highly recommended from some colleagues.

What I really liked about Michael is he takes the time to sit down and understand your situation and goals.  So many large lenders simply send you off to do an on-line application with little regard for your goals.

Michael is one of the “old school” service providers like myself that loves his job and is passonate about customer service.  You can reach him direct at 760-536-6200 or mmmekler@LibertyFirstCapital.com.  Hopefully I will do a video with Michael soon discussing the advantages of a Mortgage Broker.

To download the DRE Using The Services of a Loan Broker click on the image below:

There were 1,767 single family homes sold in July 2011 with a median price of $375,000.  That is down -3.840% from the prior year.  Average days on the market was 75.

Rancho Santa Fe (92067) had a total of 11 sales or 113 year to date.  Average days on the market was 159 days.  Median price was $1,900,000 or $2,100,000 YTD.  Last year at this time 92067 had sold 17 with a median price of $2,100,000.

Compare that to Downtown San Diego (92101) which had 75 attached homes sold or 565 YTD.  Time on the market was 104 days with a median sales price of $360,000.

Coronado had a total of 15 sales or 89 sales YTD.  Average days on market for July was 136 with a median price of $1,300,000.

To view or download the full report click on the image below:

Tips For Finding A REALTOR®

This past week I met a colleague in the real estate business for coffee and conversation.

The topics included the latest tech items, commission structures, contact data base management, and the overall perception of the REALTOR® and real estate industry.  He went on to tell me about a recent get together attended by professionals including attorneys, physicians, and educators.

The conversation eventually got into real estate and how easy it is to get a Broker’s licensee to save money by representing themselves.  The overall consensus from the conversation would be a savings of between 5% and 6% of the selling price.  It was a simple as that.

Of course I shared with him my old favorite saying that an Attorney that represents himself, has a fool for a Client.

A good deal of the perception of the real estate industry is our own fault.  Too many of us clamor about being number 1 or “top producer” and drive fancy leased luxury cars, wear expensive clothes, and have a ego the size of a 3rd world country.

From the consumers point of view why wouldn’t they believe we were an overpaid bunch of buffoons?

The things that traps all of us in life is we don’t know what we don’t know.  We second guess our doctors recommendations based on a Google search, a teacher’s method of running a classroom, and our public servants.  And we do this with out all the facts – assuming our judgement is correct.  BTW sometimes it is!

When I first started practicing real estate, I thought fresh out of the Department of Real Estate test that I was qualified to advise people in undoubtedly the largest financial decision of their lives.

Some 20 years later I am still learning something new each day, and realize how much more there is to know.   In other words, I know more than I don’t know, which is what a professional should bring to the table in any field.  You need to be immersed in a field day to day to understand it.

Last week the big story on Twitter, Facebook, and the news was the former CEO of ForSaleByOwner Colby Sambrotto had listed his 2000 square foot New York apartment for sale by owner (FISBO).He advertised the condominium through on-line classified ads and FISBO sites.  After 6 months he gave up, hired a real estate broker, and sold the property with multiple offers going $150,000 over asking price.  You can read more about on Curb New York.

In part three of my 10 part article on successful traits of a REALTOR® I listed “experience.”  The story is about a melt-down at a power plant that could not be diagnosed, an outside expert was called in, and within 10 minutes time he had corrected the problem.  Everyone was really grateful until they received a bill for  $2,000 of what they perceived as 10 minutes of his time.

Later that week the Plant Manager received a bill from the expert. When he opened the statement he was surprised to see a bill for $2,000 and immedialty rang up the expert to inquire how 10 minutes of time could be worth so much money and could he please itemize his statement.

Later that week another amended invoice arrived for the plant manager.

10 minutes time assessing the problem and troubleshooting plus travel time $25.00

20 years past professional experience in knowing which instrument to tap – $1,975.00

To immediately view or download 9 Tips For Finding A REALTOR® click image below.

Zestimates get 4 Stars in San Diego.

According to Zillow, San Diego is one of the locations that is rated most accurate with 4 stars or best Zestimate.

There are 1.0 million homes on Zillow with 840.70K having Zestimates in San Diego.  Of the properties sold 44.1% were within 5% of the sales price, 70.01% within 10%, and 88.3% within 20% with a median error of 5.8%.  Check out other cities to see how they scored.

Zillow defines the Zestimate as:

The Zestimate (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:  Read More

As with all automated value models (AVM) I tell Clients it is a general guideline.  A Comparative Market Analysis from the real estate agent should be more accurate, and a full appraisal from a licensed Appraiser would be the most accurate in most cases.

Wikepdia defines an appraisal as:

Real estate appraisal, property valuation or land valuation is the process of valuing real property. The value usually sought is the property’s Market Value. Appraisals are needed because compared to, say, corporate stock, real estate transactions occur very infrequently. Not only that, but every property is different from the next, a factor that doesn’t affect assets like corporate stock. Furthermore, all properties differ from each other in their location – which is an important factor in their value. So a centralized Walrasian auction setting can’t exist for the trading of property assets, such as exists to trade corporate stock (i.e. a stock market/exchange). This product differentiation and lack of frequent trading, unlike stocks, means that specialist qualified appraisers are needed to advise on the value of a property. The appraiser usually provides a written report on this value to his or her client. These reports are used as the basis for mortgage loans, for settling estates and divorces, for tax matters, and so on. Sometimes the appraisal report is used by both parties to set the sale price of the property appraised.

Computers don’t take into account one home located with a fantastic view while the other backs up to a 6 lane freeway.  As REALTORS® we spend our lives previewing homes as they come on the market and develop a pretty good sense of things.  Combined with a Comparative Market Analysis using recent sales, we normally can do better than most AVM’s.

AVM’s can be found on REALTOR.com and Franchise Websites and are normally used to capture someone’s e-mail.

Hats off to Zillow for being so transparent – you have to respect that!

Photo courtesy of Chris Meller via Flickr

If you want to check out schools scores & parent opinions in the US, Great Schools is a good source.

In fact, I have used it on San Diego Lifestyle for some time.

Schools are very subjective and the best way to get a general feel for a particular school or district is by looking at parent ratings (opinions) and school scores (facts).  I have always advised clients this is a good place to start, but also go speak to the school in your district and contact the parent-teacher association.  It’s not appropriate or legal for real estate agents to weigh in on anything that is not factual.

If you would like more information there is an informative Q&A on “Agent Duties, what a real estate agent can and can’t do for you.”

Because of lawsuits, there are many other types of requests that smart real estate agents will not address. For example, where I work in California, there is no guarantee that homeowners who live within certain school districts will be able to enroll their children in that school. If a client asks me to find them a home in a particular school district, I will ask them to give me the boundaries for the search. I don’t supply the boundaries. I also explain that their children might not get accepted into the school of their choice. Guaranteeing a certain school district is not within the scope of my fiduciary duties to a client and could also be construed as a violation of Fair Housing.

With the GPS function in the iPhone you can locate any school nearby including elementary, middle, and high schools.  Once located you can view detailed reviews, ratings, and test scores.

Key features of the mobile version include Search the latest school information for more than 125,000 K-12 schools in the U.S., including public, public charter, and private schools.

• Search the latest school information for more than 125,000 K through 12 schools in the US, including public, public charter, and private schools.
• Map and compare schools for any city, based on your current location.
• Filter schools by public or private, grade level, or distance, GreatSchools Rating, Community Rating, or enrollment size.
• Browse parent reviews, recent test scores, and district information.
• Save schools to your personal list of favorites for quick retrieval later.
• Share school information with family and friends.