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Add To Your Position!

2007-03-01T04:49:00.000-08:00

Add To Your Position!
BY: Joe DiPaola

When the stock market goes south, what do the market analysts tell you to do? View it as a buying opportunity, and add to your position! The same is true for the real estate market. If you believe that the real estate market is fundamentally sound, then look at this downturn as an opportunity to get in and buy cheap.

The big question has become: when will the real estate market hit bottom? My own talking head prediction is the that the real estate market will bottom out, overall, around the end of the third quarter of 2008. After that, I predict a period of what I call "equilibrium" market forces (i.e. a market characterized by no strong buyer or seller dominance, and very modest appreciation).

But why are you trying to predict the bottom? Stock market analysts will tell you that you should be in the market for the long haul. The same is true for real estate. Waiting for the "bottom" of a downturn to buy is a difficult/impossible prediction task, unless you have a crystal ball. You wouldn't do that in the stock market---so why treat the real estate market differently?

There are very good reasons to buy now:

Reason 1: Shop for bargains. While the overall market may not stop sliding until late 2008, certain regions/counties are great bargains now. In my opinion, Sacramento, San Joaquin, Riverside, San Bernadino and San Diego Counties have some great buying bargains now. Buy and hold---especially in Sacramento and San Diego.

Reason 2: When the "bottom" to the real estate market finally comes, borrowing/credit will be extremely tight. As this article is being written, 30 year fixed interest rate purchase-money loans are still being offered at 6.0% to 6.25%. Why wait? Lenders have already started to tighten up standards for borrowers---but there is still time to get in now. By the end of 2008, I predict that rates will be much higher, qualifying will be tougher, and financing the purchase will be difficult if not impossible. So, unless you have cash, when the "bottom" eventually arrives, you won't be able to take advantage of it!

Reason 3: Improve your position. Trade up! In other words, sell your current house, and buy bigger. You are in for the long haul, right? So why not view this downturn as an oportunity to buy a bigger and better house. Yes, your current house will sell for less---but it will cost you less to buy into the larger home, too. And the difference could be in your favor. But be smart---don't buy first, and then expect your existing home to sell in a week (like it would have 18 months ago). Get your current house in escrow before you commit to purchase your replacement home.

Reason 4: Builders are dumping their inventory of new homes--almost in a panic. (Some builders are really desperate: now they're offering realtors large co-operating broker commissions, when just 18 months ago they wouldn't even talk to us! LOL!). Builder panic means incredible uopgrade packages and incentives for you. So, steal a new home from a builder.

The real estate market is fundamentally sound. A market "correction" was both necessary and expected. Buyers shouldn't be afraid of it---they should welcome it! Just like the stock market, the "correction" should be viewed as an opportunity to add to or improve your housing postion.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

"Bottom-Feeder" Buyers

2006-11-21T08:41:00.000-08:00

In a Buyer's market, beware of "Bottom-Feeder" Buyers, who prey on distressed Sellers!
Please read the article below, which outlines a typical scheme:

Real Estate Agents And Others Busted In Scheme
Thursday, November 16, 2006
National Realty News (Redacted)

--------------------------------------------------------------------------------

OKLAHOMA CITY, OK - A Federal Grand Jury handed down a 14 count indictment charging that at least seven people were engaged in schemes to defraud various mortgage lenders by artificially inflating the sales prices of homes and submitting false loan applications.

The seven people referenced in the indictment included real estate agents, mortgage brokers, and home buyers.

The scheme involved potential home buyers, represented by certain agents, being told that if they agreed to purchase homes at inflated prices they would receive funds at closing under the guise of “repair costs” which would be for their personal benefit. Sellers of certain hard to sell properties negotiated the sales through the agents. Buyers would always offer more than the listed sales price.

The mortgage brokers facilitated the submission of fraudulent loan applications to lenders for buyers who could not qualify to purchase homes at the artificially inflated prices. False details of income and assets were supplied on the mortgage applications. In some cases Buyers would be provided with “down payment loans” which were to be repaid from the funds they received at closing.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Loan Fraud: Inflating the Purchase Price

2006-09-09T23:12:00.000-07:00

Loan Fraud: Inflating the Purchase Price

By: Joe DiPaola

The Buyers suggest the following transaction to the Sellers: (1) Buyers will inflate the property's value and offer a price significantly above asking price; (2) in return, Sellers will either credit the Buyers with large down paymnent monies, pay a large credit to Buyers for closing costs, or return cash to the Buyers after Close of Escrow. Should anxious-to-sell Sellers agree to the deal?

Absolutely Not!

Tile 18 US Code Section 1014 reads as follows:

"Section 1014. Loan and credit applications generally

Whoever knowingly makes any false statement or report, or
willfully overvalues any land, property or security, for the
purpose of influencing in any way the action of...a Federal land bank, a
Federal land bank association, a Federal Reserve bank...a Federal credit
union, an insured State-chartered credit
union, any institution the accounts of which are insured by the
Federal Deposit Insurance Corporation, the Office of Thrift
Supervision, any Federal home loan bank, the Federal Housing
Finance Board, the Federal Deposit Insurance Corporation, the
Resolution Trust Corporation...upon any
application, advance, discount, purchase, purchase agreement,
repurchase agreement, commitment, or loan, or any change or
extension of any of the same, by renewal, deferment of action or
otherwise, or the acceptance, release, or substitution of security
therefor, shall be fined not more than $1,000,000 or imprisoned not
more than 30 years, or both.... "

Federal law makes it illegal to artificially inflate the value of a property in connection with the making of a loan by a Federally-chartered bank or other Federal financial institution. Federal law makes it illegal to fail to disclose to the lender any/all monies or credits received by the Buyers; all information on the loan application and in loan-related documents must be truthful and complete. So if a Buyer, appraiser, real estate broker, or mortgage broker artifically inlates a property's value, or fails to disclose to the lender all cash/credits received by the Buyers, a crime has been committed. "Whenever the lender is not informed, in writing, of the true nature of a transaction, the transaction is illegal."

Even though Sellers may be stressed about their house not selling, that's no reason to be talked into an illegal scheme by disreputable Buyers. Any time a Buyer structures a "creative" deal involving an offer of more than the asking price and large cash back, bells and whistles should go off!

On the other hand, paying a credit to Buyers at close of escrow, or a giving commission rebate, are permissable as long as they are: (1) fully disclosed up front to all parties; (2) part of the written contract; (3) processed through escrow and disclosed to the lender; and (4) not part of a scheme where the property's value has been artificially inflated. Usually lenders will require, as part of their underwriting criteria, that the sum of all credits to Buyers not exceed 3% of the purchase price.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Home Loan Demand Sinks to Four-Year Low

2006-08-02T16:49:00.000-07:00

Home Loan Demand Sinks to Four-Year Low
By Julie Haviv
Wed Aug 2, 12:07 PM ET

NEW YORK (Reuters) - U.S. mortgage applications last week sank to their lowest level in over four years, an industry trade group said on Wednesday, further evidence that the once robust U.S. housing market is weakening.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity , which includes both refinancing and purchasing loans, for the week ended July 28 decreased 1.2 percent to 527.6 -- its lowest since May 2002 -- from the previous week's 533.8.

Drew Matus, senior financial economist at Lehman Brothers in New York, said that while the indexes are volatile on a weekly basis, they point to a sector that is softening.

"The data suggest that the housing market is cooling and it's cooling pretty substantially," he said. "The question is how much of an impact is it going to have on the economy and that's what we really don't understand at this point."

Matus expects U.S. economic growth in the second half of this year to be slowed by about three-quarters of a percentage point due to the direct effects of softer housing investment.

Nearly all recent measures of housing activity have pointed not just to a slowdown, but to a struggling sector. Sales are sliding, supply is swelling and price appreciation is abating.

Many analysts view the housing market as a key factor in Federal Reserve policy. With a slower housing market, growth in the United States should level off as well, which may set the stage for a halt to the Fed's two-year program of monetary tightening.

INTEREST RATES SLIDE

It was the third straight week that overall mortgage activity slumped, despite a decline in interest rates during that period.

Last week, borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.62 percent, down 0.07 percentage point from the previous week, and 0.19 percentage point below the 6.81 percent rate in the first week of July.

The MBA's seasonally adjusted purchase index tumbled for the third straight week, falling 3.3 percent to 376.2, its lowest since November 2003.

The purchase index, widely considered a timely gauge of U.S. home sales, is standing well below its year-ago level of 494.5, a drop of nearly 24 percent.

The group's seasonally adjusted index of refinancing applications increased 2.3 percent to 1,417.2, down 37 percent from a year ago when the index stood at 2,250.3.

The refinance share of applications increased to 37.0 percent from 35.6 percent the previous week. Fixed 15-year mortgage rates averaged 6.28 percent, down from 6.31 percent the previous week.

ADJUSTABLE SHARE AT 2-YEAR LOW

Adjustable-rate mortgages, known as ARMs, have been a refuge for cash-strapped consumers seeking to buy a home with low initial mortgage payments.

But with the U.S. Federal Reserve raising interest rates for two years straight, many of these homeowners will face a sharp increase in their monthly payments when their ARMs eventually reset.

As this transpires, an increase in loan delinquencies and home foreclosures is expected, which analysts say may weigh heavily on the housing market.

Rates on one-year ARMs decreased to 6.18 percent from 6.25 percent. The ARM share of activity fell to 27.8 percent of total applications -- its lowest since March 2004 --from 28.6 percent in the prior week.

After historically low mortgage rates fueled a five-year housing boom, most analysts agree that the market is cooling off from its record run.

"The cooling in housing could last for a year or two," said Matus. "But remember, even when mortgage rates were at 18 percent, people were still buying new homes, so there is a natural trend of demand for housing and it takes a lot more than what we have seen so far to push around that natural trend."

Signs of a cooling market have been more evident in the past few weeks as a deluge of data showed an excessive supply of homes, declining sales and falling prices.

The MBA's survey covers about 50 percent of all U.S. retail residential mortgage loans. Respondents include mortgage bankers, commercial banks and thrifts.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Stuck! Homes Sit Longer on the Market

2006-07-10T23:19:00.000-07:00

Stuck! Homes Sit Longer on the Market

It's taking longer to sell a house these days. Is this another sign that the boom is over?
By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The tell-tale sign of a stagnating real estate market? When homes for sale start lingering - and that's exactly what real estate brokers and other industry watchers say they're seeing now.

The National Association of Realtors does not maintain national time-on-market figures. But inventory - the number of homes for sale - spiked 37 percent for the 12 months through April 30, the most recent data available.

Homes are staying on the shelf longer.

There are no official regional statistics for the time homes spend on the market. Here are estimates for local brokers.
Market Time on market Up from
Hanover, NH 125 days 65 days
Napa, CA 60 days 10 days
Phoenix, AZ 60 days 7 days
Miami, FL 35 days 20 days

At the same time, the rate of sales has slowed, so that there is now 6 months worth of supply, up from 4.1 months a year earlier.

All that supply means homes are sitting around longer and that sellers are asking more than buyers are willing to pay -- an indication that prices may have to come down.

"Sellers are in denial, and there is a rising disconnect with the buyers," said Jonathan Miller, a real estate appraiser in New York. "Until sellers get the message, you'll see a drop in the number of transactions."

Philadelphia has seen only a modest run-up in time-on-market from about 23 days last year to a still low 33 today. But the city's inventory has grown from nearly 21,000 last year to more than 36,000 today, a more than 50-percent jump.

"The sales pace is identical, but inventory is way up," says Harry Caparo, who runs Coldwell Banker Preferred in Philadelphia. "Time-on-market is going to start to rise."

Two markets

The cool or steady markets seem to be maintaining their equilibrium. David Barnes, a broker in Nashville, Tennessee, says time-on-market there has risen modestly this year to around 75 days from 65 days.

Carolyn Heimlinger, a broker in Des Moines, says the figure there is about 82 days, up from 75 days a year ago. Prices have flattened but not dropped. "Where I see concessions is new constructions," says Heimlinger. "Developers now offer rebates and free upgrades."

In Charlotte, N.C., Wallace Perry, president of Coldwell Banker United for the area, says time-on-market hasn't changed much, at 85 days to 90 days. "It's a very good sign that the market here is holding steady."

But in once superheated markets, things have gotten tougher.

In Hanover, New Hampshire, broker Ned Redpath reports a "drastic" increase in time-on-market.

All through the 2000s, New Hampshire averaged double-digit price increases and about 60 to 70 days on market. Now Redpath estimates average time-on-market at 125 days. He expects price changes to soon reflect that.

"The longer a listing is on the market," he says, "the more the price will come down."

In once white-hot Napa, California, Coldwell Banker broker Doug Fowler reports an increase to between 60 days and 90 days, where they once were a week or two. He thinks the long-term prospects for Napa are fine, but the area could see short-term adjustments.

Boston time-on-market has gone from 52 to 58 days, according to Susan Hsu, a RE/MAX broker.

In Phoenix, according to Valley Wide Homes broker Ron Wilczek, time on the market was often less than a week in 2005. Now it's approaching 60 days.

And in Miami, the time-on-market has lengthened to between 30 and 40 days from about 20 just a few weeks ago, according to Mario Tome, of Greater Miami Realty.

All this is evidence that the real estate boom may have run its course in many hot markets. At the very least, sellers will have to set their prices very carefully if they want to move their properties quickly and avoid long months of having their houses spending time-on-market.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

The Housing Bubble Has Burst In California

2006-07-08T09:07:00.000-07:00

The Housing Bubble Has Burst in California
By Joe DiPaola

Trying to sell your California home in the Summer of 2006? Actually, you are about a year too late. The following are my doom-n-gloom impressions of the California Home Resale Market, and the California economic outlook for the Summer and the rest of 2006.

Loss of Confidence in the Housing Market by Buyers:

Buyers have lost confidence in the housing market. Buyers seem unwilling to purchase, apparently because they do not believe that their savings/investment is protected. A $50,000-100,000 down payment on a $500,000 home can easily be wiped out a year from now by a rapidly declining market. So, a Buyer is only entering the market if the Seller has heavily discounted the price---enough to effectively insure against that kind of loss. Price, in my opinion, is the only thing driving the sale of a house in California today.

Increasing Panic By Sellers:

Yes, panic. Sellers are beginning to panic. They were used to seeing homes sold in 5-10 days. Now, even with signifiicant price reductions on their part, their homes are sometimes sitting unsold for 60 days or more.

Inventory is Building:

Inventory is building. In MLS regions where I do most of my selling, the ratio of homes coming on the market to homes being sold is 2.5:1 or 3:1, and growing.

Bottom-Feeder Buyers are Prowling:

From my own experience, I see "bottom-feeder buyers" on the increase---Buyers who mass-produce drastically low-ball offers to try to steal houses from Sellers. It only takes one distressed Seller out of 20-30 mass-produced offers for them to make a profit. And, if even one Seller accepts their offer, then it establishes a new comparable in that neighborhood, putting even more downward pressure on prices for everyone else trying to sell in that area.

There is Nothing Coming on the Near-Term Horizon To Improve the Situation

If anything, it is my opinion that conditions will worsen for Sellers. There is no bottom, or even temporary floor--in sight. The off-season is ahead. Demand continues to fall, while supply continues to increase. Interest rates continue to rise (although rates are, in my opinion, only a small part of the problem). Buyer and Investor confidence in the market continue to erode. Sellers are getting more desperate. The price reductions are getting bigger, and coming with greater frequency.

My California Home Sales Forecast

My California forecast for the rest of 2006 is for a much slower California economy, led by a rapidly declining housing market, and a declining stock market.

I am predicting a substantial decline in average resale home prices, and a substantial increase in time on the market.

It's hard to predict exact timing and duration, but I predict that the declines will generally occur in waves. For example, I see:
In Northern California:
- Sacramento and San Joaquin Counties declining rapidly
- Other Northern California Counties following suit
- San Francisco, San Mateo, Santa Clara declining more slowly
In Southern California:
-Riverside, San Bernadino, Orange and San Diego Counties declining rapidly
- Other Southern California Counties following suit
- Los Angeles County declining more slowly

I am also greatly concerned about the amount of "creative" home financing which has occurred wholesale over the past few years. A significant number of Sellers marginally qualified as Buyers themselves, have no equity in their homes, and/or have mortgage payments that are becoming increasingly difficult to make. The default/foreclosure rates could balloon---in direct proportion to the fall in housing prices.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Housing Prices Dropping, Buyers Waiting

2006-06-12T22:52:00.000-07:00

Housing Prices Dropping, Buyers Waiting
By Ellen Simon, AP Business Writer

(AP) -- Low-ball bidders, persnickety buyers and cancellations are now the rule in once-hot housing markets. Rising interest rates and sky-high home prices have cooled real-estate investment, "particularly in high-end markets in some juiced-up parts of the country where speculation was most rampant," said Mark Zandi, chief economist at Moody's Economy.com.

The record low interest rates and speculators that once drove prices higher are gone. Observers expect housing prices to stagnate or decline slightly, though a steep crash for housing prices is unlikely. As the market slows, both builders and buyers are getting used to the changes.

On a recent conference call, Ara K. Hovnanian, the president and chief executive officer of homebuilder Hovnanian Enterprises Inc. said that real estate investors "have largely pulled out."

"Investors were a bigger part of the market than many thought, including ourselves," said Hovnanian, whose company builds primarily in the Northeast. Would-be flippers are not only not buying new properties, they're selling what they already own, adding to the record number of homes already on the market.

Stocks in the sector have fallen dramatically. Hovnanian, for instance, is trading near $30 a share, down from its 52-week high of $73.40. Rival Toll Brothers Inc. trades around $27 a share, down from a 52-week high of $58.67.

Wachovia last week cut its rating on builders including Pulte Homes Inc., KB Home and DR Horton Inc., citing a sharper more rapid downturn in the market than expected.

Developers have started canceling projects. Plans were scrapped last week for a 4,400-unit Las Vegas condo resort complex that had been backed by actor George Clooney and nightclub owner Rande Gerber. The development company for the project said rising construction costs and slow sales forced it to rethink the plan.

With land prices falling in some areas, Hovnanian has walked away from about $5.6 million of deposits on land parcels it had options to buy, lopping 5 cents a share off the company's second-quarter earnings.

Buyers in some cooling markets know they're in the driver's seat. Agents say clients are putting in bids well below the sellers' asking prices, or simply waiting.

"Home prices have risen to where buyers can't afford to buy," said Keith Gumbinger vice president at HSH Associates, which publishes consumer loan information.

The national median existing home price was $223,000 in April, according to the National Association of Realtors. While that was a 4.2 percent increase from April 2005, the organization predicts that prices this year will rise only 0.8 percent.

Others aren't so sure they'll rise at all.

There was a 4-month supply of unsold homes on the market in April 2004; it rose to 5.8 months in April 2006, according to the Department of Commerce.

Part of the backlog is 128,000 unsold new homes, the highest level in history, said Mario Ricchio, housing analyst at Zacks Investment Research Inc.

"(H)omebuilders may not be able to push all this supply through the market," he said.

Contract signings for new homes are down sharply and cancellations are up.

"It's a more difficult market and our salespeople are no longer just taking orders; they have to sell," Hovnanian said on the call.

Most observers say housing prices will only slide dramatically if the Federal Reserve continues to raise interest rates.

The Fed's target short-term rate is currently 5 percent. If it passes 7 percent, "then things get very tricky," Zandi said. "Many home owners will have trouble making payments. We'll see significant mortgage credit problems develop."

By the end of 2004, 35 percent of buyers had adjustable-rate loans, up from 18 percent the previous year, according to the Federal Housing Finance Board's interest rate survey.

Those buyers could see a steep increase in their monthly payments if interest rates spike. That, in turn, could cause increased defaults and foreclosure sales at low prices.

"The higher mortgage payment may lead some overstretched owners to default on payments, adding supply to an already glutted market," said Ricchio at Zacks Investment Research.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Selling in a Depressed Housing Market

2006-06-06T07:05:00.000-07:00

Selling in a Depressed Housing Market
By Joe DiPaola

California Sellers: the housing boom is over. This is a Buyer's Market. You must be realistic in your expectations. You must be prepared for a difficult selling process.

The market focus is price. Correctly pricing is the most critical step now to selling your house. And that price is no longer based on your estimate of value---it is based on Buyer's estimate of value. And, what you "need" to net out of a sale bears little or no relationship to whether it will sell.

If you want to sell your house, there are several steps that you are going to have to take which you will not like. Be prepared to take them.

1. Price to beat your competition. Do a radius search of all active listings within a certain radius (0.25 or 0.5 miles) of your house. That is your competition. The larger the inventory of active listings within that radius, then the lower your price will have to be to attract Buyers. For example, if there are 15 homes within that radius which approximate the features and specs of your home, you will need to be priced among the 3-5 lowest to get meaningful Buyer traffic. Your home needs to offer more, and be priced less, than most if not all of your competition. It's about Buyers now--it's not about you.

2. Stay ahead of your competition when it comes to price. Watch what the competition is doing. Your price can get stale, and you won't know it unless you regularly check the competition. If price reductions by your competition take prices to new levels that are significantly lower that yours, then your Buyer traffic will disappear. You do not necessarily have to reduce your price to match the first big reduction. But if 25-30% of your competition reduces price, you need to reduce to stay competitive.

3. Offer concessions/credits. Most lenders will allow Sellers to offer up to 3% to Buyers at COE as credits for things like repairs, improvements, and/or non-recurring closing costs. Offer them. There are not as many Buyers in the market, and some of those Buyers may need closing assistance.

4. Lower your expectations with respect to Buyers. Buyers will be less qualified, offer less down payment, and demand more from Sellers. Be prepared for that. Do not automatically reject marginal buyers - instead, work with a marginal Buyer to help him/her qualify and purchase. Do not automatically reject contingent sales offers--instead, work with a contingent Buyer to give him/her an opportunity to sell and remove the contingency. Margiinal Buyers and contingent Buyers may ironically become "good" Buyers---because they are likely to try hard to suceed in the purchase, less likely to demand Seller concessions during escrow, and less likely to jump from escrow-to-escrow.

5. Except for painting, clean-up, basic repairs, and staging, do not spend money on alterations or additions. If you are getting ready to sell, make sure that your home is staged properly, is clean and presentable, and is freshly painted. But now is not the time to make alterations or additions, or to spend money on improvements that you always dreamed of making to your home. It's better to give Buyers a credit at close of escrow (COE), or to drop the price the equivalent amount.

6. Be prepared to make concessions during escrow. In a Buyer's Market, Buyers are much more likely to demand repairs or other concessions during escrow. Be prepared to negotiate, and to make repairs or give a credit.

7. Use a discount (1-1.5%), full-service realtor as your listing broker. While I am a discount broker, I am not telling you to use my service specifically. What I *am* telling you is that many times there is no difference in quality between a discount full-service broker and a traditional broker. The only difference is price. So, save yourself some commission money on the listing side.

8. Don't be desperate; don't buy into the notion that only the large, traditional brokerages have Buyers. If a large, traditional brokerage tells you that they have Buyers, and that they only show Buyers their own listings, then they have broken the law several ways. First, they have breached their fiduciary duty to their Buyers (if they even have any). Second, they have violated Department of Real Estate (DRE) rules. Third, they have committed a violation of the California Business and Professions Code. Brokers have a statutory and common law duty to show Buyers all possible listings which might fit the Buyer's criteria. Brokers who use improper and illegal tactics to trap Sellers into listing with them are using a "pocket listing" strategy to try to "double-end" the deal. Remember, in a down-turning market, brokers have less sales, too---so they get more desperate to "double-end" each sale. Large, traditional brokers have certain things to offer Sellers---but use of illegal and improper tactics is not one of them.

9. Offer a healthy (2.5 to 3%) co-operating broker commission. Now is NOT the time to try to save on the co-operating (Buyer's) broker commission. While I recommend that you save money on the listing (Seller's) broker side, I do not recommend that you cut the co-operating (Buyer's) broker commission. You need Buyers---and you want to encourage agents to bring them to you. Cutting the co-operating broker commission will only hurt your chances. Brokers are not supposed to look at the co-operating broker commission rate, and are supposed to show Buyers all properties that fit their buying criteria. But the sad reality is that some agents will steer Buyers away from listings where the co-operating broker rate is low, because it means less money for them.

In otherwords, I recommend using a discount, full-service broker on the listing (Seller's) side, but to NOT cut the co-operating (Buyer's) broker commission.

10. If given a choice, close escrow in the shortest time reasonably possible (i.e. 30 days) . If you have a 60 or 90 day escrow, then that's 60 or 90 days during which prices can drop further, and during which Buyer can have a change of heart and try to jump escrow.

11. Be patient--your house will be on the market for quite a while. The average selling time is no longer 7-10 days---it is now 45-60 days, and getting longer. It will take patience and nerves of steel on your part to get through the process.

12. Don't argue with Buyers over little things. Don't argue about little things with Buyers--that's being penny-wise but pound-foolish.

13. Don't waste your money on newspaper ads or special promotions. Make sure that your property is correctly listed on the MLS, and that the listing is also populating to MLS secondary and IDX sites with full address. Put your listing on free classified internet sites with full address (Craigslist, Oodle, Trulia, etc.). But don't spend money on traditional advertising (newspapers, magazines, etc.). Instead, price a little lower--every little bit helps.

14. If you are thinking about re-financing, then do so before you list. Some lenders will not re-finance a property that is currently being offered for sale on the MLS. Even if a lender will re-finance while the property is actively listed, doing so just "invites" a pre-payment penalty from the lender. So re-finance before you list. And, make sure that you have no pre-payment penalty.

If you are a prospective California Seller and would like further help or advice free of charge, then you can call me at (707) 693-0400. Please note that I respect other agents' listings, and pursuant to Department of Real Estate rules I will not talk to a Seller in an existing listing contract.

Real Estate Transfer Disclosure Statement (TDS)

2006-05-29T04:04:00.000-07:00

Real Estate Transfer Disclosure Statement

By: California Association of Realtors Legal and Board Services Department

Question:
What is the Real Estate Transfer Disclosure Statement?

Answer:
A Real Estate Transfer Disclosure Statement ("TDS") is a form prescribed in Civil Code ss 1102.6. Sellers of residential property with 1-4 units have been required to furnish this completed form to prospective purchasers. Sellers and licensees may comply with this law by utilizing C.A.R. Form TDS-11.

The Real Estate Transfer Disclosure Statement describes the condition of a property and, in the case of a sale, must be given to a prospective buyer as soon as practicable and before transfer of title. In the case of a transfer by a real property sales contract (as defined in Civil Code Section 2985) by a lease coupled with an option to purchase, or by a ground lease coupled with improvements, the TDS is to be delivered before the execution of any of the foregoing.

The seller and any broker(s)/agent(s) involved are to participate in the disclosures. If more than one broker/agent is involved, the broker/agent obtaining the offer is to deliver the disclosures to the prospective buyer unless the seller instructs otherwise.

Delivery to the prospective buyer of a report or opinion prepared by a licensed engineer, land surveyor, geologist, structural pest control operator, contractor, or other expert (dealing with matters within the scope of the professional’s license or expertise) may limit the liability of the seller and the real estate broker(s)/agent(s) when making required disclosures. The overall intention is to provide meaningful disclosures about the condition of the property being sold or transferred. (Cal. Civ. § 1102.4)

Question:
What types of real estate transactions are covered by this disclosure law?

Answer:
These disclosure requirements apply to transfers by sale, exchange, installment land contract, lease with an option to purchase, option to purchase, or ground lease coupled with improvements, of real property (or a residential stock cooperative) improved with 1-4 dwelling units.

Question:
Are there any transactions involving one to four units property for which the seller is exempt from the necessity of providing a Real Estate Transfer Disclosure Statement?

Answer:
Yes. Certain types of transfers are specifically exempted in Civil Code ss 1102.1. They are as follows:

Transfers requiring a public report pursuant to ss 11018.1 of the Business and Professions Code and transfers pursuant to ss 11010.8 of the Business and Professions Code where no public report is required.

Transfers pursuant to court order (such as probate sales, sales by a bankruptcy trustee, etc.).

Transfers by foreclosure (including a deed in lieu of foreclosure and a transfer by beneficiary who has acquired the property by foreclosure or deed in lieu of foreclosure).

Transfers by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust.

Transfers from one co-owner to one or more other co-owners.

Transfer made to a spouse or to a child, grandchild, parent, grandparent, or other direct ancestor or descendant.

Transfers between spouses in connection with a dissolution of marriage or similar proceeding.

Transfers by the State Controller pursuant to the Unclaimed Property Law.

Transfers or exchanges to or from any government entity.

It should be noted, however, that a real estate licensee still has a duty to conduct a reasonably competent and diligent visual inspection of accessible areas in almost all of the above situations. In other words, although the seller is exempted from having to provide a disclosure statement in certain situations, a licensee must conduct this inspection, and disclose the results of the inspection, in almost all residential transactions involving one to four units.

Question:
Must a Transfer Disclosure Statement be provided to a purchaser of a new residential property that is not part of a subdivision, such as a new home being built on a lot?

Answer:
Yes. The disclosure statement must be provided to purchasers of these types of new homes.

Question:
Does the Real Estate Transfer Disclosure Statement requirement apply to "For Sale by Owner" transactions?

Answer:
Yes. The law applies even if there is no real estate licensee involved in the transaction.

Question:
Who must fill out this Real Estate Transfer Disclosure Statement?

Answer:
The seller must fill out sections I and II of the form. If any real estate licensees are involved in the transaction, the listing and selling agents usually fill out sections III and IV, respectively, based on the results of the careful visual inspections they have conducted.

Question:
On 1-4 unit transactions where the seller is exempt from providing the Transfer Disclosure Statements, but where the real estate licensees involved are required to conduct an inspection, should the licensees provide the buyer with a completed TDS form?

Answer:
No. The real estate licensees should never fill out the seller's portion of the Transfer Disclosure Statement. If they wish to, any agent involved in the transaction may disclose the results of his/her inspection on page 2 of the TDS form, or he/she can make the disclosure on a separate piece of paper.

Question:
Are the real estate agents responsible for checking and commenting on the accuracy of the seller's portion of the TDS form?

Answer:
No. The agents do their own inspection and disclose their findings, on the TDS or elsewhere, whether or not their findings agree with the seller's portion.

Question:
What about landlords or relocation companies who have never lived in, or even seen the inside of their residential property (1-4 units)? Are they exempted from having to fill out the disclosure statement?

Answer:
No. A seller in this situation must fill out the disclosure statement to the best of his/her ability.

Question:
Who is responsible for delivering the disclosure statement to the buyer?

Answer:
If two or more real estate licensees are acting as agents in the transaction, the selling agent must deliver the statement to the buyer, unless the seller has given other written instructions for delivery. If only one licensee is involved, that licensee must deliver the statement to the buyer. If no real estate licensees are involved in the transaction, the seller is responsible.

Question:
When does the disclosure statement have to be delivered to the buyer?

Answer:
If possible, it would be preferable to provide the completed disclosure statement to the buyer prior to his/her signing the offer to purchase. If the buyer receives the disclosure statement after execution of his/her offer to purchase, the buyer will have a three or five day period to cancel the transaction.

Question:
When should the prospective buyer of a new home, that is not exempt from the TDS requirement, receive the completed form?

Answer:
The buyer should get the TDS before he/she enters into the contract to purchase the home, even if it has not yet been built. In other words, no special rule applies.

Question:
Does a buyer have a right to cancel the transaction when the Transfer Disclosure Statement is furnished after the buyer has signed the offer to purchase?

Answer:
Yes. "If any disclosure, or any material amendment of any disclosure . . . is delivered after the execution of an offer to purchase, the transferee (buyer) shall have three days after delivery in person or five days after delivery by deposit in the mail, to terminate his or her offer by delivery of a written notice of termination to the transferor (seller) or the transferor's (seller's) agent." (Civil Code ss 1102.2.)

Question:
What if after the disclosure statement is furnished to the buyer but before the close of escrow, an error or omission in the disclosure form is discovered?

Answer:
The Real Estate Transfer Disclosure Statement may be amended, at any time, in writing, by the seller or his/her agent. However, if any material amendment to the disclosure statement is delivered to the buyer after he/she is already obligated under the contract, he/she has three days, if delivered in person, or five days, if deposited in the mail, to rescind the contract. In other words, if the statement is materially amended at any time after the execution of the contract, the buyer has a right to back out of the transaction.

Question:
Is it mandatory that a Real Estate Transfer Disclosure Statement be provided to a buyer in applicable real estate transactions, or can a buyer waive his/her right to receive the form?

Answer:
The law states that the seller must provide the disclosure statement to the buyer. This requirement can not be waived.

Question:
What happens if the seller refuses to fill out a Real Estate Transfer Disclosure Statement?

Answer:
The statute provides that if the seller willfully or negligently violates any of its provisions, the seller will be liable to the buyer for any actual damages which result from such a violation. If the licensee responsible for delivering the disclosure statement cannot obtain it, that licensee must advise the buyer in writing of the buyer's right to receive the statement.

Question:
If a seller gives this form to the buyer, does that mean that he/she does not have to provide other disclosure statements?

Answer:
No. All other disclosures mandated by local, state, or federal law must still be provided to the buyer, in addition to the Real Estate Transfer Disclosure Statement.

Question:
What is the liability under this law of a real estate licensee or seller who fails to comply with the disclosure requirements, either by making intentionally inaccurate statements or omissions, or by failing to deliver it promptly.

Answer:
The Real Estate Transfer Disclosure law provides that anyone "who willfully or negligently violates or fails to perform any duty prescribed by . . . (this law) . . . shall be liable in the amount of actual damages suffered by a transferee (buyer)."

Question:
Under this disclosure law, can a closed transaction be invalidated for failure to comply?

Answer:
No. The Real Estate Transfer Disclosure law specifically states that a completed transaction will not be invalidated by non-compliance. However, failure to comply can result in liability.

Question:
Does the seller have to provide a TDS if he/she sells the property "as-is"?

Answer:
Yes. There is no exemption to providing the disclosure statement for an "as is" transaction.

Question:
What is the seller's responsibility when the TDS states that an item is "not working," while the purchase contract warrants that it is operable? For example, let's say the seller states in the Transfer Disclosure Statement that the dishwasher is not functioning. On the other hand, in the deposit receipt the seller warrants that "all built-in appliances are in working order." Is the seller responsible for fixing the dishwasher?

Answer:
Yes. The seller is responsible for living up to his or her contractual obligations. The Transfer Disclosure Statement is not part of the contract; its only function is to provide information to the buyer to enable the buyer to decide whether or not to go through with the transaction. Even if the buyer decides not to cancel based on the TDS with some negative disclosures, the buyer does not waive any of his/her rights under the purchase contract.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

U.S. Housing Boom Over

2006-05-19T10:46:00.000-07:00

U.S. Housing Boom Over

By Associated Press 5/19/06

Former Federal Reserve Chairman Alan Greenspan said Thursday that Americans' consumption could taper off somewhat now that the U.S. housing market's "extraordinary boom" has ended.

Greenspan, in his first public U.S. speech since retiring in January from a storied tenure leading the Fed, predicted there is no danger of a total collapse of the housing market.

His comments come on speculation the Fed could pause its cycle of rate hikes as a housing slowdown feeds a cooling of the U.S. economy.

"This has been quite an extraordinary boom," Greenspan said in remarks at the Bond Market Association's 30th anniversary dinner in New York. "Home sales are off, applications are off, everything is going in the same direction. The boom is over, and you can say that with a fairly strong degree of confidence."

Greenspan said he doesn't see home prices falling on a national basis, but instead in certain areas of the country. He warned reduced access of Americans to equity loan extraction would have an economic impact, which has had an "important effect" in stimulating the economy.

The housing market has been one of the economy's biggest economic drivers, racking up record-high sales five years in a row. Rapid appreciation in home prices has helped power consumer spending, boosting the economy.

Federal Reserve officials — including current Chairman Ben Bernanke — came out swinging Thursday in a series of speeches to assuage inflation fears. The Fed, which boosted rates last week for the 16th straight time to 5 percent, has left its options open in terms of future rate decisions.

Greenspan cautioned that it was too early to determine how skyrocketing energy prices will affect consumer spending or lead to inflation. He pointed out that non-financial and non-energy company profit margins were not being suppressed by higher energy costs, and that higher prices at the pump weren't dramatically curtailing driving habits.

"One out of 7 barrels of world oil consumption is consumed on American highways," he said. "People apparently don't change the amount of mileage they drive, they change the vehicles they drive. That of course creates lower consumption ... it eats into purchasing power of other things."

His comments come as Wall Street was spooked by inflation worries after a jump in energy costs pushed U.S. consumer prices up sharply last month, according to a government report. Concerns that rising inflation would send rates higher sent the stock market sharply lower Wednesday.

Greenspan also weighed in on Social Security reform, a subject he knows well after leading a commission named after him in the late 1980s for President Ronald Reagan and Democratic Speaker of the House Tip O'Neil. He believes the funding shortage for Social Security "will get resolved," but identified the real fiscal problem facing the federal government as Medicare.

The former U.S. central bank chief said there is a strong probability the government will not be able to fulfill its promises to those tapping the retirement health-care program after the Baby Boom generation. This could trigger both higher debt and interest rates, he said.

"We probably at this stage under existing law have already committed ourselves to a probability which already is uncomfortable," he said. "It's an obligation of government to promise only what government can deliver."

He called the problem a "political" dilemma, and one that can be fixed while avoiding a crisis. With that, Greenspan said he had no intention of leading another commission to delve into the problem.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

California Real Estate Disclosure Forms

2006-05-08T00:38:00.000-07:00

California Real Estate Disclosure Forms
By Joe DiPaola

The following are the "property condition" and "proximity" real estate disclosure documents used by Realtors in a typical residential real estate resale transaction. For the most part, the forms refer to California Association of Realtor (CAR) Forms:

CAR Form SA Seller's Advisory (2 pages)
CAR Form BIA Buyer's Inspection Advisory (2 pages)
CAR Form HID For Your Protection Get A Home Inspection (1 page)
Car Form TDS Real Estate Transfer Disclosure Statement (3 pages)
CAR Form DBD Data Base Disclosure (1 page)
CAR Form WHS Water Heater Statement of Compliance (1 page)
CAR Form SDS Smoke Detector Statement of Compliance (1 page)
CAR Form SSD Supplemental Statutory and Contractual Disclosures (1 page)
CAR Form SPQ Seller Property Questionnaire (3 pages)
CAR Form SBSA Statewide Buyer and Seller Advisory (10 pages)
CAR Form FLD Lead Based Paint and Lead Based Hazards Disclosure (2 pages)
CAR Form MCA Market Condition Advisory (2 pages)
CAR Form RGM Radon Gas and Mold Notice and Release Agreement (1 page)
Earthquake Hazards Report (1 page)
Earthquake Booklet: "Home Owners Guide to Earthquake Safety and Environmental Hazards" (54 pages)
Booklet Receipt: "Home Owners Guide to Earthquake Safety and Environmental Hazards"
(1 page)
Preliminary Title Report (from Title Company)

Sellers will want to make the following additional physical condition disclosures, where applicable:
A Pet Damage and Pet Odor Disclosure
An Asbestos Disclosure
An ABS Pipe Disclosure
A Carbon Monoxide Disclosure
A Geological/Soils Disclosure
A Survey/Boundary Disclosure
CAR Form MHTDS Manufactured/Mobile Home Transfer Disclosure Statement (3 pages)
CAR Form HOA Homeowner Association Information Request (2 pages)

To save time and money, I recommend using a professional service to prepare a Natural Hazards Disclosure Report for Seller, such as:
Geo-TechSolutions.com
CalStateReports.com

Depending on the contract negotiated between the parties, Sellers can become contractually obligated to provide a Pest Control Inspection Report, Section 1 and/or Section 2 Clearance (CAR Form WPA Wood Destroying Pest Inspection And Allocation of Cost Addendum). Realtors/Sellers can check the license status of Pest Control Companies by going to the California Structural Pest Control Board at: http://www.pestboard.ca.gov/license.htm

This list is for educational and informational purposes only, and is not meant to be exhaustive. There may be other disclosures required in a transaction, but this list describes the forms that are typically required to disclose the physical condition of the property and/or its proximity to adverse conditions in a residential real estate resale transaction. Please consult with a Realtor or Attorney about your transaction.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

What Are Flood Zones?

2006-05-04T13:49:00.000-07:00

WHAT ARE FLOOD ZONES?

Flood zones are land areas identified by the Federal Emergency Management Agency (FEMA). Each flood zone describes that land area in terms of its risk of flooding. Everyone lives in a flood zone -- it's just a question of whether you live in a low-, moderate- or high-risk area.

ZONE EXPLANATION

X
An area that is determined to be outside the 100- and 500-year floodplains

A
Areas of 100-yr flood; base flood elevations and flood hazard factors not determined.

AO
Areas of 100-yr shallow flooding where depths are between one (1) and three (3) feet; average depths of inundation are shown, but no flood hazard factors are determined

AH
Areas of 100-yr shallow flooding where depths are between one (1) and three (3) feet; base flood elevations are shown, but no flood hazard factors are determined.

A1-A30
Areas of 100-yr flood; base flood elevations and flood hazard factors determined.

A99
Areas of 100-yr flood to be protected by flood protection system under construction; base flood elevations and flood hazard factors not determined.

B
Areas between limits of the 100-yr flood and 500-yr flood; or certain areas subject to 100-yr flooding with average depths less than one (1) foot or where the contributing drainage area is less than one square mile; or areas protected by levees from the base flood.

C
Areas of minimal flooding.

D
Areas of undetermined, but possible, flood hazards.

V
Areas of 100-yr coastal flood with velocity (wave action); base flood elevations and flood hazard factors not determined.

V1-V30
Areas of 100-yr coastal flood with velocity (wave action); base flood elevations and flood hazard factors determined.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Getting the Most From Your Home Inspection

2006-04-25T03:36:00.000-07:00

Getting the Most From Your Home Inspection
By Michele Dawson

***
Some 77 percent of all home sales in the United States last year involved a home inspection, according to a study by the American Society of Home Inspectors (ASHI) and the National Association of Realtors.

"It's clear from the study that more people are recognizing the importance of home inspections," said John Ghent, president of ASHI, the largest non-profit professional organization for home inspectors.

By following these pointers, you can maximize your home inspection benefits:

Know what it includes: Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing.

Know what an inspection does not include. Inspections for a typical home require several hours, but they do not concern every dent and scratch. For details, speak with any inspector you are considering.

If you're selling, get a home inspection before you put your home on the market. This can avoid surprises down the road when potential buyers have the home inspected by their own professional. If major or potential problems are detected, they can be repaired before you try to sell.

Hire a qualified inspector. Try to get referrals from friends or anyone you know who has had a satisfactory experience with a home inspector. Also, look for affiliations with organizations like the American Association of Home Inspectors (AAHI) or ASHI. Both groups require its members to be certified, meet professional qualifications, and adhere to specific business ethics.

Be cautious about hiring someone who may have a conflict of interest or may not be impartial. For example, a retired roofing contractor who now does home inspections to make a few extra dollars may find a problem with -- you guessed it -- the roof. This person could take advantage of your need to find someone to make repairs in a hurry, leaving you to wonder if the repairs were needed.

Include a proper home inspection contingency in your purchase agreement. This is important. If an inspector finds that the home can't survive another rainy season without $20,000 worth of roof repairs, you'll want to have the option of bailing out of the deal, asking the seller to make the repairs, or lopping the appropriate amount off the purchase price.

Be there for the full inspection. Spending a few hours with the inspector could prevent headaches and save time in the future. As the home inspector examines the various systems and components of the home, ask him or her to explain what problems may be encountered down the road, what signs to look for, what repairs and replacements are likely to cost, and how to prevent big maintenance bills.

Try to learn how things work and how to maintain systems and equipment during the inspection process. The inspector may also point out little flaws or oddities that don't measure up to being mentioned in the report, but may warrant watching.

In the case of new construction, consider three inspections: At the time the foundation is first poured, when walls are up but not closed, and at the walk-through before closing. Yes, this is expensive, but in the context of a long-term investment -- and a big investment -- such as a home, the cost is easy to justify.

Once the inspection is complete, the inspector will write a report. If major problems are found, then you have the knowledge to better guide your negotiations. And, if your new home receives stellar findings, then you'll have the peace of mind that will be a welcome relief once you're settled into your new home -- priceless!

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Understand "Presentation"

2006-04-25T03:31:00.000-07:00

Understand "Presentation"
By M. Anthony Carr

***
During a real estate course I took years ago, the trainer used a fantastic example of how human nature dictates the selection process. She produced two $1 bills. One was fresh from the bank. You almost had to check to make sure you didn't have a second one pasted to the back it was so new. The second bill looked as if it had been gone through Desert Storm, been laundered several times and was nearly disintegrated.

She went to someone in the front row and asked, "Which one do you want?" The obvious answer was the clean, crisp, freshly printed bill. Why? The value of both was the same. They both are legal tender in any American retail outlet around the country and several countries around the world. But -- the clean one always got selected.

The requirements to get top dollar have and always will be the same:

Clean the house. Thoroughly -- before you put it on the market. If it's not clean, don't even consider putting it on the market. You will lose a contract just because of dust and scum.

Paint the interior. Paint is cheap, but cleans up any dwelling place.

Declutter. Get rid of everything you don't need to live on a day-by-day basis. You don't need your seasonal decorations. The kids can do without half their toys. You can probably live without a third of your furniture. Get it into storage or a friend's house. Space adds value.

Have handouts. With more properties on the market, you need to make sure your house is memorable -- with a good marketing plan that includes a flier the buyers can take with them.

Price right. Look at all the parameters of your house, not just the bedroom and bath count. One of the houses above is sitting on a half-acre lot with a 1-car garage and built in the same year as it's counterpart listed for about the same mount of money, but which has only half as much land and no garage -- not even a carport -- but they're in the same area. (This is mostly the Realtor's job, but a stubborn seller may cause an over-priced listing.)

When placing your house on the market, keep in mind it's more involved and requires more work than selling a used car. We're not talking a difference of a couple hundred dollars on price here. Missing the mark on price and condition could cost you tens of thousands of dollars.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Cashing In on a Second Home in Mexico

2006-04-20T14:44:00.000-07:00

“Cashing In on a Second Home in Mexico”

How to Buy, Rent and Profit from Property South of the Border
By Tom Kelly and Mitch Creekmore

Mexico has it all . . . From lush and tropical mountainous municipalities perched on brilliant bays, to miles of white sand beaches merging into iridescent azure water, to quaint European-style houses lining cobblestone streets in picturesque villages and towns, our Spanish-speaking neighbor to the south is abundantly rich in geographic and natural diversification.

Cashing In on a Second Home in Mexico (Original Paperback, $19.95, ISBN 0-9770920-0-3) is a straightforward, informative guide that helps potential second home buyers, investors and renters easily understand the nuances of Mexican property, mortgage history and closing process, plus:

Discover how to safely hold property within Mexico’s “restricted zone”
Explore dynamic new locations South of the Border
Collect strategies on researching a Mexican property for purchase
How the fidecomiso, or Mexican trust, provides new ownership opportunities
Explore creative avenues of financing your dream retreat
Find innovative ways of attracting desirable, qualified renters
Understand tax benefits, ramifications of a Second Home in Mexico

Written by Tom Kelly, a nationally syndicated real estate columnist and talk show host, and Mitch Creekmore, senior vice president of Stewart International and one of the world’s foremost authorities on Mexican transactions, Cashing In on a Second Home in Mexico leads all consumers who are now working for a safe and profitable getaway property through the maze of options and possibilities of obtaining Mexican property. This useful book especially targets the Baby Boom generation - the largest, healthiest and wealthiest to enter its senior years in history – plus those in the real estate industry who assist them.

Al Heavens, longtime Philadelphia Inquirer real estate writer whose stories appear in newspapers and websites around the country, wrote “this book is as important to the first-time American second-home buyer as the Boy Scout Manual is to the tenderfoot.’’
Heavens, president of the National Association of Real Estate Editors, went on to write “it's true that much of this information can be found on the Internet. The difference is, of course, that Kelly and Creekmore have the kind of expertise that will help you sift through all of that information and make the kind of informed decision that will allow you to make a safe and sane investment in Mexican real estate.”

Cashing In on a Second Home in Mexico also contains real stories of how real people attained their dream of owning Mexican property. It includes helpful maps of some of the most popular areas, preparation checklists, capsule outlines of specific regions plus helpful websites and English-Spanish language tips and terms.

ABOUT THE AUTHORS

Tom Kelly is a nationally syndicated newspaper columnist and radio talk show host. He served The Seattle Times readers for 20 years - several as real estate editor – and his work now appears in The Los Angeles Times, The Houston Chronicle, St. Louis Post Dispatch, The Oakland Tribune, Kansas City Star, Louisville Courier-Journal and Des Moines Register plus more than two dozen other newspapers.

He is the author of “The New Reverse Mortgage Formula” (John Wiley & Sons) and co-author of “How a Second Home Can Be Your Best Investment” (McGraw-Hill) written with John Tuccillo, former chief economist for the National Association of Realtors.

In 2005, Tom’s award-winning radio show “Real Estate Today” began its 12th year on the CBS affiliate in Seattle. The show is syndicated by Business Talk Radio to approximately 40 domestic markets and airs on 450 stations in 160 foreign countries via Armed Forces Radio.

Mitch Creekmore is senior vice president and director of international business development for Stewart Information International, a world leader in title insurance and other real estate information services. He has been a licensed Texas real estate broker for more than 20 years. He has authored numerous articles on the Mexican system of real estate conveyance, Mexico’s foreign ownership requirements including Mexican land title matters, subdivision development procedures, escrow and tax considerations, ejido land and financing issues.

Cashing In on a Second Home in Mexico is distributed to the retail book industry by Partners Publishers Group, Inc.

Crabman Publishing
P.O. Box 4719
Rolling Bay, WA 98061

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Foreclosures Soar 63 Percent Over Last Year

2006-04-19T06:59:00.000-07:00

Foreclosures Soar 63 Percent Over Last Year
From RIS Media

RealtyTrac(TM) (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its March 2006 U.S. Foreclosure Market Report, which shows 101,597 properties nationwide entered some stage of foreclosure in March, a 13 percent decrease from the previous month but a 63 percent increase from March 2005. The report shows a March national foreclosure rate of one new foreclosure for every 1,138 U.S. households.

RealtyTrac publishes the largest and most comprehensive national database of pre-foreclosure and foreclosure properties, with more than 600,000 properties from more than 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate, AOL Real Estate and Knight Ridder Online.

"After rising more than 20 percent during each of the first two months of the year, foreclosure numbers experienced a fairly sharp correction in March," said James J. Saccacio, chief executive officer of RealtyTrac. "We saw a similar drop in March of '05, followed by four consecutive months of increases. Many buyers and investors typically start looking for properties in the spring, and that could have provided distressed homeowners a better chance of selling their properties to avoid default or foreclosure."

Colorado's foreclosure rate leapfrogged to highest among the states thanks to a 31 percent increase in new foreclosures from the previous month. The state reported 5,392 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 339 households -- more than three times the national average.

After spending the two previous months as highest in the nation, Georgia's foreclosure rate dropped to second highest behind Colorado thanks in part to new foreclosures decreasing 19 percent from the previous month. The state reported a total of 7,656 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 404 households and a 77 percent year-over-year increase.
With a total of 4,933 properties entering some stage of foreclosure in March, Indiana's foreclosure rate -- one new foreclosure for every 512 households -- ranked among the nation's five highest for the third month in a row despite a 17 percent decrease from the previous month.

Utah foreclosures increased 21 percent from the previous month and replaced Ohio, where new foreclosures dropped 52 percent, among the states with the five highest foreclosure rates. Utah reported a total of 1,437 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 535 households and a 32 percent year-over-year increase.

Michigan's foreclosure rate dropped from second to fifth place among the top state foreclosure rates thanks to a 25 percent decrease in new foreclosures from the previous month. The state reported 7,727 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 547 households and more than three times the number reported in March 2005.

Texas documented the most new foreclosures of any state for the fourth month in a row even though foreclosures there decreased for the second consecutive month. The state reported a total of 11,951 properties entering some stage of foreclosure, a foreclosure rate of one new foreclosure for every 674 households -- 1.7 times the national average.

California reported 11,073 properties entering some stage of foreclosure in March, the second most of any state, and the state's foreclosure rate registered slightly above the national average thanks to a 22 percent increase from the previous month.

Florida foreclosures decreased 7 percent from the previous month and 12 percent from March 2005, but the state still reported 9,283 properties entering some stage of foreclosure in March -- the third most of any state and a foreclosure rate 1.5 times the national average.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Google and Craigslist in RE Market

2006-04-10T20:31:00.000-07:00

Google and Craigslist May Weaken
Realtors' Hold on Home Listings

By James R. Hagerty
From The Wall Street Journal Online

Craigslist.com and Google.com, two Web sites that have fundamentally altered the way consumers buy a broad range of products, are emerging as places to shop for residential real estate, a development that in the long term could weaken Realtors' hold on home selling.

Listings of real estate for sale on Craigslist, a popular Web site featuring free classified ads, rose to 335,126 in March, more than triple the level of a year earlier. Google Inc., meanwhile, is testing a tool to help users sort through listings of homes for sale. Several more specialized sites launched in the past year -- including Trulia.com, Oodle.com and Propsmart.com -- offer free access to substantial numbers of listings.

While their real-estate ventures are still relatively small, sites like Google and Craigslist have begun reshaping the advertising world as they offer a potent alternative to ad spending on traditional media such as newspapers and TV. Craigslist in particular has become a popular place to post classified listings for rental apartments, child care, jobs, furniture and personals. With household brand names and huge numbers of users -- Google had 89 million visitors in February, according to research firm NetRatings Inc. -- Google and Craigslist have the potential to draw large numbers of home-sale listings.

The proliferation of real-estate sites comes as brokers are under pressure from several directions. As home sales slow, an increasing number of discount brokers are vying for customers. In addition, the U.S. Justice Department and the Federal Trade Commission are investigating industry practices that they say deter competition.

Commissions on home sales have declined slightly over the past decade and now average around 5.1%, according to estimates from Real Trends, an industry publication.

The Web-site companies say they don't aim to revolutionize real-estate brokerage and indeed are working to cooperate with brokers in many cases. But the growth of the sites may embolden more consumers to try selling their homes themselves and, when they do use agents, to reduce their reliance on them. Abdullah Yavas, a real-estate professor at Pennsylvania State University, says these sites may encourage an "unbundling" of agents' services, with consumers paying for only the services they want, rather than a whole package. For instance, a consumer might list a home on Craigslist and arrange showings, but still hire an agent -- for a lower commission -- to help with negotiations or guide the paper work.

Craigslist's chief executive, Jim Buckmaster, sees a move toward even more public access to information about homes for sale. The information "isn't something that should be controlled or owned by brokers," Mr. Buckmaster says. "It's going to eventually happen" that all the brokers' listings become publicly available. "You can mark that down as done. It's just a matter of when."

Unlike buying books or airplane tickets, real-estate transactions are complicated, so most people still want agents' help to complete the process of buying or selling homes. For buyers, the new home-shopping sites promise to further erode the information advantage enjoyed by real-estate agents over consumers. Most of the new sites offer listings of homes being sold directly by owners, as well as those being sold through agents. (Trulia.com includes only agent listings.) That contrasts with the policy of Realtor.com, the popular real-estate Web site owned by the National Association of Realtors. Realtor.com excludes homes for sale by owners.

"As a buyer, you want to see everything that's available," not just the homes represented by agents, says Ron Hornbaker, co-founder and president of Propsmart Inc., Kansas City, Mo., which owns Propsmart.com.

Shoppers can't rely on agents to tell them about for-sale-by-owner offerings, because agents often don't earn commissions for introducing buyers to these properties and find such transactions more difficult to complete. Agents also may fail to tell potential buyers about homes being sold through discount brokers.

There are already a host of specialized for-sale-by-owner Web sites, but none of them can promise one-stop shopping. ForSaleByOwner.com, one of the biggest such sites, estimates that it has 10% of all owner listings. While Craigslist and Google won't be comprehensive either, their sheer size will likely attract more listings. Another attraction for sellers: They can post information on the new sites free, while some specialized FSBO sites charge fees.

Realtor.com still has a formidable advantage, with about three million listings -- around 10 times the number on Craigslist. Realtor.com gets listings from nearly all multiple-listing services -- the local firms that compile listings from brokers and are generally owned by local Realtor organizations. The National Association of Realtors says about 13% of home sales last year were FSBO and that often those were sales between people who already knew each other.

Google in November began allowing consumers and businesses to directly submit content such as real-estate listings for inclusion in some Google search results through a service called Base. Google previously included real-estate listings from sites it came across, but they weren't always up-to-date and couldn't easily be sorted by price and other attributes. In March, Google began on a test basis letting consumers who were searching terms such as "Los Angeles real estate" narrow their results by choosing various categories -- saying whether they want to rent or buy, for example -- and letting them see real-estate listings plotted on a map.

To keep up with the competition, a number of real-estate brokers are improving their own sites. Real Living Inc., a big regional broker based in Columbus, Ohio, recently upgraded its site to provide email alerts to buyers when there is new information about some properties and to let sellers see how many people have viewed their homes and what comments they have made.

Most sellers still want their homes listed on the local services operated by Realtors. Perry Ahmed, an investor with several properties for sale in the Washington, D.C., area, lists them through real-estate agents on a multiple-listing service but also puts them on Google and Craigslist. He has worked out a deal with his agent that will ensure that he pays lower fees if he finds a buyer without the agent's help.

Many of the ads on both Google and Craigslist are for homes whose owners are represented by real-estate agents. But some are from people like Leigh Chodos, a marketing consultant in Brookline, Mass., who isn't using an agent in his efforts to sell a condo. "I'd rather save myself the 6% commission," Mr. Chodos says.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Understanding Rates, Points and Fees

2006-04-03T20:35:00.000-07:00

Understanding Mortgage Rates, Points, and Fees

By David Reed

March 31, 2006

Freddie Mac pushes a lot of numbers, and one of the numbers they push is perhaps one of the most widely published … their weekly interest rate survey. Freddie Mac has people who contact 125 lenders or so, get their rate quotes on different mortgage programs, specifically the 30 and 15 year fixed, 5/1 hybrid and 1-year ARM, then publish those averages for all to see.

Not a bad way for the consumer to get a handle on just how their current or quoted interest rate stacks up with the rest of the country. Just this past week for example, the 30 year fixed rate average as reported by Freddie Mac was 6.32 percent, with 0.6 percent in points and fees.

This means the "average" consumer in this poll got a 30 year fixed rate at 6.32 percent and paid $1,200, or 0.6 percent on a $200,000 loan, in either discount points or lender fees or any combination thereof. Okay, that's pretty neat by itself. Nice of Freddie to do that, don't you think? I do.

Freddie has been doing this for a long time, since 1971. I think Nixon was President then. The highest this rate has ever been was 17.48 percent in 1982 (can you believe it!) and the lowest recorded was 5.23 percent in 2003.

But looking a bit deeper into those numbers, one trend is also definite: People are paying less and less in points and fees to get those rates. In fact, if you go back twenty years, the average points paid on a 30 year mortgage was 2.3 points paid on every 30 year mortgage. On average.

Again on a $200,000 loan that's $4,600. Okay, yeah rates were higher then (10.89 percent) so people paid more to get a lower rate but that doesn't explain why when rates were 10.39 percent in 1979 consumers only paid 1.6 points. But enough of those numbers, the important point is … why pay any points at all?

Clearly, consumers are paying less at the mortgage pump. Point-wise. Why? I've got a good guess … because rarely does paying points, or origination fees for that matter, make good financial sense. At least in getting a return from the points paid. And more importantly, consumers might just be finding out that paying points is an option and not a requirement.

A discount point, at 1 percent of the loan amount, usually benefits the borrower by .25 percent. For each point paid, the borrowers rate is reduced by .25 percent. At least that's the way it should generally work. Some consumers get screwed right out of the gate by paying 2 or 3 points just because their loan officer told them they had to.

For instance, on a standard 30 year fixed rate today at 6.50 percent with a $300,000 loan the payment would be $1,896. At no points. Now pay one point and get a .25 percent lower rate at 6.25 percent and the monthly payment drops to $1,847, or $48 lower. But that lower payment costs $3,000. Tax deductible usually, but still $3,000.

If you divide that $3,000 by the $48 monthly savings it would take 62.5 months to "recover" that discount point paid at purchase. That's a long time in my book. One could take that $3,000 and put it into a retirement fund or something and get a better return. Or even take the $3,000 and make a principal pay-down with that same money.

But often the trade-off between discount points and lower payments rarely makes sense. For that matter, so does paying an origination fee. An origination fee is also typically 1 percent of the loan amount and is also an option and not a requirement.

Every loan that I know of doesn't automatically require you to pay an origination charge. Heck, in certain parts of the country origination fees are mostly unheard of. In certain parts of the country where origination charges aren't common the rates are the same there as they are anywhere else.

This means that when getting a rate quote or deciding whether or not to pay points or origination charges, think hard. Points and origination fees don't have to be a part of the equation. They can, and should be, a choice.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Homeowners Struggle to Keep Up...

2006-04-03T20:25:00.000-07:00

Homeowners Struggle To Keep Up With Adjustable Rates

By Noelle Knox, USA TODAY
Mon Apr 3, 7:00 AM ET

For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.

When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. The rate on their mortgage has jumped from 7% to 10.5%.

"We were having a hard time meeting bills at the time we refinanced. It seems once you get behind, you do desperate things to catch up, and you never do," says Lorraine, trying to hold back tears. "At the time of the loan, they tell you, 'Well, it may go up, but it's probably going to go down.' You want it to be so, so you believe it."

They feel alone, but they're not. America's five-year real estate boom was fueled partly by a tempting array of cut-rate mortgages that helped millions of Americans qualify for home or refinance loans. To afford soaring home prices, many turned to adjustable-rate and other, riskier loans with low initial payments. The homeownership rate hit a record 70%.

Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages. Nearly 25% of mortgages - 10 million - carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.

"Within the last year, I would say 60% to 70% of calls to our hotlines are issues related to ARM (adjustable-rate mortgage) loans," says Chris Krehmeyer, executive director of Beyond Housing, a non-profit group that offers homeownership support services in St. Louis. "That's significantly higher than in years past, because the ARMs are coming home to roost."

Last week, the Federal Reserve raised interest rates for the 15th time since June 2004 and signaled that at least one more increase is likely. That trend is ominous for borrowers who were seduced by adjustable-rate loans that offered interest-only payment options or teaser rates below 2% or that let the borrower pay less than the interest owed. They will face bigger payment shock once their loans reset to higher rates.

The number of borrowers in trouble will rise this year and peak in 2007 and 2008 as the largest number of mortgages reset to higher rates, according to First American Real Estate Solutions, a real estate data provider.

Already, in West Virginia, Alabama, Michigan, Missouri and Tennessee, about one in five homeowners with a high-interest (subprime) ARM was at least 30 days late at the end of last year, according to the Mortgage Bankers Association. After 90 days, the foreclosure clock starts ticking.

Most of those foreclosures are related to job losses in auto and garment factories; higher mortgage payments were often the last straw.

What worries experts such as Christopher Cagan at First American Real Estate Solutions are the adjustable-rate loans made in 2004 and 2005, at the end of the housing boom. These loans were concentrated in the hottest markets, such as California, where about 60% of all loans last year were interest-only or payment-option ARMs. That's the highest such rate in the country.

Of the 7.7 million households who took out ARMs over the past two years to buy or refinance, up to 1 million could lose their homes through foreclosure over the next five years because they won't be able to afford their mortgage payments, and their homes will be worth less than they owe, according to Cagan's research.

The losses to the banking industry, he estimates, will exceed $100 billion. That's less than the damage from the savings-and-loan crisis in the 1990s, which cost the country $150 billion. "It will sting the economy, but it won't break it," he says.

'What can we do?'

In the Atlanta area, credit counselors for The Impact Group say 85% of their calls are now related to ARM or interest-only loans. The calls start "when the statement hits them with the new monthly payment," says Marina Peed, executive director for the non-profit group, which offers homeownership education, counseling and financial services. "They are calling and asking, 'What can we do?' "

The call volume jumped after January, as holiday credit card bills, higher gas bills and rising mortgage payments hit some borrowers at the same time.

When Paul and Sandra Wilson moved from California, where they couldn't afford to buy a home, to Georgia in May 2004, they bought a house with an interest-only loan. But Paul, 52, has had a tough time finding work, and they lost most of their savings in a business venture. They refinanced to an ARM with a lower rate but one that reset every six months and that charges a $20,000 penalty if they refinance within three years.

The loan broker "convinced us that it was in our best interest, and in most likelihood within six months our financial situation would turn around and we were going to look at selling," says Sandra, 53, a former law enforcement officer who is disabled.

In less than a year, their loan payment jumped from $2,275 to more than $2,800. The couple filed for bankruptcy and will lose their home next month. "This was our fourth home," Sandra says. "It's not as if we weren't aware, but we'd never had an adjustable-rate mortgage before."

Banking regulators are concerned about risky loans made to people with precarious finances or those who didn't understand the complex terms and the peril they could face if interest rates rose.

In December, regulators proposed new guidelines for mortgage lenders to crack down on loose lending practices. The rules would require better risk disclosure and a fuller analysis of the borrowers' ability to repay the loan through maturity - and at the highest rates allowed under the loan terms.

Bank trade groups complained that concerns were overblown. "We do not believe it is appropriate or possible for the lender to dictate the best mortgage products for individual consumers," America's Community Bankers responded.

No matter what the final guidelines say, they will be too late to help people such as Susan Cambero. She got into trouble after she took out an equity line of credit on her home in Lilburn, Ga., to pay off her car and other bills. As a single mother with total income of $38,000 a year, including child support, she never would have been able to qualify for the $57,000 line of credit from a conservative lender. That line of credit, when added to the balance on her fixed-rate mortgage, totaled $10,000 more than her home was worth.

The monthly payments for the equity line have more than doubled in four years, to about $400. (She also has a $700-a-month mortgage and hefty credit card bills.) "I can pay it, but I have nothing left over to eat," says Cambero, a contract analyst for a computer company. "I'm going to lose my house."

Some success stories

There are few resources to help homeowners in dire financial straits, but there are some. The Homeownership Preservation Foundation offers free credit counseling and referrals, 24 hours a day, seven days a week (888-995-HOPE, or 888-995-4673). And NeighborWorks America, a national non-profit that supports homeownership and financial literacy, has member groups in every state.

One of its members, Neighborhood Housing Services of Chicago, has been receiving about five calls a day since January from borrowers who are falling behind on ARMs.

Marilyn Maxwell is one of their success stories. She refinanced her loan in 2002. Maxwell, 58, is a former U.S. postal worker who's living on disability payments from the government. She agreed to an ARM that reset every six months.

She kept up with her payments on her house on the southeast side of Chicago until last April, after her daughter, who was helping Maxwell pay the mortgage, lost her job. Last week, Maxwell refinanced her home with the help of Neighborhood Housing Services. She got a 6.8%, fixed-rate loan, plus grants to help make long-neglected repairs.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Old Collections...Pay Them Off?

2006-03-30T04:13:00.000-08:00

Old Collections... Pay Them Off?

By: Lee Kendrick

You should always try to pay your debts in a timely manner, so that you don't end up with collections and/or charge-offs appearing in your credit profiles.

However, if you are typical & among the majority of Americans, you'll have at least 1 collection account (erroneous or not) appearing in your credit profile. And, eventually, it'll be recommended that you payoff that old collection account. Before you do this, let's cover the "pros & cons" of this action.

First of all, I must provide you with the legal and politically correct answer... that paying off collection & charged off accounts will improve our overall credit rating... and this is true... for a LONG-TERM approach. However, if you're in the midst of applying for any type of loan... especially a mortgage loan... it's always best that you attempt to have the account deleted on the basis of any inaccuracy, incompleteness or unverifiability.

Secondly, failing in your attempt to have the account(s) deleted using the Fair Credit Reporting Act... you could negotiate a partial of full payoff of the account... as long as the creditor or collection agency provides you (IN ADVANCE) with a written agreement stating their willingness to PERMANENTLY DELETE the account from ALL 3 credit reporting agencies... once they've received the agreed payment amount.

Lastly, as a worst case scenario... failing to have the account deleted... most lenders recognize that any payment toward an old collection account will change the "date of last activity" to a more recent date... which will usually cause your credit scores to drop. Your "date of activity" (aka DLA) can be changed to a more recent date if you dispute the account, contact the creditor, the creditor contacts you, a payment is made, etc.

The mathematical algorithms, scoring models & computers used by the credit reporting agencies... unfortunately... "think" that you have a NEW credit problem with a more recent date of last activity... even if the account balance is now reporting as zero owed... because the words "collection", "charge off", "reposession", "foreclosure", etc. NEVER GO AWAY! This is typically referred to as the "reporting clock"... which can remain on your credit report for up to 7 years + 6 months from the date of last activity. Tax liens and bankruptcies can remain on your credit report for longer periods of time.

I'm hoping you realize the importance of negotiating to have the account deleted, before paying any monies toward any old "negative or derogatory" account(s).

And, if your credit scores drop, you may be denied for your loan request.

It's always best to order copies of your credit reports at least 45-90 days in advance of any anticipated loan requests... to insure the overall accuracy of your credit report information. Many borrowers with great credit... unfortunately... have found out that they've become the victims of identity theft... AFTER they've already made large deposits for the purchase of homes... which can be embarrassing & frustrating. It's also recommended that you order a free credit report from each of the 3 major credit reporting agencies (Equifax, Experian & TransUnion) at the beginning of each year... keeping your more informed about your overall credit rating.

There are also numerous internet services that offer to monitor your credit inquiries, scores & payment histories, but we recommend that you only use the services offered by the credit reporting agencies... to protect you from unscrupulous vendors... as these vendors may be identity thieves in disguise.

Family Mortgage in Winchester Kentucky (http://www.fmiusa.com) has a new computer program that will recommend steps for your overall credit score improvement... and this tool is offered by their credit report provider. It (specifically) offers advice to be completed in a specific step-by-step manner to improve your credit scores... to whatever score you're trying to achieve.

In some cases, paying down credit card balances may be required. In other cases, simply opening a $300 credit card account may be what's recommended. This service only costs $15 per client, and the reports are provided to you within minutes.

This service is not to be mistaken for credit repair, but it can give you ideas on what should be concentrated on first & foremost.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

U.S. Housing Market to See Sustained Decline in 2006

2005-12-07T05:37:00.000-08:00

Economic Report: U.S. Housing Market to See Sustained Decline in 2006

LOS ANGELES (AP) -- The U.S. housing market will see a sustained decline next year, causing a drag on the nation's economy but falling short of triggering a recession, according to a new economic report.

"We expect housing to start slowing the economy this quarter or the next," Edward Leamer, director of the quarterly University of California, Los Angeles, Anderson Forecast, wrote in the report to be released later Wednesday.

The cooldown in the housing sector is likely to be spread over several years, with as many 500,000 construction jobs and 300,000 financial sector jobs lost, the report said.

"Some jobs in manufacturing might well disappear as a result of weakness in housing, but this may be offset by jobs brought home or not lost to foreign competition," Leamer wrote.

The forecast said eight of the last 10 economic recessions were started by housing market slowdowns.

Previous UCLA Anderson Forecasts have suggested a decline in housing construction would begin by mid-2005.

The current report cites several signs that the decline could be underway:

-- New construction of housing in October was down 5.6 percent from the previous month, with new construction of single-family housing accounting for a 3.7 percent dip.

-- New home sales have declined.

-- Applications for home mortgages have trended downward since late September as rates increased.

-- In some regions, homes are remaining unsold longer and the pace of housing construction is outpacing population growth, which could spell a decline in demand.

"On all these grounds, we believe housing is due for a sustained decline," economist Michael Bazdarich wrote in the Anderson Forecast. "The remaining questions are how hard the fall will be and when it will begin."

The forecast for California, where housing prices lead the nation and housing-related jobs have been driving economic growth, resembles the national outlook.

Economist Ryan Ratcliff said the state's housing market will see a slowdown in spending along with job losses in construction and related sectors.

He expects California home prices to plateau while sales and new construction see moderate decreases during two years of weak growth.

"If the housing market slows more than we are expecting, a recession is not out of the question," Ratcliff wrote.

Counties showing signs of a cooldown include San Francisco, where housing sales have been off 20 percent since peaking in June, 2004. San Diego County has seen sales slow about 13 percent, while monthly price gains have plummeted to low single digits.

California's job picture has been lackluster in recent months. The rate of employment growth has slowed after a significant number of jobs were added in July and August.

Construction has remained the fastest-growing sector. But Ratcliff predicts a slowdown in construction activity through 2007 and moderate construction job losses.

Sales of Houses Fall in October

2005-11-28T15:45:00.000-08:00

NEWS ARTICLE- WASHINGTON - Sales of existing homes fell a bigger-than-expected 2.7 percent in October, a fresh sign that the red-hot housing market is cooling. The decline would have been worse without increased demand from displaced hurricane victims.

Though prices rose at the fastest clip in more than a quarter-century, the number of unsold homes rose to the highest level in 19 years. Analysts forecast that this backlog will dampen future price gains.

The National Association of Realtors reported Monday that sales of existing homes and condominiums fell by 2.7 percent in October, more than double the 1.1 percent decline analysts expected.

It left sales at a seasonally adjusted annual rate of 7.09 million, down from a sales rate of 7.29 million units in September, which was the second-fastest pace on record.

Economists said the latest report, which showed sales declines in all regions of the country, appeared to be a signal that the booming housing market was beginning to slow under the impact of steadily rising mortgage rates.

"The housing sector has likely passed its peak. The boom is winding down," said David Lereah, chief economist for the Realtors. "I expect continued softening in housing if rates remain at these levels or go higher."On Wall Street, stocks fell moderately as mixed news on holiday shopping prompted investors to take a pause from the recent five-week rally. The Dow Jones industrial average lost 40.90 points to close at 10,890.72.

The decline in sales pushed the number of unsold homes to 2.87 million, the highest level in more than 19 years. It would take 4.9 months to deplete that inventory level at the current sales pace.

The median, or midpoint, price of an existing home sold last month rose by 16.6 percent to $218,000, compared with October 2004.

Economists predicted the buildup in unsold homes would help dampen the surge in home prices that saw 69 cities report double-digit gains in prices this summer, compared with the third quarter of 2004.The sales slowdown was linked to the Federal Reserve''s continued campaign to boost interest rates to combat the threat of higher inflation after the recent surge in energy prices.

The average commitment rate for 30-year mortgages rose to 6.07 percent in October, up from 5.77 percent in September.

Patrick Newport, an economist with Global Insight, a forecasting firm in Lexington, Mass., said he expected rates, which are up by about a half-point in the past 10 weeks, to rise by another half-point in the next six months as the Fed keeps boosting short-term interest rates.
"These increases will cool off the housing market and deflate many local housing bubbles without creating a housing crash," he predicted.

Most analysts believe housing will cool gradually to more sustainable levels but will escape the adverse consequences that occurred when the Internet stock bubble burst in early 2000, wiping out trillions of dollars in paper wealth and helping to push the economy into a recession.

Lereah said he believes gains in home prices would slow to around 5 percent nationally in 2006.He forecast that sales of existing homes would decline by 3.5 percent to 6.86 million units next year, but he said 2005 should finish with 7.11 million sales, setting a record for the fifth straight year.

The weakness in existing home sales in October followed an earlier report that construction of new homes and apartments fell by 5.6 percent last month, the biggest setback in seven months. Applications for new building permits, a good sign of future activity, fell by 6.7 percent, the biggest decline in six years.

The 2.7 percent drop in sales of existing homes would have been a larger 3.2 percent decline without a boost in activity from people relocating after hurricanes Katrina and Rita devastated the Gulf Coast.Sales surged by 83 percent in Baton Rouge, La.; 32 percent in Mobile, Ala., and 14 percent in Houston. This more than offset sales declines of 42 percent in New Orleans and 44 percent in Beaumont, Texas.

The 16.6 percent increase in the median sales price was the biggest year-over-year price increase since a 17.2 percent jump in July 1979. The backlog of 2.87 million unsold homes was the highest since April 1986.

By region of the country, October's biggest sales decline occurred in the Northeast, a drop of 7.4 percent. Sales were down 1.9 percent in the Midwest and 1.2 percent in the West. Sales were down 1.8 percent in the South despite the big gains in areas where displaced homeowners relocated.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Record Low for Home Affordability in California

2005-10-08T10:29:00.000-07:00

Record low for home affordability in California

By Jim Christie Thu Oct 6, 7:06 PM ET

SAN FRANCISCO (Reuters) - Soaring prices in California's housing market have shut out a record 86 percent of households from buying a typical home with a traditional down-payment, according to a study released on Thursday.

Home prices across California have more than doubled since late 2001, increasing pressure on home buyers, who needed a minimum household income of $133,800 to buy a home at the August median price of $568,890, the California Association of Realtors said in its report.

That meant that only 14 percent of households could afford the typical home, down from 18 percent a year earlier, and the lowest level since records began in 1989, the report said.

The group's calculation was based on a mortgage interest rate of 5.87 percent and assumed a 20 percent down payment. The national minimum household income needed to buy a median-priced home at $220,000 last month was $51,740, the group said.

"It certainly is a concern when we reach a record low for affordability," said association economist Robert Kleinhenz.

August's affordability reading matched a record low 14 percent recorded in early 1989, shortly before a downturn in property prices that began in mid-1991.

"Households in California want to buy homes and can find loan products to do so, but they have to stretch," Kleinhenz added. "Large numbers of households are dedicating 40 percent and in some case 50 percent of their income to housing costs ... The norm nationally is 30 percent."

Fast-rising prices in California have forced home buyers to opt increasingly for interest-only and adjustable-rate mortgages over 30-year fixed-rate mortgages to lower their monthly mortgage payments, a trend concerning many analysts.

They argue that mortgage payments when the loans readjust will be too large for many borrowers if interest rates rise and hold at high levels -- driving more homeowners to sell under distress if they can not refinance loans.

"Our concern is that because it's been so easy to refinance, people assume it always will be," said Beth Haiken, a spokeswoman for PMI Mortgage Insurance Co., a unit of PMI Group Inc.. "They may be able to refinance, but not on the loan terms they want."

Just under a third of mortgages initiated or refinanced in California this year have interest-only components, compared with 1.4 percent in 2000, according to LoanPerformance, a unit of data provider First American Corp.

Another way home buyers in California are coping with high home prices is by increasingly moving from pricey urban coastal areas to inland areas where homes are more affordable.

California's coastal Santa Barbara region, where just 6 percent of state households could afford a median-priced home, was the state's least affordable market in August, the real-estate trade group said.

California's most affordable area in August was the High Desert region north and east of Los Angeles, followed by the Sacramento region in the central part of the state.

Twenty-eight percent of households could afford to buy homes in the High Desert region and 19 percent could afford homes in and around Sacramento, the state capital.

Home-price appreciation next year will be stronger in inland areas than in coastal areas, Kleinhenz said, adding that the overall pace of home-price appreciation in California was expected to slow next year.

"For 2006, we're saying California's median home price will go up by 10 percent, compared with a projected increase of 16 percent for 2005," Kleinhenz said.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

FSBO Challenges

2005-09-09T06:35:00.000-07:00

FSBO Challenges

Yes, there are challenges to being a FSBO Seller. Here are just a few (with some solutions):

1. CORRECTLY SET THE ASKING PRICE FOR YOUR HOME.

The first For Sale By Owner (FSBO) challenge is the difficultly a do-it-yourself home seller has correctly setting the asking price.

SOLUTION: FSBO sellers should interview at least three successful realty agents who sell homes in your vicinity. The agents interviewed won't mind if you tell them you are considering selling your home without an agent.
They count on "for sale by owner" sellers failing, and listing their home with them within 30 to 60 days. The agent most likely to get the listing is one of the agents who was previously interviewed.

Each agent interviewed should provide the home seller with a written CMA (comparative market analysis) showing the recent sales prices of comparable nearly homes and the asking prices of similar nearby homes now listed for sale (the competition).

The prime reason at least three agents should be interviewed is the home seller then has three expert opinions of market value. If one estimate is very high, that's called "buying the listing." When a market-value estimate is very low compared to the others, that agent could be hoping for a quick sale.

SOLUTION: Contact a title company (customer service desk). Explain that you are a FSBO seller, and that you want to obtain a Property Profile and CMA. Some will assist FSBO Sellers, others won't. There may be a nominal $25-50 charge - but it should be worth the price.

SOLUTION: Use a free online CMA service offered by a Realtor. Both NCaHome and 1Listing.com, for example, offer Home Valuation Reports for free to California homeowners.

2. SUCCESSFULLY SELL YOUR HOME IN A "BUYER'S" MARKET.

In a local "hot market" where there are more qualified home buyers than homes available for sale (called a "seller's market"), it's very easy to sell a home by waiting for the purchase offers from buyers. But when there are more homes for sale than qualified buyers, that is a "buyer's market."

Statistics show more than 70 percent of home buyers begin their search online. The key then, is getting online presence.

SOLUTION: 1Listing.com offers a fixed fee MLS entry only service for $299. The service not only also gets your listing posted in the local Realtor Multiple Listing Service (MLS), but also gets it published on Realtor.com, and almost every major realty company's search engine through secondary/IDX feeds. In other words, your listing populates almost everywhere that counts on the internet! Your residence gets exposed to the largest number of prospective home buyers in your community.

3. PREPARE A LEGALLY BINDING PURCHASE OFFER.

A major problem for many FSBO home sellers is how to create a legally binding and comprehensive purchase contract without a listing agent being involved. Lacking a listing agent, this task can be a major challenge because the home sale forms sold at stationery stores are worthless.

In addition, home sellers must comply with California disclosure laws, such as providing written defect disclosures (Transfer Disclosure Statement; Supplemental Statutory Disclosures; etc.) , smoke detector and water heater compliance statements, natural hazard disclosures, lead-based-paint disclosures, and other applicable disclosures.

SOLUTION: By law, commissions are NEGOTIABLE in California. Contact a local realtor or attorney, and negotiate a fixed fee for these services. It will likely be a lot cheaper than paying 3% commission.

SOLUTION: NCaHome offers a fixed fee Seller Representation service for $3699---that's complete, fixed fee full-service representation from contract to close of escrow for $3699 (no matter what the price of the house is).

SOLUTION: Use California Association of Realtors (CAR) forms. These are standardized forms made available by CAR to its members for use in a California residential real estate transaction. CAR forms are incredibly comprehensive, and they are universally used by Realtors throughout California.

4. WATCH OUT FOR CONTRACT CONTINGENCY CLAUSES.

Virtually every home buyer needs to include, for the buyer's protection, at least two or three contingency clauses in their purchase offers.

The first customary contingency is for a satisfactory appraisal of the home by the lender's professional appraiser. If the appraisal doesn't reflect the sales price agreed upon in writing by the buyer and seller, the buyer probably won't be able to arrange satisfactory financing.

The second contingency is the loan contingency. The buyer makes his offer contingent upon obtaining financing on the terms and conditions stated in the offer. If the financing is not approved, the contingency fails.

The third contingency clause requires the buyer's approval of their professional home inspector's report. Because most home sales today involve such an inspection, buyers can use the results of such an inspection to re-negotiate the purchase price (depending on the problems/defects found during inspection), or cancel the purchase based on the inspection results.

The fourth contingency clause that most home buyers insist upon is a professional termite or pest control inspection clearance. Home sellers sometimes have such a report completed before listing so they can take care of any discovered problems prior to the home being put on the market for sale.

There can be other contingencies, too. For example, the buyer can make the purchase contingent on the sale of his/her existing home. Contingencies dramatically affect the legal consequences of the contract.

SOLUTION: Require Buyer to make an Initial Deposit (up to 3% of the purchase price) to cover your damages in the event of breach, and sign the Liquidated Damages Clause in the CAR Residential Purchase Agreement. The default time limit for removal of standard contingencies (loan, appraisal, inspection) in the CAR Residential Purchase Agreement is 17 days; ask for written removal of all such contingencies when 17 days from the date of the contact has passed.

SOLUTION: Pay a professional a fixed fee to review and advise you regarding the contract and disclosure documentation (discussed above). As stated above, this should generate significant savings versus paying a 3% listing broker commission.

5. REVIEW THE BUYER'S MORTGAGE FINANCING.

Home buyers generally obtain written pre-approval letters or certificates from mortgage lenders before beginning their home search---don't accept a buyer's offer until the buyer produces one.

SOLUTION: Call the lender who pre-qualified the buyer. Ask the lender to verify the information in the pre-qualification letter. Ask the lender if he/she forsees any problems financing the buyer's purchase on the terms stated, and/or if the lender can fund and close the financing in a timely manner so that escrow can close on time.

SOLUTION: As stated above, use a Realtor or other professional to help you review offers, and prospective buyers' financing, for a fixed fee.

6. ARRANGE THE HOME SALE CLOSING DETAILS.

Another task FSBO home sellers have is to arrange for the closing/settlement for the transaction.

SOLUTION: Use a title and escrow company which is friendly to FSBO sellers. Many title and escrow companies have officers who work with FSBO transactions, and are more than willing to provide that little bit of extra help to a FSBO Selller.

SOLUTION: Use a fixed fee service. As stated above, NCaHome offers full-service representation to California sellers for $3699.

IS IT WORTH THE HASSLE TO SELL YOUR HOME ALONE?

Consider these pros and cons of selling a home alone without a professional real estate agent. "Is it worth the hassle to sell my home alone in the hope of saving about 3 percent of the sales price?"

Yes and no. The savings in commisions can be substantial. However, the aggravation and stress can be substantial, too. NCaHome and 1Listing.com suggest a middle ground---use their fixed fee services for $3699, or negotiate with your own realtor friend or attorney for fixed fee services to help you in your transaction. Paying 3% for a listing broker in today's economy is just too expensive and a waste of good money.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Cutting the Commissions

2005-07-18T12:56:00.000-07:00

NEWSWEEK MAGAZINE ARTICLE July 18, 2005
Reprinted by the 1Listing Program (1Listing.com)

Cutting the Commissions
Most real-estate agents still want a 6 percent cut. But a few clever brokers have figured out how to sell homes cheaper, by setting up Web offices.

Newsweek
July 18 issue - Will the Internet finally smash the real-estate cartel? Home prices have risen 40 percent in the past five years, yet most real-estate brokers still quote sales commissions at about 6 percent (some negotiate, if asked). The industry is using its political clout to hold down price-cutting. But consumers could win, now that prices are on the Web.

Brokers do business through the computerized Multiple Listing Service (MLS), where firms list the houses they have for sale. They work hard for their customers and know their neighborhoods. The trouble is, they trade with each other politely, at the cartel price. So a few clever (impolite!) brokers figured out how to sell homes cheaper by setting up Internet offices and letting you peep at MLS listings on your own. (These listings also go onto Realtor.com, but with less information.) A thousand flowers are starting to bloom:
Discount real-estate firms. If you're selling your house, a discounter can save you a ton of money. These brokers offer all the usual services and expertise. But instead of charging you 6 percent of the sales price, they take 4 percent or even 3 percent. That's a saving of $7,000 to $10,500 on a $350,000 house—a no-brainer, I'd say.

***You can find discounters almost everywhere. Just enter the name of your city or county into a Web search engine, along with "real-estate broker," then "low commission," "3% commission" or "discount."
FSBO sites (pronounced "fiz-bo")—"for sale by owner." People selling their own homes account for roughly 15 to 20 percent of sales. You'll find pots of free how-to information on FSBO Web sites. For a fee, you can buy a FOR SALE sign, an 800-number service for taking calls and a listing on the FSBO's site, with pictures of your home. You can even buy a listing on the MLS, so shoppers everywhere can find you. But buyers have to call you directly. If you want a broker to bring you customers, you'll have to offer a commission.

The FSBO sites offer different services at varying prices. A package at ForSaleByOwner.com includes personal telephone consulting to guide you through the sale. Owners.com is affiliated with Cendant (Century 21, Coldwell Banker). If your house doesn't sell and you decide to switch to certain of its brokers, you'll get a $1,000 rebate on the commission. Owner.com (not affiliated with Owners.com) lists other FSBO sites.

Fee for service. These brokers offer a menu of services, each at its own price. If you're selling your own house, you might want help with paperwork after you've found a buyer, or you might want the broker to show your house, or you might want an MLS listing. You buy only the service you want. Two such franchises: HelpUSell.com and Assist2Sell.com.

Referrals and rebates. These sites link home shoppers with real-estate brokers. If you buy, the broker pays the site for the referral, which in turn rebates part of that money to you. At Realestate.com, the rebate ranges from $100 to $2,250, depending on the price of the house, and comes in the form of a Home Depot or American Express gift card.

Bidding sites. At HomeGain.com, you describe the property you want to sell or buy and ask brokers for proposals (including commission charges). A new site, HungryAgents.com, encourages brokers to bid aggressively for your business.

Unfortunately, some of you aren't allowed to use all these money-saving services. Your state's self-interested real-estate brokers are driving them out. Six states (Florida, Illinois, Iowa, Oklahoma, Texas and Utah) now curtail companies that offer discounts, according to Inman Real Estate News. Other states have stopped FSBO sites from helping you market your home through the MLS. A dozen state real-estate commissions are trying to regulate discounters out of existence. Kentucky bans rebates entirely—but, in a strike for consumers—it's being sued by the U.S. Department of Justice for restricting price competition. The National Association of Realtors was planning to set new MLS rules to let traditional brokers keep their listings off the discounters' sites. The Justice Department stopped that, too.

The higher-priced brokers will keep up the fight for their cartel, but the discounters have the wind at their backs, says Stephen Murray, editor of the industry newsletter Real Trends. Today they're just 2 percent of the market, but could grow to 12 percent by 2010. Hey, this is America—we're supposed to support price competition. That means brokers, too.

Reporter Associate: Temma Ehrenfeld
© 2005 Newsweek, Inc.

1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.