Questions and Answers Surrounding Short Sales

Questions and Answers Surrounding Short Sales

http://www.greatwestgmac.com/real-estate-blog-article-Questions-and-Answers-Surrounding-Short-Sales-Sunday-19-April-2009_302.html

As homeowners grapple with declining home values, and in some instances, mortgage payments that have dramatically increased, GreatWest GMAC Real Estate professionals are increasingly be queried about Short Sales.Often a seller will become concerned because they are unable to make house payments, but do still have an ability to make all or part payment of the negative equity. They may hope to also hope to preserve their credit score. They wonder if a short sale will be right for them. The answer is, probably no. Sometimes if a seller is able to pay back all or part of the negative equity, usually to the 2nd lien holder, they may be able to work out a repayment plan. The lender will likely release the lien and allow the home to close escrow.One seller wondered why mortgage insurance wouldn’t cover any deficiency amount, if the seller defaults on the loan. The answer is that mortgage insurance is for the mortgage lender’s protection, not the seller’s protection. Ironically, mortgage insurance doesn’t usually kick into gear until the property has been defaulted on, or is close to default.During the "Short-Sale" process, one of the things which can make negotiation with all parties so long and arduous, is the fact that if the seller is current on payments, but having difficulty, the mortgage lender may in the early stages be reluctant to negotiate aggressively. After all, the bank has not yet lost money, and is somewhat in the "cat-bird" seat if mortgage insurance is in place on the property. In many instances, any "short-sale" offers, which are acquired, may be looked upon with some hesitance, unless the seller has began to get significantly behind in payments. Eventually, the mortgage insurer may enter the negotiations, and it becomes a poker game between the seller, the mortgage lender, and the mortgage insurer, and sometimes even potential buyers, to see who is going to absorb most on the difference between what is currently owed on the property, and what the property is actually now valued. During this process, any potential buyers may see their offers countered with an increase price as well.Often buyers will become excited when they see a property marketed as an "approved" short sale. It is important to understand that technically, there is no such thing as being "Short Sale Approved." If all parties to the sale come to an agreement via accepted offer, than that would be an "approval."

Latest Statistics For 4 Counties

Latest Statistics For 4 Counties

The charts linked below provide sales statistics for the counties of Sacramento. and the surrounding counties of: El Dorado, Placer and Yuba. They compare March 2009 to the year prior (March 2008), as well as data for February 2009 vs. February 2008. In most areas the number of sales posted was significantly greater to the previous year. However, prices have declined for the same time period. The Sacramento MLS 24 Hour Watch has demonstrated a significant number of days reporting more homes transitioning to "Pending Sale" compared to the number of "New Listings" entering the market. Many bank owned properties are receiving multiple offers from Buyers, as prospective homeowners, see opportunity in the marketplace.Related Links: www.webstarmagic.com/gmac/stats_4_counties.htm

Opportunities and Strategies for Real Estate Investing in the Coming Decade

Goodbye, McMansions

Book review: 'After the Fall'By Patrick S. Duffy, Friday, April 24, 2009.
Inman News
Cover image courtesy John Wiley & Sons, Inc.
Book reviewTitle: "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade"Author: Steve BergsmanPublisher: John Wiley & Sons Inc., March 2009, 201 pages, $24.95 list ($16.47 on Amazon.com).
http://www.inman.com/news/2009/04/24/goodbye-mcmansions?page=0%2C0


Audio interview: Click here for an audio interview with Steve Bergsman.
With the housing market still in tatters but showing some signs of life and the commercial markets starting their own freefall, many investors continue to consider real estate one of the last places to put their dollars to work.
In his new book, "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade," veteran real estate and travel writer Steve Bergsman argues that now is precisely the time to start considering what types of real estate sectors -- whether residential, commercial or leisure -- should be on your shopping list, both today and in the future.
Bergsman, who has also written "Maverick Real Estate Financing: The Art of Raising Capital and Owning Properties Like Ross, Sanders and Carey," "Maverick Real Estate Investing: The Art of Buying and Selling Properties Like Trump, Zell, Simon, and the World's Greatest Land Owners," and "Passport to Exotic Real Estate: Buying U.S. And Foreign Property In Breath-Taking, Beautiful, Faraway Lands," certainly seems to know his niche, having written on the subject for 25 years.
In this latest work, he carefully examines specific types of real estate for updates and provides unvarnished gut checks on their relative health based on scores of interviews with a variety of industry experts.
While many authors of books on real estate focus on housing, Bergsman instead starts out by analyzing the commercial sector, including the markets for office, industrial, retail and multifamily residential space.
For each chapter, the author takes us through a brief business journey beginning with an overview, followed by "Where We Are Today," "Where We Were," "Where We Are Headed" and "Fundamentals."
Readers can easily thumb through to whichever chapters they deem most relevant for analysis on the past, present and future for their sectors of interest. In addition, a "Bonus Box" at the end of each chapter focuses on a recent trend for a particular land use sector, such as "The Office Condominium," "Flex Space" (for industrial uses) or "Locations for Knowledge Workers" (for retail uses).
In the case of the commercial real estate markets, Bergsman paints a future portrait of haves and have-nots, in which the largest investors will favor larger urban, international centers such as New York, Washington, D.C., or Los Angeles, while largely ignoring tertiary, largely domestic markets such as St. Louis or Minneapolis.
By 2012, however, the author thinks it will actually be the sleepy, stable apartment market that will be one of the best places for institutional dollars, having likely rebounded from several years of weakness in that sector's underlying fundamentals and a dearth of new construction.
No matter the specific commercial market sector, however, one key trend expected to keep expanding is sustainability, especially for new office developments. Although the certification for LEED (Leadership in Energy and Environmental Design) has been online only since 2000, its impact has been enormous, with experts predicting future premiums for LEED-certified projects -- and future upgrades for existing buildings wishing to remain on the radar screens of many investors.
Over time, as the cost for green building declines and is more palatable for value-conscious consumers, residential builders will also start offering more robust and complete energy-efficient features and options -- especially in urban locations where consumer awareness of green building techniques is higher, Bergsman suggests.

Area's foreclosed homes sell briskly, for less, at auction

Area’s foreclosed homes sell briskly, for less, at auction

By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1795749.html


Published: Tuesday, Apr. 21, 2009 - 12:00 am Page 6B
A pair of out-of-town auction giants sold 190 more foreclosed homes in Sacramento on Sunday, earning $21 million for lenders that repossessed them for lack of payments, the firms said Monday.
Irvine-based Real Estate Disposition Corp. said it sold 162 Sacramento-area homes for $17.1 million. It was the latest event in a series of nine company auctions since June 2007 that have sold 1,912 capital-area foreclosed homes for $261.4 million, said REDC spokesman Rick Weinberg.
The firm's high-energy Sacramento auctions, attracting an estimated mix of 70 percent owner-occupant buyers and 30 percent investors, have pulled in $66.9 million for lenders in 2007, $158.7 million in 2008 and $35.8 million so far in 2009, said Weinberg.
Sunday, Dallas-based Hudson & Marshall also sold 30 capital-area homes for $4 million. Its auction at the Radisson Hotel was the firm's eighth in the capital since the foreclosure crisis began. Last year the company auctioned 200 homes in Sacramento, said spokeswoman Crystal Wright.
Weinberg said REDC has auctioned more than 6,500 bank-owned homes across Northern California in less than two years as defaults on subprime and other loans have combined with rising unemployment to drive up foreclosures. Hudson & Marshall auctioned 1,000 Northern California homes in 2008.
More than 34,000 households have surrendered keys to lenders in the past two years in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to researcher MDA DataQuick. The firm is expected to release statistics this week showing a sharp rise in new notices of default, the first warnings of foreclosure issued when homeowners miss several monthly payments.
REDC's sustained series of auctions reveals how home prices have declined. The firm's first event at Cal Expo in June 2007 sold 107 homes for $26.5 million – an average of nearly $248,000. Sunday's event sold 162 homes for an average of about $106,000.
Weinberg said prices vary with the types of homes.
"Some houses we've done in Sacramento and surrounding areas are just gorgeous. Others that we have, the properties aren't as nice," he said.
Yet the general direction of bidding is obvious.
"Prices are going down," said Dave Webb, owner of Hudson & Marshall. His auctioneers averaged about $133,000 per house Sunday. The auction was part of an eight-city event that sold $42.5 million worth of Northern California real estate, said Wright.

Bold business owners get in position early for economic upswing

Bold business owners get in position early for economic upswing

By Dale Kasler dkasler@sacbee.com
http://www.sacbee.com/business/story/1791340.html


Published: Sunday, Apr. 19, 2009 - 12:00 am Page 13A
From retailing to real estate and beyond, some businesses are starting to gear up for the next economic growth cycle.
In the face of an epic slump in consumer spending, Dimple Records is nearly doubling the size of its flagship store in Sacramento. Auto dealer George Grinzewitsch Jr. just built a $22 million Mercedes-Benz dealership in Rocklin, a community rocked by foreclosures. Ethan Conrad, a Sacramento real estate investor, has spent millions in recent months buying vacant residential lots throughout the Central Valley, the epicenter of the housing meltdown.
And even after getting burned on a $922 million land deal, CalPERS is looking at investing in a small piece of the project as it emerges from bankruptcy.
This isn't a mass spree. Most businesses are still hunkering down or just starting to sniff out opportunities. But a few have stepped in and made deals, albeit at discount prices, knowing the payoff might take years.
"If you're buying (at) 10 or 25 cents on the dollar, and it's decent real estate, it'll come back," Conrad said of his land purchases stretching from Yuba County to Merced. "The question mark is not, will I make money on them? The question mark is, how long will it take?"
Investing in something now takes some guts. Most experts believe the overall economy won't begin to improve for at least several more months.
But timing the market is nearly impossible, and a business investor should jump in now if he or she can pull it off, said Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento.
He said waiting too long can be counterproductive. Once the recovery becomes obvious, prices for everything will have shot up.
"If this (economy) turns in late 2009 or early 2010, if you wait until 2010, it's already too late," Varshney said.
That helps explain the recent run-up in the stock market, and the feeding frenzy among speculators for inexpensive foreclosed homes in the Sacramento area: Maybe things haven't hit bottom yet, but waiting too long carries its own risk.
"You can get a lot of things right now at a very cheap price," said Dilyn Radakovitz, co-owner of Dimple Records. "There's a lot of opportunity out there right now."
The family-owned chain is taking over 12,000 square feet of space next to its Arden Way store later this spring, and the recession helped make the deal pencil out. Dimple is getting nice deals on rent, store fixtures and other trimmings, saving tens of thousands of dollars, she said.
Expanding in a downturn is a gamble, "but that's life," she said. "We've been through a few of these."
A gamble on luxury
Building a Mercedes dealership in Rocklin seemed like a no-brainer to Grinzewitsch, who's owned a Mercedes service center there since 1998. Planning has been under way for years.
But when Rocklin became one of the region's hardest-hit real estate markets, Grinzewitsch, who owns a dealership in El Dorado Hills, thought about hitting the brakes.
Last summer, he talked to some of his staff about delaying the dealership. "It clearly crossed my mind," he said.
Instead, he went ahead with it. Not only that, he stuck with his vision of a $22 million "destination" dealership including a two-story showroom, rooftop parking and, in a daring move for a car dealer, a 75-seat Bistro 33 restaurant and bar.
"We decided to move forward because of my confidence in the brand, and our customer base and our employees frankly, and just the feeling like you can never time a market," he said.
A lot of people are still ducking for cover. Not a single bid was made when the Cal Neva Resort, the Lake Tahoe casino-hotel once owned by Frank Sinatra, went on the auction block recently. It remains the property of the Los Angeles lender that foreclosed on it.
Commercial real estate people remain mostly conservative, particularly when it comes to retail space.
"The current phrase I'm hearing is, 'I don't want to be early on this one, I'd rather be late,' " said Scott Crowle of real estate investment firm Marcus & Millichap in Roseville. "There are tremendous deals out there, but we're not seeing them because there isn't very much demand."

Sacramento region's repossessed home sales boom hits lull

Sacramento region's repossessed home sales boom hits lull

By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1789794.html

Published: Saturday, Apr. 18, 2009 - 12:00 am Page 1B
Months of foreclosure moratoriums, stepped-up loan modifications and bank decisions to keep repossessed homes off the market are biting hard into a slice of the economy that has come to depend on sales of distressed homes.
Sacramento-area real estate agents who sell bank-owned homes and the contractors who fix them before and after sales say business has slowed 30 percent to 50 percent since late last year. The lull, following a yearlong burst of foreclosure sales, coincides with a recent shift by banks to slow the stream of repossessed homes to market.
That's not expected to last. But the lull has dampened incomes in an entire niche industry tied to selling bank-repossessed homes.
"There's definitely a trickle-down effect on everybody," said Carey Covey, a Cook Realty agent who specializes in listing homes foreclosed by banks.
Warren Adams, a Security Pacific Real Estate broker and another specialist in bank-owned listings, said his own business is off by "practically half" in recent months.
"It's impacted every one of the little fingers that go off repossessed houses," Adams said. "That's landscapers, contractors, house cleaners, trash haulers. A lot of people have reduced staff and employees as a result of that."
John Kukis owns Sacramento-based Kukis Home Repair. He does basic fix-ups for repossessed homes – typically to $10,000 – to get them in shape for banks to sell.
"We've slowed down maybe 30 percent since the beginning of the year," Kukis said.
But he calls the lull a welcome breather after a year that saw about 23,500 foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.
The slowdown in business can be seen in the most recent figures about the number of foreclosed homes on the market.
According to Sacramento-based Lyon Real Estate, there is only about a one-month supply of repossessed homes for sale in El Dorado, Placer, Sacramento and Yolo counties. That means it would take roughly 30 days or so to sell them all at current sales paces.
A little more than a year ago, it would have taken buyers nearly five months to snap up all the repossessed homes on the market.
In the first three months of the year, the share of bank-owned homes sold in Sacramento County has declined, researcher MDA DataQuick reported Thursday. Repossessed homes accounted for 66 percent of sales in March compared to a high of 71 percent in January.
With the spring sales season heating up, many real estate agents say there are more buyers in the market than repossessed homes.
"The stuff under $200,000 is just selling, getting multiple offers," said Adams, the Security Pacific agent. He said low prices and historic low interest rates assure that the buyers will be there when the supply inevitably begins to expand again.
"Lenders have indicated this is going to change," he said. "I'd say easily in the next 30 days we'll start to see an increase based on rising defaults and foreclosures."
Changes in the market began late last fall. Starting in November as the holidays neared, numerous banks, as well as federal mortgage giants Freddie Mac and Fannie Mae, announced foreclosure moratoriums that would extend well into 2009.
"We started to see it (business) dying off about mid-December," said Phillip Connell, president of Connell Construction.
The Sacramento-based contractor repairs bank-owned homes throughout one of the top U.S. foreclosure belts: Merced, Modesto, Stockton, Sacramento and other cities north of the capital.
Many of those lender moratoriums appear to have now ended.
"We're expecting it to ramp back up again," Connell said. "That's what the banks are telling us."
Lenders have also held some of their already foreclosed properties off the market, creating a so-called "shadow inventory" that doesn't show up in statistics.
"I've been told banks are holding them, waiting for some of these government programs to kick in," said Covey, the real estate agent. "There will be more buyers to scoop them up."
Among those programs: an $8,000 federal tax credit for first-time buyers, the principal market for bank-repossessed homes.

February sales of new California homes weak

February sales of new California homes weak
State tax credit for new homes in demandBy Inman News, Wednesday, April 15, 2009.

http://www.inman.com/news/2009/04/15/february-sales-new-california-homes-weak

Inman News
February sales of new homes in California were down 54 percent from a year ago, but showed modest improvement from January, the California Building Industry Association said.
Sales of single-family homes and townhomes were both down 55 percent from a year ago, while sales of condominiums were off 51 percent. That's still an improvement from January, when sales in new-home communities of 10 units or more were down 64 percent from a year ago.
Some of the non-seasonally adjusted 42 percent increase in new-home sales from January to February was expected, as new-home sales typically pick up in February. But the increase was larger than the 11 percent gain seen from January to February 2008, CBIA said.
Median base price was down 15 percent from a year ago and 6 percent from January, CBIA said, noting that the reduced sales volume in recent months can produce price volatility.
CBIA President and CEO Robert Rivinius said he expects California's newly enacted $10,000 tax credit for buyers purchasing newly constructed homes will produce a "significant increase" in March sales.
As of April 8, the California Franchise Tax Board said it had received more than 3,100 applications for the tax credit, which is available to qualified buyers making purchases during the year beginning March 1, 2009, or until the $100 million allocated for the program runs out. Applications for $30.6 million in tax credits, or nearly one-third of the program's capacity, have been received so far.