New Short Sale Law in California (and what it means for you)

Back in July a new law was signed into effect by Governor Jerry Brown aimed at helping California homeowners selling their homes through a short sale.

Previously, lenders who held second mortgages that were used for "cash out" purposes could seek deficiency judgements against borrowers for the balance that was forgiven through short sale. First mortgage holders however were not able to do so. The prospect of the future collection of the debt for many homeowners was a terrible proposition which is what brought about this change. Banks who hold second (or junior) liens on properties of no more than four units are no longer able to seek a deficiency judgement against the borrower no matter the original purpose of the loan if the borrower voluntarily sells the property.

What does this mean for you? If you have a second mortgage on your house and you do a short sale, the owner of the second mortgage cannot collect the balance of the debt from you no matter how large the amount was that was forgiven or why you took out the loan in the first place. This could mean a faster recovery of your credit and even the prevention of filing for bankruptcy.

Furthermore, banks can no longer require sellers to make a cash contribution or sign a promissory note at closing if the short sale lender and the buyer cannot come to an agreement on the sales price of the property.

What does this mean for you? After going through all the work to find a buyer for your house and completing a short sale your lender cannot make your short sale approval conditional upon you either signing a promissory note for a specified dollar amount OR mandate that you contribute cash out of your pocket at closing.

If you would like to read more about SB458 please email me and I can send you more detailed information.

The Big Deal About Home Warranties

If you are anything like me- you never opt for the "extended protection" for your purchases, because you know that it is usually a waste of money. It always happens that when I have something that breaks I am just out of my warranty period even if I have begrudgingly bought the extended one.

I feel differently about home warranties though.

Tradition usually dictates who pays for the home warranty, which start around $350 for the first year. In the Modesto area the seller typically pays for the warranty but often times on bank owned properties and short sales the seller will not contribute for one. It is your option as the buyer though to purchase one yourself. "An extra $350+ on my closing costs?" you say, but it could end up saving you lots of money.

Here is an example:

Yesterday I received a frantic phone call from a buyer who just closed escrow on her house last Friday. After moving in over the weekend, they realized Tuesday afternoon there was water backed up in the showers, sinks and toilets. There was wet toilet paper all over her front lawn (yuck). Undoubtedly a sewer blockage somewhere.

I was able to make a quick phone call to Old Republic Home Warranty, and within a couple hours there was a plumber at her house working on clearing the blockage- all for a $60 trade call fee- which is far cheaper (and less stressful) than paying for the entire service out of pocket after having just gone through the expense of closing on your first house and moving.

This is just a small example, but I have had clients use their home warranty for heater and air conditioner repairs, new dishwashers and even new pool equipment. They really do pay for themselves even if you have to pay for the warranty yourself. Just remember- spending a little money now can save you thousands later.

FHA Loan Limits May be Going Down. So What?

You may have been hearing lately that FHA loan limits in certain counties will be decreasing starting October 1. Currently in Stanislaus County the largest FHA loan a borrower can get on a residential 1-4 unit property is $423,750. Given our decline in values that amount of money can get you a pretty darn nice house. If the limits are allowed to go down, however Stanislaus County's limit will decrease to $276,000 which is nearly a $150,000 decrease.

You may be wondering how this is relevant. It is in fact entirely relevant to everyone, so keep reading. 

Not only does FHA lend money to first time buyers, they make the loans accessible to people who do not have a ten to twenty percent down payment or do not otherwise qualify for conventional financing.

You are not one of those buyers? OK, fine. But what if you are selling a house though at the higher end of the limit? Obviously you want your house available to as many buyers as possible. The conclusion is simple: 

Lower FHA limits = fewer buyers who can purchase your home

Or, let's say you are on the cusp of the limit. Your house on paper is worth $295,000. You might have to reduce your price to fit into the guidelines to entice buyers, which is certainly not going to do any favors for values in your neighborhood or your wallet.

It is essential as we emerge from this massive real estate mess we have gotten ourselves in we do not stifle the growth we so desperately need. There are still a lot of foreclosures- even though many have not hit the open market yet. Government moratoriums on foreclosures are only putting a finger in the crack in the dam, so to speak. The homes are out there- and they cannot stay hidden in the shadows forever. Limiting the purchasing power of buyers is not the key to reestablishing a stable real estate market and economy.

I urge you to click HERE and fill out a short form that will send a message to our elected representatives to vote to extend our current, higher FHA loan limits. It only takes a minute and it could save you thousands.

I Am Trying To Buy Your House, So Why Are You Making Me Jump Through Hoops?

For many buyers getting a pre-approval for a loan is a stressful, daunting process. You are essentially handing your life (on paper) over to a complete stranger who is going to comb through it with grave attention to detail and scrutinize it in every way possible. It makes you uncomfortable, undoubtedly. You are finally done- letter in hand and a smile on your face. Now you've found your dream house- but wait! Your agent breaks the news to you: "This house is owned by (insert name of "big bank" here) and they require you to submit a SECOND pre-approval from ONE OF THEIR LOAN AGENTS  before they will review your offer". Suddenly the anxiety rises up in your throat again- you think to yourself "Again? I have to go through this AGAIN? How could this be?"

The fact is that this practice has become commonplace in the Modesto area with the volume of foreclosures we have been seeing. So, that begs the question, why do they do that? 

The answer is a simple one: Money. They have already lost boatloads of money on the house you are trying to buy. They are trying to recoup some of that loss by hopefully converting you to a borrower in addition to selling you the house. They can recoup the loss through the long-term servicing of your loan. (i.e. you pay them interest for the next 30 years).

One very important thing to remember though- if they accept your offer after you jumped through their hoops, they CANNOT make you use a specific lender. You have the right to choose. 

Is it annoying? Yes. Is it a pain in the rear? Certainly. Is it of any benefit to you? Sort of. It is a good way to get a second opinion so you are confident you are getting the best pricing and terms available. Also, it could mean getting into your dream house!

For more information on the loan approval process or a referral to a loan agent, please contact me via telephone at 209.614.3303.

Just Because Your Father/Uncle/Friend/Brother-In-Law is Handy, Does Not Mean He Should Do Your Home Inspection (Part 3 of 3)

Congratulations! Your offer was accepted! At this point the first question I get from buyers is "now what?". Well aside from your lender starting your loan process, we need to arrange for your inspections. If you have been reading parts 1 and 2 of this series you have probably already decided what inspections you are going to get. Now you have the task of deciding who you will hire to do them.

Typically your agent, who likely has built a relationship with various inspectors over their career, will steer you in the right direction of who to hire. If you trust your agent you can safely assume they will refer the right service providers to you. If you are thinking of using someone else, here are some things to consider:

1. Just because your father/uncle/friend/brother-in-law is "handy" does not mean you should have them do your home inspection.

Unless they are licensed and make a living in their given field, I DO NOT reccommend doing this for two reasons: first, they are not qualified. Just because they have nicely remodeled their own home themselves or bought/sold properties before does not mean they are qualified to evaluate the condition of the property for you. Second, if they miss something BIG you have no recourse. Home inspectors generally have errors and ommissions coverage in the event of a future dispute over items found in the inspection so you as the buyer have some recourse if there is a mistake made. I understand it is a cost saving measure, but it is not worth it.

2. Hiring the right professional carries more weight when asking for repairs/concessions:

If you use an inspection or a bid from a vendor as a reason to ask the seller to pay for repairs or take money off the sales price, the seller will ask to see the reports and/or bids. A bid or report from a qualified professional (that does not have the same last name as the buyer) will be taken much more seriously by the seller because they know it is truly an unbiased opinion from an independent third party.

3. Choose the right professional for specialized inspections:

If you are having something specific looked at, such as a water heater, air conditioner or pool equipment, have the right vendor look at it. As experienced as some handymen are you should not get a bid from one to do heater and air conditioner repairs for example. If the roof needs repairs, have a qualified roofer look at it. It may cost you a little more up front, but the knowledge and expertise you will get from them in the long run will be worth it.

These considerations are especially important in a market such as ours here in Modesto where many homes are vacant and we have no contact with the previous occupant to help assess the home. Buyers are virtually going in blind, so having the most qualified people evaluate the home for you are your best bet.

Modesto's Real Estate Deal of the Week!

This week's deal is in Modesto on Ortega Avenue near Coffee and Briggsmore and Memorial Hospital. The area is close to schools and transportation routes making for a very convenient location. The home is a three bedroom, 2 bathroom and 1350 square feet on a large lot- priced at an incredible $89,900.

Why is it a good deal? This home is not only a good deal for owner occupants, it is a good deal for investors. The same model home has sold recently in the neighborhood for upwards of $120,000 so with a little sprucing up the home could be an incredible rental. As a first time buyer it is a great opportunity to enter into the housing market in a home that you can customize to your specifications over time and build equity. Since there are similar homes in the area that have sold for much more than this home buying at the low end of the neighborhood spectrum will help you build equity more quickly in this stagnant market we are in.

If you have questions about this, or any other property please contact me here, or you can visit my website and start your own customized property search.

How Do I Decide What Inspections to Get? Part 2 of a 3 Part Series

When I started in real estate in Modesto eight years ago there was no such thing as short sales and bank owned properties. There were only regular people selling their homes. Buyers got inspections, found things wrong, then insisted the sellers repair the items and the buyers were happy because their inspection expenses were offset by the repairs they received. Nowadays however with so many short sales and bank owned properties inspections have taken on a new purpose. They are, for the most part, for informational purposes only because distressed sellers will not make any repairs to a property 99% of the time. Most of the time you are looking at a vacant property with no information from the previous occupant leaving many questions unanswered. This is where a home inspector comes in handy- he can help you address some of the mystery involved.

Home inspections aren't cheap though- and when you start adding on pest, roof, chimney and pool inspections you can hit $1000 in expenses before you know it.

So which inspections should I get, if any? Well I am supposed to reiterate to you over and over again the importance of home inspections- and they are important, but they are not for everyone. Here are some examples and tips on maximizing your inspection expenses.

1. Prioritize your inspections: Decide with your agent what inspections are most important and do those first. I would suggest starting with a home inspection. Often times if there are pest related issues or roof issues the home inspector will note that he sees a potential problem and suggest you have those items looked at. You can then do those inspections on an as-needed basis. Also, if the home is newer construction it is less likely there are going to be significant deferred maintenance issues from prolonged neglect or bad repair jobs.

2. Be realistic: Are you planning an immediate top to bottom rehab of the home? If so, a home inspection will probably be a waste of your money. Homes that are in major disrepair either from neglect, vandalism or long term vacancy and obviously have major issues a home inspection is going to tell you the obvious. A better use of your money would be with a pest inspection, which would reveal structural infestation that you cannot see (see Part 1).

3. Go a la carte: If there are certain items that are of specific concern, have them looked at individually to save money. Let's say the home is in visually good physical condition overall, but the air conditioner looks questionable. Rather than pay a home inspector $350-$400 to come look at the entire property, have an HVAC contractor come and just look at the HVAC. It will likely cost you a quarter (or less) of what an entire home inspection will cost and you will get a far more qualified evaluation of the system. The same goes for plumbing or electrical issues. If something looks obviously wrong having a plumber or electrician take a look will get you a far more qualified opinion (often cheaper too).

4. When to absolutely not skimp: If you are a person who cannot (or will not) complete simple DIY projects, are on an extremely tight budget, or have little to no knowledge about the simplest home repairs, get all the inspections you can. Not everyone is this way, but we all know this person, right? The one who can't change their own light bulbs or air conditioning filter- let alone own their own set of screwdrivers? If this is you, do all the inspections you can- and it is vital you hire the right kind of people to do the inspections for you. That topic will be covered in part 3 of this series.

5. Two inspections to never skip: This will apply to only a small portion of buyers in the Modesto area. If you are buying a home with a well and/or septic system- NEVER skip those inspections. Septic system repairs (and replacement) can be extremely costly and since they cannot be looked at visually it is vital you have them inspected by a septic contractor during escrow. On a traditional sale the seller typically pays for this but on a short sale the bank may not pay for it. It is about $450 but they empty the septic tank, test it and test the leach lines. Having the well tested will ensure your well is operating properly (so you have running water).

The last, most important piece of this puzzle is your Realtor. It is important that you work with someone who has the experience and knowledge to help guide you and advise you through these issues. Many of us have years of experience not only as homeowners, but as agents overseeing major repairs to properties. I personally have seem damage and repairs of all kinds and enjoy being able to pass that knowledge and experience on to my clients. Stay tuned for part 3 of this series that will address how to choose the right inspectors for the job.

Modesto's Real Estate Deal of the Week!

This week's deal of the week in Modesto is located on Durant Street near College and Rumble behind Davis High School. Durant is a quiet street with well kept ranch style homes that were built in the 1960's. It is walking distance to schools and parks, and in close proximity to shopping and the freeway.

This home is 4 bedrooms 2.5 bathrooms and 1800 square feet. There is a separate living room and family room, hardwood floors, ceiling fans, dual pane windows, a 2 car garage, and best of all- a sparkling pool! This property is bank owned and the bank has painted the interior and put new carpet in several of the rooms. The asking price is $174,900. Additionally the seller is offering 3.5% of the sales price for the buyer to use towards closing costs.

Why is this a good deal? I feel that this home is an excellent buy not only because of the location, but because of the size and amenities of the home for the price. This home has plenty of space for a growing family, and the neighborhood has a long established track record of being a great place to raise a family. It is move-in ready and it is a home that can grow and change with you and fit your needs for a long period of time.

If you have questions regarding this or any other home for sale, please contact me HERE

What Happens When the House I Am Buying Does Not Appraise For What I Offered?

Unfortunately the inspiration for this blog post is a deal I am currently working on in Salida. The buyers chose a home with an asking price of $149,900 in VERY good condition. Because they needed their closing costs paid, they offered $154,000 with a three percent seller concession on an FHA loan.

The buyers completed their pest, roof and home inspections and the house passed with flying colors. Then the appraisal comes back- at a low $150,000.  Unfortunately this has become commonplace in Modesto and surrounding Stanislaus County. When many comparable sales are distressed they may sell for less than market value which in turn has a ripple effect on other homes in the neighborhood. 

In this scenario there are several solutions:

1. Buyer asks seller for a price reduction to the appraised value. If seller agrees, escrow proceeds as normal and the buyer pays less than they originally offered for the home. If seller does not agree, buyer may cancel the agreement. Buyer will likely retain their deposit, but will not get any money back for the appraisal fee or the inspection fees, which total almost $1000.

2. If the buyer is asking for closing costs (as in this example) the seller may agree to reduce the purchase price to the appraised value, but no longer pay closing costs leaving the buyer responsible for the extra expense. They can use their own money, receive a gift from a family member, or adjust their pricing on their loan to receive a credit from the lender to cover the fees.

This scenario has yet to fully resolve itself, but it is my hope the seller will reduce the price and pay for closing costs because that is the best option for my buyer at this point. My main goal is to ensure that every avenue  has been explored and the end result is in the best interest of my buyers.

Modesto's Real Estate Deal of the Week!

As part of a new, regular feature on my blog I am going to highlight a home for sale in Modesto or the surrounding areas that I feel are a "good deal".

This week's home is centrally located in the heart of Modesto's desirable College Area on shady Cecil Avenue between College Avenue and Tully Road. At 2000 square feet with four bedrooms and two bathrooms it is perfect for a family and priced at an incredible $180,000. The home is in overall good condition and is the perfect template for future remodel and customization.

Why is it a good deal? It is a large home that already has the basics and can be moved right into without having to undergo major repairs or a major remodel. Also, it is an extremely accessible price for many buyers that are looking to get their foot in the door in the often expensive College Area.

For more information on this or any other property please give me a call at 209-614-3303 or email me HERE

What Am I Paying For, Exactly? The Difference Between Home Inpsections, Pest Inspections and FHA Appraisals. Part 1 of a 3 Part Series

Most buyers, especially the first-timers, often need explanation regarding the difference between all these inspections everyone is telling them they need. To many they all seem the same and a little redundant, but they are in fact all different. Following is a short explanation of each highlighting their differences.

1. Home Inspection (also known as a general property inspection): This is an inspection completed by a qualified professional. Notice how I didn’t say licensed? That’s because there is no licensing/regulatory body in California for home inspectors. There are trade organizations they can choose to belong to, but essentially anyone can call themselves a ’home inspector’. Aside from all that, a home inspector will give a general inspection of the property- but not usually go on the roof. Most will go in attics and crawl spaces to look for anomalies such as leaks or other damage. They will test electrical outlets and appliances including the heater and air conditioner. They will look at the water heater and evaluate the home for general safety issues such as holes in fire walls or improper electrical wiring. They will look at sinks, toilets, showers and tubs for current or potential leakage issues. Sometimes they can give tips and pointers as to how to remedy or repair an issue and let you know realistically how severe an issue actually is. If you are my buyer I strongly encourage you to attend your home inspection. The information you receive from the inspector is valuable in understanding what he will end up putting in his report.

2. Pest Inspection (also knows as a structural pest report): The most common misconception that I hear about pest reports is that they are meant to look for rats, mice, cockroaches, spiders and other nuisances. And yes, while those are all technically “pests” that is not exactly what we are referring to. We are referring to wood destroying pests which include termites, mold, dry rot and fungus, and issues that can lead up to wood destroying pest infestation. A pest inspector will run the sinks, toilets and showers and look for leaks- as well as go into the crawlspace (if there is one) to see any stains on the sub floor from previous leaks or termites under the house. They have a long stick they take with them around the outside of the house poking at various locations (mostly in the eaves along the roof line) looking for areas of damaged wood. They DO NOT look at the roof or test appliances or look at the heater, air conditioner or electrical system.

3. FHA appraisal: The appraisal done for an FHA loan is more in-depth than a regular appraisal, but not as in-depth as a home inspection. The appraiser not only evaluates the home from a valuation standpoint but they also look at potential health and safety issues such as broken windows, missing flooring, electrical problems, missing appliances, etc. They will do a “head and shoulders” inspection of the attic looking for any obvious roof leaks or holes. Compared to a home inspection it is more of a “summary” and should not, in my opinion, be relied upon as a substitute for a home inspection.

There are more inspections that buyers can choose- but I will explore those in a future post, as well has how to choose the right people to conduct your inspections.

Buying a Foreclosure? Frequently Asked Questions (That I Can’t Answer)

If you were a fly on the wall for one of my typical showings at a foreclosed home you may hear the following conversation (or a variation thereof):

Buyer: Lacey, how long has the house been empty?

Me: I’m sorry but I have no way of knowing that based on the information in the MLS. I can see if the listing agent knows but there is a pretty good possibility they have never even spoken with the previous occupants.

Buyer: OK…. When was the kitchen remodeled?

Me: Unfortunately we do not have access to that information because the seller of this home is a bank and they have never occupied the property.

Buyer: (sighs) OK….

Other questions I (sometimes) cannot answer:

What is this?

Why is this here?

What were they thinking?

How old is the roof?

How old is the pool equipment?

When was this carpet put in?

Did anyone die in here?

"Lacey, why is this here?"

If I had a dollar for every time I was asked questions like these while showing property I would make enough of a living so that I would not have to actually sell real estate anymore.

To ease your frustration while looking (and mine, lol) here are some things to remember when looking at foreclosures:

• The seller is a bank (or other institution) and they have never seen the home, let alone have any first-hand knowledge of intricacies of when/why certain improvements were done to the home.

• The seller, listing agent and myself will (usually) not know the age of any appliances or other systems such as roofs, windows, heaters, air conditioners and pool equipment.

• How long the house has been vacant is not something that is disclosed by the seller, and the listing agent is not required to know exactly how long the home has been vacant. They may know- but they are not required to know.

• Since the seller has never occupied the home, they will have no knowledge of any deaths on the property

• Experience helps me to explain why oddities in homes are there and what they even are- but many times it is just a guess on my part. Sometimes I am shrugging my shoulders and scratching my head right along with you.

"Lacey, what is this?"

You are probably wondering right about now what the lesson is here? It is very simple- if you are buying a foreclosure it is imperative you exercise your inspection rights. Get everything looked at and or inspected by a qualified professional so you can move in with confidence and not unanswered questions. If you are in the Modesto/Central Valley Area and are looking for a qualified home inspector, check out Welcome Home Services, a FREE full-service referral source for home buyers and sellers offered by PMZ Real Estate. To begin your search for foreclosed homes in the Modesto area, click HERE.

Moving Sucks! 8 Steps To Help Ease The Pain From A Chronic-Mover

You might assume that I know a lot about moving since I sell houses for a living- but you’d be wrong. I know a lot about moving because I have done it many, many times in my life. There is no way around it- moving sucks. There is nothing fun or satisfying about it until the last box is moved and you sleep your very first night in your new home. Here are some tips I have learned throughout my life as a chronic-mover.

1. Be prepared: Get your hands on as many boxes as you can right from the start. You will always need more than you think. Get bubble wrap and/or packing paper for the breakables. If you are going to buy boxes and other supplies Home Depot is a great place.
 
 
2. Don’t put off the inevitable: You know you are moving? Start packing now. There is no reason to put it off. The more you get done before your actual move-out date the smoother the move will go.
 
 
3. Be organized: As you are packing, label each box with the room it will go in at the new place and a simple explanation of what is in the box. Put this on three sides of the box- top, side and end. You WILL forget what is in the boxes so labeling is vital. Also, when your spouse wants to know where something is they won’t have to ask you. Quickly being able to assess what is in the box and where it needs to go in the new house will help the move-in go much smoother.
 
 
4. Start with the non-essentials, finish with the most essential: When you first embark on your packing mission it can seem overwhelming. I always start with the non-essentials and work my way through the house to the most essential items packing them last. I go room by room first packing everything that hangs on the walls, then all the items on bookshelves, mantles, side tables, etc. I then usually move to closets and cabinets- which leads to my next point.
 
 
5. If you haven’t used it in a year (or more)- DONATE IT! As I am packing I have a box (or a pile) of items that we have outgrown and/or no longer need. I do this with clothes, toys, shoes, household items, sporting goods, etc. Charities such as Goodwill, Salvation Army and The Hope Chest (local to Modesto) thrive on donations of household items, and many will even come pick them up from you and sometimes it can be a tax write-off. There is no reason to move items that you do not need anymore so save yourself the trouble.
 
 
 
6. Know when to hire help: Full service movers can cost thousands of dollars. Unless you are moving cross-country or your company is paying for your relocation you will likely not go this route. There are back-saving alternatives, however. In many communities you can just hire the muscle for a few hours to help get those beds and dressers up the stairs. I personally have had great luck finding experienced movers who hire out their services on the side on Modesto Craigslist. It saves time (and our backs). Experienced mover-helpers do it quicker and more efficiently than you or I could ever dream of.
 
 
7. First thing to do at the new place: put the beds together! If you are moving your entire house in one day, as soon as your beds are delivered put them together and make them. Do not put it off- you will be exhausted at the end of the day, so having your already made bed to fall into is the best thing you can do for yourself.
 
 
8. Don’t be in a hurry to unpack: If you have followed suggestions 3 and 4 your essential items (dishes, cups, silverware, sheets, etc) will be clearly labeled and easily accessible in the room in which they belong. Unpacking everything else can come later. Taking it slow when you unpack can allow you the time to be thoughtful about where you put things saving you time and frustration later. When I do start unpacking I always start with my kids rooms. They are still young, so making them feel at home in the new place is typically one of my first priorities.

With a little planning an organization you too can make an otherwise painful and daunting process a little more pleasurable.

Are you ready to move? Click HERE to start your search!

Doing a Short Sale? Start Digging Through Your File Cabinet Now

It is no secret the market in the Modesto and Central Valley area is flooded with short sale listings, and there is not an end in sight- at least any time soon. If you are considering a short sale it is important that you separate yourself from the rest of the sellers and show your buyer (and their agent) that you are a motivated seller who is taking the necessary steps to close the transaction in a timely manner.

A successful short sale requires a partnership between the seller and listing agent. Both need to be fully committed to provide everything the lender requests to successfully close the transaction. Many sellers do not realize they need to be much more involved than simply accepting an offer.

As the seller doing some preliminary gathering will help expedite the process, so I recommend doing as much of it as possible before your lender has a chance to ask for it. The extent of the documents required varies from lender to lender, but here is a list of things you may need to provide to get an approved short sale.

• Pay stubs- they will want to see recent pay stubs for all borrowers/owners and often they will require you to send updated ones as the process continues

• Bank statements- most recent for checking and savings accounts, all pages

• Tax returns- two most recent years with w-2s and all schedules

• Profit and loss statements- if you are self-employed you will need to submit a P&L

• Hardship letter- a letter to your bank explaining why you need to be granted a short sale

• Divorce related documents- if you divorced since you took out the loan on the property and are using divorce as your hardship, they will want a copy of your divorce decree.

• Grant deeds- often related to divorce, if one of the original borrowers is no longer on title but still on the loan they will likely want to see a copy of the grant deed in addition to the divorce decree.

• Income- if you have other income besides your job you will have to disclose that- rental income, alimony, child support, unemployment, disability, etc.

• Debts and liabilities- they will often ask how much you spend (monthly) on everything from daycare to cable, including car payments, credit card payments, food and leisure and alimony/child support. They use all these numbers to calculate your debt to income ratio.

• Assets- they will ask how much you have in savings, 401(K) and IRA accounts. They will ask about other real estate you own and how much is owed on it relative to it’s value and personal property such as vehicles, boats, RVs, etc.

• Rental agreements- if you own rental property they will want to verify your rental income with copies of your rental agreements with your tenants.

Short sales are definitely not easy, and can often be emotional for the seller. With some organization and the right agent on your side to walk you through the process you can get through it successfully with as little frustration as possible. If you are considering a short sale and have more detailed questions please do not hesitate to contact me HERE. Your trust is valuable to me so your information and situation is always held in the strictest confidence.

4 Things to Consider If You Are A Frustrated Buyer

I hear stories all the time about friends of friends who are trying to buy houses and the problems they run into. In my market in Modesto the most common problem I hear about is buyers writing offers over and over again just to have them all rejected by sellers. Here is my advice to buyers who are trying to buy but are not getting their offers accepted.

1. It is not necessarily your agent’s fault

While that statement may be shocking to some, it is true. The agent is the typical scapegoat for frustrated buyers. Ultimately though we can only be as good as you let us be. What I mean by that is we are your agent, not your attorney- meaning we act on your instruction and do not (and cannot) make decisions on your behalf. If you are giving your agent bad instructions and not listening to their advice, you may be getting less than optimal results.

2. OK, so maybe it is your agent’s fault

Let’s say it becomes apparent you are working with the wrong agent. It happens- sometimes people don’t “fit” and that is OK. The correct, polite and appropriate thing to do is to be an adult and thank them for their help thus far but because (insert your reason here) you are choosing to not work with them any longer. Trust me- we can take it. Speaking from personal experience, that is a pill much easier swallowed than finding out you told some elaborate lie to get out of the relationship.

3. It is not me or my agent. Now what?

The most important thing you can do if you are at a loss as to why you cannot get an offer accepted is this: Reevaluate your price range. Most people are inclined to look at homes that are at the top of their price range. This gives them little room to be competitive when asking for concessions such as repairs and closing costs. What I often suggest is to step down a bit in price and become the buyer with the upper hand against the competition who are maxed out on price. For example, if your max price is $150,000 and you need your closing costs paid, you may want to step down a bit to the $140’s so you have more room to offer more money if need be. The second most important thing to do is OBJECTIVELY look at how the offers you submit are structured. Look at them as if you are the seller looking at an offer from a buyer.

These are key points to consider:

• Price: Is my offer reasonably within asking price for my market? Know your market. Is it slow? Do homes sell for 90 percent of list price or is there an inventory shortage and homes sell for 105 percent of list price?
• Escrow term: Am I asking for too long of an escrow, or not allowing enough time for short sale approval? Saying up front you are unwilling to wait any less than 60-90 days for a short sale approval is the surest way to have your offer rejected.
• Repairs/Inspections/Certifications: Am I asking for repairs, inspections and certifications to be done at the seller’s expense? This turns off a lot of sellers, especially in a short sale situation. You should never expect a short sale seller to pay out of pocket for any repairs or inspections. A savvy agent will know this.
• Closing costs: Am I asking for an unreasonable amount for closing costs? Most good lenders can do a loan for a buyer with a 3% concession for closing costs. If a buyer needs 4 or more percent, something is wrong and they should get a second opinion on their financing. Remember: Anything you want the seller to "pay" comes off of the seller’s bottom line and is going to be viewed negatively by the seller.
• Do you have a good loan pre-approval? Having a pre-approval from a local, reputable lender speaks volumes for your status as a buyer. Your letter should say that your credit, income and assets have been verified, state your mid-FICO scores and the only contingencies should be a satisfactory preliminary title report and property appraisal. It must be dated within 30 days from when you are making your offer and must be for at least the amount you are offering on the home.

4. Last, and certainly not least- always put your best foot forward

In a market where almost every property has multiple offers and you are dealing with institutional sellers it is imperative that every offer you make be your best offer. Many sellers are not countering anymore, they simply choose the one they feel is the best and move forward. You may not get the chance to offer more money or put more money down or pay your own closing costs. So, if the house is one you cannot live without do not leave anything on the table. Come up with the best possible price and terms you can and hope for the best. You won’t always win that way but at the very least you will know that you gave yourself the best possible chance.

Stay tuned to my blog for more tips on buying real estate in Modesto. To start your search now, click HERE.

Buying a Short Sale? Patience is a Virtue… 5 Points to Know Before You Start

If you are entering the housing market, you will undoubtedly be looking at short sales. Hopefully you are working with an agent that knows the process enough to be able to effectively educate you, the buyer, on how the process will work- beyond the basic definition of a short sale. What I am finding unfortunately as a listing agent is an overwhelming contingent of agents who do not know what they are doing which results in frustrated buyers and cancelled contracts. If you are buying a house that is a short sale- here are a few things to keep in mind.

1. Ask your agent if they have ever listed or sold a short sale

Why is this important? Short sales are like snowflakes. No two are the same. Learning about them from a seminar or a book pales in comparison to actual real life experience. There are a litany of pitfalls that can occur, so having someone experienced on your side can help get the transaction closed. Do not be afraid to prequalify the listing agent, either. Many, many agents are extremely successful in closing short sale transactions and have teams that help them do so. Many are also not so experienced, so knowing who is working the other side of the deal can offer a level of comfort as you embark on the transaction.

2. Know what you are getting yourself into

It is often joked that short sales should be called long sales because they can take so long. I recently had one take me NINE MONTHS to close. However on the other hand I have had some close in 30 days. If you know you have to move in 60 days, you may not want to be looking at short sales at all. Do not be surprised when 4 weeks have gone by without an approval from the bank on your offer. It does not mean (usually) the listing agent is not doing their job- it just means that you are number 40,000 in a line of 60,000 offers waiting for approval.

3. Know what questions to ask

Ask your agent which bank is handling the short sale and how accommodating they are (generally), if there is a first and a second, and if the seller/agent has already initiated the process with the bank. All of these factors can contribute to a fast (or slow) transaction.

4. It does not matter how good your offer is, the process is still the same

I have been hearing a lot lately from buyers “well I wrote a cash offer, why don’t they just stamp it approved and sell me the house and not make me wait”. The quick answer- they don’t care how you are paying for the house. They still have to justify to themselves and the primary investor (the owner of the loan) that it is worth them forgiving sometimes upwards of $100,000 in debt for the seller. This process includes delving deeply into the financials of the seller- paystubs, bank statements, tax returns, letters of explanation, etc. While simultaneously determining the value of the property. The bank is just as much looking at the seller and why they are doing a short sale as they are what you have offered for the house.

5. Do not ask to contact the seller‘s lender yourself, no matter how frustrated you are

There are strict privacy laws and policies in place when it comes to short sales. As a listing agent on a short sale we are granted special permission by the seller to speak with their lender regarding the short sale. Along with this we are often privy to information why they are doing a short sale in addition to their financial records. Many buyers think they can “move the process along” by calling the bank themselves and doing what they think others cannot get done. While their heart is in the right place, it is just not going to happen. Even the buyer’s agent is significantly out of the loop when it comes to these issues. They cannot communicate with the short sale lender either and have very little control over what transpires between the listing agent, the seller and the short sale lender.

The bottom line- the point I cannot emphasize enough- is to be patient and know what you are getting yourself into. Short sales are not for everyone, so taking your situation into account can save you lots of time and frustration. If you have more specific questions about buying or selling a short sale in the Modesto, Stanislaus or San Joaquin County areas, please feel free to contact me.

House Flipping? The Devil is in the Details

As a Realtor who works with a lot of buyers in the Modesto area I have seen many, many “flipped” homes first-hand and could write a book of all the ridiculous things I have seen flippers try to pass off to potential buyers. This blog post in fact is inspired by two homes I have seen in the last month where flippers have made tragic mistakes and a recent Twitter conversation I had with a colleague, @Jeff_Kershner.

I am going beyond the basic suggestions I usually give to potential flippers and delving into the details of the property itself and how what you do (and do not do) directly affects your resale.

Here are some tips:

DO NOT alienate your target market:

• If you are flipping a house that is double your local median sales price (or more) then you need to realize your target buyer will likely have more expensive taste than a buyer at the median price range, so don’t use average (cheap) materials. This is a great segway into my second point.

DO NOT cut corners:

• Putting new flooring in the kitchen? Great! Don’t be too cheap/lazy to take out the old flooring, because when the newly laid floor is higher by ¾” than the adjacent floor it is going to turn buyers off. Why? It is not an easy fix! Who wants a tiny step to trip over when they walk from the family room to the kitchen?
• If you have never laid tile- don’t make this your first time. If you are not comfortable doing it and your only knowledge of the subject is from watching HGTV please hire someone instead.
• Installing granite counters? Fantastic! DO NOT put the granite on 30 year old cabinets that you painted. While painted cabinets can look very nice, it is a very difficult job to do and if not done properly by someone who knows what they are doing it can look very, very bad. Spending money by putting slab granite counters on old cabinets is a complete waste of money for you the flipper because the granite has no value to the potential buyer.
• Do not remodel the kitchen but ignore the appliances! Sure, they may only be a few years old- but they are still used. A bright, shiny kitchen can be completely ruined with appliances that are older than everything around them or mismatched. New dishwasher but old oven? New stove but old microwave? Equals bad news for buyers and bad news for your sales price.
• New carpet makes everyone happy. Unless it is uber-cheap carpet. Everyone knows what cheap carpet I am talking about. It is beige, has no variation in color and has a slight sheen to it and feels like it is about a quarter inch thick when you walk on it. Granted, it is new carpet. BUT savvy buyers will know that the work entailed in moving their entire house out to replace the carpet in a year or two is totally not worth having it in the first place.
• Do not ignore lighting! Proper lighting is an often overlooked yet very important aspect of home remodeling and staging. Older homes are usually lacking in proper lighting, so adding some recessed lighting here and there along with stylish overhead fixtures can go miles in making the home seem brighter and more contemporary.
• Do not leave the old toilets. Ever. Toilets are cheap and relatively easy to install. No amount of cleaning can equate to having a brand new toilet in your bathroom when you move in. It is a cheap, easy way to really brighten up a bathroom.
• Do not overlook the little things. Light switches, switch-plate covers, outlets, faucets, vent covers and doorknobs are one of the most overlooked aspects in remodeling/flipping. They can be replaced inexpensively and easily and although seemingly inconsequential, have huge effects in making homes seem CLEAN and fresh.

DO NOT fix only what you think people can see- and not fix what you think they cannot see.

• Leaving old water heaters, air conditioners, heaters, electrical systems and wiring will not make it past a savvy buyer and a good home inspection. At the very least have the items serviced or inspected by a qualified professional so you know they are working properly and are not surprised with repair requests during escrow.

DO NOT assume buyers will be willing to “just live with” all the little things you have chosen to not repair at all or repair properly.

• Although the Modesto area suffers from a lack of inventory it by no means indicates desperation on the part of buyers. This is not market specific, either. Buyers are becoming smarter and more aware, so as a seller you should too. Taking all factors into consideration, even ones you thing are “small” will ensure you get an optimal sales price in a reasonable amount of time.

House flipping is not for everyone, so if you are thinking about delving into it make sure you do your research and consult with a qualified Realtor throughout the process.

Click HERE  for Jeff Kershner's great blog on pitfalls to avoid when rehabbing/flipping.

A Dose of Real Estate Wisdom From Jerry Maguire- And No, I'm Not Kidding

OK so being your Realtor may not be quite as dramatic as Jerry’s experience in this classic scene from Jerry Maguire, but the man is making a very good point. As your Realtor, I have a fiduciary duty of the utmost responsibility to help you achieve your set-forth goals- much like a sports agent does for an athlete- I look out for your wallet.

What I cannot do though is read your mind.

What ever life-changing events may be influencing your current situation are not entirely my business. However, to a certain extent knowing WHY you are doing what you are doing helps me uphold my fiduciary duty to you so you make the best decision possible for your given situation. Here is an example: You hire me to sell your home. When I ask you the reason you could say any number of things- I want to change school districts, I want to be closer to work or family, I want a bigger or smaller house. None of these scenarios imply a sense of urgency. Therefore I suggest a price based on those goals. The problem arises though if the reason you told me you are selling is not the REAL reason. The real reason for hiring me is that you can’t afford the house anymore. The bank is going to default on you any day now if you don’t get it sold QUICK. This changes the pricing and marketing strategy considerably.

There is now a sense of urgency that we need to accommodate for. My advice to you in the second scenario, had I been aware of it, may be different than in the first- and keeping me out of the loop may result in you not achieving your goals. If I am not aware of the REAL situation, I cannot help you to my fullest ability.

This is a very rudimentary example, of course, but life changing events such as financial hardship, divorce, marriage, having children, etc. are all influencing factors when it comes to buying and selling real estate. The more you tell your agent, the better we can help you.

I know why buyers and sellers withhold information- and I can’t say I blame them. Sometimes it is to save face, and sometimes it is because they are private and do not want others to know their business. This is where it becomes vital to hire a Realtor that you are comfortable with and that you are confident has the experience and know-how to help you navigate whatever your situation may be. Trust me when I tell you if you are working with someone who has been in the business a while we have heard it all. There isn’t much you can say to surprise me anymore. I have held clients hands, hugged, wiped away tears and calmed fears more times than I can count- and I don’t intend on stopping any time soon.

So, in the words of Jerry Maguire, “help me help you”- or maybe I should say “LET me help you”.

Having Trouble Saving For Your Down Payment? This May Help!

Let's see if this scenario applies to you:

• You are a renter
• You pay your rent on time every month, along with the rest of your bills
• You have decent credit
• You live comfortably at your current rent, but have difficulty saving money

Many people in this situation really want to buy but have trouble saving money- and that does not mean that they cannot afford to buy or are not good candidates for home ownership.

I recently learned of a program offered by Lauren Morris at Ambeck Mortgage in Modesto to help people specifically in this situation. It is called the Platinum Program, and it offers a 3 percent grant to buyer to use towards their required minimum 3.5 percent down payment on FHA loans. This means as a buyer you only have to come up with .5 percent of the purchase price ($500 on a $100,000 purchase for example). As the buyer you end up with a 30 year fixed FHA loan, and since the money is a grant (gift) it never has to be repaid.

Since values in our area are so good right now, may people can find a home as nice or nicer than the one they are renting and pay the same or LESS than their previous rent!

If this is of interest to you, please contact me and I can forward you more information on the program and the contact info for Lauren. To get your property search started NOW click HERE!

Memorial Day- A Small Token of Appreciation

I want to take a moment to diverge from real estate talk for a bit to say a little about Memorial Day. I think we all know it is a day to commemorate our fallen soldiers so I am not going to bore you with definitions and history. What I do want to say though is this: As I get older and since I have become a mother I see and feel the importance of what our soldiers have done and continue to do for our country and I would like to encourage more people to do the same.

Last year on Memorial Day weekend my husband and I were in San Francisco celebrating our 10^th wedding anniversary. Although we have always frequented the city, neither of us had ever visited The Presidio, let alone were aware it is the home to one of our National Cemeteries. The cemetery sits on a hillside near the approach to the Golden Gate Bridge with sweeping views of Crissy Field below and Alcatraz in the distance. The hillside is covered in green grass dotted with bright white marble headstones aligned neatly in rows with a road leading to the hilltop. We arrived after a Memorial Day procession so the park was nearly empty, but what we found was one of the most breathtakingly beautiful sights I have ever seen. The entire cemetery- the entire hillside, was covered in American flags. Each grave site had a flag carefully placed in front of it to honor the soldier who was buried there and the road leading to the top of the hill was lined with larger flags.

I have been back since, and the cemetery is always a beautiful place, but nothing compares to the way it looked that day. The decorations are merely a small token of appreciation compared to the debt the soldiers paid to be buried there, so this Memorial Day we all need take a moment and think of the men and women who have sacrificed their lives for our freedom and be thankful we live in this great nation.

For more information and directions to the cemetery, please visit  San Francisco National Cemetery 

Don’t Sell Yourself Short- The Emotional Aspects of a Short Sale

I have been noticing lately a significant piece of the puzzle missing in the short sale debate- an overlooked, yet vital consideration when making the decision to short-sell or not. Sure, tax and credit consequences are important. There are many factors to consider in regards to those two issues. What I see missing however is the mental, emotional and social aspects of making that decision.

Many homeowners who are facing hardship such as divorce, unemployment or underemployment want to stay in their home but simply cannot keep making the payments. The stress of living this way has ripple effects throughout their lives. They may take a second job, work more overtime, sacrifice activities with the kids and other family all in the name of making the house payment. Financial stress can effect relationships with spouses causing undue tension in otherwise healthy relationships. Ultimately they are consumed with keeping the house and ’doing the right thing’ and paying the debt they agreed to pay.

What I have been seeing though is the stress and burden of living this way often clouds owner’s ability to see the light at the end of the tunnel. They are trying so hard to do the right thing but are doing it at the expense of their sanity, their marriage and their blood pressure.

Once the difficult decision is reached to do a short sale I have seen first hand the positive visible effects on sellers. The burden is lifted, the clouds of stress pass and they are able to focus on their family, their relationships and moving forward with a fresh start. If you are in this position, do not sell yourself short. Do what’s right for you and your family.

For questions and concerns regarding short sales, please do not hesitate to contact me.

UGH! My Landlord is in Foreclosure. Now What?

A question that I am asked frequently by frustrated renters is “my landlord is getting foreclosed on, do I still have to pay my rent?” The short answer is yes, as frustrating as that is. Paying your rent on time every month only to find out your landlord is not paying the mortgage on the house is undoubtedly a total drag. However, you still have to adhere to the contract that you signed with the landlord- as long as he or she still owns the house. Once the house goes back to the bank after trustee sale he or she no longer owns the home and does not have the right to collect rent from you. At this point a liaison from the bank will likely make contact with you. If you are ever in this scenario I strongly recommend doing some due diligence so you know your rights as a tenant because there are special rules that have been enacted to protect you.

Location, Location, Location!

The most important lesson I try to teach my first time buyers is that location is key. It is the one thing that you cannot change about a house- and if you are buying your first home with the intention of moving up in 10 or so years you will need to consider your ability to resell it.

Trying to buy your first home can be frustrating- especially in a market where there is lots of demand and not enough supply. What ends up happening is that buyers grow impatient and they end up compromising their needs in an effort to get into a home a little quicker.

I can always tell when a buyer is growing impatient and starting to think about compromising because the conversation usually goes something like this:

      Buyer: I really love this house! And it is so cheap!!

      Me: Yes, it is very nice and exactly what you want.

Then, before I can begin my next sentence we are interrupted by a blaring train horn and the ding-ding-ding of the crossing arms as the train blows by about 200 feet behind the house.

      Me: So what do you think about the train?

      Buyer: I think we could get used to it. I really love this house. And it is so cheap!!

Obviously everyone’s needs are different, and everyone’s ability to tolerate trains and other nuisances is different- but here are some things to consider before you let impatience get the best of you.

• You think the old phrase “location location location” is a joke? I’ll give you a clue- it’s not. The most crucial consideration when buying a home is by far the location.

The answer? Be very thoughtful about where you buy. Think about where the house is in relation to work and your commute. Do you want to add 20 minutes each way to work? Do you want to make your kids change schools? Are you familiar with the area and what surrounds it? If you are unfamiliar with the neighborhood, drive through at different times of day and different days of the week to get a feel for what your neighbors are like. A neighborhood can be vastly different from 11am on a Wednesday to 11am (or 11pm) on a Saturday.

• Once the newness of being a homeowner wears off, all the little things you knew you couldn’t change but thought you could ‘live with’ will become huge, annoying thorns in your side- and guess what? You can’t do a darn thing about it.

The answer? REALLY think about how the ‘little things’ that you notice before you buy will affect your day to day life after you buy. Think about living with that train day in and day out. Think about the neighbor’s barking dog or teenage garage band practicing every day after school when your 2 year old is napping.

• I found the perfect house and it is in a great location. Now what?

The answer? Think about how the house is situated. If your house is on a busy corner you can never change that. When you want to sell in 10 years it will still be a busy corner and your resale value will likely be affected. Don’t let a pretty interior or awesome pool blind you against obvious deterrents such as traffic noise, busy parks and schools, or fire stations.

If you are buying with the intent to resell or move up in the future- what appeals to you may not appeal to the masses. So if you pay attention to the basics when you buy you will have a leg up on the competition when you sell.

Stay tuned to my blog for more buyer tips!