Marsha Dashiell's Real Estate Blog » Folsom Lake

Is this a great time to buy a home?

Marsha Dashiell — Thu, 27 Jan 2011 20:41:44 +0000

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I found this article in the Wall Street Journal! Found this to be very interesting. Especially if you are hesitating to buy! Mr. Warren Buffet believes that the Real Estate market will bottom out this year. Make sure you are in a position to capitalize. Rates are historically low, and there is so much inventory from forecluseres and short-sales that every wise investor is taking advantage of these situations. The following is a brief article found in the Wall Street Journal:

The housing market still looks pretty bleak: There were a record one million foreclosures last year, home prices are still falling in many regions and the number of “underwater” properties is at a record high.

And things don’t look much better in other areas of real estate. The number of construction jobs continues to decline, even as other parts of the economy have added jobs. And mortgage rates have moved higher as long-term Treasury yields have backed up during the past few months.

Basically, the real estate market remains a mess.

Real estate encompasses a wide range of markets – homes, apartments, hospitals, office buildings, strip malls, dormitories and other properties. But for our purposes, let’s focus on residential real estate, or homes. Here are four reasons to think residential real estate might represent a bargain – with one big caveat.

Everyone hates homes.

Homes are probably the most hated asset class in the country. That’s what happens when a bubble bursts. People avoid thinking about the value of their home. Sellers moan about no offers, buyers gripe about impossible lending requirements.

Hatred of an asset is often the precursor to contrarian interest, and being contrarian is at the heart of many investment strategies. To paraphrase Warren Buffett, be fearful when others are greedy and greedy when others are fearful. Mr. Buffett backed that idea when he invested in the stock market in the teeth of the financial crisis in late 2008 and early 2009.

Of course, being contrarian for its own sake isn’t wise investing. Gold was hated for years (“dead money”) before it recently became an attractive asset class. Still, a lot of smart ideas begin with the question: What does everyone hate?

Smart people are buying real estate.

This cohort is led by John Paulson, the hedge-fund manager who made $20 billion betting against the housing bubble. Last fall he said in a speech: “If you don’t own a home buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

Why is Mr. Paulson so adamant? Because he believes long-term interest rates are not going to get much lower. They have, in fact, risen since he gave that speech, but they remain remarkably low by historic standards. Low rates and the expectation that home prices will rise is his argument. For his part, Mr. Buffett has predicted the housing market will bottom this year.

Real estate performs well during inflation.

There’s no inflation these days, but when buying a home one should take a longer view. And the longer view shows that the economy has enjoyed a disinflationary period since the early 1980s. A number of folks think that cycle is slowly reversing itself.

If that’s the case, then convention would argue for holding assets that do well in an inflationary environment. That includes Treasury Inflation Protected Securities, commodities and real estate. Remember that during the stagflation nightmare of the 1970s, real estate had a strong run.

Inflation isn’t a significant issue in the U.S., but it’s a growing problem elsewhere. China and India have taken steps to fight inflation, the euro zone is getting flickers of inflation and the U.K. has had oddly higher prices (above 3%) for an extended period of time. If the cycle is slowly turning, real estate makes more sense.

Demand may be coming back.

Supply isn’t as out of whack as it used to be. At the end of November, home builders reported 197,000 new homes on the market, the lowest level since 1968, according to Yardeni Research. The National Association of Realtors reports that the inventory of existing homes for sale fell 4% to 3.71 million homes, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

Those aren’t pretty numbers, of course, but they are moving in the correct direction. And that may be a reason that many home builder stocks, such as KB Home ( KBH: 15.28*, -0.26, -1.67% ) , Hovnanian ( HOV: 4.74*, -0.06, -1.25% ) , Pulte ( PHA: 23.97, +0.05, +0.20% ) and Toll Brothers ( TOL: 20.68*, -0.10, -0.48% ) , have come off their lows in the past several weeks.

It’s all comes down to jobs. There are a zillion caveats to any positive home thesis, but the big one is unemployment. If the economy is not creating jobs, the chance of a rebound in housing is diminished. It’s hard to buy a home without a job, and folks who aren’t working don’t want to take long-term risks.

The job market is still struggling and the debate is hot about when it will recover. Optimists see recovery this year. Pessimists see pain for several years ahead. How this X factor gets resolved will say a great deal about whether housing will rebound.

Published January 18, 2011

Short Sale Process

Marsha Dashiell — Mon, 17 Jan 2011 23:18:59 +0000

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Short Sale Process
Short sales are becoming even more common due to the huge increase in the number of foreclosures which are having an effect on home values across the nation. Due to the current subprime and anticipation of the more ARM resets, many people are considering short sales but are not clear on the short sale process and how it can be used to avoid foreclosure. A Short sale is basically a process which allows the borrower to sell the home for less than what is owed on the mortgage loan and allows the seller to avoid having their credit score hit with a foreclosure penalty. Although, there is still a penalty given for short sales, the time to buy a home is shortened with a short sale versus a foreclosure home. A foreclosure can stay on your credit report for up to 10 years while a short sale can range 3 to 5 years. Depending on when you plan to get short sale completed, the IRS may consider your debt forgiveness as taxable income.

The Short Sale Process for Sellers:

1.Contact the lender to discuss the chance of a short sale of the mortgaged property and determine the lender’s process for completing a short sale, successfully.
2.The borrower is to send a lender of hardship to the lender. The letter is to include all financial difficulties, in which the lender can research to validate the seller’s financial situation. Additional documents are to be included with the letter, including bank statements, investment accounts, paystubs and other financial records.
3.A lender will review the settlement package and consider forgiving the remaining loan balance and all expenses (property taxes, etc.), real estate commissions and other expenses associated when closing.
4.A BPO will be ordered by the mortgage lender to determine a Broker Priced Opinion (BPO) to examine the prices of the home in the market by looking at comparables.
5.The lender then will review the purchase agreement and determine if the real estate commission is acceptable.
Short sales can be quite lengthly and need a good real estate agent, a lender willing to work with you on the loan and a buyer.

Success Rate? Success rate can range from 6% to 50% depending on the lender holding the loan, how many loans are on the house and the Realtor’s experience. There are many factors involved in making a successful short sale. The Realtor has be prepared and present to the bank all the required documents to prove to the bank that the owner can no longer afford the house and also prove the home is worth less than the surrounding market.

Tips:

•Be ready for anything. A short sale can be finalized with the bank in 2 weeks or take as long as 5 months.
•If time is an issue. Stay away from short sales, they are unpredictable.
•Be aware that the owner is still living in the home and depending on their situation, they may take things from the home prior to closing. Make sure your realtor is on your side.
•Find out how many loan the borrower has on the home and how much they owe.
•Continue to take additional offers while the bank is reviewing an accepted offer to keep your options opened. The buyer may have an addendum that allows them to back out at any time.
•Consult an accountant, lawyer or real estate with your important decision in deciding on a short sale.
Short Sale Buyers
The Short Sale Process for Buyers:

1.Hire a Realtor to protect your best interests, especially when dealing with short sales.
2.Search for Short Sale Propeties
3.Make an offer on a short sale property and include a Short Sale Addendum which allows you to back out prior to and after a lender has sent written approval of the short sale. This way you can continue looking at homes if the short sale is taking too long or you can back out at any time if something better comes onto the the MLS.
4.Make escrow to start AFTER the lender has submitted written approval to your agent before getting your earnest money tied up in possibly many months into a limbo account.
5.Get an appraisal and home inspection AFTER the lender has approved your offer.
Tips:

•Many short sales fail because the mortgage company is unfamiliar with the local market. Don’t expect a quick answer as they research the comparable home sales.
•The lender may request the real estate agents reduce their commissions to minimize costs.
•The lender may demand the seller to sign a promissory note to pay back the short sale. If the seller refuses, it may sour the deal.
•The mortgage company does not want to own the property, that’s the last thing they want to do.
•Make sure to include an escape provision if the process takes longer than you want or a better property comes along.

Why move to Placer County???

Marsha Dashiell — Tue, 20 Oct 2009 00:14:38 +0000

Out of town people ask, “What’s so great about your area?”

Are you going to be working in the downtown Sacramento area? Live in South Placer County, have a small commute and a great quality of life!

Do you like the outdoors, lakes, rivers, hiking, horseback riding, cycling, rafting, kayaking and motorcycle riding to name a few? That’s another reason to move to Placer County! Did you know that Auburn is named The Endurance Capital of the World? Oh, did I mention that from Roseville you can be snow skiing in about 1 hour.

Worried about your kids getting into a good school district? Placer County has some of the best schools in the state.

How about shopping? The Roseville Galleria has completed their expansion and now features over 125 different services. The Fountains opened end of 2008 and features a really nice “downtown feel” with many great shops and eating establishments. If you like Whole Foods, we have the Mother Ship of Whole Foods also located in The Fountains.

Property values have adjusted in the current market to make it affordable to obtain home ownership for first time home buyers and a great area for move up buyers as well.

If you’re considering relocating to this area you owe it to yourself to come for a couple days and enjoy all the great things that Placer County has to offer!

westfield.com/galleriaatroseville/