Part 2 of Low Appraisals

For those of you wondering......

I reviewed the appraisal at length with lender this morning. He and I both feel it is valid and that appraiser actually did pretty good for us.  Keep in mind the offer was written 4 or 5 months ago!

The listing agent has contacted the SS negotiator and is asking for an extension for close of escrow and wants to have their own appraiser do another evaluation of the property and the rebut the current one to get it closer to purchase price.

Keep on checking in for the SS appraisal status!

California Hot Spot is Cooling!

Still working on yesterdays low appraisal dilemma.....reviewing the appraisal with additional comparable properties.....will keep ya posted on that one!

But, today I was pleased to read this nice little article:

Foreclosures Decline in Hot Spots

California, we're such fast people, we are one of the highest foreclosure states and one of the first to get hit so hard. Of course, everyone wants to live where we get sun, rain, snow and sun again, all in one month!

But, it was nice to read that our foreclosures had eased up and the other side of the country had increased. Really nice to read!

Low Appraisals

My clients have been very fortunate not to have had much trouble with low appraisals. I've had several buyers that the appraisals actually came in higher than the agreed purchase price. Only once, until today, did an appraisal come in less than purchase price. That case, both seller and buyer were willing to split the difference....all good.

Today's scenario is different. My client is doing FHA financing, low down-payment. Not a ton of cash in the bank and the appraisal came in at 92% of agreed purchase price. And, drum roll here.....it's a Short-Sale (SS)......

Bummer......maybe......

The lender on this SS has been challenging to say the least. They are losing a lot and there is a second lien holder that would seemingly rather go to foreclosure than not stomp their feet and demand more.

My client has stretched as much as possible and there just isn't any further stretch room.

So, the bank should just come down, right? You'd think so. They are losing their infamous shirt already, what's another few thousand so as not to take another home into their lovely foreclosure inventory?

I've discussed it with my clients lender, he doesn't think the appraisal can be revised based upon the comps that were used. I reviewed the 32 page document and I think the appraiser did the best they could with what they had. The listing agent? Hmmm......they seem to think some miracle can happen because they don't think the bank will budge.

But, here is more fuel for the fire under the SS lenders derriere.....

1) It's an FHA loan and the property will only allow FHA financing. So, if another buyer comes along, they will be FHA, and therefore, their lender will click a few buttons and Wa-La....they will see the appraised value....and won't lend towards anymore.

2) If they can't do conventional and they can't get an FHA loan in for more....that leaves 'Cash Only' in the remarks....and we know that means someone is coming in waaaay under list price because 'Cash is King', at least in a buyers mind frequently.

We shall see what happens in the next couple of days. There are so many reasons for the bank to make this go through at the appraised value.....and there are many financial reasons why they may not.

Keep an eye out for a post on the outcome.......



Copied and Pasted

One of my favorite mortgage brokers sends out a 'Market Recap' regularly. I read them, trash them, forward them if they are worthwhile. The one I received yesterday was good. I've copied and pasted the end of it for my blog fans to read. It talks about good or bad news, Real Estate is a good option for many. I'm one of the many, are you?

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Why Real Estate?

Everyone likes real estate, whether what's constructed on it serves as an abode or an investment. Real estate is tangible. Unlike stocks and bonds, real estate can be touched, handled and improved. Real estate provides “psychic revenue.” There is a pride of ownership that comes with real property that doesn't come with other property.

Financial media are rife with articles on why owning residential real estate isn't such a good idea. They point to arguments on how real estate decreases mobility or how much it costs to maintain. The articles have some validity, but they are often marked by glaring omissions. Yes, real estate can limit mobility in a slow economy, but it has always been that way. There is nothing new to this point.

Most of us have rented and owned residential real estate; we would argue that most of us prefer to own. When we own our house, it feels like a home – that's the psychic revenue. Value matters, to be sure, but if the scales are close after weighing the renting/owning choice, they still tend to tilt toward owning. It's important to keep that preference in mind when others are trying to convince us otherwise.

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Are you one of the many ?

Hatin' the Realtor

Was doing some of my usual reading this morning. Stopped after LA Times usual reads and went to Inman News for Realtors.

The article is about Overcoming Realtor Hate and how to change your perspective. It was directed at Realtors that may be feeling the hate from clients and associates in the business. You can read the full article via the link below:

Overcoming Realtor Hate

I had the worst Real Estate situation of my almost decade career yesterday where an angry seller started the conversation with "I don't hate you, but...." It got progressively worse, but the reason I share is to let you know that it was his problem, nothing I had done. Truly just a situation he was hating and frustrated and took that out somewhat on me.

Hatin' the Realtor? Ugh!

If there is one thing I know it's not that they hate the Realtor, it's just that they are unhappy with the situation. And, it's our job to keep the situation under control as much as humanly possible. My oldest son thinks I'm too much of a control freak, but it sure has helped me in my career!

So, the buyer doesn't do what they are supposed to do? Guide them. The escrow officer missed a document? Yell? Nope, help them get it in the file. The seller isn't allowing access as readily as you'd like? Find another way.

There is more than one way to skin a cat, and there is always more than one way to get the deal done. And, the better we Realtors handle it, the less Hatin' will be going on.

A successful career depends on it. Whatever happened to Realtor so-and-so? Who cares they were 'Ah-hatin' Realtor'!

And, it follows the same in most every business where you deal with the public and other people, 'Bees with Honey, not Vinegar'

Yep, just like my momma told me.....



Expired Offer?

Working with sellers right now where one is lagging behind in responding to a buyers offer.

The top of page 8 on the RPA-CA (California Residential Purchase Agreement) states, unless changed by buyer, that the offer expires after the 3rd day of submission.

So, now we are at day FIVE, what happens with that offer? Does the buyer have to write another one?

Generally not. We agents are kind of used to it due to the amount of REO's we have in inventory. Even the SS's lag behind in response time.

As a listing agent, I will prepare a counter offer referring to that original buyers offer. It is up to the buyer if they choose to accept it, re-write, counter the counter, or reject.

At this point, in this market, the problem with not responding to the offer in a timely manner is that those buyers will continue to look, most likely, and may find another property.

Until all parties have signed on the 'dotted line', we don't have an agreement.

Could we possibly get a better offer while we're waiting for seller # 2? Maybe, possibly. But remember what your momma always told you? Or maybe it was your grade school teacher?

"A Bird In The Hand Is Worth Two In The Bush!"

Stats of the Year!

I don't do the stats for my blog on a regular basis, but being today is the first business day of 2011, thought I'd let you know the following:

In 2009, yep, year before last, the total number of homes sold was 3397.

And, as crappy as we all think the market is due to the devaluation of home prices, homes are still selling, and plenty of those are standard sales.

In the last year of the first decade we closed sales on 3297. Weird huh? I actually ran it twice since it was exactly 100 less than 2009.

And of those, 859 were REO's (foreclosed). 943 were noted as SS's (short sales). 55% of our homes sold were bank involved. Either REO or SS, banking institutions were involved more than just the new buyers loan. But, 45% were standard sales, sellers that had equity.

As of this morning, we have 1229 homes, condos and townhouses included, available for sale. That would make one think we have inventory for just a few months.

I didn't calculate out how many are REO/SS, it is probably about the same as it's been for awhile now. Approximately 1/2 of the inventory.

What does all this mean? To me, hold your chin up now, a stable market. Albeit a lot of REO and SS's, it has held it's own for a couple of years now.

Do I think the market will continue to decline? Hmmm......the news says so. The signs say so. But, until all the foreclosures flood the market, and while we continue to sell this many homes? I'd say, all things considered, we're doing pretty good.

But, I am the forever optimist......