San Diego Short Sale Market -- What You Need to Know

The state of the short sale homes in San Diego has been changing over the past few months. A short sale is a sale in which the homeowner owes more on the home than the homes is worth in the current market. The bank agrees to take a loss on the loan (‘short’ the amount owed) and allows the owner to attempt a sale. This is normally an alternative or precursor to a foreclosure. In this situation, when an offer is made on a property, both the homeowner and the bank need to approve the submitted offer. Many times, a homeowner will accept the offer, but the bank may take several months to respond. In this situation, the property enters into a Contingent status. It is no longer available since it has an accepted offer, but not yet in escrow since the offer is contingent upon the bank’s approval. The bank does not always approve the offer that the homeowner may have accepted. The bank may not approve any offer submitted.

The approval rate of short sales has been fluctuating greatly offer the past year. Over the past 6 months, approximately 30% of short sales were successful (the bank and homeowner both accepted the offer and the property closed escrow). Those approval rates appear to be trending even higher, as well. Units sold appear to be rising at about 10% per month (probably the same number of listings taken but since a higher number get approved the unit sold count is rising).

In conducting this study, two major areas were evaluated: South Bay and the “Metro” Areas which include central areas such as Mission Valley, North Park, Hillcrest, Mission Hills, City Heights, Logan Heights, Linda Vista, Clairemont, Downtown, etc. This evaluation is only of single family residences. No condos or townhouses were evaluated in this study.

Over the last 3 months, the South Bay is now selling 96 properties per month. There are 942 active, contingent and pending listings in the South Bay with a burnrate (number of units sold per month) of about 100 per month (and rising). Of these 942 properties, only 186 are Active status and available to receive offers. The entire MLS has 1009 short sales homes and 4177 Non-Short Sales. Roughly 25% of the single family homes for sale in San Diego are short sales.

Of the homes that are currently active and available in the San Diego Market, there are 1500 houses priced over $1M ($1,000,000). The burnrate is only 100 per month – over 15 months inventory. (Still pretty high) Many sellers will likely take their home off the market during the winter. There are 3104 houses priced over $500 (inclusive of the $1M). The burnrate is 586 per month – 5.3 months inventory. Surprisingly low, actually.

There are 576 Actives priced over $350 that are short sales. The burnrate is 178 per month – only 3.3 months inventory. VERY VERY tight market. In the same time frame, non-short sales outpaced the short sales at a rate of over 4-1 (The burnrate in the same period for non-short sales was 898 per month!).

The market for bank owned properties is more difficult to track than short sales, however the numbers look something like this: there are currently approximately 441 Active REOs (bank owned properties), 746 Contingent and Pending REO properties, and 3265 Sold REO properties over the last 6 months (544 Solds per month burnrate) – Less than 1 month inventory of bank owned. No wonder buyers and their agents always feel like there’s nothing to buy. Only 252 of the 441 Actives are under $350 (available to the typical buyer in the market). Of the 252 only 81 are offering financing for FHA and/or VA – less than 1-in-3.

If you are shopping for a home in 2010, keep these numbers in mind and don’t be afraid to be aggressive. The market is tight, but the incentives for buyers, including tax credits and low interest rates, make it well worth it!

San Diego House Hunting
www.sdhousehunting.com
619-497-1834

Things are getting worse less quickly than before. And because of this, things are getting better.

Things are Getting Worse Less Quickly than Before; and Because of this, things are getting better.

Here’s some good news: “Things are getting worse less quickly than before. And because of this, things are getting better.” What an economic outlook!!??

http://news.yahoo.com/s/ap/20090817/ap_on_bi_ge/transunion_mortgage_deliquencies_1

Foreclosures and mortgage defaults are worse than ever. The rate of mortgage defaults is higher this month than last month. The rate of change between this month and last is not as bad as prior months. That’s reason to celebrate that the market has bottomed? This defies common sense.

Let’s say you go to Las Vegas and you bet $1000 and lose it. Then you bet $500 and lost that. Then you turn to your friend and say, “You know, since I just lost $500, that’s reason to be cautiously optimistic – I’m not losing as fast as I used to”.

Expect higher interest rates, more foreclosures, and more loss mitigation loan modifications (which only delay the inevitability of a foreclosure because they don’t reduce principal) through the end of this year and well into next year.

Jeremy Katz, Broker
San Diego House Hunting &
San Diego Commercial REO
http://www.SDHouseHunting.com
Member, NRBA (National REO Brokers Association)
619-497-1834 Office
7840 Mission Center Court #201
San Diego, CA 92108

Use a Craigslist Clone to Find Homes in San Diego

We're pleased to announce the availability of a new tool to search, and more importantly FIND, homes for sale in San Diego.

Try it here: http://www.sdhousehunting.com/tools/search/search.php

Do you use Craigslist to research available homes in San Diego? If you do, you'll really love our new tool. The main features of the new tool:
- Search for homes countywide without registration or email confirmation
- ALL Homes allowed to be published appear - doesn't rely on any agent to input the advertisement!
- Search all keywords contained in agent's comments
- No advertising. Just houses. No Spam or other annoying miscategorized advertisements.
- Automatically remove Short Sales from your search results.
- Search by zipcode, streetname or other key characteristics in a single search box (EASY!)
- Properties organized by regional areas - just like Craigslist ads!
- One click to find homes similar to the one you are reviewing quickly and easily.
- Easy access to lists of homes that meet your criteria.

We hope you'll give it a try and use it to find your dream home or next investment!

Your Questions Answered: Timelines? Cancellations?

Buyer's Questions Answered:
What would the time line be for a purchase, possibly with a downpayment that is a gift, and what is involved with moving forward and canceling if we discover something less than favorable?

The process is to get pre-approved, interview agents, and then hire the one you like best (good service, ethical, etc). From there, you go out and find the best one for you and make an offer. Takes a few days to get a response. It costs you nothing to use our services – our commission is paid by the seller. You really have to hire someone though because without that you won’t get a strong commitment of service like we offer. Hiring them means a simple one page agreement to use them as your agent for the homes that they introduce for you.

Once you find the one that’s right for you, you start an escrow and begin to review all the background and documentation on a home. In escrow you can back out if you find out something really bad about a place or discover through an inspection that something’s really not for you (whatever that may be). You only make an offer if you’re really excited about a place and can envision living and enjoying it. You get your deposit back (1% of the purchase price) if you have to back out. You may have already spent some money “trying” to buy the house however (for example the costs of the inspection and appraisal are non-refundable). You want to find out during escrow if your neighbor is an aspiring rockstar drummer!

Bank owned properties are a bit slow to process the purchase contract (compared to a normal or what we like to call “natural” seller) but you’re usually going to get a great bargain, so you have to bear that in mind. They will tell you if you “won” the negotiations but then it can take about 10 days to get the contract from them so your loan officer can begin to process your loan application. Your timeline starts when the seller signs the contract. Your agent should manage the timeline properly keeping you aware of rights, duties and obligations the entire time. Where you have options, your agent should explain them thoroughly. In cases where there aren’t choices to be made, your agent should still keep you informed of how the transaction is proceeding. We buy and sell homes every day so you don’t need to know every excruciating detail if you don’t want or care to know. The more you do want to know, however, you need to have an agent that can advise you properly and insure that you feel comfortable and confident about your purchase.

Don’t give notice on your apartment until well into the escrow. You may have a bit of “overlap” of paying for both, but you need that to make sure everything goes right and that you’re not homeless. You can use any extra time to make sure the new place is ready for move-in and that the old is properly cleaned out and ready to get your deposit back. Also remember that when you own a property you “live first and then pay” versus in a rental situation you “pay rent first and then you live” – meaning you actually pay your mortgage in arrears. As such, you “skip” a payment when switching from renting to owning!

Hope this was helpful and feel free to email info@sdhousehunting.com if you have any questions of your own!

Jeremy Katz, Broker
San Diego House Hunting &
San Diego Commercial REO
http://www.SDHouseHunting.com
Member, NRBA (National REO Brokers Association)
619-497-1834 Office

Secrets Lenders Don't Want you to Know Part 3

And now for the Conclusion of our three part series on the most importance things that lenders don't want you to know. . . Follow these key steps to be in the know when you buy your home.

8. Don’t Wait for the Bottom of the Market- The odds of your hitting the bottom of your market are about like the odds of you hitting your state lotto! You will almost never hit the bottom of a market. And trying to time it exactly right is often costly. You’re better off simply negotiating the best rate and terms you can at the time you find a property. If interest rates go down, you can refinance. This is a much better approach because you won’t miss out on the property you’ve spent so much time locating.

9. Be Honest With Your Lender- Your lender wants to help you with your loan. The only time they get paid is when you get approved. The more information (good or bad) you provide your lender, the easier it will be for them to get an approval. It helps them present the loan in the best light. This in turn helps the loan get the highest approval rating.

10. Become Completely Educated- Pick your lender’s brain. Lenders will teach you all about your various options, even if you haven’t found the right property yet. They will be very patient with you while you are looking, especially if you have aligned yourself with the right agent. They understand all the up-front work will pay off in future business. Your agent will then continue to refer people to the courteous and service-minded lender on down the line.

11. Get Pre-qualified- Lenders will provide you with a certificate of pre-qualification. By getting pre-qualified, you know exactly what financial parameters to stay within. Your agent and lender will consult with you and help you get qualified for the loan that best fits your needs. Many times, they are able to get you a larger loan than you may have thought possible.

I hope you found the ideas valuable and if there is ever any way I can be of service to you or anyone you care about, please contact us.

Thank you!

San Diego House Hunting SEARCH THE MLS LIKE A
619-497-1834 REALTOR®!

Secrets Lenders Don’t Want You to Know! Part 2

Continued . .

4. Demand Service- While there may not be a difference between a bank, savings and loan, or a mortgage broker when it comes to the competitiveness of their loan rates, the difference will lie in the service they provide. It is their job to serve you! You want to get the loan approved and move into your new home as quickly as possible, but don’t overlook the fact that you are the one spending the money and they are the ones who should cater to your needs. Don’t let the process become so intimidating that you lose that understanding.

5. Stay in Complete Touch- You should receive a written report from your lender concerning every step. This will ensure that no details are overlooked and there will be no surprises.

6. Negotiate a Flexible Loan- Don’t just accept the terms they lay down in front of you. Lenders are in the business of loaning money and they want your business. Make sure you examine every option available to you. Make sure that you understand each options benefits and possible drawbacks.

Be completely honest with your lender. Remember they get paid only if you get approved, and complete honesty helps them present the loan in the best light.

7. Don’t Give Up on the First No- Initial decisions are not always final decisions. Going to a higher authority can sometimes get you the loan, but do so with the assistance and compliance of your lender and agent. Many times, special circumstances, when explained properly to the person in charge, will win you the loan.

Coming soon . . the conclusion on our three part series on the Secrets that Lenders Don't Want You to Know!

Secrets Lenders Don’t Want You to Know! Part 1

Secrets Lenders Don’t Want You to Know!Read This 11-Point Report Before You Sign Anything!

The right decisions when signing your home mortgage can mean thousands of dollars difference in interest paid. There are very important considerations to evaluate before you commit to a 15 or 30 year note. Before making a commitment, doesn’t it make sense to know as much as possible about the financing of our home? Take the time to thoroughly investigate all of your options!

Negotiate a flexible loan. Some lenders will let you go from a variable to a fixed loan if rates start to go up.

Unbelievably many of us sign the first mortgage placed in front of us. Typically the excitement of the new home purchase reduces the mortgage to not much more than an afterthought. What you read here could save you hundreds or even thousands of dollars. Your real estate professional has established relationships with the top lenders in your area. By aligning yourself with a professional agent you ensure all the financial steps are taken care of properly and economically.

1. Utilize a Lender With Established Ties to an Agent- Lenders are much more flexible with the real estate agents who have done business with them previously. Their relationship establishes them as a team member. The lender and agent work effectively together. That’s why a good agent can make substantial difference in setting up the most economical financing. And the right financing can, literally, save you tens of thousands of dollars over the life of your loan!

2. Don’t Attempt Paperwork Alone- All the paperwork required to complete the purchase of a home can be quite intimidating and frustrating for a home buyer. Make sure you have your lender help you with all the paperwork. Get help from your team, your lender and agent. Their expertise will help alleviate the stress and it will prove to be invaluable before you sign your mortgage.

3. Look at All Your Options- Make sure you see at least 3 loan programs for your mortgage. Lenders have at least 5-7 programs and should work with you and your agent on deciding what is best for your circumstances. Evaluate all your options. After all, it’s your money you’re spending - not theirs!

Coming Soon: Part 2 -Points 4-7 to Arm Yourself with Knowledge.