Barry Ripp ~ East Bay Area Real Estate

Sales of homes for less than the amount of their outstanding mortgage debt have tripled since 2008, particularly in California, according to a report released last Tuesday.

Known as “short sales”, the increasingly common transactions for financially troubled homeowners are projected to balloon to 400,000 in 2010.  The number of transactions had exploded to more than 160,000 in 2009 from roughly 96,000 the year before. More than a quarter of the transactions occur in California, with another quarter split between Arizona, Texas and Florida

In an economy in which jobs are scarce and a quarter of homeowners owe more on their property than it’s worth, short sales are appealing to investors, banks and owners as a cheaper way out than foreclosure.

And with fluctuating home prices, lenders can be reluctant to approve short sales. The transactions can be a hassle to execute, especially when multiple loans on a home mean a slew of creditors are included in negotiations.

But on the bright side; Short sales could actually end up boosting the job market. Unemployed homeowners who can escape underwater mortgages have an easier time moving around, expanding their job search.

As I finish this posting, there are currently 604 houses for sale in the Fremont tri-city area. Of which 126 are short sales, that’s 20%.  Those numbers decrease sharply for the higher priced homes. Of the homes prices over $500,000 only 12% are short sales.

If you are preparing to move, you need boxes. If you recently moved, then you need someone to haul those pesky boxes away. Shareabox.com does both, connecting people and boxes. Share a Box was created by two green-minded REALTORS® who believe every box is begging to be used again, again, and again. Visit http://www.shareabox.com/ for more details.

For more green real-estate-related tips and content, visit C.A.R.’s Green Web site (http://green.car.org/).

                                                         To comply with the stricter lending guidelines of Fannie Mae and Freddie Mac, and to avoid accusations that the loans sold to Fannie and Freddie are based on inflated appraisals, some real estate professionals have reported lenders lowering home values on appraisals submitted to them. However, effective Sept. 1, Fannie Mae is prohibiting the purchase of loans from lenders who change appraisers’ numbers.

Generally, lenders order a low-cost electronic valuation—based on publicly available statistical data—to review the accuracy of the information submitted by the appraiser. If there is a discrepancy between the electronic valuation and the appraiser’s report, the lender’s underwriters may reduce the appraisal figure.

 ~ Barry Ripp

From:  Calif. Assoc. of Realtors & LA Times

When something breaks down in your home, wouldn’t it be wonderful if you could pick up the phone, request a service call, pay a nominal service charge and have the problem fixed? In theory, this is how a home protection plan works.

A home protection plan, also called a home warranty, is an insurance policy that insures homeowners against defects in the major systems of their home. Most policies cover the heating, plumbing and electrical systems as well as built-in appliances like the stove, dishwasher and garbage disposal. Some companies will cover movable appliances like the refrigerator, washer and dryer for an extra charge. And some policies even include roof coverage-if you pay an additional fee.  The basic warranty plan costs about $300. per year.

Home protection plans are popular in the real estate industry because they provide a relatively inexpensive way to take care of home defects that develop soon after the home sale closes. For example, let’s say the water heater quits working the day after closing. That could be a fairly high expense for a new homeowner; however, if there is a home warranty in place, the hot water heater will probably be replaced for the nominal cost of a service charge…about $45 per call.

Some sellers offer to pay for a home protection plan to cover the home for the buyer for one year. If problems arise during that year, the buyers simply call the warranty company and pay the service charge. The warranty company pays for the repair or replacement.

Seller coverage is also available to cover the home during the listing and sale period. Seller coverage works the same as buyer coverage except that there are usually more limitations on the coverage. For example, the furnace is usually covered under both buyer and seller coverage. But, the amount of coverage offered under seller coverage is often less than the amount that’s available to the buyer if the furnace breaks down after closing.

One seller who had signed up for seller coverage was able to have some of the defects that were discovered during the buyer’s inspections fixed by the home protection plan company for the cost of a service charge. This was a great deal for the seller because it saved him money and he didn’t have to pay the policy premium until closing. Seller coverage is usually charged by the day.

If the seller of a home you’re buying does not offer to pay for a home protection plan, you can pay for one. Be sure to order it before the closing date.

 ~ Barry Ripp

Information was obtained in part by the CAR & Dian Hymer (who is a nationally syndicated real estate columnist.)

Home inspections have proved to be an important part of the home buying process. It helps prevent surprises and potential expensive problems. Therefore, it’s important to know what to expect.

When the inspector checks the outside of the house, they will be looking for the following things: drainage conditions, roof, chimney, and more. Inside the house they will examine: doors, windows, plumbing, electrical, appliances, heating system and water heater. They will also crawl under the house and up in the attic as well.

The home inspector will provide a detailed report (about 30 pages) regarding the condition of the home. They might even recommend what steps to take to correct an issue.

A typical home inspection will cost approx $400. And it’s well worth the money, because it can save you thousands of dollars in possible problems.

 ~ Barry Ripp

California’s “Unsold Inventory Index” (UII), a closely watched index indicating the number of months needed todeplete the supply of homes on the market at the current sales rate, declined to 3.8 months in December, the lowest level in five years, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). By comparison, the UII for existing, single-family homes stood at 5.6 months in December 2008.

In December, the median price of an existing, single-family home rose to $306,820, an 8.4% rise from Dec.’08, the second consecutive year-over-year increase, and the 10^th  straight month-over-month increase, according to C.A.R.’s December sales and price report.

 With affordability near-historic highs, low interest rates, and home buyer tax credits, many properties in California are receiving multiple offers and sparking bidding wars. Home buyers who find themselves in bidding wars should work closely with their REALTOR® to ensure they are crafting realistic offers that are more likely to be accepted by the seller.

Here is some information on the real estate market.  In my opinion, if you’re ready to buy a home, start looking now. There will likely be more inventory to chose from in the spring, but by looking now, you’ll be ready to make that final decision when the right house comes along.

Recent good news about the housing market has many home buyers wondering whether now is a good time to buy. For example, home sales activity increased 9.4 percent nationally in September, a 26 percent increase from a low point in January, according to the National Association of Realtors.

The $8,000 first-time buyer tax credit has stimulated the market, and it has been extended. A credit of up to $6,500 is now available to repeat home buyers who qualify.

Many buyers are having difficulty finding a home to buy. The inventory of good listings on the market is low in many areas because prospective sellers who don’t have to sell now are waiting for a better market. To aggravate the situation, many sellers who need to sell now often take their home off the market after Thanksgiving and will bring it back on the market next year.

Buyers may find there’s very little on the market to choose from for the next several months. However, they may also find that some buyers will drop out of the market over the holiday season, leaving less competition for the listings that are on the market during this period.

 ~ Barry Ripp
Information provided by C.A.R and used with permission.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/12/06/REAI1ARGC5.DTL&type=realestate#ixzz0ZnrVz7Rf

Maintaining a good credit score can help you in a number of financial situations.  For example, most lenders use your FICO score to judge credit worthiness.  FICO stands for Fair Isaac Corp. which analyzes credit information to come up with a score.

A good score can mean a lot when it comes to your interest rate for car loans and home loans.

One key to keeping a good credit score is a combination of continuing to use your credit responsibly and paying down balances as soon as you can. I think it’s better to pay your credit cards off each month to avoid paying the high interest.  So don’t buy more than you can afford to pay off.

To make sure you don’t have any credit errors, check your own credit at least once a year. You can get a free report from each of the three credit reporting agencies.

For a free copy of your credit report from all three agencies, you can visit: www.annualcreditreport.com  They will ask several questions to insure security and also ask you to pay for an upgraded report, but a free report is available.

I hope you find this information helpful. I feel we all need to be more careful about using credit. But credit can be a useful tool when we need it.

 ~ Barry

Some homeowners wonder what would happen if they were to stop paying their mortgages.  

When lenders do not receive payments, the first action taken by the lender is to report the missed payment to the credit bureaus by the first day of the next month.  Sometimes this can happen in as little as two weeks from the due date, depending on when the payment is due.  Generally, this action will leave a negative mark on a credit report and decrease the homeowner’s credit score by as much as 200 points.

Because of the negative mark on the homeowner’s credit report, within the next 30 days, homeowners can expect their other creditors to take note of the late payment and to take action.  Credit card issuers may raise interest rates, lower credit limits, or close credit card accounts.  The borrower’s auto insurance, student loans, and other forms of credit also may change, as these are tied to the borrower’s credit score as well. 

If the homeowner does not pay for 90 days, the lender likely will start calling, trying to persuade the homeowner to enter into a loan modification.  If a loan modification cannot be agreed upon between the homeowner and the lender, and the homeowner continue missing payments, the homeowner likely will be served with a foreclosure notice. 

Homeowners at risk of defaulting on their mortgages, or those who already are behind, should contact their lender immediately to work out a repayment plan and/or loan modification.  

Information obtained by Calif Asso of Realtors and the Modesto Bee.
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