- Price Reduced on 66640 Granada Ave in Desert Hot Springs
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Desert Hot Springs, Riverside County - Announcing a price reduction on 66640 Granada Ave, a 1,410 sq. ft., 2 bath, 2 bdrm single story. Now 
MLS® $94,900 - Great Bones, new paint, updated plumbing and a great new price.
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- How To Cope With The New Market Realities
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Volumes have already been written about how we got where we are, in todays Real Estate market, so I won't try to rehash that information here. What I want to share is my opinion of how you should be looking at your next real estate purchase/investment.
During the heady days of the the Late 2004-early 2007 market many buyers bought by price alone. At the time you could not really fault them. Loans were easy to get, appreciation was growing by leaps and bounds on every property and to many inexperienced real estate investors it did seem as though the sky was the limit. Oh what a difference a year can make.
Woulda, Shoulda and Coulda might be easy to say now but at the time everyones judgment was distorted by the promise of great profit. As an agent working the market at the time I saw several classic mistakes being made by the inexperienced and even the experienced who decided to throw caution to the wind. Even today as we survey the ashes of the crash I hear people not talking about the flaws in their investment logic but just how unfair it is that they did not get to cash out before prices leveled off and came down. I have heard the expression "When you lose don't lose the lesson" so I think it is important to realize that the biggest part of the problem is a lack of understanding of the basics of real estate investing.
Time for a quick review of Fundamental Principles of Real Estate investing:
A) Location, Location Location:
There is a solid reason why the same home located in an outlying area of town is less than one that is centrally located. Desirability plays a big factor in purchasing a home. If it is affordable enough people are always going to choose the home that is closer to work/conveniences and daily activities. Far flung homes that require a commute and in areas that lack essential or basic services simply won't sell as well. Period end of discussion. When you look for a home look at where it is. Most communities have areas that are considered less desirable. Sometimes if you are new to an area this is not obvious. It is important to work with a Realtor or trusted resource who will be candid with you about the positives and negatives of the different areas. Just remember if the same house is much cheaper somewhere else in town there is a reason. It may turn out to be a reason you are comfortable with just be sure you know what it is.
B) Resale Potential:
Although you may think that you have found your dream home and you will never move again the reality is much different. Statistics show that we move every 5 years on average. Life changes just happen to everyone - no one is exempt. So, for example, when you are considering the new home community - think about how soon will the neighborhood be finished? You don't want to have to compete against the builders NEW homes with your "slightly used" home. Some other food for thought:
Is the community you are buying in lacking in essential services that won't be in place by the time you need or want to move?
Are you buying a 2 bedroom home in a family community where 3 and 4 bedroom homes are more common/desirable?
What is special about the home? If it is only the price ask yourself why.
Are wind, noise, traffic, flight patterns an issue?
Does every home have a view except yours? Is there a common amenity that you don't have?
Your basic rule of thumb needs to be a house that is as appealing as possible to as many people as possible. Examples are: A good floor plan, a generous yard, a downstairs bedroom, good services and schools close by. These are the things that are going to help you resell you home in an up market or a down market. If your community is known for something such as large yards, waterfront or golf courses these would be strong considerations in your purchase. Buy the thing that people are coming to your community for. Your compromises in your purchase can cost you in the end. Be sure that they well thought out.
C) Fitting Your Lifestyle and Goals:
Currently there is a really pretty (very expensive) two door import convertible on the market. Every time I see it I stare longingly. It is so sleek and cool looking. I can visualize myself in that car. However, the reality of my life is that anything less than a 4 door car is just idiotic. I have people in and out of my car constantly. It needs to be comfy and roomy and have a big trunk to cart around all my stuff.
This same logic applies when you are buying a home. A two story home with all bedrooms upstairs makes no sense if you have to care for an aged relative who can't do stairs, a sleek multi -level loft is not for you if you have a toddler, income property is not for you if you are not prepared for the trials of being a landlord (including budgeting for the month when the tenant can't pay rent) Living in the suburbs with a big yard is not very logical if you work 10 hour days in the city.
Not buying the right house for you is typically a reason that people wind up having to sell before they are ready. One of the most common scenarios I see is people who have a wish list of must have items that overtakes common sense. Typically these buyers wind up with a home in the wrong area or too far from where they need to be just to fulfill the wish list. Be realistic about the "must haves" on your list balance that against the all important LOCATION.
D) Budget Concerns:
Just because someone will give you a master card with 20,000 credit limit doesn't mean you should take it! The same is true with home loans. There are formulas to figure out how much house you can afford. A popular one is that your housing costs should not exceed 28% of your net take home pay. You know your budget. You know what you can afford. During the last ten years I have met thousands of home buyers. It is amazing how 99.999% of them know, within a range of $25,000, how much home they can afford. I have simply never met someone who thought they could spend 800K and we found out later it was really 300K. Just doesn't happen like that.
To be fair, the lenders were out of control, 1% mortgages, confusing variable rate terms and 103% financing and the list goes on. However, like the credit card example above you are in charge of your financial destiny. You don't have any business signing up for loans you do not understand or payments you know you can't afford. Personal responsibility plays a big part in this. I really like Suze Orman on the cable channel and her personal financial goal setting and education programs. Well worth watching.
Bottom line here is that you are much better off in a smaller or more affordable home than stretching yourself to the breaking point in the hopes of making up the difference in appreciation. Real Estate is cyclical and always has been. It is dependent on many factors in the economy at large and banking your financial future on a hoped for short term gain is disaster waiting to happen no matter what the investment vehicle is.
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In my next installment I am going to focus on what to buy now, what considerations to make and how to look at and analyze purchases in a market where credit is tight and homes are glutting the market.
- Riviera Hotel In Palm Springs Now Open
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After an impressive remodel the Riviera Hotel has reopened. Besides having one of the coolest signs I think I have ever seen the interior and the pool area are super well done. Very Retro -Be sure to check it out the next time you make it to Palm Springs!
- Price Reduced on 2300 E Francis in Desert Park Estates
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Desert Park Estates, Palm Springs - Announcing a price reduction on 2300 E Francis, a 1,884 sq. ft., 3 bath, 4 bdrm single story. Now MLS® $253,000 - 4 Bedroom 3 bath Bargain.
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- New Listing on 193 W Merito Place in Las Palmas
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Las Palmas, Palm Springs - Announcing 193 W Merito Place, a 1,860 sq. ft., 2 bath, 2 bdrm single story. Now MLS® $399,000 - Las Palmas Under 400K!.
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Great mid century style walking distance to Palm Springs and all the great activities there.
- Single Story For Sale in Desert Hot Springs
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Cute 2 Bedroom W/ Garage
• 1,410 sq. ft., 2 bath, 2 bdrm single story - MLS® $109,900 - Great Bones
Desert Hot Springs, Riverside County - This well priced , cute home is a fixer with great bones. Spacious rooms with an excellent floor plan. Lots of closets, great separation of the bedrooms and a private fenced back yard. Garage is on the back of the house adding extra privacy to the walled yard. Mountain views all around even a covered back porch right outside of the dining room slider.
Potential abounds in this terrific deal! Sewer connection is already in.
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- Photos of Mid Century Architecture in the Desert
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Living in Palm Springs I get to see the really cool 50's modern / midcentury architecture on a daily basis. It is part of the scenery and what makes Palm Springs Great.Recently I was looking online to see what there was about the history of that architecture and I was surprised to find that most of the sites I uncovered had few if any pictures! Words just can't do justice to some of these amazing structures and the simple yet sophisticated lines that made them what they were.Anyway, I did run across two sites that I thought were worth mentioning. They both have lots of pictures and good information. One is actually a site from Arizona but includes lots of Palm Springs pictures. So check these two out and enjoy.http://www.psmodcom.com/
- Price Reduced on 2300 E Francis in Desert Park Estates
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Desert Park Estates, Palm Springs - Announcing a price reduction on 2300 E Francis, a 1,884 sq. ft., 3 bath, 4 bdrm single story. Now MLS® $269,000 - 4 Bedroom 3 bath Bargain.
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- 66672 Flora in Central Desert Hot Springs is Sold!
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Central Desert Hot Springs, Desert Hot Springs - The single story at 66672 Flora has been sold.
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- Bank Addendums - Buyer Beware
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Once you have submitted the offer for your bank owned (REO) home you start waiting for their response, as you would with any seller. In the case of a private party seller you might get a counter offer requesting a change to a small handfull of points in your original offer. You would then start, usually with your agent, hashing out the finer points of the offer and finding that middle ground with the seller. This is how Real Estate Deals have typically gone in the past. In the case of the Bank Sale you will often receive an addendum of 10 or more pages with lots of points covering every imaginable part of the sale.
It is these addendums that require your UNDIVIDED attention. I have seen outlandish changes in the terms of the original offer. Waiving rights to inspection, requiring inspections within a certain time frame, reducing the number of days you have for inspections. Changing what the bank will pay for, making deposits non-refundable and more. Once these addendums show up be sure that you read them through very carefully and ask that your agent does too. Your good deal won't be such a deal if you miss something important that radically changes your offer or your rights under the original offer.
Most Realtors are well versed in their state contracts that they write everyday - not all are going to know these addendums forwards and backwards. Most are written by people in States other than the one the proeprty being sold is in. There may have be little if any regard to the laws of your state when the addendum was constructed. My best suggestion is to read it over yourself and then make an appointment with your agent for the two of you to go over it together. Ask your agent what they found in the verbage that raised red flags for them. Talk about it and if you both cannot find an answer seek outside assistance from a Real Estate attorney.
Don't be in a rush to sign away what you thought you had already negotiated in your purchase agreement.
- Single Story For Sale in Mission Shores
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4 Bed 3.5 Bath
• 2,748 sq. ft., 4 bath, 4 bdrm single story - MLS® $699,900 - Fantastic View Home
Mission Shores, Rancho Mirage - Welcome to Aviara at Mission Shores in Rancho Mirage. Who says you can't have it all? This house has everything and then some. Newer construction, incredible views and a generous floorplan. 4 Bedrooms 3.5 baths. A huge den with fire place. Upgraded tile and cabinetry throughout the home. Laundry room, formal livingroom, pool spa and fantastic master suite.
Outside you'll find breathtaking 180 degree views of the southern and western mountains. A fully landscaped yard with sprinler system, patios, pool, Spa, landscape lighting and a block wall.
Your home owners fee includes a social membership at world famous Mission Hills Country Club right across the street.
Find everything you are looking for in 15 Lake Mendocino Drive in the heart of the desert at Mission Shores in Rancho Mirage .
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- Foreclosed, Foreclosure, In Foreclosure, Bank Owned REO.....
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WHAT DOES IT ALL MEAN?
As an active Real Estate agent with a myriad of listing types I field dozens and dozens of phone calls each day from buyers and sellers. The level of confusion out there is staggering! It is a whole new world with the record number of mortgage defaults we all have a new vocabulary to learn. If we wonder about how we got to this level of confusion I guess all we have to do is look at the stack of loan documents that the typical loan requires. All those trees ...all that repetitive legal jargon ....all the confusion! Of course loan paperwork is just the tip of the iceberg. Perhaps real mortgage reform will be the silver lining that comes out of this cloud.
Anyway, back to the terminology: to try and clarify this issue I submit the following guidline to terms for the buyer on the open market today. These are true at least in the Southern California Market. If you know of another term in your are best check it out with a local trusted resource.
Short Sale: Seller is still in control of the property. Often still living in it. They are looking for an offer so that they can try to get the bank to accept that and release them from the balance of the loan. At any point during your attempt to purchase the property in this way it could fall into foreclosure. Your agent should stay on top of the sellers situation and watch for the filing of any default notices.
In Foreclosure: This is the period after the bank has issued the notice of default and the owner may or may not still be in the property. In California this is a 120 day process from notice of default to foreclosed. This is the biggest limbo period. Owners may work out something with the bank, have a relative rescue them, ignore everything and let the house go to foreclosure, do a deed in lieu (basically cooperate with handing the house back to the bank to avoid foreclosure) - essentially anything. As a buyer this is a risky time to be dealing with the owner. They are under a great deal of stress and truthfully anything can happen. In California there are also laws about purchasing any equity the owner may have if you are an investor and not buying it as a primary residence. So caution is the rule of the day.
Foreclosed: This is a home that the bank or an investor now owns. They have completed the foreclosure and they are now the legal owner. The bank typically hires a realtor to list the home and get it sold. However, you may see the home go to another investor for sale or the house may be put in an auction.
Bank owned - REO: Two terms that mean essentially the same thing. The bank or some lender (sometimes a private party) owns the property.
The fastest way to get a property is once the bank has foreclosed and they are the owner of record. It may take a little while to get it on the open market but once it is you can proceed with a purchase pretty quickly.
Many people ask about buying a foreclosure on the courthouse steps. This is still done. Once the bank goes for the foreclosure it will be available in this way. Most properties are not bid on though and the bank sends their representative to the sale and they buy the property back for the amount they foreclosed on. I can't imagine buying a property this way unless you are very certain that the value is there and have some idea of the condition of the property.
- Highlights of New Federal Housing Bill - No Handouts Here!
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This week some pretty sweeping changes came into play as President Bush signed into law the Housing and Economic Recovery Act of 2008. This legislation primarily seeks to protect homeowners from foreclosure, stop declining home prices, and stabilize the mortgage industry. While I can't Dissect the whole thing her ein one blog post I wanted top point out three provisions that I feel are of interest to most home buyers and sellers:
As a seller you no longer need to give the buyer your social security number! I say THANK YOU! this was a long overdue change. Up until now seller(s) had to sign a disclosure giving the buyer - who by the way IRS hold liable - this paperwork with their social security number on it and their declaration of how they will be treating the proceeds of the sale. Of course with all the identity theft this was just one more opening for a problem down the road. Not that the buyer would probably do anything with your # but lets face it boring documents like these tend to get shuffled around left in boxes in garages and attics so who knows who would wind up with it down the road.
Here is the text for this portion of the bill:
(- SELLER NEED NOT REVEAL SSN TO BUYER UNDER FIRPTA: Effective immediately, sellers are no longer required to provide to their buyers the Seller's Affidavit of Nonforeign Status (C.A.R. Form AS), which includes the sellers' social security numbers, under the Foreign Investment in Real Property Tax Act (FIRPTA). Instead, as another option, no federal withholding is required if the seller furnishes the Seller's Affidavit with his or her social security number to escrow or other qualified substitute as defined, who in turn, furnishes a statement to the buyer stating, under penalty of perjury, that it has the Seller's Affidavit in its possession. A "qualified substitute" is a person responsible for closing the transaction, such as an escrow company, title company or the buyer's agent, but not the seller's agent. The federal withholding law is now similar to California's Franchise Tax Board (FTB) policy which allows the escrow officer to remove the seller's tax ID number from the buyer's copy of the California withholding tax statement, but not other copies.)
Now on to the part that many distressed homeowners are waiting for. You can get a better loan that you can afford but..........
$300 BILLION IN FHA REFINANCING: Under the HOPE for Homeowners Program, 400,000 distressed homeowners can pay off their troubled mortgages and replace them with more affordable, FHA-insured loans. To qualify, a borrower's monthly payment on existing mortgage loans must be over 31% of his or her income as of March 1, 2008 (hence demonstrating the borrower's inability to afford the original loans). The original loans must have been originated before 2008, and secured by the borrower's principal residence (as well as only residence). Also to qualify, the borrower must satisfy FHA underwriting requirements for the new FHA-insured refinance loan.
The FHA refinance will be a fixed rate loan up to $550,400 for at least 30 years, and will include charges for FHA insurance premiums. The maximum loan-to-value ratio of the FHA refinance is 90% of the appraised value. If the refinance proceeds are insufficient to pay off the existing liens, the refinance will not go through unless the original lenders voluntarily agree to accept a short payoff as payment in full. Rules will be established to allow, among other things, equity sharing for the original junior lienholders.
Upon obtaining the FHA refinance, the borrower must share with the FHA at least 50% of any equity realized through a subsequent sale or refinance. The FHA's share in equity will be based on a sliding scale of 100% of any equity realized within the first year of the FHA loan, 90% the second year, and so on, but not less than 50%. The HOPE for Homeowners Program shall be in effect from October 1, 2008 to September 30, 2011.
As you can see this help is not going to come without a price tag. 50% of any future profit on the home. If anyone was looking to just be totally cleared of responsability for their bad loans this shows that won't be happening. However, if it helps someone keep their home perhaps it is a trade off that is well worth it. I do wonder about the effect these loans will have on the sales process down the road. I fear that some homeowners will forget that they have this arrangement as the years go by.
First time homebuyers get a $7,500 tax credit that is really a loan:
With certain exceptions, a first-time homebuyer will receive a tax credit of 10% of the purchase price up to $7,500 maximum, for the tax year in which the buyer purchases a principal residence. The tax credit, however, must be repaid like an interest-free loan in equal installments over the next 15 years or in full if the homebuyer sells the property for a gain. A buyer qualifies as a "first-time" homebuyer as long as the buyer (and spouse if any) has not owned a principal residence in the U.S. for the last three years. The tax credit phases out for a taxpayer with a modified adjusted gross income over $75,000 (or $150,000 for joint returns). This tax credit is available for qualifying homes purchased from April 9, 2008 through June 30, 2009.
New loan limits next year for FANNIE MAE, FREDDIE MAC, AND FHA REFORM: The new law permanently sets the conforming loan limit for FHA and government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac at 115% of an area's median home price, not to exceed $625,500. The new loan limits take effect after the current $729,750 loan limit expires on December 31, 2008.
So no handouts here though there is some much needed help for homeowners in distress. I can't emphasis enough the importance of talking with a competant loan professional and/ or tax advisor who can help you navigate these changes. Don't let anyone rush you into making changes before you fully understand the implications to you.
- Opportunity Knocks! 1380 E Mesquite in S. Palm Springs
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Tahquitz River Estates, Palm Springs - Announcing a New Listing on 1380 E Mesquite, a 2,400 sq. ft., 2 bath, 3 bdrm single story. Now MLS® $575,000 - Opportunity Knocks!.
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- New Listing on 55054 Shoal Creek in PGA Palmer Private
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PGA Palmer Private, PGA West - Announcing a New Listing on 55054 Shoal Creek, a 1,627 sq. ft., 2 bath, 3 bdrm single condo on the Golf Course. MLS® $429,000 - Perfect PGA Golf Condo.
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