TeamResults

When I talk to a potential home buyers, the topic of fixer uppers
comes up during the initial consultation almost everytime. It
seems everybody wants a fixer upper these days. Perhaps its the
hope that if property needs a little work, they'll be able to buy
it at bargain. Let me say that; yes sometimes you can get a bargain
if you're willing to get your hands dirty. But more often than not,
buyers don't really 'want' a fixer, especially after I show them a few.

What buyers really want is a bargain. What constitutes 'a bargain' can
vary greatly from one property to another, and also among different buyers.
Different neighborhoods can affect the perception of a bargain too. In my
Long Beach neighborhood we have quite a few homes well over the $1 million
price range. Spending a million dollars on a home might not seem like a
bargain to most buyers but if that home is surrounded by $3 million dollar
homes then suddenly that million dollar home starts looking like a steal.

I would like to take a few moments to look at some myths and facts about
fixer uppers in our marketplace. Obviously some points may not be true
100% of the time, but overall - I think they hold up. Understanding these things will
help buyers make better decisions and yield a higher satisfaction regarding
their purchase over the long run.

Myth
I can get a fixer that only needs minor repairs
Fact
A home that only needs 'minor repairs' isn't a fixer. Its every home on the
market.

Myth
If I do a little paint and landscaping I can save a lot of money
Fact
Yes you can save money by painting and lanscaping yourself. But you wont
save much on the purchase. Every home needs a little TLC, and cosmetic
changes. Thats what people do when they buy a home - They customize it
to fit their own lifestyle and design ideas.

Myth
This home needs a new roof, plumbing repairs, and new windows or doors. Its 80,000
less than the one next door. Lets buy it!
Fact
Yup! You just paid 80,000 less than everyone else on the block. You might have
also just bought a money pit. The need for extensive repair work often indicates
hidden problems that may cost so much that what you saved is now irrelevant.

You can see where this list is going, and just like the energizer bunny,
it keeps going, and going, and going...

One lesson to learn from these examples is spending more initially, may be
the best way to get a bargain in the long term.

If I've turned you off of looking for bargains or fixers, that wasn't my intent.
Lets go over some things I look for when considering a 'fixer upper'.

Outdated fixtures or appliances
 updating these yields the highest return when its time to sell

Enough space to add an additional bedroom or bathroom
 1. a home that grows with the family will remain useful longer
 2. the value of such additions at sale time means higher sale price, and better appreciation

Outdated fascade.
 yeah, that remodel job they did in the 70's sure looked great, but now people want
double pane windows, central air, stucco, siding, brick, etc. This situation requires
some consideration because it might mean a big project. But it could also mean instant
appreciation.

Deferred Maintenance.
 Not necessarily in need of major repairs, but maybe the paint is peeling, the roof
has some cracked tiles, the T.V. antenna is leaning, sprinklers water the street instead of
the lawn (and speaking of lawns... Is that crabgrass?). You get the idea. This is the stuff
that is fixed with a hammer, screw driver, and a wrench, not a construction crew.

When we're talking about low level things like these, we're not really looking at
huge price reductions, but overall value and ways to help the value increase over
time. Besides a good listing agent has already taken these things into account before
setting the asking price. Getting a credit for this or that, or maybe asking the
seller to complete some repairs before escrow closes might be just as good as paying
80,000 less.

So the next time you call me to look at fixer uppers, let me know ahead of time if what you
really want is a bucket of paint, or a bulldozer. I'm only a phone call away from either!

John Wall
REALTOR(r)
CENTURY 21 Results

www.TeamResults21.com
TeamResults@CENTURY21.COM

Can you think of other 'fixer' myths? How about sharing your 'fixer' stories? Lets hear from you!

September 7, 2008

The Office of Federal Housing Enterprise Oversight has announced
this morning, it is placing mortgage giants under conservatorship
in an effort to stabalize their ability to perform under tighter
credit restrictions and low economic growth.

OFHEO cited the importance of these organizations and their
role in residential real estate in their press release issued
Sunday morning.

James Lockhart, Director Federal Housing Finance Agency, has taken
steps over the past six months to help stabilize Fannie and Freddie
including reducing capital requirements, removing portfolio caps, and others.

"I have determined that the companies cannot continue to
operate safely and soundly and fulfill their critical public mission".
Lockhart said.

Also released was a conservatorship Q & A which defines the conservators role
as well as the actions they will take.
View the conservatorship Q&A here

John Wall
REALTOR
CENTURY 21 Results

www.TeamResults21.com
TeamResults@CENTURY21.COM

The City of Long Beach's Neighborhood Resource Center (425 Atlantic Ave., Long Beach) will be hosting a FREE workshop for local tenants and their landlords. The workshop will be Wednesday August 1st, 2007 from 6:00pm to 8:00pm and there will be refreshments available.

Presented by the Fair Housing Foundation, Dispute Resolution Services, and Legal Aid Foundation; the event will cover landlord & tenant rights (responsibilities) as well as fair housing issues.

Everyone who rents or owns a rental should attend these types of events when they come up. In the ever changing legal climate its important to stay informed of changes in the law, as well as brushing up on current trends. If you learn just one thing Wednesday evening attending this free event will be worth while.

If you would like to RSVP: E-Mail Sharron_Hinkley@LongBeach.Gov or Call (562) 570-1010.

For Map and Directions Click here. 

{Serving Long Beach and surrounding communities}

TeamResults@Century21.com
www.TeamResults21.com

Here are the stats for our investor friends. If you're brave enough to enter the foreclosure market, give me a call and we'll discuss your plan. We have the pre-foreclosure lists available, and they're updated daily. For more information on default/foreclosure activity in Southern California e-mail John.Wall1@century21.com. Don't forget to have a good one!

Ta' 

-John

When buying a home, borrower's always try to find ways to save. Their first shot is usually asking the seller for a price reduction. Here's a better way;

Example:

(Traditional Sale)

Sales Price $550,000 - 20% Down Payment, $440,000 Loan Amount. 30 Year Fixed Rate at 6.25% =  $2,709 payment.

(Price Reduction of $20,000)

Sales Price $530,000 - 20% Down Payment, $424,000 Loan Amount. 30 Year Fixed Rate at 6.25% = $2,610 payment.
(a savings of $99.00 per month)

(Seller Credit of $20,000)

Sales Price $550,000 (with $20k in seller credit toward closing costs) - 20% down payment, $440,000 Loan Amount. 30 Year Fixed Rate at 5.00% (seller bought down rate) = $2,362 payment.
(a savings of $248.00 per month)

for these and other tips on saving money in your next home purchase call on TeamResults. TeamResults@Century21.com or www.teamresults21.com

Are all sub-prime borrowers, no good, dirty, deadbeats? The term ‘sub-prime' applies to a huge section of borrowers, and sometimes the majority of borrowers in some markets. As Lew Sichelman (LA Times, syndicated author) puts it, a "certain number shouldn't have been approved for a mortgage at any price". Referring of course to the increased media attention placed on the sub prime market of late.

The Mortgage Banker's Association says its difficult to define a sub-prime borrower, but admits that if you (as a borrower) have trouble coming up with one of your mortgage payments this year, you're sub-prime. Though, the association has said that 78% of you sub-prim(ers) are actually making your payments on time and are staying current on your mortgage. There is no avoiding the fact that sub-prime loans have a higher default rate, which is expected to increase in the near future.

In his recent article Lew has categorized the following list of borrower types as sub-prime;

Former Primes: borrower's who have suffered a major life event that has affected their financial position.

Future Primes: Those who have had mistakes in the past, take on higher interest rates or credit repair loans and promise to make payments on time, to once again reach their ‘prime' status.

Rookies: (My favorite kind) These are people who just don't have the funds for a large down payment but, meet or exceed every other qualification necessary for obtaining good terms on a loan.

Second Homers: These are borrowers who were able to qualify for a prime market loan for their first home, but didn't have the credit to qualify for similar mortgage status on their investment or vacation homes. Its estimated that this borrower only makes up 7% of the sub-prime market.

Fraudsters: There isn't much to say about these guys, other than they're crooks.

Ne'er-do-wells: Borrowers with messy financials, rarely pay on time, their approval's were just dumb.

Should Haves: These are folks who really are in the ‘prime' market but for one reason or another have chosen a sub-prime loan. (my experience is that these are the one's whom although, that are able to... they just don't want to put down a huge down-payment..

So which sub-prime borrower are you?

7/17/2008 

Much of the market information I receive comes from the same sources that everyone else sees. Here's an overview of whats happening in California.

According to DQNews, in California 36,975 new and resale homes were sold in May. Down 31.7% last year.

As of May 2007, the median price paid for a home was 484,000, up 2.5% a year ago, and, the typical mortgage payment borrowers committed to was $2,266. Thats down $46.00 from this time last year.

Market indicators have been all over the place, but its clear that adjustable rate mortgages have become increasingly unpopular. Foreclosure activity has not yet impacted home values in most markets. Down Payment amounts are stable, but investor activity is down.

From all this we learn that changes are taking place, but prices are still going up, and My guess would be that much of the sales decline has to do with potential buyers who are 'waiting to see' whats going to happen next. If you have any questions about local real estate activity, I am always happy to provide answers and share my observations. Please feel free to contact me, john.wall1@century21.com.

When homeowner's fall behind in their mortgage payments or foresee a future problem looming, the decision has to be made whether to sell the home or try a ‘work-out'. Failing that means the possibility for a costly, messy, and humiliating foreclosure becomes more likely.

There are a couple of things to consider when facing this or similar situations. First if, as the homeowner, you absolutely want to keep the house you'll have to be able to prove that you can afford the payments. That means doing a budget, a cash flow statement, and providing supporting documents like Tax returns and pay stubs. Also, getting in touch with your mortgage servicer should be a top priority. Getting your servicer on board early helps to ensure their cooperation with whatever options you choose to take. They won't be too helpful if you wait until the last minute.

When making the decision to sell your home; when you owe more on your mortgage than the house is worth, your lender will become involved in what is known as a "short sale". Basically, a short sale means the lender agrees to take less than what they are owed in order to sell the property. There are some requirements that must be met before a lender will agree to a short sale, and their Loss Mitigation Department will take a look at:

•          How far behind on payments is the borrower?
•          Can the borrower tap any other assets to cover any deficiencies?
•          What caused the deficiency? Was there a hardship?
•          and more...

If a short sale is agreed to by the lender, they will generally not seek any further payment from the borrower, but that doesn't mean the borrower is home free. A lender will usually submit an IRS 1099 in the amount of the difference between the sale price and the amount owed to the lender. The Internal Revenue Service considers this amount "forgiven" as earned income to the borrower, and therefore will tax that amount.

When a short sale isn't possible or undesirable; its time to begin negotiating for a loan "work out" or modification. A modification can be in the form of a rate adjustment, or change in the terms of the loan that make the house more affordable to the borrower. Or at least, make it easier to keep up on the payments. The types of modifications that a lender can do are extensive and to make a list, would make for a very boring read. Suffice it to say, that if a modification is necessary, getting in touch with the lender early and staying in touch, is the only way to encourage them to cooperate. Remember that if you don't ask... You won't receive! So if you need a lower interest rate, ask for it. If you have fallen behind on your payments because of an illness but are able to pay on time again, ask for your past due amounts be added to the end of your loan. If refinancing is a better option, ask for favorable ‘refi' terms. If you need help, ask for it! Above all, don't panic, try not to stress yourself out, and begin looking for better options. Your real estate agent, loan officer, mortgage servicer, and others are professionals who can help, all you have to do is ask.