For the past few months the banks have not been releasing their inventory… which means the only type of properties that have been on the market are “short sales” as you probably know, short sales take a long time! Most buyers do not like to wait around the 1 to 3 months or more it might take to get a short sale approved.
Well, over the past few weeks the banks have slowly been dribbling REO’s (Real Estate Owned) onto the market. Guess what has happened with this slow distribution… YEP!!! BIDDING WARS!!! The last home I submitted an offer on for my clients received 25 offers with in a 24-hour period and the top bidders were all CASH buyers. First of all, where the heck are all these buyers coming from and secondly, where are they getting all this CASH? That is right, CASH!!! We aren’t talking $30,000 homes we are talking $300,000 homes. Haven’t these people heard we are in a recession and the stock market tanked and everyone is broke (that was sarcasm for those of you who don’t know my humor)?
I have recently been told by a few sources that the floodgates are opening and that we will have an onslaught of REO homes hitting the market soon. One of my sources sited that the reason for this onslaught will be due to the last batch of the adjustable arm loans maturing. This will mean that the bidding wars of this magnitude will subside.
I will keep you posted!
Disclaimer: I live, work, and play in the Temecula Valley and this is the market I am referring to.
Thursday, May 7, 2009
Tuesday, January 27, 2009
Bank owned home buying questions – Temecula Valley – California
I received a few great questions from buyers over the past few days and I would like to share two of them.
Question: Why did my agent tell me that my offer was accepted and then I found out it was not after I already scheduled a home inspection?
When you submit an offer on a bank owned home and you are told your offer is accepted and you don’t have a copy of the fully executed contract in your hand (that is a contract with your signatures and the banks)… you can still lose the home to another buyer—that is, once you have the banks signatures on the contract, counter offer and addendums the bank will stop looking at other offers. The banks are giving buyers anywhere from 5 to 10 days to remove inspection contingencies so I know it is tempting to schedule a home inspection, and to pay for the termite report, but hold off until you have a fully-executed contract. If you don’t wait you could be out a few hundred dollars or more.
Question: My offer was accepted why hasn’t the status changed from “Active” to “Pending” in the MLS?
Assuming this is a bank owned home ~ this question fits well with the first question. It all depends on the banks procedures and policies. For example, bank “C” (I don’t want to list the name of the bank for liability reasons) has recently been sending the counter offer to the buyers already signed by the asset manager approving the sale and once the buyers put their signature on the contract it is now fully-executed. In this situation they usually change the status quickly.
For the most part listing agents have to wait for the asset managers to give them permission to change status. Sometimes they wait till escrow has been opened, or until the “good faith deposit” has been received, or sometimes they even wait till all inspection contingencies have been removed by the buyer. It all depends on the bank and their policies. You can always ask your agent, once you are under contract, to ask the listing agent when they are going to change the status…
Question: Why did my agent tell me that my offer was accepted and then I found out it was not after I already scheduled a home inspection?
When you submit an offer on a bank owned home and you are told your offer is accepted and you don’t have a copy of the fully executed contract in your hand (that is a contract with your signatures and the banks)… you can still lose the home to another buyer—that is, once you have the banks signatures on the contract, counter offer and addendums the bank will stop looking at other offers. The banks are giving buyers anywhere from 5 to 10 days to remove inspection contingencies so I know it is tempting to schedule a home inspection, and to pay for the termite report, but hold off until you have a fully-executed contract. If you don’t wait you could be out a few hundred dollars or more.
Question: My offer was accepted why hasn’t the status changed from “Active” to “Pending” in the MLS?
Assuming this is a bank owned home ~ this question fits well with the first question. It all depends on the banks procedures and policies. For example, bank “C” (I don’t want to list the name of the bank for liability reasons) has recently been sending the counter offer to the buyers already signed by the asset manager approving the sale and once the buyers put their signature on the contract it is now fully-executed. In this situation they usually change the status quickly.
For the most part listing agents have to wait for the asset managers to give them permission to change status. Sometimes they wait till escrow has been opened, or until the “good faith deposit” has been received, or sometimes they even wait till all inspection contingencies have been removed by the buyer. It all depends on the bank and their policies. You can always ask your agent, once you are under contract, to ask the listing agent when they are going to change the status…
Tuesday, January 6, 2009
Happy 2009! My New Blog Format for Information on the Temecula Valley’s Real Estate Market.
Happy Real Estate New Year!
Well, we are 6 days into the New Year and most of us have made our resolutions and some of us have already broken them. One of my New Years resolutions is to be diligent about posting my blog once a week… However, I would like to add a little twist to my blog; I get questions from buyers and sellers all the time about market conditions in the Temecula Valley and I spend quite a bit of time responding to these questions via e-mail or phone conversations.
What I would like to do is take one week a month and share this information in my blog. If you are game to have your questions answered for everyone to view please visit my website http://www.gatlinrealestate.com/ and send me an e-mail with your questions and be sure to specify that you give me permission to post it to my blog. I think this will be very informative for other home buyers or sellers in the Temecula Valley.
This type of blog might help home buyers or sellers get their questions answered without feeling obligated to talk with a real estate professional and this will give me the opportunity to talk about issues that I might have not thought to write about. I think this will be a win-win situation.
With that said I would like to add a DISCLAIMER: I keep saying “in the Temecula Valley” because I do not sell real estate in all locations in California and market conditions and values can vary from county to county. I specialize in the Temecula Valley and I know this market! I don’t want to assume other areas are similar to ours and therefore would appreciate no nasty e-mails telling me what I say is not true for your specific location... I am aware of this. However, I am an expert with California Real Estate Ethics, Practices, and Regulations in general so these types of questions I would be happy to address.
Well, we are 6 days into the New Year and most of us have made our resolutions and some of us have already broken them. One of my New Years resolutions is to be diligent about posting my blog once a week… However, I would like to add a little twist to my blog; I get questions from buyers and sellers all the time about market conditions in the Temecula Valley and I spend quite a bit of time responding to these questions via e-mail or phone conversations.
What I would like to do is take one week a month and share this information in my blog. If you are game to have your questions answered for everyone to view please visit my website http://www.gatlinrealestate.com/ and send me an e-mail with your questions and be sure to specify that you give me permission to post it to my blog. I think this will be very informative for other home buyers or sellers in the Temecula Valley.
This type of blog might help home buyers or sellers get their questions answered without feeling obligated to talk with a real estate professional and this will give me the opportunity to talk about issues that I might have not thought to write about. I think this will be a win-win situation.
With that said I would like to add a DISCLAIMER: I keep saying “in the Temecula Valley” because I do not sell real estate in all locations in California and market conditions and values can vary from county to county. I specialize in the Temecula Valley and I know this market! I don’t want to assume other areas are similar to ours and therefore would appreciate no nasty e-mails telling me what I say is not true for your specific location... I am aware of this. However, I am an expert with California Real Estate Ethics, Practices, and Regulations in general so these types of questions I would be happy to address.
Friday, December 12, 2008
My personal tips for bidding on Bank owned homes in the Inland Empire
NOTE: these tips are based solely on my experience with my buyers and Bank owned homes in the Temecula Valley area. Procedures may differ from state-to-state and county-to-county… so please read this with a grain of salt.
1. I call the agent and find out if there are multiple offers on the property before I show it to my clients and I ask if they are still accepting offers and if so, what is the cutoff time. This saves my clients the frustration of viewing a home they like and then finding out they are no longer accepting offers.
2. I advise my clients they need to come in with their BEST & FINAL purchase price right from the start (with multiple offer properties). There is no room for haggling back and forth with the bank on price if there are a lot of offers on the home. It is important to realize this and make the offer your best offer – if you want a chance at competing with the other offers.
3. I make sure we have all required documentation before submitting the offer:
-----Required pre-approval depending on which bank holds the title to the property.
-----Proof of Funds for down-payment amount or all cash offers.
-----FICO scores are helpful (either have the lender put it in the pre-approval letter or obtain a copy of your score from the credit reporting agencies).
-----Copy of your “good faith” deposit showing you have intent to deposit the check into escrow as soon as the offer is accepted (this amount varies from about 1% of purchase price to 3% of purchase price—the listing agent will generally make a note if the required amount is 3% in the agent comments of the MLS).
4. I make sure that I am friendly, upfront and very nice to the listing agent and/or their team. Good communication and honesty can go a long way! Staying ethical and professional says a lot about a person’s ability to successfully represent their clients.
5. I try to make sure that when I submit an offer to the listing agent that it is “complete”. If something is missing it can hold-up the offer being submitted to the bank for approval. I also, follow-up to make sure the offer was received and to verify they have everything they need to submit the offer to the bank.
It usually takes a few days to get a response on the offer, but I try to keep in contact with the listing agent during this time. Sometimes the agents are very helpful and responsive and sometimes I don’t hear a word from them until the offer is accepted or rejected.
Note for other buyer’s agents who are working with bank owned listing agents: Just remember there are some really great listing agents who work for the banks out there and they truly are a pleasure to work with. However, with any business, you have some people who are not good at what they do. Don’t let this stop you from moving forward; you can try to find ways around their shortcomings to get your clients what they want.
1. I call the agent and find out if there are multiple offers on the property before I show it to my clients and I ask if they are still accepting offers and if so, what is the cutoff time. This saves my clients the frustration of viewing a home they like and then finding out they are no longer accepting offers.
2. I advise my clients they need to come in with their BEST & FINAL purchase price right from the start (with multiple offer properties). There is no room for haggling back and forth with the bank on price if there are a lot of offers on the home. It is important to realize this and make the offer your best offer – if you want a chance at competing with the other offers.
3. I make sure we have all required documentation before submitting the offer:
-----Required pre-approval depending on which bank holds the title to the property.
-----Proof of Funds for down-payment amount or all cash offers.
-----FICO scores are helpful (either have the lender put it in the pre-approval letter or obtain a copy of your score from the credit reporting agencies).
-----Copy of your “good faith” deposit showing you have intent to deposit the check into escrow as soon as the offer is accepted (this amount varies from about 1% of purchase price to 3% of purchase price—the listing agent will generally make a note if the required amount is 3% in the agent comments of the MLS).
4. I make sure that I am friendly, upfront and very nice to the listing agent and/or their team. Good communication and honesty can go a long way! Staying ethical and professional says a lot about a person’s ability to successfully represent their clients.
5. I try to make sure that when I submit an offer to the listing agent that it is “complete”. If something is missing it can hold-up the offer being submitted to the bank for approval. I also, follow-up to make sure the offer was received and to verify they have everything they need to submit the offer to the bank.
It usually takes a few days to get a response on the offer, but I try to keep in contact with the listing agent during this time. Sometimes the agents are very helpful and responsive and sometimes I don’t hear a word from them until the offer is accepted or rejected.
Note for other buyer’s agents who are working with bank owned listing agents: Just remember there are some really great listing agents who work for the banks out there and they truly are a pleasure to work with. However, with any business, you have some people who are not good at what they do. Don’t let this stop you from moving forward; you can try to find ways around their shortcomings to get your clients what they want.
Monday, December 8, 2008
Statistics 101 and Real Estate Values
Balmy day in Temecula! Many years ago when I taught statistics classes at the college level, I would consider the weather before presenting my lecture. This may seem a little silly, but with people already having a high-level of anxiety about statistics it seemed appropriate to incorporate how the weather might affect my students moods—thereby changing the way that I would present my lecture for the day.
I think a similar statement could be said about purchasing a home and having high-levels of anxiety. I don’t know if there is a significant correlation between the two but it seems fitting. Today’s Balmy day made me reminisce on the days when I would share my love of statistics with those students who were only in my class because it was a requirement for them to graduate… LOL.
Why am I bringing this up?
I am bringing this up because I think it is important to talk about how the numbers are derived in all of those reports we read on current market values. I think anxiety of statistics can stop people from talking about how we get the numbers we rely so heavily on to help make decision about a purchase as big as a home. I hope that I can add a little information to your day or at least a recap of something you probably learned years ago.
I always send my clients statistics on current comparable properties, as I imagine most Realtors do. Statistics are a way to answer a question – the formulas always stay the same and only the numbers change. Answers are what my clients want! They want to know they are getting the best deal for their money and the best way to get those types of answers are through statistics.
Most of the statistics used in these reports are called Measures of Central Tendency. Measures of central tendency are scores that represent the center of a distribution or a normal curve: The three most common measures of central tendency are the mean, median, and mode. In Real Estate we do not use the mode as an accurate measure of value (the mode is simply the most frequent number in a set of data and does not provide us with an accurate value for home prices).
Here is a look at some real data I just ran for a client:
You tell me if they are making a good choice with this house—that is, will they get the best deal for their money?
Property in question: 5 bedroom, 3 bath, 3708 square feet built in 2004 List Price is $356,900. All of the homes in the example below are comparable to subject property.
Closed Date....Sold Price...Sqft....DOM....SP/Sqft 10/31/2008.......$365,000.......3,708.....12.............$98.44
11/18/2008.......$375,000........3,708......5............$101.13 12/01/2008..........$395,000.......4,076.....14..............$96.91 10/16/2008..........$400,000.......3,755.....45............$106.52
Average...........$383,750......3,812...19........$100.75
Median............$385,000......3,731....13.........$99.79
When you see “Median” home price in a report this number was derived by taking the middle house price from a distribution of house prices. All home prices being considered are ranked in numerical order and the middle price is the “median”. So half of the prices are below the median price and half are above. Note: If there were two numbers in the middle of the distribution you would take the middle of those two numbers (add them together and divide by 2) for example; to get the median price per square foot you would take 98.44 + 101.13 and divide by 2 which gives you a median price per square foot of $99.79. One of the limitations of using the median price is that it does not account for outliers. Outliers are those homes that sold for way above the average price or way below. An example of this would be if a home in this neighborhood sold for $250,000 and was comparable to the subject property the median would not account for this price, whereas the “mean” or “average” would factor this price into the equation.
When you see “Average” home price people are generally talking about the mean also know as the arithmetic average. The average is the sum of all prices divided by the number of homes. So, in the example above all 4 home prices were added together = 1,535,000 and then divided by the number of homes = 4 which gives you an average sale price for this neighborhood of $383,750. To get the average price per square foot you first have to get the price per square foot for each property you take the sale price $365,000 divide by square foot 3,708 this gives you $98.44. Do this for all homes and then sum those numbers = 403 and divide by 4 which gives you an average price per square foot of $100.75.
Well that is enough of that!
I think a similar statement could be said about purchasing a home and having high-levels of anxiety. I don’t know if there is a significant correlation between the two but it seems fitting. Today’s Balmy day made me reminisce on the days when I would share my love of statistics with those students who were only in my class because it was a requirement for them to graduate… LOL.
Why am I bringing this up?
I am bringing this up because I think it is important to talk about how the numbers are derived in all of those reports we read on current market values. I think anxiety of statistics can stop people from talking about how we get the numbers we rely so heavily on to help make decision about a purchase as big as a home. I hope that I can add a little information to your day or at least a recap of something you probably learned years ago.
I always send my clients statistics on current comparable properties, as I imagine most Realtors do. Statistics are a way to answer a question – the formulas always stay the same and only the numbers change. Answers are what my clients want! They want to know they are getting the best deal for their money and the best way to get those types of answers are through statistics.
Most of the statistics used in these reports are called Measures of Central Tendency. Measures of central tendency are scores that represent the center of a distribution or a normal curve: The three most common measures of central tendency are the mean, median, and mode. In Real Estate we do not use the mode as an accurate measure of value (the mode is simply the most frequent number in a set of data and does not provide us with an accurate value for home prices).
Here is a look at some real data I just ran for a client:
You tell me if they are making a good choice with this house—that is, will they get the best deal for their money?
Property in question: 5 bedroom, 3 bath, 3708 square feet built in 2004 List Price is $356,900. All of the homes in the example below are comparable to subject property.
Closed Date....Sold Price...Sqft....DOM....SP/Sqft 10/31/2008.......$365,000.......3,708.....12.............$98.44
11/18/2008.......$375,000........3,708......5............$101.13 12/01/2008..........$395,000.......4,076.....14..............$96.91 10/16/2008..........$400,000.......3,755.....45............$106.52
Average...........$383,750......3,812...19........$100.75
Median............$385,000......3,731....13.........$99.79
When you see “Median” home price in a report this number was derived by taking the middle house price from a distribution of house prices. All home prices being considered are ranked in numerical order and the middle price is the “median”. So half of the prices are below the median price and half are above. Note: If there were two numbers in the middle of the distribution you would take the middle of those two numbers (add them together and divide by 2) for example; to get the median price per square foot you would take 98.44 + 101.13 and divide by 2 which gives you a median price per square foot of $99.79. One of the limitations of using the median price is that it does not account for outliers. Outliers are those homes that sold for way above the average price or way below. An example of this would be if a home in this neighborhood sold for $250,000 and was comparable to the subject property the median would not account for this price, whereas the “mean” or “average” would factor this price into the equation.
When you see “Average” home price people are generally talking about the mean also know as the arithmetic average. The average is the sum of all prices divided by the number of homes. So, in the example above all 4 home prices were added together = 1,535,000 and then divided by the number of homes = 4 which gives you an average sale price for this neighborhood of $383,750. To get the average price per square foot you first have to get the price per square foot for each property you take the sale price $365,000 divide by square foot 3,708 this gives you $98.44. Do this for all homes and then sum those numbers = 403 and divide by 4 which gives you an average price per square foot of $100.75.
Well that is enough of that!
Sunday, December 7, 2008
Thoughts, Feelings, and a Prediction of Temecula Real Estate
The current real estate market in Temecula CA is saturated with bank owned homes. A lot of buyers and investors are cashing in on finding homes at rock-bottom prices. This is great news for buyers but, very devastating to sellers - not just sellers but everyone who purchased property before the crash of the real estate market in Temecula.
As a real estate professional it is very easy to become excited about all of the homes I am selling but as a person with feelings my heart is breaking for those who have lost their dreams.
I know there are always three-sides to one story (this persons, that persons and the truth somewhere in the middle). Some people are under the impression that those who have lost their homes were at fault. Others believe that the industries of banking/lending/agents are at fault. Some are even blaming all the investors that scooped up homes during 2005/2006.
What do I think? I think I have no right to judge!!!
What is next? My prediction for next year’s real estate market in and around the Temecula Valley is this; we will have another on-slaught of Foreclosed homes also known as Real Estate Owned (REO) hit the market late January and continue into February. I think we will see home prices start increasing and continue upwards until September and at that point even out. I don’t think house prices will regain the unjustified prices they were in 2005/2006, but I do think we will see our market start to stabilize in the Temecula Valley. I don’t think home prices can go down much if any lower than they are right now. However, with that said, I would like to add a caveat -- I didn’t think they could reach the prices they are right now either… what does this say about my prediction… who knows, that is why it is a prediction!!!
As a real estate professional it is very easy to become excited about all of the homes I am selling but as a person with feelings my heart is breaking for those who have lost their dreams.
I know there are always three-sides to one story (this persons, that persons and the truth somewhere in the middle). Some people are under the impression that those who have lost their homes were at fault. Others believe that the industries of banking/lending/agents are at fault. Some are even blaming all the investors that scooped up homes during 2005/2006.
What do I think? I think I have no right to judge!!!
What is next? My prediction for next year’s real estate market in and around the Temecula Valley is this; we will have another on-slaught of Foreclosed homes also known as Real Estate Owned (REO) hit the market late January and continue into February. I think we will see home prices start increasing and continue upwards until September and at that point even out. I don’t think house prices will regain the unjustified prices they were in 2005/2006, but I do think we will see our market start to stabilize in the Temecula Valley. I don’t think home prices can go down much if any lower than they are right now. However, with that said, I would like to add a caveat -- I didn’t think they could reach the prices they are right now either… what does this say about my prediction… who knows, that is why it is a prediction!!!
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