Nancy Moeller's Blog

The good news is that  4,706 short sales were closed YTD in Orange County.   These homeowner avoided foreclosure, lenders were able to minimize their loses and buyers were able to enter the market.

The distressing news is that 5,759 short sales were canceled, expired and withdrawn in the same period. In other words. That means that over 50% of all short sales attempted this year - failed.

The why is easy ... the process is ridiculous. It usually goes something like this:

First, agents typically under price the property to attract buyers who would otherwise stay away from short sales. Then,  dozens of buyers place offers on this and many other properties at the same time. Next, the lenders take months and months to even consider the offers. In the meantime, most of the buyers have moved on to other properties ... except the buyer with the lowest offer. But unfortunately, his offer is 20% below the comparables and the lender says "no".

So then, the agent goes back on the market and tries to get another offer at this possibly, but not guaranteed "approved" price. Then maybe this time, if they are lucky, they'll find a reasonable offer, if the negotiator hasn't closed the file yet, they get the highly coveted approval letter.

Unfortunately, the approval is only good for 30 days and as we all know, it's almost impossible to get a loan closed in 30 days in today's market. So, on Day 28 the buyer's agent sends over an urgent extension request and the negotiator responds that this delay is unacceptable and someone is going to have to pay a per diem for them to even consider an extension.

But remember, the glass is almost half full and despite this process, we are able to get 45% closed.

So, how do we fix it? Based on my inexperience with our current process, here's the easy solution to get about short sale success rate up to 95%.

1.  First, the seller submits a standardized hardship financial package to the lender

2.  The lender has a negotiator assigned to the property within 7 days

3.  The negotiator orders an appraisal and 2 Broker Price Opinions within 7 days

4.  The lender evaluates the package and the market value, and gives the homeowner an approved price with a 90 day window to get the property under contract

5.  The homeowner hires an experienced Realtor who lists the property as an "approved short sale" that can be closed within the same time frames as a standard or REO sale.

If the answer is "yeah, but ... they don't have the resources" - that's crazy nonsense. This process would save them a fortunate in time, administration, personnel and eventually foreclosure costs.

Have a great week!

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

"If You Can't Explain it Simply, You Don't Understand It Well Enough"

~ Albert Einstein

"If You Can't Explain it Simply, You Don't Understand It Well Enough" ~ Albert Einstein

Every day I read articles, statistics, trends and countless opinions on real estate. In Orange County, the market snapshot and outlook has never been clearer.  

Orange County Market Facts

1.      Supply has dropped nearly 50% since last year (7,768 properties in the OC)

2.      28% of our supply are short sales and only 22% of active short sales are closing

3.      There are only 333 bank owned properties on the market in Orange County, but 444 closed last month, meaning we have only a two week supply of REOs.

4.      Interest rates are at artificially low rates and WILL increase

5.      Investors are back in the market - both flipping and holding properties

6.      Buyers are competing with dozens of other buyers for properties

7.      Properties are selling for 98% of list price, and often - much more!

8.      More bank owned foreclosures will hit the market

9.      There is plenty of pent-up demand to handle more supply

10.  It's finally possible to achieve "positive cash flow" on Orange County rentals

In addition, we have tax credits available to both first time and move-up home owners. In short, it's the best time in recent history to purchase real estate.

What to do next: Find a great agent who understands how to beat out the competition, write a winning offer on your behalf and protect your interests throughout the process.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

Good news for buyers and the housing market. These changes are effective when the President signs the bill. The credit offers several new features, including a $6500 credit for people who are not "first time" homeowners and a binding contract rule which will take away some of the pressure in April, 2010 when the credits are scheduled to expire. See the chart below for a summary:

For homeowners facing foreclosures and considering a loan modification, diligence is key.

This month, the State Bar of California launched a number of investigations into misconduct related to loan modifications. Some unscrupulous attorneys have allegedly taken fees, but failed to perform the services they promised.  

According the State Bar of California website, about one-quarter  - almost 800 cases -  of the active investigations in the Office of Chief Trial Counsel (OTC) are related to foreclosure complaints.

The State Bar has even released the names of 16 attorneys under investigation. The list of attorneys currently under investigation is available at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10144&n=96395

Be careful out there - many scam artists and others simply out to make a quick buck without the proper expertise, are affiliating with attorneys in order to collect advanced fees and seem more credible to the public.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.ZeroShort.com

Direct: 714 276-7006

Fax: 714 917-2293

No, I'm not talking about real estate commissions, but rather a great article a friend emailed me this morning and asked me to forward. Since I don't like forwarding email, I thought it best to share in my blog. Here it is:

Written By Regina Brett, 90 years old, of The Plain Dealer, Cleveland, Ohio:

"To celebrate growing older, I once wrote the 45 lessons life taught me. It is the most-requested column I've ever written. My odometer rolled over to 90 in August, so here is the column once more."


1. Life isn't fair, but it's still good.
2. When in doubt, just take the next small step.
3. Life is too short to waste time hating anyone.
4. Your job won't take care of you when you are sick. Your friends and parents will. Stay in touch.
5. Pay off your credit cards every month.
6. You don't have to win every argument. Agree to disagree.
7. Cry with someone. It's more healing than crying alone.
8. It's OK to get angry with God. He can take it.
9. Save for retirement starting with your first paycheck.
10. When it comes to chocolate, resistance is futile.
11. Make peace with your past so it won't screw up the present.
12. It's OK to let your children see you cry.
13. Don't compare your life to others. You have no idea what their journey is all about.
14. If a relationship has to be a secret, you shouldn't be in it.
15. Everything can change in the blink of an eye. But don't worry; God never blinks.
16. Take a deep breath. It calms the mind.
17. Get rid of anything that isn't useful, beautiful or joyful.
18. Whatever doesn't kill you really does make you stronger.
19. It's never too late to have a happy childhood. But the second one is up to you and no one else.
20. When it comes to going after what you love in life, don't take no for an answer.
21. Burn the candles, use the nice sheets, wear the fancy lingerie. Don't save it for a special occasion. Today is special.
22. Over prepare, then go with the flow.
23. Be eccentric now. Don't wait for old age to wear purple.
24. The most important sex organ is the brain.
25. No one is in charge of your happiness but you.
26. Frame every so-called disaster with these words ''In five years, will this matter?".
27. Always choose life.
28. Forgive everyone everything.
29. What other people think of you is none of your business.
30. Time heals almost everything. Give time, time.
31. However good or bad a situation is, it will change.
32. Don't take yourself so seriously. No one else does.
33. Believe in miracles.
34. God loves you because of who God is, not because of anything you did or didn't do.
35. Don't audit life. Show up and make the most of it now.
36. Growing old beats the alternative -- dying young.
37. Your children get only one childhood.
38. All that truly matters in the end is that you loved.
39. Get outside every day. Miracles are waiting everywhere.
40. If we all threw our problems in a pile and saw everyone else's, we'd grab ours back.
41. Envy is a waste of time. You already have all you need.
42. The best is yet to come.
43. No matter how you feel, get up, dress up and show up.
44. Yield.
45. Life isn't tied with a bow, but it's still a gift.

It's estimated 93% won't share this. If you are one of the 7% who will, forward this with the title '7%'.
I'm in the 7%. Remember that I will always share my spoon with you! Friends are the family that we choose for ourselves

I have a personality flaw. Actually, I have many ... but this one I will admit.

I am an "all or nothing" person. In life, like in poker, I find myself either "all in" or "completely out". And when there is an exception to this rule (when I find myself in the middle of in and out) ... I take on incredible stress.  

Understanding this personality flaw, I am able to control (control is another personality flaw for another blog) some outcomes.

In work, I'm usually "all in" ... but again, this is not a post about real estate or work ... so enough of that.

This blog is about fitness. Celebrating my 40^th this month reminded me that while I still "feel" 21, my body is most certainly feeling 40.

So for my birthday present to myself, I bought the home fitness series, "Insanity" by Shaun T. What appealed to me when I bought it was that it did not require any equipment - no weights, pull up bar, etc. I also liked the challenging element and intensity of it.

The best surprise so far is that I enjoy the workouts. I'm on Day 17 and haven't missed a beat. I actually look forward to the work out because it's short (about 40 minutes), intense and the stretches are a welcome, relaxing break from the bursts of insanity between them.  And because I look forward to them, I'm "all in" and that's a good thing for exercise.

Do I have weight loss or other goals tied to all of this? For a change, no. I decided just to enjoy the process, exercise every day and see what happens.

So why did I write a blog on this topic? Mostly as a testimonial for a great workout series that appeals to someone with an "all or nothing" personality type. Secondly, as a personal commitment to keep it. And lastly, to remind myself that when I feel stress, the root is probably lack of commitment or being in a state of limbo.

Enough of that for now,

Nancy

With so many properties getting multiple offers in the first few days - many from cash investors, how can a traditional buyer with a conventional or FHA loan compete?

First, be patient and don't get attached to any one house. The chances are you will be outbid.

However, if you want to increase your chances, here are some tips. As REO agents who get a lot of calls, emails and offers on our own listings, these are the things that make a buyer and their agent stand out.

1. Make contact. Ask your agent to make a personal contact with the listing agent. This is not always possible, as many busy REO agents don't return calls or emails, but it's always worth a shot to build rapport and try to gain insight into the number and strength of other offers.

2. Be concise. Ask your agent to prepare a short, concise email with their offer that conveys the following:

      a. Amount of offer

      b. Pre-approval with a direct lender

      c. Buyer has seen house and is committed to the purchase

3. Send a complete package. Put together a complete offer package, typed with the listing agent's information filled out on the forms. Be sure all initials, dates and signatures are complete. Be sure to include your pre-approval letter and proof of funds required to close.

4. Follow up. Be sure to follow up the same day to make sure your offer was received. So many times, email and faxes are unreliable ... not to mention the human element of processing so many offers.

5. Stay in the game. Even if you don't get the property, don't give up. Ask your agent to follow up with the listing agent, just in case it falls out of escrow. Sometimes it's the "last buyer standing" who gets the property when it falls out of the first escrow.

And most importantly, find a good buyer's agent and stick with them. Don't try to work with 20 different listings agents, hoping that will give you an advantage. Ethical listing agents present all offers and the best offer wins. We often submit offers for our buyers on our own REO listings that are beat out by stronger offers. The advantages of working with the listing agent are easily resolved by following the tips in this article. And the advantages of having your own advocate and agent working for you on ALL properties are far too numerous to list in this article.

Good success to you,

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

Delayed until November 2, 2009, FHA is changing the way condo projects will be approved. Under the new rules, there will still be an "FHA Approved" list, however all prior approvals will be invalid unless approved on or after October 1, 2008. For condo projects not on this list, FHA will start from scratch approving a condo by one of the following two methods:

Note: The "Spot Approval" process will be eliminated and replaced by these two methods.

DELRAP (Direct Endorsement Lender Review and Approval Process) gives an Underwriter the power to approve a condo locally. The approved lender provides HOA documentation (CCRs, Budget, HOA Management Company Questionnaire, Insurance, Reserves, etc.). The Underwriter reviews the documents and makes a decision. The lending community is hopeful that this process may be easier than in the past.

HRAP (HUD Review and Approval Process) utilities the same documentation as DELRAP but puts the approval process on HUD (Department of Housing and Urban Development). This may prove to be very time consuming.

Once a unit is approved in the project, we believe the project will be added to the FHA approved list. Going forward, all projects will require recertification every two years.

In order for a project to be approved, the following guidelines (among others) must be met:

1. At least 50% must be owner-occupied
2. No more than 10% can be owned by a single investor
3. No more than 25% of the total floor space can be "commercial"
4. No more than 15% of the units can be more than 30 days behind on their association dues
5. Project must be covered by hazard and liability insurance
6. There must be adequate "reserves" to cover contingencies

If you can't sleep tonight, you can download the entire Mortgage Letter 2009-19 document from the HUD site at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-19ml.doc

Make it a great day!

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCMarketUpdate.com (blog)

Direct: 714 276-7006

Fax: 714 917-2293

Just a few years ago during the "Bigger Fool" era of 2005/2006 ... do-it-yourself investors were picking up condos for $400,000 and renting them for $1,650 a month. We call it the "Bigger Fool" strategy because it only makes sense if some other "Bigger Fool" will pay you more than $400,000 you paid for a bad cash flow deal.

But finally, the numbers work in Orange County and its the reason investors are scooping up all the properties, while the first time homebuyer wonders why they can't get a house despite placing 10 full price offers.

Here's a great example. The Hills complex of Yorba Linda has about a dozen short sale listings. Despite the headache, short sales are a great option for the patient buyer.

The median price for a 2 bedroom condo is $230,000. The median rents for the same condo this year are $1,650. The tax rate is 1.3%, HOA dues are $305. Based on my calculations, this investment not only positive cash flows, but also has a return on investment of 8.1% BEFORE appreciation.

Let's assume a 3% annual appreciation rate ... in 20 years, this investment will be worth $415,406. Not interested in paying taxes on your gain? Keep it, exchange it or move into it for 2 years ... there are many tax savings strategies.

If you've been thinking about investing, it's time.

Seven Gables Real Estate

License #01727426

www.TheOCExperts.com

www.OCBankDeals.com

Direct: 714 276-7006

Fax: 714 917-2293

As the debate continues whether certain markets in Orange and Riverside counties have "bottomed", the usually gloomy Case-Shiller index reports that home prices have reversed course and that the bottom has passed.

Please find a link to this interesting article http://realtytimes.com/rtpages/20090804_realestateoutlook.htm from Realty Times.

For our clients in Orange County, we maintain that the market under $500,000 has reached a bottom. In Riverside County, we see this level at $350,000 and below. If you are a buyer in these markets, you are likely writting offers on multiple properties, competiting against at least a dozen other buyers and wondering why some people still believe that we're in a "buyer's market" and should expect greater price declines.

Have a great day!

Nancy Moeller, CPA, Real Estate Broker

www.TheOCExperts.com

Seven Gables Real Estate

Todd Direct: 714 404-9540

License #01762788

Nancy Direct: 714 276-7006

License #01727426