Home $$s & Sense

Buy “As Is” Without Regret

2008-09-04T14:30:00.000-07:00

Dear Sue

I heard that the homes being offered for sale “as is” are the best deals. I have been watching the foreclosures and they are all listed “as is.” I would really like to make an offer but I am afraid of being stuck with costly repairs that I can’t handle.

I have heard stories about these “as is” properties being completely stripped of electrical, plumbing, appliances…everything. I have also heard that properties that appear perfectly fine have problems that show up later.

How can I take advantage of these good deals and not end up with something I regret?

Wary Walt

Dear Walt

Many people are under the impression that homes being sold “as is” can’t be inspected. And if they are inspected, they think that they are stuck with the problems they find.

Not true! If you find a property that you like, make an offer subject to inspections and investigations. Allow plenty of time for a pest report and a thorough professional home inspection. Check the status of the property with the building, planning and environmental health departments. Most inspection periods are 17 days. If you discover something that isn’t working, have a licensed contractor give you a written repair estimate. Attach the estimate to an addendum requesting a credit or reduction in sales price by the amount of the estimate.

Keep in mind that the seller is not obligated to give you a credit. If you are not satisfied with the inspections and the seller refuses to give you a credit you can cancel the escrow without penalty as long as you do it within your inspection period.

If the seller refuses to allow inspections, go on to the next property. A seller that won’t allow inspections spells trouble!

If you find an “as-is” property that requires extensive repairs and/or remodeling make your offer subject to a construction or rehab loan. The total amount financed will include the purchase price and the cost of rehab. You will finance the repairs along with the purchase price over 15 or 30 years.

A reputable real estate agent will assist you with determining the market value. They will also provide names of licensed contractors and lending sources. They are also experts at managing the transaction.

Understanding that “as-is” doesn’t mean forgoing inspections and being stuck with a can of worms is a matter of Good Home $$s and Sense.

Price Home Right the First Time

2008-08-20T12:59:00.000-07:00

Dear Sue

My real estate agent keeps suggesting that I lower the price of my home. I know that my price may be a little high but I think if a buyer really wants my home he will make an offer. I need room to negotiate.

My friends agree with me. My best friend just sold his house. He said he priced his home a little high but he ended up getting what he wanted.

I think it is just common sense and good negotiating strategy to price your property higher than your bottom line.

What do you think, Sue?

Savvy Sam

Dear Sam

There are different strategies for different markets. When markets are trending down, over pricing can be disastrous. Thinking that one should price their home above the market in order to have negotiating room is a mistake. If one prices their home too high in a declining market the price that a willing buyer is willing to pay sinks lower and lower.

Consider the following statistics furnished by the Placer County Association of Realtors.

There were 2195 home sales in Placer County in the last six months. 1011 of those sales were on the market for 30 days or less. That is over 46%! Those sales received 99% of their asking price. In other words, the sale price was reduced by 1% of the asking price.

There were 385 Properties sold within 31 to 60 days. Those properties sold at 96.5% of the asking price or 4.5% less.

241 properties sold in 61 to 90 days. Those sold within 95.9% or almost 6% less than the asking price.

190 properties sold within 91 to 120 days for 94.2% of the asking price. Or over 6% less.

368 properties on the market for 120 or more days sold at 93.72% of asking price or 6.25% less.

While there are always exceptions, I cannot stress enough the importance of pricing your property to sell when it’s first put on the market. As the statistics show, the longer time on the market equals the less money one ultimately receives.

The primary reason is that distressed property sales have dominated the market driving prices downward. Placer County real estate is currently losing about 2% per month in value. While sales may be up prices are down.

Buyers rule. Placer County presently has approximately 2300 properties available for sale. Buyers are not making quick decisions because they have several choices and they fear that they may pay too much.

Buyers that are looking are always watching for new listings. That is why all new listings have the most showings in the first three weeks. Once that “golden window” is closed sellers have to rely on new buyers coming into the market noticing a listing for the first time. Buyers love to say, “It just came on the market and I was so lucky to see it first!” Not, “Oh boy, I was so lucky to find it. It was on the market for 100 days!”

Pricing your home to sell is a matter of good Home $$s and Sense.

An Old Pro’s Market Perspective

2008-08-13T11:08:00.000-07:00

Dear Sue

Everyone is talking like this is the worst real estate market we have ever seen. Some even liken it to the Great Depression of the 1930s.

Having lived through the Depression as a boy, I can tell you it is not even close. During the Great Depression 40% of US banks failed. Depositors lost everything. There was no such thing as a federally backed deposit. Investors jumped out of windows. Farms and factory’s went bankrupt. Unemployment was at a staggering 25% in 1933. It is 5.5% today. Shantytowns and breadlines were everywhere.

I remember the men down on their luck coming to our back door for food. My mother fed the poor men we all called “hobo’s”. We all knew in those times that anybody could be begging for food.

We have experienced REO markets during every real estate cycle, approximately every ten years. Good businessmen plan around downturns because they know they are inevitable. Conservative homebuyers live below their means and plan for down turns as well.

Back in one of the “other” downturns, many cycles ago, I was working for builder George Holstein in Southern California. I was in charge of marketing. We had been selling homes at the Eastmont tract in Orange on a land contract. (You experienced agents know what a land contract is.) I think we were asking for $95 “to move right in!” The contract was for 3 years at which time the buyers would be required to get the necessary bank financing and pay Mr. Holstein off. The contracts just covered the loan payments that Holstein had with the bank. His goal was to just cover his carrying costs. He figured that he would get some of the homes back on the “drop dead date” (due date) in about three years when the original land contracts were up.

Three years later the folks who couldn’t come up with the financing started moving out. Some of the homes were in terrible shape but as history repeats, they were worth much more than the original price. As planned, Mr. Holstein cleaned them up and resold them at a profit.

During the period of the many move-outs, we ran ads for “Mr. REO.” We didn’t have a sales office so we borrowed a little RV trailer from our sign painter. We had him paint the trailer bright yellow and parked it on a side street close to the project.

Our ads directed people there. It was staffed by an old real estate agent named Rollie Jones, AKA Mr. REO. It was working well until one night the Orange police took the trailer and impounded it in their yard. The trailer contained MR REO’s sales contracts and paperwork. We got it out and continued the Mr. REO campaign but without the yellow trailer.

You buyers out there need to get off the fence. Interest rates are starting to creep up from 5.5% to almost 7% in the last year. Every percentage point is worth a good $100 more per month on $100,000. Get online and check out the rent vs. mortgage comparison charts. They should be easy to find.

Markets go up and markets go down. When they are on their way up people think it will never stop. When they are going down people think it will never stop. But it will. It always does.

Three years from now this market will be looked upon as a fun and challenging time!

Sign me

Mr. Seen It All

Sue says, "Listening to the Old Pro is a matter of Good Home $$s and Sense!"

Ask Miss Real Estate Manners

2008-08-07T14:50:00.000-07:00

Dear Sue

We have sold several homes. Our least favorite part about having our home for sale is the inconvenience and disruption in our lives.

We hate going to all of the trouble of getting our house ready for a showing, only to have the agent not show up with their prospective buyer.

When we had our old house on the market in Southern California we would get home late and not find any business cards even though we knew that someone had been in our home. It was a very creepy feeling. One time we even found our back door unlocked.

Is this lack of consideration common or is this experience unique to us? Is there a way to prevent these kinds of things from happening to us again?

Dreading Dana

Dear Dana,

I was a guest speaker on a panel for the Women’s Council of Realtors at the Placer County Association of Realtors yesterday and realtor courtesy was a hot topic.

Everyone agreed that the lack of manners between agents and clients was an issue in our industry and agents needed to be more conscious of social grace, respect and courtesy.

When you put your house on the market discuss your concerns with your agent. Let your agent know what you expect in the way of courtesy and etiquette.

Some real estate agents are so focused on the buyer that it appears that they forget about the needs of the seller’s. When showing properties, agents could request a block of time. Asking for a specific time is often unrealistic. For example a morning block of time may be from 9AM to noon. The afternoon block could be from 1 to 4. The key is that the client’s expectations are managed thereby reducing frustration and disappointment.

It is important to realize that it is impossible to predict what a buyer is going to want or do. He may want to alter the “showing” course. Selling is a process, not a series of appointments.

When an agent drives up to a home with a buyer, the buyer knows immediately that they are or are not interested in seeing it. If a buyer is not interested in seeing the property I think it is important that the buyer’s agent leaves a note on the door and follows up with a phone call.

It may be that the first house on the showing tour list is the one the buyer wants and they don’t want to see any other homes. It is the agent’s obligation to call the seller’s that are expecting them and explain the situation. The seller may not like hearing it but he will certainly respect and appreciate the courtesy.

There are no professional training classes for how to show a home. Because there isn’t maybe the seller’s need to formulate their own written guidelines or special instructions such as, please remove shoes or leave the thermostat at 80 degrees. Please lock all doors except laundry room. Please turn off all the lights. Don’t let the cat out. Backyard dog is friendly (or not!)

Make nice cards and place them in appropriate locations through out ones home. Make them fun if possible. For example; Please remove your shoes while doing your tours…this carpet that you’re walking on may soon be yours………………………….

Simple courtesy is a matter of good home dollars and sense.

Think Outside the Lock Box!

2008-07-30T15:47:00.000-07:00

Dear Sue,

My wife and I bought our home about four years ago. Since home values have dropped we now owe more than our home is worth.

I know this is strange but we would like to trade houses with our neighbor who lives just a couple of blocks away. He wants our home and we want his. We like his floor plan a lot better than ours. He has the extra garage we need and we have one too many bedrooms. Our neighbor bought his home around the same time we did and he put about the same amount down.

Neither of us has any equity so I guess we would be trading debt. Is there any way we can trade houses? If so, how would we go about doing it?

Thanks for your help!

Trading Tom

Dear Tom,

Wow! The concept of trading debt is a new one. I believe that it can be done.

My suggestion would be to start with your respective lenders. Each lender would require that each of you qualify for each other’s loan. You will be required to go through a formal loan assumption process. That means providing two years of tax returns, w2’s for income and proof of employment and current credit reports.

If each of you qualifies it should be a no brainer. Very creative of you!

With the current foreclosures, short sales and tight money, it is very important to be creative. Realtor’s need to think outside of the “lock box” in order to assist home buyers and sellers in this market. Utilizing available lending programs is not enough.

Trades are a great way to move up or on. If there is equity to work with, seller financing is a great option. This is when the home seller becomes the bank. The home buyer makes the down payment to the seller and the seller carries back the balance on a note at mutually agreed upon terms.

Home buyers looking for money, now have fewer options since down payment assistance programs are becoming virtually non-existent. Gifts from family members or early inheritance money should be a consideration. Some parents or grandparents would love to see their children or grandchildren enjoy their inheritance while they are still alive.

IRA’s are a good source for a down payment. Either through borrowing or the once in a life time penalty free $10,000.00 withdrawal that the IRS allows.

Self directed IRA’s are an often overlooked source for buying real estate. A qualified self directed plan will allow one to buy out right or finance the purchase with 30% down as long as the loan is a non recourse loan. A non-recourse loan is one where the lenders only recourse for non-payment is foreclosure.

Sell stuff. I have a client that is selling a horse trailer, horses and tractor to come up with a sizable down payment. Turn your stuff into an asset!

Equity share. Find a partner that will help with the down payment. Put them on title for an agreed upon percentage of the profits or losses after a specified period of time. The longer the time period the greater the chances of making a profit.

Credit unions are an affordable source for all kinds of loans including home loans. The credit union interest rates are often better than bank rates. It will pay to shop a local credit union.

Lease option or lease purchases are another possibility. This is where the home buyer leases the property for a set period of time. The time period is usually 1 to 2 years. A portion of the rent is often credited towards the purchase price. When it comes time to exercise the option to purchase the buyer/tenant gets a loan and buys the property.

I am sure there are other ways to finance a new home. I look forward to hearing from my readers about alternative forms of financing that they may have come up with.

In today’s tight money market thinking outside the “lock box” is a matter of good home dollars and sense.

Should I Wait?

2008-07-23T10:15:00.001-07:00

Dear Sue

I want to buy a house. I have been waiting until the anticipated wave of foreclosures in July and August bring the real estate prices down even more.

It seems like the foreclosure news has been replaced by news of bank failures. The so-called “credit crisis.”

I know that foreclosures bring the prices down but how does the credit crisis affect my buying decision? Should I wait until the banks are more stable?

Anxious and confused

As we all know supply and demand controls price. Higher supply with little demand equals low price. High demand with low supply equals high price.

When one thinks about real estate in terms of supply and demand, the supply is the available housing inventory and the demand is the number of buyers in the market. Up to this point, few have considered that financing is the fuel for the market. Today’s credit crisis is simply a reduction in the money supply. The harder money is to obtain, the more expensive it is going to become.

Just as the high gasoline prices are causing consumers to turn to alternative fuel sources such as electric, hydrogen and bio fuels, homebuyers are going to need to look at alternative and creative sources of financing.

Recently, money suppliers Wachovia and Washington Mutual, have reported multibillion-dollar losses and have discontinued mortgage lending. To put it in perspective, they are in the “big five” in terms of size.

There is also a bill that threatens down payment assistance programs. According to FHA estimates, forty percent of FHA loan volume involves down payment assistance of some kind. The forty percent estimate means that 300,000 working class families will be locked out of home ownership. Communities across America will take the brunt of an estimated $50 billion in lost real estate sales.

I believe that anyone considering a home purchase should do it now before money becomes too expensive. If credit continues to be in short supply the cost to borrow will go up!

Buying while affordable money is available is a matter of good Home $$s and Sense.

Now I Need a Short Sale!

2008-07-23T10:12:00.000-07:00

Dear Sue

I read your article last week about the poor lady’s “bad upside down loan.” I am in a similar situation. I think I had better consider a short sale. I would like to know how to get started.

I admit that I am in this mess because I signed a bogus loan application reporting more income than I really had. Because I was able to get a loan that I didn’t qualify for, I thought my loan officer was an angel. I should have known better! Today with payments more than I can afford, I think my loan officer was the devil incarnate!

How could the country have gotten in this mess and what can I do about getting a short sale now?

Sad Sam

Dear Sam

A little over ten years ago the mortgage industry came out with “designer loans.” One of those loans was a 125% loan to value. Yes, the lender would make a 100% loan and pay the borrower an additional 25% of the property’s value as an incentive. As far-fetched as my thoughts seemed at the time, I thought it was a plot to have the government own a good part of our nation’s real estate.

Today that doesn’t seem so far out. The current government involvement with the mortgage giants, Fanny Mae and Freddie Mac, along with a measure, if passed, will get taxpayers involved in the mortgage business whether we like it or not. The extent of the government’s involvement is yet to be seen.

You ask what caused all this? I believe that lack of regulation and supervision in the mortgage industry, non-disclosure, greed and fraud are the culprits in this debacle.

This won't make me popular, but it is also my opinion that allowing the same person who sells the property to lend on the property is bad news. The realtor and the lender should never be one and the same. Unless there is owner financing I believe it is a conflict of interest.

I also want people to know that everything happening right now is the “lagging edge” not the “leading edge” of the mortgage fallout. The banks are experiencing the late consequences of all the bad loans.

I also believe that our situation is compounded by fear. If we don’t panic we will soon come to another equilibrium. At this moment it is more of a confidence crisis than a financial one.

If you want to start the short sale process, it is important to know that the requirements differ from lender to lender. New rules are being written as we speak. The first step is to engage a real estate agent experienced in short sales. Next, contact the loss mitigation department of your bank. That would be the person or entity that sends you your mortgage statements. You will be required to complete a “work out” or short sale package.

The package includes a request for a hardship letter, financial statements and a list of all of your expenses. They will also want W-2’s, two paycheck stubs and your previous month’s bank statement. You will also be required to give written authorization to the lender to speak with your agent.

The bank will then request a “BPO” (broker price opinion) that estimates the value of the property. The BPO’s are done by impartial Realtors or appraisers who are an “arm’s length” away from the transaction.

The package, after being assembled, is taken to a review committee where it is approved or disapproved.

Your agent and lender will guide you through the process once you have made contact. It sounds like in your case that a short sale is a matter of good Home $$s and Sense.

Bad Loan!

2008-07-10T10:28:00.000-07:00

Dear Sue

I bought a little fixer over three years ago. I didn’t have much of a job but I had a great down payment from an inheritance.

I paid just over $400,000 for my house. I didn’t want to borrow more money than I needed to, so I planned to use my inheritance for the remodel.

I signed loan papers that I thought I understood. I didn’t ask enough questions. I just put myself in my loan broker’s hands.

A long story made short: I put all my inheritance into remodeling. My broker has refinanced my house three times since I purchased it. After the negative amortization and loan fees, I now owe almost twice as much as what I paid for the house in the first place. Loan fees of over $60,000.00 were added to my loan. I never knew what negative amortization was before but I sure do now! Since I don’t pay enough each month to cover the full principal and interest, the amount is added to the loan balance. My loan grows bigger every month!

I feel like I need to do something before my loan comes due again in three years. I called a real estate agent and asked her to do a market analysis. She said that I was upside down and should consider a short sale. She said that I could also consider staying in my house for the next three years and see what the market is doing at then.

Given fact that I am almost 65 years old and single and have been taking the money out of my retirement to make the house payments, I don’t know if waiting would be a good idea.

I am heartsick over all of it. I just want to do the right thing. I love my home and would love to keep it. Do you have any advice for me?

Heartsick

Dear Heartsick

I am heartsick for you!

Whatever you do, don’t get a new loan. The definition of insanity is doing the same thing over and over and expecting a different result.

Begin by expecting miracles. Don’t call your loan broker. Call your lender’s (the company that funded the loan) loss mitigation department and ask the following questions:

Can the loan be restructured?

Are there any assistance programs available to help eliminate some of the debt?

If you can’t get an answer, ask to speak to their immediate supervisor. If you can’t get any help in this way, you are a prime candidate for a short sale. I would suggest asking for a short sale package, give your lender permission to deal with your Realtor, and get going.

Choose a reputable real estate agent experienced in short sales.

Thanks to recent legislation you may not have to pay tax on your debt relief. You will have lost every penny that you put into your house.

Giving up your home may be difficult for you but it may be the best thing you can do for yourself financially. It could be a matter of Good Home $$s and Sense.

Don’t let Your Home go Up in Smoke!

2008-07-10T10:26:00.000-07:00

Most of the seasons make the Foothills a wonderful place to live. Unfortunately right now we are experiencing fire season.

Since fire requires fuel to burn, it is important that you take precautions by reducing that fuel supply around your home and out buildings.

Not all fires move along the ground. Forest fires, like the recent one in Foresthill, travel from treetop to treetop.

Trees near your home may be beautiful and provide shade but if they are too close they can act as a matchstick and burn your house down.

The following tips can help prevent your home from burning down.

Use as much non-combustible or fire retardant building material as possible in new construction. Incorporate sprinkler systems even when they are not required by building code.

Replace wood shake roofs with composition, tile, slate, concrete or other materials that do not burn.

Clear all dry vegetation and low limbs within 100 feet of all structures. Do not use a mower once the vegetation has dried out! If the mower blade strikes a rock and creates a spark it can cause a wildfire. Instead use a weed eater with a nylon string. Even then it is important to keep a hose, shovel and other fire fighting equipment nearby.

Avoid outdoor fires of any kind. Fireworks and sparklers can start a fire. In my opinion it isn’t worth the risk. If you are barbequing, don’t do it under the eaves, awnings, and trees or against wood rails on decks. Clear the entire area surrounding your barbeque before you ignite.

Avoid stacking firewood near any structures. Keep the woodpile as far away from your home as possible.

Keep electrical systems in good repair. Don’t use undersized or damaged extension
cords.

Don’t store oily rags, solvents, paints and other flammables in or near structures. Intense heat may cause spontaneous combustion. A friend of mine’s entire material world went up in smoke. After refinishing her out door furniture she left the bucket of rags and paint thinner she was using at the edge of her deck. The only thing left standing was the chimney.

Keep fire extinguishers handy in the home, barbeque and shop areas. Be sure that the extinguishers are rated for their intended use.

Electrical service is usually lost during fires. If you have a well it would be wise to have an alternate back up power system such as a generator in place.

Water sources, such as swimming pools, ponds and streams are great for firefighting. A gas powered high-pressure water pump can save your property. Practice using the pump before you need it. You don’t want to be reading the manual as your house burns down.

Be informed! Get fire prevention information from your local fire department or online. Be aware of the fire dangers!

Have a plan. Discuss the fire safe plan with your family. Go over your plan on a regular basis. Have periodic fire drills that include alternate escape routes. Some plans include putting together a small bag with everything that’s needed in the event of an evacuation. Have a list of the personal items that you want to save but don’t risk your life trying to gather up things in an emergency. Don’t forget to plan for your pets.

I recently read that when disasters occur such as fire, most people freeze. The ones that make it through are usually the ones who had a plan. They practiced so their responses were automatic. That is why there are fire drills.

Taking precautions and having a plan is a Matter of Good Home $$s and Sense.

From Marriage Partners to Business Partners

2008-06-23T08:48:00.000-07:00

Dear Sue,

I am in the middle of divorcing my husband. Thank God it is an amicable separation, but we still must divide over 25 years of accumulated assets.

Since the real estate market isn’t very kind to sellers right now, we both think that trying to sell our home right now would be a bad idea. We want to sever the attachments of our relationship as soon as possible, but we think it is better to wait to sell our home when prices may be higher.

Is there any way of selling our home later while going our separate ways now?

Separated Sally

Dear Sally,

In my experience working with attorneys and divorce, the division of community property is never easy. In many cases it is down right messy! I am happy to hear that your separation is amicable.

The last asset to be divided in a divorce is usually the home. Since it is symbolically the last connection in the relationship, frequently the ex-partners can have great difficulty letting go. Did you ever see the movie, “War of the Roses?”

Since letting go is really a process, it may be wise to take your time and not rush into a sale, especially in the current downturn.

As I see it, you have several options. The first option, which is the most common, is to sell immediately and divide the remaining equity, if any. If there is no equity, a short sale or foreclosure may be the only options if you choose to sell now.

If you choose to sell later you must treat your home as a business asset or investment property. This requires an evolution from romantic partners to business partners. It requires that you both be objective and analytical in your dealings. This can be very difficult if not impossible unless you engage a neutral third party such as a mediator, business advisor or property manager.

Selling later will require that your home become an investment or rental property. If one of the partners wants to live in the property, the partner will become a tenant while also being a landlord. This means that the tenant partner will pay rent but also share in the expenses of principal and interest payments, maintenance, repair, taxes and insurance.

For example, if the rent is $1400 a month (determined by the current rental market) and the payment including taxes and insurance is $1000 a month, the partners divide the $400. If repairs or maintenance are required, both parties share the burden 50/50. The write-offs and tax benefits of owning the investment property are also shared.

For tax purposes, don’t hold the home as rental property more than three years if you want to take advantage of the $250,000 each, tax free gain only available on personal residences.

You may find that you are better business partners than romantic partners and decide to keep the investment property.

Making the transition from romantic partners to business partners can be a matter of Good Home $$s and Sense.

Make the Price Right!

2008-06-18T15:04:00.000-07:00

Warren Buffet attributes much of his wealth to buying when other people are fearful and selling when they are feeling greedy.

The recent increase in sales volume in Placer County appears to indicate just that some people must be taking this advice.

When I returned from my vacation I picked up my phone and started interviewing several top producing, real estate agents. I wanted to know what was going on in the market today. I asked each agent if they had any advice to offer.

Pam Moore of Lyon’s insists that price is the key! Pam believes that when a seller lists their home for sale, they must be ready to move. They need to have their home “show ready” at all times.

Pam’s advice, “Take the advice of your agent!”

Pam explained that the longer an over priced property stays on a declining market, the less money a seller will ultimately get. Sellers continue to pay taxes, insurance, HOA dues, maintenance and house payments while the home’s value continues to go down.

Pam says, “If you don’t need to sell now, I suggest keeping your home off the market!”

Mike Robinson of Remax Gold agrees. He says that if you don’t have to sell right now, don’t put your home on the market.

“I think we are sitting on 2003 prices. Buyers and sellers just have to understand that prices go up and down but in the long run the trend is up.”

Patrick Hake of Remax Gold, like Mike Robinson, enjoys analyzing the numbers.

“Sales volume is up in Placer County while prices are down about 25% since last year,” Patrick says.

Sellers wouldn’t bring their prices down last year to a level that buyers were willing to pay. Patrick thinks that as soon as last year’s wave of foreclosures swept the area, the shear volume brought prices down and forced the sellers that were not distressed to compete and bring the prices in line with the competition.

Patrick reported that of the 2544 residential properties currently on the market in Placer County, approximately 28% are short sales and 10% are bank owned. An astounding 38% of the current inventory is distressed.

There are currently 801 pending sales. 21% are short sales and 37% are bank owned. 58% of the pending sales are distressed.

In March through May of 2008 there were 1116 closed sales. 7% were short sales and 44% were foreclosures. 51% of the closed sales were distressed.

Patrick continued to explain that the magic number for an even market is 6 months of inventory. In other words, if no new inventory was added, and the current rate of sales continued, the inventory would be depleted in 6 months.

Patrick said that we IWW have 6.25 months or inventory in Placer County compared to over 10 months of inventory in Auburn.

Auburn doesn’t have nearly the troubled inventory that south Placer has. Auburn didn’t create a lot of new inventory. Consequently the troubled properties are due to refinances not purchases.

Kelly Richardson of Hometown Realtors sees flurries of activity in the market right now, particularly in short sales and foreclosures. The areas of activity are primarily in Lincoln and below. In our immediate area we now have a lot of activity in the under $400,000 market range. One can now find homes in the Auburn area under $300,000, which was unheard of 2 years ago.

Kelly says, “Buyers are crazy if they aren’t armed with pre-approval letters and out there buying! The buyers in today’s market are a combination of investors, move-up and first-time buyers.”

“Sellers that are priced right are receiving multiple offers. The banks are the ones receiving most of the multiple offers because they are pricing to sell. Sellers that aren’t priced right are missing out!” she continued.

Pricing your home right is a matter of good Home $$s and Sense.

Working too Hard for the Money!

2008-04-30T13:21:00.001-07:00

Dear Sue,

My plan to create some passive income from my real estate investment has failed!

My plan was to buy a house, fix it up and rent it out. I figured that I could do the work myself and add value with “sweat” equity. I would then rent it out to a good tenant. I thought that I would get enough rent to more than cover expenses and have a little left over. I was really looking forward to that “left over money.”

Now I find that I am working on my rental property in all my spare time. So much for so called “passive” income. I feel like I have another job.

I had no idea that owning income property would be so labor intensive. I would like my income to really be passive. Any ideas?

Tired Ted

Dear Ted

I envy those that have the skills and time to do what it takes to add value to a run down property.

Investors purchase properties expecting a return on their investment. The return can be from rents, appreciation or adding value like you did by fixing up the property. The value added to a property through rehabilitation is generally more immediate and over time can have a much higher rate of return.

I don’t understand why you are still constantly working on your property. Are you forced to work around a tenant living at in the property? Do you have an on-going maintenance issue or do you just not know when to stop?

If you have an on-going maintenance issue, engage a professional and get it handled once and for all. If you don’t know when to stop, just stop. Your income will become passive the minute that you do. It is as simple as it sounds. More power to you if a tenant is letting you rehab the property while he/she is occupying it. That’s a landlord’s dream.

I realize that most publications tout the benefits of owning income or investment property. In reality, there are several disadvantages or potential pitfalls in owning investment property. Among them is signing up for a second job like you did.

Other disadvantages to consider are vacancies, bad tenants, liability issues or unexpected repairs. These disadvantages can be minimized by taking the job of being a landlord seriously.

It would be prudent to build a legal and tax team to help you with a plan. Hire a reputable property manager to assist you with advertising for and qualifying tenants. A professional property management company has access to repairmen, contractors and cleaners at reasonable prices. They also have critical knowledge of landlord / tenant law. It’s better to spend hours in the library on research than hours fighting it out in the courts.

Being aware of the disadvantages of owning investment property and working with professionals can be a matter of good Home $$s and Sense.

Who Makes up Home Prices?

2008-04-23T11:54:00.001-07:00

An Auburn Journal reader recently asked a question in the Opinion page:

What causes a $230,000 hike in the price of a home?

Who decides the price of 55-year-old home that is 900 square feet and in medium condition?

The house was built in 1953 and in 1995 was priced at $90,000.00 and was for sale in 2007 for $320,000.00.

What constitutes that amount of price hike for that house?

Do our Realtors decide the prices?

William and Norma Pullen
Meadow Vista

Dear Mr. and Mrs. Pullen,

I thought your letter was a very good one.

I asked Kris Forster of Brockway properties to help answer your question. Kris has been a certified and active professional appraiser for over 25 years.

“Realtors do not establish home prices, buyers do,” said Kris.

Kris explained that real estate values are influenced by supply and demand. For example, a seller’s market (higher real estate values.) is created when buyers have very little to choose from. The shortage forces buyers to compete for the same properties resulting in higher prices.

“Our most recent experience was between 2001 and 2005. It wasn’t uncommon to see offers come in over asking price with the only contingency being able see the inside of the home!” continued Kris. “Homes were often sold within hours of hitting the market.”

Today is a different story. It’s a buyer’s market (lower real estate values.) According to Kris, we have an over supply in relationship to the demand. With so much inventory to choose from, buyers are taking their time. Sellers are lowering their prices in hopes of attracting buyers and homes are taking much longer to sell.

Areas that have offered a number of entry-level homes and have experienced a lot of new construction such as Lincoln, are seeing a greater decline in real estate values than the “move-up” areas such as Auburn where resales predominate. Auburn’s home values have held up to a much greater degree because the housing stock is more mature. There are also fewer foreclosures in the Auburn area.

The Downtown and Midtown Sacramento markets, according to Kris, are actually experiencing price increases because the supply and demand is right in line.

Today’s buyer’s market has also been complicated by rising fuel prices and a change in financing. Kris explained that in past seller’s markets, buyers would typically commute to out lying areas because of the affordability factor. High fuel prices have wiped that edge out. Last year’s $300 per month gas bill is now $600 per month and expected to rise! The higher cost of a commute comes right out of the buyer’s income and significantly limits their buying power.

The tighter qualifying guidelines for today’s buyers has had an enormous impact on demand. The hybrid stated income loans and 125% financing programs are a thing of the past. These changes have taken a lot of buyers out of the market. Fewer buyers equals lower price.

The entry level markets in Roseville, Rocklin and Lincoln seem to be revving up again. Multiple offers are being reported. Statistics indicate that the prices in these markets have hit the bottom. When investors show up it is a definite sign of a market poised for an eventual upturn.

I agree with Kris Forster. Buyers and sellers set prices. It’s the Realtor’s job to interpret the market and market trends. Understanding the forces that drive the market is a matter of good Home $$s and Sense.

Worried Pre-retirees

2008-04-09T13:23:00.001-07:00

Dear Sue,

My husband and I are in our fifties and looking forward to a nice retirement. Our plan was to retire on the equity that we have built up for the last 25 years.

We have updated the entire house using our equity line. We remodeled the kitchen and replaced all of the major appliances. We did what we thought we needed to do in order to make our home more marketable. The market was not the same when we were finished!

The home prices in our area have really gone down. We really need the money from our home in order to retire. I know that you said in one of your columns that one should never rely solely on home equity for retirement and to never refinance for any reason other than to lower one’s interest rate.

We live from pay day to pay day. We don’t have 401 Ks or IRA’s. We just have a modest savings account and the equity in our home. (what’s left of it). PLEASE Help us understand what we have to do now.

Worried Pre retirees

Dear worried,

You are still young! Fifty is the new forty.

Many boomers are facing the same retirement worries as you are. They will need to be creative and design a new retirement model.

In your case continue to take care of your home because it will take care of you. The current real estate market is temporary. Home appreciation will return. It will happen before you know it.

In the mean time create a plan. Part of your plan may include working a little longer than you had anticipated. You can plan on living a longer healthier life than previous retirees.

You say that you live from payday to payday. I would suggest creating a budget that includes maximizing IRA contributions. If you don’t have an IRA account it’s never too late to start one. Get going!

If you have never lived on or created a budget before, get some books on the subject or seek the advice of a reputable financial advisor. The big question you will need to ask yourself is how do you want to live when you retire? What do you want your life to look like? Your answers will determine how much money you will need.

You indicated that you had a savings account. Is it enough to purchase an income property? Purchasing an income property can benefit you in several ways. First, you can protect some of your income through various write offs including depreciation. Secondly, you can enjoy cash-flow from rents. Tenants also help to pay the mortgage debt if any, taxes, insurance and other expenses associated with ownership. Finally, the property serves as a growing asset through appreciation.

Historically, California real estate doubles every ten years. An investment property or two can greatly enhance ones retirement plan.

If saving or buying, investment property isn’t possible, consider moving to an area that has a lower cost of living. Friends of mine have actually moved out of the country, in order to live out their retirement dreams.

In any case, start your plan now! It is a matter of good Home $$s and Sense.

Some Good News!

2008-04-02T10:56:00.000-07:00

Right before the market changed, I bought a new home in a subdivision. My plan was to make some money when I flipped it. Of course I paid top dollar because I bought it at the highest point in the market.

The market started its downward spiral the day I closed escrow. I have been doing what I can to hold on to it but I can’t afford to keep it any longer. I plan to let it go back in foreclosure. My real estate agent said that I may be taxed on any debt that is written off in a foreclosure.

I heard that Congress passed a debt forgiveness act. Would this apply to me?

Poor Investor

Dear Investor,

Yes it is true that congress passed legislation that became effective January 1, 2008. Homeowners will not be required to pay taxes on mortgage debt written off or forgiven as part of a bankruptcy, short sale, foreclosure, or renegotiation that involves the homeowners “principal” residence.

Under the Mortgage Forgiveness Debt Relief Act of 2007, up to $2 million of indebtedness is shielded from taxes if the debt is the result of construction, acquisition or major improvement of the principal residence. The act applies to debt discharges from January 1, 2007 through December 31, 2009.

Since you purchased a home as an investment, you may not be exempt from paying taxes on the debt written off in foreclosure. I recommend that you talk to a reputable tax professional before letting your property go into foreclosure.

Dear Sue,

My kids want to buy a home. They don’t have a lot of cash but they have great credit. I suggested that they talk to a lender and get pre-qualified before they start looking. In light of the current high down payment requirements brought on by the sub prime crisis, do you think that FHA may be a viable financing option?

Caring Dad

Dear Dad,

I think that talking to a lender is a great first step. Your idea to check out FHA financing options is also very smart. FHA not only has low down payment requirements, it has temporarily increased the loan limits. The new FHA loan limits are now available on-line. Go to www.car.org. Enter the county you wish to buy in.

You will find that the single Family loan limit is now $580,000 in Placer county. The two-family home limit is $742,000. The three - Family home limit is $897,500. The four-Family home limit is $1,115,400. Many people don’t think about buying a duplex or 4 – plex and living in one of the units. FHA financing makes this possible. It’s also a great way to get started.

Knowing the new tax laws and available financing options can be a matter of good Home $$s and Sense.

Consider Renting While Your Home is Listed

2008-03-26T12:45:00.001-07:00

Dear Sue,

It looks like the market is starting to rebound. I have read recent stories about multiple offers on bank owned homes. I also heard that February home sales were up!

I want to buy a new home while the prices are still down but I want to let prices rise a little before I sell my current home.

What do you think of me buying a new home, moving into it and then renting my old house out while it’s on the market?

What are the things that I need to consider?

Landlord Larry

Dear Larry,

Renting is generally better than leaving your home vacant. Rental income can off set your expenses and a home that is lived in is less likely to be vandalized.

Becoming a landlord is serious business. If you don’t have landlord experience, I recommend paying for the services of a reputable property management company.

Property managers may be an additional expense but they are set up to do thorough tenant screening and selection. Good tenant selection is vital. A bad tenant can be costly and throw a huge monkey wrench into your plan.

Your property manager can select a tenant that understands that your home is for sale. A free month’s rent or below market rent is an often used incentive for a cooperative tenant.

Property managers also have an array of cleaners, painters, plumbers, electricians and general all around property maintenance personnel. Let them handle the early morning “Fix-it” calls.

Insurance is a consideration. You, the landlord will have a significantly lower premium because you will not be insuring the contents. The tenant should be required to have their own insurance policy with extended liability coverage. Some insurance companies will not fully insure a vacant home. In any case check it out with your insurance agent.

If your home takes longer than three years to sell, you may lose your $500,000 capital gains tax exclusion. To qualify, you must live in your personal residence two out of the last five years. If you get close to losing your exemption, you might want to cut your price and bail. Your accountant can help you with that decision.

If you decide that renting is not for you, consider professional staging and pricing your home for current market conditions. It will be a matter of good Home $$s and Sense.

Should I Pay off my House?

2008-03-24T13:07:00.000-07:00

Dear Sue,

My husband and I have been thinking about paying off our existing mortgage in preparation for our retirement.

Do you think such a move is wise? Is there anything we need to know?

Wannabe Wise

Dear Wise,

Equity has never been more important than it is today. I know of only two ways to create equity: through debt reduction and though appreciation.

Americans were encouraged to tap into their home equities as if they were their own personal ATM machines as real estate appreciated at record rates over the past several years.

College educations, vacations, BMW’s and other investments were all financed with the equity drawn from people’s homes. There was very little worry because real estate was appreciating at record rates. As money was taken out it was immediately replenished because of the unprecedented appreciation.

We all know that times have changed. We experienced the appreciation cycle for many years. It has run its course and we are now in the inevitable depreciation cycle. Home values are going down nearly as fast as they went up. Today some banks are freezing those credit lines. People are finding their ATM machines out of order. Many Americans are even struggling to make their house payments. Many are wondering why they should even bother to make those payments since their mortgage amounts are higher than what their property is worth.

In a market of decreasing values, the only way to build equity is to reduce the mortgage debt.

In answer to your question is paying off your mortgage a wise move? There is no “one size fits all” answer. It depends on many factors both emotional and financial. The emotional factor is “peace of mind.” The financial factors include the tax advantages as well as future retirement plans.

What ever you decide to do I recommend that you create an over all financial plan with the assistance of your tax advisor and financial planner.

I recommend that you compare the return on other investments with that of paying off your home. For example, if the interest rate on your mortgage is 5% and your savings bank is paying 3%, it makes sense to make an extra 2% by paying down the mortgage. If you find an investment that safely pays above 5%, it makes more financial sense to put your money there, unless of course peace of mind is of more value to you.

Paying off a mortgage may seem overwhelming. However it can be done one dollar at a time. Many people use their income tax refunds to make annual principal reductions. Making an extra house payment every year can reduce the mortgage period by 10 years or more. Some banks offer bimonthly payment plans to decrease the pay off time. Go on-line and find a good mortgage calculator. Plug in some examples and see for yourself.

When the day comes that you make that final payment, be certain that there is no pre payment penalty and make sure that the note holder signs and records a full
reconveyance .

If you need available cash in the event of an emergency, you can always get an equity line of credit.

If you are 61 or older and need money for any reason, a reverse mortgage is also an option.

If you own the property free and clear, and you wanted to sell your home, you will be in a sweet financial position as the banker holding a first trust deed.

Paying off your mortgage can be a matter of good Home $$s and Sense.

Kids Can be Influenced by Feng Shui

2008-03-13T10:05:00.000-07:00

To continue our discussion of Feng Shui throughout the home, I asked Sandra Bridges, professional Feng Shui consultant, about kids’ rooms.

She told me that there are some unique challenges in applying good Feng Shui in children’s rooms.

The biggest challenge is that a kid’s room usually serves several purposes—sleeping, playing, and studying. Secondly, children frequently share a room with a brother or sister, which also creates some issues. Lastly, but perhaps the biggest challenge, is the never-ending battle to keep the room clean.

To encourage restful sleep Sandra said that a children’s room should be painted soft colors like butter yellow, lavender, peach, soft pink or blue.

If a child is sickly, a soft green color will encourage health.

If you have a child who has a hard time going to sleep, paint the ceiling a soft blue with lots of billowy clouds and a few stars to encourage creativity. However, anything hanging from the ceiling directly over the child’s head is not a good idea. Overhead objects feel threatening.

The bed should be facing east and never under a window or kitty corner. Never allow mirrors to be seen from the bed.

Electronics, schoolwork and action toys, since they are all agitating influences, should be covered at night. Clutter in general should be kept to a minimum for the same reason.

If kids share a room, each one should have equal personal space. This will help them to learn respect for others and give them a sense of well being and self esteem.

Bunk beds are good as long as the kids like them. Bunk beds encourage conciliation and a similar point of view. Of course as children mature they may need to change their sleeping arrangements.

If kids are in separate beds in the same room, they need to face the same direction. This will also help them cultivate a good attitude with one another.

Cleaning the room shouldn’t be treated as a punishment. Sandra suggested explaining to older children how space clearing makes room for new things to come into their lives. Keep closets clean and fun. You can even decorate closets.

Sandra also brought up some general suggestions.

Hanging pictures of family members is a good idea. It makes children feel secure and guarded. They should also have a bulletin board on display featuring their accomplishments and artwork but it needs to be kept current.

Children’s rooms should have wood floors because they add “tree energy” and contribute to growing tall and strong. Their rooms should be well lit with fabric window coverings which slow down energy.

Using Feng Shui principles in your child’s room is a matter of Good Home $$s and Sense.

Don’t Flush Your Money Down the Toilet!

2008-03-05T10:39:00.001-08:00

Today we continue our discussion of the way Feng Shui principles can be applied to one’s home in order to create a harmonious environment and promote health and wealth. I have been interviewing Sandra Bridges, a professional stager and Feng Shi consultant. So far we have discussed the entry, the kitchen and master bedroom.

Today’s topic is the bathroom, the home’s place for cleansing and elimination. The bathroom impacts the family wealth and health because, according to Feng Shui, it impacts the physical body’s circulation of water.

The primary source of energy loss is down any drain. The largest drain of all is the bathroom toilet. You can avoid flushing your energy and money away by keeping the toilet lid down! (sorry guys) Keep the bathroom door closed at all times. If you have a pet that needs to enter the bathroom, it’s good to install a pet door.

Never have the toilet face the door. If there is no door, hang one or put up a drape or curtain. Keeping the door closed keeps the home’s energy from circulating in the bathroom.

Mirrors are great in a bathroom but shouldn’t reflect and another image of the toilet. More toilet, more drain. Small round mirrors over the bathroom sink and toilet provide a lifting power to counteract the downward pulling effect of the drain.

Since bathrooms symbolize cleansing inside and out, they are a great place to rid oneself of negative emotions as well as bad habits. Letting go of old stuff and watching it all go down the shower drain is a very effective and healing practice. I have personally practiced this for many years. When I am showering I imagine washing away all of my negative energy down that drain.

Add life to your bathroom with green healthy plants. A plant placed higher than the toilet is a good way to help balance the elements.

The Chinese say that a clean and beautiful bathroom helps the household stay healthy and happy. Artful décor, candles and wonderful aromas in a bathroom provide peace and tranquility. Applying Feng Shui principles to your bathroom can make you healthy wealthy and wise. It’s a matter of Good Home $$s and Sense!

Feng Shui in the Master Bedroom

2008-02-28T11:11:00.001-08:00

The most balanced and harmonious energy of any room in your home should be the master bedroom since it is the source of rest, renewal and romance for the head of the house.

“Whether you are single or coupled, the master should be a place where all your senses are comforted and intimately celebrated,” says Terah Kathryn Collins, author of The Western Guide to Feng Shui.

Please keep the master free of any exercise and work out equipment! After all, if you haven’t used that exercise bike for three months, how does it make you feel when you look at it? Thoughts of an expanding waistline or buttocks are not restorative or romantic!

All things animate or inanimate contain chi. Electronics of any kind, since they are concentrated sources of energy, should be left out of the bedroom. These electronic devices are distracting and can rob you of your chi. Your focus should be on rest, renewal or romance not the war in Iraq.

Keep the home office out of the bedroom. Bringing your work or any work related material to your bedroom is invasive. Bringing your work to your bedroom is like sleeping in your office. There’s no possible way you can get a goodnight’s sleep and feel well rested.

Sleeping with a pile of books is very distracting. Books belong in the library. Books scattered about is disturbing. It’s like having someone else’s thoughts in your bedroom.

Used furniture or furniture from a past failed relationship should be avoided at all cost. You surely don’t want to sleep with your new husband in the same bed that you slept in with your ex!

One of the biggest and often hidden dangers is in the closet. A chaotic closet is an energy drain. Keep your closets organized and artful. Get rid of anything that you haven’t used in the last year. If you haven’t used it, you don’t need it. Give it away or throw it away.

Avoid placing your bed below a window. The occupant feels a sense of insecurity when there is an opening of any kind that cannot be viewed from the bed.

The bed must be comfortable and inviting. Fluffy pillows in pairs represent partnership and support romance. Rose colored paint and accents also support romance. Keeping both sides of the bed the same encourages equality in the relationship.

The welfare of the entire household depends largely on the condition and energy of the master bedroom. Applying Feng Shui principles can enhance the quality of ones life and support your intentions.
It’s a matter of good Home $$s and Sense.

Feng Shui in the Kitchen

2008-02-20T12:16:00.001-08:00

I received questions from some readers about applying Feng Shui principles to the staging of one’s home.

The kitchen seemed to be the room of most interest. I spoke with Sandra Bridges, a professional stager and FengShui consultant. First, she was not surprised that readers were interested in the kitchen. It is one of the most important rooms in the house. The kitchen is the place that provides sustenance and nourishment to the family. People, including buyers, gravitate toward the kitchen because that is where they are nourished. And don’t be fooled into thinking that only women love kitchens!

Sandra explained that Feng Shui was a very complex system based on profound energetic principles. For that reason she decided to focus on how the theory manifests in practical ways.

Her first suggestion for good Feng Shui in the kitchen was a thorough cleaning and decluttering. Cleanliness and organization bring you half way to good Feng Shui. A clean clutter free kitchen is like providing a blank canvas. It inspires the cook. How do you feel when you walk into your kitchen “the morning after?” Contrast that feeling with how you feel walking into a tidy organized kitchen to prepare your next meal.

Some kitchens may look clean but they don’t feel clean. This can be remedied by placing a bowl of citrus like lemons oranges or limes on the counter. Citrus is said to be very cleansing not only of odors but also energetically.

Islands are great in a kitchen. They not only look good, they feel good. Be sure to always provide seating. If your kitchen is too small a stool will suffice.

Most Feng Shui masters believe that lighting is very important. Bright incandescent, full spectrum lighting is the optimum.

Rounded corners are best in a kitchen. Sharp knives should be in drawers out of sight when not in use. Metaphorically they are “cutting” and can cause accidents. It is wise to avoid menacing overhead pot racks as well.

Since the cook’s energy is transferred to the family thorough the food they prepare, it is important that the cook’s energy be harmonious. Red, a fire color, can be agitating. Avoid red walls. The kitchen ideally should be white.

It is important that the refrigerator be kept out of sight from the rest of the house. If is it visible it is said to cause insatiable appetites. (I thought this may be a good diet aid!)

The stove is the energy generator of the home. A shiny metal surface behind the stove doubles the energy. It is important that the stove be in good operating order, clean and the more burners the better.

The Chinese believe that the kitchen is the bridge between health and wealth.

Creating good Feng Shui in this important room is a matter of good Home $$s and Sense.

Make Feng Shui Part of Your Staging Plan

2008-02-17T10:35:00.000-08:00

Dear Sue,

This is probably not the best time to sell, but we are forced to due to my husband’s transfer to Germany.

We have owned our home three years. We bought it knowing that there were some things that needed repairs. Unfortunately we haven’t gotten around to all of them. Rather than get involved in a lot of repairs right now, I was considering a fresh coat of paint and a little staging and calling it good. We can always credit the buyer for the repairs.

My girlfriend said that a fresh coat of paint isn’t enough to get a home sold in today’s market. She suggested that we apply the principles of Feng Sheni to our staging plans.

There is so much information out there on Fen Shui I don’t know where to begin. Could you please give me some bottom line ideas?

Germany Bound Jennie

Dear Jennie,

I discussed your question with my sister, Sandra Bridges. She is a certified Feng Shui consultant and professional stager. I regularly consult with her prior to marketing certain properties.

The first thing she did was tell me a story. The word sincere is derived from the Latin words sin (without) and sera (wax).

In the ancient market place, merchants would sell clay pots. Some merchants would fill the cracks of their defective pots with wax. Competing merchants with quality pots would place signs at their booths advertising that their pots were “sincere” or without wax.

This is how a home must be presented when being put on the market today. A superficial fix like a fresh coat of paint isn’t enough anymore. Feng Shui is not a cosmetic cover up. It operates on the deepest levels. A bad foundation is bad Feng Shui .

Your home needs to be structurally sound. All systems should be intact and in working order with no major issues. “Move in ready” is the optimum. Once the basic issues are taken care of then it’s the “first 60 seconds.”

Sandra believes as I do that the sale is made in the first 60 seconds. A buyer usually knows from the curb if it’s the house for him or her. It’s not only how it looks but how it makes one feel.

Curb appeal in Feng Shui terms is a welcoming clear path to the front door. The preferred entry to the front door is meandering. Meandering creates a slower energy which is the most desirable. The windows are considered to be the eye of chi or energy. They need to be sparkling clean. This is the energy that brings one off the street, on to the property and into the home.

The door is of the utmost importance. It must be solid, clean, quiet and smooth. It needs to open easily. Buyers shouldn’t have to fumble with door handles, latches and locks!

Don’t choke the chi with overgrown foliage over walkways and excessive plantings and clutter at the door’s entry.

All of nature’s elements, Wood, Earth, Fire, Water and Metal should be present and in balance for good Feng Shui . Obviously one can’t have certain elements in the front yard like fire. All of the elements can be represented by their corresponding shapes and colors. For example the fire element can be represented by red or bright orange flowers.

Do you know why a red front door is believed to be good Feng Sheri? The color red represents a strong career, certainly a valuable asset in any prospective buyer. The house with a red painted door is said to attract strong capable buyers. It also adds the fire element to the entry adding to the appropriate balance.

It a buyer feels a sense of harmony and well-being when viewing your home they are more apt to be attracted to it. Buyers want a home that is visually and energetically satisfying. A home with good Fens Shui supports those feelings.

Since the art of Feng Shui is a complex subject, I recommend that you consult a good Feng Shui specialist as part of your staging plan. It can be a matter of good Home $$s and Sense.

Why Won’t the Bank Consider My Offer?

2008-02-06T11:36:00.000-08:00

Dear Sue,

I sold my home last week. I have an all cash offer with a thirty day escrow. The only contingencies are inspections. I have a really good feeling that my escrow is going to close flawlessly.

Here is my issue. My husband and I made an offer on a foreclosure. The agent for the bank wouldn’t submit our offer because we made it conditioned upon our escrow closing.

This doesn’t make any sense to us. If the bank saw our offer I believe that they would consider it but the agent insists that the bank won’t look at any contingent offers so she won’t even try.

Do you think that we should go around our agent and submit our offer directly to the bank ourselves?

Frustrated Fran

Dear Fran,

Some of the best buys in today’s market are lender owned properties. Buying a foreclosure is a great idea.

My experience has also shown that in some ways lenders can be easier to negotiate with than homeowners with short sales or resales. Lenders lack the emotional attachment of most homeowners and pretty much negotiate the bottom line. Lenders do however have their own particular set of guidelines. They each have their own “rules of engagement.” These rules vary from lender to lender and are established in advance of offering the property for sale.

The lender’s selling agents must abide by the rules that are set forth for them. Those rules may not always make sense. It appears as though the lender in your case will not look at an offer that contains a contingency to sell or close on an escrow in order to purchase their foreclosure property.

I would not recommend going directly to the bank.

Is it possible to get your buyer to remove their contingencies? If you have an all cash offer, financing shouldn’t be an issue. If you could get your buyer to speed up the inspection process and remove all contingencies, you could resubmit your offer without the sale contingency. Please be advised however, that should your sale fall though, your deposit could be in jeopardy.

Ask your agent to contact the banks agent and find out what the lender’s requirements are for submitting an offer. Maybe there is a way. You won’t know without your agent asking. It can be a matter of good Home $$s and Sense.

Is 2008 a Good Year to Buy?

2008-01-30T15:16:00.001-08:00

Dear Sue,

There are so many buying opportunities out there! Short sales, foreclosures, and deeply discounted new homes.

On one hand I think that I should buy everything I can get my hands on. But for some reason I have no sense of urgency. There’s so much to choose from. It seems like I have plenty of time.

Do you think prices will come down even more? I don’t even know if buying a home is a good idea. Every home owner I know right now has lost huge amounts of equity. What are your thoughts?

Wondering Wanda

Dear Wanda,

California experienced a phenomenal and unprecedented home buying frenzy beginning in 2000 and peaking in 2005. Buyers were frantically pushing prices up by offering more than the sellers were asking because buyers were afraid that if they didn’t buy now they would end up paying more later or worse yet, not be able to find anything at all. In many areas home prices actually tripled in that five year period alone.

Opportunists came out of the woodwork. “Flipping” became a household word. Flippers were turning properties over within days for sizable profits.

The incredible demand ate up the inventory. Properties were sold within hours of hitting the market. Multiple offers were the norm. Buyers were eager to out bid one another to get the coveted property.

Easy, no money down financing fueled the buying frenzy. Imagine buying something with no money down and walking away with thousands of dollars in profits. Designer loans that didn’t require documentation and unverified stated income loans ruled. One could state that he or she made $10,000 per month and presto, one got the loan. Some designer loans were 125% loan to value. Yes, the buyers were actually paid up to 25% over the homes value to get the loan.

As you have noticed, things are definitely different today. There’s a saying that what goes up must come down. Such an extreme and rapidly rising market could only be corrected by the equally extreme and opposite market conditions we are experiencing now.

Even though the markets yesterday and today are opposites, the forces driving those markets are the same. The primary force is demand. Demand is only fueled by financing. The feds are doing their best to make financing available. They are making it more affordable by lowering interest rates and bringing more money into the markets. The Government is also freezing the rates on currently held adjustable rate mortgages and new borrowers must meet stricter qualifications, all lending stability to the market.

The second big force, supply, has currently overwhelmed the demand. This too will correct itself in time as it always has. Remember how people felt during the recent “boom” time? They thought it would never end. Now people feel like this “slump” will never end. But it will.

According to www.housingmarketfacts.com, a national study indicates that on average, homes double in value every 10 years. The net worth of a homeowner is likely to be 46 times that of a renter. 60% of a homeowner’s net worth is in equity. I believe that California statistics are probably higher. In my mind these facts are the answer to all of your questions.
Understanding the ups and downs of the real estate market and commitment to long-term ownership are matters of good Home &&s and Sense.

Today’s New Home Trends

2008-01-30T15:14:00.000-08:00

Dear Sue,

As a builder I want to do some research on what buyers are expecting to find in a new home.

Since building is a little off right now, I have time to gather information and do some planning before I launch my next project.

So Sue, what do today’s buyers want to see in a new home?

Curious Cal

Dear Cal,

When fisherman can’t go to sea they repair their nets. I think that it is great that you want to put some time into planning and preparing.

With headlines about global warming, rising fuel prices and going green, environmental concerns and energy conservation are at the forefront of public consciousness. Today’s buyers are looking for homes that are energy efficient. They are also looking for homes that are built with materials that have less environmental impact including materials that have been recycled.

Recycled and sustainable materials are creating a new aesthetic sacrificing nothing to beauty and function. For example, recycled glass and wood are being made into amazing surfaces. Responsibly harvested material like bamboo is surprisingly beautiful.

Today buyers are also looking for open multi purpose spaces. Formal rooms are becoming a thing of the past.

The kitchen is the most highly valued room in the house. Today‘s buyer prefers a large kitchen open to other living spaces. Buyers expect the kitchen to be high-tech. By that I mean wall mounted high-def flat screen TV’s. Stainless and granite are no longer all the rage.

Functional outdoor living space is in high demand especially for the upscale buyer. Out door kitchens and fireplaces are on the top of the list. Fortunately for a builder, outdoor living spaces are a relatively inexpensive way to add space to a home.

According to the National Association of Realtors, 60% of 2530 buyers surveyed said a garage with two or more spaces was very important to them. The garage is becoming an extension of the home. Buyers see it as flexible space that can be used for many different purposes.

Building a green home with an open high-tech kitchen, flexible space, outdoor living and generous garage is a matter of good Home $$s and Sense.