Avante Real Estate – East Bay Real Estate Blog

East Bay Blog

Today's Buyers

February 25th, 2008 8:56 PM

I am starting to see more buyers in the market this year. That is good news because it means that activity is starting to return to the market to some extent. Over the last year and a half, there has been a pretty sharp downturn in home sales activity, as you probably already know if you watch TV, read a newspaper, listen to the radio... The second half of last year was particularly slow. Over the last two months however I am starting to see some buyers return. That is good news for sellers since today's report by the National Association of Realtors shows a 10 month supply of homes for sale. That means if no new homes were to be put on the market, it would still take 10 months to sell the existing inventory. The buyers I am seeing most fall into 2 different categories, bargin hunting investors looking for that great deal, and move up buyers looking for a nicely upgraded home.

Many investors and flippers have just started to step back into this market, but at this point only the best deals will attract their attention. If you are looking to sell a property in need of repair, be prepared to get a low price or start fixing your home now to get a fair price. Flippers know that if they are going to try to flip a house in this market, the price they pay will have to be extra low, because the market is still moving, so they can't be sure what they will get for it when they try to sell. These types of buyers are usually just looking in the low price range for a particular area. They will focus on an area and only look at homes that are priced at 20% to 30% below the average price for the neighborhood. Once they do find a good buy, they will usually offer well below the asking price, and won't be afraid to walk away from a house if they think they are not getting the best deal possible. If you are a seller trying to sell a fixer, be prepared to get an extremely low price for your home. Your only other option is to fix up the property.

Upgraded homes in good condition are also getting attention, but from buyers looking to move. These people will also be looking for deals, but because they are not as interested in the properties in need of repair, they are more likely to focus on the homes that are in "move-in" condition. If you are selling a nicer home in this market, these are probably the type of buyer your home it attracting. Make sure your house looks sharp. Be realistic about your price. It is hard to be the highest priced home on the block in this market. The right price for your home will probably be at least 10% below what homes were fetching in your neighborhood last year. Depending on where you are, you may have to adjust more than that. If you are just testing the market to see what you can get for your house, don't waste your time. This is not the market for sellers who are not serious. If you don't need to sell right now, don't sell.

Finally if your home lands in between a fixer, and an upgraded home, you are in a more difficult situation. Chances are that folks that are looking to move will skip over your house completely if it does not look great, and investors will skip over your house completely if you are not priced aggressively. You best bet is to wait this market out. Rent your home for a while and see how things develop this spring. Just be prepared to wait a long time if things get worse. If you can't wait, start fixing your home up so that you can attract the move-in buyer, and if you don't have time for that either, than be prepared to bite the bullet and get low-balled by investors looking for only the best deals.

Again, these are only my opinions. Every market is a bit different, and I am only speaking on what I see that is occurring in the East Bay. If you want to discuss your particular market, or are looking to get in the market as either a buyer or seller, give us a call, we'd love to help, until next time...

Posted by Ted & Lucy Ramos on February 25th, 2008 8:56 PMPost a Comment (0)

What to watch for in 08

February 13th, 2008 7:18 PM

As we enter 2008 there are going to be a lot of opportunities popping up that you should be on the look out for. If you are paying attention, you can really profit from the current downturn in the real estate market. Everywhere you look you'll find news about how horrible the current market is. Just last week, 60 minutes had a special about the crash of the housing market. We don't have to look too far to see an example of some of the hardest hit areas. Stockton, CA is #2 on the list of most foreclosures in the United States. Stockton has seen its foreclosure filings jump 276% year over year. So with all of this negativity, where are the opportunities you might ask? Well, here are some things that are happening that you may or may not be able to take advantage of.

If you are having mortgage troubles and you are 90 days or more delinquent on your mortgage payments, you should get informed about "Project Lifeline". This is a new initiative just announced by the government in cooperation with some of the nations top mortgage lenders. What this initiative does is delay the foreclosure process for you for an extra 30 days. If you are in the process of foreclosure, you may have given up and decided to just walk away from your home. Don't do that until you try to renegotiate with your lender first. Give them a call and ask for a renegotiation. Also, ask them if you qualify for Project Lifeline. If nothing else, this will at least give you the opportunity to stay in your home for another 30 days before having to leave. Renegotiation with your lender should be your first option when you cannot afford to pay anymore. A short sale or foreclosure should only be options after you've heard "no" from your lender.

Another big opportunity that looks like it will happen this year is the temporary increase of the conforming loan limits by Fannie Mae and Freddie Mac. What does this mean to you? If you need to refinance anytime in the next 3 years, and you currently have a jumbo loan, you should definitely look into refinancing during the window where conforming limits are raised. If this proposal passes, which at this point looks like it probably will, it will allow you to qualify for a confirming loan up to 125% of the median home value for properties in your county. If you currently have a jumbo loan, and are able to qualify for conforming, this will give you a much better interest rate. It will also be a lot easier to qualify for this type of loan. Jumbo loans are currently difficult to qualify for because these loans are sold on the secondary mortgage market, and there aren't many buyers for these types of mortgages currently. This means lenders will only give jumbo loans to people with great credit who can prove there income.

If you are currently in a short sale situation. The government is in the process of passing a law which will eliminate the requirement for you to claim your loan forgiveness as income. Currently, if you sell your home in a short sale, you will receive a 1099 next year for the difference between what your home sold for and what the loans against it are for. This will then need to be claimed as income on your taxes, and you will have to pay taxes on this money you did not receive. If you need more information on short sales, give us a call. We have lots of experience with these types of transactions.

Property values have dropped too far in many areas, this is a buying opportunity. You remember 4 or 5 years ago when there were all of those multiple offers on homes and properties sold in 1 day. Well today in some of the hardest hit areas, we are in the exact opposite place. If experience can teach you one thing it's this: market extremes never last. Some of the communities where many subprime buyers purchased homes are now seeing prices drop up to 65% from the high! Yes, properties were too expensive in these areas, but not 65% too expensive. In the coming years these areas will stabilize and believe me, a normalizing price adjustment will have to occur to put things back in balance. Some communities where you can find real bargains are in Oakland, Hayward, San Lorenzo, Antioch, Tracy... It will take some time, but overall these areas are now becoming undervalued because of the extent of foreclosures and short sales going on. Not to mention the many homes that are already bank owned in these areas.

The best advice I can give you in regards to the coming opportunities would be just to stay informed, especially if you are in a tough spot. Everyday the big banks and the government are coming up with new programs to help homeowners. The market is tough right now, and it has started to drag down the whole economy. The last thing the government wants is a recession. This is something the current government wants to address quickly in an election year. Keep watching the news and if you have questions or just need advice don't hesitate to contact us. As always, if you, or someone you know is in need of real estate help, call us, until next time...

Posted by Ted & Lucy Ramos on February 13th, 2008 7:18 PMPost a Comment (0)