Market Update – February 10, 2017

It’s finally Spring!  Well that’s what we believe here as our Bay Area Spring starts right after the Super Bowl.  34 new listings on market for the Friday tour is the highest this year so there is your proof!  Interesting to note is that several of the new listings this week are re-lists of homes that did not sell last year — that’s right, there are many homes in Palo Alto and Los Altos Hills that did not sell last year.

 

Market Update – January 20, 2017

There are signs that the market is beginning a slow awakening from the winter hibernation.  Last week on the Friday tour (Mountain View, Los Altos, Palo Alto) there were 22 new listings.  This week there are 29 new listings.  I believe the endless rain, Trump inauguration, and rising interest rates may be playing into another slow week.  After all, who wants to be hosting a Broker Tour or Open House in a torrential downpour?  Several very attractive tear-down lots have also come on in Palo Alto so will be very interesting to see where those go.

Bay Area Real Estate Market

The Super Bowl is finally over and Bay Area real estate has kicked into spring!  I always talk in terms of “Tour” areas — meaning, our local MLS broker tour.  Friday is Palo Alto, Los Altos, and Mountain View.  This week we have 40 new homes on the market for Friday tour.  The Thursday tour is Cupertino, Sunnyvale, and Santa Clara, where we have 47 new listings this week.  Wednesday tour is Saratoga and Los Gatos, where it’s showing 20 new listings.  Tuesday is devoted to the San Mateo County tour, which is a huge area, so of that area we cover there are 68 new homes on the market.

So what’s my point?  Inventory is growing!  Spring has sprung and as buyers, you are now starting to have choices.  Get out there and see what’s available you might just be surprised!

Short Sales Don’t Work — Part 4 of 4

In conclusion:

Again, there is enough blame to go around and I don’t care
about pointing fingers.  There is a
blatant lack of accountability at all levels in the system — from the
homeowners, the agents, the lenders, the investors, the bond ratings, etc. 

From what I can see, it looks like there are only a small
number of homeowners actually helped by going through a successful short-sale.  If it cannot be streamlined or
optimized, I would recommend remove the short-sale option entirely — have the
banks/lenders go directly into foreclosure as quickly as possible.

This will make sure the lender is losing the minimum
possible by not taking months and years to go through a prolonged
short-sale.  Buyers will actually
be able to buy the home as it comes back on the market as bank-owned instead of
waiting for something that may never be approved.  And finally, the option for people to “game the system” will
be removed because there are no ambiguities or intermediate steps.

I want to sell property and help people reach their
goals.  I’m just frustrated by the
system.  Thanks for listening.

-Mark

Short Sales Don’t Work — Part 3 of 4

Have you ever seen those late-night TV infomercial where
some fast-talking “average” guy is telling you how to build a real estate
fortune with no money down?  Here’s
an example of such a scheme that I ran into recently in San Mateo.

I called on a listing for a buyer client looking to stay
under $600k.  We found a new
listing that seemed like a great deal — nice condition and priced well.  Undoubtedly we would see multiple
offers again, but it was certainly worth a deeper dive.

Come to find out, the listing agent was actually a partner
in an investment syndicate who was listing this house for sale before they
actually owned it.  They had a
purchase contract in place with the seller but the sale price was lower than
what the seller owed so the listing agent was negotiating the short-sale with
the bank.  As it got to the point
where their offer was accepted, he re-listed it on the open market at a much
higher price!  Pure profit and they
will only own the house for ½ a day. 
Just like on TV!

Why doesn’t the bank do their homework to find out this
home was never listed on the open market before the investor jumped in with
their low-ball offer?  Why doesn’t
the seller care they are going to be hit with a bigger loss than necessary
since the home could be sold for a higher amount?  Why doesn’t the real estate board care that their members
are gaming the system?

Is there anything illegal here?  Probably not — but it makes me wonder who is policing the
system.

-Mark

Short Sales Don’t Work — Part 2 of 4

What is it called when a person demands “compensation” for
something in a threat to avoid performance on some other item or service?  Is that called extortion or just a
shakedown?

I recently had clients showing interest in a home in
Campbell, a short sale that appeared to be priced under the market value so
surely we expected multiple offers. 
As I was writing up the offer and getting ready to go over it with my
client, the listing agent calls me to tell me his seller is demanding an
addition condition for the sale — the seller wants to walk away from the
short-sale with $50,000 in his pocket. 

I wasn’t sure I heard him right, so I asked for
clarification.  The listing agent
says “to keep it legal it will be written as a purchase addendum for $50,000
for his furniture and art, which admittedly is only worth about $3,000 on
craigslist.”  I was shocked.

Basically, the seller can decide which offer to send to
the bank as the “accepted” offer for the short sale.  He will pick the one that agrees to give him the $50,000
side money for his crap.  Essentially,
he is saying “You want my house, you’ll give me $50,000 on the side and I’ll
accept your offer and work with the bank to short sale my home to you.”  The bank has no way to know there may
have been higher offers for the property without the side money.  Disgusting.

It gets better. 
As I dig into the Title report where we find how much is owed against
the property, I see that the first name of the listing agent has a 3rd
lien on this house for $19,000!

It’s pure speculation on my part since I have no “court
proof”, but here is what I think happened.  The listing agent will get nothing for his personal loan of
$19,000 if a normal short-sale goes through since his loan is in 3rd
position.  So he cooks up a scheme
with his seller-friend to get the short sale approved with this additional cash
on the side so he can be re-paid his $19,000.  Where is the IRS when you need them?!

In the end, we moved on to another home and our clients
are now happily moved into a normal sale just one block away from the
“shakedown” house.

-Mark

Short Sales Don’t Work — Part 1 of 4

Consider this a rant of sorts but I need to get this off
my chest because I think “the system” is getting worse instead of getting
better.  Let me preface this by
saying that I believe the short-sale process is a legitimate option for honest
people and families who have fallen on financial hard-times or bought more
house than they can truthfully afford. 
For these people, we should do everything possible to get their homes
sold quickly so the investor can minimize losses of a borrower that will never
recover, and so the family can move on with rebuilding their lives without the
overhanging debt.

Over the last 3 years I have witnessed some of the most
interesting abuses of “the system”. 
I go to preview dozens of homes every week to keep on top of the market
and find the best values for our clients. 
While doing this I often find myself disgusted, frustrated, and saddened
by what I see.

Why is it that it seems like every short sale home I go to,
the sellers all have a flat-screen TVs?! 
I don’t even have one, yet everyone who can’t afford to pay their
mortgage all seem to have a new flat-screen HDTV.

Or like the short sale in San Jose where I found the
sellers of this particular house have 2 newer Mercedes Benz cars in the
driveway — they can’t afford to pay their mortgage but they drive over
$100,000 worth of the best in German engineering.

Or like another short seller who contacted me to list
their home.  Even though they owned
their house for decades, they pulled all their equity out a few years back to
buy an investment home in another part of California — they bought the
investment home with all-cash at the time.  Since house values have now dropped, they owe more than their
current home is worth and now they want to do a short-sale.  They will walk away from their debt and
move into their investment home where they will never have a mortgage ever
again!

Or like the short sale in San Jose that has been on the
market since August 2008.  It is
still being negotiated with what I believe is the 3rd buyer over
that period of time.  Wouldn’t it
be nice to live rent-free for 2 years?!

I thought you might find it interesting to hear some of the things I run into day-to-day.  The stories continue in future parts…

-Mark