The decision whether to try to short sell your home or let the bank foreclose is one that should be made only after consultation with an attorney and tax adviser. Any choice you make will have consequences that are too important to leave to chance. Once you have received professional advice, try to work with your lender toward a modification or other consideration.

The bank will ask for lots of documentation, such as a hardship letter, copies of bank statements and pay stubs, and lists of assets and liabilities. Provide everything they ask for in a timely manner, and keep copies of everything you send them. In addition, keep detailed records of all communications with the lender, such as emails and notes of telephone conversations.

While every situation is different, there are a few reasons why a short sale can often be better than foreclosure:

1. Neighborhood property values are usually better preserved when homes are sold in a short sale rather than taken over by the bank.
2. Your credit rating may take less of a hit with a short sale.
3. You may be eligible for another home loan in a shorter period of time with a short sale.
4. You may be eligible for up to $3000 in relocation costs from your lender.

The Department of Housing and Urban Development website explains several available programs that might offer assistance, and provides a list of approved counselors. Stay away from anyone who contacts you and asks for an upfront fee in return for promises of assistance.

I have worked with many, many sellers who are upside down on their mortgages, and I would be happy to answer your questions or help in any way I can.

Posted by:  Deborah Byrne

Selling your home is a decision that will lead to weeks of preparation prior to going on the market. Preparing your home for the market typically includes freshening up interior and exterior paint, enhancing landscaping, cosmetic repairs, carpet cleaning, removing clutter and staging, and general maintenance and cleaning. However, don’t forget to have your home inspected by a licensed professional home inspector and pest inspector.

Your realtor can recommend a reputable licensed professional home inspector and pest inspector. It’s a good idea to hire an inspector that is reputable and respected in the industry. Like any profession, there are inspectors that don’t do a good job, and repairs that may be overlooked can cause problems in the future.

A home inspection depends on the size of the home and prices typically range between $325 – $500 (more if the home is over 5,000 square feet). Prices may vary if the property has a crawl space, or is a farm or ranch with additional buildings and structures.

The cost of a pest inspection typically ranges from $200 – $300 and will also vary if the property has a crawl space or is a farm or ranch with additional buildings and structures.

It’s a good idea to inspect your home prior to selling because you will know what defects need to be repaired. Typically, Section 1 items that are revealed in a pest inspection should be repaired (dry rot, fungus, termites, wood boring beetles, etc.). Section 2 items are informational items (i.e. tile grout is missing or a tub enclosure needs calk, etc.). Various items may be revealed during a home inspection, however, health and safety issues are items that typically should be repaired (electrical, plumbing, trip hazards, water damage, roof leaks, foundation issues, etc.). Repairing these defects makes for a much smoother sale and the buyer will appreciate purchasing a home that does not need expensive repairs. Many sales fall apart because buyers are fearful of purchasing a home that requires a lot of repairs. It makes sense to inspect your home and make necessary repairs prior to selling so that there are no surprises once you receive an offer. Buyers typically have 10-17 days once an offer is accepted to have the home inspected and if your home is given a clean bill of health there is less of a chance of the buyer backing out of the sale.

A home inspection and pest inspection are usually sufficient. However, if your home inspector reveals a problem with your roof, chimney, electrical system, plumbing, HVAC, etc. you may want to hire a specialist to further inspect the particular issue.

Yes, if you hire an inspector or have copies of inspections from a previous transaction you are obligated to disclose the inspections to the buyer (you may be sued if you fail to disclose inspections or known material facts about your home).

Everything is negotiable in a real estate transaction. If the necessary repairs are too expensive you can lower the purchase price of your home to cover the cost of repairs or you can offer to give the buyer a credit from the proceeds of the sale at the close of escrow. You can also sell your property “As Is” and adjust the asking price based on the cost of repairs. Just remember that cool heads in a real estate transaction will prevail. Working with your realtor, the buyer, and the buyer’s realtor to resolve repairs will usually lead to a successful transaction.

Posted by:  Doug Hecker

In this third and final part of the series “In Defense of Flippers,” I will discuss how the process of buying foreclosure properties and reselling them for a profit can benefit local economies and housing markets.

The Press Democrat article “Flipping Foreclosed Houses” (December 26, 2010) focused on many negative perceptions of the business men and women who flip houses for profit. I do not defend individuals or businesses who act irresponsibly or unethically, and I have no knowledge of the specific examples the author cited. In this series of blogs I am attempting to offer a perspective that was missing in the article and subsequent editorial.

Flipping distressed properties provides real and lasting benefits to the community. As the recession took hold in Sonoma County and people started losing their homes, entire blocks became abandoned, neglected and forgotten. Lawns died, weeds flourished, homes became dirty and rodent-infested, and many were even vandalized. Imagine how you would feel if you took care of your home and your yard, while the homes around you were becoming more of an eyesore and a danger. And all the while, you are seeing home values in your neighborhood plummet.

An investor/flipper buys the property, and now local trades people are working again. Goods are being purchased again. Weeds are gone, replaced by new lawns and flowers. The windows are cleaned and repaired, the exterior is cleaned or painted, and all of a sudden the neighborhood is starting to look a little brighter. A new family moves in, and brings pride of ownership where there was despair.

The investor/flipper resells the home and pays transfer taxes to the county and city. Title and escrow officers, mortgage lenders, home inspectors, and yes, real estate agents, are again gainfully employed. In many cases the profits made from a quick resale are taxed as regular income, further helping the local and state economies.

I hope I was able to shed a little light on this subject, and I welcome your perspective and ideas. Thank you for taking the time to read my comments.

Posted by:  Deborah Byrne

In this second article in a series “In Defense of Flippers,” I will address another allegation made in the December 26, 2010, Press Democrat article “Flipping Foreclosed Houses.” The article stated, “The financial returns can be eye-popping. One investor purchased a Santa Rosa home at auction for $153,575 and sold it 30 days later for $330,000 – a 115 percent markup.”

Yes, that is indeed an enormous profit – if, in fact, it is accurate. I don’t know the specifics of the example noted above, but I can speak to the processes of purchasing and flipping houses and perhaps shed some light on the realities of the business.

Up to one day before the scheduled sale date, banks will publish the list of homes they are foreclosing on. Investors who wish to bid on those homes have just a few hours to search county records to determine whether there are any outstanding liens on the property and if clear title can be conveyed. In a normal sale the buyer purchases title insurance, and the title company will issue a preliminary title report which lists any outstanding liens, easements or other impediments to receiving clear title. In these foreclosure sales there is no time to search title in a manner sufficient to issue title insurance. Therefore, the investors must rely on their quick research and hope nothing comes up later that might impede their ability to resell the home.

In many, if not most, normal sales there is a new lender involved. In foreclosures, it’s all cash. So the investor must be willing and able to immediately present a cashier’s check for the entire amount of the purchase.

At the time of the foreclosure sale, the homeowner or tenants may still be in residence. In many of these cases, the investor as the new owner will contact the occupants and offer “cash for keys,” which is exactly what it sounds like: several hundred to a couple thousand dollars for the occupant to move out within a specified period of time.

When bidding on properties at auction, the buyer often has not seen the inside of the property and has no knowledge of the condition of the home. Depending on the condition of the home, the property rehabilitation may involve a new roof, new paint, repair of dry rot or other moisture related damage, new flooring, cabinets, countertops, plumbing, landscaping, doors, hardware … the list goes on. Obviously, some investors do a better and more comprehensive job than others, but there are numerous costs involved in fixing up a property for resale.

During the rehab process, the investor also incurs carrying costs. They may be making interest payments to a private lender, and they are paying property taxes, utility costs, and sometimes homeowner’s association fees. When the property is ready to resell, they pay real estate commissions, county and city transfer fees, and other costs associated with selling a property.

And when the property is put up for resale, the return they make on their investment is entirely up to the prevailing market. In the case of the original example noted above, the investor’s profit could indeed be north of $100,000. The norm is far less than that, however, and the same investor might barely break even in the next project, or even lose money. But when all is said and done, it is these business people who accept the risk and either reap the rewards or pay the financial consequences.

In the third and final blog in this series, I will address how these investors benefit their communities. Meanwhile, I’d like to add my thanks to Deanna Majcherek of First American Title for her background information from the title company’s perspective.

Once again, I’d like to invite your questions, comments and input into this dialogue.

Posted by:  Deborah Byrne

There has been much in the news recently about the current practice of house flipping – that is, investors who buy properties as they are being foreclosed on the courthouse steps, make some improvements and within a few weeks sell for a profit (Press Democrat “Flipping Foreclosed Houses,” December 26, 2010). After that article was published, several angry letter writers expressed their opinions that those involved in the house flipping business are greedy, immoral, dishonest, opportunistic, and much worse.

This is the first in a series of blogs that seeks to dispel some of the myth and misinformation that is rampant, as well as put into perspective some of the issues raised in the Press Democrat article and subsequent editorial and letters to the editor.

The biggest failing of the article, in my opinion, was to perpetuate the idea that investors (flippers) are responsible for the fact that these homes are being sold at auction. The article focused on a few instances where the homeowners seemed genuinely surprised that they were losing their homes, only to be thrown out on the street by the new owner.

In fact, in the overwhelming majority of cases, the homeowners are aware that a sale date (i.e., foreclosure date) is looming. The homeowners likely have not made any payments in many months, and by law would have received certified letters advising them of the coming foreclosure date. I fully understand that some lenders have not acted honorably or responsibly during the foreclosure process, and I make no excuses for any of them – but to imply that an investor/flipper has anything to do with that process is absurd.

People lose their homes for any number of reasons, as the Press Democrat editorial (“Flipped,” December 29, 2010) correctly stated. But to draw the conclusion that investors are hovering like hyenas waiting to feed on the misfortune of others is just too much of a reach.

In my next blog I’ll explore the process of buying foreclosures at auction, and the risks taken on by the investors.

Your comments and questions are welcome. These are important issues and I invite a dialogue on all sides of the table.

Posted by:  Deborah Byrne

Is seller financing right for me?

7220 Hayden, Sebastopol

Seller financing can be complicated, so I recently asked my favorite lender, Megan Sovel, of Blue Oak Mortgage about the benefits of seller financing. In her usual gracious style, Megan explained seller financing for me and truthfully, there’s no reason to change up her explanation.

Seller financing IS currently permitted on Conventional Financing, given the terms and borrower qualifications conform to all of the lender’s guidelines. In short, the benefit of seller financing in today’s market is that it allows the buyer/borrower to maximize their purchasing power by minimizing their down payment.

In the past, conventional second mortgages (Home Equity Line of Credit and Closed End Loans) were a popular and smart option for buyers who wanted to take advantage of a low down payment but still avoid the added expense and qualifying restrictions that come with Mortgage Insurance. As the market has turned, however, these purchase money seconds from conventional lenders have all but disappeared as the risk has far outweighed the lender’s returns on their investment. There are currently no banks giving second mortgages above 80% of the appraised value of the property (and in most cases they cap at 70% or 75%). That’s where seller financing can comes in as a huge buyer incentive.

Assuming the seller has the available equity and is willing to carry the Promissory Note for the borrower, Fannie Mae & Freddie Mac currently allow for a combined loan to value of up to 95% of the property’s appraised value. This means that the buyer could get an 80% loan to value first mortgage through a conventional lender, a 15% seller second mortgage, and contribute as little as 5% of their own funds toward down payment. This would allow the buyer to avoid Mortgage Insurance and, in some cases, possibly qualify for a Conventional loan (versus FHA) when they otherwise wouldn’t have (due to some pretty strict current Mortgage Insurance restrictions on credit score, debt to income ratios, reserves, etc).

Additionally, the seller financing can also help make up the difference between purchase price/appraised value, and a conforming loan amount ($417,000), which carry slightly lower rates and monthly payments than High Balance Conforming or Jumbo loans.

Now, that said, the terms of the seller financing will be have to be reviewed and approved by the first mortgage lender and pass all Fannie Mae & Freddie Mac guidelines for second mortgages. For instance, the seller’s financing cannot amortize (have a term) less than 5 years from the Note date, cannot have a Pre-Payment Penalty (“early termination fees are allowed permitting they don’t exceed $500), cannot allow for any negative amortization (the borrower must make at least Interest Only payments), and cannot exceed certain limitations on rates & fees. Furthermore, in addition to qualifying for the Conventional first mortgage, the borrower WILL have to qualify for the entire principal and interest payment on the seller’s note, and the lender may require an additional review of the appraisal in order to verify that the property value meets their minimum criteria.

All in all, seller financing has some huge benefits for potential buyers. While not many sellers have the luxury of offering that option to buyers in today’s market, it can be an extremely beneficial option for buyers looking to “think outside the box” of conventional mortgage financing.

Posted by:  Martha O’Hayer

1721 Spur Ridge, Healdsburg

As you may have found, this is a testy Real Estate Market. There are no guarantees that the lenders will provide enough to cover the sale of the home. Often, buyers don’t have enough cash for a 20% or even 10% down payment. Therefore, sellers of homes in certain price ranges and regions may need to come to the table with inventive ways to attract potential buyers. I’ve seen sellers offer exotic vacations, appliances, even boats and cars to sweeten the deal.

Gifts are nice, but the most attractive incentive to a potential home buyer is a lower price. However, sometimes even that isn’t enough if comparable properties are also reduced or there is an excess of inventory. In this case, one creative option to consider is seller financing.

Here are two properties currently for sale in Sonoma County that feature seller financing. Both are lovely with fresh remodeling and seller financing may just be the ticket to make them available to a buyer who may not have the opportunity or the cash in their account to make the purchase work otherwise.

1721 Spur Ridge, Healdsburg 

7220 Hayden, Sebastopol  

Posted by:  Martha O’Hayer

If you’re lucky enough to live in the State of California, enjoying the great climate and geography, diversity and culture, history and charm, arts and entertainment, and landmarks and outdoor activities, you may also be able to add tax credits to the list of fringe benefits of living in California if you purchase a home soon.

With home prices and interest rates at historical lows, fortunate home buyers in California may qualify for a federal tax credit up to $8,000 in addition to the recent state tax credit up to $10,000 (if you time your purchase right over the next few months). However, taking advantage of Uncle Sam’s generosity will have to be timed right and not all may qualify. Many home buyers who plan to be in escrow by April 30, 2010 and close escrow by June 30, 2010 realize they qualify for up to an $8,000 federal home-buyer tax credit.

An eligible taxpayer must purchase, or enter into a binding contract to purchase, a principal residence and close escrow on or before April 30, 2010. However, the tax credit will qualify if a binding purchase contract is signed by April 30, 2010 and escrow closes by June 30, 2010.

Many home buyers may attempt to delay their close of escrow until after April 30, so they can also qualify for the new California home-buyer tax credit, which was signed into law recently. The state credit is worth up to $10,000, spread over three years. Although the chances of taking advantage of both tax credits is relief to many prospective home buyers, timing is key and the amount of buyers who will benefit from both credits may be slim.

To qualify for both the state and federal tax credits you must buy the home as your principle residence, you must be in contract on or before April 30, 2010 and you must close escrow between May 1, 2010 and June 30, 2010, and meet all other requirements. Timing will be tricky, especially if you’re in escrow on a foreclosure or short sale, which may not close escrow in the short window of time to take advantage of both tax credits.

Prospective buyers who have already locked in a mortgage rate may lose their rate, or will have to pay an additional fee to extend their rate lock (if they choose to postpone their closing to possibly reap the benefits of both tax credits).

The federal tax credit for first-time home buyers (the IRS defines a first-time home buyer as someone who has not owned a principal residence the past three years prior to the purchase) is equal to 10 percent of the purchase price (up to a maximum of $8,000, as the tax credit applies only to homes priced at $800,000 or less). The tax credit doesn’t have to be repaid unless the home is sold or no longer used as the buyer’s principle residence within three years after the purchase.

Buyers can claim the federal tax credit when they file their tax return (or amend the prior year’s return). This credit is refundable and the entire amount will be paid, even if you have zero federal tax liability or the credit is more than your federal tax.

The credit is also valid for current homeowners buying a replacement principal residence. Eligibility to claim the tax credit states that the buyers must have owned and lived in their previous home for five consecutive years out of the previous eight years. The tax credit is equal to 10 percent of the purchase price (up to a maximum of $6,500 and the tax credit applies only to homes priced at $800,000 or less). The credit is available if the home was purchased between November 7, 2009 – April 30, 2010. However, the tax credit will qualify if a binding purchase contract is signed by April 30, 2010 and escrow closes by June 30, 2010. The income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint tax returns. The tax credit doesn’t have to be repaid unless the home is sold or no longer used as the buyer’s principle residence within three years after the purchase.

The State of California tax credit is the lesser of 5 percent of the purchase price or $10,000. First-time buyers can purchase a new or existing home but repeat buyers can only purchase a new home that has never been occupied.

The California credit is spread over three years, up to $3,333 per year and it is not refundable. If you owe less than $3,333 in one (or more) of those years, you lose the difference that year. Even if you owed $3,333 before you owned a house, you might owe less due to of all the new tax deductions.

The state credit does not have an income limit or purchase price limit, however, some buyers who fall below the income limits for the federal credit might not owe enough California tax to get the full benefit of the state credit.

To get the California credit, you must close escrow between May 1, 2010 – December 31, 2010, or whenever the money for the program runs out, whichever comes first (the money will probably run out before December 31, 2010).

The state credit for new construction can be reserved if you enter into a contract between May 1, 2010 – December 31, 2010 and close escrow prior to August 1, 2011. If you choose this route, you will not qualify for the federal credit because you entered into a contract after April 30, 2010.

Buyers should consult a well-informed tax advisor and understand both credits.

Posted By: Doug Hecker

What is a HUD home?
A HUD (US Department of Housing and Urban Development) Home is a 1-4 unit residential property that is backed by the Federal Housing Administration (FHA) and is now in foreclosure. When someone with a HUD insured mortgage can’t meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. HUD then sells the home at market value through a Marketing & Management Contractor such as PEMCO.

Who can sell HUD homes?
Any licensed real estate agent or broker who is registered with HUD may sell HUD Homes.

Who can buy a HUD home?
Any buyer with available cash – or who can qualify for a loan (subject to certain restrictions) – can purchase a HUD home. Initially, priority is given to those who are buying the home as their primary residence. After the priority period, unsold properties are made available to all buyers, including investors.

How do you find HUD homes?
Finding a HUD home is as easy as clicking on hudpemco.com, searching under properties for sale in California, and selecting the home or income property of your choice.

How do you purchase a HUD home?
Once you are interested in a property, contact a federally approved California HUD real estate broker, like the Duran Group, and they will provide access to these properties and handle all the bidding, contracts, and disclosures processes on your behalf. A real estate broker must be properly registered with HUD to submit contracts for purchase or any HUD home.

Where can I learn more?
Visit the US Department of Housing and Urban Development website – and particularly the HUD in California section.

If you’ve always wanted to take advantage of the opportunities of purchasing government owned Real Estate, now is the time. Do you have any other questions about HUD homes? Have you had experience buying one? Please leave comments below or contact the Duran Group directly.

Posted by:Raina Duran

Friday, President Obama unveiled a plan designed specifically to help the five states hardest hit by the housing crisis, including California. The new initiative calls for state housing finance agencies to create locally tailored solutions to help keep homeowners in their homes and stabilize the housing market so home values can rise. More details here.

Several efforts have come out of Washington to help reinvigorate the housing market, including two home buyer tax credits, which are set to expire April 30, 2010. This means that while there are still about ten weeks to go, time is running out for homebuyers to qualify, as a typical escrow lasts 30 days.

Below is a quick breakdown of what you need to know. For further reading, the National Association of Realtors has a very informative site highlighting the Basics to the Extended Homebuyer Tax Credit. You can also visit www.federalhousingtaxcredit.com.  

$8,000 First-time Home Buyer Tax Credit at a Glance

• The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

$6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after initial purchase.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Posted By: Edward Reiners

I’ve had the privilege of working with many first-time home buyers over the years, and I find that the same few questions are consistently asked when we begin working together. As in most trades, we get so familiar with the lingo and the process that we tend to forget to explain things in plain English to the novice real estate client.

Here are the top four questions I get asked by first-time home buyers:

1. How much do you charge? The commission is paid out of the seller’s proceeds. Any property that is listed in the Multiple Listing Service has an associated percentage that the seller will pay both the listing agent and the cooperating (buyer’s) agent. 
2. Can you still help me if I want to see a home that another real estate company is selling? Yes, all agents have access to the Multiple Listing Service and can show any home that is for sale. 
3. What’s the purpose of the good faith deposit? A valid contract must have several elements, including what we call “consideration.” In this case, the consideration consists of the good faith deposit money (usually $1,000 to $5,000). The check, made payable to the escrow company, is held un-cashed during the negotiation process. It is only sent to the escrow company if and when there is an agreement between the buyer and seller and we can open escrow. At that time, the escrow company cashes the check and holds it in escrow until completion of the deal, at which point it is released to the seller as part of their proceeds. If during the inspection process the buyer decides not to buy the house, then the escrow company refunds the good faith deposit to the buyer.
4. What are closing costs? Closing costs are all the costs associated with purchasing property. Some examples include: loan fees, recording and notary fees, escrow and title company charges, interest payment to the new lender, the first year of fire insurance, and impound payments of taxes and insurance, if applicable. Together with the lender and the title company, I always provide my clients with an estimate of closing costs so they are fully aware of how much cash they must have in order to close the deal.

Are you a first-time buyer? If your questions weren’t answered here, please contact me at dbyrne@fhallen.com or leave a comment below.

And remember, if you’re anxious to take advantage of the $8,000 first-time home buyer tax credit – as well as great, low interest rates – it takes about 30 days to close and first-time buyers must have a signed purchase agreement on or before April 30, 2010. In those cases where a contract is signed by April 30, 2010, the purchase must be completed no later than June 30, 2010. 

For more information on the tax credit, visit: www.federalhousingtaxcredit.com.

Posted by:Deborah Byrne

My last post illustrated the tried and true reasons to buy real estate now. For the most part, all of those reasons were norms we’ve always known about real estate.  But today, there are different reasons to act now.  There’s a timer on some of the following reasons – some of these will disappear soon, as soon as April 30, 2010!  So tick tock.

Here we go, 5 more reasons (in no particular order) to buy real estate today:

• Home Buyer Tax Credits  -You’ve heard lots about this, but it is a good reason to get on the bandwagon and buy a home.  The tax credit applies to purchases that occur before April 30, 2010, or where a binding contract is signed before that date and the transaction is completed by June 30, 2010.  Currently, the government is offering two programs.  An $8,000 First-Time Home Buyer Tax Credit and a $6500 Move up/Repeat home Buyer Tax Credit  –  quick overview. More FAQ’s about the Home Buyer Tax Credits can be found here.


• The Energy Efficiency Tax Credits- FEDERAL—The Existing Home Retrofit Tax Credit, Tax Code Section 25C is available to homeowners and credits 30% of the cost up to a $1,500 lifetime limit are available for projects completed in 2010. 


• Local and regional funding is available for Energy Efficiency programs LOCAL– Sonoma County’s Energy Independence Program is a new opportunity for property owners to finance energy efficiency, water efficiency and renewable energy improvements through a voluntary assessment. These assessments will be attached to the property, not the owner and will be paid back through the property tax system over time, making the program not only energy efficient but also affordable.  I’ll bet there are lots of ways for you to capitalize on energy credits while you live in your home.  If you are still renting, it’s time.  Buy a home, get tax credits!  Check out what is available to you with a quick Google search.


• Time’s A Wastin’—Act Now.  Foreclosures, Short Sales, just ‘get me out of this house now’ sales. There are so many reasons prices are low.   The market seems to be correcting, so don’t wait.  Get approved for a loan, find a great realtor, and start shopping!  There’s tons of information out there.  Get someone to help you or just help yourself.  Go on, do it. Time’s a wastin’!


• Control over your environment– Owning your home offers other advantages as well. Not only can you change your home to meet your needs, but you also are not subject to the terms of a lease or a landlord’s whims. As a homeowner, you can experience the emotional and financial security that comes from knowing  what your housing expenses will be from year to year for the most part.  Unlike rents, which can increase annually, most mortgages have fixed or capped monthly payments. So, as a homeowner, you can have a much better idea of what proportion of your paycheck goes toward your home. Think of it as the ultimate savings plan. If you are still trying to decide if you want to rent or buy, this calculator, designed by Michael Bluejay may be the best tool I’ve found for that.  Have fun.

So there you have it.  My Top Ten For 2010.  Top Ten Reasons to Buy Real Estate Now.  Comments are welcome as always.  Email me at mohayer@fhallen.com. 

Posted by:Martha O’Hayer

The real estate industry is full if clichés and metaphors, for example: “location, location, location” — “a wave of foreclosures is about to hit the market” — “are we at the bottom of the market?” — “interest rates are the lowest they’ve been since the Macedonian Period!” These clichés and metaphors are spewed out more frequently than the phrase “Bailout” flashes across the ticker on Fox News, MSNBC and other media conglomerates who attempt to shape our economic thought process and buying habits. The million dollar question: “Is this the right time to buy real estate?” Although we can’t look into the future and give an accurate answer to that question, we can look at history and trends.

According to Kiplinger’s Personal Finance,

“It’s a good time to snag a bargain if you’re confident in your job prospects and you don’t plan to sell for at least five years.”

Over the past decade, real estate lost its way — real estate was typically purchased to have a place to call “home” and raise a family or create lifelong memories. However, when real estate rose faster than a kindergartener’s hand when asked by their teacher “who wants a cookie?” real estate became a commodity and the American Dream of owning a home changed overnight to an appreciation feeding frenzy. Consumers thought it was their right to gain 20 percent appreciation year after year until they were ready to sell and retire from the proceeds or refinance with a less risky loan and take cash out for exotic vacations, vehicle and boat purchases, or trips to the local home improvement store where homes were transformed from an outdated and sometimes unlivable dwellings to the neighborhood Taj Mahal. With all of that aside, it does seem like now is a good time to buy real estate. In fact, according to Forbes.com, the number one item on their list of things to buy before the economy improves is housing.

“This may be the best time in a generation to buy a home.”

The Pew research center reported that 75 percent of Americans said it was a “good” or “very good” time to buy (people-press.org). The Wall Street Journal reported that median home prices in the San Francisco Bay Area are up 9.2 percent year-to-date and MSN Money.com/Case Shiller posted the following statistics regarding return on investment from January 1, 2001 through December 31, 2008: The Dow Jones down 19.8 percent, the S&P down 35.2 percent, the Nasdaq down 59.9 percent, and Real Estate up 69.8 percent. I am often told by consumers that they’re waiting for the market to go down even more before they decide to buy. However, keep in mind that if homes decrease another 10 percent you’ll save $50,000 on a $500,000 purchase, but if interest rates increase by more than 1 percent it will offset the $50,000 you saved on your purchase price and your monthly cost will increase. USA Today is currently estimating that California’s excess supply of homes will be substantially depleted and new construction will be needed to meet demand, thus leading to a housing recovery. Over the past six years, 30-year mortgage interest rates have hit historical lows on five different occasions, followed by quick and dramatic increase in rates as reported by the Federal Reserve. Again, one cannot predict the future, but with data and statistics one can be informed and make an educated decision and our market place (especially homes priced under $400,000) is very competitive. Buyers in this price range are often bidding against multiple offers, homes are selling for above asking price, and inventory is very low — all creating a demand for a supply that has decreased dramatically. It is a good time to buy, so contact a real estate professional, get pre-qualified with a loan officer and let the shopping begin!

Posted By: Doug Hecker

This article is an attempt to inject a bit of real estate knowledge into your portfolio and update you on the recent activities that have been taking place in the real estate market. I am often asked, “what’s the market doing?” If I answered, “nothing, the sky is falling and we’re all doomed — pack your personal belongings, abandon your worthless homes, and start chanting Kum Ba Ya,” I’d be misinforming you. It’s actually quite the opposite.

The real estate market has changed dramatically compared to a year ago. Many properties in Petaluma, especially homes priced below $400,000, are receiving multiple offers and selling above asking price. Does this mean the real estate market is back to the chaos of that “oh so inflated” market in 2005 – leading the way to another economic meltdown in four years from now? The answer is an emphatic “NO!”

By now we’ve all heard what the peak of the market was like back in 2005 — when sellers had lottery fever, buyers were signing their names with the alias “Ponzi” (no relation to “The Fonz” from ‘Happy Days’) and many homeowners were re-financing and pulling out equity faster than the ATM machine in their coat closets could spit out Benjamin Franklin’s — the current market is quite different.

For example, obtaining a mortgage loan in the current market is much more sensible (simply breathing no longer gives one the right to obtain a mortgage loan). Buyers actually have to prove they have a realistic and non-inflated income and verification of employment, credit scores need to be closer to a 700 FICO score (in some cases above 700), assets need to be verified, and down payments need to be at least 3.5 percent or more.

Most loans that are originated with less than a 20 percent down payment are subject to PMI (private mortgage insurance) and impound accounts that require money in reserves to pay for property taxes, hazard insurance, and PMI — increasing buyer closing costs and helping to insure that buyers have a monetary stake in their housing investment, which, in theory, will make it more difficult to walk away from. Another significant difference is the fact that inventory is low, interest rates are historically low and the demand for housing has increased – all signs that point to some sort of recovery in the housing sector. The demand for low-cost housing is definitely greater than the current supply of inventory. Many properties are receiving multiple offers – anywhere from two or three offers on a particular property to more than 20 offers on a single property.

Where are the buyers coming from?: Many buyers who felt they were priced-out of the market in 2005 are taking advantage of low prices, tax credits, and interest rates. Investors are looking for a place to park their cash (prices make sense, as investors are buying properties and able to realize a positive cash-flow), and move-up buyers who didn’t want to take on hefty property tax bills due to inflated prices in 2005 are taking advantage of lower home prices coupled with lower property taxes.

How does one compete in this market? The answer is not simple – you may have to write a dozen offers or more before your offer gets accepted. Buyers need to be patient, prepared, and pre-qualified (pre-approved with an underwriter if possible). I am also often asked, “are we at the bottom of the market?” While we do not have a crystal ball or control what the real estate market is doing, it seems as if the market is at, or close to the bottom and much more stable. It’s a good time to buy real estate: prices are low, interest rates are low, you’ll gain a tax write-off and pride of ownership, and hopefully in the future a return on your investment.

Posted By: Doug Hecker

Ever wonder what the main difference is between foreclosures and short sales? This question is asked by consumers all of the time. Here are the definitions, in a nutshell:

A foreclosure is when a homeowner is not capable of making their mortgage payments to the bank or lending company they borrowed money from. The lending company or bank has the right to take possession of their home and sell it to try to get back some or all of the money they owe on the property.

A short sale is when the seller doesn’t have the means to pay off their existing loan on their property at the point of sale. For example, say the seller owes $300,000 on their home, but can only sell it for $260,000. The seller is “short” because the mortgage company will get less than the mortgage amount when the property is sold. Many lenders will agree to accept the earnings of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments.

My article titled “The skinny on short sales vs. foreclosures” explains these two situations in great detail. Take a look and feel free to contact me at dhecker@fhallen.com if you have any questions.

Posted By: Doug Hecker