What are Buyers buying?

The buyers out there are looking for deals right now. I know this for a fact because three of my silicon valley short sales got solid offers within the span of three days this week, while my “regular” sales did not. Everyone in the industry knows this from their experiences and buzz about it, but I wanted to get some hard data for myself, rather than rely on hearsay.

I decided to get a simple snapshot of what sold (properties that closed escrow) within the past one month. This may not be a perfectly scientific method, but it gives me some data I can share with my clients, both buyers and sellers, so they can get a true data based picture of what is going on out there in Santa Clara County and make their informed decisions.

Here are the results:

844 properties (both single family residences and condo/townhomes) closed escrow within the last 30 days in all of Santa Clara County.

560 of those properties were in distress (meaning they were either silicon valley short sales or bank owned properties). In the picture below, they are represented on the right side of the screen by the house with the $ (short sale) or the word REO (bank owned).

By my calculation, that is 66% of sold properties that were distressed properties. That’s actually higher than what I thought from anecdotal data. Mind you, that real estate is neighborhood specific, so that rate will differ depending on where you live, but it gives you a macro view of sales activity in Santa Clara County.

What does this mean? Distressed properties are priced to sell, which means typically they are marketed slightly below market price to get them to move quickly. Majority of buyers are picking properties that are the cheapest in the marketplace. If you are a seller entering the market now, you must be aware of what types of properties buyers are seeking out now, and price your house accordingly, or be prepared for a long ride.

Steve Mun, Silicon Valley Realtor
www.stevemungroup.com

Foreclosure Scam

I had written an entry recently about what I deemed to be a scam directed at an elderly client of mine, which got my blood boiling. I was angry because it seemed targeted at the elderly who are most vulnerable at the prospect of losing their homes.

The mushrooming “foreclosure fix-it industry” which is demanding up-front payments before doing any work, has fallen into the FTC’s radar, according to a Washington Post article. The article goes on to state: “[b]ut a new settlement from the Federal Trade Commission sends a blunt warning to the fast-growing foreclosure fix-it industry: If you take consumers' cash upfront and promise you'll save their homes, you'd better be able to deliver.” Or they will be charged with running a scam which violates Federal Law.

It seems the FTC (Federal Trade Commission) has had enough complaints and is now trying to shut down these scams which are preying on the fears of distressed homeowners by demanding up front payments to save their homes. The kicker is that these “professionals” were unable to do anything to stop the foreclosures anyway for the most parts, and those fortunate homeowners who were able to stop foreclosures were able to do so only by working with the lenders directly, with no assistance from these scammers.

See full article below in the Washington Post.

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/16/AR2009011601902.html


Be wary of anyone who guarantees their work but demands upfront payments before doing any work, this is a red flag for some sort of scam. Please warn your elderly family members, so that they will not fall victims to these schemes.


Steve Mun, Silicon Valley Realtor
www.stevemungroup.com

11594 Big Four Way, Gold River, CA 95670

Steve Mun | Keller Williams Realty | 408-802-5641 11594 Big Four Way, Gold River, CA 4BR/2BA Single Family House offered at $340,000 Year Built 1988 Sq Footage 2,135 Bedrooms 4 Bathrooms 2 full, 0 partial Floors 1 Parking 2 Car garage Lot Size 8,289 sqft HOA/Maint $136 per month DESCRIPTION LENDER APPROVED SHORT SALE. Come live in wonderful Gold River. Idyllic 4 bed 2 bath Ranch with a big back yard is quietly nestled in a beautifully landscaped community which is within walking distance to two fantastic neighborhood parks, greenbelts galore and the highly desired Gold River Discovery Center. The floor plan is ideal with an open easy flow from the kitchen to the family room with a separate living room/dining room area. The master suite is separated from the remaining three bedrooms for added privacy. The large backyard is perfect for kids and their toys and the swing-set stays. Everything your family needs is nearby: shopping, restaurants, freeway access. Must see the neighborhood to appreciate its beauty. see additional photos below PROPERTY FEATURES Fireplace High/Vaulted ceiling Walk-in closet Tile floor Family room Living room Dishwasher Stove/Oven Laundry area - inside Balcony, Deck, or Patio Yard OTHER SPECIAL FEATURES Lender approved short sale ADDITIONAL PHOTOS Photo 1 Photo 1 Photo 1 Photo 2 Photo 3 Photo 4 Photo 6 Photo 7 Photo 8 Photo 9 Photo 10 Photo 2 Photo 3 Photo 4 Contact info: Steve Mun Keller Williams Realty 408-802-5641 For sale by agent/broker Equal Opportunity Housing Posted: Mar 9, 2009, 11:52am PDT

Santa Clara County Market Conditions December 2008

ABSORPTION RATES IN SILICON VALLEY

Absorption Rate projects out into the future the amount of time (in months) it will take to sell a typical home if it come into the market place now. Simply put, it is a formula which looks at the numbers of homes sold in a designated area in the past (typically a full year) and compares those against the number of homes that are unsold in the marketplace (right now), to come up with the projection. It is perhaps the single most important formula in making home buying/selling decisions, yet only a handful of Realtors seem to discuss it. I hope you find this information useful. It will be updated on a monthly basis.

According to National Association of Realtors (NAR), the real estate market is defined as follows:

More than 6 months of supply = Buyer's Market

6 months of supply = Balanced Market

Less than 6 month of supply = Seller's Market

As of today January 12, 2009,

Absorption Rate for Santa Clara County Single Family Homes

(We are in a Seller's Market)

As of 01/12/09

5.63 months supply / last month was 5.36 months supply

Absorption Rate for Santa Clara County Condo/Town Homes

(We are in a Buyer's Market)

As of 01/12/09

6.72 months supply / last month was 6.78 months supply

Steve Mun, Silicon Valley Realtor
www.stevemungroup.com

Beware of Loan Modification Scams!

With the economy in a questionable state now and foreclosures at record levels, people are obviously concerned about their ability to keep or remain in their homes. These concerns are fueled by all the media coverage exacerbating the situation. When times are difficult and people are frightened, con-artists come out of the woodworks to prey on the mis-informed; especially targeting the elderly segment of our society. The media should be doing more, in my opinion, exposing these scams and warning the elderly to stay away.

I am angry right now. I have an elderly client who is facing some difficulties. She is trying everything to in her power to try to better her current situation and one of the things she has pinned her hopes on is the prospect of some type of loan modification, since she cannot qualify for a re-finance. She heard a lot about this in the news, so she figured it would be her last resort.

What got my blood boiling was that she was going to get a loan modification and lower her mortgage payment by at least $90,000 and save herself at least $900 per month because a lawyer was going to get this done for her. The first question out of my mouth was “did you pay any money?” She had not yet, but she was sold because this lawyer was so good at this that they were asking for a $3,000 deposit, and they guaranteed if they could not save her at least $90,000, they would give her a full refund! I stopped her from moving forth with this super lawyer. (Interesting that they were able to come up with the $90,000 figure without knowing anything about her financials.)

Folks, never, ever, ever ,ever put up money first for any service which claims they will give you a full refund if you are not satisfied with the service. I don’t care whether they are lawyers, doctors or Supreme Court Justices! This is a red flag associated with many scams! If you don’t really know me and I said to you “ give me $3,000 in cash and I will sell your house for $90,0000 above market price or I will give you a full refund” Would you give me the money? Probably not. So, why would you consider giving a lawyer whom you never met $3,000 to save you $90,000 if they have not even seen your financials?

Legitimate loan modifications are done free of charge. There is no guarantee that you will be able to qualify, but you don’t have to put up money first to find out you can or cannot qualify. The fact that they are lawyers has no bearing on the process.

We have to protect the elderly segment of our society. There are a lot of them out there who have already been conned into signing away their homes by unknowingly signing reverse mortgage documents or like this scheme in my client’s situation.

And to the lawyer who tried to reach out to my client: shame on you, I hope you lose your license to practice!

Is there no Hope for Homeowners?

Yesterday I wrote about the recent data which revealed loan modifications were re-defaulting at 53% rate after 6 months. In doing further research into loan modifications, I discover some additional interesting data.

HUD’s Hope for Homeowners Program, which was designed to help at risk homeowners get more affordable mortgage rates only received 312 applications (remember, these are just applications, not approvals) since its launch in last October. The HUD Chief called the program a failure because this three year program was supposed to help 400,000 homeowners. (By my calculation, at a rate of a 150 applications per month, the program will have only received 5,400 applications, or 1.4% of its goal! By any measures that is a spectacular failure.) The program designed by Congress as a part of the recent bailout program which has turned out to be too expensive for both the lenders and the borrowers, so the lenders are choosing not to participate in the program.

See the full article below

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/16/AR2008121603177.html

Is this the type of Hope we can expect from our government? Where is the $700 Billion going?

Steve Mun, Silicon Valley Realtor
www.stevemungroup.com

Re-default rates on Loan Modifications

I’ve known for a while now helping clients with Silicon Valley Short Sales that people who were doing some form of loan modifications were getting back into trouble paying their newly modified loan payments and having to seek alternative methods to avoid foreclosure. Only thing was, I had no data to determine what that re-default rate was. Well, finally some hard data and those numbers are not encouraging.

The full article below from CNN Money.

http://money.cnn.com/2008/12/08/news/economy/mortgage_summit/

It turns out that 53% of those who received loan modification in 2008 were back in default within 6 months!

The feed-back I get from my clients who get into these re-default situations: out of desperation, they believe loan modification will solve all their problems. They agree to new terms without truly addressing the fundamental reason why they got there in the first place: their financial situations had not changed. It seems they were not making drastic cut-backs in their lifestyles to address problem and only bought a little time before the same vicious cycle returned. Let me state I am not making any judgment here as I don’t wear their shoes, I am only reporting what I hear.

What’s my observation or lesson here? These loan modifications will not solve your problem if your financial situation is not changing. Presumably for 47% of the people, who have not re-defaulted, it is working out for them so far and I can only surmise that is the case because something in their financial situation has changed.



Steve Mun, Silicon Valley Realtor
www.stevemungroup.com