Livermore Homes Blog

I am trying not to laugh too hard as I write this, because it screws up my typing, but today was an interesting day of Real Estate news.  No, not the drop in housing prices in various markets or the various plans for Freddie Mac and Fannie Mae or any of the other real estate financial stories.  There were three stories that caught my eye today; two from the Associated Press, and one a slightly silly site called Zeitgiest.  The first story revealed that using an essay contest to unload your home was not working for two couples, one in Colorado and another in Oregon.  Unfortunately, I am not able to provide a link to the story, but in short these two couples, who had tried to sell their homes over a period of time, tried the essay tactic.  This is where for a registration fee, people submit an essay on why they want that particular home.  The key to the essay sales format is that you need to get a certain number of entries to clear what you want for the house and for these two couples, despite extending the deadlines for essay submission,  failed to get the necessary number of entries.  They will put their homes back on the market in a more normal way and return the entry fees.

The second story was about the fact that Auctions are up 47% since 2003.  Now according to the article the 47%  may represent that revenue from residential real estate sold at auction is up 5% from last year and 47% since 2003.  We had a blog about how auctions help up the price of slow moving homes because of the excitement an auction can create. 

But the third story, and there is a bikini in the link, I thought had a real hard hitting edge, that you as a potential home seller would want to know about…tongue firmly in cheek.  Actually I just wanted to see how many hits I would get if I used the word bikini in a post, let alone have a link to someone selling real estate a bikini.  Uhhh, I get the eye factor appeal, but I still have a hard time understanding why someone would want to buy a home based on sex appeal, a free car, or a vacation.  A house has to be right for the buyer on a lot a levels, but even the single guy knows that the girl in the bikini doesn’t come with the home.

Yet another Art Under The Oaks celebration has taken place at Alden Lane Nursery this past weekend.  Once again art lovers and gardeners from all over came to take a look at local and area artists.  It was a beautiful weekend to walk through the gardens and view the various art forms.  One of the most interesting items were the designs made from the fallen 400 year old Oak that use to greet visitors as they entered the grounds.

  By the time we got there, most of the items had sold signs on them. Anyway good times.

While talking to some of our buyers, it occurred to us that they currently have too many Choices .  Now this is not news to anybody who serfs the web, but if you plan to buy anything you have to set limits and need to have perimeters. We are currently into our third month of choosing living room furniture that no one will use.  I not going to make this a long post, but simply point out that in any buying decision, the buyer has to decide what they need, what their standards are, and what they are willing to spend. 

In the go-go days of the housing boom, you basically bid on your minimal requirements and hoped for the best.  Today with four times the inventory of the boom, many potential buyers are asking, isn’t; there something better at a lower price coming on?  We’ll, ya ,maybe.  But  what is it that you need and are you qualified to get it if it comes on the market.  Right now the biggest issue is getting a loan and the second will the property appraise. 

Think.  No home is perfect.  Everything can be changed for a price.  What neighborhoods do you like, what do  really need for for the next 5 to 7 years, then talk to your loan broker or lender and find out what you you can afford to pay on a monthly basis.

I’ve been writing lately about Short Sales, where banks agree to take less than the value of the loans and Foreclosures, where the lender owns the property and these links will give you a good background on what they are and how they work.  And as a disclaimer for what I am about to write, Joan and I currently have three short sale listings all with offers on them and one looks like it will close…maybe.

What got me to digging a little deeper into why short sales are such a headache was an article in the Washington Post with the headline; “Be ready for short sale to stumble”.  It was a brief but depressing look into some of the problems that come up during a short sale.  Though short sales technically always have existed, they were rarely seen in the last ten years.  The above article quoted a Virginia Realtor who said after checking his multiple listing service data that of every 20 short-sale listings that draw a contract only one makes it to closing.  That’s depressing!  What the article explains is that short sales are currently structured so that a home owner and a Realtor have to take a gamble that the lender(s) will agree to a short sale, but only after they have found a buyer, who is willing to take a shot (a 1 in 20 chance in Northern Virginia) at getting this home and willing to hang out for 2 to 6 months or more to find out if they did.  Lenders don’t want to do anything with a potential short sale until they have a live one on the hook.  Then the waiting begins.  The best case scenario for a successful short sale is there is only one loan and there is no Private Mortgage insurance.  Lenders will most likely let a property go to foreclosure, because they can only collect PMI in a foreclosure situation.  The second best scenario is if both a first and second loan are with the same lender.  They’ll negotiate among themselves.  With two lenders, it can get ugly, especially if the second lender, who will receive almost nothing wants to be difficult.  In California, in a non-judicial foreclosure, the first lender can not come after the owner for the difference between what the home sold for and the loan.  The second lender is in the same situation except if the second lender gets nothing, so that’s why it’s important to give the seconder lender somthing.  The other thing that can go wrong is that the potential buyer goes and buys something else, why the negotiations are going on.  There are many other reasons things can go wrong on a short sale.  Rather than deleving deeper into these reasons, let’s look at some imperfect results.  Since last September only 25 short sales of all types of homes have closed according to the MLS, in Livermore.  That’s out of 550 homes closed during the same 10 months.  Short Sales were just 4.5% of all closings overall, which is suprisingly close to the number the Realtor in Northern Virginia came up with, although the percentage has climb to about 8% in the last couple of months here in Livermore.  Short Sales are making up about 16% to 18% of the overall inventory.  I am not going to go any further down the slippery slope of statistics here, but while we see some improvement in short sales, there needs to be a lot more done to speed up the process and avoid a costly foreclosure.  This isn’t charity, this is business and it needs to be run as such to avoid bigger losses to everyone.  To be continued…

The Young Actors Theatre Camp is over for the summer, but it was a great time to break out in song and dance for 110 or so aspiring thespians.  Our daughter has been going to the winter camp for the last two years and this was her first and longest summer camp.  Shawn Ryan and John Ainsworth have been putting on their; in front of and behind the scenes acting camp, for the last nine years and it just keeps getting bigger and better every year.  The winter camp has out grown its Camp Arroyo location in Livermore and will be held at Camp Jones Gulch in Santa Cruz.  But with the help of this piece on ABC 7 news, the winter camp had a waiting list last Tuesday of 40 and who knows how many today.  Check out their website to see what all the excitement is about and how two hard working performers are giving young performers the tools it takes to succeed not only in show biz, but just about any field where you are expected to perform.  Actually, I think the skills taught at YATC can be used by anybody in any field of endeavor, except for hermits, but even there it would be helpful if you could entertain yourself.

                  I wanted to update a post from a while back about house colors.  This time of year, many people start thinking about painting the outside of their home.  The big question is what colors to pick.  A few years ago, I wanted to paint our house because the original paint was fading.  Not wanting to go to our local home owners design committee for a change approval, we opted for the original color.  OMG, how boring, what was I thinking.  Anyway mistakes can be great teachers.  Now upon review, if you need to see some good uses of color, check out the Sandhurst neighborhood off of Murdell and Cancannon.  Many use a base, a trim and an accent color to set off the home.  So you can do a drive by and check them out OR you can go on line and play with colors. 

Here’s a site that really has a lot of resources about how to paint your home.  This link goes to a variety of paint programs that let you pick a style of house and then pick colors for it.  The second one on the list, Resene EzePaint from New Zealand was the toughest to use of the ones I tried, but had the most house styles to choose from and a seemingly endless pallette of colors.  Bob Villa’s and Better Homes’ programs were easier to use, but much more limited.  All these were the free versions, if you find one you like, you can buy your favorite that let’s you upload a  photo of your house.  Then you can see what it might really look like.  But the site has many more articles about how to choose colors, it is an information rich site.  Here’s another site with color suggestions and tools. 

So my suggestions is review the advice about colors in general, like looking at the color of your roof and using that as a starting place to pick your pallette, then play with the free programs to see which one you like.  Next buy or use a program that allows you to load photos of your home into it and play with colors.  Finally, if you have followed me this far on what could be a $3,000 to $6,000 investment, find a color consultant for $50 to $150 to review your choices so they can make recomendations, suggestions and corrections.  Exterior house colors are one of those First Impression things, you only get to make one. 

One final thought is to check Consumer Reports on their rankings of brands of paints.  A couple of years ago they ranked Behr paints available at Home Depot, as their number one paint and a best buy.  Many paint contractors like Kelly Moore partly because of discount they get from the store.  Try to get costs from both Home Depot and Kelly Moore, or your favorite choice of paint when you are getting bids from painters.  AND please get at least three bids and find out if they pass along their discount from the paint store. 

Towards the end of May, I tried to guess what the total homes sold or in contract would be for the entire month in Livermore.  My prediction was between 100 and 105, but  the actual total was 109, so I missed it by that much.  Then I noticed this post on the Huffington post that gave five reasons, why the housing market should turn around by the end of the 2008.  One reason he gave was that this is a Presidential election year and with a national yearning for change, who ever gets elected will give a boost to the mood of the country and the economy.  And a second specific reason was that housing prices in some areas have fallen enough to attract investors, who can get a positive cash flow by turning them into rental properties.  Livermore is getting close to that price point, Brentwood and other nearby towns are already there.  So a week away from the end of June, here are my predictions for Livermore and Pleasanton, cities sharing a common border but separated by a $200,000 to $300,000 pricing differential.  Livermore should see a total of 83 pendings and sales of everything.  That’s down from May, but an increase over June of 2007, when we had 72 sales.  Bank owned properties and short sales make up about 42% of all sales, which is hasn’t changed much in the last few months.  Also overall inventory continues to drop and is actually below what it was last year at this time.  Again these are free predictions not necessarily accurate ones, but buyers are starting to see a change in the Livermore housing market and there are not as many perfect homes to choose from as there use to be.  While short sales and REO properties make up 28.6% of the active inventory in Livermore, Pleasanton has only 17 such properties on the market or just 6.6%.  This is keeping the Pleasanton housing market from having a bigger pricing correction then Livermore.  The current housing inventory has remained stable in June, but sales have been sliding the last couple of months and my prediction is that total contracts and sales will drop from May’s 66 to about 60.  And that trend, we see in Pleasanton of rising inventory and falling sales, will just by the very nature of the market place cause downward pressure on prices. 

So if you are a buyer and want Livermore, our recommendation is buy now, especially if you have specific needs like a particular school or a specific yard need or number of bedrooms, because we are seeing fewer choices in Livermore.  However if you want Pleasanton, I think you still have time to shop around, prices will still be softening over the summer.

I have been getting a few phone calls from folks, who have been checking out my recent posts on Short Sales and Foreclosures .  I think the headline worked.  Joan and I actively work with sellers, who may qualify for a short sale.  Everything I have been reading lately shows that in most, but not all cases, short sales are a win-win for sellers and lenders.  They are not easy and despite the fact, that you would think that banks and other types of lending institutions would understand economics, they don’t always get why a short sale is in their best interests.  So trying to work smarter not harder, and rather than suggest that I am an ultimate authority on Short Sales and Foreclosures, I thought I would point those interested to a couple of sites with lots of information on both situations.  The first site is the California Association of Realtors or www.CAR.org, and here is a pointer to their legal “copyrighted” articles.  It says it’s just for members but I think anyone can take a look at the information as long as you don’t infringe on their copyright since I got to this link without logging in.  Anyway, I included all their legal articles so you have to scroll down to short sales and REO’s to look at what the C.A.R. says about them.  One caveat, some of the references to tax consequences on short sales seem to be out of date, and don’t refer to HR 3648 .  You do want to check with your CPA or tax person about tax consequences of a short sale.  Another company that we are planning to work with has a fairly good “FAQ” section on their web site about these issues.  Check out www.shortsalesexpress.com and click on their FAQ button.  Hope this helps, but feel free to call us if you have any questions especially if you are in the Tri-Valley Area, outside of this area you may want to check out HUD  approved counselors.

Here is an update on what is going on with the new FHA loans and how they might apply to you.  This information comes from our favorite Loan Broker, Mark Wharton.  Feel free to contact him with any questions you might have.

Hi Joan and Ted;

WoW, did that statistic catch anyone’s attention?  It caught mine during a Department of Real Estate course on Short Sales.  I thought (and still think the instructor with 28 plus years in real estate) knew what he was talking about.  But I have since tried to find the source of that statistic and the best I could find was that 50% of those in default and 40% in foreclosure never talk to thier lender.  Now Never is an interesting word in how final it is.  I mean how many people, when a notice of sale is nailed to the door finally pick up the phone and call the lender, I don’t know.  And what combination of the above two numbers can be put together?  Freddie Mac says at the beginning of this year 57% of borrowers don’t know what their options are to prevent foreclosure versus 61% in2005.  It’s probably not worth hurting your brain as to what exactly is the various percentage of non-contact and non-knowledge of foreclosures by borrowers, just know it’s really big.  Now my theory as to why this is happening is that the majority of borrowers are either, embarrassed, scared to do anything or fear that the bank is going to take their home no matter what.  Check the first link above, as just one of many articles, explaining that Lenders/Banks DO NOT WANT YOUR HOME.  One of the exemptions to this is if there is PMI (Private Mortgage Insurance) on the loan, then a short sale will not trigger the insurance, and the lender will allow the property to go into foreclosure so they can collect the insurance.

Here’s how to look at a foreclosure from a Bank’s point of view, not that they all realize it yet, but they are catching on.  On average a notice of foreclosure may take 6 months to be sent after loan payments have stopped.  Then they file a non-judicial foreclosure takes 3 months.  Judicial foreclosures can take at least two and half years and are basically unheard of.  Then the lender has to advertise 3 times over 21 days, let’s call it one month.  If the borrower files bankruptcy, it can take the bank 2 months to clear the bankruptcy.  Evictions can take an average of 2 months, and then figure 1 month to make repairs and fix-ups.  Then the house goes back on the market and sale time depends on price, but let’s call it 4 months and then a month for the sale to go through escrow.  It adds up to 21 months.  Could be shorter, could be longer.  In the meantime, the lender is going to have to pay taxes, insurance, and maintenance and eat the lost payments.  Cities around the county including the State of California have or are considering passing laws to require that lenders maintain the properties, so they don’t look abandoned.  Also lenders are totally scarred of vandalism, which could be very expensive.  Again the first link says is that banks may getting at best only 60 cents on the dollar of their loan.  What I am suggesting is that it is in the lender’s best interest to work with the home owner to either make a loan modification or do a short sale.  It’s a much more of a win win situation.  Best Advice, ask for help.  Ask us.

A quick market update for Livermore as I reported in my recent Realty Times market report that 27% of the homes in Livermore were either Short Sales or bank owned, but I just realized that some agents do not know how to enter these properties correctly in the MLS and my best low estimate guess is that another 8% to 10% are not showing up with the correct code for these types of sales.  So currently my guess is that 35% of all active listings are either short sales or REO’s in Livermore.  56% short sales and foreclosures represent current solds and pendings so far in June and are up from 43% in May.