Real Estate Agent – Orange County, California – Pat Monahan

First-time home buyers have an incredible opportunity to purchase a home at the lowest value in many years at the lowest mortgage rate in 40 years AND receive up to $8,000 in credit from the Federal Government.  Many qualified buyers are doing just that. The Federal tax credit expires on December 1, 2009. To receive the credit first-time buyers must close escrow by November 30th.

Many of these first-timers bought “starter” homes that were bank owned or in the foreclosure process or distressed “fixers” that needed TLC.  The investor-buyer has also benefitted with the significantly reduced values (down 25% to 40%), often buying distressed homes in “bulk”, fixing them and selling them for a profit.  The inventory of “low-end” properties in California is down and the demand is up.

All of this activity has put a floor (of sorts) in the Cailifornia market so that the CAR is now forecasting a slight increase in values for 2010.  All real esate is local and markets vary.  So, it’s important to find a knowledgeable realtor to assess your niche market value.

The bottom line for California going forward is an opportunity for the “move-up” buyer = someone who currently owns their home and wants to move into the next bigger, better, newer home while the “getting” is good.  Mortgage rates are historically low for everyone.  But they won’t stay low forever. Property values are low, but they are destined to go up again. First-time buyers are buying. That’s why NOW makes sense for the move-up seller.

Some economists predict an increase in interest rates as early as the second quarter of 2010.  Home values may or may not go down a little more in the coming months.  The banks are not dumping their “shadow inventory” of foreclosed homes, but releasing them slowly to maintain values or selling them in bulk to investors.  The window of opportunity will be open only so long.  Anyone who can buy a property and hold it for 2 to 3 years will be glad they bought in 2009/2010.

        These are ALL the Huntington Beach single family homes under $500,000 list price on August 24^th.  There are only eight of them. Of these, only two are a standard sale. The rest are distressed sales in some stage of foreclosure. The fact that the inventory is so low in this price range is significant. It is establishing a floor for Huntington Beach. All real estate is local and this is what is happening in our local market today.

        Contact me if you or someone that you care about wants to buy a house in HB or the surrounding communities of Fountain Valley, Costa Mesa, Westminster, Garden Grove, Cypress, Los Alamitos, Buena Park, Anaheim or Santa Ana. There are buying opportunites and a bonus $8,000 credit to firsttime home buyers until November 30th. Don’t wait. You must close on your purchase by Nov 3oth.

Today’s LA Times featured an article by Kenneth R. Harney (8/16/09, Business, B12). In it he suggests a way to ease out of the painful spiral of the foreclosure blight in our current economy.

There is a House bill, Neighborhood Preservation Act, passed before the summer recess which is a response to two important questions: 1.”When homeowners lose their houses to foreclosure, should they be able to stay in the property, leasing it back at fair market rent from the lender?” 2. “Should they also get an option to purchase the house from the bank at the end of the lease term, assuming they have the income to afford it?” 

The Neighborhood Preservation Act “would remove legal impediments blocking federally regulated banks from entering into long-term leases – up to five years- with the former owners of foreclosed homes. It would also allow banks to negotiate option-to-purchase agreements permitting former owners to buy back their houses”

If the bill is approved by the Senate, it would encourage banks to consider if it’s better to foreclose and take a loss now or to lease the property and then sell when values increase in a few years. There is a debate about who should own the home and control the lease agreement.

A San Diego realty broker, Al Hackman, and his partner, Tony Huerta, “contend that lease-backs with options to buy are the way to go – but not if banks run the show.”  They have a program called “the seamless short sale” where the homeowner can stay in the home before and after the settlement. The bank first sells to an investor who agrees “to lease back the house on a “triple net” basis - where the tenants pay taxes, insurance and utilities – for two to three years.”

The property value for the buy-back is pre-set to be more than what the bank sold to the investor and less “than the original price by the foreclosed owners.” For the investor according to Hackman “the internal rate of return . . . can depend on the rents and the buy back price but typically is in the 8% to 10% range. It’s a win-win. . . The owners stay in their houses. Private investors get a moderate return on what should be a safe investment and the banks are out of the equation.”

It is time to think outside of the box to solve the housing crisis of our time. The homeowner facing foreclosure should not have to bear the full burden of a lending experiment gone amok. For those homeowners who can afford the market rent rate, the seamless short sale is one solution.  Banks can slowly clear their books of toxic assets, investors can safely benefit and neighborhoods can remain intact while the country rights itself economically. 

Orange County real estate sales in the price category below $500,000 is taking off big time! Multiple offers by serious buyers are coming at any below market listing. Many of these listings (both condos and single family detached) are distressed sales, either bank owned or in foreclosure. An equity seller must compete with the distressed properties and lower their asking price to be taken seriously.

Investors with all cash or substantial cash downpayments are competing with firsttime home buyers who want their piece of the American dream. It is so very important for firsttime buyers to be pre-approved for a loan and have it in writing from a “direct lender”. A direct lender backs the mortgage from its assets. A major bank or a credit union is an example of a direct lender. There are others who also qualify as direct lenders. Some mortgage companies are direct lenders. It’s important to know who you are dealing with, because many bank owned listings will sell to a buyer who is financing the purchase with a mortgage only if the mortgage is from a direct lender.

The mortgage interest rate is still historically LOW – below 5% for a fixed rate conforming loan. With house values as low as they are it makes sense to be buying a home at this time. Remember that you are buying a home first, not an investment. As we have seen all too clearly, speculating that house prices will always go up can be a big mistake. But if you have been waiting to take advantage of low interest rates and low home values, your time is here!

You may have to bid above list price to get the house you want. As with any auction you may lose to someone who offers more. Don’t be discouraged. Find an experienced realtor to help you find a house and negotiate for it.  Or, visit the auctions and try your luck there. But it is “buyer beware” out there because you purchase a property “as is” at an auction. There can be tax and reconveyance issues to contend with as well as repairs that may cost you more than you bargained for.

As a member of a special group called ROHRS, I have information about bank owned properties and how to “package” an offer for the bank to consider.  Many offers on bank owned homes never get seen by the bank, if they are not packaged properly. You must work with an experienced realtor who will get your offer seen by the bank’s representative. Once your offer is accepted you will have a limited time to have the home inspected and your loan funded. It’s a balancing act that requires everything to happen correctly. Let me know if I can help you.