As homeowners and Realtors know, foreclosure are eating away at the fabric of the local real estate market, putting families on the street and wreaking havoc with the values of properties in their neighborhoods. In many areas, whole blocks have been decimated by foreclosures. The mortgage industry has responded to skyrocketing foreclosure rates by increasing their outreach efforts and offering loan modifications prior to foreclosures.
For the last few months, I have had the pleasure of working with a homeowner counseling firm in addition to my work as a Realtor. We work with many of the nation’s largest mortgage servicers, primary mortgage insurers, government agencies and counseling agencies to facilitate communication with homeowners facing foreclosure, before it is too late. As an experienced real estate professional who cares about my community and has a vested interest in preserving home ownership, my job is to help the homeowner explore the option of loan modification with their lender. I am part of a nationwide network of Home Retention Consultants (HRCs) that ensures that homeowners understand their options to avoid foreclosure and help them through the process. There is absolutely NO COST INVOLVED for a client to work out their loan with any of the major lenders we represent (Wells Wachovia, CitiMortgage, B of A, etc)
Mortgage servicers are experts at managing loans and the related collections process. However, homeowners often view communications from servicers as rigid and intimidating. As a result, many homeowners never recognize the servicer’ desire to avoid foreclosure, and thus evade communications and never pursue an alternative to losing their home.
Homeowners want to stay in their homes. Servicers want homeowners to stay in their homes if at all possible. The realty is thousands of foreclosures every year that could have been prevented if only the proper doors were opened.
Home Retention Consultants are experienced, highly-trained real estate professionals who live in the communities they serve. The HRCs follow up with the process to make sure the borrower’s needs are being met.
Last week I met with a gentleman who was told, erroneously, that he needed to hire a third party firm’s service, at a cost of $2500, to complete a loan modification that the lender would have done FOR FREE. As a Realtor and a Home Retention Consultant, I am appalled that there are firms out there taking advantage of families in financial crisis, and extracting money from them, at a time when they don’t have it to spare. Shame on you!
As an HRC, I see clients at the most stressful of times, and I am able to help them. Lenders are reducing mortgage balances, interest rates, terms, and payments. Yesterday I met with a homeowner who was ecstatic to learn that their were options for his family that he had not begun to explore. I came to his home with a bona fide offer of a balance reduction of his loan, which lowered his monthly payment as well. He hugged me and said that this was one of the best surprises he had had in a long time. We called the lender, he accepted their offer, and the process was started, right then and there.
I plead with all homeowners to speak with their lender now while loan modifications are being done. Contact your Realtor, who can put you in touch with the right party to get the process started. Avoid third parties who will charge you fees for services that lenders are performing for free. Your Realtor will have the expertise to assist you in this, and will be happy to do so.
As Realtors, we have a vested interest in serving our community, not just when we take a listing or make a sale, but at any time when homeowners need our service. We can help stem the tide of foreclosures, and change our markets for the better, helping everyone in our community. Speak to your clients, and help them weather this financial storm. They will really appreciate you, and so will the community you serve.
For all of you that have been following us here at Neighborhhod Notes, we have moved a little closer to Home. That’s right, The Bremner Group is now blogging right from our home page, at TheBremnerGroup.com. In addition, you can see all of our Video Blogs there as well.
Please come join us there, and see some of our most recent postings:
Plus our Weekly Q&A which answers your most timely and topical questions.
310 N Bundy Dr,Los Angeles, CA 90049
Just listed today, described as follows: Beautiful Bungalow in highly desirable area north of Sunset Blvd. Spacious & open living & dining rooms w/large picture windows that fill space w/light. Exquisite peg&grove floors. Large kitchen with new tile floors. Bathroom has separate tub & shower, new tile & new glass shower. Smooth ceilings. Central heat/AC. Gorgeously landscaped front yard. Large rear patio perfect for entertaining. Stairs lead to two level use areas in backyard with wonderful canyon views. Inside laundry & new exterior paint.
Interesting to you as a market snapshot: This property was on the market from 6/14/2002 until it was withdrawn on 4/3/2003, after 293 days on the market. At that time, it was priced at $969,000, and made 6 price reductions, until it was taken off the market at, drumroll please, $870,000! Can it sell this time at anywhere near to its asking price of $998,000? (This calculates to $740.00 per square foot, if you’re playing at home.) More interesting, it was purchased in April 1999 for $300,000.
When the Bureau of Labor Statistics gave us the recent Job Loss data, statisticians everywhere have been working to give us an accurate picture of what this means to the economy. Of the many charts currently available, I think these three are the most informative. Click on the charts to view full size.“We can’t embrace the losing formula that says only tax cuts will work for every problem we face; that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or falling schools and crumbling bridges and roads and levees. I don’t care whether you’re driving a hybrid or an SUV — if you’re headed for a cliff, you’ve got to change direction. – Barack Obama
Comparing Percentage Job Losses, post WW2
This graph, from Calculated Risk, shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).
For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP).
However job losses have really picked up over the last year, and the current recession is now the 2nd worst recession since WWII in percentage terms (and the 1948 recession recovered very quickly) – and also in terms of the unemployment rate (only early ’80s recession was worse).
Comparing Recession Job Losses as a Percentage of Employment
The second chart, from Economix, shows job losses in this recession compared to six recent ones, with the dark blue line representing the current downturn. Since the recession began in December 2007, the economy has had a net loss of about 5 percent of its nonfarm payroll jobs.
Current Job Losses vs Previous Recessions
And finally, from Chart of the Day, this: “the Labor Department reported that nonfarm payrolls (jobs) decreased by 216,000 in August. Today’s chart puts that decline into perspective by comparing job losses during the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1950-2006 (dashed blue line). As today’s chart illustrates, the current job market has suffered losses that are more than six times as much as average (20 months after the beginning of a recession). In fact, if this were an average recession/job loss cycle, the number of jobs would have begun to increase five months ago.”
Q. Should I sell my Westwood home now, or wait until the spring?
The best way to make a selling decision is to do the following:
In consultation with a Realtor,
1. Assess the overall market now.
2. Pinpoint the buyer for your property and assess their timing.
3. View the current competition.
4. Assess your property in comparison with the competition.
5. Assess your needs and timing.
6. Strategize a marketing plan.
If all of the factors above are in alignment, you should market your home now. While no one can ever predict the state of the real estate market or the larger economy, certain factors right now are in play that make it easy to predict what various sectors of the market will be doing in the next 18 months, simply because of the pressures being brought to bear on the market by REO’s, short sales, and foreclosures.
Seasonal factors such as holidays must be taken into account in setting out your strategy as well. I can help you answer this question for your unique situation, and would be happy to do so.
Q. Is there any room for price negotiation on bank owned properties?
That will depend greatly on each property. In general you won’t find many bank owned properties where you can offer much less than asking price. The reason for this is that banks usually list their properties at or below market value to get them “off the books” quickly. (Banks are not in the business of holding real estate) What results from that aggressive pricing is usually multiple offers, hence not allowing for low bids.
In recent experience I have had clients make offers well above list price on several bank owned properties within a day or two of them hitting the market, and they have been outbid. A recent condominium sale in Culver City had 25 offers!
However, every property will be different. Properties in less desireable areas, or properties with major repairs needed will be less likely to draw many offers quickly. In addition, it is harder for the bank to calculate market value is for a property needing major repairs.
Remember to have your Realtor pull comparable listings and sales (along with expired listings) for the properties you are considering to determine true market value. After you determine the average price per square foot, you will be in a much better position to be able to negotiate a more favorable price.
Q. It seems like it might be a good time for investment in real estate. Is that true? What is best to purchase as an investment, a single family home, an apartment building, or raw land?
It’s best to do a cost vs return on investment (ROI) to determine what will be best for you. Buying land will not bring you any income, so unless you have a specific plan in mind, it does not compare with a single family or multi family in terms of income-providing investment. When looking at an apartment building, you could live in one unit and rent out the rest. For security, if one tenant moves out, you still have others providing income. Don’t forget to factor in all costs, such as taxes, insurance, utilities, homeowners dues, etc. when you are calculating the monthly outlay. As regards loans, if you stay within FMAE guidelines for up to 4 units you should not have any problems if you can otherwise qualify for a single family home with the same purchase price. If you go beyond four units, then it’s a different scenario. Management experience of investment properties will play a role, besides other factors including Debt Service Coverage Ratio, in determining whether you qualify for a loan. As for whether it’s a good idea to buy now, there are two main factors to consider:
1. Interest rates are at their historic 50 year low.
2. Prices are low in most places, and starting to rebound in others. I have written extensively about “timing the bounce”, which is impossible to do. ( http://tinyurl.com/cheskf ) The upshot of my advice?
We never know when the bottom, nor the top, is. So the best advice for buyers is, aim low. Consult with your Realtor, who will help you weigh all the facts, including interest rates, inventory, personal need, and what you can afford. Then get off the fence and buy. Don’t listen to pundits or peers at the water cooler. Have confidence that the decisions you make will be wealth- building in the long run.
If my 33 years in the business have taught me one thing, it is this: there will be a lot of people in a few years who will say, “I wish I had bought that house in 2009, when it was only $$. ” I’ve seen it before, and I’ll see it again.
I’m looking at lots in the Hollywood Hills, and there is a huge price range, from $30,000 up to $200,000 for basically the same sized lot. Why is that?
Not all lots are created equal! The answer lie in evaluating some important issues. When an appraiser or Realtor looks at the comparable properties, he does so with an eye to the values of the existing properties surrounding the lot. Good improved property surrounding the lot = higher value. The price per square foot (PPS) of the land will be most directly affected by its topography (flat lot = higher value), the shape of the lot (regular/ rectangular is easier to build), the amount of frontage on the street (most people want wider frontage), and other “cosmetic” lot issues. Views (i.e. city, ocean, treetop) will command a higher price than no view, while a negative view (i.e. alley, buildings, freeway) will detract from the price. Are there utilities present or in close proximity? (Those are definite value added.) From there, it’s a personal choice. Walk the lot with your contractor and a geologist. Is your plan feasible on this site? Do all factors appeal to you? Then it’s good value for you.
The discrepancy in the cost of the land, in the case of the Hollywood Hills, lies in the cost of in the improvements necessary to make development feasible, such as engineering, retaining walls, utilities, etc. A very interesting alternative for otherwise “unbuildable” sites can be found with a very specific, earthquake, hillside friendly building method know as pole constuction. There is a site:
http://www.haikuhouses.com that offers pole construction buildings. These are very Japanese inspired in nature, and can be constructed on otherwise unbuildable sites.
How do I qualify for a first time homebuyer tax credit? When do I have to complete the sale?
Although earthquakes are prevalent in certain areas, it is best to be prepared as quakes strike suddenly, violently and without warning. Standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage is available either in the form of an endorsement or as a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by standard home and business insurance policies. Unlike flood insurance, earthquake coverage is available from private insurance companies rather than from the government. In California, homeowners can also get coverage from the California Earthquake Authority (CEA), a privately funded, publicly managed organization. Studies done following the Northridge quake estimate that in California 12 percent of 2005 residential policies and 11 percent of commercial packages included earthquake coverage. This contrasts sharply with 31.4 percent of total residential and commercial lines policies (combined) in 1996, just two years after the devastating Northridge, California earthquake. In a recent issue of the “Insurance Reporter,” Karl Susman of Susman Insurance sent tips on preparing in advance for an earthquake, and what to do during and after one.
Learn about the six ways to plan ahead…simple things you can do to increase your preparedness, like fastening shelves securely to walls or having disaster supplies on hand. Find out what to do during an earthquake, whether you are indoors, outdoors, in a moving vehicle – even trapped under debris. And, what to do after an earthquake, as aftershocks may typically be less violent than the preceding quake but they can still cause considerable damage.
Read the following FEMA tips designed to assist you in the event of an earthquake.
What to Do Before an Earthquake
Earthquakes strike suddenly, violently and without warning. Identifying potential hazards ahead of time and advance planning can reduce the dangers of serious injury or loss of life from an earthquake. Repairing deep plaster cracks in ceilings and foundations, anchoring overhead lighting fixtures to the ceiling, and following local seismic building standards, will help reduce the impact of earthquakes. Six Ways to Plan Ahead Check for Hazards in the Home Fasten shelves securely to walls. Place large or heavy objects on lower shelves. Store breakable items such as bottled foods, glass, and china in low, closed cabinets with latches. Hang heavy items such as pictures and mirrors away from beds, couches, and anywhere people sit. Brace overhead light fixtures. Repair defective electrical wiring and leaky gas connections. These are potential fire risks. Secure a water heater by strapping it to the wall studs and bolting it to the floor. Repair any deep cracks in ceilings or foundations. Get expert advice if there are signs of structural defects. Store weed killers, pesticides, and flammable products securely in closed cabinets with latches and on bottom shelves. Identify Safe Places Indoors and Outdoors Under sturdy furniture such as a heavy desk or table. Against an inside wall. Away from where glass could shatter around windows, mirrors, pictures, or where heavy bookcases or other heavy furniture could fall over. In the open, away from buildings, trees, telephone and electrical lines, overpasses, or elevated expressways. Educate Yourself and Family Members Contact your local emergency management office or American Red Cross chapter for more information on earthquakes. Also read the “How-To Series” for information on how to protect your property from earthquakes. Teach children how and when to call 9-1-1, police, or fire department and which radio station to tune to for emergency information. Teach all family members how and when to turn off gas, electricity, and water. Have Disaster Supplies on Hand Flashlight and extra batteries. Portable battery-operated radio and extra batteries. First aid kit and manual. Emergency food and water. Nonelectric can opener. Essential medicines. Cash and credit cards. Sturdy shoes. Develop an Emergency Communication Plan In case family members are separated from one another during an earthquake (a real possibility during the day when adults are at work and children are at school), develop a plan for reuniting after the disaster. Ask an out-of-state relative or friend to serve as the “family contact.” After a disaster, it’s often easier to call long distance. Make sure everyone in the family knows the name, address, and phone number of the contact person. Help Your Community Get Ready Publish a special section in your local newspaper with emergency information on earthquakes. Localize the information by printing the phone numbers of local emergency services offices, the American Red Cross, and hospitals. Conduct a week-long series on locating hazards in the home. Work with local emergency services and American Red Cross officials to prepare special reports for people with mobility impairments on what to do during an earthquake. Provide tips on conducting earthquake drills in the home. Interview representatives of the gas, electric, and water companies about shutting off utilities. Work together in your community to apply your knowledge to building codes, retrofitting programs, hazard hunts, and neighborhood and family emergency plans.
What to Do During an Earthquake
Stay as safe as possible during an earthquake. Be aware that some earthquakes are actually foreshocks and a larger earthquake might occur. Minimize your movements to a few steps to a nearby safe place and stay indoors until the shaking has stopped and you are sure exiting is safe.
- DROP to the ground; take COVER by getting under a sturdy table or other piece of furniture; and HOLD ON on until the shaking stops. If there isn’t a table or desk near you, cover your face and head with your arms and crouch in an inside corner of the building.
- Stay away from glass, windows, outside doors and walls, and anything that could fall, such as lighting fixtures or furniture.
- Stay in bed if you are there when the earthquake strikes. Hold on and protect your head with a pillow, unless you are under a heavy light fixture that could fall. In that case, move to the nearest safe place.
- Use a doorway for shelter only if it is in close proximity to you and if you know it is a strongly supported, loadbearing doorway.
- Stay inside until shaking stops and it is safe to go outside. Research has shown that most injuries occur when people inside buildings attempt to move to a different location inside the building or try to leave.
- Be aware that the electricity may go out or the sprinkler systems or fire alarms may turn on.
- DO NOT use the elevators.
- Stay there.
- Move away from buildings, streetlights, and utility wires.
- Once in the open, stay there until the shaking stops. The greatest danger exists directly outside buildings, at exits, and alongside exterior walls. Many of the 120 fatalities from the 1933 Long Beach earthquake occurred when people ran outside of buildings only to be killed by falling debris from collapsing walls. Ground movement during an earthquake is seldom the direct cause of death or injury. Most earthquake-related casualties result from collapsing walls, flying glass, and falling objects.
If in a moving vehicle
- Stop as quickly as safety permits and stay in the vehicle. Avoid stopping near or under buildings, trees, overpasses, and utility wires.
- Proceed cautiously once the earthquake has stopped. Avoid roads, bridges, or ramps that might have been damaged by the earthquake.
If trapped under debris
- Do not light a match.
- Do not move about or kick up dust.
- Cover your mouth with a handkerchief or clothing.
- Tap on a pipe or wall so rescuers can locate you. Use a whistle if one is available. Shout only as a last resort. Shouting can cause you to inhale dangerous amounts of dust.
What to Do After an Earthquake
- Expect aftershocks. These secondary shockwaves are usually less violent than the main quake but can be strong enough to do additional damage to weakened structures and can occur in the first hours, days, weeks, or even months after the quake.
- Listen to a battery-operated radio or television. Listen for the latest emergency information.
- Use the telephone only for emergency calls.
- Open cabinets cautiously. Beware of objects that can fall off shelves.
- Stay away from damaged areas. Stay away unless your assistance has been specifically requested by police, fire, or relief organizations. Return home only when authorities say it is safe.
- Be aware of possible tsunamis if you live in coastal areas. These are also known as seismic sea waves (mistakenly called “tidal waves”). When local authorities issue a tsunami warning, assume that a series of dangerous waves is on the way. Stay away from the beach.
- Help injured or trapped persons. Remember to help your neighbors who may require special assistance such as infants, the elderly, and people with disabilities. Give first aid where appropriate. Do not move seriously injured persons unless they are in immediate danger of further injury. Call for help.
- Clean up spilled medicines, bleaches, gasoline or other flammable liquids immediately. Leave the area if you smell gas or fumes from other chemicals.
- Inspect the entire length of chimneys for damage. Unnoticed damage could lead to a fire.
- Inspect utilities.
- Check for gas leaks. If you smell gas or hear blowing or hissing noise, open a window and quickly leave the building. Turn off the gas at the outside main valve if you can and call the gas company from a neighbor’s home. If you turn off the gas for any reason, it must be turned back on by a professional.
- Look for electrical system damage. If you see sparks or broken or frayed wires, or if you smell hot insulation, turn off the electricity at the main fuse box or circuit breaker. If you have to step in water to get to the fuse box or circuit breaker, call an electrician first for advice.
- Check for sewage and water lines damage. If you suspect sewage lines are damaged, avoid using the toilets and call a plumber. If water pipes are damaged, contact the water company and avoid using water from the tap. You can obtain safe water by melting ice cubes.