Final blog post of 2010...

I can not believe 2010 is coming to an end in just a matter of hours! It just does not seem that long ago that I wrote my final blog post of 2009, and I remember writing my final blog post of 2008 while waiting for a flight to Phoenix...I have been doing a lot of reflection on 2010 lately - from both a personal perspective and a professional perspective.

In 2010, professionally in real estate I feel like I accomplished a lot in terms of my transaction productivity, education, media exposure, awards and honors, fundraising, and more. So, professionally, I:

• qualified for the Sacramento Association of Realtors "Masters Club" again - and met the requirement for all of 2010 by the middle of the year
• was the #1 Listing Agent of the Month in the Lyon Real Estate Sierra Oaks office of +/- 130 agents 4 of the first 7 months of 2010 (for the months of January, February, April, July)... then I departed Lyon Real Estate and went to Dunnigan Realtors (they do not rank their agents as Lyon does).
• successfully closed 8 short sale transactions, and have lender approval for others that will close in 2011. I was pleased that I closed more "regular" transactions with traditional sellers than I did last year...perhaps the market is starting to turn around?
• was certified as a HAFA (Home Affordable Foreclosure Alternatives) Short Sale Specialist
• 62.5% of my transactions resulted from my internet presence (someone finding me online via google, one of my websites, my blog, etc.), while 31.25% of my transactions resulted from referrals...the remainder of my transactions and income were generated from other sources (sign calls, open houses, etc)
• was quoted for different media articles regarding real estate
• was named by Realtor.com as one of the Top 100 Real Estate Influencers in the country
• was profiled on Hewlett Packard's blog about my use of technology in real estate
• was an instructor for the Sacramento Association of Realtors "Masters Club" Educational Roundtables
• was honored for my "Outstanding Service in Education" by the Sacramento Association of Realtors
• was elected to serve a term as Secretary / Treasurer of the Sacramento Association of Realtors "Masters Club"
• Was appointed to serve a on the Board of Directors for the California Association of Realtors
• Was elected to serve on the Board of Directors for the Sacramento Association of Realtors
• served as the Chair of the Sacramento Association of Realtors "Young Professionals Council" for 2010, and as one of seven "Advisors" to the California Association of Realtors "Young Professionals Network."
• helped raise over $26,000 for charitable causes through different "Masters Club" and "Young Professionals Council" Sacramento Association of Realtors fundraisers
• was appointed to serve as Chair of the Sacramento Association of Realtors "Technology Advisory Group"

I have set many new professional goals for myself for this year, including increasing my production, possibly hiring another assistant agent to work with me, and much more...look out 2011!!

Short Sales: Who pays for what...

I receive several calls per week from homeowners that are looking for information regarding Sacramento short sales, and aside from wanting to know about the process itself, one most common questions I get from them pertain to if the sale will cost them anything out of pocket, if so, then how much, and generally, who pays for what fees. Having successfully closed several short sales, I will tell ya'll what I know to be true based on my experiences.

-Who pays the real estate agent commissions? In a short sale scenario, the lender(s) who agree to forgive debt and allow a short payoff of the loan(s) pay for the real estate agent (or Realtor) commissions - generally by absorbing the costs of the commissions out of the proceeds of the sale. As a side note, often times these commissions are re-negotiated by the lender(s) during the process. Note: Real estate commissions are always negotiable and NOT set by law or local custom.

-Who pays title insurance, escrow fees, and transfer tax fees? These are negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). For example, perhaps the buyer and seller agree initially that the seller will pay for 100% of title insurance and escrow fees, 100% of county transfer tax, 50% the city transfer tax. The lender(s) may negotiate that the buyer pay a different split of these fees...however the portion that is paid by "the seller" is absorbed in to the overall debt forgiveness and short payoff. Occasionally you will see a lender agree to pay one of these fees, up to and not to exceed a certain amount (for example, they may agree to cover up to $750 of the escrow fee that costs $1200). Generally then, the buyer would cover the unpaid portion of that fee. So basically, again, the lender(s) will absorb many of those types of fees.

-Who pays for a home warranty? This is negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). Generally though, I would prepare any buyer of a Sacramento short sale property to expect to pay for this cost, even if you ask the seller or short sale lender to cover it. In my experience, this is paid by the short sale lender in less than 20% of my approved short sales.

-Who pays for inspections or certifications? These are negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). Again, most short sale lenders will not agree to cover things like pest or termite inspections, roof inspections, sewer line inspections, or any corresponding certifications. A lot will depend on the circumstances with the condition of the property, how many loans are involved, the buyers' loan program, if the property is in default, the length of time of negotiation, etc. As a safety net - buyers, do not expect that lenders will grant these requests. Generally short sale properties are sold "as-is" and sellers can not afford to make repairs anyway.

-Will the lender(s) give the buyer credits for closing costs? These are negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). I have seen this vary widely from the short sale lender(s) agreeing to pay up to 6% closing costs for the buyer (including an instance of seller-funded downpayment assistance...which is no longer possible thanks to past legislation), to the short sale lender(s) rejecting those requests. Again, much will depend on the circumstances surrounding the sale of the property.

-Who pays delinquent property taxes or liens? Sellers - if you have not been paying your property taxes or county utilities, you really need to let your agent know this ASAP! I work closely with the title company on this to make sure that we know of any lien issues in advance, but because it can take several weeks or months to get approval, new liens may pop up during the lender negotiation process. When I negotiate short sales, one of my worst fears is that after the short sale is approved an unexpected lien will pop up. This has happened to me before, and for lack of a better way of describing it - this sucks! If you can let your agent know in advance that these items are unpaid, it will save lots of headaches all the way around. IF WE KNOW in advance that these liens exist, there is a great chance that the short sale lender will absorb these costs into their overall debt forgiveness and short payoff. IF WE DO NOT KNOW in advance that liens exist, once the short sale is approved - this will halt the transaction until we can find a way to pay these liens. The seller is often financially unable to pay them, the buyer does not want to pay, the agents commission has already been reduced, and the short sale lender has already taken a loss on the loan. Sellers - please save everyone a headache and communicate with your agent.

To make a bit of a sweeping generalization, the seller usually pays nothing out of pocket to close the transaction unless specifically asked to by the lender(s).

In perhaps one instance out of every six short sale transactions I close, the lender will request that the seller make a cash contribution to close the short sale. In these instances that I have negotiated, the sellers have had cash in the bank and were financially able to make that contribution...in those instances, the lowest cash contribution one of my short sale sellers has contributed was $1,000, and the highest was $5,000.

Also, you should note that in some short sale scenarios, the short sale lender will actually pay the seller "relocation assistance" to close the short sale. I have seen this in the range of $1,000 - $5,000. Not every Sacramento short sale transaction will qualify though.

Hope that answers some frequently asked short sale questions...cheers!

Happy Holidays, love me!

Notice of Trustee Sale - time periods changing in California per SB 1221

A new change to the California Civil Code that has not gotten much publicity is going into effect on January 1, 2011. Did you hear of SB 1221? It was passed earlier this year and signed by Governor Schwarzenneger...it amends Sections 2924 and 2924c of the CA Civil Code, and changes some time periods in the foreclosure process.

There are a few steps in the process to foreclose on a property via a Trustee Sale in the state of California, which is how the vast majority (nearly 99.9%) of residential property is foreclosed. To simplify the foreclosure process, a mortgage lender can file a "Notice of Default" after a few missed mortgage payments. This is a formal notice that the loan is in default from the lender, that usually comes to the homeowner via certified mail and that gets recorded to the property with the county recorder's office. Under the current civil code, before a Notice of Trustee Sale can be filed (notice of the scheduling of a foreclosure sale on the courthouse steps), there is a 3-month/90-day waiting period to allow the homeowner to bring their payments current. The Trustee Sale can be scheduled for 20 days from the date of the Notice of Trustee Sale. The Trustee Sale itself is the final step in foreclosure, where the property is sold to a 3rd party via an auction or just taken back by the lender.

Under the this new legislation, lenders will be able to file a Notice of Trustee Sale up to 5 days before the lapse of the 3-month period, provided that the actual date of the Trustee Sale is no earlier than 3 months and 20 days after the filing of the Notice of Default.

Once a Notice of Trustee Sale is filed by the lender, it becomes markedly more difficult to postpone or delay foreclosure proceedings...while it's not impossible at that stage to postpone or delay foreclosure, if you are just starting the short sale process, timelines could become even more pinched if you are pushing the 3-month mark from the issuance of a Notice of Default.

So what does this mean?? Do NOT delay in starting the short sale process if you are considering that as an alternative to foreclosure...once the Trustee Sale wheels are set in motion, they are hard to stop.

Ask Erin: Can I do a short sale on my rental home?

Can I do a short sale on my rental home? I get asked this question all the time by folks who own investment properties, and contrary to what many people think - the answer is yes, you can do a short sale on an investment property (aka, non-primary residence, rental homes, rental duplexes, etc). Oh really, you ask in disbelief? Yes really. I have closed several short sales under these circumstances....and I have several of them underway right now.

Do the dynamics of these short sales change at all? A little. Mainly because occasionally tenants occupy these homes and we have to delicately deal with showings, the existing lease agreement terms, and a few other things. Or if the house is vacant, we may want to strategize the best way to keep the house secure and free from vandalism or burglary.

In terms of how a short sale lender or bank looks at these short sales, again they are still looking at potential seller hardship, loss of market value of the property, and the lender's total losses. Short sale sellers of investment property should ask themselves:

• Is the monthly rent covering the costs of the mortgage payment, in addition to other monthly operating expenses (like certain utilities, property taxes, maintenance, etc)?
• How big is my deficit every month, given the best case scenario of 100% occupancy? In other words, how much money am I loosing each month given the fact my tenants always pay their rent on time, and the house is always rented)?
  
• Has the property been vandalized by the current or former tenants? Is it 'rentable' in its current condition?
• Have you been unable to rent the house due to high area vacancy rates or other neighborhood factors?
  
• Were you an "accidental landlord?" In other words, for example did two people who owned homes individually get married, causing you to need to rent one of the homes in order to live together? Or perhaps did you inherit the home? Did you purchase the home for your college-age kids to live in, and now they have graduated and moved out? Did you co-sign for someone who now can not pay the mortgage?
  
• Did you suffer some other loss of income (loss of employment, pay reduction, etc.) and now have to choose between keeping your current, primary residence and letting your rental property go?

There are many reasons to short sale investment or rental property. If you are contemplating a short sale for your Sacramento area investment or rental property, I welcome your call to see if we are a fit to work together.

Looking to buy a Sacramento Condo with FHA or VA Financing?

I wrote about it earlier this year, and I think it is worth mentioning again...not all Sacramento area condo communities are eligible for purchase with FHA and VA loans. I get maybe 2 or 3 inquiries per week from excited buyers who see the prices of Sacramento area condo listings in the +/- $100k range (in fact, the average condo selling price in Sacramento County for November 2010 was $102,000), however most of them are looking to make purchases with FHA or VA loans...which isn't possible with every condo community. Many condos must be purchased with conventional financing (20% downpayment) or all cash.

In order to qualify for FHA and VA loan programs, condos must meet certain criteria, and communities / entire associations must be approved by The US Department of Housing & Urban Development for FHA, or The US Department of Veterans Affairs for VA, in advance. At one point in time, there were "spot approval" processes where an individual unit could be approved on a case-by-case basis...but unfortunately those options just do not exist anymore.

So how do you find out if a condo is VA or FHA approved? There are two online tools that buyers (or sellers, for that matter) can use to look up approved condo communities. The tool to look-up approved condo communities for FHA loans is here, and the tool to look-up approved condo communities for VA loans is here. I use these tools all the time, and find them to be invaluable!

Clarification: Fannie Mae and Freddie Mac have NOT frozen foreclosures for the holidays...

So, if you are facing foreclosure this holiday season and read the just the title of the CNN article "Foreclosure Freeze Coming for the Holidays" you might think that the foreclosure of your home has been postponed until after the holidays. This is not true, and shame on CNN for the misleading title of that article!

If you actually read the content of the article, you will see that they report that Fannie Mae and Freddie Mac are planning not to EVICT occupants of foreclosed homes over the holdiays - from December 20th - January 3rd. So - the scheduled foreclosures will still take place unless postponed for other reasons (and don't wait until the last minute to list your house as a short sale or make that postponement request!)...but the removal of the tenants or former owners of the house will not take place during that time frame.

Holiday Gift Ideas for your Favorite Sacramento Resident

Whether you are planning to celebrate Christmas, Channukah, or whatever else this holiday season, if your festivities involve gift giving, there are many Sacramento-themed gifts you can give! Here are my top 12 gifts that will make any Sacramentan's holiday, at any age or budget:

• Dinner at The Grange and an overnight stay at The Citizen Hotel; This combo has become a favorite of mine! The food at the restaurant is outstanding, and the hotel is one of the finest in Sacramento. I highly recommend one of the penthouse suites with a view of downtown! Estimated cost: $200+
• A membership to the Crocker Art Museum; If you weren't aware, it was recently renovated and greatly expanded, and is the premier art museum in the Sacramento Valley. As a member, you will receive a monthly magazine, and receive discounts at the store and cafe. Estimated cost: $65/individual annual membership.
• A Hornblower Cruise of the Sacramento and American Rivers; the cruise leaves out of Old Sacramento. Check out the confluence of the American and Sacramento rivers, and experience the wildlife and breathtaking natural beauty that this historic and important waterway has to offer. Estimated cost: $69-99.
• A subscription to Sacramento Magazine; Read up on local goings on, Sacramento hot spots, restaurant reviews, articles of local interest, and more! Estimated cost for 12 month subscription: $7.95 (there's a promotion right now!).
• A California State University, Sacramento sweatshirt; My alma mater! Stay warm this winter while supporting our local CSUS Hornets! My CSUS sweatshirt was a Christmas gift from my mother during my freshman year...I still wear that thing even though it is totally faded and worn out...Estimated cost: $36 - $75.
• Auto Detailing at Pavilion Car Care; They will make your care shine and your carpets fresh! Definitely the best car wash in Sacramento! Estimated cost: $45 - $299.
• Tickets to go visit the Sacramento Zoo and Fairytale Town; Heck if you are going to visit one, why not visit both! Located at William Land Park, this is a great diversion for adults and children alike! Estimated cost per person/ticket: $13.
• Bottle of wine from Revolution Wines; Revolution Wines is Sacramento's only urban winery. Tucked away at 21st & P Streets in midtown, they make their wine...their facilities also host tastings. Estimated cost per bottle: $10 - $25.
• Massage from Arden Hills Resort Club & Spa; Arden Hills boasts not only a fitness / wellness center, but also an award-winning day spa. Why stop with just a massage? They offer more than 75 different treatments! Estimated cost/treatment: $40 - $440!
• Dance lessons at The Sacramento Ballroom; Want to learn the Texas Two-Step, the Tango, or how to Swing Dance? They have classes for both singles and couples, from beginning to advanced levels! Estimated cost/lesson: $5 - $10.
• Tickets to a Sacramento Rivercats game; See the Oakland A's affiliate play at Raley Field. I'm a SF Giants fan, but I do really enjoy these games (especially when they play the SF Giant's affiliate team, the Fresno Grizzlies)...many of these players are a phone call away from the major leagues! Estimated cost/ticket: $6 - $30.
• A new home; Sure, I saved the best for last. Nothing says happy holidays like closing escrow on a Sacramento home...sorry if that was a little cheesy! Estimated cost: Priceless. =)

FannieMae FreddieMac LoanLookup

One of the critical pieces involved in negotiating a short sale is understanding just what entity actually owns the loan. Often times the company that a homeowner sends the monthly mortgage payment to only services the loan, but does not own the loan - meaning they do not actually make decisions regarding whether or not to approve the short sale.

So, two fairly common loan "investors" (aka, the entity that owns the loan) are Fannie Mae and Freddie Mac. They have tools online that can be used to determine if either one owns the loan...they are quite helpful so that I can try my best to predict exactly what to expect in the short sale negotiation process...here they are:

Fannie Mae Loan Look-up
Freddie Mac Loan Look-up

Other loan "investors" can be other banks, credit unions, pension plans, private investors, hedge funds, etc. that are not as easy (or basically impossible) to look-up.