East Bay Real Estate

After much consideration regarding the situation with both the Democrats and the Republicans,  Jim Walberg has decided to run for President as a fifth alternative!

A grass roots effort has already begun.  Please log on to the U-Tube that just surfaced!  I welcome your comments and support during the next 68 days.  It will require a miracle of millions of write-in votes, but I have a feeling that it just may work.  I am also looking for any input regarding some policy issues you would like me to be focus on.  I am standing ready to serve!

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Back to Southern California to enroll our last child into college!

We are gladly taking donations from all of our friends, family and the internet world.  As of yesterday we have all THREE of our kids in college - Matt at Loyola-Marymount University in West Los Angeles, and JJ and Bryana in Santa Barbara, California!  It has been a hectic time of transporting ALL of them and us to the various campuses to get them settled into their college dorms and apartments.  In addition, it will be the first time in 22 years that Ann Marie and I will be “empty nesters”! 

Bryana, as a freshman, is very excited, nervous, and filled with anticipation of how the next chapter in her life will be unfolding.  Her three girlfriends since the second grade have said their goodbyes, since they are all going to different universities.  Ann Marie found a blanket manufacturer that could weave in a photo into the blanket.  We found the girls’ favorite photo of them and surprised them with a blanket for each of them so they could be reminded of their dear friendship.  Bryana is currently focused on a career in journalism.  As you can see, she may want to start in television since she is so beautiful and so darn smart.

JJ continues his passion for surfing and golfing while attending college in Santa Barbara.  As a Junior he has kept a 3.0 GPA, and he has lowered his golf handicap significantly between his class work.  If I could pick a career for JJ it would be doing something with kids.  He is an amazing coach with sports, and he has a natural knack of having kids bond with him and listen to his advice and direction.  At the moment his major is social science.  He would be a great elementary school teacher, too.  However, no matter what he does he will need to live by the beach.  We are so glad that he and Bryana will be in the same college town, just so they know there is a family member close by.  It is comforting to us, too.

Matt is completing his last few courses at LMU.  He already graduated last June with double degrees in Economics and Music - what a combination of interests.  He is passionate about both, and during his last four years he has more than tripled his stock portfolio because of studying the stock markets daily.  He has made some BIG hits with Apple stock purchases over the last few years.  His next step will be in some type of international experience.  We will be taking him to London in January to interview with the London School of Economics.  And, next we will open some doors in Geneva, Switzerland with the Nestle Group.  He would really enjoy a year’s internship with Nestle. ( Any contacts would be greatly appreciated.)

Ann Marie and I are already planning an adventure when Bryana graduates in four years.  As she exits college at that time, we will get an immediate raise in our income.  With that in mind, we are planning to sail in the Caribbean for six months starting in the BVI and heading south with no other plans than beautiful sunsets, SCUBA diving, fair winds, and having friends meet us along the way at various islands.  I will let you know how these plans unfold.  Wish us well as we launch our last child into a new world.  ( Bryana already called today to see if we could assist her in figuring out the public transportation system to her college from her dorm. Life’s little leasons have already begun for her! )  Until next time…fair winds to all of you!

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The value of borrowers homes may not be enough to pay off their loans.  Short Sales are now impacting appraisals of properties and the ability of borrowers to secure their next mortgage.

Not since the early 1990s have I seen so many Short Sales being processed.  The challenge today is that most Realtors servicing a Short Sale were not in business in the early 1990s.  In fact, most of the people working for the lender’s side of the Short Sale negotiations have never participated in this type of transaction.  This may be one of the reasons why less than 30% of the Short Sales actually close escrow.  We now have the solution  for borrowers considering this method of negotiating with their lenders.  Our real estate Team is looked upon as one of the most successful in actually completing the Short Sale process because of having a dedicated department to serve these difficult situations.  Ellen Muzzio has just joined our Team as our Short Sale Specialist.  She is the most experienced professional we have found regarding the successful management of a Short Sale.

A ‘short sale’ is when a lender accepts a discount on a mortgage to avoid a possible foreclosure or bankruptcy. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $700,000.   The value of the home in today’s real estate market is only $600,000.  The borrower hires a Realtor to sell it for current market value.  A Buyer presents an offer for $600,000.  The purchase offer is submitted to the lender for consideration.  This is a ‘Short Sale’.

Deciding to participate in the Short Sale process is a BIG decision for a Buyer.  It is usually triggered when someone is at the point of not being able to afford their home due to; high interest rates, dips in property values, divorce, loss of employment, decrease of income, etc., then they are forced to make a life altering decision.  I will be the first to tell that a short sale is bad, but a foreclosure is worse.  However, the Buyer may have the ability to save their credit from reflecting a ‘foreclosure’ as to simply having a ‘settled debt’.

Why would a lender today be willing to take such a loss?  Here are just a few of the reason:  First, banks do not like excess inventory and delinquent loans on their books. An opportunity to sell the property is very attractive in today’s real estate market.  Secondly, lenders know they could lose a substantial amount more if the property goes to foreclosure - a trust deed sale. There are many fees involved: i.e., property taxes, liens, repairs, etc. The lender may be better off taking the loss beforehand and be finished with the headache and liability if in fact it goes to a ‘trust deed sale’.

The short sale negotiation with the lender is a difficult, frustrating and very time consuming.  A purchase contract from a Buyer is required to begin discussions with the lender.  This is the first step of many that will need to be successful taken in order of a lender approval to be secured.  A short sale approval is further complicated when there is a 1^st and 2^nd mortgage on the property.  Here is a list of the items a lender will require before they will even begin the negotiations. 

• A letter of hardship from the borrower.
• A copy of the purchase contract from a prospective Buyer of the property.
• Two years tax returns.  (If you have not filed, include that information in hardship letter)
• Two most recent paycheck stubs for each person on loan.
• Two most recent bank statements from the borrower(s).
• A copy of your mortgage statement(s).
• A signed borrowers authorization for our Short Sale Specialist - Ellen Muzzio, to communicate directly with the lender(s).

The outcome of a Short Sale will be up to the skill of the professionals managing the case on behalf of the borrower(s).  Again, it is not for the faint of heart, but it may be the best solution for a borrower in a very bad situation.  There are very important tax considerations for a borrower to also consider.  Before they even begin the process they will need to seek counsel from their tax and legal advisors.  Let me know  if you would like to learn more about how this may benefit your current real estate situation.  Until next time…

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Jim Walberg’s viewpoints regarding key factors impacting today’s real estate market results!

There are non-stop changes happening in residential real estate - locally and nationally.  Also, there are a multitude of factors that are involved in the current condition of residential real estate.  If one does not understand these factors then they will be stuck in the mental state of a “victim of the market”, or they will decide to be “paralyzed from taking action”.  Neither of these conditions will have a positive outcome.  Here are some of the pieces of the puzzle that need to be examined.  The observations are being done by a non-economist - me.

Mortgage Industry:  In the past 18 months over 250 mortgage lenders have closed their doors.  The result for the consumer is that there are VERY FEW choices left for securing a home mortgage.  In fact, the two emerging key players are Freddie Mac and Fanny Mae.  The remaining few banks and mortgage lenders have been badly damaged financially from the poor decisions they made in making the wrong bet on lending products and the belief that future appreciation would support some of the “creative” interest only and/or negative amortization loans. 

The result of the condition of today’s mortgage markets is an atmosphere of fear and over reactions as to who can be granted a home loan.  It is as if they want your first born child pledged as collateral before a home loan will be granted.  You had better have a GREAT credit rating and real money for a down payment if you want to purchase a home.

The good news within the remaining lenders is interest rates are still relatively low, even though they are contrary to what is happening with inflation rates - the highest in 20+ years!  What this means to me is that interest rates will adjust higher before the year is over, maybe right after the election.  The Feds may want to defer any more bad news regarding interest rates until a new president is elected.  They will let him deal with the realities of rising inflation rates.

Consumer Fear:  Remember my definition of FEAR?  False Evidence Appearing Real.  It has been a long time since home prices and interest rates have been so favorable.  If this novice economist is correct, a real Buyer needs to lock their loan today and purchase a home.  If a Seller does not need to sell their house they need to wait until a clearer picture of the future economy unfolds.  If a Seller needs to sell their home today then do it NOW!

World Issues:  What is happening in our local and National economy is not happening in a vacuum.  We are in a World neighborhood where what happens in oil markets of the Middle East impacts the Bay Area.  What is happening in Georgia, with the Russians in charge of their country because they want control of the oil pipeline running through Georgia, is impacting the economy of the rest of the world.  What is unfolding in China and India as major consumer of oil within the next few years will determine the price of our oil no matter how much the U.S. can come up with conservations numbers.     

So, are you getting a BIGGER picture that is causing your brain to take a moment to consider the issues that are impacting real estate and all other factors of our economic lives?  I hope so.  I welcome any of your thoughts about the experience you are currently having, and maybe even expressing what some of your fears are for the future.  Until then…I promise to not stop keeping an eye on real estate and sharing my thoughts.

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2008 “Stand Down” serves 600 homeless veterans at the Alameda County Fairgrounds August 7th - 10th!

Another example as to how your real estate community and its service-providers continue to give back to the needs of the Bay Area was demonstrated again last Friday morning at 5:30AM at the Alameda County Fairgrounds.  Members of the Realtors Marketing Association served breakfast to a “village” of war veterans.  Every two years the Diablo Valley Vietnam Veterans Association arranges for an entire “tent city” to be set up in the East Bay so homeless veterans can be served.  “Stand Down” is a term used during war to describe the practice of removing combat troops from the field and take care of their basic needs in a safe place.  That is exactly what has been created for 600 homeless veterans this week.  The RMA contracts Ruggie’s Restaurant in San Ramon to supply ALL the food they serve.

Realtor Mike Weber - a member of the Diablo Valley Vietnam Veteran’s, is the person who continues to invite the real estate community to be a participate in supporting this important project.  They always say YES!  Some of the services available for these lost, but not forgotten veterans are;

• Medical facilities to serve their health needs - including dental, plus a follow-up care program;
• A “field court” with County judges to fast-track clearing up legal issues that may be preventing these veterans from securing employment;
• Job placement services that also assists them in having DMV re-issued drivers licenses;
• Assisting with identifying residential opportunities; 
• A complete barber shop, new clothing, shoes and other basic clothing needs.

The Diablo Valley Vietnam Veterans were inspired to create the first East Bay Stand Down in 1999 in order to provide a respite from the “streets”.  In the midst of all the services provided the commitment of is to treat each of these veterans with respect and dignity.  Most of us are unaware, and maybe don’t want to know, that there are over 250,000 homeless veterans on the streets of our cities on any given night.  Just in our Bay Area there are over 7,000 homeless veterans!  An even sadder statistic is that a BIG number of these veterans have little or no contact with Veteran Administration for either medial or financial aid.  Stand Down directly addresses the issue that cannot be ignored any longer - aiding and assisting veterans in need to improve their lives, no matter how difficult it may be to do so.

The first Stand Down was held in San Diego in 1988.  It has now been integrated into over 200 cities around the country with over 100,000 veterans and their families being served.  A key objective is to break the cycle of the homeless epidemic within the veteran community.  These are the men and women who have served our country, and we need to make sure they are not forgotten.  A quote that is appropriate for their mission is, “A community is often judged by how well it takes care of its own.”  Serving the needs of those who have served to protect and create Freedom in the world is a worth activity for all of us to consider.  Please contact Stand Down or Jim Walberg if you want to personally get involved, or to make financial contributions.  Also, contact me any time to find out about other service opportunities for Bay Area community projects.  Until next time…your East Bay real estate detective remains on duty.

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