The Double Struggle to Buy A Home

REALTOR® Outlook

By Kay Wilson-Bolton

October 17, 2009

The current shortage of inventory makes it difficult for the average, intentional homebuyer to complete a purchase if the FHA loan is the loan of choice.

A sad condition is developing when a buyer wants or needs to use FHA financing to complete a purchase. This loan was designed to assist marginal buyers. Asset Managers, and sometimes the listing agents, are making it clear that buyers with cash or conventional loans are more desirable

An additional stressor is found in what we hope is a temporary “new normal”. Some buyers have been told their chance of purchasing a home is increased if they work with the listing agent for the property they want to buy.

We have lost clients and buyers who have been told by listings agents that if they offer through them, they are virtually guaranteed to be the successful buyer because no other offers will be presented.

Clients have told us they would be told the amount of the highest offer if they made a new offer through the listing agent or a team member.

Every market and economic environment creates new problems, challenges and opportunities.

Due to today’s issues, many clients have faced the dilemma of staying with an agent they trust or switching to the listing agent who controls the listing but is unknown to the buyer.

These actions fly in the face of the REALTOR® professional Code of Ethics and Standards of Practice.

If you have heard these statements and feel you have been damaged in any way, pleased let your agent know or speak to a member of the Ombudsman Committee for Ventura County Coastal Association of REALTORS®, 805.981.2100. You can also file a grievance to be heard by the Professional Standards Committee. Ask for Randy McCaslin, Executive Officer.

 

 

Kay Wilson-Bolton served the real estate industry since 1976. She is the broker for CENTURY 21 Buena Vista with offices in Santa Paula and Ventura. She brings a regional perspective to local issues. She can be reached at 805.340.5025. Her web address is www.readysetkay.com

 

HOW TO NEGOTIATE YOUR REO PURCHASE

REALTOR OUTLOOK

BY Kay Wilson-Bolton

March 1, 2009

If you find a home you think is a “good deal”, chances are someone else does too. To avoid disappointment, hassle and whatever else goes with this “new normal” way of doing things, here are some tips on getting your offer accepted—first and early.

If you want your offer to stand out, you are convinced the house is a good deal in the long run and you can afford the payments in the short run, make note of the following.

Make your escrow period as short as your lender can deliver.

Make your deposit at least 1% of the offered price.

Come as close to full price as you can.  If you love the house, offer a little over. In this market of inventory shortage, you will have others competing for this home.

You won’t notice the difference in monthly payment but the asset manager will notice the difference in price.

If a termite report exists on the property ask about the cost of Section I. If the cost is affordable, don’t ask the seller bank to pay for it. Always agree to pay for Section II work.

Don’t ask the seller bank to pay for home protection plan. The trend is to cut them out—1000 homes time $330 per home protection, computes to a big savings for the seller.

Limit your inspection period to 10 days or less.

If you are going to ask for closing costs, offer a little more on the price. The days of banks paying 3% for costs and 3% for buydowns are generally considered to be over.

If others join you in the bidding, you may be asked to submit your best and final offer within 24 hours. If you are in that situation, improve your offer with the same suggestions.

If you plan to offer over asking price, don’t make it a game for another day. Don’t rely on the fact that the seller will agree to a price reduction a week before closing because appraisal did not match asking price. When this occurs, seller/banks may agree to reduce the sales price, but don’t count it. By this time, almost everyone is mad. Some sellers will cancel the escrow and start over. Others will reduce the price to match the appraisal.

The “per diem” charge is a penalty for late closing and is often $100 per day. To avoid these charges, make sure your agent requests for extensions on a form known as an Addendum. Very seldom are per diems charged if the asset manager is informed on the progress of the transaction.

Another sensitive area is when buyers ask for repairs. If you asked for and received closing costs up to 3%, you may not receive credit for repairs. If the seller does grant a request for repairs, it will be called “credit against closing costs”. It is possible that your request for repairs will not actually be received because you will not be given cash back at the close of escrow.

If your lender can legitimately increase closing costs to cover the costs of lender required repairs, the repairs will have to be paid with this money.

Wrap-up.  Can it take a long time to get a response to your offer? Yes it can. Can it take a long time to get the escrow opened once the offer has been accepted? Yes. Are delayed closings often the fault of the seller/bank?  Yes they are. Is the listing agent able to “move” the asset manager? Generally not.

There is a fair amount of frazzle within the real estate community over this “new normal,” real estate environment. Most accept the new rules and work with it. Most adapt and continue to serve their clients with intelligence, creativity, grace, imagination, and honest dealing.

 

 

Kay Wilson-Bolton is a broker for CENTURY 21 Buena Vista with offices in Ventura and Santa Paula.  She can be reached at 805.340.5025 and met at www.readysetkay.com.

Fire Season Is Here Again.

REALTOR® outlook

By Kay Wilson-Bolton

805.340.5025

September 1, 2009

With the 2009 fire season upon us, it is problematic for all residents and poses special circumstances for homeowners who may have their home in escrow at the time a fire sweeps an area.

The California Association of REALTORS® legal staff has provided some very helpful Q and A’s.  They provoke thought and consideration for the public and real estate professionals alike.

It has happened more than once that a home in escrow is damaged by fire. If the purchase contract between the parties does not specify who is to bear the risk of damage or loss to the premises during the time between the execution of the contract and the transfer of title, the liability of the parties is governed by the California Uniform Vendor and Purchaser Risk Act (Cal. Civ. Code § 1662).

The current Residential Purchase Agreement and Joint Escrow Instructions was revised in October of 2002 and does not dictate how risk of loss is allocated between a buyer and a seller.

If all or a material part of the premises are damaged before title or possession is given to the buyer, the buyer can cancel the contract and recover any portion of the purchase price paid. It is not clear whether the buyer can alternatively elect to enforce the contract with a reduction in the purchase price equal to the loss of value or cost of repair.  (Cal. Civ. Code § 1662.)

After the buyer has taken possession or has received title, the buyer bears the risk of loss or damage to the premises (assuming no fault on the part of the seller). Therefore, if the premises are damaged, the buyer must still complete the contract and pay the balance of the purchase price.  (Cal. Civ. Code § 1662.)

If the purchase contract does contain a risk of loss provision, that provision will govern to the extent it is different from or more specific than the Uniform Vendor and Purchaser Risk Act (Uniform Act) (Cal. Civ. Code § 1662).

If fire damage to the property is minor, it is unlikely that the buyer can cancel the contract.  The seller will likely be required to repair the property.   Paragraph 7A of C.A.R.’s Residential Purchase Agreement requires the property to be maintained in substantially the same condition it was in on the date of acceptance.  Under this language, a seller could be obligated to repair fire-related damage to his or her property.

If the damage or loss caused by fires to the property is major, it is possible that the buyer can compel the seller to repair the home but cannot compel the buyer to complete the repairs.

If the damage occurs before the buyer has removed an inspection contingency in his or her purchase contract, the buyer can, of course, exercise any inspection, disapproval, and cancellation rights provided by the contract.

If the damage occurs after the buyer has removed his or her inspection contingency, the buyer generally does not have an automatic right to reinspect the property and approve or disapprove of its condition under most purchase contracts. However, the seller may be obligated to repair the property.

A purchase agreement may, however, require a seller to disclose fire-related information, which in turn may give a buyer a right to cancel a transaction, even if he or she has already removed contingencies.

C.A.R.’s Residential Purchase Agreement provides that if, prior to the close of escrow, the seller becomes aware of adverse conditions materially affecting the property, the seller must provide a subsequent or amended disclosure or notice, which then gives the buyer a right to cancel the agreement.

A seller must disclose the fact of a fire even though it was not significant because the seller has a duty to disclose material facts that may affect the value or the desirability of the property.

California law does not clearly answer whether a seller must disclose past property defects and repairs.  At the present time, the law does not appear to require disclosure of past defects and repairs unless the problems may be persistent.  In other words, a defect which has been fully repaired and no longer threatens the value or desirability of the property probably need not be disclosed.

On the other hand, defects which are difficult to remedy and which may continue to plague the property may have to be disclosed.  Given some uncertainty in this area of the law, many sellers may prefer to resolve doubts in favor of disclosure to minimize the risk of liability.

The measure is like another good idea and that is to tell others what you would like to be told.

 

Kay Wilson-Bolton is the owner of CENTURY 21 Buena Vista with offices in Santa Paula and Ventura. She can be reached at 805.340.5025 or at www.readysetkay.com, She is also a Chaplain for the Santa Paula Fire Department.

 

 

New California Law:  AB 957  – the Big Gorilla Meets A New Gorilla

REALTOR® Outlook

By Kay Wilson-Bolton

October 16, 2009

Every “market” has its own unique influences that make a mark in history.

When the market we know today became driven by banks and asset managers, they formed alliances with various service providers for title and escrow. The goal was to increase efficiency and reduce costs. I’m not sure either of those goals was met but those alliances created major hardships on our local title and escrow providers, because they were excluded from all this new business.

Millions of dollars have been spent in  other cities and counties on services that have been traditionally provided by local companies.

A new law was signed by the governor on Sunday, October 11, 2009 that enacts the Buyer’s Choice Act. This new law, “prohibits a mortgagee or beneficiary under a deed of trust who acquired title to residential real property improved by 1-4 dwelling units at a foreclosure sale (or trustee’s sale) from, requiring, directly or indirectly, as a condition of selling the property, that the buyer purchase title insurance or escrow services in connection with the sale from a particular title insurer or escrow agent.”

The law does not prohibit a buyer from agreeing to accept a title insurer or an escrow company  recommended by the seller if written notice of the right to make an independent selection is first provided by the seller to the buyer.

It is interesting to note this law applies only to REO transactions.  Furthermore, the real estate agent of the REO seller is included under this definition.

A “seller” who violates these provisions will be liable to the buyer for an amount equal to three times all charges made for the title insurance or escrow services. In addition, any person in violation will be deemed to have violated his or her licensing law and will be subject to discipline by the Department of Real Estate.

However, a transaction is not invalidated solely because of the failure of any person to comply with any provision of this law.

A validating principal is the existing Section 9 of federal law Real Estate Settlement and Procedures Act which prohibits a seller in all transactions from requiring the home buyer to use a particular title insurance company as a condition of sale.

In fact, buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.  However it is not a violation of Section 9 to require a buyer to use a particular title insurance company so long as the seller pays for it.  This new California law does not clarify this distinction as to whether to law applies or doesn’t apply depending on who pays for the title insurance or escrow services.

So, if you have a favorite title or escrow company and want to use it in your next transaction, ask your agent to submit a copy of the new law along with your offer. Your choice of title and escrow will likely be ignored and REO agents will not advocate your request, but at least this is a set towards fair and equitable competition.

Corporate sellers will get the message after a while and agree to let  money for these services be spent in Ventura County instead of places far from home.

Kay Wilson-Bolton served the real estate industry since 1976. She is the broker for CENTURY 21 Buena Vista with offices in Santa Paula and Ventura. She brings a regional perspective to local issues. She can be reached at 805.340.5025. Her web address is www.readysetkay.com

 

 

A Bright Spot in Today’s Housing Market

REALTOR® Outlook

By Kay Wilson-Bolton

July 15, 2009

It is difficult to see bright spots in this continuing market shift, but brokers and agents who are providing broker price opinions to asset managers and intermediaries determine today’s prices for shortsales, pre-foreclosures, refi’s and loan modifications are finally able to check the “stable” box, indicating that prices are not dropping– for the moment.

Industry chatter is there is a huge inventory of foreclosures ready to freefall into the marketplace in late August now that the moratorium on foreclosures has expired.

Today’s real estate market has its own shade of character: low inventory, multiple offers, over-asking prices, and appraisal failures. The components have taken some of the joy out of the much of the business, but it is good for sellers who can ill afford continued drops in prices. It is good for buyers who are the heart for tough negotiation and reasonably good credit supported by a lender who can actually close a loan on time.

News reports affirm that August will bring lots of new home choices for homebuyers. Two major lenders state that while August will begin the next phase of home selling, the peak may not be met until this time next year.

Until then, increased inventory means greater options and choices for homebuyers reflected in lower offered prices for sellers whether they are foreclosed properties or shortsales.

Bottom line?  There is an open window for a stable market for a while. Home owners who need or want to sell in the next 18-24 months should think about doing it now. Sellers who are not shortsale candidates have a better chance of selling at the highest price.

Today’s demand for homes is huge and inviting.  If you want to sell soon, contact a qualified REALTOR® to help you make that choice. Local REALTORS® will give you your best options because they know the marketplace. If you have a price in mind, test it within reason in the marketplace.

A good choice is a REALTOR® is one who has done a good job for someone you know and trust.

Kay Wilson-Bolton is the owner of CENTURY 21 Buena Vista and an REO and shortsale specialist.  She brings a regional perspective to local issues. She can be reached at 805.340.5025. Her web address is www.readysetkay.com