2008 April (2)

Archive for April, 2008

Pasadena Real Estate Market Report - March 2008 - 91107 Homes Sold

April 23rd, 2008 categories: Seller Financing

As you can see from the above market statistics, home sales have slowed considerably since March of last year . . . the number of closed sales is just over half.

Prices are holding fairly well, though, (down about 4%) but you have to be willing to wait a little longer to close escrow. Still, 63 days on market isn’t bad, considering that the national numbers are showing 10 months of inventory (meaning, the average time it takes to sell a home is 10 months).

Fewer sales are occurring, but they are occurring, and the sellers that are willing to price their property reasonably are doing better than their national counterparts. The listings insisting on last 2 years’ prices are expiring unsold in droves, but the properties priced well are selling fairly quickly.

When a bank offers an REO (real estate owned) property for sale, and they actually put a good price tag on it, there are multiple offers, usually above asking price.

Besides staging and making your property attractive physically, another way to make sure you get as much as possible for your property is to offer terms, if you can. There will always be more buyers for your property if you advertise: OWNER WILL CARRY.

Why not sign up to be notified of updates automatically?
Find a home in Pasadena, or just read more on Pasadena living.

Ummm . . . Why Don’t You Store a Little Food on Your Real Estate?

April 23rd, 2008 categories: Real Estate News

Make room to store a few food items in & on & around your real estate. There could be some temporary shortages and periods of unavailability. I ordinarily don’t worry a whole lot about world events, but there are some interesting trends developing. It wouldn’t hurt to be prepared with a few key items, including water and toilet paper!

According to Kevin Kerr,

“Even in the U.S., food rationing is becoming a reality, as much as the mainstream media would like to pretend it’s not. The lead story on Drudge today suggests Costco and other food wholesalers have begun to quietly limit purchases of flour, rice and cooking oil.

“Due to the limited availability of rice,” reads a sign in a California Costco, “we are limiting rice purchases based on your prior purchasing history.” Interesting times…

Meanwhile, “There’s a risk of a silent famine,” U.N. Food Program’s Paul Risley said today. “If you’re making $1 a day, $2 a day, somewhere near the bottom of the economic scale, a sudden doubling of the price of rice or of wheat is going to make it impossible for you to put food on the table.”

I just finished ordering 25-lb bags of wheat (which we can soak and sprout) and steel cut oats (the kind that sticks to your ribs). I also keep about 100 gallons of water in storage in the back yard, and I’m always grateful for the orange trees that give us citrus almost year-round!

My Sellers are Afraid to Carry Paper - Has Anyone Seen a Bank Call the Loan?

April 21st, 2008 categories: Seller Financing

Sellers who are willing to offer terms and carry paper can really give themselves a nice seller financing advantage in today’s market, but sometimes they get freaked out by the “due on sale” clause. They are worried that if they wrap the existing lien, they’ll be in trouble if the bank gets wind of the transfer.

Wrapping good underlying financing is a great way to put a deal together, but there can be a lot of fear out there, as evidenced by this email I just received from another real estate agent:

Question:

“I have a client looking to carry and was just told by Title that the banks could call the loan due at any time. Has anyone ever had that happened and would it be beneficial to contact their mortgage company with a ‘heads up’ of what they were doing, or would that red flag it? Cannot believe in this real estate climate that a bank would do that if the mortgage was being paid for in a timely manner. Sellers are now ‘freaked out’….any suggestions?”

Answer:

“Dear Mr. Awesome, Enlightened, Progressive, Agent Who Educates Clients About Seller Financing,

There is a “due on sale” or acceleration clause technically in the note which theoretically gives the bank the right to call the note due. For some reason this causes a lot of fear and trembling and makes it seem like it’s borderline illegal, which of course it’s not.

I have never heard of anyone’s note being called. Like you said, what lender is going to call a perfectly performing asset? I know at one point in history when interest rates had spiked from single digits to double digits, the banks were calling loans to force people to refinance at the higher rates. Given the current climate, there simply isn’t any incentive for the lenders to call a nicely performing loan.

My personal feeling is that wrapping a nice underlying mortgage is a great way to get a deal closed right now, and that the risks are minimal if the loan stays current. The risks of not selling and waiting for further depreciation and/or hyper-inflation are possibly a much greater risk.

If the buyers are willing to hold title in the name of a trust, then a trust could be set up and the likelihood of the banks picking up the transfer is reduced even further. For instance, if John Smith is the seller, then sell the property to John Smith Living Trust (with the buyer as the beneficiary) and the banks will just see this as an estate planning strategy.

Good luck in educating your sellers. The due on sale threat is more of a boogey man than anything else, in my opinion. And P.S. I would never call any lender to give them a ‘heads up.’ This is sort of a humanitarian posture . . . don’t you think they’ve got enough to worry about these days? ”