Find out about Real Estate on the Monterey Peninsula

It happens most years, but it’s always a shock when you have buyers who are pre-approved and ready to go, but they can’t get funded. Let’s hope the Government gets a deep investor pool for this coming year. I have many buyers anxious to use that loan program to get into their first home.

I’ll confess, I don’t like to wait. I doubt many people do, but those that have the fortitude to do it will be the ones reaping the biggest reward. Buyers are in for lesson in patience with this market.

Many properties are inundated with multiple offers. It’s easy to panic and start writing offers on homes you don’t particularly like, just because you are desperate to get an acceptance. That’s a huge mistake. Feeling the pressure to “buy anything” will lead to disappointment and frustration.

It’s time to stay focused on the right type of properties, be prepared to view and write an offer on the type of homes you REALLY want to live in. It’s a time for true patience.

Why do people need hard deadlines to get stuff done? It’s just so amazing to me that I can find a property and get an accepted offer and then wait around for a couple of months to see if the buyer’s loan will get accepted. It’s only when the escrow’s about to get canceled when I finally start to see movement on the loan approval.

It’s been crazy for a while, but it’s getting even more insane. Two weeks ago we wrote an offer for a client in East Salinas. This is not the pretty part of town. The home was priced at 119,000. Our buyer offered 150,000. Not good enough. Why? Because 21 other offers were received on the same house and the only ones considered were the 5 all cash offers.

This week the same buyer picks another East Salinas house to make an offer. This one should be easy. It’s an REO, but the bank is having trouble kicking the owners out of the house, so it’s for sale “subject to inspection”, meaning whomever buys it will not be able to examine the interior until after the offer is accepted by the bank and the previous owners have been removed. That should keep most buyers away, right? Nope, 7 offers in 2 days! It’s not uncommon to talk with people that have written 20 plus offers and STILL don’t have a house. With the deadline coming up on December 1st for the first time home buyer credit, people are getting panicky about finding a home and closing escrow.

I want to tell you a story about a friend of mine named Rigo. I meet him at a seminar I hold in my office on how to buy REO properties. He had worked with other Real Estate Agents, had written offers and was not happy that he didn’t hear back on why his offers weren’t selected.

I educated him on the process, answered his questions and he made the decision to choose me to be his buyer’s agent. I was honored he picked me, but I was honest with him and explained that we would have to work hard to get him a property he would like. You see, Rigo is not a rich man. He works hard for a living and is like most first time home buyers. We were looking for a really good deal, but our competition was using stronger financing than us.

Because of that, we wrote many offers that were not accepted. The inventory started shrinking and even more buyers joined the hunt. Rigo was getting discouraged, but I continued to promise him that if he’d trust in me, I would find him the right place at the right time.

Well, that time just arrived. I got a tip on a new REO that had been on the market for a long time as a short sale. Agents sort of forgot about it and I told him we had a chance if he wanted it. We wrote the offer and negotiated the acceptance.

Rigo is ecstatic. He will tell you it was harder than he thought it would be. He’ll tell you he had started to give up hope. He’ll tell you he’s still nervous because it’s going through escrow. The main thing he’ll tell you is to persevere. He had faith in me and I’m so happy he did.

I keep hearing from the media that it’s a “buyer’s” market right now. Really? The numbers I look at don’t seem to imply that. If anything, it’s a strong seller’s market Consider this, as of today (6-22-09):

Seaside has 38 active listings available for sale. They also have 70 properties in escrow.

Marina has 24 active listings for sale. They currendly have 40 properties in escrow.

Greenfield has 33 active listings and 92 properties in escrow.

Affordable housing in Monterey County is red hot, and unless we see more inventory soon, it’ll continue like this until interest rates go up. It’s not uncommon for good properties to get double digit offers in a week. There’s no shortage of buyers.

I met a new friend today. Her name is Myra. She called me to ask some questions she had involving real estate. I was happy to assist her, but I was even happier when she offered to assist me.

She had found my number because she had visited a popular real estate website and I had answered a question. She told me she was intrigued enough to research my other online answers and blogs. What she found made her feel comfortable enough to call me and ask questions and share personal information. I was humbled by the fact she searched for me and shared so freely. What blew me away was her request for me to mail her several business cards so she could recommend me to her sphere of influence.

From reading some postings I had made and one single telephone conversation with me, she was willing to put my name next to hers with her friends and co-workers.

Boy, do I consider that to be an honor! This is not the first time this has happened, nor do I expect it to be the last, but I’m always in awe of the impact I can have by being willing to share my education and expertise with people. I live by the adage, “you’re only a stranger because I haven’t met you yet”.

I hope what I shared was helpful to Myra, because what she shared was very helpful to me. It’s my desire to educate and enlighten all who read what I write. If I can ever be of service to you, or people you care about, don’t hesitate to contact me and give me the opportunity to serve you. I would be honored.

As a Realtor, the most common question I get is “What’s going on with the market?” Of course people want to know. Sometimes it’s very easy to answer that question, other times it’s not. Like now.

I just got done looking over the Zillow market report for Salinas. It’s full of “mixed” news. Here’s some key data:

Good stats include single family homes purchased in 2009 have 50,814 in equity for median owners. Compare that to median owners who purchased in 2006 (they are minus 214,305). Homes purchased in 2009 with negative equity stand at 22%. Homes purchased in 2006 with negative equity stand at 83%.

While those are good stats, there are also some bad ones to look at.

Single family homes lost 37.3% value over last year in Salinas. The last time the market was at this value was the second quarter of 2000. The percentage of homes losing value the past 12 months is 93.3%

The foreclosure transactions the past 12 months have increased by 46%. Salinas has lost more value than any other town in Monterey County this past year. The zip with the highest value lost is 93906 (46.8%)

Ok, so you bought your home before prices got crazy. You’ve been paying your mortgage on time, keeping your credit score high. You’ve done all the right things. You could be the perfect candidate to move up.

Think about it. Interest rates on a 30 year fixed rate loan could be lower now than when you bought. Depending on your location and where you would want to move, you might be able to buy a home that is bigger and newer, finance it cheaper and come out with a lower payment then you currently have.

Depending our your financial situation, you might even be able to rent out the house you’re living in and have future equity.

This is a very difficult concept for buyers to wrap their head around. They see a home being marketed at a certain price and they assume that’s what the home is worth to the seller.

Wrong!

The home is worth “market value”. What exactly is market value? It’s what a buyer is willing to pay for that type of property at that time. It could be more than the listing price, it could be less.

Here’s the problem, buyers are not used to buying things like that. Oh, we go car shopping and see the sticker price and start negotiating down from that, but who goes to a store or showroom and expects to negotiate up? No one. And yet, this is what it takes to buy nice homes in this kind of market.

How much more? You need good information and data to make that determination. I’m doing market analysis on properties for my buyers so that can make smart decisions on what they should pay for properties.

Don’t get caught thinking that list price equals market value. In many cases, it does not…..