Cheap is small and not too steep But best of all cheap is cheap Circumstance has forced my hand To be a cut price person in a low budget land Times are hard but we’ll all survive I just got to learn to economize Low Budget — The Kinks
Spending a few dollars to properly stage and photograph a property can make an impact. This is either a listing agent raising the bar or an owner that knows how to participate in the sales process. Look at the outstanding staging and photographs of this property.
I particularly like the composition of this one. First, you have the green plant in front of the white wall reflected in the window, and you have the green plant on the white pillow reflected on each arm. The sunlight creates an interesting bright spot that calls your attention to the attractive wood flooring, and the interesting wicker shadows. You get a sense of the function of this space while your eye is drawn to the important features.
The sky in this photo appears to have been photoshopped based on some artifacts in the photo (there is a framelike edge that appears to be a series of dragged pixels) and the uniformity of the color of the sky. In the photographer’s defense, based on the washed out colors of the exterior shot, it was probably an overcast day, and the sky in the photo was likely totally white (it is a photographic effect). The blue makes it a bit more interesting, but at the expense of realism. It also makes me wonder if you really see sky and not perhaps another condo, but I will assume the view is as presented.
This is a small condo in a spotty neighborhood (by Irvine standards). The reality of its existence is totally lost in the photographs — which is great. The money for these photographs was well spent.
Beds 3 Baths 2 full 1 part baths Size 1,430 sq ft ($327 / sq ft) Lot Size n/a Year Built 1980 Days on Market 1 Listing Updated 12/4/2009 MLS Number S597926 Property Type Condominium, Townhouse, Residential Community El Camino Real Tract Wc
JUST REMODELED…JUST-LIKE-NEW! VERY DRAMATIC and CONTEMPORARY. (CHECK OUT THE AWESOME PHOTOS!) BIG Grass YARD with Large Patio, just like in a Single Family Home! NEW GRANITE Kitchen Counters with NEW STAINLESS STEEL Sink & Faucet! NEW WOOD Laminate throughout the ENTIRE bottom Floor. NEW Porcelain Floor Tile in upstairs Bathrooms. NEW Designer Paint, NEW Light Fixtures, NEW Bath Faucets! Spacious and Glamorous Master Bedroom with Romantic View Deck…BEST Irvine Home in this price range…EQUITY SALE…HURRY!
intermittent CAPS lock.
The owners have increased their debt since buying, but unlike some of the HELOC abusers I profile, the rate of increase of their mortgage balance was not outrageous, and it appears to have been spent on improvements. If they get their asking price — something our sub-5% interest rates make possible — they will make a substantial profit.
The Option ARM problem has not gone away. It serves as a testament to the denial of the lending industry, and it is the textbook example of extend, amend and pretend.
I know that the prospects weren’t all that good But they improved, and I’d have thought that you could Have strived for that something we all have deep inside Not let it vanish, along with your pride
Now with the aid of your new walking stick You hobble along through society thick And look mesmerized by the face of it all You keep to the gutter in case you fall
More
than $200bn of outstanding pay-option adjustable-rate mortgages (ARMs)
originated and securitized from ‘04-’07, according to market commentary
by Moody’s Investors Service this week.
This sector shows “dismal” performance, with more than 40% of
borrowers 60 or more days past due on payments. And many of these loans
have yet to experience a recast event, when initial minimum monthly
payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.
“Even though borrowers with Option ARM loans have the option to make
monthly payments typically lower than the accruing interest on the
loan, many borrowers are choosing a different option–not making any
payment at all.”
Moody’s said the performance is comparable to subprime, despite the
trend of more acute negative equity among Option ARMs than subprime.”
It is not surprising that 40% of Option ARM holders are currently in
default. What is surprising is that there are still $200,000,000,000 in
outstanding Option ARM loans. This is the classic example of kicking
the can down the road, and here is the reason why:
“Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs. Modifications would
have to be applied aggressively to have any lasting effect and keep
borrowers paying on their mortgages, Moody’s said.
As I demonstrated in the post Cure Rates, once people go underwater, they are far more likely to default. Lenders are praying the California bubble markets do not get pushed over the edge by a flood of foreclosure inventory, so they are pretending the $108,000,000,000 problem here in California will just go away.
High defaults might be mitigated only by as extreme a method as
principal forgiveness. Moody’s recommended a term extension to 40
years, significant interest rate cuts and some principal forbearance to
keep borrowers’ cash flowing.
In other words, it is hopeless without lenders committing the ultimate sacrilege in lending: forgiving principal:
“There is little hope that most of these [delinquent] borrowers will
start making payments again if no principal is forgiven,” Moody’s said.
“Forbearance does not eliminate the obligation to repay the loan
principal, it only delays it. And many delinquent borrowers are
potentially so far underwater that it would take close to a decade for
them to attain any positive equity in their home.”
The delinquency rate of Option ARMs is expected to rise as a wave of
these loans recasts after the initial payment period, according to
recent market commentary by Standard & Poor’s.
“Option ARMs are the most vulnerable to quick payment increases
because of the low payment options they offer borrowers,” S&P said.
“Upon full recast, option ARM borrowers may experience sudden payment
increases to varying degrees depending on the payment options they
chose to exercise prior to the recast.”
The recasts have not occurred yet, and these loans already have 40% delinquency! How can that be good?
Equity is made up of several component parts: Initial Equity,
Financing Equity, Inflation Equity, and Speculative Equity. Each of
these components has different characteristics and different forces
that govern how they rise and fall. It is important to understand these
components to make wise decisions on when to buy, how much to buy, and
how to finance it. Failing to understand the dynamics involved can lead
to an equity graph like the one for the peak buyer who purchased at the
wrong time and utilized the wrong terms. Nobody wants to suffer that
fate.
Figure 8: Peak Buyer, No Downpayment, Negative Amortization Loan
The default rates on these loans will reach 100%. The only hope for these borrowers to stay in their properties is a loan modification, and that hope, IMO, is one of a series of Bailouts and False Hopes that ultimately serve no purpose other than to get borrowers to make a few more payments.
Beds 4 Baths 2 full 1 part baths Size 2,477 sq ft ($303 / sq ft) Lot Size 2,502 sq ft Year Built 2001 Days on Market 4 Listing Updated 12/2/2009 MLS Number S597447 Property Type Single Family, Residential Community Northpark Tract Othr
According to the listing agent, this listing is a bank owned (foreclosed) property.
Gorgeous Property in Prestigious North park. Beautiful home has Gourmet kitchen w/granite counters & stone backsplash. Huge Master Bedroom w/Fireplace and Retreat Room. Jacuzzi Tub in Master Bathroom. Lower level has tile flooring thru-out with the exception of vinyl in the laundry room. Custom Plantation Shutters & Vertical Blinds. Front patio and a small fenced, private rear yard. 2-Car Garaged. Guard gated community. Walk to Association Amenities-Pools, Spas, Parks, Gazebos, Award Winning Schools & Shopping/Restaurants.
I am convinced that Californian’s really believe that a mortgage is something people work to manage its growth. Mortgages are supposed to get smaller; people are supposed to pay them off. Even the “treading water” mindset of interest-only rests at the cusp of a Ponzi Scheme, but doesn’t cross the line. Day after day I find people who have increased their mortgages; some by a lot, and some by a little, but everyone is doing it. It isn’t hard to see why houses are so desirable.
The previous owner of today’s REO managed to obtain a $720,000 first mortgage and a $90,000 HELOC in January of 2007. That didn’t work out so well for the lender…
Foreclosure Record Recording Date: 10/15/2009 Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Foreclosure Record Recording Date: 07/07/2009 Document Type: Notice of Default
(People with access to property records will get the joke about Jeopardy.)
I want to thank you for signing up for our newsletter and our get-to-know-you email program. Although this is the final email in the series, you will continue to receive the IHB newsletter which will keep you abreast of community events, real estate market conditions and our current listings.
The goal of this program is to make you comfortable with the IHB, to introduce you to the key company personnel, and prepare you for the next stage in the process. Shevy and I are here to serve. You can contact us anytime with questions, concerns or comments.
Larry@idealhomebrokers.com
Shevy@idealhomebrokers.com
In conclusion we would like to review the reasons why Ideal Home Brokers is the best choice for meeting your real estate brokerage needs.
Why should buyers use Ideal Home Brokers?
One of the most important features you can find in an agent is the ability to make you feel comfortable with the process. In order to be fully at ease, (1) you must know your agent is extremely knowledgeable on residential real estate, (2) you must trust your agent is looking out for your best interests, (3) you must rely on your agent to be honest and dependable, and (4) although it may sound trivial, you must like the agent you work with. Without all four of those characteristics, you will not be comfortable with the sales process, and you will not have a good experience.
After introducing ourselves and showing how you can access the great educational resources our on website, I trust that we have established our expertise on real estate. While writing for the Irvine Housing Blog, I publicly predicted the crash of housing prices when the rest of the real estate community was telling its customers prices would rise forever. You can expect superior market analysis, and you can trust us to tell you the truth. You will find few in the industry with our depth of knowledge on the subject.
Shevy and I consistently warned people of the dangers of buying during the price decline and encouraged people to rent rather than buy. We have always looked out for the best interests of clients rather than trying to manipulate clients into buying and put them into dire financial straits just to generate a commission (which is what many others did). We want you to buy the right house at the right time so you have a comfortable place to live and enough money left over to enjoy your life.
Honesty and dependability can only be established over time. I have been writing for the Irvine Housing Blog since February of 2007. Since that time, I have created a detailed account of my views of the market, and I have established my character with my daily readers. Shevy is not as well known but in the year I spent getting to know him before launching Ideal Home Brokers, he established his character with me. As you get to know him, you will see he is an honorable man committed to helping you find your ideal home.
Likability is always an intangible. Much of makes someone amiable is based on their character, but much is based on charm and feelings of warmth and well being you get when you spend time with someone. Some people like us, and some do not, but you will not know for sure until you meet us. We look forward to it meeting you to discuss your real estate adventure.
In addition to our superior real estate expertise, we add significant value to the sales experience. Based on the work developed for the IHB, we provide detailed property profiles. We supply a report showing (1) recent sales comps, (2) maximum cashflow value, (3) rental parity value (with rental comps) (4) cashflow investor value, and (5) the complete cost of ownership. To our knowledge nobody else is delivering this service.
As a buyer, wouldn’t you like to have an objective and accurate report on what the property is worth and what it will cost you to own it? I would.
As a seller, wouldn’t you like to have a realistic view of the market and establish what your house will really sell for? I would.
Why should sellers list with us? We reach buyers.
Perhaps you know a local listing agent. They frequently walk through neighborhoods knocking on doors trying to get homeowners to list their properties with them. Listing agents get to know many potential sellers, but how many buyers do they meet? Very few. Most listing agents rely on the multiple listing services (MLS) to sell the property for them. A listing agent is not going to gain exposure to your property beyond the MLS. The IHB does.
If you are a seller, and if you want exposure to many buyers, the listing must be where buyers will find them. The readers of the IHB are overwhelmingly potential buyers, and there are a great many of them.
So how many potential buyers are we talking about?
Most of the readers of the IHB are from Irvine or the surrounding areas (although I did get an email from a reader in the Czech Republic). Most readers are interested in Irvine real estate, or they would not be at the Irvine Housing Blog. Here are some interesting statistics for you (as of Summer 2009):
4,750 average daily visitors
2,500 bookmarked visitors (daily readers)
2,950 readers via daily RSS feed
What other medium has the promise to deliver your listing to more potential buyers than the IHB? No broker reaches more buyers outside of the MLS than the IHB.
Do a Google search for Irvine Real Estate; that is what your buyers would be looking for. You will find the IHB (and the article on me in the OC Register) near the top of the list. Do any Google search you can think of concerning Irvine housing, and we will be on the first page.
Other reasons to list with the IHB
We reach more buyers than anyone else. That is reason enough to list with us, but there are other factors to consider as well.
Although your listing will reach many potential buyers on the IHB, it will also be listed on the MLS. This is a very important medium for advertising your property, and it is not used well by many other brokers. When you read these property descriptions at the IHB, doesn’t it make you cringe? Wouldn’t you be ashamed if your property were presented this poorly? Let us present your property in the best possible way. Every property has positives. We will write a nice description without the exaggerations, flower adjectives and realtorspeak, and we will photograph your property with enough high-quality pictures to display it well. Next to the profile on the IHB, the MLS listing is the most important advertising vehicle for your property. It must be presented properly in both locations.
We will also show you what your property is worth based on current comps to help you price it to sell. If you do not agree, or if you want to list at a price well over comparable sales, we may take your listing, but we will also be returning to you ever couple of weeks to reduce the price until you meet the market. An overmarket price wastes everyone’s time, as it does not result in a sale. If you list at a price near comparable sales, you will be eligible for your unique “IHB Buzz” sales campaign. We will list your property solely on the IHB for one week to generate pre-sales interest before listing it on the MLS. IHB buyers are keen to get a good deal on an exclusive offering, and the property may sell even before reaching the MLS.
Larry Roberts — Irvine Housing Blog
Credentials:
Master of Science in Land Development – Texas A&M University 1994
Bachelors of Science – University of Wisconsin at Stevens Point 1992
I have been involved with real estate my entire career. Come work with me. I am here to help.
Shevy Akason — Ideal Home Brokers
Credentials:
Bachelor of Arts- Claremont Mckenna College 2003
Real Estate investor since 2004
Academic All American- NDSCS 2001
Associates Degree- NDSCS- Business Administration 2001
Shevy works closely with both buyers and sellers to help them meet their objectives. He is committed to reliable personal service. He is here to assist you.
This is the last in a series of automated emails you will receive from us. You will continue to receive our newsletters with information on community events, market trends, and current listings.
Thank you again for allowing us the opportunity to present ourselves to you through this program. We look forward to working with you.
It is worth quickly explaining why a collapsed housing bubble leads to a recession, since the policy people responsible for this disaster have done so much …
Maybe its the new tasty kool aid the Federal Reserve is serving up? Are you ready for homedebtor’s prison?
Beds 2 Baths 1 full 1 part baths Size 951 sq ft ($336 / sq ft) Lot Size n/a Year Built 1983 Days on Market 3 Listing Updated 11/24/2009 MLS Number P712200 Property Type Condominium, Residential Community Orangetree
Tract Othr
DESIRABLE LOWER UNIT WITH A PRIVATE PATIO AND GREEN BELT
NEARBY.LARGE MAIN LIVING AREA. INSIDE LAUNDRY UNIT. STORAGE UNIT IN THE
PATIO AREA. LIGHT AND BRIGHT WITH THE MASTER BEDROOM OPENING TO
THE PATIO.COMMUNITY POOL AND SPA. WALKING DISTANCE TO IRVINE VALLEY
COLLEGE. WASHER AND DRYER INCLUDED
ALL CAP
Does it seem reasonable that a low end condo would appreciate 6.2% a
year since 2001? The affordability based on payments looks much better
on this one, but this $220,000 condo is elevated to $320,000 thanks to
the Federal Reserve.
We all know interest rates are artificially low, and buying under
those conditions is likely to result in being underwater for 3-5 years
while this disaster plays itself out. Do you want to be in a condo in
Orangetree for a decade? I heard they are opening a new condo
development in San Francisco…
The third of a three part series exploring an owner’s options when they decide they want to sell their real estate, and yet another Quail Hill WTF listing.
Honey I know, I know, I know times are changing. It’s time we all reach out for something new, That means you too. You say you want a leader, But you can’t seem to make up your mind. I think you better close it, And let me guide you to the purple rain.
Some people — many people — can benefit from having an agent as a
leader and guide them to a closing. Yesterday, we explored the
for-sale-by-owner option and today we are going to look at utilizing a full-commission broker.
Today is the third of three parts where I examine the
conditions, circumstances and options owners face when they want to
sell their homes:
Once an owner has examined the alternatives available to them, for better or worse most end up choosing to have professional representation by a real estate agent. There are several advantages of using a full commission broker including:
The tasks are handled by a trained professional
The MLS presentation is also professional which captures the interest of buyers
Conduct the negotiation in a way that maximizes revenue
Manage to documents necessary to complete the transaction.
These advantages are possible from using an agent, but not a guarantee. As we have noticed on many occasions here at the IHB, agents are not always well-trained and professional in their MLS presentation. Many agents have weaknesses in key areas just as professionals in any occupation have their good and bad practitioners. Picking the good agents from the bad is part of the problem.
The cons of using a full-service brokerage
When an owner is considering going full service, they need to fully understand the drawbacks. There are five primary problems with taking the conventional approach:
The full-service brokerage is expensive. It is a full 6% commission, a number large enough to prompt people to go FSBO.
Many agents are not very good, as we have seen on many occasions.
I will explore these cons in more detail in following sections.
People do not trust realtors
The general public’s opinion of realtors is not good. IMO, one of the main reasons they are held is such low regard is their tendency toward dissembling and their manipulative sales techniques. In other words, they have earned the scorn they receive. If realtors change their ways, perhaps attitudes will change, but neither seems very likely.
Exposure off the MLS is key
All properties on the MLS are on equal footing for exposure to buyers, and many agents are capable of marketing a property on the MLS in a way that piques the interest of buyers. Some agents claim to be the best in this area, but such claims are subjective at best and spurious at worst. How would you measure such a thing? Mostly it is agent puff and sales nonsense. Property exposure outside the MLS listing is the tangible and identifiable feature that sets the best agents apart.
Print media has been the traditional method of reaching buyers. It doesn’t work very well. Besides the high cost, it only provides a marginal improvement over the MLS for individual property display. On the MLS, the property may be one in several thousand a buyer may or may not find, whereas in a glossy magazine of print ads — which has a limited circulation — the property may be one in a hundred; a little better, but not much. This is one of the reasons the print media is dying.
With the dawn of the internet, very few people use print media to find property. The National Association of Realtors concluded that 84% of buyers use the internet for their property search. When owners are selecting a full service broker, they want the one that dominates internet market both on and off the MLS.
Broker websites
Any listing agent will provide an owner with an exclusive listing on their website. Including the owner, the listing agent and the listing agent’s mother, maybe five people will see it. Nobody goes to a small-time neighborhood farming agent because their website delivers buyers eyeballs to the listing, and it is very unlikely this showcase treatment has any effect. With the death of traditional media and the limited success of realtor websites, the neighborhood farming agent is at a disadvantage.
Keep this in mind when interviewing agents; neighborhood farming agents are good at knowing owners and sellers since they spend so much time and effort farming certain neighborhoods; unfortunately, sellers are more interested whether or not an agent can find a future buyer, not whether or not the agent knows all the owners in the neighborhood. If you go with a local farming agent, you may not receive top-notch exposure off the MLS.
National real estate portals
Most broker websites, Ideal Home Brokers included, are set up as MLS portals where people can search the MLS for the exact property they are looking for. When a property is displayed on a real estate portal page, it is one of thousands or more available to view. Some of these real estate portals get copious internet traffic, but they all fail to deliver eyeballs to specific listings. Even when thousands go to these sites each day, it doesn’t give an owner much exposure because there are hundreds of thousands of properties competing for visitors attention.
In many ways, owners are no better off on the heavily trafficked real estate portal sites. Perhaps five people will see a showcased listing on a small realtor website, but the number is only marginally higher on the big portal sites due to the competition for attention. On all MLS portal sites, buyers will not be presented with an owner’s property; buyers must find it on their own.
What is the best solution?
There is no perfect solution to real estate sales challenges. Some people can be successful going FSBO, but most will not. It may look less expensive, but it generally results in a lower net because (1) it is hard to find the right buyer, and (2) it is even harder to motivate them. Discount listings reach many more buyers because the property is on the MLS, but it puts the burden of marketing and transaction management on the seller. Some can succeed in this scenario and save money, and others cannot. The full-service brokerage is the most expensive, but it reaches the most buyers in the most effective manner.
All agents have MLS access, and some of those have the competence to market a property well. Identifying and picking from this group is tough because there are few ways of knowing in advance the service you will receive; however, there is an objective and measurable feature owners can use to select a brokerage: reaching buyers outside the MLS through a strong internet presence is the key differentiating factor determining which brokerage will deliver buyers and which may not.
Selecting an agent is difficult
As we have seen here at the IHB, many agents are not competent, and it can be difficult to know which ones are good and which ones are not. There is often very little differentiating those that are competent. Given this truth, two trends emerge:
(1) over two-thirds of owners list their property with the first agent they meet, and (2) many sellers are not satisfied with their agent’s performance.
Real estate sales is a personal service business, and finding an agent the seller likes and feels comfortable working with is about the best they can hope for — if this agent is competent, it is a bonus. There ought to be a better way.
The best solution for most sellers is to use a full-service brokerage that presents their property well on the MLS and provides superior internet exposure of the MLS.
I don’t know where sellers might find that, do you?
Beds 3 Baths 2 full 1 part baths Size 2,460 sq ft ($487 / sq ft) Lot Size 8,038 sq ft Year Built 2004 Days on Market 5 Listing Updated 11/23/2009 MLS Number S597009 Property Type Single Family, Residential Community Quail Hill Tract Oliv STUNNING Olivos Plan 2 in upscale Quail Hill featuring three generous bedrooms PLUS LOFT (could be converted to bedroom #4), two & one-half baths & 2 car attached garage. Has curb appeal that only a super-sized, corner lot can deliver, including mature Olive trees, custom flagstone hardscape, Zen-like rear yard water feature, patio cover & much more. INTERIOR UPGRADES include elegant wide-plank distressed hardwood flooring, upgraded carpet, designer paint, integrated surround sound speaker system, custom media built-in, Plantation shutters,multiple ceiling fans & security system. GOURMET KITCHEN includes solid granite counters & sit-up island, custom mosaic stone backsplash, stainless steel appliances including premium built-in refrigerator & large walk-in dry-foods pantry. Enjoy resort-style amenities award-winning schools.
These owners were typical Irvine borrowers. When the purchased the property for $1,013,500 back in 2004, they used a $810,000 first mortgage, and a 203,500 downpayment. The refinanced in 2005 for more money — $864,000 plus they opened a $179,600 HELOC. There is no evidence they spent it, but why cash out $54,000 if you are not going to touch the HELOC?
Since they have increased their mortgage, they are entitled to sell the property for more and pay off the debt, aren’t they?
STUNNING Olivos Plan 2 in upscale Quail Hill featuring three generous bedrooms PLUS LOFT (could be converted to bedroom #4), two & one-half baths & 2 car attached garage. Has curb appeal that only a super-sized, corner lot can deliver, including mature Olive trees, custom flagstone hardscape, Zen-like rear yard water feature, patio cover & much more. INTERIOR UPGRADES include elegant wide-plank distressed hardwood flooring, upgraded carpet, designer paint, integrated surround sound speaker system, custom media built-in, Plantation shutters,multiple ceiling fans & security system. GOURMET KITCHEN includes solid granite counters & sit-up island, custom mosaic stone backsplash, stainless steel appliances including premium built-in refrigerator & large walk-in dry-foods pantry. Enjoy resort-style amenities award-winning schools.