Low Housing Inventory, Multiple Offers…When Do Buyers Have The Advantage?

During a short vacation to welcome my new baby girl into the world, I had some time to ponder some valuable blog topics. If you read the local Sacramento news, you hear a lot of stories about frustrated buyers, and their seemingly endless quest to find the right home in our Sacramento Housing Market. Most of the stories these days, center around Sacramento short sales, where banks have all the power, and buyers are left sitting on the edge of their seats, waiting and praying for a favorable approval of their offer. As evidenced by the media, the wait can be grueling, and can really test a buyer's commitment to purchasing a home. Many buyers I come upon, feel powerless in our current Sacramento market.

So, when can a buyer feel powerful again?

In a market like ours, sellers are starting to feel more confident that their home will not only sell, but attract a lot of attention, and sell fast. When that doesn't happen, sellers are left to wonder, "why not?" The confidence begins to fade, and is replaced by anxiety, and desperation. Enter the opportunistic buyer. In this situation, buyers may now have some power to negotiate terms, such as a lower price, repairs, credit for closing costs, etc. The longer a home stays on the market, the less strength the seller will have in negotiations.

Now, these listings are not growing on trees, and their does take an amount of research, and patience, to find them. Having a strong Sacramento Real Estate Agent to assist you, and correctly advise you, is critical! Good Luck!!

Happy New Year!

Kyle Groves

Sacramento Short Sale vs. REO: What’s The Difference?

As a Sacramento Realtor, I am often asked, "What's the difference between a Short Sale, and a REO?" The question stems from the majority of the inventory in Sacramento's real estate landscape. I am one of those crazy folks who love stats, so I'll try to keep this short…of the 3,268 Sacramento Area single family homes for sale, in November, 52% of them were Short Sales, or REO's. When you breakdown Sacramento Short Sales vs. REO's, Short Sales make up 67% of the inventory, which is a huge shift from last year (2008) at this time, when REO's made up 67% of Sacramento's distressed, single family, real estate market.

So, what's the difference between a Short Sale, and a REO?

Short Sale listings, typically, still belong to an individual owner, who through some sort of hardship, cannot afford to make the payment anymore. The reason they are considered Short Sales, is the loan balance(s) equals more than the home's current value. The owner must list the home with a Sacramento Short Sale Agent, obtain an offer(s), and prepare what's called a "Hardship Package" (detailed list of expenses, letter detailing the hardship, and income documentation), which the agent will submit to the lender(s) to be approved. This initial portion of the transaction can take days, but the short sale approval can take months, as most banks do not have a solid Short Sale process in place. Buyers and Sellers must have a tremendous amount of patience in a Short Sale transaction. A solid Sacramento Short Sale Agent can make an incredible difference!

REO listings, also called Bank Owned, are properties that have gone through the foreclosure process, and made their way back to the bank. The banks hire Realtors to list REO properties, who then obtain the "highest and best" offer for the bank to review and approve. A Sacramento REO Buyer Agent, must take the time to educate clients on these transactions. Sacramento Area REO's, in certain price points, are receiving multiple offers, as First Time Home Buyers flood the market, and listed inventory continues to diminish. Additionally, the banks do not have prior knowledge of the property, and typically sell the property in its "as is" condition. A Buyer cannot expect the bank to pay for any inspections, repairs, or warranties, and the bank will "encourage" the Buyer to move quickly with shortened inspection periods, and a per diem cost for every day the transaction extends through the close of escrow. Having the right Sacramento REO Buyer Agent can be critical to obtaining the right property, and closing on time!

If you find yourself wanting, or needing, to explore the Sacramento Area Real Estate Market, give me a buzz, (916)214-2082, and I'll be happy to work with you!

All the best,

Kyle Groves

Bank Owned & Probate Properties: Buyer Beware!

I was chatting with one of my investor clients yesterday, as we are getting ready to close on the purchase of a Probate Sale, and our discussion centered on the unknown. In most property transfers, the seller(s), and seller's agent, are required to disclose material facts regarding the physical condition, and events that have taken place over the past three years. So, what happens when the owner or agent can't obtain that information, as is the case with probate and bank owned homes? You can't disclose what you don't know! The bank's Asset Manager never lived in the property, and the same may be true for the Executer/Administrator of a will, or living trust, which excludes either of them from disclosing, what may be, important details to a buyer. Additionally, these type of properties are typically sold 'as is', where no repairs or warranties are given from the selling side.

So, where does the burden fall? The burden falls squarely on the shoulders of the buyer, and buyer's agent. Now, in the case of my investor, it is known, and has been disclosed, that the owner did expire in the property, which is a material fact that may make some buyers queasy. Obviously, that bit of information didn't affect my investor's decision, and when he is done with the "top-down" remodel of this property, it won't matter to a lot of people. But, what about the pest report? Roof? Electrical? Plumbing? Foundation? If he were not a contractor, he'd have all these items inspected by a professional, reports would be generated, and the decision to continue with the purchase of the property would hinge on the results and recommendations within those reports. Costly? Yes. But, for the everyday buyer, potentially more costly not to! Now, I don't want anyone to think I am steering buyers away from these types of properties…nothing could be farther from the truth, due to the potential for incredible discounts. As a buyer, just be aware of the potential pitfalls, have a professional real estate agent, and reap the rewards this Sacramento Housing Market has to offer!

Best wishes,

Kyle Groves

Short Sale Doesn’t Always Mean You Have To Wait To Buy Another Home…

So you had to Short Sale your house? Conventional wisdom says you won't be able to buy a home for, at least, the next two years, right? In most cases, conventional wisdom is correct…however, not absolutely correct in every case. I was talking to Rich Estep, a Sr. Loan Officer with Paramount Equity Mortgage, recently, and he shed a little known fact about FHA loan guidelines, and how they pertain to borrowers who have had to Short Sale their home within the past two years. I am paraphrasing, but the statement was something like this:

"A seller in a short sale transaction, even within the past two years, can obtain a FHA loan to purchase another primary residence, if the previous mortgage was current when the short sale closed, and all other minimum FHA guidelines are met (credit score, income, etc.)."

Now, I understand many folks who have faced short sale, may not have been able to keep up with the payments. But, for that small percentage that were able to keep up, or after falling behind were able to become current, this bit of news could be very helpful. Rich did say, procuring a loan after a short sale, is not a slam dunk, but if you fit the criteria, it is definitely worth exploring! If you fit this description, contact your mortgage professional, or you can contact Rich at restep@paramountequity.com. Then contact me to help you find your next Sacramento Area home!

Best wishes,

Kyle Groves

Sorting Out The Federal Tax Credits For Home Buyers…Sellers Take Notice!!

By now, you've probably heard story on top of story about the "First Time Home Buyer Tax Credit," originally set to expire on November 30^th…well, Congress got together, and agreed to extend that credit until April 30^th, 2010! Great news, right? $8,000 in "free" money to the individual(s) who decide that NOW is a good time to enter the Sacramento Area Real Estate Market. But wait, it gets better!! Congress also passed legislation to expand the tax credit to include $6,500 to "Move Up Buyers," or existing home owners who are looking to buy a new primary residence.

Sacramento Area SELLERS, we have BUYERS!!!

In Sacramento, it's a "No Brainer" to enter the market, regardless of the credit, due to declining home values, the likes of which haven't been seen since the 90's. In reality, the tax credit is icing on the cake, as investing in real estate, right now, is the safest bet it has been in a decade. The fact that Congress passed the extension for First Time Home Buyers, and the expansion for Move Up Buyers, the move is, likely, a huge boon for Buyers and Sellers alike. As housing inventories wane across the Sacramento Area, we are entering a period of normalcy. The backlog of 2008 is no longer, the banks are trickling their REO inventories out to the public, short sales are taking months to get done, and Buyers are running out of homes to purchase. As the Holiday Season approaches, let me jump back into my childhood, and liken this the "Cabbage Patch Kid" phenomenon…everybody has to have one, Toys R Us has lines out the door, and only a few will actually get one. In the Sacramento Area Real Estate Market, that equates to Lots of Buyers, Multiple Offers to Sellers, and Rising Home Values!

It's about time for Sacramento Area Sellers, to think about getting Off The Fence!

Here's a peek at some of the Tax Credit Qualifications:

• Tax Credit now applies to sales occurring between January 1, 2009 and April 30, 2010
  
• Allows up to a $6,500 tax credit for repeat (existing home owners) who have lived in their current home for at least 5 years
  
• There is a maximum purchase price of $800,000; no minimum purchase price
  
• Income limits have been increased to:
  
  • $125,000 for single tax payers
    
  • $225,000 for married tax payers filing a joint return
    

For specific information & requirements on both, the $8,000 1^st time Home Buyer Tax Credit or the $6,500 Repeat Buyer Tax Credit, visit: www.FederalHousingTaxCredit.com or consult your tax professional.

All the best,

Kyle Groves

In Sacramento, Buyers Must Move Quickly And With Purpose!!

Ahhhh, my first blog...grab the bottle of bubbly, and smash it on my bow!  As a Sacramento Realtor, I've been helping buyers purchase homes in our, often misunderstood, real estate market. 

Bank owned, Sacramento Short Sales, Probate Sales, Flips...yes, they are all out there.  Typical buyers entering the Sacramento market believe, by no fault of their own (insert Media here), that these homes are falling off the shelves at the local Savemart, and that sellers will be begging for their heavily discounted offer. 

My job as a Sacramento Realtor starts here, with education.  No longer do we have 13 months of housing inventory, where buyers routinely received 5 digit discounts, as we did in 2008 and the beginning of 2009.  Sacramento is down to 2-3 months of inventory, and in some areas, less than 1 month. 

What does that mean? 

All of you who said, "Housing Shortage," get an "A"!  Buyers are out in droves attempting to take advantage of Uncle Sam's First Time Homebuyer Tax Credit, and sellers are hunkered down in their fallout shelters, waiting for the dust to settle.  Here, we apply a little Economics 1A, the Law of Supply and Demand, and guess what happens...bidding wars, rising prices, and buyers who need to "think about it" are consitently disappointed. Buyers, if you want to buy a Sacramento home, you have got to move quick, and you have to move with purpose. 

      -Have your preapproval in hand when you meet your agent for the first time

      -Know what you can afford, know where your downpayment is coming from, and understand that there are closing costs for your new mortgage loan. 

      -Have a good idea of what you want your new home to look, and feel like, and what about our new home is most important to you. 

      -And pick a Sacramento Real Estate Agent who you mesh with, but is also willing to tell you what you don't want to hear!! 

If you do these things in advance, it will save you a lot of frustration, anxiety, and time!  And if you are looking for Sacramento Real Estate Agent with these qualitites, Give me a call!