Fed Cut and other issues...

Recently, while listening to Fresh Air I heard Gretchen Morgenson, a financial reporter and business columnist, speaking about the mortgage crisis and how we got here. The most important factor was this: Lending Institutions went away from tighter lending guide lines and gravitated towards riskier loans which meant higher rates of return. Now we are seeing the fallout from those very risky lending practices. Borrowers are defaulting. Now we see the flip side of the coin where there is more supply and falling prices. Primary causes of this are:

1. More Foreclosures on the market and

2. Fewer buyers because of tightening lending standards.

We've come full circle. and are now in a Buyer's market (sorry Sellers). Mrs. Morgenson goes into great detail about the mechanisms behind this, but one pearl of information was this:
Each housing market is different and you should be aware of local market conditions when considering a purchase. Who better to inform you than a trained professional, someone versed in the current market condtions, a Realtor!

Mrs. Morgenson also addressed the the recent action by the Fed cut to the interest rate. (Since this broadcast they dropped it another 3/4 of a point) With these cuts you'd expect interest rates on houses to drop, but they haven't dropped as much as they normally would. Why is this happening? She says that it is because lending institutions are trying their best to cover the losses from the bad loans they put out. Unfortunately, the loser in this scenario are the Borrowers out there. They are being used to cover the risky lending that went over the past few years.

Many people ask me when is the time to buy? I would say this: Now is a very good time because there is great selection and lower prices. Additionally the interest rates are low and should drop a bit lower.
Also we are now seeing the investors come out of the woodwork, a good indicator the market might be bottoming out...

So if you need some advice, feel free to contact me:

mobile: 707-616-3456

email: andy@azalearealty.com


If you'd like to browse the MLS for homes for sale click this link :

First Time Home Buyer's Questions?

I often am asked questions by people who are first time home buyers about the home buying process. In this post, I will answer some of the most commonly asked questions. Please be advised that I will update this blog entry from time to time, so check back!

Q: I'm looking to buy a home, what should I do first?
A: The first thing that you should do, before even looking for a home is contact a lender (Either a mortgage broker or your bank). This is because you want to let your Realtor know how much house you can afford. You may like a house in the $350,000 range, but may only be able to comfortably afford a payment @ $250,000. That's a big difference. You wouldn't want to waste your time looking in the wrong price range.
Additionally, you can be ready to make an offer, should a house you like become available. Even in a Buyer's Market, you could lose out on a house if you are not already pre-approved with a lender. If there are competing offers, a seller is more likely to accept an offer from a buyer that has been pre-approved with a lender and provides a letter from the lender stating that.

Q: When am I committed to buying a house?A: You should be committed to buying a house when you make the offer! However, there is a possibility that you find out about a condition during you inspection time frame that would affect your decision to purchase. There could be too much work to do to the house and the seller is not willing to negotiate, or some personal factor arises that changes your mind. In either case there is a a Buyer's Investigation Contingency in the contract. Unless otherwise specified, there are 17 days to perform inspection (investigations) and you have the right to cancel the agreement based on the findings of the inspection. The Seller would be obligated to give you back you earnest money deposit and any monies placed in escrow for the down payment.
If you REMOVE your Buyer's Investigation Contingency, you most likely will LOSE your earnest money deposit because you have defaulted on the contract.
There is a possibility that you can cancel the contract after the Buyer's Investigation Contingency has been removed and keep your deposit. There are a few ways this can happen:
1. If you make the contract contingent on a loan funding and it doesn't fund
or
2. If you are presented an additional disclosure from the seller after your release of the Buyer's Investigation Contingency. If you don't approve of the additional information you have the right to cancel the contract and it will not be considered a default.
You could conceivably cancel the contract up to the date of closing, but not without financial repercussions i.e. loss of deposit or loss of up to 3% of the purchase price. That might sting a bit!

Q: What's the difference between Pre-Qualified and Pre-Approved?
A: Pre-Qualified is when you have visited with a lender and based on the information you have provided them the lender will state that you may qualify for a loan.
Pre-Approval is when you have visited the lender and they have taken a loan application, pulled a credit report, and in many cases, verified the necessary funds to close the transaction.
Obviously, Pre-Approval is stronger that Pre-Qualification.

Inspections - "Kicking the Tires"

So you've decided to purchase a house, you may be asking, "How am I to know what I'm buying?"
The answer lies in the inspections. This is an important consumer protection provided to the buyer of Real Estate which allows the buyer time to kick the tires and check under the hood, so to speak.
Buyer's Inspections are a very important of the Home Buying process, and by default they matter a lot to the seller as well. Any contract has a 17 day period for buyer's investigations (or longer if you change the timeframe). During this time it is the duty of the seller to provide the buyer with all Statutory Disclosures required by law and the Buyer should conduct any and all inspections that they deem necessary. These inspections include, but are not limited to:

• Wood Destroying Pest Inspection, an inspection that investigates the whether the structure has current infestation of wood destroying organisms such as: termites, fungus, dry rot, wood boring beetles, etc (called section I); conditions that may lead to infestation(s) (called section II); recommendations for conditons to be inspected and repaired by other trades people (i.e. roofers) and informational notes about the current condtion of the house, such as plumbing existing over finished drywall or freshly painted surfaces.This inspection will also have a diagram denoting the location of each condition and a corresponding number based on what type of problem is present. These Numbers will also have a bid to fix the condition.



• A Home Inspection, that investigates the Systems of the Home: Plumbing, electrical, etc. It also has information regarding the health and safety of the home.



• A Roof Inspection, examines the roof and will make suggestions and cost of repairs to guarantee the water tightness of the roof for 3 more years.



• Investigations of local building codes, can you build, subdivide or add a mother-in-law?



• Neighborhood makeup - do you like the neighborhood?



• Personal factors - are you getting a divorce, having another child, getting married and if so, will this house work for you?



• Review of the disclosures - is there something that has been disclosed that you can't live with? Has someone died in the last 3 years in the house?



• Square footage - is the home the correct square footage?



• ETC.

You get the idea...
If you discover some adverse condition during this time period, the buyer may also make a request for repairs or other corrective action (including but not limited to a credit from the seller to the buyer or a new negotiation of the price). This request should be given to the seller before the 17 day inspection timeframe is up. A buyer may also cancel the contract as a result of the information discovered or disclosed during these inspections. The seller is bound by the contract to return your earnest money deposit.
Once a Buyer is satisfied with their inspections or has negotiated with the seller for repairs, they would release their investigation contingency. When the inspection contingency has been released, default on the part of the buyer will result in the loss of the buyer's earnest money deposit.
The most important inspection (at least with residential real estate) is the Wood Destroying Pest Inspection. They are so important that Completed Pest Inspections are filed with the Pest Control Board and can be searched for on the pest control board website . For a small fee, a buyer can obtain a copy of a past Pest Inspection.
For my money the best Inspector in our area is Mike Strickland, not only is he a nice guy, but he's a straight shooter, which I like an appreciate.


When Listing a Home, I ask the seller to get a Pest Inspection up front. Why should a seller do this? It's because a seller can price the home correctly if there is Pest work that needs to be completed. You can also usually avoid a secondary negotiation after the inspection timeframe. The Buyer won't come back on the seller to ask for a credit for the work that they already knew about.


Even if a home is purchased as-is, inspections should be performed. You want to know what as-is, is!
Looking to buy?
Look below:

Interest Rates are low! A good time to refi or buy!

Time to buy!

Wow! I am amazed at the Fed cutting interest rates yet again! In the last nine days the central bank has cut the rate at which they lend money to banks by 1.25%. This means that they are trying to increase borrowing and stimulate the lagging economy.


If a qualified buyer is looking to buy, now seems to be a great time. Why? There are three main reasons:


1. It will cost you less to borrow money at this time (1/30/2008) than it would have just 6 months ago. Consider a payment on a 200,000 loan at 5.5% vs. a 6.5% loan. At 5.5% the payment is $1135 per month vs. $1264 per month (these payments don't include taxes or insurance.)


2.Prices have come down from their historic highs, so first time buyers will find it is an attractive time to jump in the market.

3. With Increased Inventory comes a greater selection. Buyers will have more to choose from.
Additionally, you have greater negotiating power when sellers are competing with other listings for sale.

If you are looking for a new home feel free to use this link to search our MLS:

Or feel free to give me a call at 707-616-3456
email works too! andy@azalearealty.com

Realtors should always be looking for Buyers

Now you might say to yourself, "Well, Duh!" Of course a Realtor should always be looking for buyers, how else are they going to make a living? While the above is true, I'm speaking about looking for your buyers! In Humboldt County, there are 3 days of the week that you'll find Humboldt County Realtors on Tour (Or Realtor Caravan as they call it in other parts of California).
On Tuesday we hold tour in the South Bay, switching back and forth from North to South. The dividing line is Harris Street.
On Thursdays it's North Bay, Covering listings from Big Lagoon to Bayside/Indianola Cutoff.
On Fridays it's the Fortuna Tour, covering Loleta, Ferndale, Fern Bridge, Fortuna, Hydesville, Rio Dell and all points in between.
If you were to ask me, I'd say the most enjoyable tour is the Fortuna Tour. they serve a full breakfast and it is good!
But forget about the food, My point is that any Buyer's Agent worth his/her salt is attending these tours on a regular basis. There are a number of reasons why:

1. To be familiar with the listings that are out there! When you are working with a buyer and they ask you about a particular house, it's always good to be knowledgable about the house. If you've had "boots on the ground" you are in a position of having superior knowledge and information. We all know that the pictures online are (usually) the best ones. It might be the case that the agent used pictures that made the listing look better than it actually does. The reverse could be true as well. Maybe the listing agent only took one picture and it makes the house look like bad. Having visited the house, you might tell your buyer that it's a house they should look at. I alway walk into a house and ask myself, "What buyer do I have for this house?"

2. Going on tour gives the Realtor a sense of what a particular house is worth. It might be tomorrow that someone wants you to list their home and if you've seen one of the comparable homes, you get a better sense of the comparable value and how you can adjust the price on the comparable home you are using for a market analysis.

3. Invariably, on tour you have many of the same faces. These are Realtors, like me, that attend regularly. We want to keep abreast of Market Conditions. In many cases, we have developed a relationship, which can mean a world of difference when ou are submitting an offer. Assume for a minute that you have buyers that have submitted an offer with an agent you have developed a relationship with. This offer has the same terms as an offer submitted by an agent that the listing agent does not know. It's my belief that the listing agent will always push a little harder for someone they know than someone they don't know. Every little bit counts.

So these are some of the reasons why as a buyer, you should insist an agent who's aware of market conditions. What's available and what works for you!
For any information about any Humboldt County Property, call me at 707-616-3456 or email: andy@azalearealty.com
Feel free to browse Humboldt County Listings by clicking on the links below.

Buying a Home in Humboldt County

Whether you are a first time home buyer or a seasoned Real Estate investor, buying a home can be a stressful event. In 2008, one of the things you may be wondering is should I buy a house now? The answer is YES!

Buying in Humboldt County, California

1. Prices are falling.

On the whole prices are coming down from the previous years. Because homes are staying on the market longer and there is less competition to buy homes, Sellers must reduce their prices. also, gone are the days of buying a Home "AS-IS". Sellers are willing to negotiate on repairs.

2. Interest rates are low.

As of this posting (1/10/2008) Interest Rates for Buyers with good credit and full documentation on loans are BELOW 6%. The key is to have good credit and good income.

When money is cheap, it's a good time to buy!

3. Inventory is high.

Although, inventory isn't as high as it was a few months ago, it is still very high, so buyers have more homes to choose from. As prices fall, that house you want that was just out of your price range is liable to fall into your lap. but don't expect miracles, it's rare to find a house that will fall $100,000 in price, unless you're looking at high end real estate.

4. Fewer Buyers.

Fewer Buyers equals more competition to sell a home. These are favorable buying conditons that lead to...

5. Sellers that are willing to negotiate.

When there is more competion to sell homes, Sellers that are motivated will work with a Buyer, from the time the initial contract is signed to negotiation of repairs that are discovered during your inspection time frame (17 days, more to come on this in a later posting).

6. When the Investors are out that means its a good time to buy.

Blood is in the water, so to speak, and the Savvy buyers are coming out of the woodwork. These are experienced investors who were waiting around for these types of conditions. Investors are looking mainly at Houses priced in the 200K range. They may not be complete dumps

How many times have you heard "buy low and sell high"? That's what these investors are looking to do.

If you have any questions about the buying process call me at 707-616-3456.

Of course email works too: andy@azalearealty.com

If you'd like to browse the MLS for homes for sale click this link

Humboldt County Real Estate - Foreclosures and Short sales

FORECLOSURES IN HUMBOLDT

I get asked quite a bit about Foreclosures in Humboldt. The perception is that these properties are available for a "song". The reality is this: they can be quite a mess! The former owners can be quite messy or destructive (wouldn't you be?)
At times you can walk into a foreclosure and wonder, "How can someone live like this?" A distressed sale or a foreclosure is when a savvy investor can make quite a bit of money.

There are a number of ways to profit on distressed properties, the first way is the short sale.

While not a foreclosure, the short sale is when a seller (with the lender's approval) sells a home for less than is owed on the property. Commonly the Lender will agree because the Foreclosure process can be very long and costly. The process of the short sale is hampered properties that have a second deed of trust on them. The entity that holds the second deed of trust is second in line to get paid, so because they will commonly be left holding the bag, they will not agree to a short sale, thus allowing the property to go to a Trustee's Sale.

The next way is the trustee's sale
The holder of the note in foreclosure will auction off the note to the highest bidder. At this point a second deed of trust holder has an option, let the second deed go unpaid or buyout the first deed. This is the reason that the second trust deed always has a higher interest rate, more risk = higher reward.
To cash in on the foreclosure at this point takes a ready source of cash because the holder of the first trust deed wants cash or cashier's check. These sales are noticed in the Legal Section of many Newspapers as is the total amount due.

If the sale nets less than the total amount due between the First Trust Deed and the Second Trust Deed, the first is paid off and the second is wiped out. Not all encumbrances are removed from the property, there may be a mechanic's lien or a tax lien that is still on the property. You can find out if such encumbrances exist at the county recorders office. You'll need the Assessor's Parcel Number (APN) and you can perform a search to see if the seller has more recorded encumbrances.

If you do purchase a foreclosure at this stage, one major concern could be whether it is occupied. The former owner or a tenant could be living in the home. In either case if you want them out, contact an eviction service. These people could potentially stay for a long time if you aren't proactive in removing them.

If you do purchase a foreclosure at a trustee's sale, BEWARE! Presumably, you won't have any inspections, so be aware that adverse conditions could possibly exist either with the structure or associated systems such as a septic tank or water supply.

The Last Way to buy a foreclosure is through a broker. If the trustee's sale doesn't net a buyer, it becomes bank-owned or real estate owned (REO). These foreclosure properties are then marketed through a Broker . It is not necessary to have the Bank's broker represent you in a transaction, you can use your own Realtor. The one thing to be mindful of is this: Inspections are shortened by the Bank, usually 5 days. The best bet is to arrange inspections prior to an accepted offer.

Another concern is this: the bank will not be willing to negotiate the price down, so be ready to walk away from the transaction if they don't negotiate a major issue that is uncovered during your inspections. These listings are usually priced below market competition. Why? The Banks are not in the business to own property, they lend money, so it is possible to buy a home below market value and at an outstanding deal!

If you have a question about foreclosures or how you can profit from them, feel free to call me at 707-616-3456 or email @ andy@azalearealty.com

FOR A LINK TO FORECLOSURES CLICK HERE: