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Monthly Archives: May 2011

Understanding the Difference between an Equity Sale, a Short Sale or an REO (Part II)

In my previous article (Part I) I tried to define the meaning of each of these types of sales in a brief and succinct manner in order to lay the groundwork for the contents of this article which will focus primarily on the Equity Sale. Each type of sale offers its own unique challenges and opportunities or put another way each offers their own risks and rewards. Having a knowledgeable and competent Real Estate agent involved on your behalf will help you navigate those risks and rewards as well as move things along in a smooth and timely manner.

On the surface the Equity Sale by virtue of its lack of basic complications that the other types of sales offer is usually considered the best option from the standpoint of ease of communication between all parties. A typical purchase involves a purchase agreement submitted by the buyer to the seller and typically within 3 days the seller responds with an acceptance, a rejection or a counter offer. It is the acceptance part of the process that is one of the biggest rewards to purchasing an Equity Sale as the response is often much quicker than the other types of sales. This can be a rather large benefit as some buyers really miss out on some great opportunities by tying themselves up with an offer to purchase a Short Sale or REO property that may take weeks or even months to get a response. I don’t want to sound too negative against Short Sales and REO’s, but sometimes timing is everything. A good Real Estate agent will point out the risks and often hearing it from a professional will help you make an informed decision that is in your best interests. The other benefit to an Equity Sale is the State mandated Disclosure requirements for a “traditional” seller to provide the buyer with material facts that may otherwise go unnoticed. The typical contract will permit the buyer a period of time to investigate the property to their satisfaction but having the sellers disclosures does provide a good foundation for what the buyer needs to look for in their investigations and inspections. Some Equity Sales are exempt from State mandated Disclosures and your Real Estate agent will be able to explain those unique situations.

 One of the negatives of an Equity Sale that should be pointed out is there is often a higher value expectation by the seller and typically there is less negotiation room on the price and other terms. Usually the difference in price between an Equity Sale and the other two types of sales is somewhere between 5 to 10% however, this is not always the case. This difference will vary depending on the market you are in and a professional Real Estate agent is a good resource to ensure that you are paying fair market value.

I have only touched on the basics of an Equity Sale and there are a number of other factors to consider before you make the decision to purchase that piece of the American Dream. In my next article I will discuss some of the risks and rewards associated with purchasing a Short Sale. I hope this information has been of value to you.

As always should you have additional questions or concerns then feel free to contact me at mike.southwick@c21selectgroup.com and I will be happy to assist you. I am always available for a consultation on real estate related matters and should you need my services to buy or sell real estate then please contact me via e-mail or call me at 530-295-2911.

Warmest regards;

Mike Southwick
DRE License# – 01019265
Branch Manager for Century 21 Select Real Estate
Placerville and Pollock Pines
 
Article written by Mike Southwick
Use only by permission
 
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Posted by on May 31, 2011 in Real Estate News

 

Another Satisfied Homebuyer

This is Mike and Piper who recently took advantage of historically low interest rates and historically low home prices and purchased their first home together. They purchased with the FHA minimum down payment of 3.5% and the owner paid for most all of their closing costs which meant that their out of pocket costs to purchase did not exceed $6000. Their fixed rate monthly payment of approximately $1200 is less than most people pay for rent! The home that they bought was a 4 bedroom 2 bathroom home on nearly ½ acre of land located in Placerville. I thoroughly enjoyed working with this couple and throughout their entire home buying process we became like family. I just loved their enthusiasm and appreciated their cooperation. I was glad to participate with them in buying their little piece of the American Dream! Congratulations Mike and Piper!!!

If you or someone you know is looking to purchase or sell Real Estate then contact me right away. I can be reached via e-mail mike.southwick@c21selectgroup.com or 530-295-2911.

 

El Dorado County Veterans Monument

This Monday is Memorial Day and there will be a tribute held at the El Dorado County Veterans Monument to honor the sacrifices and services of the men and women of the Armed Forces of the United States of America. The tribute will take place on location (360 Fair Lane Placerville, CA) at 11:00 am. This will be the 6th annual event and a program is planned. As you go through this weekend and especially on Monday, please remember those who sacrificed their lives for the cause of Freedom. On Monday don’t forget to fly the American flag in their honor. Below are a few photos of the El Dorado County Veterans Monument as well as a few of my personal photos of other monuments in Washington DC, Arlington Cemetery, and the Vietnam Memorial at the California State Capital.

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Understanding the Difference between an Equity Sale, a Short Sale or an REO (Part I)

The home buying process can be a challenge for a first time home buyer or even a veteran home buyer in trying to understand all of the ins and outs of that come with starting a search for a home. It used to be much simpler and the rules and terms were a little more clearly defined. It doesn’t take long for the average home buyer to realize that they need a Real Estate professional to navigate through the sea of “potential” uncertainty that comes with trying to buy a piece of the American dream. It is because of this that I have set out on a quest to help assist today’s homebuyer and home seller in having the necessary information to better understand the process of buying a home.

This article is the first in a series that will help you the consumer understand some of the risks and rewards in trying to find the home of your dreams. There can be a great deal of misinformation out there and even some who attempt to manipulate the data in order to keep you confused and perhaps coerced into purchasing something that really doesn’t suit your needs – or worse yet  it may just be a bad purchase. The information provided in this article and those that follow are intended to provide you with enough facts, figures and data to better equip you for your next home purchase.

Let’s first define our terms and then in some future articles we can examine some of the risks and rewards found in all three of these types of sales:

An Equity Sale is now being used as a way to define a traditional real estate sale that involves a seller who has equity in their home. Simply put the seller owes less than what the home is worth and in the end after everything is settled, the seller will net positive cash.

A Short Sale is defined as a real estate sale in which the seller owes more than what the home is worth and requires their lien holder (the bank or mortgage institution/investor) to forgive a portion of the debt/mortgage as well as pay for other expenses and fees associated with the sale of the home. The term “Short Sale” is probably a misnomer since the actual process of purchasing and closing escrow on a Short Sale is anything but short. This type of sale is twofold in that it first requires the seller to accept the offer and then the lien holder to approve the loss. There are a number of hoops to go through for the seller and even a few for the buyer so patience is needed with these types of sales.

An REO Sale stands for Real Estate Owned and is most often understood to be a bank owned home, or a home owned by the government, such as a HUD home (FHA) or a GSE (Government Sponsored Enterprise) like Freddie Mac or Fannie Mae. The most frequently used term for this type of sale is a “foreclosure” as the lien holder has acquired the property through foreclosure or the result of a Trustee Sale. These types of sales often involve a third party “asset manager” that services and works toward liquidating the asset/property on behalf of the public or private owner. Typically these types of sales are often significantly discounted to allow them to be sold quickly (30 days or less) and in their present as-is condition.

You will find that most Real Estate sales in today’s market fall into one of these three categories and I hope I have helped you to at least understand some of the basic terminology surrounding these types of sales. In my next article I hope to address some of the risks and rewards that you may experience in either of these real estate classifications. In the event that you have additional questions then feel free to contact me at mike.southwick@c21selectgroup.com and I will be happy to assist you. I am always available for a consultation on real estate related matters and should you need my services to buy or sell real estate then please contact me via e-mail or I can be reached by phone at 530-295-2911.

Warmest regards;

Mike Southwick
DRE License# – 01019265
Branch Manager for Century 21 Select Real Estate
Placerville and Pollock Pines
 
Article written by Mike Southwick
Use only by permission
 
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Posted by on May 25, 2011 in Real Estate News

 

Get the Real Estate Facts Right Here

I suppose the only way to combat false information is to spread the truth. The truth is simply this – the California Real Estate market is improving! I know I may sound repetitive as I have said this before or I may even sound biased, but I find it totally necessary to share this message since the “general news media” is behind the curve on this one. I cannot make predictions of the future but I can report what the current trends are showing and they are not showing signs of a “double dip” drop in values.

It is completely true that nationwide sales of existing homes took a slight dip in the month of April when compared to the previous month of March. In addition if you compare the sales volume to this same time last year you will see a slight decline in sales (year over year) and about a 5% drop in value compared to this same time last year. It is important however to factor in the “tax credit” that the government issued last year which spurred a rather significant push in home sales in 2010. The impact of this tax credit was rather significant and it spurred a rally of home sales that was absent in the first quarter of this year. That tax credit is no longer available and yet we only had a slight dip (.8%) in sales nationwide when you compare March and April of this year. The overall year to year comparison without the influence of the tax credit would probably be so insignificant that it would hardly be worth mentioning and certainly not newsworthy. 

The report released by the California Association of Realtors showed a 2.9% decline in existing home sales when compared month over month (March to April). The overall year to year comparison showed a 5% increase in sales. The report went on to show a 2.5% increase in median home pricing on a month to month comparison and a 4.4% decline year over year (293,570).

In looking at both the nationwide figures and the statewide figures there is no sign of a dramatic downward shift or as some like to call a “double dip” of the real estate market. Neither the month to month comparison nor the year over year comparison show signs of significant decline in home sales. On the contrary, I believe we are witnessing a market that has found itself and is moving toward stabilization and a healthy return on investment. The most obvious sign of this is that nearly one quarter of the Real Estate sales in April were purchased by investors who may well believe that home prices have reached the bottom and interest rates will soon start to increase.

As we move toward the summer and fall we should see a continued decline of “distressed” properties although some California counties will have more struggles than others. Currently the bank owned properties (REO’s) account for about 28% of the California sales and short sales account for about 19% of the sales according to the California Association of Realtors. One year ago the REO’s and short sales accounted for over 50% of the overall sales. 

It is the non-distressed properties that are beginning to pick up steam as those sales increased during the month of April. The wise home buyer is weighing out the cost of repairs and the potential risks in purchasing bank owned properties. These risks and other factors are causing non-distressed properties to gain momentum. The first time home buyers which make up approximately 36% of recent sales are currently looking to purchase in the 100,000 to 250,000 price range and homes in those price ranges are seeing multiple offers.

Existing home sales are expected to trend upward toward the end of 2011 as all purchasing groups (first time buyers, move up buyers and investors) are preparing for the spring/summer home buying season which is expected to be pretty volatile due to bargain prices and the fear of an increase in interest rates.

The general rule of supply and demand will dictate the overall improvement of the Real Estate market and each local market will have its own influences on their recovery. I hope this helps bring some truth and clarity to what some “negative media” outlets are making out to be false and confusing.

 

Best regards;

Mike Southwick
California DRE# 01019265
Branch Manager – Century 21 Select Real Estate
Placerville and Pollock Pines
 
Article written by Mike Southwick
Use by permission only
 
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Posted by on May 24, 2011 in Real Estate News

 

Placerville (“Hangtown”) Car Show – May 22, 2011

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These are pictures from today’s Placerville Car Show that took place on Main Street in Downtown Placerville. There were lot’s of cars and lot’s of people – a good time for all!!

 

Placerville (“Hangtown”) Car Show

 

The Hangtown Car Show is an event that is presented by the Placerville Lion’s Club and in conjunction with the Placerville Downtown Association. You absolutely must mark your calendar for this huge collection of pre-1972 cars parked on the curbs along Historic Main Street in downtown Placerville. The show will be Sunday (May 22,2011). It is free for spectators and will go from 9 am through 3 pm. This event is one of the highlights for Placerville and they are expecting up to 200 cars in all. Don’t forget to visit the various shops and restaurants located on Historic Main Street in Placerville. For more information for entrants or spectators please visit the Placerville Downtown Associations web site which is also listed below:

 Placerville (“Hangtown”) Car Show