Let me introduce you to two good friends and somewhat near neighbors – Ross and Mimi. I met this wonderful couple a few years ago when I began taking morning walks up a hill that led me right by their house. On many occasions we would pass each other as one of us was either heading up or down the hill and we would often stop and catch up on some of the latest news. Over time Ross discussed the plan to sell his mother’s house and I recently had the privilege of helping with that process. Even though the sale of the home is complete, we still see each other most mornings either coming or going. It is working with people like this that makes me happy to be selling real estate in Placerville. Ross also has a talent with wood working and you will find him most days working in his garage on some new wood project. I recently asked Ross to restore our picnic bench at our Century 21 Select Real Estate office in Placerville and you can see by the photo below that he did a great job! Thanks Ross! Best wishes to you and Mimi and I guess I will see you on the trail.
Monthly Archives: June 2011
The El Dorado County Fair started today, Thursday – June 16 and will continue through Sunday June 19. Judging from today’s crowds it looks to be a BIG success! While at the Fair I met a fine gentlemen, Richard Barb who is running for El Dorado County Supervisor as his booth was right across from our booth and I snapped this photo below. Best wishes to you Richard!!
One of our greatest American Holiday’s is coming up and I want to provide you with several July 4th Firework celebrations in Placerville, Pollock Pines, Cameron Park, El Dorado Hills, Folsom, and the greater Sacramento Area. If you know of others please let us know and we’ll try to get the word out. Enjoy the celebration!! Please click on this link for a full description of the various 4th of July Celebrations
A little piece of the American Old West still lives on in Placerville, California. Today marked the 62 anniversary of the Highway 50 Association Wagon Train event where a group of volunteers made a 7 day trek on horseback and wagons departing from Meyers, California and finished up their trip right down Main Street in Placerville. It was a beautiful day full of old fashioned fun and for those who came to witness the wagon train and parade they were also treated to a good old western shoot out! Be sure not to miss this next year and mark your calendar. You can also click on this link for Fun Things to do in June – compliments of the Placerville Real Estate Guy.
This was a perfect day for the Cameron Park Foothill Cruiser Classic Car Show. The sun was shining, the cars sparkled, the crowds gathered and the owners proudly showed off their personal pride and joy! What a great tribute to those who so carefully preserve these beautiful cars which are not just a car but a little piece of American History. Hats off to you car owners who willingly shared what is to you a special part of your own lives and gave the rest of us a chance to enjoy these beauties as well!!
Summer is almost upon us and there are plenty of fun things to do in and around Placerville, El Dorado County and the surrounding Northern California Counties. Starting with this weekend the calendar is jammed packed with the Colusa County Fair, the Western State Horse Expo at the Cal Expo in Sacramento, the Valhalla Renaissance Faire at Camp Richardson in Lake Tahoe, the 13th annual Cameron Park Cruisers Car Show and the 62nd annual Highway 50 Wagon Train event that begins in Meyers, California and concludes its 7 day trek right down Placerville’s Main Street and a final BBQ at the County Fair Shopping Center right across the street from Century 21 Select Real Estate on Placerville Drive . For more information click on this link for a detailed list of events – June Events Flyer
In my initial 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 REO 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.
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.
These types of sales are around whether the Real Estate market is facing a housing boom, bust, or even if it is stable. These REO sales really come into the forefront and can dominate even a local market when the overall US economy faces a significant lengthy headwind, a stock market crash or loss, a long and drawn out inflationary trend, high unemployment, or even a sustained lack of customer confidence. Unfortunately the United States economy has faced and continues to face most if not all of these problems since the start of the housing bubble burst of 2006. There are a number of forecasters who have varied opinions about when the US will rebound and I have my own opinion but that is not the purpose of this article. I just want to point out that even though REO sales are a part of any market, the quantity of REO inventory has never been as high as it has been over the last 5 years. This sustained category known as REO or Foreclosed Properties continues to be a significant factor in most all markets and in some counties it pretty much dominates their local market.
The risk that comes into play when buying an REO is that the seller (often the bank, the government or a GSE) is exempt from a number of state mandated disclosures that a traditional seller is required to complete. The buyer comes into the purchase without being able to obtain any history about the property that a traditional seller is either required or willing to provide. This lack of disclosure forces the buyer to be extra diligent and careful in their inspection and discovery period that a typical purchase allows. Some of the other risks can involve such things as vandalism during an escrow (the purchase process), As-Is clauses, possible or potential title issues, a lack of adequate inspection periods, passive contingency removal verses active contingency removal, appraisal problems and even more challenges that are unique to each purchase. Having a good local Realtor or Real Estate agent will go a long way in helping to guide you through some of the risks associated with such a purchase.
Some of the other things to consider when buying an REO are to evaluate the “true” costs of repair. Usually its carpet and paint and other flooring that most people budget for and then once they actually get into the property after closing they discover that the roof, the water heater, or the heater needs replacement. These costs can really ad up and it can make that “deal” seem more like a money pit. If you haven’t watched the movie starring Tom Hanks called Money Pit then perhaps you should. Most people will take all of these costs into consideration when buying an REO, but I feel that a good reminder and warning to the public is prudent.
One final warning worth mentioning before I get to the reward is the “possible” local ordinances or permit issues that can come into play if you don’t do your proper diligent investigation. You want to make sure there are no pending notices or code violations from the county or city that will catch you by surprise after you close escrow. Once you close escrow then those notices to correct will be your responsibility and you probably will have no recourse against the seller since they are typically exempt from disclosing these types of defects.
The reward in purchasing an REO usually comes in the form of getting a deal or in some peoples mind a “steal”. This can be true in some cases and as long as you give serious consideration and evaluation into your decision then you should be fine. The cost savings between an “Equity Sale” and an REO should be greater than 10% of Fair Market Value. Put simply, if a traditional home sold for 200,000 then an REO in the same general neighborhood with the same square footage, age, lot size etc. should have a price point of 180,000 or less. The more repairs needed then the more that the price point should be reduced. The “asset manager” representing the seller along with the listing agent usually base their pricing on all of these factors as well as local market conditions so the “deal” is typically already built into the list price. There may still be room for negotiating but unless the property has significant defects or has been on the market for an extended period then usually the variance is insignificant.
This concludes my series on “Understanding the Difference between an Equity Sale, a Short Sale or an REO” and I hope the information has been beneficial. I can’t stress enough that it is in your best interests to have a professional Realtor representing your interests whether you are buying or selling. As always should you have additional questions or concerns then feel free to contact me at firstname.lastname@example.org 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