My refinance, chapter five hundred something

Bank of America actually phoned me about my refinance today! They are just waiting for a questionnaire to be filled out by my home owners association management company. That's all, they say. I asked if we could proceed to closing once they received the document.

No.

Then, it gets assigned to a processor. Then, it takes three to five weeks more.

But at least they called me this time...

More on multiple offers

The house at the top left is 1913 Rose in Burbank. It is a 2+2+den, 1300 sf., and listed last week at $529,000. It sold early this week after receiving 5 offers.

The house at the bottom left is 936 Tufts in the hillside neighborhood of Burbank. It's a 3+2, 1515 sf and listed last week for $595,000. Last I heard, it has 11 offers on it. Yikes. Lotsa buyers out there.

Buzzwords for the week: multiple offers and deliberate underpricing

They're back. Just when we thought we'd never have to deal with multiple offers again. In the areas I serve, including Burbank, Toluca Lake and Studio City, homes are selling in days again with many offers.

Of course, it doesn't help that certain Realtors are underpricing homes in order to get a bidding war going. How does this serve the buyers and sellers? It doesn't, but the Realtor saves time and money on marketing.

And you'd think that full price, all cash offers would be enough. But no. A client of mine just lost a condo in a bidding war situation like that.

I'm glad to see the market come back, but not like this.

Independent (of me) report that home sales are on the rise

Here's an AP story stating that sales of existing homes rose 5.1% last month. That's good news, and I'm happy to see that I'm not imagining things. I've been saying that we've been at the bottom now for awhile, and I've been seeing buyers coming out in droves. Finally, the mainstream press is seeing this, too.

Here are a couple of quotes: "If the economy stabilizes around midyear and financial conditions improve, then sales will probably begin to slowly increase as buyers step back into the market," wrote JPMorgan Chase analyst Abiel Reinhart. "An important reason for this is that affordability has already increased sharply, both as a result of lower prices and lower mortgage rates."
And: "However, in a positive sign, seller asking prices are starting to rise in places like San Diego and Orange County, Calif., where declines have been severe, said Lawrence Yun, chief economist for the Realtors. That could be an early indication that prices are stabilizing in the most distressed parts of the country."

Rates are down again -- yes, even FHA rates

Conforming rates are down again. Even FHA loans can be had for under 5%! That's about three-quarters of a point lower than they were last month. Thanks to that, I expect that more buyers will be looking in the next few weeks and we can expect more multiple offer situations.

Have we hit bottom?

Here's an article from today's L.A. Times stating that local home sales prices have held steady since January. If you read this blog, you'll note that my boots-on-the-ground post in February said we are pretty much at the bottom for local prices. This is due to favorable lending conditions including low interest rates and the $8000 tax credit for first time buyers.

Caveat: if this year is like other years, sales will slow down in late July and stay slow through the end of the year. If that happens, we may see prices drop a little bit more.

If you are an FHA buyer and you are making an offer on a foreclosed property, the lender/owner of that property may never even see your offer.

Facts to know:

-As we all know, the government guarantees many loans through FHA.

-FHA puts some sensible restrictions, usually having to do with health and safety, on properties that it will back. For condo projects, restrictions have to do with HOA finances and ratio of renters to owners. Conventional lenders have the same restrictions on townhomes/condos.

-Right now, most of the buyer groups I am working with need to "go" FHA.

- There are "mega-lister" brokers out there who have hundreds of foreclosure listings.

-I had a great experience recently with a Realtor who has a normal amount of listings, some of which are foreclosures.

- Biggest fact: If you are an FHA buyer and you are making an offer on a foreclosed property, the lender/owner of that property may never even see your offer. Here's what happened to my clients this week in the form of an email string.

First, here's my email with names changed, of course: [Mega-Lister Realtor], on Sunday my clients wrote and we submitted an offer to you on [unit in large condo building in Burbank]. I had contacted your office on Friday and was told the property was available. My clients are Mr. and Mrs. _____. The offer was close to asking and was accompanied by financial information including a pre-approval. It is an FHA offer.

I phoned your office for status on Monday and spoke to [unlicensed assistant]. She told me another offer had already been submitted and that the townhouse complex was not FHA approved. She told me this was because there were too many renters in the complex. She also said that she could not submit the offer, because your company would get "in trouble" with the lender/seller for submitting an FHA offer on an un-approved complex... The mls says nothing about accepting or not accepting FHA offers.

I am very, very familiar with this complex and have been for years. It is extremely well maintained and I believe the HOA has very healthy reserves. I also find it hard to believe that it has less than 51% owner occupancy. I will check that in the next day with the HOA management company. I have also checked FHA's website, and the complex is not listed as approved or not approved. We've all been very educated about FHA requirements lately, and I know of no reason this unit/complex could not pass those.

I know this new market is a tough one for us all. But could you please guarantee and confirm that our offer has been submitted to the seller? It is a good offer and we need to know that the seller has seen it and responded.

Please phone me or email me with any questions or concerns. Thanks very much!

And here's the email that I got back from the mega-lister Realtor: I have reviewed the property prior to marketing and my recommendation is not to accept FHA offers based on the fact that it is not approved on huds website and the HOA verbally told us that there are only 45% owner occupied units. We don't have a condo cert yet however there is no sense in any of us getting into a deal that cannot be closed... I hope you understand.

Now, it probably sounds like I just have a case of sour grapes because my clients did not get the townhome. Well, okay. But, Realtors have a legal obligation to present all offers to their sellers. And Realtors should not be making the decision about what reasonable offers their clients should see. And Realtors also have an obligation to post on an mls listing if something is not eligible for FHA funding. And it seems to me that lenders who own bad assets and are getting bailed out with tax payer funds should be looking at everything.

Words of the week: FHA, tax credit

First-time buyers are really out in force. Lines of people have been snaking through the open houses that I've attended, piles of broker cards are at every listing, and properties are going in multiple offers.

I think this is due to three things: the availability of FHA loans for first-time buyers, the low interest rates, and the $8000 tax credit offered to first-time buyers. Plus, I think people are feeling optimistic again. Could the worst be over?

The one thing the local r.e. market needs now is more inventory.

Judy's re-fi, chapter 562

Today, the nice folks at Bank of America told me our re-fi probably wouldn't be completed for 75 to 90 days. The last time I spoke with them, they said it would be 60 to 90 days, but the interest rate is locked at 4.375%. The excuse is the same: high volume of business.

I can wait. However, if BofA can't expedite a simple, low-balance re-finance, how are they going to handle mortgage work-outs and the new plan to lower interest rates to help keep people in their homes? Why can't this be just like the credit card companies, where you call your credit card company (say, Capital One) and tell them you've been offered a lower rate on your Visa through another company than they are offering you and then they offer to knock two points off your existing card interest rate?

A voice from the Inland Empire

As you may know, I often comment on the L.A. Times' real estate blog, LA Land. Over the years, I've actually developed relationships with some of the other posters. "Inland Empire," one of the regulars, responded to my recent posts stating that the local market seemed to be accelerating again. Here's the post:

"Hi Judy,I don't go to the Times real estate blog much any more but when I do its nice to see a sane voice there (yours). I can believe you when you say things are going fairly fast in your neck of the woods - we probably made offers on 12 houses ourselves this past year only to get outbid. (Riverside Co.)We have a house in North San Bernardino. Its a custom home in a so-called exclusive area (on a hillside, city lights view, lots of custom homes and rich folk with trust funds). We couldn't sell it so we will be renting it out for the duration. We went there today and I could not believe how few for sale signs and foreclosure notices there were in comparison to recent months. Houses that had been on the market for ages are now occupied and show signs of people fixing them up. This was in the streets near our house - maybe a couple of square miles of area. Things are perfect but they are not the pit of gloom lots seem to think we are in.I think the blog [LA Land] is full of people who are either terribly afraid of life in general, fear the future or just plain idiotic. I am "Inland Empire" on the blog."

I love fan mail, Inland Empire!

REOs are not that bad! Really!

I just closed an REO, which is a property that has gone through the foreclosure process and is now owned by the bank. It was much easier than I expected. The house (pictured) at 1101 N. Catalina in Burbank, was owed by Wells Fargo. It listed for $500,000 and my buyers, knowing that there were other offers, came in at $501,000 -- just as the bank accepted another offer. During that escrow, we kept checking back with the listing agent re the status. Sure enough, it fell out of escrow at the last minute and the bank accepted our offer. Escrow was a little bit slow to open. The seller/bank agreed to credit my buyers $2,000 towards repairs and had already done all pest work. Great!-- we were not expecting that. There was a last-minute glitch regarding the home warranty company, but we still closed escrow right at 30 days. Of course, it helped to have very heads-up, proactive buyers and a great lender (thanks, Dana).

And further...

The post below talks about all the buyers who seemed to be out last weekend. It appears they were buying, not just looking: The house above is 1110 N. Avon in Magnolia Park. It's a 3+2, 1309 sf, 6750 sf lot with pool, and needed a lot of updating (the kitchen, especially). It listed last Friday for $439,000. It is now in escrow, less than 7 days later, for $490,000. Yes, it went in multiple offers.

FHA buyers out in force

There appear to be lots and lots of first-time buyers out looking for properties now in L.A. and the San Fernando Valley. I attribute that to the ability of buyers to obtain FHA loans -- only 3.5% down! And it can all be a gift!, low interest rates, and the new $8,000 tax credit. As we all know, prices have fallen, too.

Problem: for single family homes, inventory is very short. Once again, half-way decent properties are listing and selling in a few days. No, I haven't seen a price spike, but if everything starts selling with multiple offers, that will follow.

There is a better supply of condos, although not all of them can be approved for an FHA loan, which will be the subject of another post. Many of the condos I've seen lately are new, too, and the developers are still attempting to get top dollar for them. Or they're really old, and need mondo updating. Stay tuned for news about our ever-changing market.