Inflation!? Oh nooooo...

Many national economic experts are predicting a rise in inflation soon. As one who lived through the last double-digit inflationary period in this country, I pray this doesn't happen. Here's an excellent, simple explanation from eHow.com on how inflation may affect real estate prices and the housing market. I hope you find it as informative, and somewhat calming, as I did.

Good news/bad news/good news for the end of the week

As we come to the end of the first week in July, here's some good news: interest rates are down again. The bad news is that there's not much to buy out there, unless you're in the market for a new condo. But the final good news is that I've seen a few foreclosures list this week. Not that it's good that somebody got foreclosed, but that the foreclosed property is finally hitting the market. Stay tuned...

Mandatory buyer loan approval with SELLER'S lender?

If you’re in the market for a new home, you’ve probably already been pre-qualified or pre-approved for a home loan with a lender of your choice. However, many sellers and listing agents are requiring buyers to pre-approve with the listing agent’s lender of choice as a condition of even reviewing a purchase offer.

The pros of this approach: The seller and listing agent receive more seemingly "trustworthy" information since it is coming from a lender that they have presumably worked with before. However, the cons include the following:

-In the current economic climate with layoffs still occurring, there are no guarantees that a loan will fund until it actual does so, regardless of buyer qualifications.

-Getting a purchase loan is a contingency which must be met in a certain number of days after offer acceptance anyway;

-This is a time-consuming burden to sincere, already-approved potential buyers, and in multiple offer situations, not all offers will be considered anyway;

-A potential buyer may have to share confidential financial data with several institutions over the course of their search. Privacy, anyone?

Solution: 1. If a listing agent wants to know if a particular buyer is qualified, the listing agent needs to do the legwork by calling the buyer’s lender and asking for particulars. The listing agent can then advise their seller client accordingly. That’s what we’re paid for. 2. The listing agent & seller can ask the buyer to "double apply" during the loan contingency period if extra certainty is needed.

Here are two emails between me and a listing agent about just such a situation. Names and details changed, of course. Background: my buyers were pre-approved for a loan, have plenty of provable cash, good credit scores, stable employment, were putting down 25%, and made an offer that was $34,000 over the list price. Offers had to be in 72 hours after the property listed.

My email: "[Listing agent], as you know, my clients have a very strong offer in on the [address] property. I'd like to ask you to reconsider the requirement that my clients get pre-qualified through [lender name] at [lending institution].

[Mr. Buyer and Mrs. Buyer] are continuing to go through all sorts of gyrations in an attempt to meet [seller's specific lender] requirements although they've had an extremely short time period to do so. This includes attempting to get their 2008 taxes filed today. They had been holding off to take advantage of the $8000 first time buyer tax credit that can be applied to 2008 taxes. Now, in 2009, they make too much money now to qualifiy for the credit. So, [listing agent], the way I see it, they are losing $8k in just attempting to get this house.

Also, I am attempting to line up another [seller’s lending institution] to get the letter you need.
The issue appears to be [buyer's 2006 and 2007 income]… Obviously, this is 2-year-old and three-year-old information anyway. The [Mr. & Mrs. Buyer] were barely out of college at the time. Subsequently, [Mr. Buyer’s business has taken off and [Mrs. Buyer] is an accountant at [large company]…

Most importantly, they have already been conditionally approved by [buyer’s lender] at [large lending institution]… one of the biggest home loan lenders in the area. You can call [buyer’s lender] at [phone no.] for any information that you need, and/or I can get a letter from him. You'll recall that you and I had a very successful transaction in February with [same lender] as the buyers' (Mr. & Mrs. [former buyers]) lender -- it was FHA and it closed on time. Thanks for considering this."

Response from listing agent (a nice guy, btw):

"sorry but [seller bank] requires a pre-qualification letter from a [seller bank] loan officer. If things aren’t going well with [seller’s specific lender] you are free to get one from another [seller bank] loan officer. Please try to remember that [seller’s specific lender] is doing what she is supposed to... [seller’s specific lender] is just trying to be thorough and avoid problems down the road."

Outcome: two days into the process, the seller’s lender told us that there was a better offer and we would not get the property anyway. Gosh, wouldn't it have been nice to know that before all this time was wasted? As my buyer said, "There is more drama going on here than in General Hospital."

Nicest house of the week, so far

This is 1251 Graynold in Glendale. Listed by my collegues Laureen Endoso and Doyle Barnes, it's a 3 bed, 1.5 bath, 1692 sq ft on a 6480 sq ft. lot. List price: $679,000. It's really nicely done inside as well. More pictures are on my site at www.JudyGraff.com. For those of you who don't know Glendale, this is in northwest Glendale, above Glenoaks.

Happy 4th!

Have a safe and happy holiday.

Wall Street Journal says home prices have risen in California again

This article appeared last week in the Wall Street Journal. Of course, all markets are local, but I would not be surprised to see big statistical spikes for May and June in the L.A. area.

Thinking of buying a condo downtown? You may want to hold off for awhile.

Here's an excellent guest post from Blogdowntown about the future of the condo/loft market in downtown Los Angeles. The author, Fred Cordova of Colliers International, states that there will be deals to be had there -- but not for another 12 to 24 months.

IMO, the market for downtown L.A. condos and lofts has always been naturally limited because downtown is so family-UNfriendly. But, then, maybe that's wrong. After all, being family-unfriendly has not hurt the real estate market or prices in NYC or San Francisco.

Getting the rug yanked out...

Here's another names-and-details-changed-to-protect-bla-bla story. My buyer clients made an offer last week on a home that had been on the market for a few months. It was listed at $699k and hadn't had any takers. We came in with a very intelligent offer in line with the comparables. It went back and forth in counters for a few days. My buyers came up a little, the sellers came down a very little bit, etc.

Then, yesterday, another buyer got all aggressive with an offer, swooped in, and snatched it out from underneath my buyers. Not for much more, apparently, but for enough more to make a difference.

We're bummed, and I'm gnashing my teeth. And I face the undesirable prospect of encouraging all of my buyers to be way more aggressive with their offers than they are comfortable with.

And the biggest lesson here is for me: just because a house hasn't sold yet doesn't mean the interest in it won't suddenly spike in a crazy white-hot market. Like the one we have now.

30 showings in one day; 21 offers in one weekend. I know, I know; this news is getting old.

This is 5523 Strohm in North Hollywood. It's a 3+1 and is almost 1100 square feet. Yes, it's very cute, and many buyers have also thought so. It listed Friday night for $325,000 and had 21, yes, 21 offers on it by Monday night. Apparently, the sellers had over 30 showings on Sunday alone. Although I don't know what the actual sales price is, I think it's safe to say that it is probably considerably over the list price of $325,000. I'll say it again: we need more housing inventory on the market!!

Real estate gods bring multiple offers back. With a vengence.

Twice in the last week, I've submitted offers on properties that were over the asking price. Yes, each home was "priced to entice" -- listed low in hopes of getting a lot of offers quickly. Unfortunately, this strategy seems to be working all too well.

Each offer was from well-qualified buyers and was definitely in line with the comparable sales. One house was in the $750k range and another was in the $500+ range. And each offer was blown out in a multiple offer situation where the prevailing offer was much higher.

Colleagues tell me about 48 offers on a house on Margate, or 18 offers on this or that one in Reseda, 8 on a West Hollywood condo, etc., etc.

This isn't supposed to be happening. Aren't appraisals tightening up? Aren't buyers sitting on their hands? Well, obviously not. The real estate gods have turned this back in to a sellers' market.

This all may change if a lot of foreclosures come on the market soon. That should produce increased inventory, which will have a downward effect on prices.

It sold for HOW much?

What follows is the remains of a post regarding a recently sold home. The listing agent has demanded that I take down the picture and the address as she believed it maligned her client and the house. In the interest of good business relations and honesty, I have omitted the details and left the remainder of the post.


This is [address and photo of property removed at demand of listing agent]. It just sold. It is a tudor-style 3+2, 1748 square feet, 7000+ sf. lot. It was okay. The kitchen was big but needed a lot of work. It was in average condition. It listed for $545,000 which I thought was a good price for the size/condition.





It just reported sold for $585,000. What? Why? And what happened to the appraisal? I am seriously astonished it sold for this much.

Maybe there will be foreclosures on the market this summer after all

Lender extraordinaire Dana Dukelow sent me the following:
CA’s Foreclosure Moratorium a Sham… We’ve Been Lied To By Our State Government
By Mandelman - Last updated: Monday, June 22, 2009
Well, thanks to one of my loyal and eternally vigilant readers, Mandelman Matters has learned that California’s 90-day moratorium on foreclosures, which had the potential to be almost meaningless… well, as it turns out is actually much less than meaningless… it’s a sham.
Apparently, almost all of the lenders and servicers who were ostensibly not to be allowed to foreclose on homes during the 90-day period made possible by the moratorium on foreclosures passed by the legislature about a week ago, were able to get exemptions to the moratorium and did so BEFORE the foreclosure moratorium bill even passed the legislature! The exempted lenders and servicers don’t have to modify or prove they tried to modify a single mortgage before foreclosing on properties in California. In other words, nothing changed… essentially nothing… nada… not a thing.
Of course, what bothers me about this isn’t that the foreclosure moratorium won’t be effective, or that it won’t accomplish what it was supposed to accomplish… it never had a chance to accomplish much of anything anyway, which is why I chose to make fun of it in my article about how it’s purpose was to allow surfers to spend more time surfing summer breaks.
The point that offends me deeply is that our state government… and by state government I mean you, Arnold, flat out lied to us. And although I’ve come to expect that from many politicians, I don’t expect it from the Viennese weightlifter who is running things in Sacramento.
So, just so we’re all on the same page here…
Our state government announced that the legislature had passed a 90-day moratorium on foreclosures, saying that it would give people time to obtain loan modifications and the like. But, they also knew that something like 90% of all lenders and servicers in California had already applied for and received exemptions to the rule, effectively rendering the moratorium moot.
Are you kidding me? Did you guys really do this? Unbelievable. How dare you… Do you have no sense of what people are contending with out here in reality land. No, it’s all too obvious that you do not. You should be ashamed.
Here’s the link to the firms that are exempt from the California Foreclosure Moratorium:
http://www.corp.ca.gov/FSD/CFP/pdf/ExemptList.pdf

Sunday reading: HGTV's "Real Estate Intervention"

Here's a tv show that I can't wait to watch! It's HGtv's "Real Estate Intervention." Read the Salon article about it here.

Yet one more reason that Burbank rocks: the Mayor is your parking valet!

Gary Bric, Burbank's mayor, is also the owner of Gary Bric's Ramp, a workingman's steakhouse and watering hole by the Hollywood Way/5 Fwy off-ramp. (Does this sound like the outline for a sit-com?) If you don't know the Ramp, you should. The non-descript building and paneled dining room have been offering up pretty terrific steaks, etc. at reasonable prices for a few decades now. And on Friday night, was Bric behind the bar, in the kitchen, or counting receipts? No! He was parking patron's cars! For hours! For free! With a smile and wave! (The parking lot is postage stamp-sized.) No, he was not accepting tips. Somehow, I just can't see Villaraigosa or Bloomberg doing this.

Nicest house of the week, so far

I think it's time to be positive about something (for a change; don't get too used to this), so here's the nicest house I've seen so far this week. It's 5124 Daver in La Crescenta, and features 4 beds and 2 baths in 1600+ square feet. The lot is over 8,000, but some of that is upslope. It's on a pretty cul-de-sac in the hills and is listed at $759,000. It's really beautifully decorated and just showing it lifted my spirits. Seriously.

No more foreclosures for awhile

California has put another three-month moritorium on foreclosures. That means that there won't be bunches of REOs on the market until mid- to late Fall. It also means that there probably will be more short sales (banks: get your act together on this) and inventory will be short this summer. I think.

Median So. Cal. home prices rise slightly

Dataquick is reporting that the median home price in So. Cal. rose slightly last month. Here's the story from the L.A. Times. However, before you go getting all excited: experts and economists say that this is because the higher end properties are actually selling for less, not that prices are actually rising.

Still, doesn't that mean that the middle and lower-end properties are holding steady? "May's median price bounce marked the fifth straight month the Southern California price median has held steady at roughly $250,000."

Extreme home makeover, Disney-style

Since Burbank is the home of Disney, it should come as no surprise that the city is also the home of some mighty Disneyesque architecture. For example, here’s 911 Harvard. This house used to look like this:

Then, it sold for $575,000 in 2003.

And now it looks like this:

Yup, pardners, there are lots of western touches inside, too. Frontierland, here we come!

That's not all. After the re-do, somebody bought it in either '06 or '07 for $1,375,000. It had originally been listed in ’06 for $1,899,000. You read that right. Now, it’s a short sale (coincidence that the street numbers are 9-1-1?) and has come down to $999,000. Unbelievably, It has been listed for 460 days. It’s hard to show – the seller was furious when I showed it on a recent Saturday (hey, my buyers were only in town for the day! – and they seriously considered making an offer on this! but made an offer on something else instead because, surprisingly, western kitsch is not quite their style). One would think upside-down sellers would be happy to have serious buyers consider their house. But no.

However, in keeping with our Disney architectural theme, I’m hoping that some brave Burbankian will soon turn their modest Burbank bungalow into Adventureland. I think Burbank could use some fake crocodiles and hippos.

My BofA refinance, chapter 732

For those of you following the saga of our personal refinance, Bank of America called us yesterday. They asked for authorization to re-run our credit report. You see, the original report, which they ran in January when they approved the re-fi, has expired. Gee, what a way to bring your "A" game, BofA!

Increased German Shepherd sightings

In the past few days, I've shown three homes that each had German Shepherds. That's a lot of one particular kind of dog breed to encouter in such a short period of time. (They were all nice dogs.) Plus, all of a sudden, I've seen a lot of German Shepherds being walked here in Burbank. WTF? Is this:
- just a coincidence;
- an indication of a rise in a need for guard dogs;
- a message from the cosmos;
- or just ridiculous bs?

Sunday reading from the L.A. Times

Here's a great article about loan limits and how they are affecting the real estate market. Recall that the limit thresholds here in L.A. are $417,000 and $729,000. Any loan above that amount is a "jumbo" loan.

...And client Sheila's take on the La Crescenta showings (below)

Sheila and her husband, Paul, and I are hunting for a house for them. She was with me during the somewhat-odd showings in Montrose/La Crescenta and here is her hilarious take:

" [I] have not had a chance to chat with [Paul] about that Oakdale property with the $20,000 hand carved marble statuary fireplace and the valiumated guard dogs... It certainly has potential...But it is a lovely piece of property that went into the wrong hands, obviously. I really liked that area. I also liked the area over by Oak Circle, where I drove up to a vacant house for $799K after we split. However, the ... comedians were at it again, and placed travertine tiles from top to bottom along the corners of the front of the house, and, of course, a couple of columns (doric or ionic, not sure...) to let you know you are entering the Manse. Seriously though, WTF. These lovely little cottages all around it, all very just so. And here comes the new hybrid: cottage cum eastern european temple. But the travertine wasn't the highlight. No, leave that to the unique, and uniquely placed, brand new outdoor laundry room on the dining deck out in the backyard. Sip your margarita, watch the sunset, and oh - did you spill? - no problem, we'll just toss in the washer and dryer in our OUTDOOR LAUNDRY ROOM! Convenient for parties, because it doesn't have a door to jam your thumb in when you're already too soused to keep your drink in your mouth, which is why it's running down your shirt in the first place. Why, we can even sit here, sip our drinks and listen for the buzzer to tell us when your shirt is dry! I really need to do some kind of life, soon.

Please find me a house soon so I can stop this."

Girl, if you're going to be this hilarious, I might just have to prolong your agony just to keep laughing!

La Crescenta showings, livestock and locked-up models

I showed two homes on Oakendale in La Crescenta early this morning. The area is absolutely beautiful. If you’ve never been there, it has lots of old-growth trees and verdant hillside views. La Crescenta is known for good public schools as well. And you pay for that old growth and decent school system.

We had showing appointments at both homes. The first home had a nice layout. The owner extensively remodeled it and it is now a short sale. The seller owns the quietest Rottweiler and German Shepard that I’ve ever encountered. This home is listed for $729k, has 3 beds & two baths, and is about 1800 sf.

Then it was down the street to 2912 Oakendale (pictured), listed at $739k. Nice layout. Nice dog. Nice view of the wash and the Verdugo mountains. That’s it for the nice. The housekeeping was extremely poor and I don’t think the garbage had been taken out recently. This four bed, 3 bath house had one bedroom locked up so we couldn’t see it. We thought somebody might be in that room, which is not exactly an optimal showing situation. The listing agent later told me there indeed was a 20-yr-old model in that locked room. Sorry, but locked-up models do not add value to a home for sale.

None, I repeat none, of the toilets were flushed, which is totally disgusting. People, if my clients and I are going to set our alarms and travel to specifically see your home in order to maybe pay three-quarters of a million dollars for it, can you please flush? But I digress. There was a cloth cord tied to the foot of one of the beds. Hmm. A rifle leaned against an outside patio wall – take that, woodland creatures! The Tiki Hut barbecue is used to hold tools, paint, tackle blocks…There were some cute little kangaroo rats (yes, really; see the picture) playing in the ivy next door.

And the listing agent tells me the sellers will not accept anything less than full price. Good luck.

Interest rates are up and tax credit news

Bad news: interest rates are up. This will likely put the brakes on our local market somewhat. The good news for buyers is that houses will likely be staying on the market longer.

Remember HUD's move to monetize the $8000 first-time buyer tax credit? So a buyer could actually apply it towards down payment or closing costs? Guidelines and details are still not out on that yet. I predict that very few people will actually be able to use the credit this way.

And speaking of: did you know there are income caps on the $8k tax credit? If you are single, and make more than $75,000, the credit is reduced. If you make over $100k, it is eliminated. For couples, the salary threshold is $150,000.

A star-crossed closing on 848 N. Avon

Yes! 848 N. Avon in Burbank closed! I had the pleasure of representing buyer clients Todd and Anika in this deal. We had been in escrow on another property on Lomita in Burbank, but it fell out of escrow because the appraisal came back lower than the purchase price. Imagine our surprise and delight to find this house soon after. There were no appraisal or poor condition problems on this one; it is really nice.

Which is more than I can say for the seller. She is an amateur astrologer, and the planets had to be perfectly aligned for her to contemplate moving. Of course, they didn’t align until after closing and the date for possession in spite of her assurances to her agent that she’d move out on time. Well, she didn’t, so on behalf of my clients, I had to light a fire under her moon-is-in-Aquarius rear end to move the horoscope along. Sometimes, real estate isn’t pretty! But she’s out now; and I’m looking forward to seeing how Todd and Anika will decorate the house.

The past week in real estate and a big DON'T for sellers

This past week brought "more of same" as far as real estate goes. I toured Valley Glen, Valley Village, North Hollywood and Burbank for homes that are 3+ beds, 2+baths, 1200+ square feet, and between $450k and $600k.

You would think that would describe every home on the market in the SFV.

Nope.

I found four homes that were more-or-less decent in that price range. One, on Mariposa in Burbank, faces the back wall of Costco. Another in Burbank was decorated with a highly-developed devotion to knotty pine (as versus the medium-developed devotion so common in the Valley) and a third house had no windows in the master bath.

Which brings me to the fourth house in Valley Village, which is arguably the nicest of the bunch. But: the owners made a 1/2 bath of the master bedroom closet. The master was already small. Sellers, putting toilets where they don't belong is a big turn-off to buyers. Toilets belong in proper bathrooms, not in closets, laundry rooms, garages, or back patios. I've seen them in all those locations in homes for sale, and those homes invariably stay on the market for a long, long time and sell for less than comparable sales. So if you're thinking about adding a "bathroom" in say, the hall closet, for the love of God don't.

Glendale is safer for prostitutes. How fabulous.

The Glendale News Press reports an upswing in prostitution in Glendale. "The ongoing recession is attracting more out-of-town prostitutes to Glendale and Burbank, which reportedly produce higher-paying clients in safer environments, authorities said." Wow, how much better can it get for Glendale -- first Americana, and now a safer place for hookers! The article profiles several prostitutes, and surprisingly, none are former Realtors.

It's also common knowledge that one of the big bakeries on Glenoaks Boulevard was recently busted for running a prostitution ring from its second floor. Apparently, "I'd like some baklava, please" had a different meaning at the establishment.

Gorgeous redone Mission-style in, yes, Burbank

I saw this splendid listing at 1004 Sherlock in Burbank today. It made me so giddy that I just have to blog about it. Yes, it is listed at $1,298,000 but would probably go out around $1.6mil in, say, Studio City or Los Feliz. Secluded and private, the house features 3 beds, 5 baths, a view and 2754 square feet. It was originally built in 1921, but every inch of the inside has been beautifully restored -- see more pics on my site at www.JudyGraff.com. The park-like backyard has a man-made creek and art studio. And, it even has a natural bedrock cave for the family bear! Sorry for gushing, but it's just that nice.

Observations and universal truths of the week

I saw a lot of homes this week and, as usual, I experienced several surprises.

Most unpleasant surprise of the week: A home on Fremont in South Pasadena. This $900k house seemed under-priced, but it’s on a busy street. Nope. Although no indication was given that the house wasn’t just perfect, we arrived to find poor maintenance, rotting windows and a green, algae-filled pool. Yes, it had a gorgeous kitchen (see below) but it also had a teenage boy problem (see below). All in all, just plain gross and I don’t know why anybody would pay almost a million for it.

Trend observation of the week: almost every house I saw had a nice, recently-redone kitchen. Unfortunately, that’s as far as the sellers’ efforts went. Sellers, if you want that all-singing, all-dancing great kitchen, fine. But please spare some money and effort maintaining the rest of the house. Like maybe fix the roof. Or paint. Or replace old windows. Or clean the place.

Little house of teenage boy horrors: Teenage boys are the scourge of the earth where real estate is concerned. What did we see in these boys when we were teenage girls? Their rooms are invariably not just messy, they can be scary and disgusting. They leave them for showings under duress, if they leave them at all. And if the teenage boy has his own bathroom, DON’T GO IN THERE. If you must, wear a hazmat suit and blinders. Sellers, please ship your teenage sons off to military school while the house is listed. You’ll be glad you did.

Why is it so hard to show homes? Alas, lockboxes seem to be disappearing. Instead, to preview homes, I had to make at least three calls per house to the listing agent, listing office, seller, what have you, and then come at a narrowly-appointed time. Okay, I can deal with that. But then I got to a house on Zelzah in Encino at my appointed time and the seller wouldn’t let me in. She said nobody had called her. And the three calls made to a listing agent for a house on Miranda in Valley Village went unreturned for about 36 hours. When she finally called me back, she upbraided me for not coming to the six previous open houses or caravans. Whatever. But if I can’t show it, my buyer clients can't buy it.

Nicest surprise of the week: the Sparr Heights neighborhood in Montrose. Still lovely, still well-maintained, and very few homes have been bigified beyond all reason. Not inexpensive, though.

$8000 1st-time buyer tax credit can now be used for a downpayment

As we all know, The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Now, according to this HUD press release, first-time buyers can now use their $8000 tax credit towards their down payment or closing costs. While I don't quite get the mechanics of how this will work, it's good news.

Here's a quote: "Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate." Here's what that means. Often, a buyer's interest rate is a little higher for a government-backed loan, like FHA. This will enable a buyer to "buy down" their interest rate and therefore have a lower monthly payment.

Interest rates went up today

I don't think there will be any more loans under 5% for the time being. Some buyers may decide to wait awhile longer before purchasing. Stay tuned...

If you think there's nothing to buy out there...you're right

Yesterday, I searched the mls for all "active" single family homes in North Hollywood under $300,000. I found 34 homes. Virtually every one, every single one, was a short sale, foreclosure or probate -- and they all had offers on them already.

The way it works is this: for a short sale, the property can't be listed as "pending" until the bank signs off on an offer. But before that happens, the seller has to sign off -- and the seller may have several acceptable offers that they've already sent to the bank. They may not actually look at other offers if they've already done that, even if the property is still listed as active. The bank may just be taking their sweet time -- it usually takes them two months or more to approve a short sale. To recap, even though the property is listed as active, it's really "pending."

For foreclosures, the process is similar but faster. And recall that if the property is listed by a mega-lister foreclosure agent, they've been putting feelers out to investors -- and maybe even getting offers -- before the property even comes on the market.

Questions from a recent transaction

Question 1: should non-profit, city government-funded housing entities sell houses that are unsafe?
Question 2: should non-profit, city government-funded housing entities sell houses to investor groups?

These questions have to do with a recent client transaction. Some names have been changed to protect the innocent (and me!).

My clients, Mr. and Mrs. Buyer, are approved for an FHA loan. We have been looking for a home for them since February. They found a home in Glendale that seemed to perfectly fit their needs.

The house was owned by Verdugo Housing Corporation, a non-profit organization that, I’m told, is chartered by the City of Glendale. I understand that Verdugo Housing was formed as a non-profit city partnership to increase affordable home ownership in Glendale.

Verdugo Housing had recently purchased the property for somewhere in the $200,000’s and had done a cosmetic rehab (carpet and paint). The home was for sale in the very high $400,000s and Mr. and Mrs. Buyer made a full-price offer just before it went on the market. Escrow was opened in April.

We repeatedly asked for legally-required physical inspection disclosures, but VHC never furnished them to us. And the house inspection did not go well. At all. (Recall that FHA will not fund loans on substandard houses.) The roof was crumbling. A couple of rooms that were added on were not attached to the foundation. The a/c and the stove didn’t work. The electrical work was substandard in places. Those were the major issues; there were many minor issues as well.
The buyers asked the sellers to fix the major issues; after all, a non-profit housing corporation would not want to sell substandard homes, right? To our surprise, the VHC declined to do so. My broken-hearted clients cancelled the escrow. We heard through the grapevine that the day after escrow was cancelled, Verdugo Housing Corporation sold the house on an all-cash deal to a group of local investors, who intend to rent it out.

Wednesday morning reading from LAT and Burbank Leader

The Burbank Leader reports today that several big condo projects have reduced their prices significantly. These include the Burbank Lofts and the Excelsior project at Glendale's Americana. Well, good. It's high time the prices on these came down. I think they're running at about $400k+ now -- which, in the case of the Excelsior units, is down from $800k! Remember, though, that many banks will not fund loans unless a condo project is at least 50% sold and the builder/developer has turned over to the actual home owner association funds to the actual home owners association.

Next is an article from today's LA Times about home prices and activity in the Southland. Just as I bin sayin' "But Los Angeles County's median home price actually held steady in April for the fourth month in a row..."[emphasis mine]. Is that not a sign that the bottom is here, and has been here for awhile? But here's another significant quote: "The worst may be yet to come for wealthier areas because "we still face two big threats to price stability: layoffs, which can cause foreclosures across the home price spectrum, and possibly a new round of foreclosures triggered by defaults on 'option ARM' and 'stated income' loans used in mid- to high-end markets," DataQuick President John Walsh said."

Remember flippers? They're baaack...only now they're called investors

Remember house flippers? Those folks who would buy beaten-up houses, fix them up sorta (or try), and put them back on the market? That didn't work out too well for everybody that did it. Yes, some people made money, but some overestimated their ability -- and the cost -- to fix homes up, and some people lost their shirts.

Well, flippers are back. Now they're called investors. And all of a sudden, I've seen several investor-owned properties on the local market. These investors have bought foreclosed homes at an auction for a couple dollars more than the mortgage, then hired a cleaning lady and a gardener, and then put the houses back on the market. For, oh, about $100k to $150k more than they bought them for last week. Okay, it's not that easy -- the investors usually have to pay all cash.

Good thing or bad thing? Right now, I'm happy for any real estate inventory to show. However, I'm worried about price escalation. And also, buyers obtaining FHA loans can only obtain loans on investor-owned properties if the last sale is at least 90 days old. Which cuts most FHA buyers out, at least for now.

Picture of a pet-friendly home for lease in Burbank

Is this cute or what? It's located at 841 N. Screenland in Burbank and will be available for lease mid-June. More details are on my 5/8 post.

Easier loan modifications and short sales. Are you listening, banks?

Regardless of what the banks would like you to believe, loan modifications and short sales should be getting easier to accomplish, thanks to the U.S. government. Here's a link to an article from today's L.A. Times.

A Burbank foreclosure for only $294,030!?

1913 Niagra (also spelled Niagara) has just listed in Burbank. It's a 3+2, 1150+ sf and is a foreclosure. It needs to sell all-cash, as one bathroom's fixtures have been removed and that makes it extra-hard, if not impossible, to get a loan. It is listed for $294,030, which must be the lowest per-square-foot price in Burbank. The listing agent's assistant tells me that there is already one offer in, and clients of mine want to make an offer early next week. Do I think that it will sell for $294,030? Nope. I predict it will sell in the mid-$300's.

Burbank Leader on bidding wars

Today, the Burbank Leader picked up the story about artificially-low listing prices and the bidding wars they generate. Here's a quote from the article: "Markets are most tight with moderate- to low-priced homes, or about $500,000, with some agents luring multiple shoppers with artificially low postings and forcing bidding wars that can drive up totals by tens of thousands of dollars, Realtors said." See my previous posts on this subject.

Prediction: While I think we've hit the bottom for most San Fernando Valley real estate, I don't see that we'll have a real acceleration in prices. I do think we may have more inventory, or at least properties staying on the market longer, in July and August.

Opting out of a Zestimate

Correction to the following: Spencer from Zillow has commented below, and here's what he has said: What you're referring to is the DoJ ruling with respect to Virtual Office Websites. The settlement allows sellers (via their listing agents) to opt out of having their listings on websites with valuations. But VOWs are password protected broker websites. Zillow is not a VOW and is not affected by this policy at all. If the seller or the listing agent puts a listing onto Zillow -- either manually, or through their broker sending Zillow a feed, or in some cases through their MLS sending a feed to Zillow -- it will have a Zestimate. In fact, all homes on Zillow have a Zestimate, whether it's listed for sale or not. If you ever see a for sale home on Zillow without a Zestimate, that's because for some reason we couldn't match the address for that listing, not because we removed the Zestimate.Here's a great video for real estate professionals about the Zestimate: http://www.youtube.com/watch?v=Vuloq6S6MLM

Original post: If your home is listed for sale on a multiple listing service, you can now opt out of having a Zestimate (Zillow's estimate of value) on Zillow.com, or on any other site such as Redfin or Trulia that has home value estimates and allows comments. This is accomplished through a simple key stroke when your Realtor adds your listing to the multiple listing service.

This is a good thing as we've never known just how these sites' algorythms calculate value data. Their dollar values for specific properties are often quite different -- lower -- from comparable sales data, and of course, Zillow hasn't actually seen the house nor driven through the neighborhood. And who needs somebody's snide comments about your house (unless they're Judy Graff's snide comments) when you're trying to sell it?

*@!#% 116 N. Valley, Toluca Lake is already in escrow

116 N. Valley in Toluca Lake listed on the MLS Sunday night for $521,730. It's a 3+3 with 1900+ square feet. As you can see from the picture, it's a "completer" and it's a foreclosure. Somebody obviously ran out of money in the middle of re-doing this.

It's already in escrow. How can that be after it has only been on the market one day? I'm not sure, but I'll bet the listing agent, another REO mega-lister, has been courting offers on their own and just listed it to appease the bank/seller. It seemed too good to be true, and it was...

Another pass at Westlake Village

I showed property in Westlake Village again today. Lovely homes there cost the same as unlovely homes in the SFV and L.A.. And the community is green and hilly. But. It took me an hour and 45 minutes to drive home.

Need a pet-friendly lease in Burbank?

A fabulous home will be available for one-year lease in Burbank starting mid-to-late June. The hacienda-style Spanish has 3 bedrooms, 2 baths, and is a little over 1700 square feet. The house was built new from the ground up in 1998 and has a gas-burning fireplace, carpet, tile, a/c, attached garage, and open floor plan, plus a charming covered patio and lots of lovely landscaping. It's so nice, I'd buy it if it were for sale (it belongs to my BFF). It's in the Roosevelt elementary school district and pets (with certain restrictions) are welcome. The price is $2800 a month plus security deposit. Please contact me if you'd like to see it.

Buzz of the week: low inventory and price-to-entice marketing strategies

My colleagues and I have been discussing two main issues this week. The first is the shortage of homes for sale, in every area, in the $700k and under price range. The only stuff out there is either geographically undesireable, a fixer or ridiculously overpriced. Sounds like my dating life when I was single.

The other issue is the deliberate underpricing by some Realtors in order to create bidding wars. Here's how it works: a Realtor lists a home $50k or more below the comparable sold properties, does no marketing, and quickly gathers multiple offers which bid each other up for the "great" deal. The properties always go over the (under) listed price. Who benefits? Primarily, the Realtors, who spend no money marketing the property. Who loses? The seller, who gets a fast sale but no real marketing. Who knows what kind of great deal the sellers would get if a house is truly exposed to the market? And future sellers lose, too, because now there is an artificially manipulated future market, based on these new listing comparables. But the biggest losers are most buyers, who couldn't afford a market-priced house to begin with and have no hope of getting the seemingly-great deal. Buyers tend to lose heart after trying to buy and not succeeding. So if you're a buyer, if the deal seems too good to be true, it probably is.

A colleague tells me he thinks there may be a Burbank Leader story about this strategy soon, which has been frequently employed by a local team lately. Update 5/8/09: This strategy is now being applied to some not-yet-approved short sales, with the following language in the MLS: "We will accept best offer after (usually 13 days), open escrow. You inspect then we submit for bank approval." Whoa! This will get a lot of people exited about and spending their energy on about a property that may not even be able to "go" short sale! Once again, if the deal seems too good to be true, it is.

Award from Relocation.com

Relocation.com just notified me that they've chosen this blog as one of the best in L.A.! Check it out here.

This blog is at the top of the page, and they say,

"Judy Graff’s San Fernando Valley Real Estate Blog is really good. A nice mix of humorous pieces about real estate life, tidbits about the communities she serves, and analysis of the current housing market. She even gets a bit snarky. This post rips overpriced homes near freeway off-ramps, and this one recounts a nightmare home showing (hint: naked guy!). Judy’s blog gives me a very good idea of what kind of agent she is: open, honest, knowledgeable and funny. Not a bad combination for someone who’s trying to find me a home — and look out for my interests when buying it."

Finally! An LA Times article about what's REALLY happening in our r.e. market

Today's L.A. Times has a great article that says -- finally -- what we've been saying: that it's not a buyers' market everywhere, prices on nice homes in nice neighborhoods haven't come down that much, and yes, there are still bidding wars for desireable properties. Here's the link to "Not that Cheap."

Quotes from the article: "...The supposedly wondrous buyers' market seems more consumer myth than easy pickings...," "...Just because an abandoned house in a troubled part of San Bernardino County might be going for $200,000, it doesn't mean you can get a nice place in Sherman Oaks for that amount -- or even twice that amount," "...[buyers] don't know where to vent their anger: lenders demanding higher down payments and less-favorable terms, talking heads distorting the market...or listing agents itching for bidding wars [we've seen a lot of that in Burbank]."

There's also a great sidebar entitled "Want that House? Follow these tips." The last item talks about financial institutions who prefer conventional loans over loans requiring longer closing times, e.g., FHA loans. Unfortunately, most of the buyers out there are getting FHA loans.

Westlake Village, Thousand Oaks, El Segundo, La Canada...covering the waterfront 4 u

Yesterday I showed property in Westlake Village and Thousand Oaks. I haven't been out there in awhile, and I was delighted to find many very nice properties at real prices. And the two school districts there are outstanding. For example, the house pictured above, 3117 Rikkard in Thousand Oaks, is almost 2000 square feet with 3 beds and 3 baths. And it's listed at $568,800! Gosh, not to bash on Studio City, but that hardly will buy you a condo there! Everything I showed was nicely maintained, spacious, a decent price, and in a nice neighborhood. Okay, so the commute is hellish and some people have described the area as soul-less. I say it's a good option for home buyers, nevertheless.

I have been enjoying searching for homes in areas other than my usual territory. Last week I was in La Canada, and next week I'll be in El Segundo. And I plan to return to Westlake/Thousand Oaks, too. If you or somebody you know is looking in other areas, I'd be happy to help them with their real estate needs.

Worst. Showing. Ever.

Yesterday, I took buyers Laura and Mark to see the home pictured above. The address is 2945 N. Buena Vista in Burbank, it's a short sale listed at $545,000 and it has 3 bedrooms and 2 baths in 1604 square feet. I had previewed it a couple of weeks ago, and on Saturdday I set up the appointment to show it Sunday.

We walked into a mess. Junk everywhere. Loud tv blaring. Pit bull running through the house. And best of all, a naked body face down in a bed, screaming at us to "GET OUT!" No, the buyers did not like the house.

Why loan modifications aren't happening

Today's New York Times business section has an interesting column regarding why more loans aren't being modified. Check the story by Gretchen Morgenson here. In short, there are two reasons: fear of lawsuits from investors, and fear that servicers of loans will make out like bandits, while leaving the owners of the loans high and dry.

Pig surprise for new Burbank home owners

My buyer clients, Shane and Stephanie, recently closed their purchase of a house on Pass Avenue in Burbank. Yesterday, they learned from the neighbors that the house had previously been used as a Vietnamese pot-bellied pig rescue sanctuary! One of the previous owners kept anywhere from 15 to 20 pigs on the property at any time -- and kept it secret from the City of Burbank, too. Nice work. We wondered about a 1-foot deep hole dug in the backyard and what it had been used for. I'm now guessing that it was a pig wallow. While I am surprised, I'm always happy to know that some humans are kind enough to protect animals. And my clients are waiting for a stray pig to come to their door some day and ask for sanctuary.

Maybe we are crazy here in So. Cal. Or at least in La Canada.

I looked at property yesterday in La Canada. Some properties were lovely; some not so much. A couple of homes, such as the one pictured, were right off freeway on-off ramps, but were still priced over $800,000! I know La Canada is a beautiful community and the public schools are outstanding. But $800,000 to live by the freeway? That rushing sound is NOT a river. No wonder people in other parts of the country think we're out of our minds about real estate.

Another week, another FHA issue.

Don't get me wrong; I love FHA. Without it, most buyers could not get loans. But it is certainly a new world. Two weeks ago, my clients fell out of escrow on a Burbank house they were purchasing because it would not appraise for the purchase price -- and FHA is very strict about the comparables used. This is a good thing, but was very disappointing for the buyers. Last week, some other buyer clients learned they had to pay FHA PMI up front at closing. Big, unpleasant surprise for us all. And now, another client couple has learned that the house they want to buy has a really bad roof -- rightfully, an FHA no-no. A good thing to know, but also a wrench in the works. Stay tuned.

I'm on Twitter.

I have a Twitter account now. You can "follow" me at twitter.com/judygraff. At least I think that's it. I'm not sure how much I'll be tweeting or how useful this will be or how many people really care what I'm doing every minute, but whatever.

Good news from LAT about the housing market, sort of.

I am a day late with this news and I apologize. Los Angeles Times has reported that home prices for the lower half of the So. Cal. market may be stabilizing. According to Dataquick, the median price has remained unchanged for the last three months. But I think LAT really buried the lead on this story. Further into the article is the statistic that March home sales are up 52% over March 2008. Is L.A. Times being cautious? I think this is a pretty impressive stat, and it dovetails with what I've experienced.

So much for loan modifications

I received this email this morning from former clients. Their loan is through GMAC Mortgage.

"We have been attempting to do the loan modification program however we cant seem to get anywhere - We have fed ex'd the paperwork - faxed the paperwork and have made appx 14 phone calls in cluding to supervisors - they say we have not recived your paper work or it has not been updated in your file. we have provided them with proof of delivery and they say they can not do anything. they say it takes 5 days to update the files its been a 3 weeks since it went 3/23 it was signed for and faxed twice - two weeks ago and last week - again today. The Mortgage modification program otherwise called loss mitigation is run out of texas and you can not get the same person twice - it takes about an hour to two hours to get thru on the phone and they go thru the spiel again and ends with sorry we dont have your paperwork cant help you. its getting really ugly now and we have no recourse... From wht they tell us its all out of texas. We have tried everything possible and made them put our pphone call in the file and the fed ex number. We are so frustrated at this point Hope yu are having a better time of it. "

Wow, talk about a run around! And coincidentally, here's info on how to get around the loan mod run around from LAT's LaLand. Do banks want to have a lot of foreclosed homes to sell? IMO, if these banks are taking taxpayer money to stay afloat, they have a responsibility to help those same taxpapers.

Appraisals. Yes, they are still very tight.

Some buyer clients of mine opened escrow on a Burbank house two weeks ago. I received a call from the assigned appraiser this week. She suggested saving my clients the cost of the appraisal by cancelling it, because her preliminary work indicated the house would not appraise for the sales price.

The appraiser told me that the comparable sales indicated the house should sell for $25,000 to $30,000 less than the agreed-upon purchase price. She also informed me that all comparable sales have to be less than 90 days old, and no farther away than one mile from the subject property. This applies to both FHA and conventional loans. And, if the loan amount is over $417,000, there will be a second appraisal, from a different appraiser, prior to closing. She also had obtained a copy of the physical inspection report, and knew that the upgrades to the property would not make up for its physical issues.

Okay, the buyers and I knew the appraisal might be an issue. And we hoped that if that was the case, the sellers would come to their senses and negotiate a lower price with us. They didn't. And our escrow has cancelled.

Another perk for first-time buyers - job loss insurance

Thanks, Mr. & Mrs. Hill, for pointing out another new perk for first-time home buyers in California: the C.A.R.H.A.F. Mortgage Protection program. This gives first time buyers free mortgage insurance in case of job loss. Check out the link here. (This is not to be confused with lender mortgage insurance.) Here are the requirements:

• Be a first time buyer or have not owned a home in three years;
• Close before December 31, 2009;
• Use a California Realtor (it is a CAR program, after all); and
• Be w-2'd, not self-employed.

A qualified buyer who has involuntarily lost their job can be eligible for up to $1,500 a month in mortgage payments for up to six months. A co-buyer can be eligible for up to $750 a month for six months.

The New Yorker profiles a local foreclosure specialist

This week's (April 6, 2009) New Yorker profiles Leo Nordine, a successful foreclosure listing agent here in the Los Angeles area. This link only provides an article abstract, but you can still pick it up on the newsstands. The amusing article, by Tad Friend, also discusses our local foreclosure market. Leo Nordine is what I call a mega-REO lister. His is one of several local operations that have hundreds of foreclosure listings.

The article discusses Nordine's problems in getting a doctor out of a Burbank townhouse. My clients made an offer on the same townhouse (8000 Via Pompeii in the Cabrini development) last month. Alas, it went into multiple offers and my clients didn't get it -- they were getting their loan through an FHA program, and I was told the seller bank did not want to accept an FHA offer. That's wrong, in my opinion. However, Nordine's office was good to work with, as far as the mega-listers go.

One thing the article didn't say: this same foreclosed townhouse owner took all of his food, including milk, sugary stuff, etc. out of the refrigerator and cabinets and placed them along walls of the living room and dining area. The food was still sitting there each time my buyers and I saw the unit. I suppose he may have been trying to encourage a big-time bug and rodent infestation. I told Nordine's office about it during the offer process; I hope they were able to clean it up before the crawlies and critters got there!

Spikes at 10862 Bloomfield, Toluca Lake

This is 10862 Bloomfield in Toluca Lake. This 22-unit building was built in 2006. It has three short sales and two foreclosures on the market -- at least it did until this week. One foreclosure has been listed since December for $317,900. It sold over full price last week with cash multiple offers. No surprise, that's a pretty low price. The second foreclosure has just been listed for a couple weeks at $355,500. It is on the same floor as the first foreclosure and has the same features, size, etc. It has also sold with multiple offers and may close (depending on variables including the appraisal) as high as $370,000!

There's two ways to look at this. The first way is the foreclosures-have-halved-local-equity way: that's a lot of foreclosures/short sales for condos that originally sold for $600,000-$800,000. The second way is the market-is-rebounding way: that's quite a sales price increase for two essentially-the-same units in the same building (I've seen several units in this building).

The short sales are comparably priced, too, but as we all know, short sale offers are difficult to get accepted.

West Hollywood wants to ban open house signs

Just when you thought local city governments couldn't get any sillier: West Hollywood wants to ban Realtor open house signs on its city corners on Sundays. Read the L.A. Times article here.

Good luck, Weho. The City of Burbank went through the same process a few years ago. The reason given for the city's ban was that "somebody could fall on one of the signs and get hurt." A year and lots of hearings later, Burbank relented -- as long as Realtors observed many restrictions AND paid a permit fee.

Currently, local Realtors are working to be able to put flags up in the front yards of Sunday open houses. Again, this "issue" has been kicked around the City of Burbank for close to a year. Mind you, this has to do with flags on private property. There is no limit on how many campaign signs one can have in their front yard, but I guess that's different.

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.