It’s All About the Banks
September 28, 2008
So much has changed…and so quickly. Remember when banks were in the business of receiving deposits from savers and issuing loans to borrowers? It appears as though banks are engaged in an entirely different line of work these days.
Our banks have become home owners! As you know, our local Orange County real estate market is driven by bank foreclosures. But did you know that the other major factor driving down real estate prices right now is real estate “short sales?”
So what on earth is a short sale? A short sale, or “short payoff”, is a negotiated settlement between lender and borrower that allows a property to sell without the normal requirement for the mortgage loan(s) to be paid in full. If you are having trouble making your mortgage payments, a short sale may be a viable alternative to foreclosure.
Here’s a practical example: a buyer purchases a home somewhere in Orange County back in late 2005 for $1 million. The buyer also takes advantage of the lenient and generous loan terms available, and borrows $950,000 with only a $50,000 downpayment. Let’s now assume that the price of the home has corrected 25%, and that the home is now worth $750,000. But in order to sell this home, the owner must now contribute more than $200,000 in cash to bridge the difference between what the home is worth and what is owed to the bank.
Such a large out-of-pocket expense is not so easy a task for most people, especially in a slowing business environment. And unfortunately, many homeowners who can afford to pay off their loan choose not to do so, and let their properties go to foreclosure. That’s where the negotiated short payoff fits into the picture. Rather than foreclosure, the property is sold through conventional means subject to the lender accepting less than the full amount owed. Why would a lender cooperate? Based upon current market values, upon genuine hardship of the borrower, and the inevitability of foreclosure, the bank will often cooperate with a borrower and accept a short payoff. By doing so, the bank avoids becoming a home owner. We have always asserted that banks lose more money when they foreclose and resell a home, than when they accept a reasonable short sale. The seller avoids a foreclosure, the neighborhood avoids yet another “fire sale”, and perhaps, the market rebounds faster without so many bank foreclosures.
We have a great deal of experience with negotiation of short sales, dating back to the Orange County real estate market correction of the early ‘90’s. Call us, or contact us via email, for a confidential consultation to determine if a short sale is the best strategy for your individual situation.
The Financial Capital of the World
September 28, 2008
That title used to belong to New York City. But now it appears as though all eyes are on Washington, D.C.
Officials, elected and otherwise, of our Federal Reserve Bank, and of our Federal Government, are convening daily to devise strategies to bail out our ailing financial institutions.
It’s amazing to see the list of companies in trouble or shut down. Lehman Brothers, Merrill Lynch, AIG, Countrywide, and Washington Mutual are among the largest and best known companies that have ceased to exist in their previous form, thanks to the crushing effect of bank foreclosures nationwide, and to the high-risk financial shenanigans played by these “titans” of Wall Street
How does all this affect Danawoods? Actually, our neighborhood is holding up notably well! Sure we have had a short payoff or two in the couple years. And no, Danawoods is not an island – prices have fallen here from the peak of the market. But Danawoods has enjoyed a relatively low turnover in this market cycle, and as a consequence, it is among the most stable neighborhoods in Dana Point!
It’s a buyer’s market, for sure. But if you need to sell a home, in Danawoods, or elsewhere, call us. We’ve been through market cycles like this one before. We know how to maximize your equity through proven strategies designed for today’s challenging real estate market.
Be on the Lookout for Warm Floors!
September 19, 2008
Noticed a “hot spot” on your floor? You might have a slab leak.
With increasing frequency, some or our Danawoods neighbors have been impacted by the cost and inconvenience of “slab leaks”. Now, of course, the slab itself isn’t leaking. But our homes have copper supply lines in, through, and under our concrete slabs. For example, three or four of our friends with Chelsea or Bridgeport floorplans have discovered leaks in pipes between their laundry rooms and lower level bath. And make a mental note: having a leak in a hot water pipe is a huge advantage in one respect. It’s much more difficult to detect water leaking from the cold water pipes…
What causes the pipes to leak? It has been suggested to us that one common occurrence is the corrosion that occurs in copper pipes when in contact with the steel reinforcing bar (“rebar”) in the concrete slab. Galvanic action is the technical term for this type of corrosion between dissimilar metals. Here’s another explanation and photos of pinhole leaks that occur in copper pipes (photo courtesy of the Curaflo website).
Need a plumber? If you have a neighbor who has experienced a slab leak, ask them if they would recommend their plumber. Or contact us via email, and we would be happy to recommend our plumber, Dave Ortiz, who is outstanding.
One important warning: your home is built on what is called a “post-tension” slab. What this means to you, in regards to the warm floor under your feet, is that you cannot simply start jack-hammering the slab to find the leaky pipe. Post-tension slabs have tendons that are under incredible force and which keep your slab from cracking. Cutting through one of these tendons is a REALLY bad thing. In fact, you’ll often find that some plumbers will not cut into a slab because of the liability and danger involved. There is excellent background information on wikipedia regarding post-tension slab construction.
September Notes from Bill Inglis
September 19, 2008
We had the pleasure of interviewing Bill Inglis, the President of the Danawoods Board of Directors (BOD). Here are a few highlights of our conversation:
Q: What is the most pressing issue for the HOA in the year ahead?
A: Danawoods is in great shape. The BOD is committed to keeping HOA dues low. But there are significant expenses associated with the replacement of the stairwell on the east side of Danawoods park. The consequence of these costs is a postponement of some work on Danawoods trees until next year.
Q: What can residents do to make Danawoods, a great community, even better?
A: Show up to our monthly HOA meetings! The next meeting is Wed., Oct. 15th, at 6 pm.
Q: Are there any other projects or improvements upcoming in the neighborhood?
A: The Tower in the pool complex was just painted, and some of the straps in the lawn chairs have been replaced. Recent high winds knocked down some trees which required prompt action.
News Flash – Market Hits Bottom!
September 19, 2008
Did that get your attention? But does anyone really know for sure when any market tops or bottoms, especially our finicky real estate market? Of course not…but…check our Market Update column this week for more information on late-breaking news and its effect on our Orange County real estate market.
The California Department of Real Estate (DRE) reports that over 40% of agents are not renewing their licenses! You may have had a family Realtor…and now you might not! Call us! We are always accepting “applications” for new clients! With over 1000 happy customers…since 1989…you can be assured that we will take phenomenal care of you, your family, and your friends and coworkers, and all your real estate needs!
We just recorded a month in which our office exceeded company records with 104 sales!!! Call us at (949) 240-5892 to find out how we sold, sold, SOLD so many homes in what many despondent real estate agents and sellers are calling “the worst market ever!”
Get ahead of the crowd! Call us today to explore ALL of your many buying and selling options!
Week Ending September 19, 2008
September 19, 2008
Wall Street is looking and behaving a lot like Knotts Berry Farm lately. Our financial markets have been on a real roller coaster ride this year, but the intensity of the ride increased dramatically this past week.
Earlier in the year, the investment firm, Bear Stearns, was “bailed out” through actions of the Federal Reserve Bank and the U.S. Treasury Department. More recently, and with direct impact upon our real estate market, the Federal Government took control of both Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are (were) what is (was) known as GSE’s, or governement sponsored entities. In other words, these GSE’s behaved like private corporations (badly), but were implicitly backed up by the strength and credit of our Federal Government. So the new owners of Fannie and Freddie are, you guessed it, you and us!
This week brought even more turmoil, and finally, some “resolution” as well, when the Treasury Secretary announced the planned formation of a government entity to purchase and process bad loans, similar to the Resolution Trust Corporation that was formed after the savings & loan debacle in the 1980′s. How does all of this relatively bad news all affect your home’s value?
Inventory of homes for sale on the market is high, but what’s worse, the inventory is dominated by bank-owned foreclosures and properties subject to lender short-payoff (more on “short pays” in a later column). Despite the argument that Uncle Sam (all of us, again) should not be in the business of buying bad debts from dumb lenders, the efficient disposition of these loans and properties should help to lessen their impact on our residential resale market in Orange County. The sooner we get back to a “normal” market of buyers and sellers, helped by lenders who happily make loans to qualified purchasers, the better off we will all be as homeowners.
You Never Really Kill All Your Termites
September 16, 2008
Got termites? We did. Our neighbors did. Their neighbors did, and you probably do, too. So what is a homeowner to do about termites?
“Be a control freak,” appears to be the answer implied by most pest control company owners. And “control” is the key word, as opposed to “elimination.”
We are all familiar, as homeowners, with the process of fumigation. The termite contractor sends out a crew of guys, and they cover an house with a bunch of tarps, making a tent over the entire house. The residents take their food, their house plants, and pets, and move out of their house for a couple of days. Hey, don’t forget the kids! Nasty, bug-killing gas is introduced into the “tent”, and a couple of days later, all the termites are dead. Right?
Well, not exactly all of the termites are dead, at least not all of the time. The rest of the story is…
One termite out of one hundred will survive a fumigation, statistically, that is…fumigation is considered 99% effective by the industry, and by this research paper on termites, published by my alma mater, the University of Arizona. Your fumigation may kill every termite in your house, but then your neighbor’s fumigation might be ineffective due to too little gas, an overly cold day in Dana Point, and so on…ah, statistics are scary things.
What’s worse for a homeowner is the likelihood that a swarm of the little buggers will visit, and stay, even after you just evicted the last infestation. Here’s the nightmarish scenario: you fumigate on a nice warm Tuesday in September, and on Friday, new guests fly in from over from Apple Street, and decide to stay permanently. You’ve got termites again, and you won’t notice until the new colony begins to show evidence of its “occupation”.
So what’s a homeowner to do? Control is the key word. Some inspectors, including Gary Woolery, owner of Americana Termite, recommend annual inspections. Kill ‘em if you got ‘em, and then kill ‘em again when their cousins visit. By doing so, the catastrophic damage that can occur after years of ignoring the problem is avoided.
Contact us with any questions you may have about termites, especially if you are considering preparing your house for sale. We highly recommend Gary Woolery and Americana Termite. Here’s a screenshot from Americana’s website. Click on it for more information.
Danawoods.info is Our New Website!
September 15, 2008
Once upon a time, there was the old Danawoods website, danawoods.com. But, in the words of someone who shall remain nameless (Mark R.), “static websites are boring…we need one that gets updated regularly, one which has fresh content, one that changes weekly.
“Blogging” is all the rage on the web, so why not a blog for Danawoods? Because the new website is cleverly built atop a “blog” engine, we will enjoy frequent updates in addition to other useful stuff on our new neighborhood site.
Your inputs are welcome! Please contribute your ideas to danawoods.info, and let’s see where it takes us!
