Realty World -Blue Property Group

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Of all the things we do in our day to day financial dealings, how we handle our credit has the deepest impact on our financial lives.

Good, bad and ugly credit will affect many aspects of our financial health that are driven by that all powerful “Credit Score”. Some effects are obvious and some are not so well known to every day people

I want to she shine the light on some of those effects. It will not be an all inclusive list, but will touch on some of what I consider to be important issues for every day people.

1. Interest rates paid on loans: This is one of the more obvious results. Interest rates on home loans, car loans, boat loans, credit cards and other loan rates are affected by your credit score.
2. Insurance rates paid: Your car insurance rate, homeowners insurance rate and and other insurance rates are affected by your credit score.
3. Rental rates / terms: Home rentals, apartment rentals, commercial space rentals and other rentals are affected by your credit score.
4. Job search: Employers are running credit reports on prospective employees more and more. Having bad or ugly credit can actually stop you from getting a job.

The first step to getting control of your credit is to be able to effectively monitor it on an on going basis. There are lots of subscription services out there, where you pay a monthly or annual fee to monitor your credit.

But why pay for something, when you can get it for free?

Below is a link where you can get your credit report free once a year from each of the three main credit reporting agencies (Experian, Equifax & TransUnion). So you can actually get 3 reports total each year! They may try to sell you extra services, but you don’t have to buy and they are each required by law to give you one free report per year upon your request. My suggestion is to run your report once every 4 months. Just rotate through the agencies each time you run it.

AnnualCreditReport.com

Some people will find errors on their reports that negatively affect their credit scores.  Address these issues immediately, it will help raise your score.

Others will not only find errors, but outright identity theft in progress! Alert all three credit reporting agencies and the police of the situation immediately! There could be terrible consequences coming from the identity theft that can be avoided with quick action.

If you need help with reading your credit report and or want tips on how to improve your score, give me a call right away.

On Your Team,

Shantell Owens: (925) 594-0321

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All we here about today is the media rambling on about all the bank REO’s (stands for “real estate owned”…means the same as repo, foreclosure or bank owned property, etc) that are out there in America, waiting to hit the market.  Mind you, they are not here yet, and have been promised for almost 3 years…and if we in the business hear the term “shadow inventory” one more time (the favorite media term meaning bank repos are heading our way), my head is going to spin!

It took me a while to get this information together….. But, here’s a little lesson on Bank Repos (REO’s).  There are a massive number of REO’s the banks are hiding, more on the way, and when the number of homes that are worth less than what is owed are figured into the mix, the amount of REO”s and potential REO’s  is mind blowing.  So as a real estate professional and consumer, I have this HUGE QUESTION:

Where are they? We have been hearing about this huge surplus of REO’s headed our way for over 30years, and they have yet to show up…and so my clients ask me all the time…Where are all these REO’s they keep hearing about?

Remember the old TV show with Bob Barker called, “The Price is Right” (My favorite game show), where contestants will often get to pick “potential” prizes behind certain “Doors”.  In the case of the missing REO’s, there are about 5 doors from which you can choose.

Door #1… Behind this door, the banks actually have their REO’s ready to go…they are just “waiting” for the best time to sell them.  Mind you, with the exception of the really depressed areas of the country, they are not waiting out of a concern for the neighborhood.  Banks can care less about people.   What they are waiting for is the best time to take the loss on their books and report it to Wall Street…because the DO care about that.  So…they parcel these properties out when it is best for them.

Door #2… Behind this door are the properties that the bank has foreclosed upon, but cannot take possession of because they are currently occupied by the former owner or tenant.  In this case, because the government has passed so many new rules and regs that are designed to “protect” the occupants of a foreclosed home, it can take another 6 months or more to get the home vacant for sale.  Those who side with the occupants feel that this added time beneficial to the former owner, and those that side with the banks think it is just a costly delay of the inevitable. The time time it takes to get an REO to the market for sale has doubled or tripled in the past 12-24 months.  Is that a GOOD thing or a BAD thing?

Door #3… In two words…”Bulk Sales”.  If a particular bank has a BUNCH of REO’s in the pipeline, there are large investment groups that will buy hundreds at a time from this particular bank.  From the banks viewpoint, they get to dump a lot of properties in one swoop and eliminate the hassle of selling them all one by one.  From the bulk buyers viewpoint, they get both the benefit of some really reduced prices on these homes (volume discount), and the opportunity to purchase them first.  Yes, they get the headaches that come with the properties, but to them its worth it.  Most of these houses are fixer uppers with some paint, new carpet or a new roof and is ready for someone to buy it.

Door # 4… The courthouse steps.  Here, savvy investors can purchase the property from the bank before the bank actually takes ownership.  These sales are done every day at courthouses through out California, and either investment groups or individuals can play…These purchases require lots of cash, research, and nerve…and there are still risks.  However, they have become quite popular, and many of the potential REO’s are sold here.  Some are kept as rentals to be sold many years down the road, but most generally return to the market fixed-up for sale as in Door #3 above.

Door #5… Short Sales.  In the beginning of this real estate market crash (mid 2007), there were very few short sales because the banks simply were not geared-up to handle the process.  Now, almost 4 years later, short sales make up a large part of the homes currently for sale.  In this case, the short sale is simply a REO in waiting, so when the bank chooses to accept a short sale price, they are simply getting rid of the “potential REO” earlier rather than later.  It never becomes an official REO so it will not appear on the REO stats.

The bottom line is, if you’re a buyer holding your breath waiting for the banks to open the REO flood gates, don’t hold your breath for too long  it’s NOT going to happen!!!  Time will tell if that remains the case, but for now, be aware…there are many ways these properties get to market other than as a bank owned REO. In the meantime, Short Sales over the next 2 years will increase.

With a documented 85% closing ratio on Short Sale negotiations and closings, I am more then qualified to answer your questions.  Call me for a consultation and I will be more then happy to help assist you with Buying or Selling a short sale.

Shantell Owens: (925) 594-0321

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Greetings everyone, I hope all you had a wonderful, safe and productive week!

If you’re a First Time Home Buyer, it is important that you know that approximately 70% of all the sales that occur these days are completed with FHA financing.  FHA offers the best combination of low rates and low down payment, so it is used by the majority of today’s buyers.  Which means that if you are a seller, you really want your property to appeal to an FHA buyer for obvious reasons.

However, if you own a condo, appealing to an FHA buyer just got tougher in 2011 due to some new regulations imposed on condo developments by FHA.  Here’s what FHA is now requiring for them to make any type of loan on a condo.

1.  No more than 25% of the property’s total floor space can be used for commercial reasons.  This is primarily directed at the newer developments that have a business downstairs, and living quarters upstairs.  For most condo owners, this does not apply.

2.  No more than 10% of the units can be owned by more than one investor.  Again, generally not a problem, but beware…this applies to a developer who may still own a lot of units because they decided to rent them out if the original sales were slow.  Be careful here.

3. No more than 15% of the units can be late with their association payments.  This is a biggie.  In today’s market, it is hard to find a condo development that will pass this new rule.  Foreclosures, short sales, and job loss all contribute to the owner of a condo simply not being able (or willing) to make the association payments.  If the owner is not making payments to the bank, then the usually are not making payments to the association.  This rule will affect a lot of condo developments.

4. In the case of new construction, 50% of the units must be sold before FHA will make a new loan.  Since there is almost no condo development at the moment, this new rule will generally be moot.

5. At least 50% of units must be owner occupied.  This is a problem if many of the units have been repossessed by a bank.  In that case, the unit becomes “non owner occupied”, and therefore can really skew the occupancy numbers…so be aware.  Basically, FHA considers it a larger risk for them if the majority of the condo complex is renters as opposed to owners who live on site.

6. FHA will not make a loan to a new buyer if they have already made loans to over 50% of the complex…so if you are too late as a buyer and others got their FHA loan before you, tough luck.  FHA does not want to have all their eggs in one condo basket, so to speak.

Some of these rules may seem to be a bit harsh, but hey…when it comes to FHA financing, we all either play by their rules, or they will take their financing ball and go home and no one will get to play at all.  The climate of the real estate world has changed drastically and ALL of us must make the necessary adjustments to play the game.

If you’re interested in purchasing a condo, call me directly and I will be more then happy to walk you through it.

Shantell Owens: 925.594.0321

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