Mark Anderson’s Orange County Real Estate Strategies

Home buyers interested in the housing market in the fall of 2009 have some great advantages to help them!  Even in traditionally high-cost areas like Orange County, California.

First of all, the low price of homes available for sale will prompt many to buy now.  Distressed homes like short sale properties and REO, or, bank-owned properties - homes that have been through foreclosure - and motivated home sellers - have driven the prices to new lows.

When a calaulation is made on the low price of a home versus the income of area residents, it turns out that over 50% of residents in some areas can afford to buy now.  This is the “affordability index” and we’ve been watching it for years.  Just a few years ago, prices were so high and household income was similar to where it is right now - so that the affordability index hovered between 10-20% in some areas.  That means that only 10% or 20% of the area buyers could even afford to buy.  Now, the goal of home ownership is within the reach of over 50% of the population!

Interest rates are still at historically low levels.  Contrary to many people’s ideas - there are loans available for qualified buyers!   Consider that in the 80’s buyers were getting mortages at 15% - 18%!  Today, current interest rates on 30-year, fixed mortgages is just over 5%!  Some buyers even ask motivated sellers to contribute money toward their closing costs.  They will then use that money to “buy down” the loan’s interest rate even more.  As a general rule of thumb, each “point” in buy down money lowers the interest rate by 1/8 %.  So, on a $300,000.00 loan, one point would be $3000.00 and it would adjust the interest rate from 5.0% to 4.875%.  Over the term of the loan - that’s a lot of money saved!

Creative mortgages are still available.  Almost gone are the no-document loans.  Those were the loans where a buyer “stated” their income and assets.  However, FHA loans have many features that make them an exciting alternative.  For instance, with an FHA loan a buyer can put down as little as 3.5% as a down payment.  On that $300,000.00 property we just mentioned - that would be under $12,000.00!  Also, that money can be “gifted” from family members - or there can be non-occupant co-borrowers who can help buyers actually “qualify” for the loan.  Also, FHA loans are assumable down the road.  If interest rates are much higher in the future, and if the FHA seller has to move, they have a marketing benefit of being able to offer their assumable loan at a much lower rate.

Finally, the first-time home buyer tax credit of $8000.00 is due to expire on December 1, 2009.  Fortunately, there is legislation winding through Congress to extend this credit until June 2010.  They are also talking about adding a $6500.00 tax credit for other buyers in the market - not necessarily the first-time buyers!

We’ll keep an eye on this legislation and be back to report on it’s progress.

In the mean time - let your friends, relatives, co-workers and other potential home buyers know the benefits of buying right now!  Low prices, low interest rates, tax credits and creative mortgages.  This might be their opportunity to own their own home!

For additional details, visit www.LifestyleEstates.com or call Mark Anderson at 1.888.746.6275.

Buyers who want to get into a home within 30 days might want to heed this advice…look for REO homes.  REO properties are lender-owned (Real Estate Owned).  They have already made their way back from the homeowner and are now on the books of the lender. 

The transaction to buy one of these properties is more simple - and it can be quick.

For a short sale, when a buyer makes an offer, the short sale file must be reviewed and approved through a time-consuming series of steps.  As of a short time ago - a normal short sale transaction was taking 8 months. In fact, many of the homes listed for sale as a short sale did not resolve in a successful transaction.  They went on through to foreclosure.  Many buyers have gotten their hopes up on a short sale property - then waited months and months only to hear that the sale was not approved.

In dealing with a lender on an REO, there is less paperwork and the approval process is streamlined.  The lender already knows what they need as a bottom line purchase price.  For a qualified buyer - this can mean a shorter transaction time.

I have a transaction in Rancho Mirage that will probably close within 30-35 days from the submission of the offer.  The home is a great size and style, it is at a low price, it is very clean (some REO properties are not) and it will meet the buyers needs for space, location and low HOA fees.  It’s a smooth transaction.

Looking for cheap or affordable properties and homes for your family?  Think about an REO home.  It’s already been foreclosed on - and it’s ready to go with a short escrow.

Many of these homes are available in South Orange County, California - where the living is great!  Sign up to view them at www.LifestyleEstates.com .  You could email for lists of REO properties at mark.and@cox.net - or call for free email alerts on new listings at 1.888.746.6275.  Follow me at Facebook for update info at Mark Anderson.

Using the Social Networking sites to keep ideas floating around is a challenge for me.

It’s my goal to participate with something meaningful - that others who care about real estate will get something from.

I could talk about the fact that REO properties are easier to buy - and can be some great price bargains.

I should talk about the 8% Tax Credit by the Federal Govt. - and the fact that this will go away if not used by November 30, 2009.

I can relate my real life experiences as I negotiate and consult with my clients who are buying property. 

I could show how smart property sellers are pricing their homes to compete with the Foreclosed homes in their area.  There are many buyers with cash - ready to buy right now!  Interest rates are near their historic lows!

I should talk about my own ethics - and philosophy of doing the deal.  Maybe I could compare it against all of the unethical loan modification companies currently operating.

Maybe it’s all about educating buyers, sellers and investors so they can maximize their real estate holdings.

If you hae some other ideas that you think might help - contact me at my website - www.LifestyleEstates.com or give a call on my toll-free number at 1.888.746.6275.

Until then, I’ll keep thinkin’ - and writin’ - and sellin’ - and consultin’ - and enjoyin’ life!

Loan Modification schemes – don’t pay money up front!So many homeowners have gotten into a desperate situation with their home loans – that they will turn almost anywhere for help.  It is because of this intense motivation – that unethical Loan Modification companies are popping up on TV and the internet on a daily basis.  It’s confusing because there are Modification companies that can help – that are ethical and honest.Usually these companies use their lawyers to press a homeowner’s lender into modifying the terms of the loan – first the interest rate – then, maybe, the principle balance.  They may try to make the lender feel like it was their fault that the homeowner is now struggling to make their mortgage payments.In California, as well as many other states, it is illegal for these Loan Modification companies to receive payments up front – before the work is done.  In some cases, it may be worth the $2000.00 or $3000.00 or more – which the Modification Company charges – if the homeowner has a lower interest rate – and thus a lower payment.  Too often, however, desperate homeowners are paying money up front, and then the Loan Modification Company isn’t getting the job done.  They leave the scene with the mortgage holder’s money – and the mortgage holder still has the loan – with payments they may default on in the near future.The Federal Government has a list of approved avoidance counselors – just follow their links on www.hud.gov to see whom might be able to help.Our local California Association of Realtors (C.A.R.) has information that may help too.  Their web site will list the existing mortgage workout programs available from several lenders.  You’ll find it on www.car.org/economics .Realtors also want to help.  If we can get your mortgage under control – you will build confidence in our consultation and professionalism – we’ll be able to do business down the road – or from a referral that you feel comfortable in giving.  Find more info at www.LifestyleEstates.com or call 1.888.746.6275.In any case, don’t be pressured into paying up front for Loan Modification services.  It’s illegal, unethical – and may not get you the results that you want!

I met many eager home buyers this weekend at an Open House in Aliso Viejo.  I was showing an REO property.  REO stands for “Real Estate Owned” and it means it’s a bank-owned property.  Usually, it has already gone through the Foreclosure process -and the lender has taken the property back, now listing it with a broker.

Many of the buyers I met had questions about the process of buying REO and bank-owned properties, as well as questions about the difference of buying these properties versus buying a “short sale” property.  Here are a few answers for those buys - or others out there looking at currently available Orange County homes that area listed as REO, bank-=owned or Foreclosure.

First, searching for most of these property is as easy as getting onto the Multiple Listing Service - or, MLS.  Many web sites have direct access to real time information - such as www.LifestyleEstates.com.  In my case, I have my Preferred Client group - who get signed up for automatic emails several times per day as new listing come onto the MLS and automatically get referred to these Preferred Clients.  I can also follow up and send information directly to them - information about REO and Foreclosure homes that are going to be listed on the MLS in a few weeks - but is still only available to an exclusive group of buyers.

Buyers also ask just how the financing works for REO and bank-owned homes.  In some cases the lender who owns the home would like to get the new loan by a qualified buyer.  In most cases, when a buyer has their financing in place - that will be all that’s necessary to make an offer and get into escrow.  If the REO property has a guideline that it must close in 30 days - that could be a challenge to the outside lender helping a buyer.  In that case, sometimes the lender who owns the property can get the deal done quicker!  Some homes are even approved for FHA financing - which carries a 3.5% down payment amount and has several other benefits for some first-time buyers.  You may want to investigate this more at www.TimeforFHA.com .

Bidding for an REO home can sometimes be a challenge - because the home may be priced under the area’s market value.  In these cases, savvy buyers and investors of these Foreclosed homes already know the value - and several buyers may be bidding at the same time.  This may drive the price up.  The key is to have your professional real estate consultant work with you to determine your top dollar and best use of each property that’s in question.

These challenges being met, the REO and bank-owned homes available may hold an opportunity waiting to happen - and a price that’s affordable for a buyer, a first-time buyer or an investor.  It’s an opportunity that will, eventually, go away to a great extent - as these homes are snapped up!

While managing an Open House for a home headed for this week’s auction…I was excited by the positive views expressed by buyers looking to flip a home.  Some media nay-sayers would suggest that there’s not a market for flipping homes in today’s economic climate.

Not true, and I heard it from the buyers themselves!  There might be money to be made on a home “flip” - if buyers follow some specific guidelines. 

First, a “can-do” attitude is critical.  Being able to do some of the clean-up and upgrade work on a property is a big help in saving those costs.  Knowing that fear usually stops people from going forward with their plans can encourage a buyer to offset their fears with solid information and decision-making.

Also, doing the homework needed to know how the total home investment relates to the future sales price will allow flippers to decide if the effort is worth it.  Knowing the average home prices in an area, knowing the cost of your cash investment, knowing the costs of upgrades, knowing the possible rents generated - all will play a part in the decision.  Using the mortgage calculators at www.LifestyleEstates.com can get a buyer closer to a decision.

Setting specific purchase price and upgrade cost goals will be a determining factor.  As Gary Keller says in his book “The Millionaire Real Estate Investor”, profit on an investment home is made on the front end.  Maybe this is the time to make $10,000 or $15,000 on a “flip” - rather than the $25,000 to $50,000 made only a few years ago.  Flipping a home or two per year at these lower profit margins might ease the burden of an overworked, tight home budget!

Then, spending the time needed to find the right properties will narrow the flipper’s search.  Looking for a home that would make a great rental is an escape valve flippers use if the house won’t re-sell quickly.  Using a professional team to help, like a great Realtor, committed lender, thorough escrow officer, etc - can allow a buyer who flips homes to delegate some of the work out - to key professionals who can identify those homes that fit the profile and help manage the transaction.  (Search the Southern California MLS at the same Realtor web site.)

It is also good to know that investors can now own up to 10 properties - and still get the financing necessary.  This is one of the new federal guidelines designed to get buyers back into the market!

Flipping a home is not easy - and may not be as rewarding as it was a short time ago.  But it still is an exciting way for qualified buyers to see opportunities in the current challenging market!  I was encouraged to see that some buyers can see far into the future - and it’s a bright one!

You had to be impressed if you watched the Opening Ceremony of the Olympics from China.  What a huge amount of effort, money, practice, personal sacrifice and ego went into the making of that night!  It makes me wonder if there’s really any focus on the athletes and their quest for gold!?  But in the light of the fireworks glow - we may have some insight into our current plight here in Orange County - with regard to the REO and Foreclosure properties.

While the China government polished itself to show the world how up and coming they are - there are stories of the strong armed approach that was needed and of the number of their own citizens who were displaced or moved to action because of this worldly display.  How many of their own people have to worry daily about food, poverty, education and their own government’s powerful position?

Here in Orange County, we seem to be caught up with the “American Dream” - and everything that goes along with the housing industry.  Maybe because we got so starry-eyed about real estate, we now have more homes for sale than the amount of buyers that are looking.  We have homes that are selling as a “short sale” property - or as other distressed properties like REO homes or Foreclosures.  In reality, these conditions may bring us back down to earth with our prices, lending practices - and even our “investor” views on home ownership.

We can’t do much to help the Chinese in their plight - except put some pressure on their government - or stop buying their products.  We can do some things about the REO properties - and search for the opportunities to begin making solid decisions about the homes we buy and live in.

For great blogging about the political side of the Olympics - check out the Nation at www.thenation.com/blogs and see what they have to say.  For direct lender info about available REO properties, look into www.countrywide.com. You can see a great lender’s personal scoop on things by visiting Kevin Budde at his blog, http://kbudde.blogspot.com. 

Drop me a note on your Olympic thoughts -or your desire to see REO and Foreclosure properties in Orange County.  Visit www.TimeforFHA.com or call 1.888.746.6275 for recorded information and the relevant info on FHA loans!  Ciao!

Mark Anderson

Our recent trip to Seattle was fabulous.  After a visit to Leavenworth, the Bavarian Village of the Cascades (see www.Leavenworth.org) we headed back to Seattle to ride a 58 foot boat around Lake Washington.  We rode by the Gates compound as well as homes owned by the Nordstrom family and others in Seattle’s long history!  Not a lot of REO homes for sale here!

The beauty of Seattle, the fun of Pike Place Market (www.pikeplacemarket.org) and the thrill of seeing King Salmon swimming up the “fish ladder” all made this trip enjoyable!

Returning to work in Orange County, the REO and Foreclosure homes were continuing to grow in numbers!  REO homes seem to be cheaper - and easier to manage the wait for an accepted offer.  The wait on Short Sale properties is unbelieveble!  If you want a blow-by-blow on how these transactions go - call my cell at 949.235.5467 and I’ll fill you in.  For a list of these distressed REO and Foreclosure homes, email me at mark.and@cox.net and I’ll set you up on the auto-notification system.  This system of listing REO and all other properties is updated twice daily - and the latest info gets to you immediately.

One other nice surprise upon returning - was the seminar attended that had instruction from the editor of www.RainCityGuide.com - one of the best sites I have seen for keeping track of the housing activity in Seattle.  So, not only can you go visit from time to time - but you can visit this site daily for info about the real estate market in that area.

For info and to search for homes in Orange County, visit www.TimeforFHA.com and get the latest!  Recorded information is available at 1.888.746.6275.

Doesn’t it seem odd that all of this information is now coming out about the effects of the so-called “sub-prime” meltdown - and that the effects are much more far-reaching than originally thought?  Did we identify these practices as “predatory” when they were happening?  Did we have an idea when we homeowners were getting multiple re-finance opportunities in the mail?

Think about the marketing push and business analysis that went into the construction of these securitized investment vehicles - and their subsequent sales pitch to the general public.  These are not shallow or casual business folks running the big banks and lending institutions.  These are cracker-jack MBA grads who know how to continue to increase the benefit to thier stockholders - and themselves.  These are lawyers who are expert at finding the loopholes in the law to jump through.  These are politicians who created the loopholes and who want desperately to get re-elected, and they need lots of money to do it.

Why hasn’t any group or individual been called to task for these actions?  Is there real fraud here - and if so, would it be brought to the light of day anyway?  How much “spin” would happen to sheild almost everyone involved? 

Real Estate wealth building is a valid ideal - and it can be done ethically - using good judgement and honesty in it’s application.  I know how, and I think my clients would tell you that we’ve done it together over the years! 

Have you been affected by the actions of these corporations or individuals in the last ten years?  Do you know of friends or family who have been affected?  I would like to hear from you with your story.

Call 1.888.746.6275 and tell your story or leave a message for me to call. Let’s see if we can all get a little bit wiser about what’s being allowed to happen by our leaders of industry and government.  It should stop.

As an additional way of helping home buyers afford the FHA loans that are so beneficial right now, HUD has added some additional guidelines regarding the cost of MIP -Mortgage Insurance Premiums.  Since this insurance is required for at least five years of the FHA loan, it can be an additional expense to the buyer.  The rate had been set as the same for all loans.

Now there has been a reduction in the MIP rate for some of the FHA loans - based on a few factors.  The size of the loan, the size of the down payment and the FICO scores of the buyers can all have an effect on the final MIP rate.  It could mean the savings of hundreds of dollars per month!

Since the FHA loan rates have been moved up to $729,000 in Orange County and other parts of Southern California, these Government Insured loan packages are being used daily by buyers in this area.  Many condos, townhouses and single family residences now fit into this approved category.  Mark Anderson knows that and he shows these FHA approved properties to his clients and writes offers for them as their Buyer’s Advocate!

For more information on the FHA loans that are so beneficial to First Time Buyers and Home Owners who need to re-finance their homes, refer to the recorded information at 1.888.746.6275 or log onto the popular site www.TimeforFHA.com and see if these Real Estate wealth-building concepts can help you or your family and friends.