This post will update daily with new foreclosure listings in San Francisco mid-peninsula locations. Below you will find an introduction to buying a foreclosure property as a personal residence or investment.

• There are foreclosure properties available on the San Francisco Peninsula. In the mid-peninsula, many of these can be found in Menlo Park, Redwood City, and East Palo Alto – typically areas near and on both sides of Highway 101.
• More specifically, the majority of foreclosures are located in neighborhoods where the average price at the peak say 2006 was $700,000 and below. There have been very few foreclosures in neighborhoods and cities were average price was over $1,000,000 at the peak.
• Some are good buys, some are not. Some houses are totally destroyed and others are in reasonable condition. They can be a good opportunity for first-time buyer or small investor.
• Like any investment, one needs to understand that particular market to do well.  Any buyer interested in considering buying REO foreclosure homes, should find an agent who knows the market in the specific neighborhoods where foreclosures can be found. For investors, finding an agent with local specific neighborhood of rental values who performs property management functions including Section 8 rentals is of high importance.
• Foreclosure REOs are currently priced (depending on area) around 50% of previous sale price.
• Most REOs receive multiple offers, many of them cash offers. Most properties go quickly.
• REO banks require SOLID pre-qualification, proof of funds to close (bank or investment statements), both for offers that are financed and for all cash offers, and a copy of earnest money deposit check (EMD).
• If the condition of the property is poor, property probably will not qualify for FHA loan.
• Buyers of foreclosures need to understand any REO purchase contract is prepared by the REO bank, no changes allowed. Contract is totally structured to protect REO bank - we, the seller know nothing about the property, totally as is, no warranty, no repairs, buyer beware.

That’s OK. Buyer needs to do his own due diligence.

Below you find find new foreclosure listings on the San Francisco mid-Peninsula.

Showing properties 1 - 5 of 14. See more Only Foreclosures.
(all data current as of 2/5/2012)

The past 18 months I have been quite active with investors who typically pay cash for a foreclosure REO in either East Palo Alto or east Menlo Park.These investors typically fix the property up and place back on the market for sale. These transactions are known as flip due to the short turn-around time from original purchase as an REO and then re-sale to the “end user” – either an owner occupant or long-term investor who wishes to rent the property out.

Last year, FHA had a rule that stated they would NOT fund any purchase of the property that was originally purchased within the past 90 days. In fact, they would not fund a loan on a property when the contract for sale was entered into less than 90 days after to the last purchase date.

So if an investor bought an REO August 1, 2009 – fixed the property up and put it back on the market, any buyer wishing to use FHA financing to purchase the fixed-up house could not ENTER INTO CONTRACT on this property until 90 days after August 1, 2009 or November 1, 2009.

After a while, FHA realized this rule was messing up the market. In areas hard hit by foreclosures, it was in everyone’s interest to get these foreclosure properties sold, fixed up, and then re-sold to owner occupants. Having distressed vacant properties all around a neighborhood does nobody any good.

FHA then amended the rule to allow funding of flip properties. However, there are some strongs attached.

Justin McHood in BiggerPockets lays out how different lenders apply this FHA 90 day flip rule.

So if you are considering buying a property with FHA financing and you believe the property was recently purchased, be sure to have your agent find out the date of the prior purchase and then contact your specific FHA lender to see what their guidelines are.

Another excellent REO opportunity has come on the market in the Belle Haven area of Menlo Park.

1150 Hollyburne Menlo Park is a 2 bedroom 1 bath home listed by New Light Realty at $287,500.

Unlike many REOs, this home is actually in pretty good shape with an update kitchen and bath. Yards and fencing are in good shape. New laminate floors have been installed. Some fresh paint and maybe some new carpet in bedrooms and this home will be in move in condition.

Click here for more info

Here are a few videos of the property.

Call me if you would like to see this property and learn more about these opportunities.

I previewed the following East Palo Alto for a client of mine today.

2384 Oakwood Drive 3 bedrooms 2 baths $209,000.

This is a REO property.

One of the most active and strongest markets on the San Francisco Peninsula can be found in the Belle Haven area of Menlo Park and in East Palo Alto.

Most of the listings in these areas are either short sales or foreclosures.

Run-down fixer uppers can be found sometimes below $200,000 and generally between $200,00 and $250,000.

These homes when repaired can rent for $1800 per month or perhaps sold for $300,00 or more.

Buyers need a fair amount of cash to compete in this market but good properties can be found.

I have helped numerous buyers this year in East Palo Alto and Belle Haven area of east Menlo Park purchase REO foreclosure homes and attractive prices.

One client used funds from his IRA to pay cash for a rehabbed home that generates about a 6% cash return on purchase price.

Others clients have purchased REO fixers, rehabbed them, and sold at a profit.

One of my clients, a former tenant, was able to buy their first home in East Palo Alto with FHA financing – amybe $10,000 total cash investment – will receive $8000 first-time buyer credit – and have total fixed ownership monthly payments of like $1700. They are quite happy.

Whether buy, fix and flip or buy and then rent or buy to live in, all present good options in today’s real estate market.

Please contact me at 650 566-5329 or acenedella@cbnorcal.com to learn more.

I am happy to discuss your options with you – no cost – no obligation.

In my previous few posts, I documented that the number of homes sold in San Carlos Menlo Park and Palo Alto during the second quarter of 2009 was TWICE the number of homes sold in the first quarter of this year.

The numbers tell the story – but stories also illiminate the numbers.

I recently wrote an offer for a buyer client of mine on a property listed listed at $619,000.

My clients offered $670,000 “as is” - had a solid pre-approval and a 35% cash down payment.

This offer had only an appraisal contingency and would close in 30 days.

The buyers had read and approved all reports, inspections, and disclosures.

So basically the offer was as clean an offer as any seller could want.

Offers were due earlier this week in the early afternoon of the offer day.

In the morning, I checked with seller agent and was told there were 8 offers.

By the end of the day, there were 25 offers on this property!

I am not sure what property sold for but it was over $700,00 and I suspect closer to $750,000 by the time the dust settled.

I have heard of other properties priced in the $400,00 to $500,00 range in Redwood City selling for $100,000 over list.

So if you are waiting for the bottom, I think we may have already hit bottom and have started back up.

This is certainly true under $1,000,000 price range.

San Carlos has just enacted a first time buyer down payment assistance program.

San Carlos will make a second loan up to $55,000.

Interest rate will be 3% with no payments for 5 years.

For more information, click here.

A big thanks to Chuck at ReMax for pointing this out.

Jay Thompson the Phoenix Real Estate Guy provides an excellent review of all the factors that go into a seller’s evaluation of an offer or offers.  It does not ALWAYS come down to price.

Each seller has different needs and motivations so each seller will give differing weight or importance to all of the factors you detailed.  The strength of the buyer financially and the likelihood this particular buyer will close can be a very strong factor in which offer gets accepted.

When trying to buy an REO, the bank almost always will go with the buyer that has the most cash.

Banks just want to get that property off their books.

A buyers’ agent can really earn their commission and help their client by effectively packing their offer with supporting documentation and structuring the buyers’ offer to meet the needs of the seller.

The buyers’ agent’s reputation is also a factor considered by seller and seller agent. Is the agent a professional – who gets sales closed – with minimum of drama and headache? Does this agent do what they say?

When I present an offer on behalf of one of my clients, I make sure I have:

1. Pre-approval letter.

2. Copy of earnest money deposit check

3. Asset statement with account numbers removed to show seller buyer has liquid assets needed to close

4. A fully signed and completed disclosure packet.

5. A fully complete and signed offer with all addendums. If the offer is sloppy or missing necessary items, seller and seller agent will wonder just how good buyer agent will be in taking care of all the details needed to bring sale to close.

I never “run down” a sellers’ property when presenting an offer. Most sellers have pride and a lot of memories about their home. It is not to the buyers’ advantage to have their agent irritate the seller with negative comments about the property. That being said, I do present the relevant market data to support the buyers’ offer price. I do not close the door on further negotiations. I always tell seller if offer is not acceptable, buyer would love to see a counter – I am not sure what buyer will do – but let me know what you want and I will present to my client.

Many folks seem to be in a large degree of despair about the economy and the housing market.

Yes, things are a little rough right now – but we are nowhere near “the end of civilization or the world as we know it”.

We need to keep things in perspective.

Here is some historical data that may help do that:

Recession 1973-1975

21% inflation

Dow Jones down 45%

Recession 1981 – 1982

Prime rate 18.87%

Dow Jones down 24%

Recession 1990 – -1991

653 failed banks and savings & loans (none in 2008 and 2009)

Dow Jones down 21%

The Great Depression 1929 – 1939

Unemployment 25%

Dow Jones down 89%

We survived all of the above!

Here is some more data:

30% of all homes are owned free and clear

96.7% of all homes with a mortgage are current on their payments

Housing affordability the highest it has been in 20 years

Please understand I am NOT saying “happy days are here again” or that our economy is going to turn up in the next month but I believe the media is far too negative on our current economic situation. I believe we will work our way out of this and in the next year or so will see real improvement in the economy and real estate market.

I do believe the current time does present opportunities for people to get into the real estate market where this would have been impossible 3 years ago.

I have generally been pretty skeptical about whether any of these much talk-about government programs will actually help any homeowners? Are these programs just more of the “promise a lot, deliver a little” that we seem to get out of Washington DC the past 10 years or will they actually help people.

I like to stay in touch with my past clients on a regular basis and try to speak with each of them at least every quarter and often once a month.

Today I called a first-time home buyer, Jim, who in January 2009 bought a home in Redwood City at a very affordable price. After a few minutes of chit chat, I suggested it might be a good time to look into a refi since rates have dropped maybe about 1% since they bought. He told me that they were already working on that through the Making Home Affordable program. They hope to reduce their rate over 1%.  Jim said since he mortgage was owned by Freddie Mac and Fannie Mae, Jim and his wife, Lynn, were eligible for an interest rate reduction. Please understand, Jim and Lynn are current on their mortgage payments – a requirement for the loan refinance. Jim and Lynn purchased with 5% down on a house a little over $500,000 – so a typical refiance that requires 20% equity is not possible for them – but with the MHA program refinances up to 105% of the value are allowed.

Jim told me they hope to know by June whether their application will be approved.

I am interested to see if the progrma will actually work as intended and reduce their loan payments to a more affordable level. Stay tuned and I will keep you posted.

Check the Making Home Affordable site for more info.

Click here to see if your loan is owned by Freddie Mac and Fannie Mae.