Arn Cenedella

Archive for the 'Foreclosures' Category

Homeowners in trouble with their mortgage (Part 1)

If you are having trouble making mortgage payments or if you owe more than your home is worth, there is help available for you. Do not just put your head in the sand and hope something good will happen.

Generally a homeowner in distress has 5 options:
Loan workout or modifcation
Deed in lieu of foreclosure
Short sale
Bankruptcy
Foreclosure

Each of these options have serious legal, credit, and taxation ramifications. Before choosing any option be sure to consult with competent legal and tax advisors. Real Estate agents can help guide you through the process but are not qualified to answer specific legal and tax questions.

Here is a list of useful links to government and community based nonprofit organization
websites which include information on foreclosure prevention, loan modification, no cost HUD approved counseling services and other important information.

U.S. Department of Housing and Urban Development
http://www.hud.gov

U.S. Department of Housing and Urban Development
Guide to Avoiding Foreclosure
http://www.hud.gov/foreclosure/index.cfm
*Talk to a counselor

Federal Housing Administration
http://www.fha.gov

Hope Now
http://www.hopenow.gov

Internal Revenue Service
http://www.irs.gov

Search for: Mortgage Debt Relief Bill
Click on: Home Foreclosure Debt Cancellation

Click here for a list of NO COST HUD counselors

So get help if you need it. Try to make the best of a bad situation.

Get a team together to help you – attorney, CPA, and knowledgeable real estate agent.

They can help you conisder all your options and assist you in making the best decision.

Buyers always contact me and say they want to buy a foreclosure.

I get several inquiries or phone calls a week from buyers wanting to buy a foreclosure.

I ask: Why? They say: To get a good deal.

They want a list of foreclosure homes before the lender forecloses on the home – Realty Trac sells this information.

In my opinion, this is the wrong strategy for buyers who want to get a deal!

First of all, buying property on the court house steps at a foreclosure auction is NOT for the non-professional John Q Public who rightfully wants to get started investing in real estate. Investing in real estate is a good thing for the long-term.

Consider the following:

The best buys in the market are REOs – real estate owned by banks and other lenders – who have foreclosed and take title to the property. Several of my clients have recently purchased REOs for about 50% of their previous sale price. Most if not all REOs are listed on mls. Have your agent search specifically for REOs – that is where you will find the best deals.

Let me explain my thinking….

Consider you have an owner that owes $400,000 on his house and for whatever reason he can not make his payments – so the lender starts foreclosure proceedings by filing a notice of default – this process in CA takes 3 months and 21 days minimum.

If the property is worth $500,000, this owner can put his property on the market – sell tomorrow for $450,000 and walk away with $50,000. Why would this owner walk away from $50,000 cash – the answer is: he would not!

If the house is now worth only $350,000, he can not sell the property without lender approval of a short payoff.

Say the property does go to the foreclosure sale, the bank’s minimum bid would be their loan amount or $400,000 plus back payments, unpaid taxes, penalties etc.

If the property was worth only $350,000; why would anyone bid $400,000 at foreclosure auction? Again the answer is – he would not.

Bottom line the only properties that go to foreclosure HAVE LITTLE OR NO EQUITY. If there was equity, owner could sell cheap and get at least some cash out.

So the smarter strategy is to let bank foreclose – take title and put on market as an REO.

Based on my experience in listing and selling REOs, the bank would probably put this property on the market at $250,000 – get 6 offers and sell for $310,000.

Trust me after 31 years in the business, the best buys are NOT foreclosures – it is a myth – the best buys are REOs.

Hope this helps. Let me know if I can be of any help in finding you a DEAL

First-time buyers – this may be your opportunity to buy!

Yes, the economy is weak and yes, we may not have seen the worst.

But if you feel your employment is secure, if you buy within your financial means, and if you wish to make the San Francisco Peninsula your home, this is a good time to buy.

Long-term, I think we can have confidence that the economy will recover and that our area will continue to be a major employment center.

Prices are down in many areas – especially the more affordable entry-level neighborhoods.

30 year fixed rates are around 5%.

The Senate has passed a proposal for a $15,000 tax credit for home buyers. This is promising. But I caution everyone that this is NOT LAW. The House and Senate will need to agree on the bill and we need to see the exact final form of the bill. Will there be income limits? The current $7500 credit has a $95,000 limit for individuals and a $150,000 limit for couples. Will the new bill contain income limits? This issue will make a big difference in our area.

This is all good but I would like to bring it down to a personal level.

Some former tenants of mine (Rick and Beth) moved to LA a few years ago. Rick and Beth now want to move back and I met with them on Saturday January 17 to look at homes in East Palo Alto and east Menlo Park. We looked at 5 homes and found a real cute 2 bedroom 1 bath at 2230 Poplar Ave. listed at $199,950.

There were several offers and Rick and Beth went above list price a little but we had seller – a bank – pay all their closing costs.

Their total cash outlay to purchase will be about $10,000 and their monthly payments will be $1255 loan, $50 for insurance, $234 property taxes, and $100 mortgage insurance – total monthly payment $1639 per month.

So $10,000 plus $1639 per month buys a 2 bedroom 1 bath single family home on a 5000sf lot.

This house has fresh paint, carpet, vinyl, and new windows.

So basically with little cash outlay (I mean it costs $4000 to move into an apartment around here) plus basically a rent payment, Rick and Beth will become homeowners.

I believe it is reasonable to assume that in 5 to 10 years, this house will be worth more than the $225,000 paid for it. Do you agree? And even if it isn’t, they will be owners instead of renters. They can fix the house and yard up the way they want and enjoy living in this house.

If East Palo Alto isn’t for you (my first home was in East Palo Alto, BTW), then there are other areas where you can buy single family homes for under $500,000.

A home just closed in White Oaks San Carlos where I have lived for 23 years for $680,000.

That is a great price!

So first-time buyers, get moving to take advantage of the current opportunities.

I am confident – if you buy now - in 5 years you will be grateful – you did. 

One of my favorite loan agents, Linda Lunsman of Princeton Capital, handled the loan for Rick and Beth. Linda helped get their offer accepted since she knew the listing agent and got Rick and Beth’s FHA 3.5% down loan approved in 8 working days.

Rick and Beth will be moving into their home before the end of the month. Trust me, they are ecstatic!

I have been in the real estate business since 1978 and I have plenty of professional contracts that help my clients in all aspects of a purchase or sale. These allied professionals would include several excellent lenders, contractors, inspectors, accountant, landscapers, painters, and flooring contractors. I also offer property management.

Contact me if you wish to get started in a low-key no-pressure but professional manner.

Get moving you will not regret it.

Smart Markets to buy Real Estate In

Forbes has just published article listing the top 10 smart market to purchase real estate in.

Forbes looks at the percentage of “motivated” sellers – these would be owners who are in financial distress or lenders who have foreclosured and now own properties they do not want – ie. REOs.

Interestingly enough both San Francisco and San Jose are on this top 10 list.

Here are the top ten markets – the first number is the 2008 percentage and the second number is the 2009 percventage of “motivated” sellers in each market. In each case, the percentage of “motviated” sellers is higher in 2009 than it was in 2008.

10. Atlanta             17%                  30%

9. San Jose             9%                    33%

8. Washington DC          11%         33%

7. San Francisco              15%               37%

6. Phoenix                 12%              40%

5. Detroit                   24%              40%

4. Los Angeles            28%                41%

3. San Diego               30%                 47%

2. Sacramento            41%                   54%

1. Las Vegas               28%                  64%

Wow – 5 of the top 10 are in California.

Another Government Boondoogle – Loan Modifciation Program does not work.

I have written two posts about how most loan modifications programs will not work and the other. Even if they did work, they would be extremely unfair as the “help” would more likely go to people who made NO cash down payment at purchase as opposed to people who actually used their own cash to buy a house. I have been especailly critical of government efforts to get involved in loan modifications which in my opinion are best left to the borrower and the lender to work out.

Tom Royce of Real estate Bloggers indicates the federal Hope for Homeowners program has taken 312 applications – 312 – that’s like 3.5 applications a day in the entire country since the program was first instituted. Our brilliant Washington DC leaders have allocated $300 BILLION dollars for this program – are you kidding me? This is a total boondoggle. Tom contrasts this government program with a private program Hope Now that has helped 2.2 MILLION homeowners.

Does anybody in Washington pay attention?

I hope Obama comes up with a better plan but I fear the Washington DC culture is so corrupt – our elected representatives care more for looking good in front of the TVs and spreading taxpayer cash around to their cronies – that I have my doubts.

Foreclosure Opportunities #2

There are 42 homes currently priced under $300,000 in East Palo Alto and east Menlo Park.

Here is list of homes and asking prices.

Most of these homes are REO or short sale foreclosures.

Lenders are anxious to get these homes sold and “off their books”.

2035 Ralmar Ave., East Palo Alto $239,900

A new bank-owned property has just come on the market.

3 bedrooms 1 bath priced at $239,900.

West of 101 right next to Menlo Park Willows neighborhood.

This property was purchased for $640,00 in April 2006.

Property listed with Athena Chilicas Coldwell Banker Woodside.

Call me and let’s take a look!

Investor Alert – SF Bay Area homes break even with 20% down

For many years, I have had numerous clients contact me looking to buy rental real estate on the San Francisco Peninsula that would “break even” with 20 % down. Until now,  I would say “that is not possible – you need 40% down to “break even” on a single family home.

Banks and have other lenders price their foreclosed homes very aggressively.

Multiple offers are not uncommon.

Let’s look at sample purchase for $250,000.

$250,000 less $50,000 down (20%) leaves $200,000 loan.

$200,000 at 6.5% has a monthly payment of $1,264.

Property taxes will be $250 per month.

 Insurance will be $75 per month.

Total monthly ownership cost $1,589.

Your typical 3 bedroom home in these areas will rent for $1800.

In a Section 8 program, the County will pay 80% to 90% of the contract rent leaving only a small amount to collect from the occupant tenant.

Buy San Francisco Peninsula real estate and break even with 20% down.

You used to have to go to Texes to get cash flow – now you can get it right here.

Contact me and let’s get started.

Foreclosure opportunities on the San Francisco Peninsula

There are areas on the San Francisco Peninsula where there are many foreclosure opportunities currently for sale.  Foreclosures can often be found in Redwood City and San Mateo – especially east of El Camino and in East Palo Alto and east Menlo Park.

Excellent buys can be made on homes currently owned by the banks. 

Banks do not like own properties. Banks handle money.

 I am currently helping several clients purchase these homes.

I have 30 years experience in helping people buy homes on the San Francisco Peninsula, please give me a call for a free no-obligation consultation.

Many of these homes can be purchased at about 50% of their previous sales price.

Homes in East Palo Alto for $250,000 to $300,000.

Homes in Redwood City and San Mateo for $300,00 to $400,000.

You can complete a map-based search for foreclosure homes by going to:

 http://idx.diversesolutions.com/search/960/40

 Let me know when you want to get started!