Archive for April, 2009
Real Estate Retrofit Bills Gaining Traction
INDUSTRY NEWS, REAL ESTATE LEGISLATION, TIPS FOR SELLERS
For decades Realtors have fought legislation that would require homeowners that decide to sell their home perform 
certain point-of-sale renovations. It’s amazing some of the bills that are pushed through our legislature by special interest groups. Here’s a list of some of the items homeowners would need to address before transferring title if these bills had become the law of the land:
- Pool safety barriers
- Insulation upgrades
- Window replacements
- Fire sprinkler installation
- Carbon Monoxide detectors
- Water conservation retrofits (toilets, faucets, etc)
- Gas floor furnace change out
- Foundation bolt installation
- Auto reverse garage door openers
- Window bar removal
- Gas meter shut-off valves
- Defensible space certification
- Foundation inspection
- Energy audit
- Proximity to power lines disclosure
- Asbestos mapping
Realtors believe, regardless of how well-intentioned these point-of-sale mandates may be, penalizing property owners that just happen to want or need to sell is discriminatory. If it makes sense to pass a law requiring toilets, shower heads, appliances, etc be upgraded to conserve water, great! Make it apply to everyone, not just those selling their homes. Otherwise, it will take decades for all those subject to a law to comply since some properties change hands infrequently.
These retrofit laws unfairly punish those that need to sell. If the homeowner lacks sufficient equity to pay for these upgrades, the owner may be unable to sell. Some of these retrofits are simple and inexpensive. Others can run into the thousands of dollars. The California Association of Realtors is the only trade association that fights these bills on behalf of property owners. We view it as a property rights issue.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Drought May Spur Point-Of-Sale Retrofits
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR SELLERS
One impact the extended drought in California could have are new regulations requiring home sellers change out older water-thirsty plumbing fixtures with ones that meet current building codes. “Renovation on resale or retrofit on resale” are stratagies recommended by the Urban Water Use Efficiency Subcommittee, Land Use Subcommittee and Advisory Committee working on an update for the California Water Plan.
The California Association of Realtors has actively participated on these subcommittees and opposed point-of-sale mandates. However, the report recommends local governments use their report for water planning purposes and consider implementing retrofit standards. Depending on what ordinances local governments decide to implement, the cost could be well over a thousand dollars if mandatory retrofits are required
It makes sense for all homeowners to replace toilets, shower heads and appliances with more efficient models but property owners wishing to sell should not be singled out for expensive renovations. If the effort to save water is necessary to conserve in areas with limited water supplies, make every property owner comply, not just those that need to sell. Otherwise, it could take decades before all properties are forced to retrofit due to a property sale.
The California Water Plan will be discussed at workshops across the state at which time comments from the public will be accepted.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
AB 33 Would Abolish Department of Real Estate
INDUSTRY NEWS, REAL ESTATE LEGISLATION, REAL ESTATE PRACTICE
A bill working its way through the California Assembly proposes to abolish the Department of Real Estate, the Department of Corporations, the Department of Financial Institutions and the Office of Real Estate Appraisers and replace them with a new Department of Financial Services.
The California Association of Realtors (CAR)opposes the bill primarily because “the function of a real estate licensee is not to provide financial services” according to a news release from CAR’s Virtual Advocate. CAR does not want our business blended with banks, credit unions, consumer finance lenders, pawnbrokers and residential mortgage lenders. Unlike these businesses, real estate agents are individually licensed and have a fiduciary relationship with their clients.
The National Association of Realtors recently prevailed in a long time battle with federal regulators to keep banks out of the real estate sales industry. Merging real estate agents and appraisers under one state department would likely open the door for banks to delve into real estate sales just as national banks had hoped to do the same.
Based on the recent revelations about banking practices that have brought the world economy to the brink of financial catastrophe, the banks have proven they should not be trusted with selling real estate. Combining real estate and financial institutions is a step in the wrong direction.
The bill will be heard by the Assembly Business and Professions committee on April 28th.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER STREETS
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Redding Real Estate Market Stats For March 2009
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
March sales numbers include good and bad news for the local real estate market. According to data gleaned from the Shasta Multiple Listing Service (MLS), 148 homes sold in March compared to 165 a year earlier, roughly a 10% decline in units sold. However, the number of active listings slid 22% from 1742 last year to 1361 today.
The total number of homes pending today on the Shasta MLS is 418. On April 21, 2008 356 homes were in escrow. The reason the number of homes sold in a given month is so much lower than the number of homes in escrow at a given point in time is due, in my opinion, to the vast number of short sales and to a lesser extent, new homes that are in long escrows during their construction period.
In fact, more than 100 homes currently in escrow are short sales, meaning the owner is trying to get the bank to forgive a portion of the loan so the buyer can purchase the home closer to market value. This process can take months to accomplish, depending on the lender. Surprisingly, I had a lender recently respond to a short sale offer in two weeks, almost unheard of in the short sale arena.
On the horizon, foreclosure activity is on the rise as government efforts to slow or stop the tide have expired. The potential spike in foreclosures could hamper a recovery in the near term for the local real estate market.
One other trend of note in the past several quarters is where the real estate sales activity is focused-the low end! In March, 86% of the sales were homes priced under $300,000. Only one home sold over $500,000 out of 214 homes for sale above the half million mark. If I am doing my math right, that means a home priced over the half million mark has a 0.5% chance of selling! Ouch!
At the other end of the spectrum, 55 homes sold under $150,000 or 34% of the 162 homes listed in that price bracket. Yes, there are many livable homes in our market area affordably priced for investors or entry-level buyers. This was not the case just a few short years ago. Low prices and low interest rates have combined to allow many buyers the opportunity to own a home with mortgage payments lower than rent, especially for those that can take advantage of the tax write-offs that home ownership provide.
Stay tuned for future developments!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Five Star Bank Offers Niche Loan Products
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS
Local banks tailor loans to fit unique properties found in Shasta County. Five Star Bank, the new kid on the block, has jumbo and construction loans not found at most banks that offer real estate loans. Jean Peterson, a long time loan officer in Northern California, reviewed these loan products with local Realtors recently.
They offer a jumbo loan for properties valued over $417,000 to $1,000,000. Here are some of the loan parameters as of April 15, 2009:
- First deed of trust only-no secondary financing allowed
- Credit score for borrower above 700
- 65% maximum loan-to-value
- Full documentation required
- 30-year amortization
- 1 point plus $500 doc fee, appraisal and title insurance
- 7.5% interest, 7.610% APR, due in 5 years
- 7.75% interest,7.861% APR, due in 7 years
Owning a high end property costs nearly 3% more in mortgage interest than the more affordable homes selling today. These loans can also be utilized for ranch properties with large acreage sizes.
Construction loans are available for builders and owners constructing a new home or purchasing a manufactured home to be placed on private property. Jean can refer a borrower to another lender to arrange a permanent take-out loan to refinance the construction loan once the improvements have been completed. Most banks do not get involved with short-term construction loans.
For more information on jumbo and construction loans, contact Jean Peterson at 530-223-6652.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Teachers and State Employees Have Specilaized Loan Programs
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
CalSTRS and CalPERS loan programs offer competitively priced loans using funds from these retirement funds. Cal STRS is for teachers that have invested in the State Teachers Retirement System and Cal PERS is available for state employees, legislators and city/county employees that participate in the Public Employees Retirement System.
CalPERS requires borrowers tender a 5% downpayment or 3.5% for a CalPERS FHA hybrid loan. The downpayment can be borrowed from their retirement funds as long as they have twice the amount needed in their retirement account. Currently the interest rate is around 5% and the loan rate can be locked for up to 60 days.
CalSTRS has a new 80-17-3 program. The applicant makes a 3% downpayment, borrows 80% of the puchase price on a first and 17% second loan with payments deferred for 5 years. Interest accrues on the second loan at the same interest rate as the first and is tacked on to the principal then amortized over 25 years after the payment deferment period. This allows the buyer to have a lower payment for a period of time before the full payment kicks in.
Contact me for more information or referral to a lender that processes loans for CalSTRS or Cal PERS.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
CalVet Loan Losing Luster
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
CalVet loans have fallen out of favor with borrowers due to plummeting interest rates on conventional loans. Interest rates for CalVet loans are determined by bond sales. Periodically, CalVet places a proposition on the California ballot authorizing the Department of Veteran Affairs to sell bonds to raise funds for this unique loan. Bond sales have been challenging due to the housing industry meltdown. Current funding comes from the sale of bonds that occurred years ago at higher yields. The best rate CalVet can offer today is 5.75%. Conventional loans are under 5% today.
Here are some other details about Cal Vet loans:
- Maximum loan limit in Shasta County is $370,266-Tehama-$273,058-Siskiyou & Trinity-$258,690
- Loans are now available for mobile homes in parks-90% LTV for new homes and 85% LTV on used
- Cal Vet can be combined with a VA loan for 100% LTV (loan-to-value)
- Cal Vet requires a 3% downpayment. The borrower will be required to pay a funding fee
- If the veteran can muster a 20% downpayment, there is no funding fee
- The funding fee ranges from 1.25% to 3.3% and is waived for disabled vets with 10% or higher disability rating
- Eligible vets include non-California veterans, California National Guard or US Reservists
- Loans can be processed directly through the local Cal Vet office or mortgage brokers
- Qualified veterans must apply for a loan within 25 years of the last date they left active service
- Cal Vet loans use a Land Contract of Sale instead of a deed of trust to secure the loan
Cal Vet will study the bond market this fall and may try to sell bonds at lower rates if the bond market has investors interested at the lower yield.
Contact Audrey Sandeen, District Manager for the California Department of Veteran Affairs with specific questions. She can be reached at 530-224-4955.
CalVet requires the vet purchase a life insurance policy that will cover the mortgage payments for 5 years if the vet dies.
For more information on cal Vet loans, view my previous post at:
http://movetoredding.com/?s=calvet
Contact me if I can be of help.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Earth Day Arrives April 22nd
REDDING LIFESTYLES, REDDING RECREATION, SHASTA COUNTY
The first official Earth Day was celebrated on the March equinox by the United Nations in 1969. Another Earth Day was started the following year by US Senator Gaylord Nelson of Wisconsin. April 22 is the date Earth Day is celebrated every year during spring in the northern hemisphere and autumn in the southern hemisphere. Senator Nelson used the day to have a “teach in” to focus on the impact of population growth. The grassroots effort coincided with a strong push towards “Zero Population Growth”.
UN Secretary-General U Thant supported this global initiative and on Feb. 26, 1971 signed a proclamation worth noting that said:
May there only be peaceful and cheerful Earth Days to come for our beautiful Spaceship Earth as it continues to spin and circle in frigid space with its warm and fragile cargo of animate life.
Today, Earth Day is a celebration of political support for an environmental agenda. Senator Nelson was inspired by a visit to Santa Barbara after the horrific oil spill in 1969. He went back to Washington and passed a bill designating April 22nd as a national day to celebrate the earth. Today, millions of people celebrate Earth Day or Earth Week worldwide.
Many colleges and government agencies have developed programs to engage citizens in environmental projects in their communities during Earth Day or Earth Week. The California State Parks Foundation has developed a Earth day Restoration and Cleanup Program.
Click here for more information: http://www.calparks.org/programs/earth-day
My wife and I have become involved with Redding’s Adopt-A-Park Program and help keep one park clean year round. The city has found many sponsors since starting the program 2 1/2 years ago but there are still parks and trails in need of adoption. 15 of the 33 parks in the program still need a sponsor. They include:
- Minder Park and Trail in the Edgewood neighborhood
- Alta Mesa/ Western Oaks Park in Enterprise
- Clover Creek Park/ Hawn Park near Starview Estates
- Creekside Park in South Redding
- Ridgeview Park in West Redding
- Vista Ridge Park in North Redding
Of the 12 trails up for adoption, only two remain available:
- Old 99 Trail
- Palatine Trail
A new trail will be available for adoption once the Sacramento River Trail is extended to the Hwy 44/Hilltop Drive area.
Visit the Redding Community Services department at the following link for details:
http://www.ci.redding.ca.us/CommunityServices/adopt.html
Make Earth Day Earth Year by adopting and caring for a small slice of this beautiful place we call home!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
New Regulation Will Cut Communication Between Lender and Appraiser
HOME LOANS, INDUSTRY NEWS, REAL ESTATE PRACTICE, TIPS FOR BUYERS, TIPS FOR SELLERS
Fannie Mae and Freddie Mac, the government sponsored agencies that purchase mortgage loans from lenders across the country, have placed stipulations referred to as the Home Valuation Code of Conduct (HVCC) on future loans they buy . These regulations will be implemented May 1, 2009. The rules prohibit loan officers, brokers, real estate agents and anyone else with a vested interest in the approval of a mortgage loan from ordering an appraisal or influencing the selection of the appraiser.
It has been common practice for loan officers to directly communicate with appraisers to discuss the value needed to get the loan approved and discuss property condition issues that might cause a problem for the borrower. In fact, during the market boom lenders routinely called appraisers regarding loan refinance appraisals asking if the appraiser could justify a specified home value. If the appraiser could not justify the desired value, the lender would simply call another appraiser and repeat the process until they found an appraiser that would agree to work up an appraisal at the requested value.
These rogue appraisers pushed the value beyond reasonable fair market value in order to make the deal work for the buyer and lender. Unfortunately, the investor that ended up with the loan falsely believed the loan was secured by sufficient collateral which, in many cases, just was not there.
The downside to the regulation is real estate agents will not be able to assist appraisers by providing comparable sales data for properties the appraiser has overlooked. Borrowers wishing to refinance may pay several hundred dollars for an appraisal, only to find out later the value was not high enough to allow a refinance. They lose the appraisal fee and are unable to refinance.
Some banks have already adopted the regulations and order appraisals through a management company that retains a pool of licensed appraisers. The listing agent can make arrangements for the appraiser to access the property but can not provide any comps to assist the appraiser.
The management companies will retain a portion of the appraisal fee and ask appraisers to reduce their standard appraisal fee. If the appraiser refuses the lower fee, the appraisal management company will assign the appraisal to another appraiser. The end result is the borrower may not get an experienced appraiser but one that is hungry for a paycheck.
Mortgage brokers will find the new regulations difficult to implement because the appraisal will not be transferable from one lender to the next. This will put mortgage brokers that shop loans to a number of lenders at a disadvantage with institutional lenders and mortgage bankers who loan their own money.
Like so many laws, these regulations punish honest loan officers and appraisers in an effort to root out the few bad apples that tarnished the real estate profession. Most would prefer existing laws that regulate the real estate industry be enforced rather than creating a new layer of rules. Ultimately, borrowers may have fewer choices when selecting a mortgage lender and pay higher fees for appraisals.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Homebuyer Assistance Programs Running Out Of Funds
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
Representatives from Redding, Anderson, Shasta Lake City and the County of Shasta addressed Realtors regarding their respective loan programs targeted to first-time buyers. In short, Redding is the only housing agency with some money left to loan.
Shasta Lake City has not been reimbursed by the state for loans they have placed resulting in a suspension of their downpayment assistance program. Anderson and Shasta County applied for funds from the state to run their programs but were denied. They will reapply in August, find out in November if they were awarded any funds and if successful, could accept applications in 2010.
The City of Redding has renamed their Downpayment Assistance Program (DAP) to Homebuyer Program (HP). They have added some loan options including a lease-option program, forgivable-interest loans in target areas of the city and a Homebuyer Incentive Program for bank repossessions that need additional money for repairs.
The maximum income limits have been raised for various family sizes 1-8 but the maximum purchase price has been lowered significantly to $218,500 to reflect current market pricing. Low-income homebuyers will be eligible for the largest silent second loans of $60,000. Median and moderate income borrowers will receive maximum loans of $25,000 and $10,000 respectively.
Some other rules to keep in mind about these programs:
- Homes that are currently rented cannot be purchased using DAP money
- Homes must be professionally inspected and the city housing department will specify needed repairs
- Borrowers must make at least a 3% downpayment
- The homes cannot be rented after the purchase has closed escrow
- Homes must have a Section I and II pest clearance
- First-time buyers are defined as those that have not owned a home in the past 3 years
Jodi White of the City of Redding indicated available funds should be enough to fund 8-10 home purchases in Redding. They expect a fresh allocation of funds to continue the program once existing funds are depleted. Contact me if you have any questions.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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