Archive for May, 2009
Renters Can Now Stay In Bank REO’s Longer
INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHASTA COUNTY
Bona fide tenants now can remain in a home that has been foreclosed on for 90 days before having to vacate. This applies to the REO lender and/or the buyer of the home. Furthermore, if the tenant has a lease that extends beyond the 90 day period, the property owner must allow the tenant to stay until the lease ends.
In areas with rent control laws, rent-subsidized programs (Section 
or other state laws that provide additional protections, the stricter provisions apply. This law sunsets December 31, 2012. The law applies to single family homes and homes where a federally-related mortgage was foreclosed upon.
Lenders typically have real estate agents or bank representatives inspect a property to ascertain if it is occupied or vacant. Some tenants are offered “cash for keys” to expedite the process of vacating the property in order to ready the property for sell. If a tenant agrees to vacate early under such an agreement, they will waive their rights to remain in the property as per their lease.
This law took effect immediately as part of the Helping Families Save Their Homes Act of 2009 signed into law by President Obama.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
CORNER OF COURT AND PLACER IN REDDING
Realtor Survey Concludes Experienced Agents Survive While Newer Agents Wither
Inman News reported recently the results of a national survey detailing Realtor income during these lean times. Based on the findings, the median income dropped 14% in 2008 to $36,700. Those agents in the business 2 years or less made $8,600 before taxes and expenses while those in the business at least 16 years grossed $53,900.
The National Association of Realtors also reported that membership in the country’s largest trade association plunged from a high of 1.34 million to 1.2 million in December 2008. 73% plan to remain active in the business for the next two years, down from 77% in 2008.
Some other items of interest:
- 9 out of 10 Realtors said open houses were of limited use in generating business
- 86% specialize in residential sales, up from 74% in 2005
- Agents reported closing a median of 7 transactions in 2008 compared to 8 in 2007
- 27% of agents with less than 2 years experience completed no transactions in 2008
- The median age of Realtors rose from 52 to 54 from 2008 to 2009
- The average years of experience increased from 8 years to 10 years from 2008 to 2009
- Median net income fell 14% to $23,200 in 2008, in line with falling home prices and sales volume
- Only 7% of Realtors blog, down from 8% the year before
If you are looking for an agent with more than 25 years experience, give me a call.
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
IRS and HUD Lock Horns Over Tax Credit
FHA LOANS, HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS
Over the past week or so, the Department of Urban and Housing Development (HUD) has been working on a plan to allow buyers to use the $8,000 tax credit immediately to pay for their downpayment and closing costs. The Internal Revenue Service (IRS) has said not so fast.
Now HUD is pushing forward with their program and wants the IRS to step aside and allow the rule change to move forward. Details are skectchy, but it appears the program will allow buyers to borrow against the tax credit then repay the loan when they receive their tax refund. This resembles a “bridge loan” in real estate jargon.
Other states that have already implemented similar programs include Colorado, Missouri, New Jersey, Pennsylvania, 
Tennessee and Washington. The impetus for these programs was to infuse cash quickly into their housing markets by creating additional options for first-time homebuyers short on cash.
In the event the borrower fails to repay the bridge loan, the debt morphs into a 10-year-fixed-rate mortgage with an interest rate 1/2 % higher than the primary mortgage. Thus far, most of the buyers that have used this program in other states have repaid the loan upon receipt of their tax refund. Some states do not allow the buyer to use the entire $8,000 tax credit in case they have some tax liability.
This could be a big help for homebuyers who, according to the National Association of Realtors, typically have only 4% of the loan amount they qualify for saved. In Redding/Shasta County, where the current median price is $180,000, having access to $8,000 would make the difference between buying a home or being locked out of the housing market for many first-time homebuyers.
Prospective buyers that have good credit and a stable job but little or no savings could benefit from this rule change if adopted. Buyers would only be able to utilize FHA financing to take advantage of this program.
Contact me if I can be of assistance.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
CORNER OF COURT AND PLACER
Revised Fire Ratings Spike Insurance Rates
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS
A local insurance agent form AAA discussed changes in Shasta County fire ratings and the impact on insurance rates with a group of Realtors recently. Fire districts are assigned a number between 1 and 10 which determines, in part, how much a homeowner will pay for a fire policy. The lower the number, the less you will pay for insurance. Due in part to changes in staffing at fire departments, training, firefighting equipment and water pressure to hydrants, these ratings are reviewed and adjusted periodically.
Redding has a rating of 3. This is considered very good. Anderson recently saw their rating increase to 5. This was due to cutbacks in staffing and taking into account full-time firefighters vs. part-time or volunteer staffs. Anderson residents will have their insurance rates increase if their rating increases any further according to the agent discussing these ratings.Shingletown is rated a 9. Anyone purchasing property in this area can expect to pay a premium for living in a high fire hazard zone and having a volunteer fire department.
Buyers are strongly encouraged to obtain rate quotes on a property they are considering purchasing. The purchase agreement specifically allows the buyer to cancel the contract if the cost to insure the property is unacceptable to the buyer. Besides the fire rating for a specific location, insurance underwriters consider the following when setting insurance premiums:
- Size of the home and type of construction which help determine replacement cost
- Roofing material
- Proximity to a fire hydrant
- Age of home
- Whether the home is equipped with fire sprinklers
- Whether the home has a fireplace
Some insurance companies will not insure log homes. Most will not write new policies if wildfires are currently burning in the area. This was a problem last summer when wildfires burned for several weeks around the Redding area.
Homeowners insurance premiums typically start at about $400/year for a brand new home within the city limits with a fire rating below 6. Once you move outside the city limits, premiums can soar over $1,000 and reach $2,000 or more for large homes in high fire danger locations.
Other variables that can raise premiums or cause a denial of coverage include:
- Swimming pools
- Vicious dogs
- Storing guns in the home
- Bad credit
I always ask my home buyers to obtain several insurance quotes soon after entering an agreement to purchase a home. Another reason to get a quote is the insurance company will review the claims history kept in a national data base for the property which could divulge serious problems the seller has had with the home where a claim was made. Contact me if you have any questions.
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
Foreclosure Flu Sickens Many
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS
Forget about swine flu or its proper name H1N1 flu, foreclosure flu is sweeping the country! What is it you ask? Any seasoned real estate agent can tell you stories about homes that never should have been placed up for sale. These homes will gag you before you swing the door fully open!
Every so often, I will show or preview a home that makes me ask myself “Who could live in this filth?” This question is being asked more and more frequently due to the sharp increase in the number of foreclosures. Some homeowners went out of their way to spread human and animal waste on walls and floors and cleverly figured a way to shoot it on the ceilings. Prospective buyers grab their shirt sleeve transforming it into a mask to breathe but smartly exit the home quickly, anxious to get as far away as possible. Needless to say a sale is not made. Eventually the home sells for much less than it should, hurting neighborhood property values.
Worse yet are the homes we see that were not trashed by the occupants on their way out the door but appear to have gotten into their current state after years of hard living. How can people live and breathe the stench? Had I ever seen kids living in such squalor, I would make an urgent call to CPS to effect a rescue. The shear number of foreclosures has allowed Realtors to see first-hand how many fellow residents live, for better or worse. In some cases, it’s downright disgusting.
Some believe real estate agents should not allow homes to be listed for sale if buyers will flee with a case of foreclosure flu. This is when the smell is so disgusting you become instantly sick to your stomach. Other symptoms include puking on the lawn before jumping in my car as I burn rubber while peeling out of the driveway!
Thankfully, California disclosure laws require real estate agents make a diligent visual inspection inside and out of every home they list or sell. Other states lack this law, so many agents list foreclosures sight unseen. This dramatically increases the chances of catching foreclosure flu!
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
Mary Lake Beaver Mystery Continues
REDDING RECREATION, SHASTA COUNTY
I was surprised when journalist Ryan Sabalow of the Record Searchlight called to ask me if I heard the news regarding the suspicious deaths of 5 beavers in the past few months in Mary Lake. Apparently he found numerous posts I had on my blog regarding the life and times of Mary Lake’s beaver family. First, I didn’t know we had so many beavers living in Mary Lake. Second, I had no idea five of these playful critters had been killed or died and local Fish and Game wardens were investigating.
The mystery centers on the cause of death of these water rodents. Did they die of natural causes, from competing wildlife such as river otters, or as one neighbor believes, malicious actions of teenage boys? Hopefully, a necropsy soon to be performed by state officials will shed some light on the cause of death for one unlucky beaver.
After the Record Searchlight featured Ryan’s story on the plight of the beavers on the front page of Saturday’s paper, I was contacted by a neighbor who saw three teenage boys recently kill a mallard and hurl huge boulders at a beaver. My neighbor confronted the boys but did not stick around to see the outcome of their actions. The article spurred my neighbor to file a report with state wildlife officials including a description of the boys and the vehicle one was seen driving.
Thank you Record Searchlight for bringing attention to this tragedy. Time will tell if the cause will be determined and appropriate actions taken to protect the critters that call Mary Lake home.
Please contact me if you have any information on these events.
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
Trade Group Attorney Discusses Short Sale Issues
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
Neil Kalin, Assistant General Counsel for the California Association of Realtors (CAR), briefed Realtors in Redding last week on issues surrounding the listing and selling of distressed properties. Specific forms have been developed by CAR to address legal and financial considerations for buyers and sellers of these properties.
Sellers of properties that are “upside down”, meaning the amount of money necessary to pay in full all loans, tax liens, commissions and closing costs exceed the current market value, should consider the following:
- Tax consequences-a short sale could result in taxable income to the seller even though the seller does not receive any cash proceeds
- Credit consequences-even if a foreclosure does not take place, a short sale can have a negative impact on the seller’s credit rating
- Lender considerations-Lenders have no obligation to accept a short sale. In fact, the majority of sellers attempting a short sale never make it to a successful closing
- Tax and legal advice-real estate agents should have a general understanding of the ins and outs of short sales but sellers are advised to consult legal and tax professionals to determine how a short sale will impact their specific situation
Unlike other areas of California, local title companies in Shasta County do not allow real estate agents to order a title report until a purchaser has opened an escrow. A title report provides important information regarding liens against the property and/or seller that can determine if a short sale is feasible.
Another important consideration is the possibility a seller that agrees to a short sale could inadvertently provide their lender information that may expose loan fraud. In order to determine if a hardship exists, the lender will require the seller complete a hardship package that includes current financial information. If the lender compares that to the original loan application and finds discrepancies, the seller could open themselves to a fraud investigation.
Anyone considering a short sale should consult with a knowledgeable Realtor, attorney and tax accountant before moving ahead. Contact me if you need you any help.
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
Redding Home Prices May Have Hit Bottom
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
A local appraiser pointed out the fact that the average cost per square foot for April was the same as the average for the first quarter of 2009. This could mean that prices have settled for now at $136/square foot. Heretofore, prices have steadily dropped since their peak in mid-2007.
These averages include a large number of distress sales, or as the appraiser stated “some are just downright fire sales” !
He goes on to state these averages don’t necessarily reflect the overall market, which has a large variety of homes that differ in many ways from these distress sale properties. Thirty five new homes sold with an average price of $291,974 which averaged $155/square foot.
Specific amenities will raise the value. Swimming pools, outstanding views, extra garage space or quality workmanship will add value over the homes lumped together and averaged out. However, even the best of the bunch rarely push the cost per square foot above $200. During the height of the market bubble, $200/square foot was a base point for most properties.
Looking ahead, time will tell if the steep increase in March foreclosure filings in Shasta County will impact home prices in the coming months.
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
Consumer Confidence Up 12 Points In April
INDUSTRY NEWS, TIPS FOR BUYERS, TIPS FOR SELLERS
One more sign the economy may be on the path to recovery are increases in several indices that track consumers outlook on future economic growth. Besides consumer confidence rising from 26.9 in March to 39.2 in April, the Present Situation Index rose from 21.9 to 23.7 and the Expectations Index jumped 19 points from 30.2 to 49.5.
The pessimists have declined as well. Those that believe the economy will deteriorate further over the next six months declined from 37.8% to 25.3%. Those expecting an improvement have increased from 9.6% to 15.6%.
Take these numbers with a grain of salt. All these indices remain well below levels normally associated with strong economic growth. Stay tuned for ongoing economic updates.
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
Bidding Wars Igniting Redding Real Estate Market
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS
Whether I represent buyers or sellers, one thing is for certain: many buyers are bidding against one another to buy attractively priced homes in hopes of locking in a loan at historically low levels. This phenomena is sweeping the country including California, Redding and Shasta County.
Here’s why:
- Inventory is shrinking in many markets. Some areas are running into shortages of moderately priced homes. The Unsold Inventory Index dropped from 12.2 month supply in March of 2008 to 5 months in March 2009.
- Led by gains on the West Coast, home prices nationwide rose by 0.7% in February from January. First-time buyers should pay attention as this could signify the narrowing of the window of opportunity we are experiencing presently.
- Economists and housing analysts predict Sacramento and San Diego, hard hit areas of California, are poised to recover first. An executive with Lyon Real Estate in Sacramento said recently if the sales pace for foreclosed homes maintains its current pace, the supply will be exhausted in one month. For non-foreclosure properties there is an eight month supply.
- Lenders responding to offers on foreclosed homes are more likely to accept all cash offers or offers from buyers with pre-approved loans than the highest bid. Buyers unable to pay cash should get full underwriting approval before shopping for a home.
- Buyers should expect to offer full price or above for extremely desirable homes receiving multiple offers. Doing so increases the odds of sealing the deal.
I have written offers for several different buyers this year that were in a multiple bid scenario. Buyers should realize that some lenders are intentionally underpricing homes to create a frenzy of bidding activity. Being a buyers market, it is difficult to advise buyers they need to bid more than the asking price. Buyers usually learn the hard way after losing out on several properties they really wanted to buy. Eventually, they get tired of losing and accept the fact overbids are necessary to prevail.
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
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