Each county in California has customs as to who pays for closing costs in a real estate sale transation. In Santa Clara County it is customary for the seller to pay for escrow charges/fees, title fees (Owners Policy) and County transfer tax of $1.10 per thousand. Buyer and Seller customarily split the $3.30 per thousand city transfer tax in Mountain View, Palo Alto and San Jose.
Technically these customs and are subject to change, but rarely do.
Rick Bonetti | Alain Pinel Realtors | 408-857-8800
Montalvo’s Summer entertainment season is ending with a bang with three concerts mid-September as they prepare for fall concerts at the Carriage House Theater:
I am not a foreclosure expert, but I have received training from Alain Pinel Realtors that empowers me to represent buyers of distressed properties.
As I have previously noted on this blog, Saratoga, Monte Sereno and Los Gatos are now experiencing some distressed property sales, but they are generally random (in terms of neighborhoods and price ranges) nor do they dominate most neighborhood markets.
From Google searches I receive phone calls from potential buyers interested in purchasing homes for investment in Saratoga, Monte Sereno and Los Gatos. In particular, Sunday I received an inquiry from an investor about a home on Saraview Court in Saratoga – it was already scheduled for a trustee foreclosure sale on Tuesday. It was too late to mobilize for a purchase, but I was curious about the process so I attended the auction and videoed excerpts of the proceedings because I though my readers would be interested. Perhaps this will help make clear that trustee foreclosures sales are not an easy arena for making a quick buck. You may choose to focus your search on standard listings or REO (real estate that is already owned by the bank), as these transactions are more likely to close escrow.
In this video you will hear the auctioneer’s clear disclaimers about the condition of a property and the buyer’s lack of assurances of even clear title; cash is king if you want to play this game.
There is a sad and unfortunate story about every distressed property sale. One of the auctioneers Tuesday asked repeatedly not to be photographed (a request I honored), not because he was “wanted by the law”, but presumably because he did not want to be the focus for displaced anger of someone whose home was sold at auction. The Saraview Ct. property is part of an very unseemly tale of the destruction of greed and even murder. This is not genteel real estate.
One point I hope that the video makes clear is that most foreclosure trustee sales are usually redeemed by the second trust deed holder if they think they have sufficient investment to recover. When the auctioneer said that the property was “sold” on the court house steps for $884,904 ($1 over the opening bid price) this really means that the second TD lender was merely trying to protecting their interest to eventually recover a portion of the amount they had loaned on the property. The property is still subject to the $1 million encumbrance for the first TD lender! Even though this property was “sold” to the second trust deed holder the initial first trust deed obligation remains, so the eventual REO list price is likely to be the sum of both, not the “sold” price.
The second point is that the foreclosure process (including attempted short sales) is typically frustratingly long and unpredictable. The process often extends beyond the three month statutory minimum. The closer an attempted short sale is to the foreclosure date, the less likely it is to close escrow. Over 100 properties scheduled to sold at auction on Tuesday were canceled or delayed! This video shows just a condensed, edited snapshot of a auction process that took place over 40 minutes. There were several other private potential bidders there, but were effectively shut off by the second TD lender’s winning bid. If there were other active bidders it could have taken hours.
I don’t plan to make a habit of attending trustee foreclosure sales in the future; I suggest you might not want to do so either. There are other more effective ways of purchasing a good real estate investment – that’s what I specialize in!
Rick Bonetti | Alain Pinel Realtors | 408-857-8800
As of Aug. 1, 2010 home mortgage servicers participating in the federal government’s Home Affordable Modification Programare required to implement the Home Affordable Unemployment Program or “UP“. This new program provides eligible unemployed homeowners a temporary period during which their regular monthly mortgage payment is reduced or suspended, which is called “forbearance”.
To qualify for the new federal program, borrowers must request their servicer consider them for UP before three full unpaid mortgage payments are due. They must also be able to document that they are unemployed and will receive unemployment benefits in the month the forbearance period will be effective. Servicers also may require that the borrower has been on unemployment benefits for up to three months before the forbearance period can begin.
Once accepted into UP and upon meeting basic Home Affordable Modification Program requirements, the unemployed borrower is placed into a forbearance plan for a minimum of three months or until the borrower becomes re-employed. At the end of the initial forbearance plan, customers may be able to extend the forbearance plan – based on circumstances and at their loan servicer’s discretion – in three-month increments for up to a total of 12 months.
The nation faces the worst stretch of long-term joblessness since the Great Depression. According to Labor Department statistics as of the end of June, 14.6 million people are unemployed and nearly 46 percent of them have been for more than six months. The unemployment rate is 9.5 percent, and 1.4 million workers have been unemployed for at least 99 weeks.
This “forebearance” process will help ease the pain for the nation’s unemployed – we are not insensitive to the plight of millions, whose work prospects are decidedly NOT looking “up” yet! It should help support property values in certain housing markets by forestalling a glut of foreclosures. However, it may also extend the short sale/foreclosure process, so potential short sale buyers should be aware of potential delays in closing a distressed home they would like to purchase.
Rick Bonetti | Alain Pinel Realtors | 408-857-8800
The number of transactions rose to more than 160,000 in 2009 from roughly 96,000 in 2008, with more than a quarter of the transactions occurring in California. The increasingly common transactions are projected to rise to 400,000 in 2010, and such sales will likely remain routine as the mortgage industry attempts to stabilize. As I have stressed before, real estate is very local, so not all markets are effected the same.
Last week I participated in an Alain Pinel Realtors seminar to become certified as a Distressed Property Educated Buyers Agent – this allows me to represent buyers in purchasing a short sale property, but I have chosen not to represent sellers of such properties as part of my real estate practice. If you know a seller with this need I can refer you to someone in our company who is Certified in this aspect.
Among the things that were discussed by APR Trainer Jim Pojda for selling agents were:
Questions to Ask the Listing Agent
Identifying the Seller Hardship
Setting Proper Buyer Expectations
Methods to Help Ensure Lender Package Delivery
Suggested Contract Items to Protect Your Buyer
Notice of Default – Investor Buyers – CAR NODPA Contract
Items to Review Upon Receiving Short-Sale Approval from the bank
Forms to Protect Commissions
Real estate agents are licensed under California law in very narrow areas and they are not lawyers nor are they foreclosure advisers. We may have general knowledge of changes in the law or banking policies affect these transactions, forgiveness of debt, tax law, credit, rehabilitation, or mortgage relief, but it is standard practice to recommend in writing to our clients that they seek out and obtain the advice of competent lawyers, accountants or other licensed professionals with respect to the individual issues which may impact them.
Last summer, 2009 when I took the California Association of Realtors Distressed Properties Training I noted that a local agent active in short sales said that “probably only 10% of short sales actually close escrow!” Last Friday I asked Jim Podja whether the percentage has improved since 2009 and he said “it has because both banks and real estate agent are now more experienced in the short sale process, but he did not have an updated percentage estimate. There is still a wide variance in practices among various banks/investors and agents.
Alain Pinel is a leader in training its agents about the nuances of distressed property sales; unfortunately, there are still too many licensed agents working for smaller brokerages who do not have either training or experience. Call me if you need help with your real estate transaction.
Rick Bonetti | Alain Pinel Realtors | 408-857-8800
