411 for my Peeps

Hi there!!

I'm doing an introduction type blog for everyone I know, to share a new adventure of mine!! Most of you know, or maybe we haven't spoken in a while....but I purchased an REO (bank owned) property this year (January 9th was my closing date). I had some savings available to me and was concerned about Money Markets etc and their decline...as well as the stock market, so I started poking around in the real estate arena just to see if I could actually BUY something in CA. Unfortunately, with the economy, a lot of homes are abandoned or repossessed..... but it puts them on the market at super affordable prices for people like me and you!


So the break down for how it worked for me was this:

Pre-qualification is key....I went to a bank that did a cursory pre-qual(they kind of guessed based on what I told them=bad) which really put me in a pickle because I THOUGHT I could afford more than what turned out...so I had to back out of researching a bunch of homes I was interested in. A legitimate pre-qualification will run your credit....and use a formula of debt-to-income ratios. In the end you balance out how much you want to spend a month with what you can afford. Your payment = Total loan amount that puts you there.

So today, you can get into a conventional loan with a standard 20% down payment, OR a government FHA loan with a 3.5% down payment. There is a daily change in what programs are out there...so I'm not here saying I know what might be available tomorrow. I have some financial wizards in my office that will take some of your time, and plug your numbers into a calculator....super painlessly....and tell you where you stand. It's a good piece of knowledge to have, AND....you'll know what’s happening on your credit, your strengths/weaknesses and what your goals could be!?!

Wait...she just said "my office". Yeh...well most of you know I have my Real Estate (RE) license right? Well the people I met while purchasing MY house, were amazing. Jayme and Woody the Super Couple!!! Jayme ran around and showed me houses until we could both barely walk....and Woody has 34 years plus in the industry on both Lending and RE, so he was the paperwork master!!! I thought...wow, if I could run around and show houses like Jayme does...that would be ideal RE for me. Woody wants to do all of the hard part!!! Haha. So I renewed my license and joined their team!!

Working with a great team that specializes in REO properties exclusively makes the search pretty streamlined!! It’s SUPER important to know how this works, or it can be difficult to manage the transaction. You're not buying from an owner....in REO's you're buying from a bank that have a few levels of people below them that need close attention to keep your ball rolling. ;)

They set me up with a service that sent me 5-20 homes new on the market per day. It's pretty cool....I got to log in and tweak the settings and I can earmark the houses I liked and they would set up showings for me. Also I would search the Multiple Listing Service on the "non-licensed" side. Here's the link www.socalmls.com drag the map around and put your requirements in. You'll need a realtor to let you into the homes, which is where I can help you of course.

There are several types of homes on the market for sale....

Bank owned REO's: being the premier market for buyers right now.
Owner-occupied: which means someone still owns them, and your response time and bargaining will be easier, but the price is generally a lot higher.
Short-sales: which is something that I steer HUGELY clear of. Short sales are simply this: An owner before foreclosure gets the bank to agree to sell the home for less than what is owned to prevent foreclosure, so some agents list the house for a random amount to get a few offers. Once more than 2 offers are submitted, an asset manager from the bank that holds the note comes in and determines the value of the home and also what is owed on it....and then they counter offer the first person and down the line. The response from the bank can take 3-6 months and is usually wayyyyyy above what you hoped to spend on the house. This is my experience....and believe me, it's frustrating. I know a few people that bought short sales before this economy and did okay, but today seem to be a different story. http://en.wikipedia.org/wiki/Short_sale_(real_estate)

Back to REO's!! Here's how this works: With these you're dealing with the bank on your purchase and, surprisingly...there are a lot of buyers!! I must have looked at 30 houses, and written offers on half of them being repeatedly beaten out. I learned a lot the hard way ...the bank owned homes aren't above market so you have to be prepared for full price offers. Owner occupied listings usually price high and bargain down....REO's usually do the opposite (unless they see the house sitting for a long time). Most of the active homes I was involved with were new on the market. They had all of the "essentials" I wanted...and man, 15 Realtors would be through the door the first day!! (My competitive side was of course in full swing)

There are houses that sit, some due to repair issues....some are tear downs; some are marketed wrong (which is where I found mine). There's something for everyone out there!!! Be aware that to finance a home you'll need to meet certain guidelines of "livability", kind of like a salvaged title on a car...banks loan to guidelines!

Overall, banks want the houses sold so; they list it at fair market value and get the best offer in and through the process. Oh and the process isn't always quick. Be prepared to be tied up in the process for 15-45 days. Sometimes they sit on your offer, simply because they are completely overloaded with REO's...and sometimes it's due to a lot of offers. My team shows you how to be the sparkling gem at the top of the pile ;)

So why go through the grief?

Well....my house is already "in the black". I could rent it out today and go live at the beach and maybe even pocket some cash....and that was with 3% down!!! (Last year FHA was 3% down).

For first time buyers....you're going to get the stimulus money around 7k!! I'm not a first time buyer...so I didn't get it, but man....7k back??? I wish I could have. It's not a loan, it’s a gift! (Well...it's a govt gift haha) This runs until November this year!! I'll make sure you're lined up for it. ;)

This is the lowest CA will see for RE pricing...and yesterday (when I looked)....the rates were below 5% on a PURCHASE!!!! That’s insane!! My mom was selling houses at 18%. Sub-5 is a dream. So low housing prices...and low interest rate is an open window for us.

Homes are ALWAYS a good investment. Good or bad market my opinion stays true....it's your retirement and your biggest asset. Just make sure you can afford it!!

Homes are a fabulous write off = more money into your check a month, and more money back at the end of the year.


So in conclusion...yes I'm finally DONE....if you're even slightly interested....I might be able to answer some of your questions. There are a ton of misconceptions out there....and not only am I offering the business now...I just went through it, so ask me some questions!!

I hope to talk to you soon!!

Kelly