Coastal Real Estate and Lifestyles

The loan officers I work with do a good job of keeping me (and I’m sure their other Realtor contacts) up to date on any news about loan changes or updates from their companies.  I got an email notice yesterday from one of the loan originators I refer to, Gordon Ling at Bank of America.  He provided BofA stats on their company’s purchase money loans for 2009 - they closed the most purchase money loans in 2009 for San Mateo and Santa Clara counties then other lending institutions, including jumbo loans, according to Gordon’s reports.

Gordon represented one of my clients last year with a jumbo loan (over $1 Million loan amount) with an extremely competitive rate and a smooth close.  I was referred to Gordon by a mortgage broker who knew she could not provide the best loan product for my clients’ needs - a professional approach I appreciate.

These are the rates as of yesterday.  As you know they change daily and the final rate is subject to the borrower’s overall situation.  Gordon advises borrowers still need to pay special attention to major job, asset or income changes, and self-employment.  These rates are for general information only.

Thanks to Gordon for his care and service to my clients.  Fortunately, I have found a few loan officers who provide an exceptional level of integrity and service over the years.

As a footnote, I just want to add it’s not just about the rate, but also whether your mortgage professional stands behind his/her words, and can get the loan funded in a challenging lending environment.

Between January 24th and 31st, there has been a flurry of activity on the Coastside.  These numbers include Half Moon  Bay, El Granada, Moss Beach, Montara and Pacifica.

22 new listings - 3 are at $1.2 Million and above, all in Half Moon Bay.

9 price reductions - there are some good values here; one of the best is 414 Sevilla in Lower El Granada

7 pending (continue to show or no show)

5 contingent (meaning Pending Release; another offer may be able to obtain first position over the first offer).   It won’t show as “active” because an offer has been accepted but worth looking into if it turns out to be a desirable property for you.

3 transactions fell through (TFT) - not unusual in this lending environment.  All 3 are in Pacifica.

About half are under $600K and have are over $600K (the over $600K group is between asking prices of $799K and $1,099K).  This is a good sign.

It’s a beautiful day to cruise open houses….it’s sunny and clear.  I’ll be holding 365 Coronado, Half Moon Bay CA open today from 2pm to 4 pm.  This one is a short sale listing, listed by Margot Lockwood, Coldwell Banker Woodside.

No time for chocolate (my market morsel picture) today, but there will be fresh made oatmeal-butterscotch cookies at 365 Coronado that I made this morning.  Stop by to say hi and bring a cookie home to someone special.

I got up close and personal with one short sale transaction this past year.  The lack of standard procedures can be unsettling and challenging in preparing your clients for what to expect.

Here’s the story…My extremely well qualified and patient buyers submitted an “at market” offer on a short sale listing last Spring.  The sellers had two liens on the property – both with the same bank.  There were 5 other offers, we were told at the time.  After a month, we were informed that our offer was selected and that the bank approval should occur in about a week.  One, two, three weeks…nothing in writing.  The agent told me they would inform me of updates, but they weren’t coming very regularly.  Every week or so, I check in with the listing agent to obtain a status – so I could document my file with something…anything.  I believe they were doing the best they could.  We then get an Addendum signed by the bank, but the approval was yet to come.  My buyers still hang in there. 

I learn they have offered the 2nd lien holder a few thousand dollars.   Another couple of weeks pass by. We then learn that the first lien would be 100% covered, so it did not need to participate in the short sale.   The listing agent would need to now work with the 2nd lien holder to accept a short sale without the first loan involved.  While the listing agent and loss mitigators at the bank were negotiating, at least that’s what I think is going on, (maybe the file is just sitting on someone’s desk, I don’t know), my clients change their mind.

By this time, my clients decide that it is not making any sense that an over asking, market value, cash offer is not good enough, on top of the minimal and sometimes conflicting communications that we were receiving.  I could not give them any real reason for the delays from the information I was getting.  They asked me to cancel the contract in the Fall; they received their small initial deposit back and found another property, where they are currently very happy.  As for this short sale property, it appears to have closed as a private sale in November 2009.

The national average of short sales in 2009 was 12% according to the National Association of Realtors.  Here on the Coastside we were at approximately 6% of all 2009 sales according to MLS Listings - half the national average.  We’re learning from distressed property specialists in other parts of the Bay Area and California who have been in the distressed property trenches for over a year that there may be more coming.  Time will tell - a recurring theme.  More important, stories of short sale fraud are finally being reported.

A recent CNBC article exposed that second lien holders - when there is one - (not the first mortgage, but the 2nd or subordinate loan) are asking for additional money “under the table” in order to agree to the short sale.  According to the article:  “…But here’s what’s not legal and what’s apparently happening quite often recently.  Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale.  When I say “on the side,” I mean in cash, off the HUD settlement statements, so the first lien holder doesn’t see it.”

And here’s the facts:  The New RESPA Rules FAQ 12/30/2009 on the HUD website as it relates to the current activity being discussed in the media right now:

Q: Can items be listed as “Paid Outside of Closing” (POC) on the Good Faith Estimate (GFE)?

A: No, the totals included in the column on page 2 of the GFE must be the sums of the prices or fees, by category, for all settlement services that are required to be shown on the GFE.  Where individual components of these totals are required to be itemized, each third party settlement service must be identified and the estimated total price or fee to be paid for that service must be stated to the left of the column.  The standardized GFE form does not allow information to be included on any part of those totals that would be paid outside of closing.  Such information would not help borrowers to shop for loans and would not facilitate comparison of the charges on the GFE with the charges on the HUD-1.

Tomorrow I’ll post my first-hand short sale experience from a few months ago.

There were 9 transactions in Nov 2009 - the month with the most transactions during this period.

There were 7 transactions in Nov 2008.

The month with the lowest # of transactions was Dec 2008 (1).  Dec 08 and Jan 08 were REALLY slow.  I’ll share what this year looked like soon.

The month with the highest median sale price was December 2008 - $1,150,000.  Well, it was just one sale!  The month with the lowest median sale price was January 2009 - $432,000 (3 sales).  Not a lot to go on, but this is what it was.

The median price for listed properties is down 6% - from $1,084,000 to $1,017,000.

The median price of sold properties is down 32% - from $1,025,000 to $699,000.

The number of properties going into contract is trending up over the last 12 months –

• 0 in November 08
• 5 in December 08
• 2 in January 09
• 2 in February 09
• 5 in March 09
• 7 in April 09
• 5 in May 09
• 5 in June 09
• 8 in July 09
• 9 in August 09
• 9 in September 09
• 9 in October 09
• 8 in November 09

The number of NEW PROPERTIES LISTED by month trended up until July 2009 and then began trending down.  The month with the largest inventory was July 09.  Eight new listings came on the market 11/09 compared to 2 new listings on the market in 11/08.

Months Supply of Inventory peaked in the first quarter of 2009 with about 41 months of inventory!  Tons of inventory but not a lot of buying going on (why?  financial meltdown).  It’s been trending down ever since with November 2009 at 7 months.  This is still not a balanced market, which for our area is more in the 4-5 month range, but definitely improving!  Also, Half Moon Bay sales prices from November 2008 to November 2009 were down about 35% - that is for all price points/neighborhoods and single family homes only (not including lots, condo/townhouses or multi-family properties).

Annual and other stat reports to come, this is just to give you an idea of the kind of numbers we’re talking about in Half Moon Bay over “roughly” the last year (11/08-11/09).  As you will see from my past stat posts if you read them, I will discuss specific towns, or the Coastside as a whole, or compare it to other areas or time periods.  To look for Statistic posts specifically, go to the Quick Search button on the right sidebar and put in “stats or statistics”.  Or if you want the full 21 page report from which these numbers were generated (the San Mateo County Multiple Listing Service - MLS - MarketMetrics), just email me at mb@mariansbennett.com.

Hope you enjoy the mocha, my favorite drink :)  Happy New Year.

This has been an good year for these two Pacifica neighborhoods.  This chart shows two things 1) Average and Median sales prices on the left axis.  I wanted to show you both so you can see that they’re pretty consistent.  Note there are 2 lines for these unless they overlap.  This means there probably weren’t any properties that sold out of range (an outlier) for the area, which is one possible reason for differing numbers.  2)  Inventory (the number of properties for sale) on the right axis.  Note how different the numbers were a year ago compared to now.  Those of us working in the Park Pacifica and Sun Valley neighborhoods have been aware of this for months.  Below the graph are some key points.

This is a different market from a year ago.  I wrote about these neighborhoods in April 2009, titled Pacifica Buyers Find Value.    “Except for 2 sales in February 2009, there have been no closed sales since September 2008.”

The dip in January 2009 means that there were no closed sales that month.

Inventory peaked in late Winter and again in late Summer, a little earlier than more typical Spring and Fall inventory bumps.  In Nov 2008 there were 13 single family homes for sale and 1 sale (13 months of inventory); last month there were 4 homes for sale and 2 sales (2 months of inventory.  In the last 3 months, the absorption rate has been between 2-3 months!

The Median Sale Price broke the $600K mark in the Spring of 2009 and has sustained.  The Median  Sales Price in Nov 08 was $475,000; Median Sales Price in Nov 09 was $663,000.  Who knows if this approximately 28% increase will last in 2010 but it’s a welcome upturn for sellers who have seen a downturn since the peak in Quarter 1 of 2005 when the average sale price in these neighborhoods was $1,033,838.  At that time the Median sale price was $812,500, which is probably the more accurate range if we look at the trends.

Average Days on Market at the peak was 34; average days on market over 6 months is 58; average days on market over the last 3 months is 35.  This is with only one bank-owned (REO) property in the mix (1166 Fassler, originally listed for $513K, reduced to $498K 30 days later, accepted offer 10 days later, closed on 12/20/09 for $523K.)  I mention this because distressed properties can wreak havoc with days on market averages, but not for this market right now.

Potential sellers in Park Pacifica and Sun Valley - get a Comparative Market Analysis if you’re thinking about selling but wanted to wait for the market to stabilize.  There have been enough sales to satisfy appraisal concerns and price intelligently.

Potential buyers considering Park Pacifica and/or Sun Valley - have your financing in place BEFORE you make your offer.  Listing Agents may contact your mortgage broker or lender if there will be some financing.   Also, there are still cash buyers in the market.  Work with a Realtor who can guide you through a strategy that will insure you end up with the right house for you.

Search Pacifica properties or get listing alerts.

Search Pacifica properties in the $400K-$700K range or get listing alerts.

Related Article:Comparing Sun Valley and Park Pacifica - 3/31/2009

You do.  We buy and sell homes in earthquake country.  We’re used to it and we advise sellers and buyers of their rights and obligations to protect themselves here.  Thank goodness we’re not dealing with tornadoes…I’ve lived in Michigan!  I’m going to break it down a little here for you.  Pay attention to compliance disclosures at a point of sale - here’s an example…

California Health and Safety Code 19211.

(b) The seller of any real property containing a water heater shall certify to the prospective purchaser that this section has been complied with. This certification shall be made in writing, and may be included in existing transactional documents, including, but not limited to, the Homeowner’s Guide to Earthquake Safety published pursuant to Section 10149 of the Business and Professions Code, a real estate sales contract or receipt for deposit, or a transfer disclosure statement pursuant to Section 1102.6 or 1102.6a of the Civil Code.

Two disclosures related to earthquake safety are the Residential Earthquake Hazards Report questionnaire and the Natural Hazard Disclosure Statement.  Local purchase contracts (Item 4C on C.A.R. and Item 9 on PRDS) specify that the seller provide property disclosures that include environmental, natural hazard, earthquake and other compliance statements for the protection of both parties.

The Earthquake Hazards Report Form is included in the Homeowner’s Guide to Earthquake Safety booklet given to the buyer with their disclosure package.  The seller has checked off the boxes and signed it.  The seller will want to check to make sure he is in compliance and the Realtor will want to make sure they’re handing out the most current version of the booklet.

The Natural Hazard Disclosure Statement and Report is compiled by a third party company.  This report tells the buyer some important things about the house they are considering - such as whether the property is located in an Earthquake Fault Zone, a Seismic Hazard Zone for landslides, or a Seismic Hazard Zone for liquefaction.  It will also tell you what it means to be in these locations. 

In addition to these seller disclosures, the buyer is advised to get a home inspection.  The home inspector will discuss areas of the property that may be seismically unsafe and warrant further inspection by a specialist - two common discussion points are the foundation and water heater.  Most seller homes that I see have their water heaters strapped, however there are more than you would think that have them strapped improperly, as pointed out by home inspectors.

As an example, I stopped in Oceanshore Hardware on Tuesday to check on their water heater strapping kits for this post.  As I discussed the confusion that we sometimes experience between sellers and buyers, the owner, Larry Hassett, agreed that there is a “disconnect”.  A seller will honestly believe the water heater is strapped properly and a buyer will ask that it be strapped to be in compliance before they take possession.  A good listing agent will get it done pronto because it protects their client!

Back at the hardware store, Larry also pointed out that the marketing on the packages may be misleading when it comes to resale homes (water heater already installed).  So he graciously took the time to open the package… sure enough, there was a plastic “block” allowing the company to advertise “California compliant”, but as he points out and as I’ve seen firsthand, what’s in the package may not be the right piece for your house.  Bring in a plumber or contractor to have it assessed and sleep at night knowing at least your water heater isn’t going anywhere when the rumbling starts.

Water Heater bracing general instructions

Related Article:

Coastside Continues to Prepare for the Big One.

Develop a working relationship with your Realtor.  I know some of you are thinking…I’ll contact a Realtor “when I’m ready to BUY”, not before, heaven forbid.  Here’s the reality. . . a Realtor will guide you through the contract and escrow when you’ve identified a property; a Realtor can also help you narrow down an area, neighborhood, and the right property for you.

Sites that offer community information offer lots of value to those who are trying to narrow down where to focus their search.   Keep in mind that you will only be getting a fraction of what that community is all about.  Most of the public search sites miss the local flavor - the heart of a community or neighborhood.  That’s not the purpose of them anyway.  So if online searching is the first step, driving the area is a good second step.  When you’re ready to delve into a community or begin looking at properties within that community, that is the best time to talk to a Realtor.  Many prospective buyers attend open houses, check websites and reviews, and ask their friends/neighbors for referrals.

Whether you’re relocating to a new community or moving down the street, how do you begin a relationship with a Realtor?  You send an email or pick up the phone.  So now you’re thinking “what if I don’t like that Realtor?” (for whatever reason).  Any professional relationship is based on integrity and trust.   The only way to gain trust and learn about their style is to get to know that person.  Check their website and online presence (our industry is getting transparent like everything else) and talk with them.  It is our job to LISTEN and GUIDE and help you reach your real estate goal, so open communication is best.

Two documents to be aware of with this next step:

Disclosure of Agency Relationships:  It states that the Realtor (in front of you) agrees to do their “fiduciary duty” in the type of transaction you’re discussing (e.g. buyer or seller).  It’s an important clarification if you stop to think about it.  When you’re being shown a property, don’t you want to know who the Agent is representing?  According to California Association of Realtors’ Agency Laws Summary Sheet, a Selling (Buyer) Agent must disclosure agency relationships by providing the appropriate Agency Disclosure form and asking for a signed receipt “ASAP Before Buyer Executes Offer (i.e., After More Than A Casual, Transitory, Or Preliminary Inquiry)”.

Buyer Broker Agreement:  A buyer is free to use any Realtor unless there is a signed agreement; however, many buyer/agent relationships are based on mutual respect without use of a signed agreement.  If you are asked to sign an Agreement, it will be the Buyer Broker Agreement.  There are different reasons that a Realtor may ask you to sign this document.  Discuss this in detail with your Realtor if you are asked to sign this.

 C.A.R. Q & A about Buyer Brokerage and Agency.

Let me start by saying, I know this is a dry subject, but if you’re in the market, you want to know this stuff.  So grab a coffee or glass of wine and read it, including the good linked articles…

Getting a loan in the current economic environment.   If you plan to borrow any money from a lender to complete your purchase, you will quickly realize that it is not the same loan process of a year or two ago.  A few consideration points…

1)  Will you use a mortgage broker, direct lender, mortgage banker?  They’re the money person who will play an integral part in getting your escrow to a successful close, not to mention determining your monthly payment.  What are the differences and how will those differences affect what is best for you?  Ask questions until you feel comfortable.

Mortgage broker - A mortgage broker works with many lenders, perhaps hundreds, to locate the best loan product for your needs.  Some may favor certain lenders; you can ask why if they say they mostly work with one or two.

Direct lender - some borrowers go directly to the bank they currently do business with as a starting point.

Mortgage banker - A mortgage banker accesses only that lender’s portfolio of programs.

Two important changes related to the getting a loan took affect this year:

1)  Mortgage Disclosure Improvement Act of 2008 (MDIA) as part of the Housing and Economic Recovery Act (HERA) took effect on July 30, 2009.  In a nutshell:

• Timely delivery of the Good Faith Estimate (GFE) following loan application.
• Mandatory three day review period for loan documents.
• New disclosures required if your interest rate changes (not sure how much it has to change).
• Rate locks can be extended up to 3 weeks, down from 4 weeks.
• The cost of a one week rate lock extension is one-quarter of a percentage point of the loan amount.
• Another 3-day waiting period may be required during escrow if the annual percentage rate (APR) on the loan increases by at least an eighth of a percentage point.

Our local in-house lender, Susan O’Driscoll provided this PDF handout:  MDIA Information Sheet

New York Times 8/16/09:  New Law May Cause Delays for Borrowers 

2) Home Valuation Code of Conduct (HVCC) took effect May 1, 2009. (i.e. the new appraisal process)

• The code does not require or prohibit use of foreclosure data as comps.
• A lender may order appraisals directly from an appraiser.
• A lender may not accept an appraisal prepared by an appraiser that was ordered by a Mortgage Broker.
• The borrower may not pay the appraiser directly for the appraisal.
• The lender must provide the copy promptly upon completion of the appraisal, but no less than three business days prior to closing. (by “closing” they mean the signing of the loan docs).
• Appraisers and Realtors are able to communicate with each other; “Realtors can often be a source of data in the market in which the subject property is located. ” quoted from Fannie Mae 2009 HVCC FAQ July 2009 (link below).

Local market side note - the appraisal for a Montara property where I was representing the buyer came in over list price and over the offer price.  The lender was Wells Fargo; the appraiser they sent was from Fremont.  I provided him with not only local comps, but first hand information about the houses and locations.  He was planning to use a Clipper Ridge neighborhood house for this ocean view Montara house.  He seemed grateful for the local info… also called twice to get clarification on comps before finalizing the appraisal.

July 2009 update to HVCC FAQs.

Examiner.com 6/26/09:  Home Valuation Code of Conduct

The Big Picture 8/19/09:  Home Appraisal Reform:  WSJ vs NYT

Pending Show - ratified contract with contingencies
Pending - ratified contract with contingencies removed
Pending with Release - a 48-72 hour release of contract clause for performance, for example, when the buyer has a home to sell making the contract contingent on the property selling.

39 total pending statuses
11 are pending
24 are pending show
4 are pending release

Other data tidbits:

50% sold after 100 days on the market

The area with the most pendings currently is lower El Granada (MLS area 620)

5 should have closed by now based on the Close of Escrow Date in the MLS

13 are due to close in August

14 are due to close in September

2 are due to close in October

1 is due to close in November

List price points selling:

• $2 Million + - 1
• $1-2 Million -8
• $900K’s - 0
• $800K’s - 4
• $700K’s - 5
• $600K’s - 8
• $500K’s - 6
• $400K’s - 3
• $300K’s - 2
• under $200K - 2

Noteworthy - the Million dollar buyers are coming back into the market.  A well-priced/presented/located home in the $500K-$600K range is selling very quickly.  Still lots of inventory for the time being; currently coming down a little (129 single family homes for sale compared to 158 just a few weeks ago).

My opinion - There are very well qualified buyers now in the market.  They are writing offers with strong down payments and pre-approvals.  Some are all cash buyers.  They are being selective and they are savvy.

My apologies for not writing more frequently these days…been extremely busy writing offers, working for my sellers, and being there for my youngest who graduated from Half Moon Bay High School this June, who is now getting ready to head off to Cal Poly in San Luis Obispo.  I have so much to share, it’s just going to take me a little while to get it onto the blog.