by Gagner | Jan 27, 2013 | Uncategorized
For months now, the national news has been reporting that residential real estate prices have turned the corner and are rising throughout most areas of the country. Of course, real estate trends are local events, and nowhere is the rise in prices more evident than in the bay area. If you own a home in the Cambrian area of San Jose or have been considering this area, you may be surprised by the strength of the recovery. I love the Cambrian area of San Jose for many reasons, including its central location to work and play, good public schools and reasonable prices, relative to other parts of Silicon Valley. Besides the economy, this combination of factors really helps home prices over time. The positive sales trends for homes in Cambrian area began in March 2012 and have continued mostly unabated right thru the generally slower seasonal period (Oct-Dec). My intention is to provide readers with an ongoing picture of the overall Cambrian area housing market, along with specific market topics that may be of interest. Two key figures that indicate the strength of any real estate market are “average days on market” (avg DOM) and the “sale to list price ratio”. Prior to March 2012, the avg DOM in Cambrian area were well above 2 months and often pushing 3 months or more. In fact, this figure for all of San Jose was well above 3 months since the great recession began. Suddenly, beginning in March 2012, the avg DOM dropped to 40 days (95124) and 27 days (95118), and continued to mostly trend down all the way up...
by Gagner | Jan 26, 2013 | Uncategorized
You may or may not have heard about lease options. Why and when would this be a credible strategy to sell your house? We’ll discuss those concepts here. A lease-option allows a seller to sell their property when it may otherwise be difficult to sell (poor physical condition, undesirable area or neighborhood, buyer’s market, etc). In many cases, a seller can net more money when offering terms to a buyer. In addition, sellers can often avoid paying realtor sales commissions by using a lease-option agreement (as they have already found the buyer themselves). In most lease-option arrangements, the tenants agree to pay move-in “option” money that will be used for credit toward a down payment on the house. You’ll also want them to demonstrate their commitment by paying above-market rent, the “above” portion of which (10 percent and up) will be credited toward a sale. If the tenants back out of the deal at the option point — typically one to three years after move-in — you’ll get to keep those monies, which can amount to a nice little chunk of change. Another bonus is that lease-option folks are inclined to maintain a home better than conventional renters, because they have a vested interest in it. In other words, you’re less apt to suffer the dreaded “renter trashing.” Also, you get to retain the income-tax benefits of the house during the lease period and won’t have to pay taxes at all on the option money until it’s formally credited toward the house. A lease option, by the way, is not to be confused with a lease purchase, a very...
by Gagner | Jan 2, 2013 | Uncategorized
Seller financing is almost always an attractive proposition to a home buyer. This is particularly true for investors that are looking to minimize their financing costs while fixing and flipping a property. The general wisdom is that a seller can maximize their selling price with attractive terms. Seller financing generally offers the buyer the lowest cost of acquiring a given property. Why would a seller finance their own property sale? Many reasons: Make it easier and faster to sell an otherwise difficult to sell property. Seller won’t recognize capital gains until each payment is made, minimizing their tax liability Acting as a bank, the seller essentially creates an annuity, which can provide on-going funds. Maximize sales price by offering more flexible purchase terms. If funds are not immediately needed from the sale of your property, this may be a great option for you. Particularly if the interest you can charge is greater than other returns you can safely make. Think about it, IF the buyer is unable to make their payments, you can foreclose (just like a bank) and take the property back. In the meantime, you have gained the benefits of whatever interest and principal payments the buyer has made. Of course, the risk is that the buyer does not take care of the property and you end up with a house that is worth less than when you financed it. Just like a bank, you should do your due diligence on the buyer. Make sure they have a responsible payment history and reasonable credit score. Generally, people that are responsible have solid credit histories. I also recommend...
by Gagner | Dec 25, 2012 | Uncategorized
If you haven’t heard yet, most banks today are foregoing foreclosure efforts in favor of short sales. Simply put, they have finally figured out that a short sale is actually more beneficial to their bottom-line than foreclosing on a property owner. This is important to know for those people who still find themselves “under-water”. That figure still comprises over 25% of California home-owners. How do you know if a short sale is the right strategy to pursue? There are many factors involved. First, ask yourself if you need to leave your house now or can you “wait out the storm”. If you don’t need to sell your house, then why damage your credit for 3-7 years (depending on your FICO score). The answer to this question is dependent upon your circumstances and your goals over the next many years. Even if you want to leave your house, it is important to recognize that banks will only approve a short sale if the owner can show a hardship, which includes: Unemployment, loss of hours or under-employed 50+ mile job relocation Business failure Medical losses Divorce or death of spouse Increased mortgage payments The bank will also want to know if you have considered other options, such as refinance, lender workout, forbearance, loan modification and rent it. If you meet the criteria above, a short sale may be the right strategy for you. If that is the case, be prepared for a tedious process that can easily take 60-90 days or more. The length of time required to complete this process depends on the financial institution(s) involved and the complexity of...
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