Property Tour Video Blog

Years ago, in the middle of the melt down, my partners and I ran a "Distressed Property Tour." Once a month, on Saturday morning we would meet at the Thunderbird office with whatever clients showed up and caravan around town to look at REOs,  short sales and fixers. I may be odd, but to me, it was kind of fun. We ran into all kinds of strange architectural phenomena. More than a few times, I heard the question, "Why do you think they did that?" I enjoyed interacting with the bargain hunters who were willing to give up their Saturday morning to go traipsing about in hopes of finding a diamond in the rough. About 2 years ago, the number of bank owned homes started to drop off dramatically (a good thing) and we didn't have enough properties to show, so I reluctantly called off the tour.. Ever since then I had in the back of my mind that I should video the tour and let people see these homes without having to get off the couch.

This is the first in what hopes to be a series of posts, videoing properties. I will be walking through the homes just like I do when with a client. I call it as I see it, making comments about the good, the bad and the ugly. I am not going to be deliberately negative, but I will mention the power lines in your view, the noise level and any other features not mentioned in the advertising.

The video quality is a little rough. It is just me with my phone walking and talking my way through the house. If you are prone to motion sickness, look away from time to time to protect your lunch. I hope you enjoy it. I will get better as I continue. I would really appreciate your feedback.

How to Find Killer Deals, Grow Amazingly Wealthy and Rule The World in 7 Easy Steps.

How to Find Killer Deals, Grow Amazingly Wealthy and Rule The World in 7 Easy Steps.

You’ve heard this pitch before, right? How many seminars and webinars have you attended? How many books and tapes have you purchased? How many pushy telemarketers have you patiently listened to? They all promise a 6 or 7 figure income, almost guaranteed, if you just follow our simple program which can be yours for a paltry fee payable in 6 affordable installments. I remember my irritatingly perceptive teen age daughter remarking to me, “Dad, the people getting rich are the ones selling you those books and CDs.”  Ouch! From the mouth of babes…

So why do we keep looking? Is it an image from a magazine, tall dark ruggedly handsome man in a tux walking casually across the runway from his Mazerati to his private jet, while beautiful women steal furtive, longing glances?  Hello! Don’t let someone else’s marketing define your dreams.

Wouldn't it be better to be happy and productive, get Joey through college, take care of the important people in your life and still have enough to retire in freedom and comfort? This is your life! Enjoy the journey, but pay attention!

Here are 7 steps that will bring you closer to your goals:

1. Silence the inner critic.
   You know the critic I mean. Those negative thoughts that leap to the forefront of our consciousness every time something doesn’t go as planned. Whether those thoughts tell you that you are stupid, weak, ugly, unlovable or incompetent, they all boil down to, “You’re not good enough, so why try?” They can be paralyzing.
   Recognize these thoughts for what they are. They probably started out as a misguided attempt at self-motivation, but can develop into a debilitating, self-punishing habit. Don’t feel obligated to play back the same negative thoughts and emotions like an old tape loop, over and over, whenever you are not perfect.
   Once you recognize that these thoughts are just an auto responder from the sub-conscious, it puts things in better perspective. Think of those negative thoughts as optional. You don’t have to hit the playback button every time. Honestly, would you ever use the words ugly, stupid or incompetent on a co-worker or a loved one? Why are you using them on yourself? Give yourself a break. None of us are perfect. Settle for being excellent.
   
2. Take action..
   I remember many years ago when I was managing several departments in a software company that was being constantly reorganized, my new boss told me to take a “Ready, fire, aim” approach to my job. I was horrified. It might work for Dick Cheney, but not for me. I was sure you were supposed to plan carefully, take all aspects into consideration, and then judiciously make your best decision.
   Looking back, I get the point.. Take action. Test the waters. Get in the game. Move ahead. You can adjust your course as you gain experience.
   You don’t gain experience unless you participate. Nothing gets done without action.
3. Educate yourself.
   Don’t stop after 1 seminar or 1 book. Keep reading. Keep talking. Keep listening.  Find other people with similar objectives. Find a mentor. Who is already doing what you want to do? Study them. Be an apprentice if you can. Ask questions. Think about what makes sense and what doesn't. Ask more questions. Learn from doing.
4. Be part of a team.
   No matter how good you are, you can’t do it all. We all have strengths and weaknesses. Focus. Do what you do best. Ally with people who have complementary strengths. Find strategic partners that are good at their job and that treat you well. Avoid anyone that makes you feel “less than.” Keep your ego in check and lead, follow or get out of the way, as the situation demands.
5.  Be persistent.
   You will make mistakes. You will have setbacks. Things will take longer and cost more than you plan. People that you trust will mislead you. Guaranteed. So get over it and get on with it. Nothing is more important than persistence. Talent is not. There are too many unhappy, unsuccessful people with talent. Intelligence is not. Brilliance is often blinding. Education alone is inadequate. The world is filled with educated derelicts. If you get knocked down nine times, get up ten. Persistence almost guarantees success.
6. Treat others well.
   Be fair, courteous, generous and loving. Courtesy costs nothing.  A smile or a thank you note can make someone’s day. Don’t give away the farm, but if you possibly can, make sure that people who help you are rewarded. You may need their help again. Love is a funny word. Human beings are social animals, hard wired to bond with each other. Love is the glue.  Don’t over analyze. Just go with it.
7. Focus on the journey.Every adventure begins with an unlikely hero. In your story, that would be you. It isn’t the pot of gold at the end of the rainbow that makes you successful. The real reward is the person you have become during the journey. If you silence your inner critic, if you move yourself to action, if you are constantly learning and surrounding yourself with good people and if you are doing these things persistently, you are already successful. The outward rewards will be almost anti-climactic. The real reward is the person you have become. This journey, your day to day existence, is really all you have.  Stay alert. Avoid getting trapped in mindless routine. You have one life. Live it like you mean it.
   
   Mike Young is a Broker Associate working at Thunderbird Real Estate
   (831) 234-1545
   License 00952966
   mike@MikeYoungProperties.com

Short Sale Buyer’s Guide

Short Sale Buyer’s Guide

“As we head into the winter of 2013-14, I believe that short sales are an especially good opportunity to buy at below market, if you can find short sales to buy.”  - Mike

Definition:

A short sale occurs when the total net proceeds from the sale are insufficient to pay all the debt secured by that property. (most commonly, the mortgages) Example, The home has a mortgage of $650,000, but in today’s market the highest offer the sellers gets is $550,000. The bank agrees to be paid back “short” and lets the sale go through.

Drawbacks for buyers:

You have to wait…and wait…and then wait some more. Don’t make an offer on a short sale unless you are prepared to wait 6 months or more before you own the property.

At the end of the wait, the price can change. Since the bank is not being paid in full, they have to approve the price and other terms of the sale. You don’t really know for sure what you are paying till you have the approval letter in your hand. However, if the bank changes the price, you can walk away or counter offer. There is no penalty to you.

Benefits for buyers:

Sometimes you can get a ridiculously good deal. The banks can be very inconsistent in their valuations, both high and low.  If they come back high, you can always walk away.   If they agree with your price, you say, “Thank you very much,” and put that money in your pocket.

The wait period works for you in an appreciating market. While the bank spends months processing the short sale, you have the property tied up with no risk and no "skin in the game." You can often get the property at last year's prices. 

There is also typically less competition for short sales and you may find yourself in the running for properties that would be out of your reach as a “normal sale.”

How to proceed

Use an experienced short sale agent. You need a savvy agent in your corner.  I have been involved with roughly 40 short sales over the last 6 years, usually on the seller side.  Believe me, they are definitely more complicated.

Offer strategy is important. Your agent must communicate to sellers’ agent that you are flexible and on their side. Sellers and their agents are under extreme pressure, dealing with a complicated, sometimes random, bureaucratic process with foreclosure staring them in the face. As long as you are getting a good deal, let them know you will do everything you can to make their job easier. 

Are you following me here? Price is not the seller’s primary concern. They just want an offer the bank will approve so they can get on with their life. The sellers get nothing, regardless of the price. 

If you need to pay for a month or 2 back HOA dues or a short sale negotiation fee or any other random item the short sale bank won’t approve, let the seller’s agent know you are open to that, as long as your bottom line still works for you. Again, you need an experienced agent to figure out the lowest price the bank is likely to accept. Low purchase price is where you make your money.

What to expect

60 to 90 days after your offer is submitted you will usually have an answer in the form of the approval letter which spells out the terms of the sale. Wait time is over and hurry up mode begins.  Most often they want you to close the deal in 30 days or less. At this point it becomes more like a regular sale. You usually have 17 days to do your inspections and get your loan approved. During this initial 17 days, after the approval letter is issued, you can back out with no penalty. Most short sales are approved at the offer price, but you never know till you get that approval letter.

Happy hunting! Do not hesitate to contact me if you have any questions.

Mike Young - Thunderbird Real Estate
Realtor, Broker Associate, MBA, SFR, CDPE, HAFA
(831) 234-1545
License 00952966
mike@MikeYoungProperties.com

Property taxes headed back up

Property taxes headed back up

The black cloud of the housing collapse had one small silver lining. Many homeowners bought at the top of the market 2004 through 2007 only to see their home values crash through the floor in 2007 – 2009. Prices declined 40% across California causing recession, foreclosure and heartache. The silver lining was that county assessors across the state lowered the assessed value on millions of properties to bring them in line with then current values. That in turn, lowered property taxes providing much needed relief for beleaguered homeowners.

Home values stabilized in 2012 and have been increasing steadily, even rapidly ever since. In a process termed, “value restoration” or recapture,” property assessments may be increased almost as rapidly as they were reduced. Normally, Prop. 13 limits the increased valuations to 2% per year, but revenue starved counties may increase valuations and taxes much more rapidly.

I asked Santa Cruz County Assessor Sean Saldavia what property tax payers could expect in our county. He replied, ” Over the past six years we proactively lowered thousands of assessments due to the declining market.  Now that the market is rebounding these reductions will be restored. “

If your property taxes were not reduced you are still protected by the 2% cap on increases. Saldavia continued, “Most property owners did not receive a reduction and therefore will not receive a future increase above the Proposition 13 annual increase capped at 2% per year.  Property owners that did receive a reduction will have it restored over the upcoming years as the market rebounds. “

Any increases in property taxes due to value increases this year  (20% +) will not be implemented till next year according to Saldavia and there will be a notice to each tax payer affected, explaining the method used to establish value. If you disagree with your new assessment, there is also an appeals process which is outlined on the assessor’s web site.

You may access the Assessor’s web site at http://www.co.santa-cruz.ca.us/asr/ or contact Mr. Saldavia directly at ASR001@co.santa-cruz.ca.us . 

Rent or Buy in Watsonville?

Rent or Buy in Watsonville?

In 2007 - 2009, we saw housing prices come crashing down like they never have, at least in our life times. Home prices across the state of California declined 40%. The last two years, prices have bumped along the bottom as buyers cautiously re-enter the housing market.

Among people I talk to, the mood of buyers has changed a lot since 2005. No one is expecting to double their money in five years, but they still have to live somewhere, right? So for many people, the issues become more personal and immediate. Do I want to have to ask my landlords’ permission to paint the bathroom a different color, or to put up a basketball hoop? Do I want to live in my own place? Will my monthly bills go up or down? Is it safe to buy a house and can I swing it if I wanted to?

Only you can answer the personal questions, but I found a great tool for figuring out the financial piece of it. The Department of Housing and Urban Development or HUD has a very nice rent vs. buy calculator on their website at:

http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

I plugged in an example of a 4 bedroom home in Watsonville. Purchase price $350,000, loan rate 4%, 3.5% down payment ($12,250) vs. rent of $2200 per month. To be ultra-conservative I said housing prices will stay exactly the same as they are today, no appreciation over the next 10 years.

The first dramatic difference is that your monthly payment drops to $1,274, but there are many other savings that you might not think about. There is a hefty tax deduction. Rent will increase over time. Your mortgage payment stays fixed. Over time you are paying down the loan.  Over a 10 year period, the overall savings amounts to $140,787. If you were to assume even a 2% increase in home prices, your total savings would be $207,796 over the same 10 years.

It is something to think about. Where else are you going to accumulate that sort of savings? What will that mean to you and your family? Take advantage of the savings if you can. Talk to a lender to see if you qualify. You will be worlds ahead a few years from now.

Note: The calculator above uses these items in its calculations: private mortgage insurance, homeowner's insurance cost, loan closing cost, cost of selling a home, property tax, homeowner's tax saving, and rent increases. Calculator results are estimates only.

Mike Young is a Broker Associate at Thunderbird Real Estate in Capitola.

Mike Young - Thunderbird Real Estate
Realtor, Broker Associate, MBA, SFR, CDPE, HAFA
(831) 234-1545
License 00952966
mike@MikeYoungProperties.com

   

2012 - The year of the short sale?

To be clear, a real estate short sale is any sale where the net proceeds are not enough to pay off the mortgage completely. In other words, the bank is paid back “short.” That is where the name comes from. It has nothing to do with the amount of time involved. Short sale is most often used as an option to avoid foreclosure. Foreclosure is expensive for lenders and is often the worst option for borrowers.

Though short sales were almost unheard of 5 years ago, they have become more and more common in recent years. There are several advantages for both lenders and borrowers leading to an increase in short sales both nationally and locally. More and more Watsonville homeowners under financial duress are opting to attempt a short sale.  In 2011, 141 homeowners in zip code 95076 successfully completed a short sale compared with only 60 in 2008.

Forecasters are predicting that 2012 may see an even sharper increase in these transactions due to the following factors:

1. Foreclosure activity in 2012 is predicted to increase 25% over 2011 as banks work through their legal problems associated with the “robo-signing” scandal. An increasing number of homeowners, when faced with foreclosure, will choose a short sale instead.
2. New laws in 2011 granted greater protections to Californians who complete short sales. It is now illegal for any mortgage holder to pursue a short sale seller for any shortfall in paying off the mortgage.
3. Many banks, including Chase, CitiBank, and Bank of America are offering cash incentives for delinquent borrowers to do short sales.. These may range from $3,000 to $35,000
       
4. Perhaps the biggest motivator for homeowners under financial hardship to complete a short sale in 2012 is for tax reasons. The Mortgage Tax Relief Act, eliminating tax on mortgage debt forgiveness, expires Dec. 31, 2012.  Consider this example, if you owe $500,000 on your mortgage, but proceeds from foreclosure or short sale only net your lender $400,000 you may be liable for ordinary income tax on the $100,000 difference.  Especially in the Watsonville area, where home values have dropped 60% or more from the peak in 2005 - 2007, this may result in a huge tax consequence, just when you can least afford it.

If you are considering a short sale, it is extremely important to get advice from your lawyer and a qualified tax advisor.

 Resources:

 California Rural Legal Assistance Watsonville

 21 Carr Street
 Watsonville, CA 95076
 831-724-2253

 Government programs

www.FreddieMac.com/singlefamily/avoid_foreclosure.html

http://www.makinghomeaffordable.gov/pages/default.aspx

Fannie Mae Making Home Affordable Program Eligibility Address Check

Freddie Mac Making Home Affordable Program Eligibility Address Check

HAFA Program Information. Home Affordable Foreclosure Alternatives

HAFA Unemployment Program Information.

HAMP Program Information. Home Affordable Modification Program

Mortgage Forgiveness Debt Relief Act and Debt Cancellation

Homeowners Assistance Program (HAP Program) Information

Preforeclosure Sales Program through HUD

Department of Veterans Affairs Regional Loan Center Compromise Sale Program

Mike Young is a Realtor and advocate for the underwater homeowner based in Capitola, CA

mike@MikeYoungProperties,com

831-234-1545

Strategic Defaulters -Deadbeats or Survivors?

Is it wrong to stop paying your mortgage just because your home is worth less than the mortgage balance? My answer is not just, “No,” it is “Hell no!” It is time to stop blaming the victims of the real estate market meltdown and start moving toward solutions.

Having the 99% majority squabbling amongst themselves about how to respond to having your entire life savings ripped away suits the 1% perfectly.  That conveniently deflects attention from the warped financial system that got us into this economic quagmire in the first place.

Housing prices have declined on average over 50% in California since the peak in ’07.  Some communities have seen declines in excess of 60%.  Next year’s appreciation is predicted at 1.7%. It could be 20 years before prices return to 2007 levels.  At what point do you say, “Enough is enough?”

 
At what point is it moral to not pay? When your savings are depleted? When your retirement is gone? When the stress has ruined your marriage and your health? What are your true priorities, the bank or your family? The bank has no morality. It is a mindless, money eating machine.

Paying the mortgage on bloated mortgage debt makes no sense. The bubble has burst.  There is no way to put Humpty Dumpty back together again.  We are in a new reality where there is no shame in refusing financial servitude.  Don’t fall for their horse manure.  Don’t cling to the debt! Take advantage of your rights and protection under the law.  Some banks are actually paying you to do short sales.  Go ahead. Push the reset button. Declare a do-over. You will be able to rent right now for much less than your current payment and buy again in 2-3 years for way less than you owe now.