John Fischer's Real Estate Views

John Fischer

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Volume 1 | Issue 5 | May 2011

In This Issue:

A Note From John:
This Month's Note from John:
Short Sales and Foreclosures

Featured Article:
5 Common Complaints

Mixed Bag
A Monthly Offering on a Variety of Current Topics
 

MARKET MATTERS*


April 2011**

  Active

Pending

Sold

Alamo

84

39

12

Blackhawk

52

12

10

Danville

201

115

60

Diablo

11

1

1

Dublin

126

186

45

Lafayette

95

36

22

Moraga

36

18

20

Orinda

56

22

12

Pleasanton

185

114

74

San Ramon

218

221

88

*I have much more data at my fingertips than can go in the newsletter. If you would like more specific information about a particular area or neighborhood, even if it is what the neighbor's house really sold for, just call or email me and I will be happy to provide the information for you.

** These statistics reflect active, pending and sold single family homes for the month ending April 30th, 2011.

MORTGAGE MINDER


WEEK OF May 9th

Loan (National Average)
15 Yr Fixed Conforming
30 Yr Fixed Conforming
30 Yr Fixed Jumbo
5/1 ARM Conforming

Rate
4.05%
4.77%
5.26%
3.43%

Interest rates per MonitorBankRates

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If you have a family member, friend or co-worker who is thinking about buying or selling their home, please forward this email to them or have them contact me at:

[email protected]

Your referrals are truly appreciated!

Recent Testimonial from a Satisfied Client:

"Working with John was a great experience! He stuck with us through the ups and downs and even when we were completely frustrated he assured us that the right home would come along - and it did.

We now have the home of our dreams, and it's due to John's patience and guidance through the whole process!"

Nov. 2010, Alamo Buyer

A Note From John

Short Sales and Foreclosures


A topic of great interest these days is short sales and foreclosures. A Short Sale happens when the amount of a home mortgage is greater than the market value of the home. If the owner wants to sell a property that is "short", they should contact the bank (mortgage holder) and seek approval for a short sale. Provided that the seller details a financial hardship acceptable to the bank, the bank will approve a short sale.

Many borrowers stop making their payments before requesting a short sale as lenders do not seriously consider any sort of loan workout request from borrowers who are current on their loans. Lenders are now taking a long time to foreclose, 16 months after no payments and sometimes longer. Many homeowners considering a strategic default vs. a short sale should at least make an effort at a short sale.

In both foreclosures and short sales, banks will issue IRS Form 1099. Under the Mortgage Debt Forgiveness Relief Act of 2007, the IRS is not charging income tax on most mortgage debt forgiven through short sale or foreclosure, especially on a borrower’s primary residence so long as it occurs before the end of the 2012 calendar year.

However, the bank may not issue a 1099 in foreclosures involving equity lines or loans that resulted in cash out. The bank might retain the right to pursue the borrowers for those funds in California.

This whole topic has been in flux since the level of short sales and foreclosures became topical four years ago. Before you make a decision about whether to attempt a short sale or let your home go to foreclosure, consult with a tax professional and get fully briefed on how the relevant tax laws will affect you.

Money Magazine, May 2011 issue states that 39% of US homes sold were short sales or foreclosures. The median discount on a short sale or foreclosure was 15% compared to conventional sales. It shows that the drop nationwide in single family homes prices from their 2006 peak was 32%. Prices are down in the US and the San Ramon Valley approximately this amount.

- John Fischer

Featured Article

The 5 Most Common Complaints of Short Sale and Foreclosure Buyers

So you've decided to buy a short sale or foreclosure property, you want a bargain and you want to close the deal fast. Hold on! You're about to enter the "Twilight Zone" of Real Estate.

There are a completely different set of rules that apply to REO's and Short Sales, which barely resemble a traditional home purchase. Understanding how it works before you start shopping can make the process much less stressful and prevent high blood pressure.

1. Loooong Escrows. Don't expect to close the deal in 30 or 45 days like a "regular" home purchase. Foreclosures can take a few days to a few weeks longer, you're dealing with a bank that's in no rush to close. Short sales can take 3 to 6 months or longer to close, if they do at all.

2. No Lowball Offers. The bank (for REO's) or the homeowner (for short sales) won't even look at your offer if it's way below the asking price. The bank has a duty to it's shareholders/investors to get as much as they can for the property. The homeowner is looking for a solution to their mortgage woes, not a way to make it worse. Make an educated and realistic offer and everybody wins.

3. Hurry Up and Wait. It's best to stay flexible when it comes to "distressed" properties. The bank or mortgage holder can throw a monkey wrench in the works at any time, and they often do. Don't rent the moving truck until you have the key to the front door in your hand.

4. When Will I know? You usually will know in a few hours or days if your offer is accepted on a normal sale. It could be weeks or months with a bank-owned or short sale. I doesn't matter how much you want to know or how big of a hurry you are in. You'll know when you know. Keep looking and placing offers on homes until you get an offer accepted.

5. Above the Law. Dealing with a bank is not the same as dealing with a real seller. The bank will pretty much do what they want to do in terms of time lines, disclosures and contracts. No amount of cajoling or threatening will get the bank to do it "the right way". Chalk it up to "the way things are" when dealing with the bank.

While purchasing an REO or short sale may be more challenging than a traditional home purchase, the rewards can be enormous, provided you keep a cool head and manage your expectations.

Mixed Bag

VA Loans - Great Opportunity

Veterans, Reservists, National Guard or surviving spouses may qualify for NO down payment and 103% financing up to $1,000,000 in some areas. Loans are assumable with no prepayment penalties. No PMI or MIP to pay. You might qualify for this tremendous benefit for veterans. Contact me and I will get you in touch with a qualified VA lender.

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About John Fischer
I've been selling residential real estate for the past six years here in the Diablo Valley. After graduating from UCLA and then getting my MBA, I spent most of my career in corporate sales starting with Xerox in the 1970's.

Following that, I proceeded into IBM computer sales and leasing. My wife, Janeen, and I have lived in the same house in Alamo since 1983 and have raised three children. They all graduated from Monte Vista High School and have gone to UCLA, UC Davis and University of Washington. Our youngest, Kelsey, is now attending UC Hastings School of Law.

John Fischer
President's Club '08, '09 '10
CA DRE #00695958
925-980-4816
[email protected]
http://www.johnfischerrealestate.com

J. Rockcliff REALTORS
15 Railroad Ave., Danville, CA 94526

"Serving the East Bay communities of Diablo Valley (Alamo, Blackhawk, Danville, Diablo, San Ramon), Lamorinda (Lafayette, Moraga, Orinda), Walnut Creek and Tri-Valley (Pleasanton, Dublin)."

Copyright © 2011 John Fischer

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