Archive for August, 2008

How to Purchase a Foreclosure

Wednesday, August 6th, 2008

It is not uncommon for a client to ask me about purchasing foreclosure homes.  We hear the misleading ads on the radio, “I just bought a home for $199 a month”.  While that number is totally unrealistic in Marin, foreclosures can be a bargain.  In some parts of the country banks and other owners have foreclosure auctions, other than the occasional homeowner (usually with an unrealistic reserve) I have not seen this in Marin. Although our foreclosure rate is significantly up from prior years it still is very low and most foreclosed properties are taken back by the bank.

In Marin, properties in foreclosure are sold at the court-house steps.  Buyers with cashiers checks (for the full amount) bid against each other and the bank.  The bank does not need a cashiers check because it is their loan that would be paid off.  Okay, get this straight, you need cash to buy the home, often you have never seen the inside of the house, and you many not be sure the title is completely clean.  Once you win the auction you can get title, go to a bank and then (after you bought the home) try to get a loan.  You also get to evict the occupants and finally see the inside of the home you just purchased.  The experienced buyers have lots of cash and make a bundle on most of them but do loose their shirts on about one in ten.  This is a rich person’s game as most of us don’t have the extra cash laying around and can’t afford our one purchase to be the dog that is a money looser.

So the court-house auction does not work for most of us but the next best thing is post foreclosure, bank owned property (REO – real estate owned by the bank). Once a bank takes a home back they want to sell it quickly because they are in the business of lending money, not owing excess homes.  These REO homes are priced (usually) realistically, as the banks wants to dump them within a month or two. Caution here; just because a home is an REO does not mean it is a good deal and the banks will negotiate.

If you are interested in looking for these homes ask your agent (or me if you don’t have one) as it is easy to do a search in the Marin MLS.

Is Your Granite Countertop Radioactive

Tuesday, August 5th, 2008
Granite Countertop

Granite Countertop

The fad for granite kitchen countertops looks like it may last a couple of million years, the radiation that is, not the fad. According to Rice University physics professor, W.J. Llope, some granite countertops have enough uranium to pose a danger to humans. Some of the countertops produce both radon and radiation. Radon is the number two cause of lung cancer just behind smoking.

Some granite countertops emit radiation at levels much higher than typical atmosphere exposure. Some samples have levels 25 times higher than recommended EPA levels. Not much testing has been done on kitchen radiation and radon levels but it appears most countertops are in the safe range according to the Marble Institute of America. None the less, if it were my home I would go for the testing.

The American Association of Radon Scientists and Technologist have a web site that can help you find someone local and qualified to test your counters. The cost can run several hundred dollars. Also, if you Google “radon test kits” you can find them for under $12.00 at Amazon but they will not test for radiation. I would recommend the professional over the self-test kits.

Most of Marin County real estate does not have an issue with radon from the ground so not many properties here have been tested but it looks like this might be a newly popular test, for the kitchen anyway.

Novato Short Sale – Are They Closing

Monday, August 4th, 2008

Novato has half the Short Sale listings in the Marin MLS (B.A.R.I.E.S.) yet they are not closing escrow at anywhere near the rate they are going into contract. Short Sales in general have a high escrow fall-out rate and most of the time that is due to the bank taking too long to respond to legitimate offers. The banks are overwhelmed with paperwork from poor performing loans and don’t seem to know how to deal with the situation.

Here is the interesting part; Novato currently has 121 Short Sale listings and 48% of them are in contract (various stages of the sale process). If that percentage were actually closing escrow it would represent a very strong Sellers Market, which is definitely not the case.

In July 2008 Novato had just 9 Short Sales close escrow. Assuming the number of listings was similar in July to this August, which it is that means that less than 20% of the Short Sales are closing which is way off from the 48% in contract.

What happens to these homes when they fall out of escrow? Some go back on the market to give it another go but many are taken back by the bank and sold as bank owned property (REO – Real Estate Owned “by a bank” ).

Ghost Towns in Marin County

Saturday, August 2nd, 2008

The August 2, 2008 edition of the Wall Street Journal has a front-page article about ghost towns throughout America. The ghost towns are largely a result of unfinished subdivisions. Many of these subdivisions remain a half filled with for sale signs outnumbering occupied properties. Many of the projects have been abandoned by their developers with little hope of being completed in the near future.

The story features a couple who won a rent-free, for five years, with an option to purchase a home at the end of the term for $452,000. I suppose this could turn out to be a great deal for the lucky renters if they don’t mind what can a weed filled yards for the next couple of years. Most of these ghost towns are in areas that had extraordinarily high development of new homes. Conversely, Marin County had very little development in the preceding five years. Most of the development that did occur was in Novato and not surprisingly Novato has experienced the largest reduction in prices in Marin County during the current housing market.

Most of Marin County is designated open-space which prohibits the development of new housing tracts and this remains one reason that Marin County pricing has weathered the current market downturn better than other counties and states. While Marin counties foreclosure rate has increased dramatically it is still significantly below the statewide average. There are very few abandoned properties in Marin County and those that have been abandoned are usually quickly resold by the banks.

If you are looking for one of those funky Western ghost towns I suggest you drive outside of Marin County.

Tired of paying the MMWD

Friday, August 1st, 2008
Water Well

Water Well

With ever increasing water rates and the constant threat of a water shortage it makes you wish you had own well.  Getting a well that produces enough water may not be as easy or inexpensive as you imagine as I learned while hunting for agriculture land for a client.

Wells are measured by the number of gallons per minute they produce.  For residential use usually five gallons per minute is adequate and even with that amount you many need to time when you water your yard.  One solution for temporary heavy usage is to have a storage tank that will fill during slack usage.

Drilling a test well usually run $15,000 a pop and it can take several tries before they hit water, if they find it at all.  Then there is the issue of well running dry.  It can happen seasonally or during low water years.  If you are in the county and that happens you need to truck water in.

I do know of someone that drilled their own well in San Anselmo.  This was in the “old days”, it was hand drilled and he only had to go 30 feet when he found an underground spring.  That sounds great, but the time being I will stay with the Marin Municipal Water District.

Warren Carreiro, Broker