Marin Real Estate Pulse

It is all over the news this morning; home sales PLUNGE to levels not seen in 15 years.  While this may be true nationwide the saying “real estate is local” definitely applies to Marin.  Sure we have taken our hit on prices and sales and I do feel badly for those homeowners that are underwater or have lost their homes to foreclosure, however, our sales did not plunge in July.

According to the report on Huffington Post sales nationwide are down 27% from last July.  In Marin sales were down 3% from last July.  Year-to-date sales of Marin County Real Estate are up 21% compared to 2009.  The Marin median price is also up 5% so far this year.

Even Belvedere which has a high number of listings (47), with only 2 in contract, and believe me those numbers yell OVERPRICED, is doing better than last year.  So far this year there have been 18 sales compared to 13 for the same period last year.  The median price is down to $808 per square foot from $941 but because it is such a small town with few sales the statistically base is too small to mean much.

Warren Carreiro, Broker

This has not been making the newspaper headlines yet but the sale of single family homes has taken off the first couple of months of 2010 up 50% from the same period last year. Perhaps more disheartening to first time Marin buyers is just 18% of those homes sold for $500,000 or less (compared to 22% for the same period last year).

The focus here is single family homes because they are currently hot. This is not permanent as condo prices tend to leap-frog homes when the price differential is great. That is to say when condo prices approach house prices people tend to say lets buy the house, it is just a little bit more and does not have an association fee. The jump to single family home purchases cause prices to go up creating a price difference large enough that condos look like the better deal. As condo sales increase prices go up and thus the leap-frog of prices. This is true of neighborhoods too, when Greenbrae is just a little more expensive than San Rafael that is where the buyers go. Once the price difference is great San Rafael looks more attractive.

For the first two months of 2010 there were 199 single family homes sold and 18% were $500,000 or less. For the same period in 2009, 22% of the 133 homes were $500,000 or less. All the information for this post comes from the Marin County BARIES MLS, which does not include “off market” sales.

For more information contact:

Warren Carreiro

DRE# 01031805

warren@RealtyOfMarin.com

This is a great opportunity, because of very low prices, for first time buyers to finally get into the housing market.  Those that have saved a down payment (sometimes as low as 3% with FHA financing) and have documentable income can buy a home that just a few years ago may have cost twice as much.

The problem is many of these homes have multiple offers, ten or more is not uncommon in Marin county.  It is not unusual that the majority of those making offers are cash investors that have no plan on living in the home.  Nothing wrong with that, after all the United States is a capitalistic society which is not a dirty word.

The sellers, big banks many of whom received bailout money favor cash offers as do most sellers.   There should be some regulation that would put intended owner occupied buyers on the same footing as cash investors.  If the buyers have a down payment and proof of income and fully qualify for the purchase REO banks should not be allowed to accept a lower cash offer from a non owner occupied investor.  These qualified buyers are the type that build communities, have an interest in local events and tend to keep up the homes and therefore the neighborhoods.  This just seems like a no-brainer to me especially if the REO bank is using OUR bailout money.

Buying a foreclosure is for the pros with a big checkbook. In Marin a “real” foreclosure is literally sold on the steps of the courthouse on Fifth Avenue in San Rafael. The buyers have several denominations of Cashers Checks that add up to the maximum they will pay. They bid against each other and the bank that holds the loan on the house and is foreclosing on it. The bank has the upper hand because they don’t have to write a check unless the bidding goes over the loan amount.

You will be bidding on a house you likely have not seen on the inside. No bank will lend you money until you buy the home. This is a cash transaction that does not come with title insurance.

When you hear someone say they bought a foreclosure that usually means they purchased a home that has already been foreclosed on by the lender. They are known as REO’s, which stands for Real Estate Owned (by the bank). When buying an REO the paperwork sucks. Banks expect buyers to start their inspection and financing timelines without so much as a signed offer acceptance from the bank. In many cases the acceptance of the offer is conveyed to the buyer verbally. As you know, in real estate verbal does not cut it, the law requires everything in writing. But as long as you are getting a good deal are you really going to fight with the bank that selling the house?

Homes are also sold in pre-foreclosure status which may mean the seller had a notice of default (they are late in mortgage payments) or it is a short sale. In a short sale the seller gets the bank to agree to sell the home for less than the amount owed.

Warren Carreiro

Propositions 60 and 90 were passed by California voters and lets you transfer your current property tax rate to your new home sell and purchase your primary residence. These propositions apply if you or your spouse are 55 or older. In some situations the rules also apply to permanently disabled individuals (prop 110).

This is not intended as tax advice, I am not qualified to offer that so please check with your accountant, attorney and the county assessor to verify you qualify.

The basic rules are:

1. The home must be your primary residence.
2. You or your spouse must be 55 or older when you sold your primary residence.
3. The replacement property must be purchased two years before or after you sell your primary residence.
4. This exclusion may only be used once in a lifetime.
5. The replacement property must be of equal or lesser market value.
   1. 100% if purchased before the sale of your home
   2. 105% if purchased up to one year after the sale
   3. 110% if purchased in the second year.
6. Prop 60 only applies if you new home is in the same county as the one you sold.
7. Prop 90 allows transfer to a different county if the new county allows. Most counties do not follow prop 90 so check with the assessor before you count on this. Counties change their rules so check again even if you have previously done so.

The counties take the rules very seriously so don’t think or try to “beat the system” because it will come back to bite you. Also, the rule refers to market value and in some cases counties are looking at REO (Bank Owned Homes) as not selling at market value. For more information look at the Board of Equalization web site.

Warren Carreiro, Broker.

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.

What is the difference between using a listing agent, buyer’s agent or just finding a house on my own using the Internet?  Over 80% of people start their home search on the Internet, and in my opinion usually continue to use the Internet throughout your search process.

The Internet should include all tools available including e-mail, Web searching, and agent offered tools such as CleanOffer or Home Alert.  The Internet is a great tool to give you a basic understanding of the prices of homes available and also to rule out some homes you find undesirable for one reason or another.  If you know the type of home you are looking for i.e.: number of bedrooms price range cities and school district it is possible to have those listings e-mailed directly to you as they come on the market. 

Okay, now you’ve searched for your home on the Internet found a likely suspect and it’s time to just go to the listing agent and make your offer right?  Some buyers to go directly to the listing agent to make their offers and it is not illegal for the agent to write your offer and some agents love it, after all they get double the commission.  Now it’s time for the negotiations to begin.  The listing agent you’ve chosen as legally committed to represent the seller’s best interest and now you as a buyer can in the picture and they are also you represent your best interest?  Some agents love this for obvious reasons others shy away from it just to avoid the appearance of a possible conflict of interest.  I think what the buyer is hoping is that because the agent gets double the commission they will share some of that with them and the buyer will end up with a better deal.  Theoretically that better deal is possible, however, in reality because the agent is negotiating with himself they may not have the same incentive to get you the best possible deal which could far exceed any commission savings are in my opinion, this is like going to a car dealer and asking the salesperson to go to the manager and have them tell you the best deal he can give you on the car.

I good buyers agent will give you an honest opinion of the value of a property show you other properties that perhaps are even a better deal.  They will take the time to learn what type of house you like, the neighborhoods that appeal to you and give you an honest opinion of the value of that house in that neighborhood.  Their fiduciary responsibility requires them to negotiate the best possible deal you and they will also show you homes that may not even be on the Internet yet.  For most buyers, this is by far the best method to use when looking for a new home.