HomesMax Bay Area Real Estate

Open House Bandits Captured

A man posing as a prospective home-buyer and a woman claiming to be his mother were arrested today after they allegedly made the rounds at open houses throughout the Bay Area, stealing purses and wallets, police said today.

Paul McClung, 30, and Carol Ann Chapman, 59, were arrested out-of-state while driving a Hummer they rented, said Berkeley police Lt. Wes Hester.

The car's OnStar vehicle tracking system led police to the pair. The credit card they used to rent the car was stolen. The credit card company called the owners of the credit card and asked if they had rented a Hummer. When they replied "no", the police were contacted and one call to OnStar is all it took to locate the pair.

Since at least April, McClung and Chapman, who had claimed to be his mother, have shown up in a Jaguar in upscale parts of Berkeley, Oakland, Fremont, Newark, Piedmont, Kensington and San Francisco, police said.

The two visit open houses and realty offices, saying they are willing to buy homes for cash. While the woman distracts the real-estate agent with conversation, McClung steals wallets and purses, which they used to commit more fraud, according to the police.

At a recent open-house in Oakland, McClung stole a badge belonging to a former Santa Barbara police officer, police said. On June 10, he appeared at a Kensington real-estate office with the badge on his belt, claimed to be an officer moving to the area from San Diego and asked for a listing of all open houses, police said. During the visit, he allegedly stole a wallet.

McClung was last seen in Berkeley as recently as June 16 and 17, police said.

"They said a number of different things to gain entry and to gain their confidence, which is typical of people who do fraud," Hester said. Real-estate agents or homeowners thought they were legitimate because they were very convincing, police said.

McClung was arrested on a warrant for failing to appear in a 2004 vandalism case in Pleasanton and for probation violations. Both were also booked on numerous other warrants for crimes including fraud and petty theft, Hester said.

It is extremely rare for something like this to happen during an open house but we always recommend that you secure all valuables and prescription drugs when your home is for sale. The real estate community have been on to this couple for a few weeks now. We have all been alerted to their descriptions and M.O. That may be why they left the area to loot in virgin territory.

Lies, Damn Lies And Statistics

The latest housing statistics for April are in and they tell a story of a changing market. The number of homes that sold dropped to the lowest level since 1995. Sales in Contra Costa County fell 28% from 1,735 in April of 2006 to 1,246 last month.
     The curious thing is that the median home price in Contra Costa County rose from $575,000 last April to $600,000 last month for an average of 4.3%.
    Alameda and Solano counties both had negative numbers.  Alameda had a 37.2% drop in sales and a 2.1% drop in the median price. Solano county had a 12.9% drop in sales and a 7% decline in median price.

     This rise in median price in Contra Costa County has to be taken in the proper perspective. Numbers alone never tell the whole story. While a rising market is like a tide that lifts every boat more or less evenly, a sinking market leaves some boats dashed on the rocks and shoals, while others are able to navigate to deeper water.
     What is happening is that higher priced homes in better neighborhoods are still selling, but at lower prices than last year. The entry-level or lower priced starter homes and condos are selling, both at lower prices and in dramatically fewer numbers than last year.

     Since a higher percentage of sales are of higher priced homes, this drives up the median price while actual prices are lower than last year.  Thus, the numbers are misleading.
     Tougher lending practices, the subprime implosion, the drastic drop in the availability of 100% financing, and modestly higher interest rates have led to fewer first-time homebuyers being able to afford a home while buyers of the higher end homes are not as affected by these conditions and are still able to buy. 

Subprime Lending Meltdown- What Happened and Why

Bay Area– The news has recently been full of stories about the latest development in the housing market: 

The Subprime Lending Meltdown

     “Subprime” loans  traditionally make up less than 20% of the total number of loans made. As the name would suggest, these are loans that are made to people who cannot qualify for “A paper” loans that are reserved for the most qualified borrowers. The “sub-prime” niche was created to accommodate folks with less than perfect credit or hard to verify income (read self-employed). They could now qualify for a home loan, but at higher interest rates than “A” borrowers. 

     The recent run up in local housing prices was,  in part, fueled by the easy availability of money. Investors wanted to make these loans because they could receive a higher yield and the loans were secured by homes that were rapidly appreciating in value. How could they go wrong?  If they had to foreclose, they could easily sell the home for more than was owed because the home was increasing in value every month.

     Virtually all of these loans have adjustable interest rates. However, to make them more attractive, most offered low “introductory” monthly payments or interest rates that were “fixed” for a predefined time period. The introductory period ranged from a few months to a few years. Most had “negative amortization”, a feature that caused the loan balance to increase monthly if the borrower made the low “minimum payment”.
     Once the introductory payment period ended, homeowners saw a dramatic increase in the monthly payment. Some payments increased as much as 50%.  As a result, many homeowners are no longer able to afford the home they purchased a few years ago.  To complicate things further, investors have stopped making these low start rate (or teaser rate) loans, so borrowers have no option to lower their payment back to an affordable level. Accordingly, a record number of homes have gone into foreclosure.

     Over 50 major sub-prime lenders have closed their doors because they can no longer sell these loans to investors. As the default and foreclosure rates climb, lenders have tightened the qualification process further, making it harder for folks to refinance their way out of the problem.  It has created a “Catch 22” situation.  Significantly more homes are coming on the market, many owned by desperate sellers trying to avoid foreclosure, which dramatically increases inventory, all resulting in even more downward pressure on prices.

    Underwriters have now gone back to the basics when approving home loan applications. Good credit, documented income, and a long employment history are back in vogue. The subprime bust is forcing lenders to go back to the fundamentals of sound loan underwriting.

    

What This Means To HomeBuyers

   If you’re thinking about buying a home, you should be jumping up and down with joy at the opportunity to buy the home of your dreams at a great price with a low fixed interest rate loan. In the January newsletter we talked about the “Perfect Storm” of market conditions that will enable you to buy your dream home. We warned that this window of opportunity was quickly closing and you should act now to take advantage of these great market conditions.

     The recent subprime implosion has extended that window of opportunity but with a new wrinkle. You now need to have better credit than just a few weeks ago to obtain the same loan. Lenders are tightening standards across the board. Even if you have good credit and are able qualify for an “A” paper loan you can expect the process to require more verification paperwork than the last time you purchased a home.

     If your FICO is lower than 620, you may find yourself scrambling to qualify for any loan at all or even shut out of the housing market altogether. That’s why it’s so important to know just what your FICO scores are even if you’re a year or more out from buying a home. Credit repair can be done but it sometimes is a slow process. Even if your credit is damaged through no fault of your own due to credit bureau errors or even identity theft, you’ll need time to clear up your credit.

     You can go to www.MyFico.com to obtain your FICO scores from all three major credit bureaus. Once you have your FICO scores you can go to www.FicoFixKit.com and get our FREE Credit Repair Kit. This free kit is available exclusively for our clients. We developed this credit repair system by helping hundreds of home buyers with less than perfect credit to become homeowners. Both Curtis and I have used this kit to raise our own personal FICO scores so we know it works.

     Once you have your credit score as high as possible, the next step is to get pre-approved with a lender. This step is necessary before you start to look at homes. Most sellers will not accept an offer and take their home off the market unless you are pre-approved for a loan. Being pre-approved puts you in the best bargaining position and provides peace of mind. It is like shopping with cash in your pocket. When making an offer for less than asking price you want your offer to be rock solid in every other respect. A lower offer from a strong buyer is better than a higher offer from a buyer who may not be able to close the escrow because of lending problems.

     These changes in the housing market allows us to negotiate hard on your behalf. This is why we offer some unique guarantees for home buyers. For more information go to www.BestBuyerGuarantee.com to find out just how we can guarantee to save you thousands of dollars when buying a home. We look forward to helping you find the home of your dreams. We promise you will save thousands and enjoy the process.

What This Means To HomeSellers

    In one word - restratification.  We use the term to mean that prices are finding their own level again, community by community.

     There was a time, before the wild market experienced during the past few years, when homes of equal size and features would sell for dramatically different prices depending on where they were located.

    As housing market was climbing and prices were appreciating wildly, we saw homes in less than desirable locations, conditions and neighborhoods went up at a higher rate than homes that were better situated.  We know, like many realities this is counterintuitive.  Keep in mind the frenzy in which buyers rushed to find any home they could afford. They were willing to overlook things. The housing market is now restratifying as housing prices go down unevenly. Some more desirable areas such as Walnut Creek and Danville  have actually seen prices go up 1%-2% while a few miles away in Brentwood and Antioch prices have slipped well over 25%. 

     Homes that have some defect like an obsolete floor plan or noisy location are now sitting unsold as buyers have the luxury of choice. Homes that don’t shine and sparkle once fetched top dollar as a “fixer” because of wanna-be investors who overpaid for these homes after watching too many episodes of “Flip That Wreck”. These same homes now go through a series of price reductions and still don’t sell.

     The number of first time buyers has shrunk dramatically as many of  the most popular loan options have been severely curtailed or restricted. This creates a ripple effect at all price points as trade up buyers who have good credit and want to buy a new home are unable to sell their existing home at a price they can live with.

     Today, it is vital to take care of any problems that may cause a potential buyebuying your home. Buyers have so many choices, they are gravitating only towards “turnkey” homes that they can move into with no work.

    The four components of any home sale are  Location, Condition, Marketing and Price.

You can’t do anything about the location so the condition of your home and the marketing exposure your home receives will directly affect the price. The HomesMax HomeSelling System will give your home the marketing exposure you need, so don’t worry about that.r to think twice about

    The greatest impact you can have on obtaining the very best price is by improving the condition of your home.  If you’re curious about your homes value you can go to www.BayAreaHomesWorth.com and we will send you a detailed comparative market analysis of all the homes similar to yours that have sold recently in your area. We can also stop by and give your home an in depth analysis of what  you can do and what you should not do to prepare your home for sale. As always, there is no obligation.

Churn'em and Burn'em- An Outdated Business Model For Real Esate

Bay Area— People often ask us “what makes HomesMax HomeSellers different’? Just yesterday a potential client said to me “picking a real estate company is like playing the lottery, getting a winner is a gamble”. This is true about real estate agents but we’re not real estate agents. We’re HomeSellers!

     All real estate companies before HomesMax HomeSellers have adopted the Churn and Burn business model. This is a business model that we’ve rejected. We’ve all seen the ads for real estate agents– No Experience needed– We pay for training– Companies hire 10 people a month knowing that 8 out of the 10 won’t even last long enough to receive their real estate license. The other two may last a year. Occasionally an agent will be successful and be able to make a career in real estate but these people are rare. The real estate company is churning or running through potential employees. The first thing they do is tell their brand new agents to work their “Sphere Of Influence”. That’s it. That’s all the advice they give. The real estate companies hire these poor people with no intention of having a lasting business relationship with them. They in turn get these people to Churn and Burn the people closest to them, their family and friends. The idea is that if the real estate company churns 8 people a month and those people in turn churn and burn their friends the company will get a handful of deals every month that they wouldn’t have had otherwise. These deals are usually on a 50-50 split minus desk, marketing and other fees. Real estate companies prefer these deals over the ones with their established agents because the established agents get a 90-10 split or better. The big real estate companies have a vested business interest in the failure of the vast majority of their new agents.

    HomesMax HomeSellers is the first company that takes responsibility for the success of their employees. We don’t churn  and burn our people and we don’t let our people churn and burn their family and friends either. The responsibility for the customer service experience you receive rests with the company not with the individual agent. Most people inside the real estate industry think that the next wave of real estate companies will depend on a technology based business model. We think that the old fashioned people based business model is the wave of the future. Curtis had a vision of taking the best business practices of all industries and implementing them into the real estate industry. We’re constantly analyzing what makes  a company not just good but GREAT. While technology and integrated systems are a crucial part of the HomesMax HomeSelling System which is guaranteed to sell your Concord CA home, your Pleasant Hill CA home, your Walnut Creek  CA home  or any home in Alameda County or Contra Costa County, they are not the bedrock that we build our company on. Serving employees, clients and even other real estate agents are what we strive to do better every day.

Sellers- What Are They Smoking?

We all know that 2006 was a tough year in real estate. Most sellers insisted on putting their homes on the market at 2005 prices. Most buyers sat on the fence and waited. They only bought homes that were priced aggressively (read relatively cheap). A huge number of unsold homes were the result. We had an unheard of 6 listings expire unsold last summer. We took a long hard look at the market and how we were operating. As a result, we made changes to our systems, our beliefs and ways of doing business. We learned and adapted and then thrived in the last 6 months of the year because we changed things.

We thought that sellers had realized the truth about the market and were lowering their expectations. Sales volume went up in November and December because many well priced homes came on the market during the holidays and were sold as a result. We looked forward to a year of lower prices and higher sales volumes as the expectations of sellers and buyers came closer together. This was our hope. To our dismay, early indications are that the unrealistic sellers only went away for the holidays, because as the weather warms up they have come back in force.

There is one crucial difference between last year and this year. The sellers of last year had comparable sales data from late 2005 supporting their price. Buyers had many homes to choose from and only bought homes that represented a great value and ignored the older comparable sales data. By doing this they have created a whole new set of data. We now have the ability to look at what has sold and what didn’t and we often make offers significantly lower than asking price and use recent market data to defend the offer to the seller. The real shock to unrealistic sellers is that bank appraisers have become much more conservative in their estimates of value. Low appraisals are common if the recent sales data does’t support the selling price. Even if an unrealistic seller  finds a buyer who is willing to overpay for their home, the appraiser will bring everyone back to reality.

These lessons have been painful for us to learn. But, not learning would have been even costlier to ourselves and our clients. We would be doing our selling clients a disservice by not telling them the truth. They lose money and have to put their lives on hold when their home won’t sell. Studies show that a seller gets the most amount of money for their home when they price it correctly from the very start. It’s counterintuitive but proven that a lower price in the beginning will net you more in the end. What happens is that an overpriced home languishes on the market and then it is ignored by buyers. When the price is finally dropped to where it should have been, no one notices. This phenomenon is due to the attention given new listings and the speed a home becomes a “stale” listing.

Home buyers can greatly benefit from what we have learned during the past year. The testimonial below from one of our recent buyer clients says it all. We researched the market, ascertained the seller’s motivation, and came up with a low offer that made sense. The sellers rejected our offer but called us back later asking if the offer was still good. We beat them with the “logic stick” by outlining exactly why this was the best offer they could hope for in light of the current market data. The fact that the seller was doing a 1031 tax free exchange and had limited time to retain the tax free status helped too. Our research told us that the seller had a choice between paying capital gains on $600,000 or accepting our buyer’s offer. We think he chose wisely. This is an example of getting inside the seller’s shoes, thinking like he does and negotiating with all the facts. Most agents are relatively new so they lack the perspective that comes from our extensive 30+ years experience as HomeSellers.

Paranoia and False Accusations

This morning I was showing a couple about to be married some homes in Pleasant Hill and Martinez CA. We were just about to enter a vacant home when my phone rang.

It was Mr and Mrs Neal Brito,the owners of 33 Santa Lucia Ct. in Pleasant Hill. We had just left their lovely home not more than 15 minutes before.We were actually talking strategy about how to best present an offer on this home when she called. Christina Brito asked if I was the agent that had just showed their home. I said yes I was. She then told me that a swiss army watch that she had given her husband as an anniversary gift was missing. I quickly confered with my clients and told Mrs Brito that no one had seen the watch. She became adamant that we had to have taken the watch because "no one else was in the house and she knew exactly where the watch was when they left". She went on to tell me that this is exactly why they were not allowing their agent to hold any open houses and that appointments were required to see the home. She indicated that she was afraid that this was going to happen.

I was flabbergasted and didn't know what to say. I told her I understood that she was upset that she could not locate the watch but I was at a loss for words. I told her many times that no one had taken the watch and perhaps she should have looked around for it before calling. Her husband Neal Brito was in the background saying "Call the police, Call the police". She told me that because I was not voluntering to go back to the house, she took that as a sign of guilt and was indeed going to call the police. I told her that she should do just that as I was not going to march my clients over to her house in order to be interrogated by her. She became hysterical because I would not admit that we stole the watch. I told her to give me a call when she found the watch. At that she hung up.

My clients told me that they were indeed willing to go back to the house if it would help Mrs Brito to feel better that we had not taken the watch. My client Amanda said that she understood how Mrs Brito must feel and would call her first. Amanda talked to Mrs. Brito at length. She said that we would go back to the house if it made her feel better but that we had no watch to give her. They talked for about 15 minutes with the conversation ending when Mrs. Brito hung up on my client. Amanda told me that during the conversation I was referred to as that S.O.B. by Mrs Brito.

I then called the listing agent to give him a heads up that we had a problem. He asked if we had any kids in our party and I said no. I went on to tell him that these particular clients were close personal friends of mine and I could vouch for their character. I explained that I was in the Persian Gulf War (the first and good one) with my client Wes and that I had lived cheek to jowl with him during the most stressful 3 and a half years of my life and knew his character better than his own mother.

He told me that the both Neal and Christina Brito were very concerned that this would happen and that he had them sign a document advising them to lock up any valuables. He said his client had not called him, that he would call them and talk to her. I asked him to please give me a call when the watch turned up.

Christina Brito left this voicemail on my cell phone while I was talking to her realtor Christina_Brito_Voicemail.mp3

The reason I left the lights on in the Brito's house is because all the lights were on when I entered the house and our policy is to leave things as they are when you leave a home. They might have had more realtors showing the house after me and you want to have the home shown in the best light.

A little while later the listing agent called me and told me that the Britos 3 year old son had taken the watch. I asked him if he could have Mrs Brito call Amanda and apoligize to her as she was very upset at being accused of thievery.To date she has not called to apoligize or tell us the watch was found.

The scene of the non crime

Whats the lesson?

Thats what we at HomesMax HomeSellers try to ask ourselves about any negative situation. We know that the only way to benefit from a bad situation is to learn from it.

I really can't think of what I could have done differently. I tried to show empathy for Christina and Neal Brito's situation and did not raise my voice or become angry when being called a thief. I encouraged her to look for the watch. I just couldn't give them what they wanted- the watch.

The most valuable lesson is that when a person has a preconceived notion about something they only look for evidence to support that belief and ignore anything that conflicts with their belief. (Think Bush and WMD's). Neal and Christina Brito have a deep mistrust of others. They left their home thinking "they are going to steal something,they are going to steal something". They came back to their home thinking "what did they steal, what did they steal?". Their minds were looking for proof of their fundamental belief that people are not to be trusted and seized upon the very first evidence that supported their belief systems. They didn't take a moment and a deep breath and look for the watch. I have a three year old also and I know thats were I would have started my inquiries(Occams Razor).

The sad thing is that the Britos of the world only hurt themselves. Curtis and I operate on the belief that people are fundamentally good and can be trusted. The result is that we attract good and trustworthy people and clients into our lives. The Brito's of the world push good honest people away and attract dishonest and warped personalties ( Birds of a feather)

For myself I can't allow Christina Brito's accusations to effect me. I have to remind myself that selling a home is a very stressful time in anyones life and that emotions can run hot. I'll just mark it up as a learning experience and forgive.

That said we will not be making an offer on their home after this. I suggest that you don't either.

Don't Make Me Blush

Here is a well-deserved testimonial for you:

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Thank you for providing my wife and I with truly exceptional service in finding our house in San Ramon.  Several factors made this particular house hunting project so demanding:  (1) due to a job start date, we had only two months to find a house, close escrow, and move in; (2) we lived in Southern California, which meant that we had to drive 12 hours round trip for each house hunting trip; and (3) our two-month window included Christmas and New Year's, which meant that any transaction would impede on vacation schedules. 

The success we had in finding the right house on-time was a result of your efficient and effective manner of doing business.  First, each time we drove to the Bay Area you had pre-scanned, and often pre-visited, several houses that met our criteria.  You paid close attention to our reactions when visiting potential houses to hone in on what exactly we wanted. 

Second, you always made yourself available, even rescheduled family time, in order to meet our demanding deadline for finding a house. 

Third, for every question I had, whether about the pros/cons of a location or the defects of a house, you'd provide a concise, well-reasoned response.  Your prior General Contractor experience was extremely useful and sets you apart from most real estate agents. 

Fourth, when it came time to make an offer, both you and your partner Curtis fully researched the market and the seller's situation to negotiate a defensible offer.  You negotiated a price over $100,000 below asking! 

Fifth, in our very short 21-day escrow, you promptly provided the necessary documents and information to the escrow officer, my mortgage broker, and the appraiser allowing us to close escrow on-time despite losing several days to the Christmas and New Year's holidays.  You even stayed in touch with me during your family's vacation to Disneyland! 

Sixth, during the house inspection, you actually crawled underneath the house with the inspector to ensure that the inspection report was accurate.  That was truly above and beyond.

Your no-nonsense approach to business, quick turnaround time, and honest answers to my questions made you the ideal agent for us.  Thank you again for everything.

Benson and Mariko, San Ramon Ca

Bay Area Real Estate What Happened and Where Are We Headed

BAY AREA–  The local housing market went from Real Hot to Real Weird real quick in 2006. ( I love that line)

All markets are cyclical in nature. This allows us to take a look at the past performance of real estate and predict where the market is headed in 2007.

We believe that the average price of a home may continue to drop slightly in the first quarter, reflecting the good terms buyers negotiated during November and December, and then prices are expected to stabilize for 1-3 years. Sales volume which was off  by almost a third in 2006 will rebound starting in February. We expect that buyers will start to buy again and the average days on market will drop to 45-60 days.

Sellers are now accepting that their home is now worth less than it was. The only homes that have been selling are homes that have been well priced. Many sellers have learned the hard way that overpricing their home in a slipping market means that their home will not sell.

Buyer demand can only be pent up for so long. When buyers believe that prices are “close enough” to bottoming-out and see that interest rates are still very low, they will come out in droves. While the local market will not return to the blistering red hot market of the early 2000’s you can look forward to a stable market. The buyers market that we are currently in will transition into a more balanced market where neither buyers or sellers have the upper hand.

If you’re a buyer you should buy before the weather warms up.  You’ll have your pick of homes without much competition. If you wait too long, you won’t have the negotiation leverage that you now enjoy.

If you’re a seller, the most important things are to price your home right and executing a marketing plan that provides the widest exposure possible. Negotiations are back in vogue and the best prepared agent/homeowner team is the one who will net the most money.

A Perfect Storm For Home Buyers

Rates on 30-year mortgages were unchanged in the first week of the new year after posting three consecutive increases to close out 2006. Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.18 percent this week the same as last week 

For 2006, 30-year mortgages peaked at 6.80 percent in late July with rates trending lower for most of the rest of the year. That decline was welcomed by the embattled housing industry, which is in the grips of a severe downturn after five boom years.

A year ago, rates on 30-year mortgages stood at 6.21 percent. Rates tend to go up every spring so buying now to lock in this low rate is a good idea.

Home buyers tend to fixate on the purchase price of a home and not think about the interest rate and how that affects cost. If home prices dropped 10% more but interest rates go up by only 1% your monthly cost is the same. Interest rates are lower this January than they were this week last year. This combined with the 5-20% drop in home prices (depending on the area) and very little competition means that we have a "Perfect Storm" for home buyers. The sad thing is that the vast majority of home buyers won't see this incredible opportunity for what it is until the storm passes to be gone forever.Consider this your storm advisory.

This is a typical price versus cost analysis. Consumers look for a low price but don't consider what the long term costs are.If you are waiting for home prices to drop any further you will most likely see your costs skyrocket as interest rates go up

Flipping Shows and Flipping Realities

The Discovery Home Channel (DHC) has a program called Flip That House. Each episode shows a person or group of people renovating a house and then selling it within a month or two for a huge profit.

We do not recommend the Flip That House show because it leaves out, or glosses over, a number of important facts.  All participants have powerful reasons to make flipping look good and  the approach the show teaches is generally the opposite of what competent fixers should be doing.

Transaction costs - The show tells viewers the purchase price of the home, the fix-up costs, and the resale price. They leave out the transaction costs related to the purchase and the subsequent sale. 

Carrying costs—Flips are vacant. That means all the carrying costs are borne by the flipper prior to closing the resale. Houses typically have negative cash flow when they are rented. Think how much more negative cash flow they have when they are vacant.

Value of the flipper’s time - Another large overlooked cost is the value of the flipper’s time. Finding a beat-up property that one can buy for 60% of neighborhood values is extremely difficult and time-consuming. Then after buying, the TV flippers are expending tens of thousand of dollars worth of their own time to pull these deals off.

Choice of improvements - The flippers in Flip That House generally make the typical beginner mistakes with regard to what improvements they make to the house. That is, they fix the house up as if the goal is to impress others with their excellent taste and their “amazing transformation of the property”. The best way to make money in flips is to buy an uninhabitable disaster and sell it to someone else as a fixer. Why? There are too many amateur fixers who will overpay for the slightly run-down properties.  In order to buy such properties, you must outbid the amateurs.  If they are paying too much and you are outbidding them, you have little hope of making a profit from flipping.  Most amateurs were making a profit, in-spite of their mistakes, due to market-wide appreciation during the fixing up period and incorrectly attributing it to their real estate savvy.
Insurance -  Owners of buildings must carry hazard and liability insurance. But flips are vacant and insurance companies do not like to insure vacant buildings because they attract vandals, thieves, children, drug dealers, lovers, and squatters. Special arrangements have to be made to get such insurance and it costs much more.      

Neighborhood price ceiling—One of the most basic truths about fixers is that you should never over-improve the home and expect that it will sell for more than other homes in the neighborhood.                                                                        

Financing and other hassles—Buying, renovating, and selling real estate involves numerous hassles. Almost every purchase has seemingly insurmountable obstacles involving inspections, financing, disclosures, disputes about what is included in the sale, and so forth. It is very difficult to get financing for a flip. The worse the condition of the home, that harder it is to get financing.  Most real flippers do it with lines of credit which are hard for beginners to obtain. Building-permit authorities and government building inspectors often are obstreperous and cause unexpected problems. When you tear out an old wall, ceiling, or floor, you often find unexpected damage or structural features that must be corrected at unexpected additional cost. All of these reasons are why we believe that “Flip That House”  breeds false expectations and has caused financial ruin for more than one intrepid investor who failed to obtain competent professional advice or worse, obtained that advice but chose to ignore it.

If you still want to try your hand at a flip, call Jay at (925) 788-6227.
His background as a General Contractor gives him the knowledge, experience, and perspective needed to guide you and help make your flip a profitable one.

This article is an edited article from John Reed. Read his full article by clicking here. John Reed On Flipping Shows

3 Cheers For Bad News Headlines

The October housing stats are in and the news is bleak. Sales have dropped by almost 25% and prices are sliding in most areas of the Bay Area. Every time I see a negative headline about the housing market I break out in smiles. It's been a tough year dealing with sellers waving a year old appraisal and insisting that their home is an exception to the general market trends. People don't seem to believe something until they read it in the paper and see it on the nightly news. A new reality is not believed until it is heard from several different sources. Conventional wisdom is slow to form and even slower to change once formed.

The first 9 months of this year we had the same conversation over and over again and had very similiar responses- generally disbelief. I can't tell you how many listings we lost because we brought a thorough Comparative Market Analysis to the table. Sellers were quick to discount what we had to say about home values because we were the first to tell them the painful news. The past month sellers seem to accept what we are saying at face value and not think that we have some ulterior motive to price their home lower than market value.

Buyers are the ones that need to wake up to the truth now. The market has taken a deep breath and a pause. Buyers will keep on waiting for prices to drop and they will for a time but ask any homeseller  how hard it is to time the market. Superbowl Sunday is the deadline to enjoy this incredible buyers market. You can only hold back demand for a short period of time. Buyers will come out strong this spring and you will find competetion for the first time in a year for homes.

I'm not saying that prices will go up in the spring. What I am saying is that the only people that will have their homes on the market from now until SuperBowl Sunday are motivated sellers. You can take your time pick the home you want and negotiate HARD on price and terms. You will be one of the few buyers out there right now and you will be in control of the negotiations. This window will not last. If we've learned anything about buying patterns from the past few years its that buyers have a herd mentality. Thats why the market skyrocketed and thats why its falling now. This herd mentality is what influences most buyers. When the herd moves in the spring the best opportunities will be gone.

The simple truth is that there is a chronic undersupply of homes in the Bay Area and the local economy and job market is still going strong. If you are thinking of selling your home I would wait until spring. If you are thinking of buying do it NOW! We are so sure of this that we guarantee to save you $25,000 on your home purchase or we'll give you $5,000. We don't just talk a good game we back up our words with our guarantee.

Pleasant Hill CA Home Value Of The Week

Rare 4 bed/2 bath home w/family room and backyard pool. Newer roof and gutters, new garage door and interior paint. Central A/C. Walk to Strandwood Elem. Ideal for handyman. Tons of potential here!! Asking $549,000

This Is The Home Value Of The Week

1948 Ardith Ave Pleasant Hill CA 94523

This fixer is priced right and I bet it'll sell in a week. This area of Gregory Gardens is a great neighborhood. The schools are top notch. The mature shade trees give it a nice feel and I live around the corner. What more could you want. Most homes in this area are just 3 bedrooms and 1 bath with 1042sq ft and go for this price when they are fixers. This house has an extra bedroom, bathroom, family room and a pool. Add the central heat and A/C and you've got a goodie. I'll be showing this home to my buyers this Sunday. It's not my lising just my pick of the litter.

Piece Of Crap Found In Piece O'Crap

This Overpriced Piece O' Crap shows what you should not do when trying to flip a house. This home is a 4 bedroom 2 bath house on a intersection of two VERY BUSY STREETS (1912 Geary in Pleasant Hill Ca). It was last sold in Aug of 2005 at the very peak of the market for $565,000. The owner went in and did some very bad remodeling and put it on the market at $799,000.

They bought it at a time when buyers were ignoring the fundamental rule of real estate. (Location) Buyers have now gone back to the basics and are ruling out homes like this that sit in less than ideal spots. When the market was hot you could have a home with many problems but the price didn't need to be discounted in order to sell.

What a difference a year makes.

Buyers now take their time and demand perfection in a home or deep discounts. Sometimes both. The worst mistake that the seller is making is ignoring the material condition of the home because it has been sitting for a while. The cultured stone on the exterior is falling off, the empty rooms make all the defects in the walls, floors and painting jump right out at you and worst of all this Piece O' Crap has a broken toilet with you know what floating in it. All of this makes this weeks selection of Piece O' Crap a no brainer.

You can nominate your own Piece O' Crap by just letting me know your Pieces address.

List Of Best Condo Values

This list of condos are all the Vacant condos that have been on the market for 90 days or more in Alameda and Contra Costa Counties. That means that either someone is paying two mortgages because they bought another home OR some investor has no cash flow coming from his property.

These are the condos that you can offer much less than asking and have a good chance of having the offer acceptted. Let me know if you have any questions about any of these condos. They are listed Alphabetically by CITY. Alameda is the first city and Walnut Creek is the last.

Condo List 1-50   Condo List 51-100

Messy Sellers Can Mean Good Deals

Want a Bargain? Look Under the Clutter

Some of the best bargains to be found in the housing market are discovered underneath a mountain of newspapers, old clothes, and just plain "junk". For the savvy buyer, a house that needs a little TLC could be the buy of a lifetime.

Just to be certain we are on the same page, a cluttered house is not necessarily a "handyman special". While most fixer-uppers ARE cluttered, not all cluttered homes fall into the "handyman special" category. The largest difference between them is that the former normally needs structural and cosmetic repairs, while the latter usually requires a few large trash bags and some soap and water.

The biggest error that slovenly sellers commit is in not realizing how much their sloppy habits will cost them when they go to sell their homes, and the biggest mistake naive buyers make is in thinking that careless housekeeping automatically means negligent maintenance of the major components of the home.

Some of the most conscientious and responsible homeowners in the world may also just be pigs or pack rats! The smart buyer will see past the personal habits and living style of the inhabitants, and concentrate on the dwelling itself. That is not to say that buyers must disregard the condition and appearance of a house when making a bid. To the contrary, a house that has not had a good cleaning (or seen a patch of empty floor space) since George Bush was president is a good candidate for a lowball offer. Buyers can logically argue that they have a great deal of work ahead of them to make the place habitable. They can, legitimately, point to a "cream-puff" comparable home and deduct not only the cost of the actual work to be done, but also the value of the labor they will have to expend. This "sweat equity" is usually calculated at a rate far in excess of the actual cost of getting the work done.

It is not unusual for a cluttered home to bring thousands of dollars less in a sale price than does a house in move-in condition. Most buyers steer clear of properties that need a little work. Clutter gives buyers a reason to pause. If a buyer need fast possession, he may think: "How are they (the sellers) ever going to be out of here in two months?" Or, a buyer may wonder, "Maybe there isn't enough room for my stuff," since clutter makes rooms and closets look smaller.

To make certain you properly assess the merits of every home you see, here are two tips that may help you see past the clutter, and give you a glimpse at a true diamond in the rough!

• The Tape Measure Is Mightier Than The Eyeball. Do not rely upon your eye sight to judge dimensions. Get accurate measurements. You may be pleasantly surprised at the actual size of a room that appears small because it is loaded to the gills.
• Happiness Is A Home Inspection Firm. Having all the systems and components of the property checked out by a professional home inspector means you don't have to wonder if this is simply a cluttered house, or a true fixer-upper. Concentrate on the features of the home, and leave the technical stuff to the experts!

When all is said and done, keeping an open mind about houses that are less than perfect may ultimately buy you a lot more home for a lot less money.

Fixers Are Back

I'm starting to see some real bargains again in fixers. I haven't really been looking for any for myself this year because sellers wanted too much for their Pieces O' Crap. Last week I was looking at solds trying to get a handle on the market and five properties that were great deals were on the list. Each of them sold in 4 days or less. That made me realize that the opportunities for fixers was coming around again. The down market has driven the hobbists out of the market and the emotional buyers who are buying for a place to live are still largely on the sidelines too. 

Here is todays list. Their are 145 homes on it. As always it is in alpabetical order by CITY. Alameda is first and Walnut Creek is last. If you have any questions on any of these properties give me a call.

Fixer list 1-50

Fixer List 51-100

Fixer List 101-150

US house prices have biggest tumble since 1970

Prices for newly built American homes have suffered their largest drop year-on-year since 1970, according to data released yesterday, highlighting the dramatic nature of the downturn of the US housing sector. However, growing sales offered homebuilders some hope of recovery.

The median price of a new home fell to $217,100 (€172,000, £116,000) in September, 9.7 per cent lower than in the same month a year earlier. Average house prices fell 2.1 per cent, down from a growth rate of 6.4 per cent in August.

However, sales of new homes increased for a second consecutive month following three months of decline, rising by 5.3 per cent from August to 1.075m and beating the consensus expectation of 1.04m.

The fall in house prices comes as builders try to slash swelling inventories of houses by reducing the number of residential permits they seek and increasing incentives to buy – such as including larger bathrooms and more expensive kitchens for free.

Builders seemed to be cutting prices to encourage sales and consumers appeared to be responding to the lower prices, said John Ryding, an economist at Bear Stearns.

The Federal Reserve has been juggling the threat posed to the ­economy by the slump in housing with the threat from historically high levels of inflation. On Wednesday the central bank’s interest rate-setting Open Markets Committee signalled it was ­relatively content with the current balance, predicting “moderate growth” for the economy and deciding to hold rates steady at 5.25 per cent.

The sharp fall in the price of newly built houses was balanced against stronger-than-expected durable goods sales figures, although that was almost entirely due to a strong month-on-month increase in aircraft sales.

Economists warned that the housing figures were not entirely reliable. “No doubt a good part of this drop reflects an increase in the number of smaller homes in the sample,” said Ian Shepherdson, chief US economist at High Frequency Economics. “Still, mean prices also slumped . . . so we think there probably has been a serious drop in prices per square foot.”

Pulte Homes, the largest US housebuilder by revenues, said yesterday it was too early to call a bottom to the slowdown.

“With the acceleration in house-price deflation, the supply of unsold homes should fall further,” said Dimitry Fleming at ING Bank. “It will take a long time for builders to clear their backlog. Don’t rule out further price declines.”

Housing Crashes Reveal Housing Truths

This article was first published in the early 90's. It was about the small correction the market had in 89-92. It could have been written for today. It's amazing how some things (like the truth) never become dated.

Fred George of Puritan Realty in Plymouth, Mass., knows a thing or two about buyers' mistakes. In the mid-1980s, he found himself a casualty of the banking crisis. Like many others, George was caught up in the buying and selling frenzy before the bottom fell out. Banks closed, homeowners lost the homes that were now mortgaged at inflated rates, and in a matter of a few short months, George lost the real estate holdings he'd spent 30 years acquiring.

Although it's difficult to speculate which came first -- the chicken or the egg -- that buying and selling frenzy in the real estate market led to runaway home prices. When the dream came crashing down, property values, both real and imagined, increased like never before. Buyers agreed wholeheartedly to pay far more than sellers were asking, simply to get the homes of their dreams. Banks, in turn, loosened their standards. "There was a feeding frenzy that was ... helped by bankers willing to finance almost anything at any cost, sometimes even making illegal loans that were called 'no docs,' where they didn't even check credit ratings, look at the property, or do the usual necessary work before approving a loan.

"The banks were making money," he continues. "Real estate brokers, lawyers, and everyone involved were reaping the profits, but the cost wouldn't be determined for a few years. It was like a train going down the tracks at 100 mph, then applying the brakes; but the train ran out of track and crashed. We were living in a false economy."

George says he learned an invaluable lesson from the experience, and it's one he wants to share with first-time homebuyers as they embark upon one of the most important decisions of their lives: "The old saying in real estate -- 'location, location, location' -- really does not hold true. A more appropriate saying would be 'timing, timing, timing.' In other words, when to buy and when to get out."

While this warning might sound daunting to first-time homebuyers who don't claim to be economists, here are some practical tips that demystify the homebuying experience in layman's terms. A smart buyer is a qualified buyer. First, obtain a copy of your credit report, and make sure it's in order. Now is the time to clear up any problems. And ask to be pre-approved for a mortgage. Many first-time buyers make the mistake of seeking pre-qualification and stopping there. "'Pre-qualified,'" George says, "only tells you theoretically what size mortgage you can handle. It doesn't mean the lender will pre-approve you for that amount unless you make a formal application to the bank, filling out all of their forms and getting your credit checked along with employment and bank accounts to verify balances.

What pre-approval does is to make you a cash buyer. In the eyes of the seller, you are a better prospect than pre-qualified buyers who only have an estimate of the extent they can buy, but who have not gone through the necessary paperwork to be pre-approved." The bottom line is that buyers are more prepared, which puts them in a position of strength before negotiations begin.

Mortgages may be obtained from one of three options: your local bank, credit union, or mortgage lender. Buyers should investigate all three options to find out what each has to offer. When you make your decision, seek pre-approval.

Another advantage of pre-approval is that your lender is often able to provide you with a close estimate of your closing costs. Closing costs generally are between 3 percent to 6 percent of your loan. The estimate should include items such as bank's attorney fees, surveys, appraisals, and points applicable to your mortgage, as well as pre-payment of any interest due and tax escrow account.

Many first-time buyers are stumped as to whether to use a seller's broker, buyer's broker, or multiple listings broker. There are pros and cons of each type of broker, along with a warning concerning a fourth type of broker -- dual brokers. Dual brokers wear two hats, representing the seller as a listing broker, and also the buyer as a buyer's broker. "All I can say is, 'Be careful,'". "Remember the old saying, 'One cannot serve two masters.' This is true here. You should be very careful when a broker says he is representing both parties. Legally, he can't be looking out for both parties' interests at the same time on the same sale."

When it comes to home-buying -- particularly in the case of first-time homebuyers -- it seems that old adage is once again proven true: Knowledge really is power.

How Sellers Can Hide Things From Buyers

Your house is on the market, and you're a motivated owner. Translation: you REALLY want to sell. Because you have instructed your Realtor to: "Show me the Buyers!", you are getting a ton of showings. Prospective homeowners arrive on your doorstep with a moments notice.

In addition, you are driving your family crazy. You have decreed: "No dishes in the sink, no crumbs on the kitchen counter, no dirty clothes on the floor! No one will eat, drink, sleep, or brush the dog again until this house is sold!"

Take a deep breath, sit down, and relax. While it IS true that you don't get a second chance at a first impression, most buyers ARE human and realize that sellers have to live, too.

Just for the fun if it and because it might actually come in handy one day here are the FIVE places buyers are LEAST likely to look when viewing a house for the first time. Therefore, these are the best last minute hiding places:

• Under the bed. You probably didn't need us to tell you about this hiding place, and you may have trouble squeezing any more "stuff" under there. What makes this an ideal place is that it is big, and usually centrally located in the room. Therefore, clothes, toys, shoes whatever can be flung from all directions with a good chance of finding their mark. Any last minute items can usually be kicked under the bed.
• In the washer & dryer. Buyers rarely, if ever, open a washer or dryer. This makes them ideal last-minute hideaways for toys, books, and boots, as well as dirty clothes. When utilizing this hiding place, it is a VERY good idea to tell the rest of the family. You never can tell when someone will get ambitious and turn on the dryer, or start to fill the washer.
• Trunk of your car. This, at first glance, might seem a little drastic. But, if the Realtor is pulling into the driveway, and you are standing with two paper bags filled with household items, the trunk could come in very handy!
• Refrigerator. Again, while this might appear far-fetched, buyers will NOT open your refrigerator. This makes it an ideal place for the last-minute stashing of anything that won't suffer from being a little cold!
• Behind the sofa. Another old standby that could already be seeing some active duty, the sofa usually has a wall behind.

The other side of this issue deals with those areas buyers are MOST likely to inspect during a house tour. Try not to use any of these locations for your last minute secret hiding places.

• Oven. Do not store your pots and pans in the oven. This makes it appear as if you are short on kitchen space. If possible, the oven should be totally empty, and, of course, clean.
• Bedroom closets. One of the things buyers tend to remember about the houses they see, and to either comment favorably or unfavorably upon, are the closets. Avoid cramming the bedroom closets with extras; the more space that shows in your closets, the better.
• Kitchen drawers. The same buyers who would not dream of opening your refrigerator, will think nothing of pulling out a drawer. Try to keep kitchen drawers as uncluttered as possible. If need be, utilize bedroom drawers for all the kitchen utensils and junk you have to put someplace.
• Laundry room. A nice, neat laundry room is often a pleasant surprise in a home, and something that buyers tend to remember.
• Kitchen pantry. Like the laundry room, the kitchen pantry is often the "dumping ground" for all kinds of odds and ends. The less cluttered the pantry is, the bigger it looks, and the more buyers will remember it, favorably.

As you can probably tell, the secret to hide & don't seek is to keep those places that are USUALLY used for storage as clear as possible. This gives the buyer the distinct impression that he/she will have plenty of room for all the stuff they need to put somewhere. In order to do this, you may need to move your items to unusual places that are not normally of concern to a buyer.