The New HVCC Law – Does It Help, or Just Plain Suck?

So there’s this new law affecting the real estate and mortgage industry, called the HVCC – short for “Home Valuation Code of Conduct”, which went into effect last month, and is the byproduct of a legal settlement between NY attorney general Andrew Cuomo and Fannie Mae & Freddie Mac.

Here’s how it was “supposed” to help: to assure appraisers that they would not be unduly influenced by lenders in the appraisal process.

Here’s where it proverbially, “sucks”: costs rose, and accuracy in appraisals took a nosedive. Moreover, appraisers that are unfamiliar with local markets, inexperienced or both, are using distressed sales – foreclosures and short sales of existing houses – as their comparables

Kenneth Harney from the Washington Post (in my opinion, probably the best columnist covering real estate issues, bar none), wrote a great article recently(full contents here, but I’ll quote some of the highlights below).

How it can affect everyone:

It could directly affect the value of your house – probably negatively – by tens of thousands of dollars

The issue concerns low valuations and the new rules guiding appraisers in both price-depressed and rebounding markets. Consider these snapshots of what’s going on:

• In San Diego, Steve Doyle, division president for Brookfield Homes, is trying to close out the final 20 houses of a 120-unit single-family subdivision. Prices range from $340,000 to $350,000. But recently there’s been a major hitch: Appraisers assigned by banks are coming in with valuations $60,000 or more below Doyle’s selling prices. The appraisers, who Doyle says are unfamiliar with local markets, inexperienced or both, are using distressed sales – foreclosures and short sales of existing houses – as their comparables. Some of the distressed properties are in poor condition, and all of them offer fewer amenities, according to Doyle.
• In Wilmington, N.C., a loan applicant with a house in excellent condition, and an unblemished payment record, sought to refinance into a 4 3/4 percent mortgage. She had purchased the property four years ago for $160,000 and made about $20,000 worth of improvements in the interim. Her loan application, according to Paul Skeens, president of Colonial Mortgage Group of Waldorf, Md., was “a slam dunk. Nothing to it.” The house was worth $180,000 to $200,000, according to one estimate.

But when an appraiser with little local knowledge was sent in by a bank to value the house, he chose two short-sale properties that had both closed in the mid-$140,000 range, and one inheritance sale around $155,000. The last property was “in horrible condition,” said Skeens. “I’d call it dog meat.” The deal-paralyzing appraised value that came in for the cream-puff refi: $149,000.

Complaints about lowballed appraisals – from builders, realty agents, consumers and mortgage companies – have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules into effect nationwide. Critics charge that the new system is fostering the use of appraisers willing to work for low fees – sometimes 50 percent below previous standards – and who are willing to conduct home appraisals far outside their typical areas of activity.

Under the HVCC, appraisers are now routinely assigned by appraisal management companies rather than being selected by mortgage companies or loan officers. The management companies pocket as much as 40 to 50 percent of the appraisal fee.

Frustration with the new system boiled over and made its way to Capitol Hill late last month. The National Association of Home Builders called for an immediate change in the rules governing the use of foreclosures, short sales and other distress transactions as comparables for appraisals on non-distressed, typical homes, whether new or resale.

Two congressmen – Travis Childers, D-Miss., and Gary Miller, R-Diamond Bar (Los Angeles County) – have introduced legislation calling for an 18-month moratorium on the appraisal code. In identical letters to James Lockhart, the top regulator of Fannie Mae and Freddie Mac, and Cuomo, the National Association of Realtors also requested a moratorium and complained that the code is raising costs to borrowers, distorting property values and killing sales.

Asked for comment, Lockhart said through a spokesperson that his agency is monitoring the situation, and considers “the views of market participants important.”

Bottom line: Be aware of the issue. It affects your equity, even if you’re not buying or selling. And watch to see whether Congress fixes the problem.

Schedule of 4th o’ July Activities for Redwood City

(straight from the city’s Public Communications Manager Malcolm Smith)

This year’s 4th of July spectacular, brought to you by the Peninsula Celebration Association, will be another in the long tradition of offering the very best 4th of July event on the peninsula. All the details are at www.parade.org, the home page of the non-profit Peninsula Celebration Association. The Peninsula Celebration Association has been in place for nearly 70 years with a goal of helping to make our city not just a great place to live, but also a real community of people who care.

Visit www.parade.org for the entire schedule of family fun on the 4^th of July in Redwood City.

A Dying Breed: Paying Over $1M for a Mt. Carmel Home

It seems like just yesterday – ok, maybe 2 or 3 years ago – when a new listing in Mt. Carmel that came on the market with a price tag higher than $1M didn’t raise an eyebrow. Heck, there were even some bordering close to $2M that I thought “well, if someone’s willing to pay that much, then that must be what it’s worth.”

Of course, these are wildly, WILDLY different times now in real estate. That shouldn’t come as a shock to anyone, right?  Well, as experts in what we do, many of us Realtors can quickly and generally assess a home’s list price relative to its neighborhood and say, “yes that’s priced well”, or “what the hell is the color of the sky on THEIR planet?”, or “what are they smoking in their pipe?”  You get the idea.

I’m talking now, of something that seems to be getting more extinct than journalistic integrity in real estate reporting (oops! Did I just say that out LOUD?), and that is, paying over $1M for a home in the Mt. Carmel area.

Let’s do a quick look at the numbers: out of the 16 homes that have sold in Mt. Carmel in the last 6 months, only one of them sold for over the elusive $1M price tag (that would be 263 Iris, for $1.238M, which, incidentally, was one heck of a gorgeous home).

And out of the 17 homes currently active for sale, 8 of them are priced at over $1M.  A few of those have been on the market for 361 days, 259 days, 116 days, and 98 days.

Now this absolutely is not saying that any of these homes currently on the market is not worth its asking price.  As I always say, the value of your home is whatever a buyer is willing to pay you (and for you to accept). If you’re a seller, then this blog post and this one are MUST READS.

And what I also say is that if your home is on a busy street, and you want to sell it in under 1 year, do NOT price it as if it were set further in on a neighboring, non-busy street.  It’s a pretty rare breed of buyer that wants to buy a $1M+ home on a busy street, especially if they have children.  An even rarer bird is the buyer who will pay over $2M to live on a busy street – I just seem to think, if it were me and I were spending over $2M on a home, I’d be more inclined to look in, oh, Emerald Hills, Woodside, Portola Valley, Los Altos, San Carlos hills…but that’s just me, what the heck do I know about what buyers want (rhetorical sarcasm…don’t answer that!).

Time will always tell what these homes eventually will sell for.  Timing is everything – if you were fortunate enough to sell a home 3 years ago for a price that no one would touch in today’s market, you may be more lucky than anything else.

New Listings in Mount Carmel (and Pending Ones, too!)

Tales of my disappearance from the blogosphere have been greatly exaggerated. Finally, after more than a quarter of being just crazily busy (recession, what recession?), your friendly Mount Carmel neighborhood blogger is “Back in the Saddle”, to quote one of my favorite Aerosmith songs.

Has nothing been going on in Mount Carmel? Apart from the Mt. Carmel festival last month, and with school almost done for the summer in a few weeks, the real estate market in Mount Carmel is definitely showing signs of rebounds. Lots of “sale pending” signs are now replacing “Open Sunday” signs. That’s always, ALWAYS a good thing.

So, without further adieu, here’s what’s new (and pending) in Mount Carmel:

 

45 Hudson St., $1,795,000 – 4br/2.5ba, 2720 sf on a 9100 sf lot. On the market last year most recently at $1.85M

1737 Brewster, $959,588 – 3br/1.5ba, 1590 sf on a 7150 sf lot

264 Elwood St., $978,000 – 4br/2ba, 1950sf on a 6500 sf lot

250 Myrtle St., $924,900 – 3br/2ba, 1620 sf on a 6500 sf lot

1603 James Ave, $959,000 – 4br/2ba, 1230 sf on a 9950 sf lot. What an amazing lot this home has. Truly a must-see.

1306 James Ave., $929,000 – 3br/2ba, 1490 sf on a 7645 sf lot

37 Fulton, $975,000 (sale pending) – 2br/1.5ba, 1614 sf on a 6110 sf lot. This one was an absolute charmer, and heartily deserved it’s “Best of Tour” award when it first came on the market.

171 Myrtle, $935,000 (sale pending) – 3br/2ba, 1680 sf on a 0.15 acre lot.

89 Offers? And a good use of Twitter too?

 I’m reposting this from my general purpose real estate blog, “The Gory Details“, because, though it’s not specific to Mount Carmel real estate, it’s a good read for what’s going on out there in the market.

Ok, now this just sounds insane. Or maybe I should have started it as “I never thought this would happen to me, but…” (echoes of Seinfeld’s Kramer reading from Penthouse Forum).

It’s mind boggling, but the notion of multiple offers – particularly on the lower 1/3 of the market here in the Bay Area– is as prevalent now as it was 3 years ago. Now granted, the affected market segment is much more specific – I don’t really see this happening much on the higher end of the market (above $900K). But now that lending has thawed a bit from the catatonic state it was in Q4/’08 and Q1/’09, there are a TONS of investors and first time home buyers that are scooping up homes once priced in the $500K+ range which are now priced in the $200K-300K range.

There’s a huge “dang, this is a bummer” element for any agents like myself, representing buyers who keep getting outbid, or beat to the punch by others making offers on homes the day they come on the market.  It seems like in Q4/Q1, that a home would come on the market, and the buyer mentality was “I’ll just wait 2 months, and they’ll be lowering their list price”.  Let me opine here, that mentality is as long gone as Dick Cheney’s sanity.  My recommendation to any buyer out there is this: if a home seems priced ‘right’ (totally subjective), don’t wait to make an offer on it, because chances are someone else will. Oh, and making lowball offers?  Don’t even bother, as the window where you could go into contract offering 10% or more less than the list price has pretty much shut for good.  Lowball offers? You might as well just stand on the rooftop and say “I don’t really want this house.” Don’t try it, as that train left the station in Q1.

So back to the 89 offers.

Ok, so I (representing a buyer) present a good, slightly over asking price offer on an REO (bank-owned) home in South San Jose.  Couple days later, an automated email from the listing agent comes back saying they’re doing a multiple counter-offer, to ALL of the 72 offers they received.  I go to check the Listing Agent’s listing updates on Twitter, and they now have 89 offers. I wouldn’t make that up if I tried. Eighty….nine…offers.

I then picked up my jaw from desk upon which it hit….

Now here I venture to my geek side – this now, is actually a pretty good application of Twitter to real estate.  Many of these foreclosure-specialist listing agents have 20, 30, 100 listings – all foreclosures – they are juggling all at the same time.  Updating status on each listing in MLS with this amount could be a time-consuming task. Using Twitter, the agent gives to-the-minute updates on if offers were submitted to the bank, if they’re in counter-offer with a buyer, if they’re taking no more offers, etc. – much more useful information that could be gleaned from the “Notes” section in the MLS.

But back to this multiple offer topic. No matter what you read, the market in many instances in the Bay Area, is showing PLENTY of signs of life.  Yes, things slowed down early in the year, as did almost every micro-market in the world.  But even in price points between $800K – $1.3M, there are homes that are going in to contract within 2 weeks of coming on the market. It’s becoming less and less of an anomaly. If a house is priced right based on its location, it will sell.

The Mt. Carmel Festival — It’s That Time of Year Again!

Yes, it’s time again for cavity-inducing cotton candy, stomach-churning rides, and harmless carnies.

Mark your calendars for April 24- 26, at Our Lady of Mt. Carmel School. You can purchase tickets online here.

I’ll be manning the bar along with some of the other fellow Men’s Club peeps, so stop by and say hi!

Recent Sales in Mt. Carmel

Well, I guess ‘recent’ being a relative term. There’s currently a good handful of homes for sale in the Mt. Carmel –15 by my count — really nice ones too, at many different price points — from a comfortable 2/1 for $869K (181 Myrtle), to a gorgeous Craftsman for $1.398M (at 1627 Brewster).

But, so what’s been selling though, you ask? By my count, six Mt. Carmel homes closed escrow, in the last couple months.

And here’s how you can see firsthand the effects that economic turmoil have been having on our microcosm. Because what’s interesting is that most of these homes sold at the mid- to lower-end price ranges that we had typically seen in Mt. Carmel in the last couple years (ah, remember those days when some Mt. Carmel homes went for 1.1M, 1.2M, and even a couple at 1.5M?).

Here they are, in no particular order:

2591 Brewster – 3br/2ba, 1550 sq. ft. on a BIG 11,480 sf lot

• Sold for: $752,000 / Listed at $749,000
• 8 Days on market (DOM)

173 Fulton – 2/1, 1190 sq. ft. on a 6500 sf lot. I’d heard unconfirmed chatter that this one received multiple offers in the double digits (over 10 offers)

• Sold for $555,000 / Listed at $495,000
• 28 DOM

1441 James – 2/1, 1020 sq. ft. on an 8550 sf lot.

• Sold for $475,000 / Originally listed at $568,000
• 67 DOM

7 Inner Circle – 2/1, 870 sq. ft. on a 7014 sf lot

• Sold for $625,000 / Listed at $649,000
• 47 DOM

224 Hudson St. – 2/1, 910 sq. ft. on a 6500 sf lot. (this handsome little Craftsman is that “green house” that, if you ever drive down Hudson near Brewster, you know EXACTLY which house this is)

• Sold for: $670,000 / Listed at $695,000
• 43 DOM

1120 Harrison Ave. – 3/2.5, 2100 sq. ft. on a 6480 sf lot

• Sold for: $870,800 / Originally listed at $980,00 (though was on the market last year for $1.279M)
• 98 DOM

Curing the Housing Crisis with Puppies & Kittens

“Ah, if I’d only followed CNBC’s advice, I’d have a million dollars today — provided I started with a hundred million dollars.”

Hilarious line from Jon Stewart (watch clip below or here).  He lambastes Rick Santelli from CNBC, who think we “shouldn’t bail out loser homeowners”, but rather we should bail out winners like AIG. Hmmm.

The Daily Show With Jon StewartM – Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

 

But even funnier, is Stephen Colbert’s interview with Jim Cramer last night — where Colbert popped up endless video of puppies and kittens during Cramer’s yapping, with the intent of improving market psychology and making people feel safe about investing in the market.

The Colbert ReportMon – Thurs 11:30pm / 10:30c

Market Psychology – Jim Cramer

Colbert Report Full Episodes
Political Humor

Rap Battle
Joke of the Day

Beware of the Property Tax Reassessment SCAM

So, this is more of a warning of something you may receive in the mail, that in my opinion is a trying to scam uninformed homeowners, and kind of a total crock of you-know-what.

So in the mail today, I get this official looking letter from “Property Tax Reassessment”, from a p.o. box in Los Angeles. The letter looks official, heck it even has the parcel number of my property.

Why do I think this is a crock? Firstly, they’re asking me to send in $179 by 2/26, and if I don’t, I have a service fee of $30 on top of that.  For this fee they’ll submit all the documentation to the county and “act as my agent” in all dealings with the County Assessor’s Office.

Secondly, they’re implying that my home might be OVER-ASSESSED by $263K.  Being in the business, I have a really, really good idea what my home would sell for if I were to put it on the market today, even in today’s unpredictable market.  And there’s just no way in heck my home is worth as little as they’re proposing what it “should” be assessed at.

Please don’t fall for this….it may be legal, but it REEKS of scam and deception.  Read the following articles for reference:

http://www.venturacountystar.com/news/2008/aug/15/hscam-header-header-header/

http://www.sandiego6.com/content/unit6/story/Property-Tax-Refund-Scam-Hitting-Mailboxes/FXaKYyPcZkmrtPHeRVNizQ.cspx

Getting your home reassessed for property taxes, it’s REALLY easy, and can be done online in almost any county in California (and I’d be happy to help you find the right forms if you need any help).

Common Home Buying Myths — Don’t Believe Everything You Hear

As first-time homebuyers grow curious about the home-buying process, they often turn to friends and family for advice about purchasing a home. While these sources can provide useful tips and information, they also may perpetuate some common home buying myths.

 

While family and friends may have the best intentions when sharing their purchase experiences, it is important to make sure that first-time homebuyers have accurate information.  As such, there are many resources first-time buyers can use for learning about the home financing process, including attending local mortgage seminars or researching online. Many national mortgage lenders often have educational resources and mortgage tools on their web sites.

 

So what are some of these common home-buying myths?

Myth 1: You need perfect credit. An individual’s credit score will significantly affect his or her mortgage loan approval and interest rate. Credit scores may range from 500 to 850, but the majority of scores are between 600 and 700. The higher the score, the more options you will have when looking for a mortgage. Along with your credit score, lenders will need to consider other factors before they approve a loan. Carefully review your credit report and immediately contact the credit reporting bureaus to correct any

errors. You will want your credit report to be accurate by the time you apply for a mortgage.

 

Myth 2: Owning a home is more expensive than renting. In many markets, owning can be as affordable as renting, especially when you consider the tax advantages of owning a home. Unlike rental costs, which increase over time, fixed-rate mortgages provide consistent monthly principal and interest payments for the life of the loan. As you make payments, the money will be applied toward the principal, increasing the equity in your home over time. Historically, owning a home has been one of the best ways of building wealth in America as home prices generally increase over the life of the investment.

 

Myth 3: Lenders share your personal information. Your personal information is protected by federal and state privacy laws. Generally, lenders must get your permission to share personal financial information with non-affiliates.

 

Myth 4: The mortgage process is too long and complicated. With the right resources, the process of buying a home and obtaining a mortgage can be simplified. Expect an experienced loan officer to review the home financing process with you, define terms, and address concerns to find the financing option that is right for you. In addition, many home lenders offer a number of online resources such as payment calculators, appraisal tools and a glossary of commonly-used mortgage terms to simplify the home-buying process.

 

Myth 5: Lenders love to make you wait. Mortgage lenders really don’t enjoy making you wait, but it does take time to review your application. Although some lenders may give you a preliminary and conditional pre-approval based on the information provided in an application, they will need to verify this information. This typically involves confirming employment and income, financial assets, and assessing the value of the home you are purchasing. Other documents, such as a payoff statement, may have to be ordered as well. Because lenders must rely on the response time of third parties, the process may take longer than anticipated. Ask your lender about what to expect when you submit an application and to keep you informed of unexpected delays