David Allen

Short Sale - The new business as usual

2010-02-11T04:20:00Z

Buyers are looking for the Foreclosure. They have heard that the foreclosure is the real deal. Last year banks, in the Corona/Riverside area, dumped some badly damaged properties onto the market. They were accepting anything just to clear out their bad inventory. you could easily pick up a place and get some sweat equity. Today you need to think of those as "The good old days!" That was then this is now.

Today many banks are managing the rehabilitation of their vandalized properties. They paint and repair the home to make it a turnkey property. They are slowly releasing inventory of vacant properties onto the market. The banks new policy is to minimize the losses that they once realized because of their panic selling. Their new policy seems to be to release the vacant properties in determined and systemmatic manner. Their new policy is creating a consumer confidence in the market.

The banking industry has had major procedural changes since 2008. The government involvement has moved them from a rapid foreclosure procedure to a new process of placing emphasis on Loan Modification and Short Sale. Today banks use foreclosure as a last and least desirable solution.

Look at the numbers. In Corona - Eastvale there were 70 homes sold in January. Today there are nine Bank Owned properties listed. There are 79 Short Sale listings. The banks are not yet up to speed in handling short sales. They are under pressure to do loan modifications whenever possible. The sooner they take the hit on a short sale the sooner it is off their books. Most banks are gearing up to streamline the short sale process. The business as usual model for the next two to three years will be short sale. The result of this procedural shift is that it will smooth out the next spike anticipated by the loans that are pending a reset.

The market must anticapate not only the impact of the reseting loans but also the growing anger over upside down loans that are presently being paid monthly by responsible owners. Owners who are seriously considering a Strategic Default. Thus far the banks have succeeded in stabilizing the market locally. Prices are slowly climbing. Each month that passes with increased values creates a softens the impending blow of a wholesale Strategic Default spike.

Bad loans being considered, house values of today seem to be unrealistically low. Why? In today's dollars, a preponderance of the homes selling are selling at a price that is below their replacement cost. From an investment standpoint, many homes can be purchased and rented out for a gross return around 8% or more. Throw the inflation factor on top of that return and you may understand why so many homes only stay on the market for a few weeks.

As a Realtor in the Eastvale area I regularly have people tell me they do not want to get involved with a Short Sale transaction. Buyers know the facts. They have heard of the many short sale cases that drag on for months and just as they are ready to close the whole deal finally explodes! Believe it or not, the banks are moving to change that situation. It is taking time for them to retool for the new model.

Strategic Default - Is it the next wave of homes to hit the market?

2010-02-10T17:33:00Z

Strategic Default - is it the next wave of homes to hit the market? Strategic default is what banks call the event when people who can afford to make the payments decide to walk away. It is not the fact that the home owner can not make their house payments, it is that they CHOSE NOT to make payments. They continue making payments on a home that is not worth the loan against it. Most Americans are honest, ethical and responsible people. They try to pay their debts.

Many Americans harbor resentment and a growing anger because Washington DC insiders are being bailed out with tax dollars while the struggling home buyer is receiving no relief. It appears that the government is covering the losses the banks took on the bad loans that they made. Why should an individual have to personally pay mortgage payments for a bad debt?

These links are examples of the information homeowners are viewing.

(Note: you may have to cut and paste the links)

http://topforeclosuretraining.com/blog/2010/02/09/are-we-being-duped/

http://www.youtube.com/watch?v=SFuWW-Sju0c

www.mybudget360.com/the-art-of-strategic-mortgage-defaults-the-coming-wave-of-foreclosures-

It is possible that this kind of information is finding expression in the "Tea Parties."

However, Americans have a strong sense of fairness. They grapple with the idea that they have a moral obligation to pay their house payment. But, there is a growing feeling that the government is helping the insiders get rich and ignoring the middle class Americans.

This growing problem is not a hidden or concealed fact. The banking system has factored it into their forecasting. The banks are trying to prevent foreclosures. Foreclosure is expensive. They pay residents to move to prevent the necessity of an eviction.The property is vandalized and must be maintained while vacant. Banks want to do loan modifications. If some of the information (see links above) is correct, it is possible that they are not even losing money on a short sale.

There is also an additional solution for the banks to use. The bank can rent to the former owner under an arrangement of "Lease for Title." The bank can then hold the house until it is to their benefit to sell it.

As a local Realtor in the Corona Eastvale community, I have a strong confidence in the fact that the market in this area has stabilized. I have seen the prices increase over the past year. Yes the inventory has reduced to a two month level. Yes, there are many houses waiting to come onto the market. It will be another year or two before there is a feeling of a stable market.

As a local Realtor, I am happy to discuss [with you] what all of this means to your own personal situation.

Market Conditions - Eastvale area of Corona February 2010

2010-02-10T06:20:00Z

2009 is behind us. We begin the new year with brisk sales. Eastvale posted some 70 closed sales in January. There are roughly 140 active listings. These numbers indicate there is a two month inventory. This is the pattern we have seen recently. That is, there seems to be a steady stream of homes coming onto the market to keep the inventory around a two month supply.

The lowest price was $304,900 and the highest recorded was $543,000.

The smallest home is around 2100 square feet and the largest being 4,763. The cost per foot for the smaller homes is higher than the cost per square foot for the larger homes.Smaller homes sell for about $130-$140 per foot. Some of the larger homes sold for around $100 per foot.

Most of the homes sold for more than the listing price. Some cash offers were above listing price. The majority of homes sold rather quickly. The oldest listing took 283 days to sell while the quickest sale was 3 days.

Presently homes are selling rather quickly. What is causing the buying spree?
     1. The fact is that most of the homes are selling at a price that is below the replacement cost of the equivalent house.
     2. The fact that the home loan available today is cheaper than can be expected in the near future. The anticipation of a loss of value in near future is offset by anticipation of increased loan interest. Roughly, if interest increases by one percent the payment will increase by about 10%.
     3. There is an incentive to get the tax credit for buying now.
     4. Presently, real estate is thought to be a good place to invest in an asset that should maintain current value or should grow in value. Real estate has historically been seen as a hedge against inflation

The big question is; are prices going up, down or staying level? Overall it appears that prices are inching upward slightly.

Eastvale is rapidly coming to be recognized as a desirable hometown. It is becoming a community of choice. It is a good time to consider buying a home or two in Eastvale.

Real Estate Market Projections for Election Year

2010-01-14T08:13:00Z

Can anyone predict the future with any certainty? I doubt there is anyone who can. Although, the politicians will tell you with certainty what will happen. It is just a simple matter of approving their proposal. They leave you with the threat that If you do not do their plan then everything will be bad.

Without being political, can we look at events and draw conclusions that seem reasonable? How can we project what to expect in 2010?

2010 is an election year. The pressure is on the politicians to do something to earn your vote. They must kill the gloom and worry that public currently feels because of the poor economy. They must do something to encourage the economy to grow. The politicians must try to bring unemployment down. If they can not do so, they will probably do something to at least give the perception that the economy is growing. That pereception alone creates consumer confidence. They hope to translate the confidence into votes.

Conclusion: The economy and jobs will NOT continue the downward spiral as we approach the election

There has been no hesitation for politicians to pay out enormous amounts of money to save the big, huge, enormous businesses. The dollars spent merely add to the national money pool. The dollars do not reflect an expanded Gross National Product. The dollars have been added to the available dollars without any additional GNP. The added dollars spread over the same GNP is classic inflation. Also known as the deflating of the dollar.

Conclusion: We can expect to realize heavy inflation in the not too distant future.

Wealth is created by the production of goods and services. If there are no new goods and services, there is no new wealth. The strength of the USA economy has been the initiative and the imagination of individual taking the risk to a new product or service. Politics aside, the economic engine (small business) will find ways to prosper under the given circumstances.

America has experienced a "roaring 20's" episode over the past several years. Everyone was living good. The banks let people live high on borrowed money. 2009 saw the end to easy money. 2010 will be a year in which small businesses and individuals will have a better opportunity to borrow.

Conclusion: More money will be available to qualified borrowers.

The reports reveal there is a 2-3 year inventory of loans that have not yet been reset. The banks are planning on making lease for keys and streamlining loan mods in an effort to flatten the spike.

America has seen the building of new homes come to a virtual stop. There is the perception that there is an excessive inventory of houses. The new houses that were built and selling at inflated prices, were being occupied. Many larger houses were lived in by more than one nuclear family. The housing inventory was being effectively utilized. There was not an idle inventory of houses. The houses that are vacant today are a result of economic pressure. They are not the result of too many houses being built. When the resident/home owner could no longer afford the house they had been buying, the house became vacant. Most of the former home owners still wish they could buy a house. The economy prevents them being able to buy. Banks are holding foreclosed houses off the market and allowing the market to stabilize. This process has produced an increase in house prices. Bankers know that the value is not dropping. They also know that the current price of many homes is at or below replacement costs. They are holding appreciating assets. They will wait it out.

The lower housing prices and the low yield on many other investments are bringing investors to the market. They are able to get 6%-10% return in today's rental market. This return is NOT dependent on appreciation. Real estate has usually been a good investment during inflationary periods.

There is very little new construction coming on the market. Overall, the housing inventory is getting older. Without replacement housing being built, it is a depreciating inventory.

Conclusion: There are not excessive houses that can not be absorbed in a stable economy. The inventory will reasonablly be absorbed when the economy recovers. There will be a demand for new construction at that time.

2010 will see the employment picture begin to turn around. We will see inflation threatening the recovery. Banks will have to develop loan policies to allow for home loans to a different buyer than in the past. Your job may be your credit. Interest will not stay low.

Housing in the Eastvale, Corona and Norco area was hit hard by the downturn. Over the last year, it has actually seen an increase in prices from the lows of January, February 2009. The bank owned houses are hitting the market in a systemmatic manner. The government bailout is still playing a role in the market but overall it appears we are at present in a stable market.

Conclusion: It seems reasonable to project that 2010 is a good year to buy a house or two.

Eastvale Foreclosure Homes for Sale

2009-11-21T20:39:00Z

The "Foreclosure Fire Sale" is over!

The first half of 2009 was a time to buy a distressed foreclosure house. The house was in "poor repair". That is politically correct for saying the house was "trashed!"

Common knowledge at that time was, to get a bargain on a house; buy a foreclosure. Those houses were sold "As Is".

Today in the Eastvale area, there are a few foreclosures that do not show well. They are the exception. The new business model of the banks is different. Most foreclosed homes are now cleaned, repaired, painted, landscaped and generally they are "move in" ready. Some banks do not want the property to be advertised as being a foreclosure.

The banks now manage the foreclosures in a much different manner than they did just a year ago.

Here is the good news and bad news about the change. The bad news is that if you missed the "Fire Sale," you missed out. It is over. The good news is that the new banking business model is creating a stable market. Do not expect to see more panic sales in the near future.

Most of the homes on the market today are "Short Sales." The bank controls the sale price to assure the house sells for a fair market price. Short sales are not panic, price slashing sales. The bank takes a loss, but the house sells at a fair price.

The primary determining factor in today's market is affordability. Can the buyer afford the house. The buyer must realistically qualify to make the loan payments. That factor is an indication that we are in a standard housing market.

An additional factor is the appraisal of the home. Just because a buyer offers a given amount does not mean that the bank will loan on that price. This is just another indication of a stable market.

Real Estate Market Conditions and Projections for 2010

2009-11-21T18:54:00Z

What is ahead for the housing market?

The real estate market expansion was fueled in part by loans that did not amortize (pay down the balance). They also had below market interest rates for the first few years. These loans scheduled a large increase in the monthly payment after a few years. With the price of houses increasing, buyers thought they could sell their home if they could not refinance their "Toxic loan".

When prices began dropping the sell option was not possible. During 2008 we saw countless foreclosures hitting the market. The neighborhood blight and dead real estate market are the result. There are still toxic loans that are due to adjust over the next two years. This fact makes us think the problem will continue to falter for the next two years.

Looking ahead to 2010 there may be some good news.

Loan Modification is the first option. Banks are being pressured to modify loans whenever possible. The federal government is providing banks incentives to modify loans. If the owner can not pay a regular house payment even with the terms of the loan modification terms, the banks now have two other options.

The bank may chose to accept a short sale. The home owner sells the house for less than the loan balance and the bank takes a loss.

The bank can now offer "Lease for Keys". The owner of the home may be able to pay market rate rent for the house. If so, the owner of the house will be given a lease. They can stay in the house and rent from the bank. To stay in the house under the lease terms, the owner must sign over the title to the house giving the bank ownership of the house.

The expected result of this practice is that the bank will not be in a crisis to dump distressed homes on the stressed market. The banks can hold the houses. They will have the option of releasing them into a stable market at some time in the future.

There is one other factor that is at play in today's market. The federal stimulus money is beginning to reach the Inland Empire.There is a large inventory of blighted homes on the market. The City of Fontana has money to buy, refurbish and sell homes. This project will aid low income families get into a home that the family can afford.

The Inland Empire Economic Recovery Corporation is also rehabilitating houses. It is a public/private corporation that has stimulus money backing it. This corporation will also be a player in getting blighted houses off the market.

Both of these operations are just beginning to swing into action. They should make a real difference at the low end of the market. They will help low income families get into a home without fear of being victimized by a toxic loan.

The results to expect from these changes are encouraging.

1. Now that the banks have the ability to release homes onto the market at a selected pace, the market should not experience another drop in prices. The controlled market will be stable.

2. Stimulus money is backing the low income housing component of the market, which takes the less expensive homes off the market.

3. Now the moderate income buyers can buy a home with confidence. They do not need to fear a new wave of foreclosures slamming the market.

Lease for deed - Are bank foreclosures history?

2009-11-12T05:42:00Z

Many people have been fearful of the next wave of foreclosures to hit the market. It is estimated that it will about two or three years before all of the adjusting loans (toxic loans) are out of the system.

We are all aware of the out of control flood of foreclosed properties hitting the market about a year ago. Prices plummeted, properties languished and communities suffered.

Over the past several months there has been a freeze on foreclosures. During the freeze the inventories have dropped. Prices have increased.

At last the solution is in place. The banks are encouraged to modify loans whenever possible. If the owner can not qualify for a modified loan there is now a new option.

In the event the owner can pay market price rent and the rent does not exceed 31% of their income, the owner is offered the option of signing the deed back to the bank and becoming a tenant in their own home.

The length of the lease is not specified. The tenant is responsible to keep the property maintained to community standards. It can n ot become blighted.

These provisions allow the banks to systemmatically put the properties on the sale market without flooding the market. They can help to stabilize the market.

New bank regulations allow for "Lease for deed" - Are bank foreclosures history?

2009-11-12T05:42:00Z

Many people have been fearful of the next wave of foreclosures due to hit the market. It is estimated that it will be about two or three years before all of the adjusting loans (toxic loans) are out of the system.

There are new methods of dealing with the foreclosure requirement. Last year the banks were required to follow certain guidelines to handle defaulting loans. They did not have lots of options. There were strict rules and timelines.

The new system encourages the bank to avoid foreclosure as much as is possible. Banks are urged to make loan modifications whenever possible. If an owner is not able to meet mortgage payment requirements, the house can go to short sale.

The new option allows the bank to offer the owner an opportunity to lease the house from the bank. The owner will be required to pay market rate rent. The rent can only be 31% of the owner's income. The owner will have to sign the deed for the house back to the bank. The bank can hold the property for months or years. It is the bank's choice as to when they will sell the house.

Are foreclosures history. No. Foreclosure is still possible. Banks now have other options available. Now that banks are able to hold properties until it is the right time to sell, we can readily expect to see the market stabilize.

One year ago, foreclosed properties were in terrible condition and the banks would not fix them. Today, banks freshen up homes and make them appear as if they are a vacant house listed as a standard sale.

For those individuals who waited to see what the market was going to do; it is time to act. The price drop is gone. Eastvale home prices are already showing positive growth.

Open House in Loma Linda on Sunday

2009-11-04T21:37:00Z

Loma Linda, California - We invite everyone to visit our open house at 11423 Campus St. on November 8 from 11:00 AM to 5:00 PM....(read more)

Price Reduced on 11423 Campus St. in Loma Linda California

2009-11-04T21:34:00Z

Loma Linda, Califonia - Announcing a price reduction on 11423 Campus St., a 1,840 sq. ft., 3 bath, 3 bdrm single story. Now MLS® $389,900 - Beautiful Pool Home.

Property information

Eastvale Town Hall Meeting

2009-10-29T00:50:00Z

Tuesday October 27, 2009 the Eastvale Town Hall meeting was rather eventless.

The Sheriff is stopping tagging.

The CHP is receptive to knowing about our ongoing traffic concerns.

Code Enforcement is putting pressure on banks to keep the vacant properties looking good.

VanderMolen School has been recognized by Disneyland for their computer animation program for the elementary school students.

Bellegrave will not be completed through between Sumner and Hamner until the properties adjoining the missing road section are developed. The developers will provide the funds.

Eastvale Incorporation is moving along. The next LAFCO meeting is on January 21, 2010. There are some questions about fiscal neutrality since the economy slipped. The County may need to loan the new city some funds for a few years.

Since Eastvale is ahead of Jurupa in the incorporation process, we must now wait for them to catch up.

There were some residents from east of I-15 who attended. They want to be included in Eastvale. They point out that Jurupa has room to expand to the north and east. Eastvale is quite limited in its ability to expand.

Again this holiday season there will be a contest for holiday decorations. This year there will be two categories. One for exterior decor and one for interior decorations.

So for those of you who missed the meeting, this is Deputy Dave bringing you up to date!!

Eastvale, Corona,Norco, Chino and Ontario may sometime have a farm odor

2009-10-27T02:10:00Z

Back in the 1950s, Orange County was covered with farms, orchards and dairies. There was a unique smell in many of the communities. Residents knew it was only a matter of time before the "farm odor"would be gone.

Developers and builders bought the land from the farmers. The dairies moved out of Orange County. Homes were then built on the farm land. Many of the farmers relocated into the valley between Chino, Ontario and Norco,Corona. The area was known as the Chino Valley in San Bernardino County and Corona Valley in Riverside County. When the farmers moved their herds from Orange County, they brought the "Orange County Air" with them. Today Orange County does not have the "farm odor."

For some time the Chino/Corona Valley has had that same unique "farm odor." The odor in the words of my grandchildren is "Cow Air." In years gone by, if you were traveling along the I-15 around Limonite, you could notice the "cow air" if you had the car window open.

Beginning in the 2000's the developers expanded out of Orange County and came to the Corona Valley. They built homes where the cows once roamed. Today the Corona Valley has very few dairies remaining. In their place is a thriving new community known as Eastvale.

Many people do not know that before building, the developers were required to remove the tainted soil and refill the land with fresh soil which was properly compacted. The odor is not coming from the soil under the houses. The odor blows in from the nearby fields and farms. Currently there are still many open fields for growing crops. The farmers spread fertilizer to grow the field crops. But for the most part the "farm odors" are not from the Eastvale community.

I have lived here in Eastvale for several years. At times the odor is strong. But usually, it is not even noticable. The aroma is especially strong after a rain. However, it is always the strongest whenever you have visitors who come out from Orange County!

Eventually the entire area will be developed. The farms will all be gone. Meanwhile, if someone tells you that the farms and the smell will all be gone within the next year or two, you may want to question that idea.

Eastvale has many beautiful homes for sale. Today, in Eastvale, you can purchase a large home on a pool sized lot at an affordable price. Eastvale is a community of new neighborhoods with home owners who take pride in their homes and are fond of our growing community. We are rightfully proud of our schools and numerous parks.

Real estate market projections from Eastvale, Corona, Norco and Riverside, CA based upon Obama Administration objectives.

2009-10-20T03:33:00Z

Eastvale is one of the areas that had a remarkable price growth during the housing price run-up. Eastvale, Corona, Norco and Riverside now appear to be at the bottom of the market. In the recent weeks, prices have increased in all 4 of these communities.

Every day someone asks me, "what is ahead?" They remind me that there are probably two more years of toxic loans yet to be dealt with. There is not anything that they can see to prevent the bottom from falling out again. I assure you that another round of bank owned panic "fire sales" will not happen. Those were the good old days for the investor.

Beginning roughly in March of 2009, the banks quit dumping foreclosures on the open market. Previously they had statutory deadlines to follow. A freeze was placed on foreclosures. It is not like nothing is happening. I am here to tell you, "Things are a changing."

You will notice that banks now have approval to hold properties. By holding them off the market, prices have again started to climb. That is only step one.

What about the toxic loan knot that is on the horizion? That problem is real. It is not being ignored. There really does seem to be a plan that is being put in place by the Obama Administration. And you well know that there is no lack of funds to underwrite the bailout plan.

Let's look at some of the things that are happening.

The Obama Administration is encouraging banks to modify loans. If a loan can not be modified, the house probably will become a short sale. The push is that the short sale will be the solution of choice.

The vast majority of homes for sale in Eastvale are short sales. Everyone knows that a short sale is a long drawn out process. Why? A bank is being asked to take a big loss on a loan. That loss reflects on their ability to borrow.

Since the Obama stopped the "fire sale" of repossessed houses, the house price drop is slowly reversing. Houses are again an appreciating asset. The longer the bank holds on to a house, the smaller their loss.

We all know that a short sale is a big nightmare for the potential buyer. We have all lost customers because they have given up any hope that they can get a house. In a short sale, everyone gets a big run-around and is totally bogged down in bureaucracy.

Maybe I am cynical. I truly think that if it were beneficial to the bank to sell the house, it would happen immediately! I have heard of one bank that processes their short sales in a timely manner. It truly can be done. Banks know that the market is NOT about to crash. If it were (going to crash) wouldn't they hurry to dump problem properties?

Also remember that the bank does not show a loss (hit on their credit score) until they dump the asset.

Market analysis shows that the prices are no longer falling. There is still the question of the pending toxic loans. What is the pressure relief valve for the toxic loans?

There are presently new business/government companies being formed. They are public/private non-profit corporations. These corporations are going to be able to buy bulk properties at wholesale from the banks. (Do you see stimulus money here?) Hundreds of these companies are currently being formed nationwide.

What will the non-profits do with the houses? Their corporate non-profit status will require them to sell homes to low income buyers. Can we see them selling them to low income families with a federal subsidy. Can you see them renting them to low income families who are getting section 8? Yes there is a plan for the toxic loans.

Conclusion. I believe we are past the housing price drop era. The banks are NOT just waiting do start another fire sale. The big buyer non-profits are the next piece of the puzzle.

What some consumers may not like this scenario is that the low-income buyer may have a better chance of getting a REO than a regular buyer. But, that is another discussion.

I'm Deputy Dave, Realtor DRE # 01852925. I look forward to reading your comments about this probable scenario.

Local Real estate - Eastvale, Corona and Norco - Is Zillow in tune with our local area?

2009-10-15T02:00:00Z

I am a Realtor who works in the Eastvale, Norco and Corona communities. I just read an article in the California Association of Realtors reporting the fact that buyers are still buying homes below asking price. The report was based on surveys taken by Zillow. The observation that sales prices are still below asking price does not resonate with my personal experience in the local field.

These reports are either broadbased or just plain "dated". Reporting on information from July in the middle of October does nothing but create confusion in the mind of buyers. In my local market, whenever a prospective buyer tells me that they want to offer 5% below asking price, I realize that the (non-cash) buyer is not current. I will admit that most of my buyers are looking in the lower price range. Possibly by adding in the upper end homes the statistics could support the fact that homes are selling below list.

My limited checking of closed sales in my communities of Norco, Eastvale and Corona indicates that sellers are getting over asking price in the majority of sales.
In Norco checking 41 of the most recently reported closed sales, only 11 sold below asking price.
In Eastvale checking 50 of the most recent reported sales, 15 sold below asking price. Of the 15 reported to have sold below list price, two actually sold for more than the ORIGINAL list price. Three of the 15 were for cash. Regardless, our market shows that over 75% of sales closing are closing above asking price.

My job as a local agent is to help my client to understand the LOCAL market. Zillow is considered by many people to be an authoritative source. Please do not confuse their national report with local facts.

I do not set the prices. I only report what BUYERS are paying for houses in my local market.

Why use a Realtor?

2009-10-10T03:51:00Z

I am a Realtor. They call me Deputy Dave. I sell homes in the communities of Eastvale, Norco and Corona in California. Some clients think they know how it all works but, often people have confusion about how the home buying or home selling process actually does work.

Your Realtor is a professional who can guide you through the selling/buying processes. Most transactions involve buyers and sellers negotiating the price and terms, through their respective agents. The financing, appraisals, inspections, disclosures, repairs (if any), title search, loan documents, funding of loans, payoff of loans, prorating taxes and insurance, binding new insurance, recording of documents and many other issues that may arise are necessary to properly complete the transaction. An escrow company processes the information and documents according to the instructions in the selling/buying contract. Escrow companies are neutral and do not represent either party of the transaction.

For more information check the website da4re.com