Buyers

Ramifications on Real Estate in Divorce. Is it time to sell your Simi Valley home?

July 24, 2011 By Ted Mackel Leave a Comment

Divorce happens, not every marriage is successful and as a Simi Valley real estate agent I have been called to help divorcing couples sell what usually amounts to their largest asset in the marriage, their home. This is typically one of the more stressful events in a divorce as not only is the home a large monetary asset for both the husband and wife, but it is also very personal, as it was home to a family with many memories.

Simi Valley like most of the nation is trudging economic challenges, significant drop in housing values and employment challenges which has added additional stress on families and has contributed to increased divorce rates. The stress and emotions involved in divorce can create many challenges as couples move through the process. The division of real estate assets and the protection of that significant investment for both the husband and wife requires a seasoned real estate agent who can work to protect that investment and be flexible to work through the emotions and stress of a divorce environment. The bottom line is that many times in divorce, emotions are out of control, which undermines common sense and when common sense gets undermined, the monetary cost to the divorcing couple is significant and wasteful.

It would be nice to wave a wand so both parties in the divorce could work on the division of their real estate assets in a amicable manner, but since that does not always materialize, if you are in a divorce please remember that with less emotional reactions and the more you approach the sale of the real estate assets with common sense and a business like attitude, can protect and save money.

What are some of the plans of the divorcing couples with the real estate asset(s)? Well that depends on if the divorce is amicable or turbulent.

Does one spouse want to retain the home?
Try to retain the property while the children are in school and then selling the asset later?
Not happy with the market conditions and want to try to hold on to the house and sell it later for a larger profit?
Sell the real estate assets now?

One of the challenges of one spouse trying to retain the home is reaching an agreement on value. Sometimes an attitude of retribution will possess either the husband or wife in that they think by holding on to the house they can buy out the the other party at a discount and get a leg up in the divorce. This is a bad plan as the house will be appraised and possibly a few broker price opinions ordered to determine the value of the home.

Sometimes when children are involved and/or the real estate market is declining there is motivation to try and keep the house and sell it after the children are grown. If this will be 5 or more years, who is going to pay for the deferred maintenance that will occur. The house may need costly items, such as a roof, paint, etc. If the spouse retaining the home in this transitional period does not have the money to make these repairs, the plan to sell the home later for more money may backfire as the deferred maintenance items will negatively impact the value at sale time. When the property does sell later money used to maintain the house will probably need to be reimbursed which could cause more points of disagreement.

Financial Implications and Taxes

Unfortunately, divorce will cause both the husband and wife to make decisions that will not be easy. Selling the house should not turn into a contest to see who wins the trophy. The winner could put themselves in a tough financial position trying to keep the home.

Consider that there could be tax advantages to selling the property now. This is not tax advise, but rather questions think about and hopefully a prompt to push you to consult a qualified tax professional. Currently a married couple selling their primary residence may have up to a $500,000 exemption in capital gains value while an individual has only $250,000. Here’s the rub, and why you need to see a tax professional. If one spouse retains the property, then can the other can spouse claim the house as their primary residence while they are not living there? Does the spouse who moves out now turn their interest in the property to an investment interests which could hold larger tax implications?

Unpopular as it is, sale of the house as terms of the divorce will provide a solution that will bring closure to the situation. Replacement property can be found for either spouse to relocate to, while the standard of living, i.e. house size and neighborhood may not be the same, Simi Valley provides many great neighborhoods and getting re-established in Simi Valley will provide opportunity that may not be available in other communities.

If facing divorce and the value of the property is has dropped significantly, in that it there is not going to be enough money to pay off the debt against the house, take a step back form the scorched earth policy of trying to get back at the other spouse by letting the house go to foreclosure. Today the alternative of Short Sale will help both spouses get back on their feet quicker. I cannot emphasize enough, don’t let the stress and emotions get the better of your common sense. You are making a break, make it with the smallest amount of collateral damage, selling now can be achieved if you have equity and even if you do not (with a Short Sale to avoid foreclosure).

How to choose a Realtor

This is where things can get tough. Ladies, you probably have friends that are in the business, getting your husband to agree to using one of your friends is going to be as likely as you allowing your husband to use one of his buddies. Selling your house in divorce is not about having a person to complaint to about your spouse. You need a professional that is going to work to get you home sold for the highest price possible and be able to facilitate and protect the interests of both husband an wife through the process. Document execution and disclosure needs to coordinated and monitored in a timely manner as to not affect a buyer’s ability to conduct investigations or complete their loan process. Many times the husband and wife will not agree on negotiating terms with the buyer which takes extra skill to work out the differences for a successful sale. You will need an experienced, skilled practitioner, especially in this market with Short Sales common in divorce situations.

Marketing your home is a topic in itself, but the ability for the Realtor to remain calm in the middle of divorce negotiations is not a skill possessed all.

Filed Under: Buyers, Sellers Tagged With: Broker Price Opinion, Buyer, divorce, home, real estate, Realtor, Seller, Simi Valley

Simi Valley First-Time Homebuyer Assistance Program

July 22, 2011 By Ted Mackel Leave a Comment

Simi Valley First-Time Homebuyer Program

The City of Simi Valley offers a First-Time Homebuyer Assistance Program to qualified low-income first-time homebuyers who wish to purchase their first home in Simi Valley. The property may be a detached or an attached single-family home, a condominium, or a townhome. The Program is available to those who have not owned a home in the last three years. Single parents who owned a home while married and displaced homemakers may qualify even if they owned a home in the previous three years. Following is a brief summary of the Program:

The Simi Valley Program offers low-income housholds a deferred payment second trust deed loan (no monthly payments required) up to $50,000 per bedroom, not to exceed $200,000.
Restrictive Covenants (Resale Restrictions) will be recorded against each property upon the initial purchase and shall restrict the resale of the unit at a price-affordable to low-income first- time homebuyers for 55 years. The 2nd trust deed loan will be assumed by an eligible low-income first time homebuyer throughout the 55-year term of affordability.
Applicants with an average FICO score of 700 or higher will be required to provide a minimum of 3% down payment. Applicants with an average score between 600 and 700 will be required to provide a 5% down payment. Buyers with additional cash assets in excess of $10,000 will be required to use such assets towards down payment and closing costs.
Applicants with an average FICO score below 600 or who have had a bankruptcy within the past four years are not eligible to participate in the Program.
Gift letters are acceptable in meeting up to one half of the minimum down payment requirement as long as there are no repayment terms. A minimum of one half of the required down payment must come from the applicant’s personal assets.
The household’s projected annual gross income (income before taxes) cannot exceed the folllowing limits:

Number of Persons in Household	Low-Income Limits
1	$49,850
2	$57,000
3	$64,100
4	$71,200
5	$76,900
6	$82,600

The above limits apply to the income of all members of the household 18 years of age or older. The income limits are based on figures published by the U.S. Department of Housing and Urban Development (HUD).

Simi Valley’s Program eligibility will be based on total household income, a housing cost ratio not to exceed 35%, and a debt-to-income ratio not to exceed 45%. Housing costs include principal and interest, property taxes and insurance, private mortgage insurance, homeowner association dues, if any, and a utility allowance. Ratios are determined by dividing monthly housing and long-term installment expenses by the gross monthly income.
The primary loan must be a fully amortized loan provided by a bank, savings and loan, mortgage banker or other institutional lender. The City will not allow balloon payments or stated income loans.
Buyers must occupy the unit as their primary residence.
A portion of the proposed $50,000 per bedroom subsidy may be used for necessary repairs to bring the property into compliance with the City’s Housing Quality Standards (HQS). A third trust deed for a home rehabilitation loan will be recorded after the close of escrow to address repairs identified. The maximum $50,000 per bedroom subsidy will not be exceeded since the City’s second will be reduced by the amount of the rehabilitation loan.

The maximum home price and City subsidy limits appear below:

Bedroom Size	Maximum Market Purchase Price	Per Bedroom Subsidy Limits	Maximum Affordable Sales Price
1	$206,700	$50,000	$156,700
2	$280,950	$100,000	$180,950
3	$349,300	$150,000	$199,300
4	$418,600	$200,000	$218,600

Maximum home price limits are subject to change when new Income Limits for Ventura County are published each year. Please note that the City’s per bedroom subsidy will at no time write down the property to an amount lower than the maximum affordable sale’s price. Therefore, the maximum per bedroom subsidy may be lower than the amount shown above.

Upon Pre-Qualification of Eligibility, applicants will be provided a copy of the Policies and Procedures Manual for the Program, which gives detailed information on the Program.

Applications are available through the Department of Environmental Services. The First Time Homebuyer Application is available as an Adobe Acrobat document. Complete and return the Application and all required documents to the Department of Environmental Services, Housing & Special Projects Division, 3855-A Alamo Street, Simi Valley. If you need further help please contact me at (805) 432-7705 or via email.

The City also partners with other available First-Time Homebuyer Programs such as the Ventura County Regional Mortgage Credit Certificate Program (MCC) administered by the County of Ventura and the California Housing and Finance Authority (CHFA). The CHFA Programs offer down payment assistance and in some cases assistance with closing costs. The MCC Program offers a 15% tax credit of the annual interest you pay on the home mortgage, reducing your federal income taxes and increasing your earnings. The income limits, the down payment assistance, the type of 1^st and 2^nd mortgage loans, and the maximum purchase price differ for each First-Time Homebuyer Program.

NOTE: This information was obtained from the City of Simi Valley.

Filed Under: Buyers Tagged With: assistance, first time buyer, home, program, Simi Valley

How the right Lockbox can help your Simi Valley Home Sell Quicker

July 16, 2011 By Ted Mackel 1 Comment

(Updated 7/16/2011) In my last article on this subject “The importantance of a lockbox when selling your Simi Valley Home” we discussed the importance of giving flexible access. A concern for any seller when giving access to their home is security. In this article I will discuss the GE Supra iBox vs. an old style combination box and how that affects your listing agent’s ability to track who has been in your home..

To the right is a picture of a combination style lock box. While these are effective in providing an extra key, once the combination is given out there is no way to track who has opened the box or control people from giving the combination code to others. These style boxes are ideal for family members or setting up access for handymen or utility providers if the home owner so desires, but this is a very poor choice for Simi Valley Real Estate Agent showings due to the lack of control. These mechanical combination lockboxes should only be used for temporary purposes and in my profession recommendation never use this type of box for giving access to agents who want to show your home.

In my trade area (including Simi Valley and Moorpark) the SoCal MLS and the Ventura County Regional MLS have chosen to use General Electric’s Supra iBox lockbox system. This blue iBox is controlled through an infrared communication device on the front of the box. Agents can rent an electronic key pad or have apps loaded onto any PDA Smart phone. There is an additional device that pairs with Android and non Apple Smart Phones so the real estate agent’s phone can communicate via infrared. Apple iPhones have a very small device the plugs into the bottom of the phone.

The iBox has a computer chip inside that stores data on all who enter through the box. The Smart Phones and the keypads call the system every 15 mins when the software is on or the key pad is powered up and transmits which properties the agent has accessed. If the Listing Agent has registered their lockboxes and has their current email address in the GE Supra system, the Listing agent will receive an email almost immediately after any of their lockboxes are accessed. The email contains the agent name and contact information of who just opened the box. This provides security in that the listing agent knows at all times who has accessed the property with a time a date stamp and if a real estate agent has not paid their bill or is disciplined by the MLS, the system can be set to not authorize their keypad or smart phone to open any of the boxes.

The software on these computerized lockboxes allows for some very flexible programming. For example, the weekdays, Saturday and Sunday can be programmed so the boxes will open only certain times.

If you really want to crank down on who gets in your Simi Valley home, there is a CBS setting. The Call Before Showing (CBS) setting requires the buyer’s agent to call the Listing Agent for an additional unique code to open the box. Using the CBS you could prescreen the agent calling and determine if you are comfortable enough to give out the CBS. Additionally you know right then and there who is going in and at what time. Please remember that the more restrictive you are with the times buyers can view your home, the fewer showing you will get as I pointed out in the last article The importantance of a lockbox when selling your Simi Valley Home“.

There is a note section in the software so a note will pop up right after the box is opened and you can type in any important notices for the agent, for example, “please leave your card or please turn off the lights”. ”Feed the dog or take out the trash” is probably not a good way to greet a buyer’s agent. Another positive feature is that the Listing agent can put their contact information in as a virtual business card and Listing comments as an electronic flyer. When used as designed and programmed properly, the iBox lockbox system not only becomes powerful tool to increase exposure, but help provide a record of who is accessing the property and a complimentary way to help follow up on potential buyers for your Simi Valley home.

As a side note, most properties that have been foreclosed on and are now owned by the bank, will use both boxes. I work with several banks as a listing agent for their Simi Valley properties. The mechanical lockboxes are used for bank personnel only, handymen etc. Those codes are not supposed to be given to real estate agents.

The Supra iBox costs a Simi Valley Real Estate Agent approximately $130.00, I own 25 boxes. When you are interviewing agents, ask if they have a Supra iBox. If they don’t or they suggest to use a mechanical box; please take this advise, stop the interview and show them the door. Homes for Sale in Simi Valley range from $150,000 (condos) in to the millions; I think it is reasonable to assume a listing agent can afford a $130 box.

There is an argument against any use of any box and that the listing agent needs to be present for all showings. That can be an article all by itself. The short answer is that Simi Valley is a bedroom community, people have conflicting schedules, a listing agent can only be in one place at one time. Why limit the times a potential buyer can see your home? And no, a listing agent cannot do a better job selling or touring the prospective buyer; many times the listing agent becomes an annoyance to the the buyer and their agent. It really does not mater how it is done in other parts of southern California or other parts of the country, it only matters how it is done in Simi Valley because your competition (the other Simi Valley homes for sale) are using the system very effectively. Don’t be the last to sell your home over lack of access.

Originally posted April 27, 2008.

Filed Under: Buyers, Sellers Tagged With: combination, homes for sale, lockbox, mls, moorpark, real estate, Simi Valley, Supra ibox

Asking for Closing Costs Could Cause Home Buyers To Over Pay For Their Purchase

July 1, 2011 By Ted Mackel Leave a Comment

Home Buyers many times ask Home Sellers for concessions or assistance when they make an offer to purchase a home. The typical request from a home buyer is for closing costs, a home warranty, repairs or for the seller to include certain personal property items for sale. This article will focus on closing cost requests from home buyers.

The following information pertains to California real estate only. Real estate settlement and closing procedures vary from state to state, so if you are looking for information for real estate transactions in a state other than California, the information below may not apply to your situation.

As the Simi Valley housing market has lost value and sales have slowed, the requirements for buyers to get financing has become difficult at the same time. The Simi Valley real estate market has seen the most activity in homes selling under $450,000. The buyers in this price range typically have low down payment offers and do not have significant reserves or savings. The FHA loan program allows those buyers with limited resources to purchase homes with as little as 3 1/2% down. For Simi Valley this translates into approximately $8000-$15,000 minimum down payment needs; the FHA program helps these buyers get into homes.

Looking at Simi Valley homes selling for under $450,000, the typical closing costs associated with those home purchases can range in the $8000-$10,000 range. It has been a pretty common practice for buyers to write an offer asking the seller to concede up to 3% of the sale price to assist the buyer with these closing costs. While not all sellers have the ability to make this concession, the buyers will add this figure on top of their offer price so the seller will realize a net sales price closer to what is acceptable to the seller.

In 2010 the federal government changed the Good Faith Estimate (GFE) and tightened down regulations on this form to protect buyers from overpaying fees associated with obtaining financing. Once the buyer’s lender issues the GFE, the lender is bound by those numbers and has very few options to increase any of the figures on that statement. The 2010 GFE does allow for some minor adjustments, but overall the buyer can feel pretty good about the actual closing costs associated with their purchase and loan after receiving this document. These new regulations with the GFE have created an issue in how buyers should ask for a closing cost credits from the sellers. If these credits are asked for without consideration of the new GFE requirements, the buyer can end up paying more for the property than they intended.

For example,

The buyer asks for $10,000 credit toward closing costs in their offer to the seller.
The seller is clear that they would like to receive no less than $400,000 for their property.
The buyer’s offer is for $410,000 with the seller crediting back $10,000 toward the buyer’s closing costs.
The seller accepts the offer and escrow is opened.
The buyer now makes loan application with their lender.
A GFE statement is issued within three days of the loan application outlining all the buyers costs.
Those buyer costs total $8,000.
The seller’s obligation is only $8,000 and the $2,000 difference is now realized by the seller in a net sale price of $402,000.
The buyer just overpaid $2,000 more for the property than they originally intended to.

The example above outlines one of the problems Simi Valley home buyers may encounter when asking for closing costs to be credited by the sellers.

Some might say, ” when the buyer makes loan application, shouldn’t the lender set all the fees on the GFE statement to equal the $10,000?” The 2010 GFE was designed to outline and identify the costs to obtain financing, so buyers could go out and compare the costs between different lenders. How would it be to the lender’s advantage to inflate the costs and fees; just to try and burn up a concession/credit from the seller? Also, why would anyone want to pay more for property or pay more for costs than they need to?

If you are a buyer who is considering asking for a seller concession in closing cost assistance, understand the ramifications of such requests. If reserves/savings are one of the driving issues into asking for this type of seller concession that is one thing, but if you are asking for the seller concession while you have the money to pay for these closing costs, consider the following:

Your property will be assessed for property taxes in the amount of the sales price. Is increasing the sales price worth paying additional property taxes over the course of time you own the property?
By offering more than the original listing price to cover your closing costs, remember you will be paying interest on the higher purchase loan amount for next 30 years (if your loan is amortized on a 30 year schedule). I’ve always felt that home buyers should deeply reconsider (if possible) financing closing costs for 30 years. It’s does not make much since to pay interests on fees, since the first 20 years of the 30 year amortization schedule is weighted toward paying down the interest on the note.

Last, if you’re reading this article and you end up educating and instructing your real estate agent on these issues, ask yourself how well you’re being represented by an agent who’s not aware of these issues. If tour real estate agent is not aware of issues as important as the impact of closing costs on your pocketbook during negotiations of your home purchase; then what else are they unaware of that may leave your money on the table or put you at a disadvantage in negotiations?

My sellers will gladly accept the additional funds if your closing costs are overstated in your original offer. Wouldn’t you feel better if you had an agent representing you trying as hard as they can to make sure you’re not leaving money on the table? Call or text (805) 432-7705

Filed Under: Buyers Tagged With: closing costs, Home Buyers, Home Sellers, homes, Market, real estate, Simi Valley

10 Mistakes Home Buyers Make with Simi Valley Short Sales

June 27, 2011 By Ted Mackel 1 Comment

Simi Valley Short Sales have been a big part of my business for the last couple of years. These transactions are very complex and not every real estate agent is equipped to handle these transactions. It is easy to get a seller to agree to list their home, but working with the Seller’s bank to get short sale approval is another story. Many of the licensed agents that take short sales listings have no business doing so. It is easy to attend a seminar and get a certification, but each and every short sale I have worked on is different with it’s own set of circumstances, nothing can be substituted for hands on experience.

Understand that the representative at the bank has a typical work load of over 100 properties on their desk in various stages of the approval process. My job is to keep my client’s file at the top of that stack and any time the bank representative throws a condition at us, we need to answer quickly and be able to state a case in support of my Seller.

A big part of my success is using a 3rd party negotiator on my team. My negotiator is Real Estate Attorney and Licensed Broker, while he is acting only as a negotiator, the years of experience between the two of us has proven to a 100% track record in getting approvals. We have completed traditional Short Sales and Short Sales under the HAFA program.

Your biggest obstacles as a buyer in a Short Sale are mostly going to be related to having unrealistic expectations. Some will be generated on your own and the rest will be generated by the real estate agent representing you.

#1. Not understanding Market Value – You will write a Low Ball offer for several unsound reasons

First unsound reason – The bank already has written this property off at a loss, if they don’t take my offer they will lose even more money down the road.
Second unsound reason – They are getting more from me now then they will if they foreclose.
Third unsound reason – By the time I fix up the house after I buy it, I will have $50,000 into it, so my offer needs to be $50,000 below asking.

The bank has send appraisers out and paid other real estate agents for market opinions. The Seller’s lender has a very good idea what the surrounding homes have sold for. Additionally, I will price my Short Sale Listings at Market value and this is one of the direct reasons why my Short Sale Listings not only get approved, but they also close escrow successfully. Typically the Seller’s Lender will come back and ask the buyer to come up with additional money if the Seller’s Lender thinks the offer is low compared to the market value.

#2. Asking for Repairs – You or your agent will think that you can ask repairs after an inspection. The seller is in a Short Sale because they are broke and out of money. They probably barely have enough money for a deposit on a rental when escrow closes and if your agent puts in your head that you can ask for repairs, you might want to look for a new agent before looking at other homes. Short Sale Lenders do not care that the water heater relief line does not exit to the outside of the home, they don’t care that the screens are broken or that the pool is green. No they don’t care that the GFI’s are missing in the bathrooms. The Short Sale Lender has a bottom line number in their approval and if the buyer cant work with that number, then the approval will not be issued. The bank’s bottom line number and your low ball offer will not be compatible. Seller is broke so that means you the buyer gets to pay for the repairs.

#3. Ask for Termite – Your agent tells you to ask for termite inspection and repair. Once you put it in the contract now your lender is going to require the work be done, but remember the Seller’s bank isn’t going to pay for it and the Seller is broke so the only person left to pay, is you the buyer.

#4. Ask for Home Warranty – Once again the Seller’s bank isn’t going to pay for it and the Seller is broke so the only person left to pay, is you the buyer.

#5. FHA & VA financing - Try a Short Sale at your own risk, because FHA and VA will inspect the house and come up with a list of Lender required repairs. See #2 and remember the Seller’s bank isn’t going to pay for it and the Seller is broke so the only person left to pay, is you the buyer. FHA & VA buyers have bought Short Sale properties, they just had to come out of pocket for Lender required conditions and repairs.

#6. Closing costs – Your Lender or Real Estate Agent told you to ask for $10,000 in closing costs. The Seller’s bank isn’t going to pay for your closing costs and the Seller is broke so, the only person left to pay for your closing costs is you the buyer.

#7. Unrealistic about time frames – Short Sales take a long time. I have obtained approvals in as short as 3 weeks to 6 weeks, but the majority of the approvals are taking 90 to 120 days. If you don’t know how to sit and wait for a long time with little information on the status, then you should not be writing offers of Short Sale properties.

#8. You have a home to sell – While I might be the only listing agent in Simi Valley to complete a Short Sale with a buyer who was selling their home and needed the proceeds from that sale to complete the purchase of my Short Sale; I have not had any other bank agree to this. The timing on these short sale approvals is so drawn out and consuming, it is very difficult to hold all the buyers together and wait for approval. The representative for the Seller’s Lender know this and they do not approve offers that are contingent on the Buyer selling their property first.

#9. Attempt to flip or the old Double Escrow – You want to negotiate with the Seller’s Lender so you can turn around and find another buyer and make a quick profit. My seller has no motivation or obligation to help you make a fast profit off their loss. Keep in mind that the Seller’s Lender may have deficiency rights against may seller, so my seller would be crazy to take on larger future tax and deficiency obligations for your investment plans. I wrote “Beware of Short Sale Flipping” which explains this better, but it can be illegal and FBI has been going after investors that are concealing their profit schemes from Short Sale Lenders.

#10. Not understanding THE SELLER IS BROKE and THE SELLER’S LENDER IS NOT GOING TO AGREE TO PAY FOR THINGS YOU DEMAND. You should realize by now that there could be as much as $1,000 or even $2,500 of issues on a Short Sale property and if you are not prepared (as a buyer) to deal with those issues, you probably should not be writing offers on Simi Valley Short Sale properties.

The Seller’s Lender has a sale price they are willing to accept for the property that is going to be very close to market value. The Seller’s Lender will try to get the buyer to pay over market value. The Seller’s lender is going to try every possible thing they can to to minimize the the costs to sell the property which is why buyer demands are not the concern of the Short Sale Lender.

To understand the short sale process better please read

Filed Under: Buyers, short sales Tagged With: fha, HAFA, lender, Short Sale, Simi Valley, VA

How does a Lis Pendens affect California Real Property?

June 17, 2011 By Ted Mackel Leave a Comment

I see questions all the time about Lis Pendens in online Real Estate discussion forums all the time. Before diving into the information below please understand the following. This information pertains to California Real Estate Law. This information was obtained with permission from the California Association of Realtors Legal Department. I am not an attorney and this information is not intended to be legal advise from me, please seek professional legal help with this matter.

Q 1. What is a Lis Pendens?

A: Lis Pendens is a Latin phrase which means a pending suit. When people refer to a Lis Pendens they are generally referring to what Code of Civil Procedure Section 405.2 calls a “Notice of Pendency of Action” (hereinafter “Lis Pendens” and also “Notice”). The Lis Pendens is recorded in the office of the county recorder and serves as a warning to prospective interest holders in real property that the real property is involved in a legal action (Cal. Code Civ. Proc. §§ 405.2, 405.4). This means that the person who is asserting a real property claim (the claimant) must file a lawsuit prior to recording the Lis Pendens.

Q 2. What is the purpose of a Lis Pendens?

A: The purpose of a Lis Pendens is to notify prospective purchasers, encumbrancersand other real property interest holders that any interest acquired by them in the property is subject to the outcome of a legal action currently in progress concerning the real property. Although recording the Lis Pendens doesn’t legally stop a buyer from purchasing the property, the buyer is subject to losing the property to the claimant should the claimant ultimately prevail in the litigation regarding entitlement to the property. Therefore, for all practical purposes, the Lis Pendens assures the person recording it (the claimant) that the property in question will not be transferred before the lawsuit is resolved (See Question 3).

Q 3. Can property be transferred if a Lis Pendens is recorded against it?

A: Yes, but if it is transferred or encumbered, the transferee or encumbrancer is deemed to have constructive notice of the legal action affecting the property and takes title subject to any rights or interests in the property the claimant subsequently obtains in the legal action. The rights of the claimant relate back to the date of recording of the Lis Pendens. Thus, even though the property may be transferred, it is unlikely that any prospective transferees will take the risk that the legal action will be decided in favor of the claimant. Thus, recording a Lis Pendens effectively makes the property unmarketable.

Q 4. Who can record a Lis Pendens?

A: A party to an action (lawsuit) who asserts a real property claim may record a Lis Pendens. A real property claim is defined as a pleading which, if meritorious, affects (a) title to, or the right to possession of, specific real property or (b) the use of an easement. (Cal. Code Civ. Proc. § 405.4.)

Q 5. Can a buyer record a Lis Pendens against a seller who refuses to close escrow?

A: Yes, if the buyer pursues a legal claim against the seller for specific performance of the contract. If the buyer is only interested in return of the deposit or money damages then a Lis Pendens should not be recorded.

Q 6. Can a buyer record a Lis Pendens against a seller who refuses to return a deposit?

A: No. If the buyer is only interested in return of the deposit or money damages then a Lis Pendens should not be recorded.

Q 7. Can a seller record a Lis Pendens against a buyer who breaches the contract?

A: No. A seller may pursue a breaching buyer by seeking either specific performance or damages. When a seller seeks specific performance against a buyer, the seller attempts to force the buyer to purchase the seller’s property. The seller makes no claim against property owned by the buyer and, accordingly, a Lis Pendens recorded against any property then owned by the breaching buyer would be inappropriate. Obtaining specific performance against a buyer is very difficult. More typically, the seller sues the buyer for damages. This is an action for money. A Lis Pendens is inappropriate in such a case.

Q 8. Does a liquidated damage clause affect a buyer’s ability to record a Lis Pendens?

A: No. A liquidated damage clause (like the one in the C.A.R. purchase contracts) sets limits on the monetary damages in the event a buyer breaches a contract. Since a Lis Pendens would generally only be recorded when a breaching seller refuses to sell the property to the buyer, the liquidated damages clause has no effect on a buyer’s ability to record a Lis Pendens.

Q 9. What does a Lis Pendens claimant have to do in order to record a Lis Pendens?

A: The claimant must do the following:

(1) The claimant must file a lawsuit which asserts a real property claim (Cal. Code Civ. Proc. § 405.4).

(2) A Notice of Pendency of Action must be prepared which contains the names of all parties to the actionand a description of the property affected by the action (Cal. Code Civ. Proc. § 405.20).

(3) The Notice must be signed by the claimant’s attorney of record. If the claimant does not have an attorney (is acting in propria persona) the claimant must have the Notice approved by a judge. (Cal. Code Civ. Proc. § 405.21.)

(4) The Notice must be mailed by registered or certified mail, return receipt requested, to all known addresses of the parties to whom the real property claim is adverse and to all owners of record of the real propertyas shown by the latest county assessment roll (Cal. Code Civ. Proc. § 405.22).

(5) The Notice can then be recorded in the county in which all or a portion of the property is situated if it is accompanied by a proof of service that the Notice has been properly served on the persons listed in paragraph 4 (Cal. Code Civ. Proc. §§ 405.20, 405,23).

Q 10. Can a Lis Pendens be recorded if the purchase contract requires arbitration and not litigation?

A: Yes. In the event that both parties to a dispute have initialed an arbitration clause, the party wishing to record a Lis Pendens,must first file a lawsuit and must, at the same time the action is filed, also present to the court an application that the judicial action be stayed pending the arbitration. Then the claimant must take the steps needed to record the Lis Pendens as indicated in Question 12.

Q 11. Once a Lis Pendens has been recorded, how can it be removed from title?

A: At any time after the Lis Pendens has been recorded by the claimant, any party to the action or a non-party with an interest in the property (“moving party”), may apply to the court in which the action is filed to “expunge” (remove from the record) the Lis Pendens (Cal. Code Civ. Proc. § 405.30). A person who is not a party to the action must first obtain permission from the court before bringing the motion to expunge (Cal. Code Civ. Proc. § 405.30). The expungement order is not provided by the court unless there is “the giving of an undertaking” (i.e., the moving party must post a bond) in an amount that will indemnify the claimant for all damages resulting from the expungement which the claimant may incur if the claimant prevailson the real proeprty claim (Cal. Code Civ. Proc. § 405.33).

There are three instances in which a Lis Pendens can be expunged.

(1) The Notice shall be expunged if the pleading of the Lis Pendens claimant does not contain a real property claim (for example, the claimant is only seeking money damages) (Cal. Code Civ. Proc. § 405.31).

(2) The Notice shall be expunged if the Lis Pendens claimant has not established by a preponderance of the evidence the probable validity of the real property claim (Cal. Code Civ. Proc. § 405.32).

(3) The Notice shall be expunged, even if the claimant has established the probable validity of the claim, if the court determines that adequate relief is available by the property owner providing a bond in an amount sufficient to indemnify the claimant for all damages proximately resulting from the expungement (Cal. Code Civ. Proc.§ 405.33).

Q 12. What does “preponderance of the evidence” mentioned in the previous question mean?

A: Essentially, to show a “preponderance of the evidence” means that the evidence presented is of greater weight or more convincing than the evidence which is offered in opposition to it (Black’s Law Dictionary 616 (5th ed. 1983)).

Q 13. What does “probable validity of the claim” mean?

A: It means that it is more likely than not that the claimant will obtain a judgment against the defendant.

Q 14. Who has the burden of proof in a motion to expunge a Lis Pendens?

A: The Lis Pendens claimant (Cal. Code Civ. Proc. § 405.30).

Q 15. How long does a property owner or other party bringing the motion to expunge (“moving party”) have to post a bond if ordered to do so as a condition of granting the motion to expunge?

A: The court will set a date on which the moving partymust return to court and show that the bond has been obtained. If the moving party fails to demonstrate by that date that the condition has been fulfilled the court will deny the motion to expunge. (Cal. Code Civ. Proc. § 405.33.)

Q 16. Can a Lis Pendens claimant ever be required to post a bond in order to keep the Lis Pendens of record?

A: Yes. The court may require the claimant to post a bond in order to maintain the Notice. If the court issues such an order andthe claimant does not show compliance with the court’s order on the date established by the court, then the court will order the Notice be expunged. (Cal. Code Civ. Proc. § 405.34.)

Q 17. What is the effect of a Lis Pendens if it has been expunged or released?

A: Once a Lis Pendens has been expunged or voluntarily released it is no longer considered actual or constructive notice of any of the information contained in the Notice. Subsequently, anyone who, for valuable consideration, becomes a transferee of an interest in the property shall not be deemed to have knowledge of the matter contained in the Notice whether or not that person had actual knowledge of the action. Thus, expungement or voluntary removal of the Lis Pendens allows the property to be transferred free of any cloud otherwise caused by the recording of the Notice. (Cal. Code Civ. Proc. §§ 405.60, 405.61.)

Q 18. Can attorney fees be awarded as a result of a motion concerning expungement or maintenance of a Lis Pendens?

A: Yes. The prevailing party on any motion made to expunge shall be awarded reasonable attorney fees and costs unless the court determines that the imposition of these fees and costs would be unjust. The same rule applies to the prevailing party on a motion made to request that the claimant post a bond as a condition of maintaining a Lis Pendens. (Cal. Code Civ. Proc. § 405.38.)

Q 19. What effect does expungement of a Lis Pendens have on any lawsuit between the claimant and the property owner?

A: None. While as a practical matter the expungement of a Lis Pendens affects the parties’ relative bargaining power in an action, the expungement does not otherwise affect the legal relationship between the parties to the dispute.

Q 20. If a Lis Pendens has been expunged or removed, does a subsequent purchaser of the property take title subject to the outcome of any lawsuit still pending between the claimant and the property owner?

A: No. (See Question 17 above.) That means that a subsequent purchaser does not have to give up the property regardless of the outcome of the lawsuit between the claimant and the property owner.

Filed Under: Buyers, Foreclosures, Sellers, short sales Tagged With: california Real Estate, Lis Pendens

Simi Valley Home Sales Report for November 2010

December 15, 2010 By Ted Mackel 3 Comments

Simi Valley home sales trends for November 2010 continued to match patterns we’ve seen over the last year. Volumes, pricing and most other factors remain unchanged month over month. While this stability is a good sign for the Simi Valley real estate market, most are still uneasy about future outlook of home sales.

Interest rates below 5% coupled with rates hitting their lowest point in November have not created any new stimulus for the Simi Valley real estate market. Looking at the Sales Volume chart below, you can see that over the past five years November has had a very common pattern except for 2007.

The bulk of the activity in Simi Valley home sales still remains in the under 500,000 price range while homes above this price point fluctuate, the luxury markets are still selling at a very slow pace. Distressed properties including short sales and foreclosures are still negatively impacting the market and will continue throughout 2011.

Current market conditions are still favorable for qualified Simi Valley home buyers as low interest rates and average home pricing afford good opportunity. Looking at the Average Sale Price Graph below shows that average pricing seems to be holding steady without any major swings. Much if this is related to the low interest rates and the rental payment comparison. Renters looking to buy over the last few years are looking to keep monthly mortgage payments near what they would pay for rent and have been unwilling to enter the market without out a bid up mentality just because rates are the lowest we have seen in a long time.

Purchases made in this market are a long term position. Until the employment picture both on the State, Local and national levels recover overall home pricing and the Simi Valley real estate market will react on a similar pace as we have seen over the last couple years.

Filed Under: Buyers, Market Updates, Sellers Tagged With: Home Buyers, Home Sellers, market. homes, real estate, Simi Valley, sold

5 Reasons Home Values Should Not be your Biggest Worry

December 1, 2010 By Ted Mackel 2 Comments

How in the world can I get away with saying Home Values should not be your biggest worry? I am sure this statement is enough to get under the skin of any homeowner/home seller and those buyers out there looking for the best deals possible.

As a seller, the goal is to get the highest price possible and as a buyer, the goal is opposite. So why not worry about the value? Because as a home seller or home buyer you have little control over market values. Below are the five reasons to consider which may help you sell your home at the maximum possible price or purchase a home at the best possible price.

Your are not in control
Consider the Contrarian
Population Growth & California
Keeping regional data reports in perspective
You home is a place to live not a commodity

1. You are not in control. There are many outside contributing factors that affect Home Values. Everything from area employment opportunities, the local and regional economy, mortgage interest rates, supply and demand and location. Any one of these conditions will impact home values significantly and if two or more of these conditions are present in the market at the same time, the impacts are even more dramatic.

2. Consider the Contrarian. Who is the contrarian? A Contrarian as known in the stock market is the person that goes out and buys Exxon stock after the Valdez crashes and fills Alaska’s waters with crude oil. While the event causes significant environmental damage and investors sell off all their Exxon stock, the Contrarian will come in and buy the stock while on sale knowing that Exxon as a huge company can weather the lingering effects of accident. Are there real estate contrarians? I believe so. Take a state like California and even in the worst economies, real estate will eventually recover. Climate and opportunity has always driven California.

For example looking at the West side of Los Angeles, areas like Brentwood and the Palisades may be affected negatively by a declining real estate market. Now consider their proximity to business and opportunity in Santa Monica, Century City, downtown, the movie/tv industry in Burbank and Hollywood and it becomes easier to understand why those areas over the course of history in Southern California have remained affluent and highly desired and tend to recover quickly.

3. Population Growth & Control. California’s population increased by approximately 5 million over last decade. California population growth in the past was tied to people migrating from other states. This is not happening anymore. While population growth in California has slowed due to a higher cost living, the population continues to grow through increased birthrates and foreign immigration. If and when the state government can fix it’s own financial problems, as the recession eases and unemployment begins to retreat, California’s attractiveness will return and the slowdown in population growth for the state will end. Because of the climate and the opportunities California has afforded those who have moved here over the course of history, the long-term outlook for our state will always be positive. The big take-away is that California is increasingly become very diverse culturally and we all should consider that doing business with our foreign immigrants will increase and be very common.

4. Keeping regional data reports in perspective. The news typically reports regional trends for real estate and rarely delves into the specifics of any local or hyper local market. Traditional news, such as the papers and television are tied to viewership and advertisers. Stories are watered down and massaged to gain readers and viewers. The chore of reporting detail below a regional level has been absent from the newspapers for a long time. Over two years ago Los Angeles Times closed down their real estate section.

Consumers have access to real-time information on market conditions through many internet sources. The median home price for Ventura County is essentially useless for a homeowner in Simi Valley. That median price for the County takes in account million-dollar homes in Camarillo, entry-level homes in Oxnard and all the neighborhoods in-between. If you live in a single-family detached home in Simi Valley that is approximately 2500 square feet, 20 years old with an average size lot, the market conditions of the homes on the extreme ends of entry-level and the million-dollar markets really don’t matter. Besides, buyers looking for homes in Camarillo typically do not have a search broad enough to include Simi Valley. Local market trending is extremely important when determining home values.

5. Your home is not a commodity. Probably the biggest thing that has been lost in translation for those at the cusp of the baby boom, generation X and generation Y, is how home valuations function over time. Over the last 10 to 15 years younger generations have placed home ownership as a high yielding investment. This is in complete contrast to the older baby boomers and those who grew up in the depression.

Since home values have been recorded, if you go back historically, a maximum of a 6% average annual increase in value is what you will find. The 10%, 15% and 20% gains we saw just five or six years ago are more a fluke tied to lending and hyper consumerism. The Wild West mentality in the banking industry will not return any time in the near future, which ties people’s incomes to how much they can borrow. As people can only qualified for monthly payments tied to their income, home pricing will return to historical trends. Historically home prices have always been a function of a person’s real income and the market is now correcting to that trend. Doubling or gain large capital gains form the sale of a home purchased today is going to take a very long time.

The sum this all up, Home Sellers need to be very cognizant of their local market conditions, how much competition they have in the market place and what the buyer can afford to pay in price. Home Buyers need to understand that there a very good buys out there now, but the screaming deals are not the norm, no one is giving their house away. Short Sale prices are ultimately determined by the Seller’s lender and foreclosures on the open market are subject to healthy buyer competition. Write down your Home Selling or Home Buying goals and see if that fits with the current market conditions before moving forward as this may help you avoid frustration.

Filed Under: Buyers, Sellers Tagged With: California, home owner, home seller, homebuyer, recession, Simi Valley

12 Tips To Make Your REO Offer More Attractive (Bank Owned Homes)

October 22, 2010 By Ted Mackel 27 Comments

12 Tips To Make Your REO Offer More Attractive (Bank Owned Homes)

Simi Valley Bank Owned Homes. REOs and Foreclosures

Currently I represent a local Southern California Bank with their REO (Bank Owned) properties in Simi Valley, Moorpark, Camarillo, the Conejo Valley and West San Fernando Valley. I have also represented buyers on other bank owned homes. Below are 12 tips to help move your offer to the top of the stack for consideration.

Your offer must be in writing, include a financing pre approval, FICO scores and proof of funds to close (i.e. a bank statement that shows you have the money)
The Seller is a financial institution or sometimes a government agency. They work 9-5, Monday through Friday. Offers are sent to the asset managers during these times. Response times are at the discretion of the Seller and could take several days to a week. If your offer is reasonable then a time response is likely.
Currently Simi Valley Bank Owned (REO) properties are selling at 105% of list price. You will have competition from other buyers.
The Bank is looking for the HIGHEST AND BEST OFFER. Sometimes the Best Offer is not always the highest. Offers that are very straight forward with the fewest conditions, reasonably close to list price are attractive. Use of “Shill Buyers”, are easy for banks to spot, better to be straight forward than to use a shill. Your offer will look weak if it is assignable. The bank wants to sell the property, they do not want to be tied up with a property flipper who is going to drop out of escrow. The bank runs a spread sheet similar to the investor buyer, the bank has a formula for how much they will give on price and terms.
Don’t expect a counter, response or even a rejection. You may be granted an opportunity to submit your highest and best offer.
If your offer is accepted, it may take several days to a week for the Seller to put together their Addendum to the purchase agreement. Expect that many of the terms you have in your original purchase agreement will be eliminated in this addendum. Once the buyer receives this addendum, the buyer will have 24-48 hours to accept the addendum or back out of the purchase.
The bank is exempt from most property disclosures since the bank has never occupied the property. Many times the bank and it’s employees are located very far from the property; their knowledge of the property condition is very limited. Buyers are advised to conduct their own inspections. Do not expect the Seller to agree to any repairs.
Be prepared to operate with email and PDF documents. Fax machines are notorious in degrading the quality of documents. More and more REO agents are now requiring email only; if you agent is not familiar with PDF, Scanning and good with email, your offer could be jeopardized. Try to get all your information in a PDF digital format with a scanner. When you submit your offer to the listing agent, make sure it is complete with all supporting documents together in one PDF file. You offer will need to be transmitted through Real Estate agents and the management at the bank. Email is the preferred way to transmit all communication.
If you need to reach the listing agent. Email is the best vehicle. Email will provide you with a contact log. Many REO agents have staff that will probably be your main point of contact. Those REO agents that provide cell phone numbers can be contacted through text and you will probably receive a quicker response.
If you plan to use FHA financing, the FHA appraisal may reveal required repairs. The bank may not be agreeable to repairs and may not even consider any offers that have FHA financing. Seller paid closing costs is not unusual, but don’t plan on more than 3%.
All properties are sold AS IS, with no guarantees. Home warranties sometimes may be included.
I can’t stress enough….the bank has sent out appraisers and hired out local real estate agents to give “Broker Price Opinions” (BPO). The listing agent has already given an opinion of value to the bank. The bank is educated on the area market conditions and is not going to give away property. Unreasonable offers get little attention.

Stealing as a strategy cannot be duplicated. There is a great opportunity to pick up good solid value in REO purchases. Do your homework, be reasonable, write your Highest and Best offer. The listing agent wants to sell the property too, so make sure your offer is complete, easy to read, easy to transmit and easy to understand.

For more information see:

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Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Buyers, Foreclosures Tagged With: 12 tips, Bank Owned, fha, offer, real estate, REO, Simi Valley

Trulia Voices Answers Understanding Short Sales Buyer’s Purchase Contract Issues

August 24, 2010 By Ted Mackel 1 Comment

Short Sale Buyer Contract deal points can make or break a short sale. In this video blog I go over the Short Sale Addendum for a quick overview of the form and some commentary on how it can help protect the buyer in the transaction.

Make sure to read: Simi Valley Short Sale Information here on HomeBuysBlog.com