fha

FHA Loans are about to get more expensive

April 4, 2012 By Ted Mackel Leave a Comment

On April 9th the Federal Housing Administration announced that the cost of mortgage insurance premiums are going up. This will affect home buyers in the following ways:

An increase from 1% to 1.75% in the upfront mortgage insurance premium
A .10% increase in the annual mortgage insurance premium.
On June 11, 2012 loans exceeding $625,000 will see a .25% annual mortgage insurance premium increase.

An example would be if a Simi Valley home buyer was purchasing a home with 3.5% down and financing 96.5% with an FHA backed loan, that buyer would pay a 1.75% of the loan amount as upfront mortgage insurance premium. This would be part of the buyer’s closing costs. The Buyer would also be charged an annual premium at 1.25% (this fee is higher for FHA Loans over $625k after 6/11/12) for all FHA case numbers assigned after April 9th, 2012. If the buyer is borrowing 95% or less of the purchase price that annual premium is 1.2%.

Filed Under: Buyers Tagged With: Federal Housing Administration, fha, Home Buyer, Mortgage insurance, 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

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:

Search for Homes in Simi Valley California

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

Simi Valley Home Buyers – FHA Premium Goes Up After Oct 4th

August 18, 2010 By Ted Mackel 5 Comments

Simi Valley Home Buyers, if you are out shopping for a home and are going to use FHA financing it is important to make sure you get your FHA case number before October 4th, 2010 as the FHA Premium goes up after this date. John Yang independent mortgage broker and author of the Mortgage Video Blog explains how the increases will affect your monthly mortgage payment in this video.

Other articles on Lending: Understanding the GFE Statement

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: Market Updates, Money matters Tagged With: fha, financing, Home Buyers, Simi Valley

Second straight month Simi Valley Home Sales drop – Inventory edging up

March 3, 2010 By Ted Mackel Leave a Comment

Second straight month Simi Valley Home Sales drop – Inventory edging up

The Simi Valley Real Estate market may have more personalities than Sybil. December saw the highest closed sales for single family detached homes in Simi Valley for 2009 with 98 closings. I believe that year end accounting for many of the corporate sellers influenced the uncharacteristic high volume for December. January followed with 74 closings and now February with 59.

I have been pretty emphatic that this will be a bumpy recovery so let’s look at the mixed signals.

This information is for single family detached homes in Simi Valley only. The reason why I leave out the condos and town homes is that HOA dues coupled with requirements for FHA and VA financing have influence on those sales that we do not see on Single Family detached homes. Also, single family detached homes are affordable which is redirecting demand away from the townhome/condo market.

2009 Monthly volume slightly picked up to an average or 80 closings per month over 2008′s 78 closings per month.
Conventional 20% down Buyers and All Cash Buyers in February controlled 74.5% of the purchases
Inventory has increased 15% over the last couple months.
The most active segment of the market continues to be in the under $500,000 purchase range.
List to sell ratios in the entry level homes was almost 100% until recently. Now these home are selling approximately 97% of the original list price.
Average Sales Price showed signs of stability last year and had a slight increase over the last 12 months.
Historically low interest rates help affordability and stabilize pricing.
Federal Tax incentives.

Looking at the closings for February and any likely trends, we see that in 2006 there were 112 closings, 2007 there were 75 closings, 2008 there were 53, 2009 there were 60 and this year (2010) 59. Anticipating that a few sales will report late, even if that number moves up 5 closings, we can see nothing really significant is going on with the Simi Valley Housing market to signal a full recovery.

As encouraging as the average pricing has been, I think that there are too many other factors that could influence the market at this time. I doubt that any huge drop in pricing is eminent as last year saw some incredible buys that cannot be duplicated at this time. For example, I sold a house on Hope street in east Simi Valley last year. The sale price at $252,000 for 3 bedrooms and 2 full baths would be bid up today near $300,000 if available.

I can only reiterate – if you are looking to buy a house to live in, possibly raise a family, then a long term buy and hold is the mindset for this market, If you are looking for a short term turn around, then an open market purchase will probably not work with your goals and you will need to evaluate where to participate for properties that can be purchased under market value. Typically these target properties for turn-around will not be “creme puffs”. Homes that have upgrades, have minimal maintenance issues and are showcased to sell are not going out a bargain basement prices.

Filed Under: Market Updates Tagged With: closings, fha, Home Sales, housing, Simi Valley, VA

Simi Valley Home Sales Report YTD – January 31, 2010

February 15, 2010 By Ted Mackel 1 Comment

Simi Valley Home Sales Report YTD – January 31, 2010

Simi Valley Housing Report Simi Valley home sales for the first month of 2010 trended back to average levels seen through 2009. While December 2009 showed the strongest sales for the year, my hunch was that many Short Sale lenders trying to close their books for the fiscal year increased the sales totals.

The new trend appearing in all this is, fewer and fewer bank owned properties showing up on the open market. In January a total of 74 single-family detached Simi Valley homes sold. They broke down as follows:

45 properties were non-distressed sales (60%)
17 properties were short sales (23%)
12 properties were bank owned (17%)

These properties were primarily financed with conventional loans (20% down). 25% of the properties were financed with FHA and we even saw a few VA’s. Cash offers rounded out about 11% of all the sales.

In December we saw a big jump in average sales price which was due to two factors; And the first being a larger volume of total sales and the second factor was the increase in the number of closings over $800,000.

Another number to look at is the ratio between the original listing price and the final sales price. In the entry-level price range for single-family homes up to 400,000 homes sold for approximately 4.2% below the original list price. In the mid-level price range for single-family homes between 400,000 and 700,000, homes sold for approximately 3% below the original list price. In the upper level price range for single-family homes over $700,000, homes sold for approximately 7.6% below the original list price. I like to break out these ranges because sometimes an average of all will skew what’s really happening.

The Simi Valley condominium/ townhouse market showed 19 properties sold for January. They broke down as follows:

3 properties were non-distressed sales (16%)
13 properties were short sales (68%)
3 properties were bank owned (16%)

Dissecting condominium and town home sales has its own set of challenges. As these are more entry-level properties in the likely buyers with low down payments needing FHA or VA assistance, some of the HOA’s are not approved for these types of financing vehicles and when there’s fewer financing options, prices are impacted negatively. If you own a town home or condo in Simi Valley, please give me a call and I can check to see if your HOA is FHA and VA approved.

Significant factors that will impact the short-term real estate market in Simi Valley are the federal tax credit, interest rates, the economy, inventory levels and employment. The deadline to identify a purchase for the federal tax credit expires April 30. This means a home buyer who would like to take advantage of this tax credit must have a property in escrow by April 30 and close that escrow prior to June 30, 2010.

Inflation, interest rates, any increases in on employment will impact buyers negatively, as long as government and the banking system can hold some of this in check, than the current market activity will most likely continue.

The housing market cycle in Simi Valley follows a predictable trend. Sales volume slow and new listings volume decrease between Halloween and just after the Super Bowl. However, inventory levels have increased somewhat over last year’s averages and sales volumes have picked up a little, these are not reliable figures to predict a whole year. Considering affordability at the recent highs we have been experiencing, significant declines in pricing do not seem likely.

Non-investor buyer’s considering a purchase at this time should still plan on a 10 year hold position the minimum, while investors can pick up bargains through purchases at the Trustee sales, Auctions and other Pre open market venues.. Quite a few of the homes scheduled for sale have been regularly postponed, but some deals can still be found.

As a recap summary. Affordability is at the best levels it has been at in 40 years. The general public still refuses to understand that normal appreciation in housing historically is 4%-6% annually. Any unrealistic expectations that home appreciation needs to go above the historical norms will continue the prolonged recovery. The delicate balance of interest rates, tax credits and inventory levels could create another set back if upset, however looking at the activity over the last year and who the buyers are, that set back will probably be minor compared to what we saw in 2007-2008.

December 2009 Report

November 2009 Report

October 2009 Report

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: Market Updates Tagged With: Bank Owned, fha, Home Sales, Short Sale, Simi Valley, VA

Simi Valley Home Sales Report YTD – December 31, 2009

January 10, 2010 By Ted Mackel 2 Comments

2009 Ends for Simi Valley Real Estate In this year to date Simi Valley Home Sales Report, I am going to first cover what happened in December and then look at the year as a whole, with a prediction of how I see things shaping up for the 2010 Simi Valley real estate market. I am seeing similar activity in the West San Fernando Valley and East Ventura County areas is this is where I conduct 90% of my real estate activity. Also, it is important for you to understand that one of my duties is to provide broker price opinions for several banks. I regularly prepare half a dozen of these price opinions every week covering mostly West Hills, Woodland Hills, Canoga Park, Chatsworth, Granada Hills, Northridge, Tarzana, Winnetka, Calabasas, Simi Valley, Thousand Oaks & Moorpark. As an active agent listing, selling and providing price opinions in these areas, I get a very good look at real estate trends.

For December 2009 we had a nice increase in closings. A total of 98 single-family detached homes sold in Simi Valley for December. Compare that to the 66 homes that sold in December of 2008 and things are looking somewhat better. Taken against the rest of the year as a whole December is our highest closing month followed by May 2009. Looking at the averages over the last couple of years, in 2006 we had an average of 100 single-family detached houses close escrow each month, followed by 68 per month in 2007, 78 per month in 2008 and 80 per month in 2009. Low inventory levels and low interest rates have artificially kept the market moving, however these are fragile conditions for the market and if inventory levels rapidly grow or interest rates move up over 6% ,the market will slow.

Looking closer at the single-family detached sales in December of 2009, short sales and bank owned properties did not dominate like they have in prior months. In fact, these distressed sales only accounted for 38% of December’s closings. Additionally, 56% of those closings were purchased with conventional loans (20% or more down payments), 12% with all cash and 32% using the low down payment vehicle, FHA.

The attached homes (Condos and Townhomes) had a total of 26 closings for December 2009. Similarly, only 34% were distressed sales. They broke down as, 39% using conventional financing, 19% using all cash and 42% were FHA.

This large number of closings for December is unusual and bucks the trend of declining activity during the holiday season. This declining activity typically has not been influenced by good markets or bad markets, but in this case factors like the tax credit and distressed sellers trying to close out their books for year end probably helped the increase in closings.

The average sales price activity is interesting. The chart below takes the average sales price for single-family detached homes sold in Simi Valley for each month in 2008 and 2009. A average price low and stabilization is showing in 2009 with an increase for December. I believe prices will remain relatively stable as the low inventory and low interest rates are two of the main factors keeping buyers and investors interested in California real estate. While this chart is very encouraging, remember that this spans all price ranges from mansions to very the entry-level homes. When looking at sales by price range, December saw higher percentage of homes over 900,000 sell as compared to prior months. This dramatically drove the average sales price over $500,000.

Click on the chart to expand to a larger size for easier viewing

So what does this all mean for Simi Valley and Southern California home sales in 2010? In my opinion we should expect to see some favorable activity up through April 30, as this is the drop dead date to get a home into escrow in order to qualify for the federal tax credit. Once this tax credit goes away, it will be interesting to see if the first time buyers with low down payments back away from the market. That $8000 credit has been very enticing for those with little reserves or savings.

As long as investors can continue to pick up properties at auction at below market prices, that segment of the market should remain the same. So I predict the real estate market to be very similar to 2009 with caution over interest rates, employment, inflation, and lending requirements. Any expectation that the market is in recovery at this point is premature. Our State and Federal economy has a long way to go. From the mid 1990′s through 2006 our economy was based of people using the equity in their homes to extended their spending habits, banks lowered their requirements for home loans and the drop in interest rates gave people the mis-understanding that real estate, investments and business grow at unchecked double digit rates. While our Government , Major Media Outlets and Wall Street live in denial over growth rates, everyone will suffer through a drawn out recovery that will see it’s fair share of ups and downs.

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: Market Updates Tagged With: all cash, Conventional, fha, forecolsures, Home Sales, Market Udate, real estate, short sales, Simi Valley, West Hills, Woodland Hills

Simi Valley Home Buying Guide for 2008

May 19, 2008 By Ted Mackel Leave a Comment

As an adjunct to my Perfect Storm Blog post. I went to NAR’s website and looked at the historical sales data, to study the trends as I am constantly asked how long will a recovery take or when will the bottom hit. Those waiting for the bottom will likely miss it as the laggards in every business cycle always do. Sure there is probably some hold out time left, but if mortgage interest rates rise, then the rise in rates will washout perceived gains in timing the bottom.

The issue of mortgage rates is critical as in the Simi Valley Moorpark area, a typical home is well above the FHA preferred rate limits and the increased conforming limits under Fannie and Freddy just require a large down payment.

The volume of sales has been declining, but declining from what?

NAR Stats Chart >

The following decades show the volume trends nationally:

Decade	Low	Average	High
1970s	1.6 mil	3 mil	3.9 mil
1980s	2.2 mil	3.3 mil	4 mil
1990s	3.1 mil	3.9 mil	4.9 mil

In 2005 the Volume reached an all time high of 7.1 million homes sold
in the united states. 40% of these homes were non-owner occupied compared to a typical year where only 12% of the volume would yield to non-owner purchases. The market was so hot the Fed jacked the interest rates to cool off the speculation.

NAR is forecasting 4.5- 5 million units to be sold in 2008. Does this mean that the market will continue to decline? Different areas will have opposite reactions, for Simi Valley Moorpark, we will most likely see more of the same until the REO/short sale market begins to lose steam.

Let’s face it, the banks were giving money away and now they are holding on to their money with very restrictive lending requirements. Easy money will no longer drive our market.

Most of the major carnage has happened. Some neighborhoods are poised for continued price adjustments, however good homes that are priced well are selling and selling with multiple offers. If you find the home that you fall in love with and are worried that whether you have the timing just right, let me assure you, if you wait a replacement home that gives you the same feeling, it may not be available if you wait.

Ask yourself the following questions:

Is this the house I love for what I can purchase now?

Size?

Location?

Affordability?

Amenities?

Can I see myself living here for the next 5-10 years?

If your answer is yes to these questions then don’t try to second guess and let’s write your best offer