Mortgage Changes Effective January 1st 2009

Here are some mortgage changes we will see in the coming new year.

FHA Loans

1. Maximum loan amount for Fresno area $281,750
2. Minimum down payment will be 3.5%
3. Monthly mortgage insurance .55%
4. Up front mortgage insurance premium 1.75%

Conventional Conforming Loans (Fannie Mae and Freddie Mac)

1. Maximum loan amount remains at $417,000
2. 6 month seasoning required for all cash-out refinances
3. Total number of financed properties is four

Fresno Real Estate Market Surging!

We are seeing increased activity over the last several months as prices have dropped dramatically. Many homes are 1/2 the price they were just 3 years ago! Just last week, I got an accepted offer on a bank owned home in Madera for $157,900, that originally sold new in 2006 for $340,500. The bank is also paying 3% towards buyers closing costs. The home is 4 bedrooms, 3 Baths with 2053 SF of living space. Here is a picture of that listing:

It had been roughed up a bit in the foreclosure process, and needs interior painting and carpeting, but will be a "like new" home when those items are completed by the new owner. Prices in Fresno are slightly higher than Madera, but there are many good buys to be found. The negotiating process is slow with bank owned properties due to the massive inventory these banks and asset managers carry, and buyers must be patient. This home took about 3 weeks waiting for an answer to the offer. It was worth the wait.

Fresno Real Estate 4th Quarter Market Snapshot

Here's how our inventory of active listings in the Fresno MLS stand at the start of the fourth quarter 2008. I ran a search today for all active listings of homes and condos in Fresno and Clovis. The results are a total of 3156 active listings. From the total, there are 681 "short sale" listings or (21.5%), 902 "bank owned" (28.5%) and 1573 (49.8%) traditional seller owned listings.
So from these numbers, it shows that a whopping 50% of the homes for sale are distressed and foreclosed properties.

Important Facts About Buying Bank Owned Properties


Prospective purchasers of bank owned properties (REO's), are hereby advised of the following:

1. The bank or lender that owns the property may require that you sign and agree to the provisions of an Addendum to the purchase agreement.
2. These bank owned properties are sold "as-is", without any inspections or disclosures provided by the seller.
3. Addendums are prepared by a lawyer representing the bank. Guarantee Real Estate is a licensed real estate broker and is not responsible for, and is prohibited as a matter of law from explaining or advising you regarding the legal ramifications of the Addendum. If you agree to the Addendum, you are strongly advised to seek the advice of a lawyer or tax consultant, prior to signing.
4. You may risk the return of your initial deposit or any money delivered into escrow if the transaction is not consumated or escrow does not close. The release or return of funds delivered to escrow can only be released by the mutual, written agreement of the buyer and seller, typically emodied in escrow cancellation instructions.
5. Most Addendums include a "per diem" charge which is a fee charged to the buyer for every day the deal is not consummated/closed, beyond the date agreed to for the close of escrow, regardless of which party caused the delay in closing the escrow/consumamation of the purchase agreement.
6. Some banks or lenders may not be duly licensed California corporations or foreign (out of state) businesses, which may create difficulties in filing suit or recovering monetary damages (or return of your deposit).
7. You can attempt to negotiate the removal of the Addendum or certain provisions thereof, including per diem charges, prior to executing the Addendum. Most banks or lenders will not negotiate the removal of the Addendum or any provisions thereof.
8. If you agree to the Addendum, make sure you read it carefully and proceed with diligence in performing your obligations under the purchase agreement and Addendum thereto.
9. If you agree to pay a "per diem" fee, be sure you, your lender and your Realtor act diligently. If possible, avoid making changes to the purchase agreement or escrow instructions, which may cause a delay in the transaction closing or being consummated.
10. If the bank or lender, or escrow company causes delays in the transaction, make sure either you or your Realtor send and email, fax, or letter to the listing agent representing the bank notifying them of the delay, the cause of the delay, requesting a waiver of the per diem and enclose an Addendum waiving the per diem and granting an extension of time to close escrow, sot he per diem fee can be addressed by the parties, for the bank or lender's signature. Also, send email, fax or letter wtiht he ddendum to the escrow officer, signed by the bank or not.
11. If you refuse to pay the "per diem" fee, regardless of which party caused the delay, you must notify the escrow officer that you will not close escrow unless the per diem fee is waived by the bank. While not required, such notification should be in writing, with proof that it has been transmitted.
12. All contracts for the purchase of real property must be in writing. If a verbal acceptance of your offer is transmittd to you, in most cases it is unenforceable and you do not have a contract for the purchase and sale of the property, or the right to compel performance of the bank by court order, unless you received you offer, signed by the bank and all contingencies have been removed.

Tips In Making Offers On Bank Owned Properties

1. Buyers must be "pre-approved" for financing in advance, and submit a letter of pre-approval with the offer. If the buyers are paying all cash, provide a bank statement or proof of funds at time of offer.
2. Be prepared to have the property inspected by a professional home inspector at the buyers expense. Bank owned properties are sold "as-is" and they are exempt from providing any disclosures. Buyer beware!
3. Buyers must be patient, and expect 3-5 days for a response to their offer.
4. If there are multiple offers submitted, expect a counter offer requesting a final "highest and best" offer.
5. Make the offer clean, and without any contingencies of another sale closing.
6. Banks will negotiate on price and many times will pay some of the buyers closing costs, but they are looking at their highest "bottomline" net cash at closing.

Life is Too Short for Short Sales!

When it comes to making sales in real estate, I focus on the listings that are genuine, and can close escrow. I would estimate that 90% of short sale listings never sell and close escrow. The fallout factor of short sale escrows is huge, because what buyer can and would want to wait months to get an answer on an offer? Sure, the owner will accept any price, because he is not getting any of the proceeds due to his upside down equity position. In a short sale, the sellers owe more on their loan than the asking price, usually tens or hundreds of thousands of dollars. The lender holding that loan, must approve of the short payoff and loss. If they do make that decision, it will happen just before the property gets foreclosed on at the public trustees sale on the courthouse steps. The lender may end up approving some loss, but maybe not at the original price the seller accepted. Buyers are reluctant to hang on for months waiting for an unsure tranasaction, and I don't blame them for backing out. Most of the time the property just ends up going thru the foreclosure process and becoming a "bank owned" listing. When it gets repossessed by the bank, the bank will aggressively price it to sell . The market is full of great listings of bank owned and other well priced listings, so why mess with a short sale. In my opinion, the listings that are short sales are nothing more than a big waste of time. Most agents like myself, won't even show these listings.

Fresno County FHA Loan Limits Increased!

Good news in the mortgage market! As of 3/5/08, the FHA has increased the maximum loan limit to $381,250 for Fresno County. This will significantly help the local Fresno Home market, because FHA loans are available with as little as 3% down payment. Madera county had it's maximum FHA limit was also increased to $425,000. There are many benefits to FHA loans, such low down payment, and easier qualifying.


Search the Fresno MLS database of active listings at http://www.fresnohomes.net/

Auctions of Bank Owned Foreclosure Properties in Fresno!

There are a couple of auctions coming up, one tonight where there will be about 30 foreclosed homes up for auction. This is a very small percentage of the actual number of foreclosed homes currently on the market in Fresno. One thing bidders should be aware of, is that these auctions have a "reserve" price, which means if you are the winning bidder, the bank that owns the home may not allow the sale to thru unless the price meets their reserve price. It's really all about the media hype that goes on with the slick TV advertising and auctioneers driving up the frenzy in bidding. The last time an auction came to town, about six months ago, there were about 20 homes that were auctioned off, but only about 5 of them actually resulted in a successful sale with the bank. There are hundreds of homes available that are bank owned in our active Fresno MLS system. Buyers can search all active listings at http://www.FresnoHomes.net

2008 Fresno Real Estate Market Ripe With Opportunities!!

Amid all the negative news we hear daily, with foreclosures, subprime mortgage losses, and failing consumer confidence, there is some real opportunities for investors and serious home buyers. Many of your average buyers are running scared from national news reports that are creating a lot of fear. Many buyers are asking "when will we see the bottom". Well, by the time we know where the bottom is, it will be too late. Get in the market now!!!I'm seeing many outstanding prices in the Fresno, Clovis real estate market today. Investors are starting to take interest in the new values of homes. Interest rates on new loans are at historic lows. The new guidelines for financing, which is really like the old guidelines: (you have to qualify on income and credit scores) Unlike the subprime days when anyone with a heartbeat could get a loan. Hence we have eliminated some buyers from buying homes, but it is fundamentally sound lending now and this will be good in the future as the economy recovers from the current turmoil. For good credit buyers with some money to invest and hold onto, this is a great opportunity time. It was the unscrupulous lending practices that got us into the mortgage mess and slowing economy as we have now. Prices have been falling steadily throughout in Fresno during 2007 and I've seen another round of price reductions at the start of 2008, and the most aggressive pricing is coming from the "bank owned" listings. The properties are being sold "as-is" and many are in poor condition due to deferred maintenance. Visit my website fresnohomes.net where over 7000 properties can be found by searching the Fresno MLS database.