The San Diego Real Estate Blog

Appraisal: Seller's Moment of Truth

So lets say I'm your hero and I bring you an offer for a bazillion dollars for your listing. Your listing isn't worth a bazillion dollars but you, as a seller, think it is. So here's the kicker.

The appraisal is the seller's moment of truth. The seller may feel that their property is worth above market value but once the appraiser (for the buyer's lender) sets the appraisal price, you may have a problem if it appraises below the sale price. Reason being, the lender will require the buyer come up with the difference between the sale price and the appraised price. This is why, in this situation, most buyers will either want to pay the appraised price or back out of the deal. Is there any buyer out there that wants to pay over market value for the price of any house? I doubt it.

The appraisal has now set the market value on your home. So now what? The appraisal report has become a disclosure item and must be shown to the next buyer (if you choose to seek one). So you're stuck. You could get the buyer to agree to having another appraisal done but if the new one is lower you're really in trouble. Big risk. If it's higher the buyer is now tainted and he won't want to pay more. You could ask for the first appraiser to "re-appraise" but if that comes in higher the buyer is still tainted by the first appraisal price.

Best bet is to cut your losses and allow the buyer to purchase at the appraised price unless they agree to come up with extra cash for the difference......or stay there and wait out the market for a few years or make it a rental property.

So when you get an offer and it's over market value don't hold your breath if the buyer is getting a loan. Reality is, the buyer's loan is based on the property appraising and if it doesn't then you'll have to go to plan "B." So sellers, unfortunate as it is, be aware your moment of truth is coming when the appraiser arrives.

Best Links for San Diego Firestorm 2007

Friends and clients in the San Diego area: With all the fire related craziness that's been going on around here over the last three days it's nice to know there's help in some way for just about everyone. These are links for just about everything fire disaster related you can think of. This Encinitas Realtor was almost evacuated as I sat in my back yard and watched plumes of smoke rise from inside Rancho Santa Fe. We have a huge canyon just in back of us that, as my buddy the Carlsbad Fireman said is like a gun waiting to go off, if primed with the right Santa Anna winds would have gone up like a firecracker. Fortunately it didn't happen. If you have any other links you think are good don't hesitate to post a comment and I'll put it up for everyone to see. I also have a great connection to many rentals in the area that are being earmarked for those displaced by the fire.

Just a brief rundown of links: Realtor online disaster relief, air quality info, evacuation center list, Red Cross, FEMA disaster relief funds, IRS tax relief for disaster victims (Now that's incredible!), SBA disaster relief loans, HUD temporary housing, Assett Disaster Recovery help, CA Department of Insurance, Talking about fires with children, Current fire activity and evacuation zones (best site I've seen through all this)

Fire activity, special links, evacuation zones, video fire stories. This is the best site I've seen for anything to do with Firestorm 2007 in San Diego.  http://www.CBS8.com

C.A.R. Application for Disaster Relief Fund now available online

C.A.R. members impacted by the Southern California Wildfires may apply for assistance from the C.A.R. Disaster Relief Fund by accessing the application online at the link below. The C.A.R. Disaster Relief Fund will distribute grants of between $1,000 and $5,000 to REALTORS® and local association staff who have lost their homes or place of business as a result of the fires.

http://www.car.org/library/media/papers/pdf/ReliefFundApplication03.pdf

                                 
Information About Air Quality & Fire-Related Pollution
http://www.airquality.org/smokeimpact
The

California

Air Pollution Control Officer's Association (CAPCOA) has released a new Web page that provides information to the public about the health impacts of smoky air.

Evacuation Centers
http://www.car.org/index.php?id=MzI3NDI=

Disaster Assistance Information from the

California

Office of Emergency Services
http://www.oes.ca.gov/Operational/OESHome.nsf/LevelTwoWithNav?OpenForm&Key=Disaster+Assistance

Local American Red Cross Chapters
http://www.redcross.org/where/chapts.html#CA

Apply for FEMA Disaster Relief Funds
http://www.fema.gov/about/process/
Those affected by the

California

wildfires should apply for assistance by calling toll-free to (800) 621-FEMA (3362). Disaster victims may register by calling this number. They do not have to wait to go to a disaster assistance center. The number for speech and hearing impaired individuals is: 1-800-462-7585. Federal disaster assistance available for residents and businesses in the affected counties includes Temporary Housing Assistance, Disaster Loans and Other Needs Assistance Grants.


IRS Grants Tax Relief for Victims of

California

Wildfires
http://www.irs.gov/newsroom/article/0,,id=117499,00.html
The Internal Revenue Service has announced special tax relief for

Southern California

residents in the Presidential Disaster Area that was struck by wildfires beginning Oct. 21, 2003.

SBA (Small Business Administration) Disaster Loans
http://www.sba.gov/disaster_recov/loaninfo/property.html
"The Facts About...Disaster Assistance Loans for Homes & Personal Property"
Federal subsidized low-interest loans to repair or replace homes, personal property or businesses that sustained damage not covered by insurance. Call (800) 488-5323 to apply for relief.

Ginnie Mae Provides Forbearance and Buyout Authorization for
Loans in Areas Declared a Disaster by President Bush
http://www.ginniemae.gov/apm/apm%5Fpdf/03%2D22.pdf
Ginnie Mae encourages all single-family, manufactured housing, and multifamily Ginnie Mae issuers to provide forbearance to mortgagors in areas declared a disaster in

California

by President Bush.  Ginnie Mae is prepared to assist issuers holding mortgage loans in the affected areas in making their Ginnie Mae pass-through payments.

Mortgage Relief -- Freddie Mac
http://www.freddiemac.com/news/archives/servicing/2003/mtgrelief_102903.html
Families whose homes have been damaged or destroyed by the wildfires spreading across Southern California can seek mortgage relief designed to protect their credit ratings and financial interests in their homes, Freddie Mac announced Oct. 29.

Mortgage Relief -- Fannie Mae
http://www.fanniemae.com/newsreleases/2003/2818.jhtml?p=Media&s=News+Releases
Fannie Mae has mortgage relief provisions in place for Southern California homeowners facing hardships as a result of widespread damage caused by the wildfires raging in San Bernardino, Riverside, San Diego, Los Angeles, and Ventura counties in Southern California.

Mortgage Relief
HUD Mortgagee Letter 2001--07: "Special Program, Underwriting and Servicing Policies to Assist Victims of Presidentially Declared Major Disaster Areas-Single Family Loan Production and Servicing"
http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=01-$%5Bno%5D&op1=AND&SECT1=TXTHLB&SECT5=MLET&u=./legis.cgi&p=1&r=24&f=G
In addition to information provided in the above HUD mortgagee letter, contact your lender to find out about any special assistance or loan-forgiveness programs that may be in place.


HUD Offers Temporary Housing & Foreclosure Protection to Displaced Families
In an effort to aid wildfire victims, HUD announced it will grant immediate foreclosure relief; provide temporary housing and shelter; offer Section 108 loan guarantee assistance; make available mortgage insurance; make available insurance for both mortgages and rehabilitation; and work with local governments to streamline re-allocating federal resources to disaster relief.
http://www.hud.gov/news/release.cfm?content=pr03-117.cfm

FHA Mortgage Insurance for Disaster Victims
http://www.hud.gov/progdesc/203h-dft.cfm
The Section 203(h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Disaster Recovery: A Guide to Financial Issues
http://www.redcross.org/services/disaster/beprepared/FinRecovery/
Prepared by the American Red Cross

Information Asset Recovery After a Disaster
http://www.arma.org/news/Emergency.pdf
Tips to start recovery process for businesses that have suffered losses as a result of disaster, including plans to file damaged-property reports, recover key records, and other business properties. Excerpts from "Emergency Management for Records & Information Programs" by Virginia A. Jones & Kris E. Keyes.

Picking Up the Pieces After a Fire (American Red Cross) http://www.redcross.org/services/disaster/0,1082,0_569_,00.html
The American Red Cross has prepared this information to encourage you take precautions to help keep you safe and speed your recovery after a fire. It also offers ideas on what you can do to help make yourself and your home safer from fires in the future.

Insurance Related: Ca Dept of Insurance Wildfire Information
DOI can be contacted for general information and guidance about insurance claims by calling (800) 927-HELP (4357).
http://www.insurance.ca.gov

Animals Lost in Disaster
http://www.disastercenter.com/pets/animals.htm
Information for people who have lost pets, livestock, or other animals during a disaster.

Tips to Mitigate Risks and Losses Resulting from Fire
Prepared by the American Red Cross http://www.redcross.org/services/disaster/0,1082,0_584_,00.html

Spanish-language information: http://www.redcross.org/services/disaster/foreignmat/resfispn.html

Protecting Your Home From Wildland Fire
Tips from the National Interagency Fire Center
http://www.nifc.gov/preved/protecthome.html

Talking About Fires with Children
http://www.disastercenter.com/guide/fire.html
Information from the

California

Disaster

Center

to help prepare families for fire, including developing a family disaster plan.

Information from the American Red Cross about Disasters and…

Children: http://www.redcross.org/services/disaster/0,1082,0_602_,00.html

Seniors: http://www.redcross.org/services/disaster/0,1082,0_9_,00.html

Pets: http://www.redcross.org/services/disaster/0,1082,0_604_,00.html

Farm Animals: http://www.redcross.org/services/disaster/0,1082,0_11_,00.html

Financial Preparedness: http://www.redcross.org/services/disaster/0,1082,0_605_,00.html

Creating a Family Disaster Plan
http://www.disastercenter.com/guide/family.htm
Steps to take to create a family disaster plan to expedite voluntary and forced evacuations in the event of an emergency.

Encinitas Octoberfest Draws Big Crowd

The 13th annual Encinitas Otoberfest was held this past Sunday September 23rd and had just about everything for every age. This Encinitas Realtor attended several years in a row and been rather underwhelmed but this year was particularly unique. Vendors had lot to offer and there were lots of them. The crowd was fun and great to watch and the food was awesome and authentic.

Activities ranged from face painting, jewelry exhibits, food varieties from Vagillucci's Italian restaurant, Mexican food, Brauts and beer and dancing to a great oompa band that kept people hopping all day. A huge tent housed the food area with foods by famous Tip Top Meats while Mountain Vista was lined up and down with vendors from Encinitas Karate, Navy Seals, Encinitas BMW, unique beach art, paintings and face paintings. The booth I thought was of special note was the Encinitas Chamber of Commerce booth with their new t-shirts, coffee mugs, maps and other logo branded goodies. Honestly Encintias is truly on board to compete head to head with other cities with their new image campaign. If you haven't seen it, you'll want to check it out. The t-shirts make great gifts.

Another attraction of note was the Firefly Grill & Wine Bar strategically perched above street level with outside tables. The tables were full from early lunch till wrap time around 5 with patrons relaxing and watching the crowds. The video recap of the Encinitas Octoberfest can be seen here or on my website at www.MickeySellsHomes.com . With the weather turning cool and the temperatures about as perfect as they get here in Southern California, the Octoberfest and happenings in and around the area are just going to get better through the end of November. Have fun!

Buyers take your mark, go!

That fence has been getting pretty heavy. There's been lots of buyers on it for some time now and there's no reason in this Encinitas Realtor's opinion, not to think about buying a home now that the Federal Reserve has cut the interest rates by a half point. Pardon me for saying it but, thanks to the Fed for doing something! It's a move we'll watch observantly because of how it was done. This type of cut is more for helping credit card and home equity line of credit borrowers who's rate is tied to this type of cut. Mortgage interest rates are tied to the bond market. When it goes up rates go down.

I had an open house at my single story 1800sf super fixed up listing in South Encinitas on Sunday and no less than 18 sets of buyers showed up. It's a range price of $679,000 to $739,000 (yes we have ranges in San Diego). I've never been more slammed trying to answer questions and meet everyone. I kept asking and trying to figure out why so many people were there and after talking to many of them discovered they believed the market was about to turn. Hey, I knew something might happen if the Fed dropped rates 1/4 point but SURPRISE (it's your birthday!) have one of these 1/2 point cupcakes.  If anything's going to do it it's a lowering of interest rates and it will certainly help reduce inventory here in North County San Diego and help buyers get off the fence and start looking again.

We're a bit inventory deficient with single stories right now and I've got two of them (one with fabulous lagoon view in Aviara) that's about to come up and one in Encinitas with hand pounded copper sinks, new travertine, Hans Grohe faucets, new kitchen and baths. The sub-prime crisis has eliminated 1/3 of the buyer pool and it's been a tooth and nail battle with every listing fighting it out for market positioning. If the interest rates bring out the buyers and the inventory begins to decrease we might have some balance, something we've not had here in San Diego for quite some time.  I'll let you know what next weeks open houses bring. 

Using the Comps to Your Advantage

There are many aspects to buying Encinitas real estate or selling an existing home, but price is at the top of everyone’s minds. If you’re buying how will you know you’re getting a good deal? If you’re selling, what price is high enough to get the most money and low enough to be competitive? It’s the comps, or comparable values, that set the market trends. It’s a sales history of sorts that buyers and sellers use to price or make offers on homes. If you understand how comps work for you or against you, you’ll have more confidence about your home purchase or sale.

Everything that sells in your neighborhood is a comp. Whether it sells low or high, the next buyer or seller is going to be using that statistic to determine value. If your neighbor gets foreclosed upon and his home sells low at auction it affects everyone’s values in the neighborhood. If you use an agent unfamiliar with the neighborhood to sell you home and he doesn’t know about the history of each sale, he may recommend your home be priced to low or to high. If it’s priced to low it hurts everyone in the neighborhood because buyers will use those comps against the next seller. It hurts you because you made less money. That’s why it pays to at least talk to and consider using the agent that farms (mails to) you and your neighbors. It’s more likely that person can turn vulture like buyers into a buyer who understands neighborhood value because a foreclosure situation can be explained.

Comps are also used by appraisers. I get calls from them all the time asking about concessions or credits that were issued by the sellers or received by the buyers. They want to know how the deal really stacked up. Comps show up in the MLS or tax records as a single sale price. What does that price mean though if a home sold for $650,000 with a $30,000 roof credit? It means that the house really sold for $620,000 and the records don’t reflect that. This is why it’s so important to have a professional advocate working in your corner who is local and knowledgeable of an area’s sales history. At the very least, you need someone who is interested enough in doing the research to find out what the data really means.

Lastly, comps mean a lot to buyers because that’s what tells them how things are selling. It’s a gauge that let’s them know if buying a fixer is really a good deal. If a fixer house sells for $550,000 and the buyer needs to put $75,000 into it to bring it up to livable condition, how would he know he was doing the right thing by doing those improvements? That’s right, it’s the comps. If the same house down the street recently sold for $675,000 and it was all fixed up with similar improvements, the buyer of the fixer would now be $50,000 ahead. Make sense?

It never hurts to keep track of sales prices in your area or to visit a few open houses. Best bet is to talk to a real estate professional who studies comps in your neighborhood every day. In the long run you’ll feel more confident about your home purchase or sale decisions by having someone who can help you understand how comps affect a home’s value.

June Newsletter

The June Newsletter is here! We seriously check out some of the new marketing trends and discuss what helps and what hurts when selling your home. Unless you have a brain like a CPA, you probably weren't aware of many cool things your con deduct when buying or selling a home. "Taking Advantage of Home Ownership" will give you the how to.  If you're far past that point, check the foreclosure timetable to see how much time remains before you have to answer to the bank. Want to know some creative ways out of the forclosure trenches? Download june_newsletter_07.pdf

La Costa Canyon High School Gains Top Honors

La Costa Canyon High School was among 9 county schools named top state honors as a highly prized California Distinguished School this month. Jack O’Connell, the state's superintendent of public instruction, said in a press conference and visit recently, this signifies it as “best of the best”. To qualify, public schools must score well on standardized tests. The award also prizes other accomplishments that are not readily quantified – including exemplary counseling programs, a rich offering of elective classes, internship programs, teacher collaboration, support for young students and a well-rounded campus life.

Schools that choose to apply for the recognition undergo a tough application process. They must meet certain eligibility criteria, which includes specific levels of academic achievement. A lengthy application must be submitted that describes their curriculum, how they teach, what support they offer students and campus life. A team of educators not connected to the school then visits the school for an on-site evaluation.

Statewide, 76 middle schools and 95 high schools were selected – about 7 percent of the total number across the state. Elementary and secondary schools are recognized during alternate years. The award goes beyond the obvious recognition for academic achievements and educational environment helping improve property values for everyone in the district. Oh, and by the way, they have a killer surf and skateboard team too!

Home Shopping Tips You Can't Be Without

When you're shopping for homes, how do you know when it's a good time to make an offer? Here's a couple of tips and steps you can keep in mind as you house shop.

First thing to do is sit down with a nice cup of coffee and ask yourself why you really want to move. Are you motivated? Do you have something to sell first and what is the cost of selling that property? Will your economic, social or life position improve as a result of your move ie. get closer to work, be in a neighborhood with people like you for example. Depending on the type of person you are, if you draw two columns on a piece of paper and label it plus and minus you may begin to see the clearer picture.

Ok, so looks like you answered "yes" so read on.

Get the formalities out of the way. Get prequalified by a mortgage professional so you don't waste your time looking at things you can't afford. Do it online or talk to someone in person. Then, go to some open houses in neighborhoods you like and meet some realtors. It's likely since they're local that they'll know the neighborhoods well. Realtors have previewed lots of homes and probably know floor plans that match your needs. Try to find an agent that's not pushy and provides lots of information. Ultimately you want someone that will guide you, not convince you to buy a home. Suplement your open house tours and look on line at CaMoves so you can target price ranges of neighborhoods or go to the open house section of CaMoves, Open House.com or SignOnSanDiego.com.

Once you've identified some towns or neighborhoods you like, set yourself up or have an agent set you up on an "automatic" email search targeting only the parameters of properties you're interested in. Our MLS here in North County San Diego can target over 900 different search fields so if it's out there you'll see it within 24 hours of a new home coming on the market or having changed it's price. Identify some homes you'd like to see and call your agent to go see them. It's important to keep your logic and emotions in check through this process.

There's no such thing as a perfect house. Every parameter your looking for isn't likely to appear in the same house and you should be aware that you may have to compromise on some issues. Pull out that paper again and write down your priorities so you can look at it as you walk through properties. Believe me, I've worked with enough buyers to know that many times those priorites go right out the window because their emotions can take over easily.

There are many different personalitiy types and that's why it's important to have an agent who can help you keep yourself in check by acting as a sounding board. Things like whether or not the home may be easily resold later because the floor plan is friendly to the most buyers is important. Comparables (what similar homes have sold for) in a neighborhood play into the equasion too. There's no rules other than to shop smart, get lots of information and find an agent you trust. Need some other tips or have a question about the process? Email me or leave a post and I'll be happy to help you as best I can.

Dreaming in Pacific Beach San Diego

I’ve lived in San Diego for 6 years and I’m ashamed to say I get stuck in my own little pocket here in Encinitas and it’s tough to get out. Hey, not that it’s bad because actually its incredible here. It’s just that you don’t realize how vast the activites are that exist elsewhere, the variety of beaches (never thought it could get better than Encinitas!) and the diversity of the people...oh the incredible people, until you talk to people in other parts of the nation.

I held an open house this weekend in Pacific Beach and a guy from Upstate New York walked in off the street. He said he wanted to go to school at San Diego State University, which has an incredible Masters in Business Administration program and he wanted to live in “PB.” Pacific Beach for those who don’t know it is close to downtown (for those professionals who work there), is bordered by Mission Bay Park to the South (best water skiing!), the pacific ocean to the West and is totally surrounded by some of the most active night life, restaurants and activities one could ever imagine. Who needs a car here?? Beach bike, surfboard, skateboard, walking and jogging is the “transportation a la mode.”

The lifestyle and living opportunities are abundant. Imagine a life where you walk Tourmaline Street beach 3 blocks from your house in North West PB. You’re back in the condo or house by 8, hop in the shower, across the street for a cappuccino, then just a short jaunt to the down town office. Home in the afternoon and put the car away for the night and then you’re away for the night. Meet your buddies at the local pub, walk up the street for dinner and then stroll in the clean night ocean breezes as you head back to rest and look at the surf lit up from the bars on the beach. When you wake up on Saturday morning, make sure you go to the street fair and farmers markets.

Slap, slap….then I woke up from my day dream. Oh wait….not a dream; it was the guy from New York telling me about how he’d lived upstate for 25 years in tons of snow, ice and freezing weather. (I did the same in Syracuse, NY for 4 years at SU) But then there’s life at the beach!

North County Inventory Low - Multiple Offers Frequent

There's yet another market change a foot in North San Diego County and the Encinitas & Carlsbad area.  After 12 months of getting use to 25,000 homes for sale in San Diego County the inventory has shrunk to the point where sales are rapid and buyers frequent. The inventory now sits at about 16,000 homes as we come into the prime selling season here in Southern California.

January 1st marked the start of the open flood gate for buyers. Agents all over are experiencing buyers coming into open houses and commenting that they think the market has gone about as low as it's going to go in this cycle. Interestingly, I couldn't agree more based on the decreased inventory and frequent multiple offers. I recently had a sale with 5 offers!  I stood in front of our buyer sale posting board in our office tonight with several people gathered around, pointing out the many multiple offer sales that had occurred this month.  The decreased inventory and increased number of buyers may be the cause of homes starting to move more briskly and with many offers.

Lag time on market conditions is an important thing to watch for buyers and sellers. Consumers in general live in the "8 month ago" mode. Home prices, on a per square foot basis, dropped almost 10% in North San Diego County in 2006. Today you can get a bigger house for the same price as what sold 12 months ago.

For the buyers lag time is important to understand too. I've got many buyers who tell me "Hey, things are moving slowly and I can take all the time in the world to make a decision and shop." In reality, market time has decreased dramatically. Things are selling faster and with multiple offers so be careful. I've had several buyers lately who failed to make decisions quickly and the home they had their eye on went into escrow before they had a chance to make an offer. The 8 month ago mode of 90 days + market time is a reversing trend. 

As we approach the prime selling season I'm sure we're going to see some inventory changes. There's plenty of sellers who weren't realistic about their market price at the end of 2006 and they took their homes off the market toward year's end. I think we're going to see some of those return in addition to the usual increase in inventory that happens as we approach summer. If inventory remains steady and the number of buyers keep increasing (like has been happening) at least we'll see some stability come to what in 2006 was a falling market.  Forecasters see 2007 as a year of stability and 2008 exhibiting signs of appreciation. Add the Fed into the mix with a possible rate decrease and we might be poised for an interesting and active market.