Neighbors Helping Neighbors

With so many homeowners facing financial challenges these days and the threat of foreclosure, good Samaritans in communities around the country are stepping forward to help.

An article in the Chicago Tribune, distributed by RISMedia provides examples from around the country of community groups and individuals that are volunteering to personally visit homeowners who are behind on their mortgage payment and offer assistance in preparing the paperwork necessary to obtain loan modifications. According to the article an “estimated 3.2 million delinquent borrowers nationally that may be eligible for a mortgage modification under the federal government’s Home Affordable Modification Program”.

In a similar effort, Bank of America is enlisting community minded homeowners in Chicago to counsel their neighbors who are delinquent in their mortgage payments to seek loan modifications. Bank of America reportedly has an estimated 990,000 home loans in danger of default nationally.

Could a program of this nature work in the Chico area? Perhaps a local civic group, fraternal organization or church group could mobilize to the cause, or maybe adjacent homeowners – concerned with the well-being of their neighbors and the declining neighborhood home values that come with nearby foreclosures could be affective in helping.

What is House Flipping and Will it Work in Chico?

The term house flipping conjures up images of a judo move, but actually the pejorative term applies to the practice of buying a home at a low price and quickly reselling it at a higher, profit making price. House flipping is in the news right now as the conditions for it are ideal…for those who have cash and some courage!

Conditions are perfect for house flipping because of the high rate of distressed properties available. While pre-foreclosure and bank owned properties can be flipped for a profit, the competition for them is usually intense, which can drive the price up just enough to make them to risky for flippers. The flippers dream is foreclosures, those homes that are sold by auction, often on the steps of the county courthouse (as is the case in Butte County). Here is where the real deals are had. Because the auctions require cash or immediate proof of it’s availability, the competition is greatly reduced. Those with ready funds can often buy foreclosed homes for pennies-on-the-dollar, leaving lot’s of upside when they go to resell.

Buying foreclosures is risky business though. To be successful buyers must carefully research the property they will be bidding on for unseen liens and easements that can come back to make the property unprofitable or unsellable. They should also inspect the property physically for defects and possible repair costs. Potential buyers should work with a Realtor to get the most relevant ‘comparable sales prices’ for similar properties, so they have a clear picture of what price they will have to put on it to resell it quickly, and a real estate agent can help assure the property receives the proper marketing to flip it in the shortest amount of time.

With proper research, preparation, cash and nerves…and the help of a Realtor, houses can be flipped as profitably in Chico as anywhere in the country!

Realtors Give Regularly

When you go to your doctor do you ever ask him to discount his fee? How about your attorney? CPA? Your child’s teacher?

Have any of these professionals volunteered to help you with costs associated to their services? Does the doctor ever offer to pay for part of your prescription? Your CPA help you pay your taxes?

Enter your friendly Chico Realtor. Like your doctor, attorney or CPA your professional Realtor runs a small business. We have professional and association dues, continuing education costs, advertising bills, office fees and more. Each agent or office sets their commission based in part on what their expenses are. An agents commission gets divided up many different ways, generally every commission: 1. is split 50/50 between the buyers and sellers agent 2. is split again between the agent and their broker 3. has franchise fees, title company fees and errors and omissions insurance deducted from it. and 4. pays back advertising costs, vehicle expenses, professional dues and other costs.

Unlike other professionals Realtors are often asked to reduce their fee by their customers. Depending on the situation Realtors sometimes give up a part of their income to help make a transaction work for their clients. More often they assist by helping either the buyer or seller with some of the costs associated with selling or buying a home, like paying for an inspection or a repair. These contributions come directly out of the Realtors household income.

Realtors representing buyers often spend weeks and months showing their clients homes. Sometimes these clients end up either not buying or not using their agent to buy a home in the end. In cases like this the agent has worked long hours for no pay.

To better appreciate how generous Realtors are, try asking any other small business person if they will give you 20% off their advertised price, or only charge you if they win your case or cure your illness… And Realtors never make you wait in the exam room for a half an hour!

Cash at Close For Repairs?

Just this week while representing a buyer I ‘re’learned a lesson about repairs. My buyer is purchasing a resale south Chico home using an FHA loan. We have completed our inspections and, while the home is basically sound there is one troubling area of potential problem – the Heating/Air Conditioning unit is about 26 years old and (according to the inspectors report) this type of unit has a normal life expectancy of about 20 years. The inspector said we should be concerned about hairline cracks that develop allowing dangerous gases to permeate the house!

No problem thought I, we’ll ask the seller (in this case it is a bank owned property) to provide us with a ‘credit’ or ‘rebate’ for repairs, which the buyer will use to make the repairs once they take possession of the house….WHOOPS! The other agent quickly stated his belief that to rebate funds to the buyer is “illegal”. While I can find no evidence that to do so would be illegal the reality is that most lenders do not allow money for repairs to be paid to the buyers at the close of escrow. The FHA goes further in stating that any conditions affecting the ‘Safety, security or soundness’ dictate that “appropriately registered/licensed trades person, as applicable, must provide documentation that all deficiencies have been acceptably corrected upon completion of repairs”. And those repairs must be completed before the loan is funded aka close of escrow.

The reasons for this is are understandable: 1. the lender doesn’t want to know that the house has problems, cut a check to the buyer to fix it and find out later that the money was used for a trip to Hawaii! and/or 2. the lender wants to know that the buyer has used all of their own funds (or approved gift funds) for the down payment and closing costs and is not using the repair rebate money to pay back a loan shark that lent them the money for their down payment (thus increasing the buyers monthly obligations).

Sooo… back to the conference room to draw up a differently worded request – this time we will probably ask the seller to pay for a new Heat-A/C unit to be installed prior to the close!

A Home For The Holidays?

According to the National Association of Realtors as reported by RISMEDIA “existing home sales rose again in November 2009 as first-time buyers rushed to close sales before the original November 30 deadline for the recently extended and expanded tax credit”.

In Chico however the strong jump in sales occurred in September and October, while November sales actually declined slightly. We’ll have December’s figures for the Chico area in early January.

On a nationwide basis existing home sales–including single-family, townhomes, condominiums and co-ops– rose 7.4% to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October, and are 44.1% higher than the 4.54 million-unit pace in November 2008. Current sales remain at the highest level since February 2007 when they hit 6.55 million.

Lawrence Yun, NAR chief economist, attributes the healthy sales to the homebuyers tax credit “This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead,” Yun notes that the extended (through April 30, 2010) and expanded (to include existing and prior home owners) tax credits should have a similar effect on 2010. “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires and balance should be restored to the housing sector with inventories continuing to decline.”

Walking the Walk in Chico

One of the newest trends to emerge in residential real estate development in recent years is the concept of ‘walkable neighborhoods’ aka “homes located within walking distance of amenities such as schools, parks and shopping”.

Here in the Chico area New Urban Builders has been methodically educating home buyers on the advantages of so-called new urbanism. Doe Mill Neighborhood, built in the early 2000’s near 20th Street and Bruce Road surprised those accustomed to sprawling acre plus ranchettes by quickly selling out block after block of craftsman styled homes on small lots with front porches, narrow streets and almost no yards!

The developers much anticipated Meriam Park Project, on hold until current economic conditions improve, continues the evolution of ‘walkability’, envisioning a “range of housing types, sizes and prices, a mix of civic and commercial uses, and a network of connected slow-speed streets”.

As a fringe benefit to the lifestyle advantages that this sort of neighborhood provides, there is evidence that this type of development will also lead to higher resale home values later on when it comes time to sell. According to Amy Hoak of MarketWatch as reported on MSN.com, homes in walkable neighborhoods are “worth more than homes in neighborhoods where driving is the rule”.

According to a report entitled “Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," which looked at 94,000 real-estate transactions in 15 markets, higher levels of "walkability" were directly linked to higher home values in 13 of the 15.

How to Fight a High Property Tax Assessment in Butte County.

Depending on how long you’ve owned your home you may find yourself with a tax assessment that is significantly lower, or significantly higher than it’s current value.

If it is lower, thank 1970’s tax crusader Howard Jarvis, relentless promoter of Proposition 13. Prop. 13 limits the amount your property taxes can adjust upward to a maximum 0f 2% per year, even if property values are appreciating at 18% a year as they did between 2000 and 2006. If you purchased your home before those years, chances are it is still assessed at less than it’s current value.

If on the other hand your property tax assessment is higher, it is probably because you bought your home during those same ‘boom years’. The property was reassessed when you bought it AT the purchase price. Now that values have dropped steeply you need to check your tax bill and find out whether the county assessor has decreased the assessment of the value of your home. If not - you can asked that it be reduced and challenge the assessment if the county will not agree to your request.

The following is from the Butte County website:
“The property taxes you pay are based on your property's assessed values as determined by the County Assessor. If you disagree with the Assessor's value, you can appeal that value to the Assessment Appeals Board. Assessment Appeals are filed with the Clerk of the Board.
Prior to filing a formal appeal, you are encouraged to talk to the staff at the County Assessor's Office (530) 538-7721. The Assessor's Office can explain to you your assessed value, answer questions you may have about the assessment, and review additional information you may have to support your appeal. Often a disputed assessment can be resolved prior to filing an appeal. If you cannot reach agreement with the Assessor's Office, you may obtain an Application for Changed Assessment from the Clerk of the Board's Office by calling 530-538-7631.
The Assessment Appeals Board is an independent entity, separate from the Assessor's Office. Appeals Boards can lower or raise a property's assessed value, remove penalties imposed by the Assessor's Office, and/or reverse a change in ownership or new construction assessment. The Assessment Appeals Board cannot reduce your property's assessed value based on what your neighbors are paying for their taxes, remove penalties and interest for late payment of taxes, reduce taxes based on ability to pay, fix the tax rate, levy taxes, change tax rates, grant or deny exemptions, extend filing periods or rehear an issue already ruled upon.
The State Board of Equalization has prepared a pamphlet which details the Assessment Appeals process. You can view that publication at http://www.boe.ca.gov/proptaxes/pdf/pub30.pdf.
You can also view a video developed by the State Board of Equalization to provide information to taxpayers reagrding the appeals process at the following link: http://www.boe.ca.gov/info/AssessmentVideo/AppealAssessmentIndex.html
Should you have any additional questions, please contact the Assessor's Office or the Clerk of the Board's Office at the numbers listed above, or email the Clerk's Office at kmoghannam@buttecounty.net”

$44,000 Tax Assessment Increase in One Year?!

It would have Howard Jarvis turning in his grave! But that’s just what happened to a friend of mine that I spoke with this morning. She had just returned from a hearing of the Butte County Assessment Appeals Board. Her property assessment was raised $44,000 in one year, supposedly due to the in-ground pool she had put in her yard.

As far as she is concerned there are a couple of problems with this scenario: 1. Prop 13 dictates that no increase in property tax in excess of 2% may be levied from year to year. 2. Although the pool cost $44,000 to construct, sales data demonstrates that the market value of the house is only increased by perhaps 10-20% of the cost of adding the pool (pools are a poor investment if your goal is increasing your homes value, but that’s a topic for another day) .

The board it seems had a different way of looking at it. They wanted to know the actual current value of the home, which in this case is perhaps $100,000 or more in excess of the assessment. Is their reasoning based on Article XIII-A, which (from the Butte County Website) “requires the Assessor to reappraise all property at its full market value when any of the following occurs:

A change in ownership (with some exclusions).
New construction is completed.
New construction is partially completed on the lien date.”

The explanation of the county’s obligations under Prop 13 goes on to state “As long as there is no new construction or change in title, the base value is not increased more than 2% annually, regardless of the rate of inflation.”

Who is right? The three member Assessment Appeals Board has not rendered a final judgement in this case yet – stay tuned for the outcome.

Up next: How to appeal your tax assessment

How do Real Estate Agents Help in a Short Sale?

If a defaulting borrower feels that they have exhausted their options for keeping the home (loan counseling, loan modification, etc.) and are looking for a way to divest themselves of the property without the major blow to their credit that a foreclosure brings, short-sale may be a less damaging method. Borrowers often find the red-tape of dealing with a financial institution a daunting and frustrating process. A real estate agent can help by knowing and speaking the ‘language’ of the lender, and can often successfully mediate a satisfactory compromise between the lender(s), the borrower and a new buyer that will allow the home to be sold prior to foreclosure.

As part of the process the lender will likely want to know that the property has been actively listed for sale on a Multiple Listing Service, and that there was an opportunity for showings. At some point they will require a Brokers Price Opinion (BPO) from a real estate agent who works in the area where the home is listed (though likely not the agent that has the home listed or who has submitted an offer on the home). The lender will also require a third party authorization, to allow the listing real estate agent to speak on behalf of the borrower in representing an offer. Some real estate agents prefer to hire a professional negotiator to assist them in presenting their case for the short-sale price to the lender.

If there is a second mortgage, like the City of Chico example in my last post, the real estate agent works with both lenders, and the lenders with each other to see if a compromise is possible. Typically when a short-sale is successful the holder of the first mortgage gets the majority of the available money from the sale to offset their loss, the second mortgage lender gets only a very nominal portion of what they’re owed and the real estate agent collects a commission for the work they’ve done in putting the sale together. If the holder of the first is receiving an amount within their parameters for loss they will normally give the deal their blessing, if the amount is insufficient they may let the real estate agent know what the minimum amount they will take is, or they may reject the offer outright and foreclose. If the lender ‘counters’ the price the agent must go back to the buyer (or buyers agent) and attempt to negotiate a higher offer amount. In the case of a second mortgage the mortgage holder is in a weak negotiating position and may have to agree to a very minimal return. If they reject the amount offered they can ‘kill’ the sale and allow it to be foreclosed, in which case they can try to purchase the home and resell it themselves or they can allow it to be foreclosed upon and lose all of the money they’ve invested. When possible, the real estate agent attempts to mediate a settlement that has buy-in from the second mortgage lender.

In some cases lenders may be able to go after the borrower personally in an attempt to recoup some of their loss after the foreclosure.

Anatomy of a City of Chico Short-Sale

Here are the factors that have lead up to one of the short-sale proposals facing the City of Chico Mortgage Subsidy Program (MSP). The homeowners name has been changed for this account.

-Sue (the buyer/borrower) paid top price for the home during a period of depreciating home prices – home was immediately worth less than purchase price.

-MSP loaned money in the form of a second mortgage on the home.

-Sue miscalculated her personal budget and ability to repay. Sue became late on a number of accounts and incurred fees and penalties which exacerbated her ability to repay mortgage loans.

-Already depreciating home prices suffered a steep decline.

-Sue goes deeper in debt, unable to find a solution to multiple past due mortgage payments and penalties.

-Sue consults with a real estate agent (me) for alternatives to foreclosure. I ask Sue if she has explored credit counseling, or loan modification. Sue feels all options have been exhausted. For the purpose of salvaging some of Sue’s credit I suggest a short-sale as a possible alternative to foreclosure.

-Home is listed as a ‘short-sale’ offering at or slightly below the current market value – in this case significantly under the original purchase price (about the same amount that was loaned by the City).

-Within 2 weeks a contract to purchase is secured with a new buyer.

-I contact the first and second mortgage holders and provide a 30 page ‘short-sale’ package that includes a copy of the new offer-to- purchase, a copy of the listing contract an explanation letter from the borrower, paycheck stubs, tax statements and other documentation of income and expenses to both.

-City of Chico Housing and Neighborhood Services Department schedules review of the proposal for late January.

What comes next?

Both the first and second (MSP) will seek a second opinion on the market value of the home. Based on that opinion, the first and second mortgage holders will negotiate with each other to determine how the funds from the sale would be divided – typically the first mortgage holder will offer the second a ‘token’ of what they are owed (1-2% of what they loaned). Based on the amount of the offer and how the split is negotiated, mortgage holders will decide whether to accept the short-sale offering or foreclose. As second mortgage holders the Chico MSP options in the case of foreclosure are 1.) to hope that the home sells on the steps of the county courthouse for more than what the first mortgage holder is owed OR 2.) to pay off the first mortgage and take title to the home. The City would then own a home worth significantly less than they just paid for it.

To be continued…

Short Sales Strike City Subsidy Program

The specter of foreclosures reared it’s head in Chico this week as the City of Chico Mortgage Subsidy Program (TMP) was presented it’s first default scenario… unfortunately not the last they’ll encounter.

The TMP is a well intentioned and popular program that in recent years has assisted numerous first time buyers of homes within the city limits of Chico in obtaining no-to-low interest second mortgages to help in dealing with upward spiraling entry level home prices. The program, administered by the Chico Housing and Neighborhood Services Department has been so popular in fact that it was recently discontinued as a result of all of the available funds having been loaned out. The first-blow to the program came on Monday of this week as the committee overseeing the program was presented with a ‘short-sale’ proposal from a defaulting home-owner.

Short-sales are a procedure designed to prevent foreclosure. Whereas foreclosure means that all loans other than the first mortgage are wiped out as the bank acquires the home and create a long-lasting credit hit for the borrower, a short-sale allows the home-owner to attempt to sell the home prior to the foreclosure (usually with the help of a real estate agent), saving the first mortgage lender the cost and risk of taking back the property, offering the chance of some return for second mortgage holders, and salvaging some of the borrowers credit.

At issue in regards to the TMP is the question of ‘some return for second mortgage holders’. With home prices depreciated by as much as 50% in some areas, when it comes time to sell the home there is not enough value to even fully repay the first, let alone ‘some’ funds leftover for the second. This second-place is the unsavory position that the TMP now finds itself in.

Options for the City are few. If the Home is foreclosed upon the City can pay off the first mortgage and take possession of the home, hoping to re-sell it and recoup some it’s investment, but this is a very risky proposition. The City will have costs involved in the purchase of the home, The City will find itself in the home ownership business and there is no guarantee that the City will be able to find another buyer for the home willing to pay more than the City itself has purchased it for. If, on the other hand, a ‘short-sale’ occurs the price may very well be so low that the City receives either nothing or only a token repayment.

Monday’s meeting focused on the first of at least two short-sale proposals before the city. The first scenario involves a $30,000 loan, the second, scheduled for consideration in late January for $50,000.

To be continued.

A Warming Trend No Matter How You Slice it.

Another way to slice up Chico Home sales statistics for the last 2 years is by Supply and Demand.

Clearly listing inventory (homes listed as available to purchase) dropped significantly in November, to the lowest level in 6 months. While seasonal factors (holidays, weather) may have contributed to the decrease in available listings, certainly the (mostly) steadily increased ‘under contract’s and ‘solds’ since February of 2009 has contributed to the depletion. June, July, September and October of this year saw especially energetic sales.

The longer view also suggests a warming trend for the real estate market. In November of 2007 there were 658 homes for sale in the Chico area with only 59 under contract. In the same month this year 67 homes were under contract while there were far fewer homes to choose from at 499.

As Days on Market Decrease - Prices Increase

A logical extension of the previous bar chart showing reduced time on the market is a corresponding increase in median sales price. The same increased demand that leads to homes being purchased sooner means that demand is up…as demand increases so does competition for the best deals. Competition equals multiple offers (in the entry level price range) and multiple offers drive up price. As this chart shows, the median price for a home in December rose nearly $20,000 over the preceding 3 months - to approximately $270,000.

In September I listed a 3 bedroom, 2 bath home on Ceres Avenue for $215,000. Within two weeks we had three offers. The competition among buyers drove the price up to what the market would bear - $222,000 with $1,500 in seller concessions. The home closed in app. 45 days.

If you’re considering selling your home allow me to assist you with a pricing and marketing strategy that will get you the best possible price for your home. If you’re looking to buy let me help you get the jump on the competition by providing you with immediate information on newly listed homes the moment they become available.

A Bar-Chart is Worth a Thousand Words

After three months of increased market time for Chico area homes to sell, ‘Days on Market’ (DOM) plummeted in November, 2009. This is a departure from the normal pattern of a holiday season slow-down in November as seen in the November 2008 DOM.

Indicative of a the success of the First Time Home Buyer Tax Credit? increased consumer confidence? or a general turn-around in housing sales? Only time will tell…

I'm on the road this week - more recent sales stats to come!

Is There Any Special Home Financing Available to me as a ?

This question was posed to me by a young firefighter considering using the $6500 Federal ‘existing homeowner tax credit’ to purchase his second home.

If you fall into any of a multitude of State or public agencies the answer is YES! According to Wikipedia: The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families”

The types of employees covered include California state agencies and universities, counties, cities, towns, special districts, auxiliary agencies, fire districts, and other government entities, school districts, national guard and more.

In addition to managing retirement savings for it’s members, CalPERS also has a home loan program. These loans feature a number of advantages over standard loans including controlled closing costs, reduced processing fees, discounted mortgage insurance, discounted title and escrow fees, free interest rate locks and more! Plus the CalPERS loan allows employees to borrow the money from their retirement for their down payment to reduce up-front costs.

If you work for a California or public agency and wonder if you can take advantage of all of the benefits of the CalPERS loan program, please call me today!

Why Not a Black Friday Real Estate Sale?

Retailers pin their hopes for the season, perhaps even for the year on one very special day: ‘Black Friday’ - the day after Thanksgiving and the biggest shopping day of the year. Could home sellers and Realtors learn something from this?

What if one day a year Realtors could work with their sellers to provide buyers a ‘sale day’ ala Black Friday? Here’s how it might work.

-A national campaign promotes ‘Green Wednesday’ (any color or day would work!) as the one day per year that buyers could save THOUSANDS of dollars on a home purchase.

-Real Estate agents work with the owners of their listed properties on a combination of reduced price/reduced commissions. Perhaps even the Title companies would agree to reduce their fees in order to enhance the volume of home sales that would be created on this day. Example: Sellers of homes that have been listed with little activity for months would reduce the price of the home for Green Wednesday by 2%. The listing real estate agent would agree to reduce their commission by ½ percent for this day, and any agent who writes an offer for buyers on this day would also agree to a ½ percent reduction. The Title company agrees to cut their fees to the home-seller to compensate for their price reduction.

In this way, a buyer purchasing a home in Butte County on Green Wednesday at the current median price of $279,000 could save $8,370! How does that stack up to how much YOU saved on Black Friday?

How many sales of ‘stagnant’ listings might be stimulated by this campaign?

Tough times call for creative solutions. If you’re looking for a creative solution to getting your home sold in today’s market please contact me.

How to Get Your Free Money to Buy a Home in Chico.

The U.S. government has finally come up with a plan that doesn’t involve too much red tape. You needn’t fill out a single form in advance of the process, all you need to do is 1. Make sure you meet the criteria 2. Find a house that fits within the very broad criteria and 3. Make sure you’ve completed the purchase by a certain date.

The criteria is – if you’ve never owned a home before or have not owned one within the last 3 years you qualify for $8,000 free. If you’ve owned a home for 5 of the last 8 years you qualify for $6,500 free. You may earn up to $125,000 individually or $225,000 if you will be buying as a couple.

The home can be any owner occupied residence of 1- 4 units, it can’t cost more than $800,000

You must have a contract to purchase the home prior to April 30, 2010 and you must complete the purchase prior to June 30, 2010.

Once you’ve purchased your home according to the above guidelines you will request the appropriate tax credit amount on your 2009 or 2010 tax return. If you don’t owe any taxes you will receive a check for the amount of the credit. If you owe taxes the amount of the credit will offset what you owe and the difference will be sent to you.

Soooo…claim your part of this pile of money! Contact me for more information on the tax credits (and be sure to run any scenario by your tax adviser or CPA). The funnest part is finding the home that will allow you to apply your credit. And…Chico area home prices are at their lowest in years! I’d welcome the opportunity to assist you in finding the ideal home before the deadline.

Things to be Thankful for II

It’s all perspective…if you own property, or if you’re thinking about owning property here are some items to consider giving thanks for:

If you’ve owned your own home since before 2000: give thanks for the nearly 120% appreciation you enjoyed before 2006 which means you’re home is still worth at LEAST 75% more than you paid for it.

If you purchased your home between 2000 - 2003, give thanks that it is likely still worth more than you paid for it.

If you purchased your home since 2003 and plan to live there for a long time be thankful that once we get through all of the foreclosures, appreciation on homes should return to the normal 2-4% per year (maybe more). Also be thankful for economic stimulus money that provides rebates and incentives for upgrading your home and making it more energy efficient.

If you purchased your home since 2003 and you would like to move, be happy for all of the programs that have been put into place to help you – loan modifications, existing home buyer tax credits and more. Although the home you’re selling is worth less, the home you’re buying is a lot cheaper too !

If you’re thinking of buying a home, be thankful that homes are much more affordable than they were 2 – 5 years ago, and for the $8,000 first time buyer home credit being extended to April 30, 2010.

Most of all, be thankful for family, good health and freedom.

Chico Home Sales Slow? Here’s the Reality.

For some time now the ‘word-on-the-street’ has been that Chico homes are not selling, and that they’re selling for ‘pennies-on-the-dollar’. Let’s separate that myth from the reality…

REALITY: Homes in certain price ranges are experiencing longer marketing time and are undergoing greater discounts off asking price than others. For instance, the median number of ‘days on the market’ to date in 2009 was just 27 days for homes in the $200,000-$250,000 range. In the $400,000 - $500,000 range they were nearly three times as long at 76 days. High end homes have seen price reductions of up to $95,000 in order to sell.

REALITY: Homes in the ‘entry-level’ or ‘first time buyer’ price range of app. $275,000 and less are experiencing brisk sales, here are some examples:

184 Pauletah Place sold in 3 days for $6,000 over the $208,000 asking price.
2621 Swallow Tail Way sold in 2 days for $3000 over $207,200 asking price.
206 Rochester sold in 1 day at the asking price of $223,000.

REALITY: Homes in all price ranges, if they are priced in accordance with what comparably appointed homes are selling for in the area AND if they are easy to show and in very good condition are selling quickly. Here are some higher priced 2009 sales:

3356 Summit Ridge Terrace sold in 9 days for $1250 over the $557,750 asking price.
10306 Fimple sold in 8 days at the asking price of $849,000.
824 Whispering Winds sold in 6 days for the $600,000 asking price.

So...home sales slow? Not necessarily...there are definitely buyers out there for homes that show well and are priced right!

Chico Housing at Most Affordable Level in Years!

“Nationwide housing affordability, bolstered by affordable interest rates and low house prices, hovered for the third consecutive quarter near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 70.1% of all new and existing homes sold in the third quarter of 2009 were affordable to families earning the national median income of $64,000, down slightly from a near-record 72.3% during the previous quarter and up from 56.1% during the third quarter of 2008.” This according to RISMEDIA

In the Chico Area, the median price for a single family home purchased in the month of November became app. $46,000 more affordable, down from a high of $325,000 in November 2006 to the current month-to-date median of $279,000.

What does this mean in terms of monthly payments? At $325,000 a buyer obtaining an FHA loan with $9750 (3%) down at 5% interest had monthly principal and interest (P&I) payments of $1697.50. Today’s buyer at $279,000 can put down $1380 less and end up with payments of only $1452.80 on the same loan, a savings of $244 per month!
Click this Link for a look at what you can buy at the median price of $279,000 in the Chico Area today.

Things to be Thankful For (Real Estate Version)…

This just in from RISMEDIA: Lawrence Yun, chief economist for the National Association of Realtors (NAR) says the housing market and the economy are headed for a sustainable recovery “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”

Here’s an example of how the first-time buyer credit is working in Chico:

I’m currently working with a first-time buyer who is looking for a home in the $190,000 price range. This buyer is getting an FHA loan which requires a 3% down payment (app. $5700). The buyer will be borrowing the down payment money short-term from a family member. When the buyer receives the $8,000 tax credit money in the spring the buyer will be able to pay back her family member AND have app. $2300 left over for furnishings!

Already a home-owner but wanting to change neighborhoods? Be Thankful for the new $6500 tax credit for existing homeowners wanting to purchase a replacement property. More information at Tax Credit Details.

Ask Not What You Can do For Your Realtor…

...Ask what your Realtor can do for you! Answer: calREDD

The Chico Association of Realtors unveiled their new Property Search program for agents ‘calREDD’ at an introductory training meeting yesterday at the Chico Elks Lodge. So how you ask does that help you?

Speed: the system appears so intuitive to use your agent can navigate it quickly to seek out the properties or data you want instantly.

Connectivity: The automated email updates are easy to set-up so that you receive news of hot properties as soon as they hit the market. For sellers it means that news of your home for sale is automatically emailed to waiting buyers searching for a home similar to yours.

Efficient: many new ways to seek out properties like a variety of map search options and customizable amenities searches.

Expanded Range: The calREDD system is built with the long-term goal of allowing access to property listing data from the entire state of California. Want to know what your mom’s house is worth in San Diego? Your Chico agent can now access the comps for her neighborhood within moments!

Like to see how it works? follow this link for a 16 minute demo video!

The switch-over to this system is still weeks away, plenty of time for Chico area agents to become familiar with all of the new features. I look forward to putting calREDD to work for you!

Chico Foreclosures: Looking Ahead

Will there be more pre-foreclosures and REO’s in the coming months, or fewer? Here are some indicators to ponder…

According to the credit reporting agency TransUnion (as reported in the 11/17 Enterprise Record) 6.25 % of U.S. mortgages were past due 60 days + in the third quarter of 2009, which is up 58% from one year prior when the percentage was 3.96. The 60+ late category is a good clue that a borrower is headed towards default.

Another consideration is seasonal buying patterns. The typical scenario in Butte County is a winter slow-down in home purchases. As home sales slow, inventory goes up, prices nudge down and distressed properties become more distressed!

These factors suggest that for the next few months anyway the availability of short-sale and bank-owned properties will continue to grow.

Although this is a prolonging of the dark cloud of distressed properties, for buyers there is the silver lining of lower prices and higher inventory which create an even better buying environment for home-seekers and investors. So if buyers are watching market conditions they’ll know that this winter is a great time to buy.

Click these links for a list of all short-sale and REO properties currently for sale in the Chico Multiple Listing Service.

More Free Money* for Chico Homebuyers!

Okay, you already have 8,000 free dollars waiting for you in the form of the recently extended Federal First Time Home-buyer Tax Credit…where else can you wrangle a few more dollars to help you to buy your first home? If you live in the City limits of Chico here is an incredible opportunity to obtain interest free, payment free money!

City of Chico Mortgage Subsidy Program. The City is generously offering to loan you money to help with your down payment. The amount they’ll help you with depends in part on your income, low income buyers can borrow up to $70,000, moderate income buyers up to $30,000. You must be a first-time home-buyer, you must contribute at least $5,000 of your own money towards the purchase, the home must be located within a residential area within the City and it must be safe, sound and sanitary.

The coolest part is the repayment arrangement. The loan is classified as a ‘deferred payment loan’ – no (zero) monthly payments required! Interest on the amount borrowed accrues for the first 10 years. For each of the five years between year 11 and year 15 the city forgives 20 percent of the interest, meaning that after 15 years all you owe is the principal amount you borrowed, without ever having had to make a payment! The flip side is that you must remain living in that home for 15 years to get full interest forgiveness – if you sell within the first 10 years you’ll owe all principal AND all interest. The point is, you pay nothing until you sell (or otherwise leave this earth). For more information and specifics on the Chico Mortgage Subsidy Program visit the Mortgage Subsidy Program Web Page or call Sherry Morgado - Housing and Neighborhood Services Director (530) 879-6301

* my friend Anthony Watts conscientiously replied to my last post on this subject with "And who's paying for this - you and me. There IS NO FREE MONEY"... Especially if you don't get some of it Anthony!

The New Face of a Foreclosed Chico Home.

Foreclosures…REO’s…bank-owned properties… where are they and what do they look like?

The iconic image that comes to mind when you hear the term foreclosure is either the demonic banker driving the residents out of the home and into the snow or the boarded up home with chains across the door and notices posted all over. The first image is definitely an outdated scene from the last century and the second is only partially true.

Sometimes but not often - resentful homeowners will ‘trash’ the home before the bank takes it back, other times they will pull anything of value out of the home, like cabinets, dishwasher etc. Generally though, by the time the bank puts the property back up for sale they have (often by way of the real estate agent they are listing it with) fixed any major damages that occurred during the foreclosure.

Here are images of a couple of bank-owned properties currently on the market in Chico.

(continued from above) Another common misconception is that foreclosures only occur in depressed or low-priced neighborhoods. In fact, high-end home-owners have perhaps been hit the hardest recently as most of the current buyers are ‘first-timers’ and therefore purchasing homes in the starter-home price range, while more affluent buyers are biding their time waiting for the market to come back so they can sell their homes for a decent price before buying a replacement home. This can leave owners of more expensive homes high and dry for the present time, and those affected by job-losses or salary reductions are just as likely to have been foreclosed upon as the owners of lower priced homes.

Here are examples of higher priced bank-owned properties in the Chico area

(continued from above) Click this link for a look at all Current REO listings in the Chico Area . If this link is broken or, if you’d like more information on any home you see here, to set an appointment to take a look inside or for more information on financing please email me at greatscottwhatarealtor@msn.com or call (530) 321-5579

What’s the Deal With Foreclosures in the Chico Area?

As reported on KHSL Channel 12 on October 28, Chico has earned the dubious distinction of being named a ‘Foreclosure Hot-spot’ based on a reported 284 foreclosures in 2008. So what does that mean and what’s happening with these foreclosed properties?

Foreclosure is the process by which a lender attempts to either sell or take back a home, usually initiated after 3-6 months of missed payments. The first step in the process is a Notice of Default, where the borrower is notified of the lenders intent to foreclose. If the borrower doesn’t work things out with the lender a Notice of Trustee Sale is filed and posted, specifying a date that the property will be sold by the bank. Even at this late date homeowners may be able to work things out with the bank to avoid foreclosure (see your attorney!), but if not the home is sold at the county courthouse to the highest bidder. If there are no bidders or the highest bid is lower than the bank is willing to take, the bank itself claims title to the home and it then becomes what is known as an REO (Real Estate Owned).

Buying a foreclosed property does not disadvantage the previous home-owner, they gave up the property well before it became available for purchase as an REO. And buying a ‘short-sale’ property (buying it from the owner BEFORE it is foreclosed on for less than the bank is owed) in many cases is a relief to the current home-owner, who may be able to salvage some vestige of their credit if it is sold rather than being taken back.

Many short-sale or pre-foreclosure properties are listed for sale in the Chico Multiple Listing Service, please contact me if you’d like to receive automatic notification each time one is listed for sale. In many other cases, owners have already ‘given-up’ and conceded that the home will be foreclosed on when in fact they, the bank and a potential buyer may be able to benefit from a short-sale. I regularly receive lists of these unlisted pre-foreclosures that never show up on the multi-listing service, if you’re serious about finding an unlisted short-sale property please let me know.

Likewise with REO or bank-owned foreclosures. Many eventually hit the market, and are typically priced so competitively that they receive multiple offers. Savvy agents and buyers know that there is a ‘lag-time’ between the Foreclosure and the home being listed for sale when an offer may find favor with a bank before being exposed to the masses. Once again, please contact me if you have an interest in this process.

Some information for this article was found at http://www.biggerpockets.com/foreclosure-process.html

Home Buying Assistance for Veterans

In honor of our Veterans and Active Military on Veterans Day I’ve compiled some information on loans and incentives for U.S. Military personnel.

One of the most utilized services for Veterans is the VA Guaranteed Home Loan. The Veteran’s administration doesn’t make the loan, but guarantees the loan to the lender (bank etc.) you are borrowing from. The current guarantee is $417,000, which can buy a lot of house these days in Butte County! In addition to guaranteeing a loan for the purchase of an existing home, the VA also guarantees loans for the construction, remodel and weatherization of a home. Financing for condos and manufactured homes are also guaranteed (with certain restrictions).

Some other qualities of a VA backed loan include: requirement that new home builders provide a one-year warranty, assurance of structural repairs if needed within 4 years of the guarantee, no prepayment penalties and a requirement that certain loan and transaction costs and fees not be paid by the buyer. The greatest benefit for most VA buyers is the allowance for purchasers to get into the home with zero down-payment.

California Veterans receive some additional benefits via a Cal-Vet Home Loan which include: lower than market interest rates and down payment amounts. Cal-vet also provides home and loan protection plans that allow for a $500 deductable on flood, earthquake and mudslide claims as well as fire and hazard coverage.

Information for this article was found at Military.com, visit their site for information on all veteran’s benefits. For more information on how to get the most from your veteran status when buying a home in Butte County please contact me at (530) 321-5579

(continued below)

(continued from above) p.s. Don’t forget that Applebee’s is offering free meals for Veterans today!

The Market for Bare Land in the Chico Area

Bare land lots and parcels were selling at premium prices in 2005 as move up buyers, cashing in on the appreciation of their current homes competed for the best cul-de-sac, oversized and view lots on which to build their dream homes.

At that time in-town residential lots, if you could find one, were selling for as much as $215,000 (Godman Ave.) and estate-sized view lots for $365,000 (Canyon Oaks). This 6 acre lot (see photo below), 15 minutes from town with beautiful views but no water, power or pavement sold for $120,000 cash. (continued below)

(continued from above) 2 acre lots in nearby Orland were selling for $200,000.

Flash forward to today and some great news for buyers – much greater selection and inventory is available with prices down a minimum of 25%-50% or more. In-town residential lots are currently being sold for $72,000-$106,000 and the highest price paid for a Canyon Oaks estate lot is $280,000.

That 6 acre lot 15 minutes from Chico that sold for $120,000 cash? The lot next door (continued below)

(see video of parcel above) is currently listed for $61,500 and the owner will carry the financing! Those 2 acre Ranchette Lots in Orland that were selling for $200,000 are now selling for $100,000.

Whether you’ve been wanting to make a change from old to new or have been longing to build that close-in dream home, prices on bare lots and land in the Chico area have not been this good in years!

Free Money !?!

Who say’s there’s no such thing as a free lunch? The U.S Government is giving away $6,500-$8,000 to you with no strings! – just for buying a home.

Here’s how it works: buy a home before April 30, 2010 and the government will mail you a check in conjunction with your tax return, or if you owe taxes they’ll apply it as a credit against what you owe.

Eligibility requirements:
Be a first-time buyer – their definition is that you have not owned a home in 3 years.
Be an existing homeowner – you must have lived in your current home the last 5 years or more.
Purchase the home as your primary residence only.
$125,000 maximum income for an individual, $225,000 for a couple.
Home can’t cost more than $800,000
You must live in the home you purchase for at least 3 years (exceptions if you’re in the military).

More questions? Want to find a home to apply your credit towards? Please call or email me AND double-check all information with your CPA or professional tax adviser.

Buying Foreclosed Chico Area Properties

Buying a foreclosure often is appealing to buyers trying to stretch their dollars. It’s finding a good one can that can be a challenge.

If you’re considering the purchase of a home that is now owned by a bank, it’s important to know at the outset just how much work you’re in for — and how much it is going to cost you. Many foreclosures are in various states of disrepair; some of the fixes are cosmetic, but some can be extensive.

Those looking for the best deal probably shouldn’t rule out non-foreclosure properties, either, said Mark Goldman, a mortgage broker with Cobalt Financial Corp., and a real estate lecturer at San Diego State University. Sometimes, people set their sights on bank-owned properties “like the word ‘foreclosure’ equals ‘good deal,’” he said.

And that’s not always true.

First: allow an experienced agent like myself to assist you. My partners Mark Reaman, John Spain and I work regularly with REO’s so we are better able to track down the properties than agents who avoid REO’s. The Chico Multiple Listing Service currently has approximately twenty-three Bank owned properties listed for sale and another forty-five ‘short-sale’ (pre-foreclosure) listings, and that’s just in the immediate Chico area. There are many more that are unlisted and we regularly track these properties.

Some other things to be aware of are:

Lenders aren’t held to the same disclosure requirements as sellers who have lived in the home, mainly because the lender hasn’t occupied the home to notice leaks or other problems. For that reason, an inspection is crucial. I always recommend that my buyer clients allow me to order a home inspection for them to flesh out any potential problems.

“If there are lessons out of the last couple of years, it’s certainly buyer beware,” said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa, Fla.

“We have all heard the stories of people ripping the copper pipe and wiring out … people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall,” Steward said. Some have ripped out toilets and kicked in walls or left water faucets running before they left the house, often out of anger.

You don’t need to be told the toilet is gone, but an inspector can tell if there is damage 20 feet down the water line because of the way that toilet was ripped out, he said.

Other issues could pop up due to the property being vacant. Large banks will often hire a field service to cut the grass, clean the gutters and winterize a home, yet when homes aren’t occupied it’s harder to catch small problems before they become big ones.

“When we live at home or drive the car, if something is off we notice it. We notice it and we deal with it,” Steward said. When a place is unoccupied, pests could become an issue. If you were living in a home, a nest of raccoons probably wouldn’t be able to find a home in your crawlspace—not for long, anyway.

The time it takes to complete the sale can vary from lender to lender. In some cases, the process goes smoothly, Goldman said. Other lenders are disorganized.

“It really depends on who you’re doing business with,” Goldman said.

But for your best chance at having an offer accepted and for a quick closing process, have everything in order before making the offer, said Duane Andrews, CEO of Clear Capital, a company that provides valuation products for the mortgage and lending industries. That includes having the financing firmed up and writing a clean offer — for example, asking for new oven racks as part of the deal could peg you as a demanding buyer who will be annoying to deal with, he said.

“What this tells the seller is this guy is going to be a pain and they don’t have time for this pain,” Andrews said.

In fact, most bank-owned properties are sold “as is,” so if there is something you want fixed, it’s best to just factor that into the price you’re offering, Melvin said.

But don’t expect to bargain the listing price way down, Melvin added.

Banks typically price their properties at a 20 percent to 30 percent discount anyway, he said. If the property has been on the market for a week or two, don’t expect the bank to drop the price; if the listing is older, you might have more power, he said.

Also, don’t be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don’t have to take the loan from their company, but they may want to get a closer look at your finances to make sure you’re a solid buyer, Melvin said.

Above all, make sure to follow directions when submitting the offer, he said. That likely includes having an approval letter from the bank and the correct amount of earnest money.

“Most listing agents will have instructions how we want buyers agents to submit the offer,” he said. Delays can occur when instructions aren’t followed exactly.

Portions of this Article Courtesy RISMedia, October 5 2009 ‘Market Watch’

What is the Real Estate Value of a Chico Tree?

One of the many nick-names for Chico - ‘The City of Trees’…got me wondering how trees relate to Real Estate values here in Chico. Personally I’m a big fan of trees, as a birdwatcher trees are generally the feature that I spend most of my time looking at. As a Real Estate agent I imagine that I sometimes ‘impose’ my affinity for trees on my clients – I assign a higher value to homes with mature trees and have often told buyers and sellers that a particular house is ‘worth more because of it’s trees’…is it true?

A Google search of the words ‘trees add real estate value’ provided me with a number of different sites and articles on the subject.

According to an article by Valerie Finholm for Frontdoor.com, trees add from “7-19%” additional value to the price of a home. Finholm quotes Vredevoogd Combs, immediate past president of the National Association of Realtors. "People tell us they want trees and privacy behind," she said. Well-landscaped yards with mature trees and bushes that provide privacy not only fetch higher prices -- they sell more quickly than houses with little or no landscaping, she said, noting that they provide the ultimate "curb appeal" by impressing buyers before they even walk into a house.

Another site belonging to the Southern Urban Forestry Associates claims that their research shows that the value trees add to a particular property ranges from 7 to 25 percent of the total land value. This site contains links and specifics for appraising the dollar value of trees!

With these statistics in mind I decided to check out sales figures for Chico homes featuring prominent trees in an attempt to determine whether the sales prices were positively affected by the presence of the trees. (continued below)

(continued from above) Two neighborhoods featuring some massive valley oaks are just off of Springfield drive in southeast Chico. Skymountain Circle in the Village Park subdivision and Heritage Oak Drive in the Heritage Oaks subdivision both feature homes with giant trees in their front yards. Of these, homes at 65 and 67 Skymountain Circle share a massive oak tree, and both addresses sold in 2006 and 2007. While this assessment is patently not-scientific or definitive it does support the claim that these dominant trees add value. (continued below)

(continued from above) Because homes vary in age and size, a valuable statistic in determining relative value is the PRICE PER SQUARE FOOT that a home sells for, relative to other homes that it’s being compared to. In the case of the homes sold on the attached chart (below) I’ve compared the two homes with the dominant tree to other home sales on the same street of homes without the benefit of a large tree. Although the homes may have featured other amenities that contributed to a higher selling price per foot, it is interesting to note that the two homes with the beautiful tree also shared the highest sold price per foot of any in their neighborhood. (continued below)

(continued from above) The moral of the story? Don’t underestimate the value of mature trees. In addition to the obvious aesthetics of the tree and it’s tenants (birds, squirrels, butterflies, etc.) trees have some very real energy saving benefits, providing cooling shade in summer and, in the case of deciduous trees lose their shading qualities in winter to allow the sun in. Trees provide a necessary haven and nesting site for resident and migrating birds. And, as suggested above, mature trees can add tangible financial benefits when the time comes to sell. Therefore, preserving and nurturing existing trees, and even planting trees (if you plan on staying in the home long enough to reap the benefits) should be as much a part of your home maintenance and upgrading planning as remodeling the kitchen or painting the exterior! (continued below)

(continued from above) *An interesting footnote to my research for this post is that as I was out photographing trees I happened upon a city tree-trimming crew preparing to prune one of the largest of these giant oaks on Heritage Oaks Drive. Because these trees are within ten feet of the city street, their health is the responsibility of the Chico Urban Forester. The city is also responsible for damage caused by falling limbs.

The length of Time it Takes to Sell a Chico Area Home

The length of time that a home listed for sale in the Chico area remains unsold can be an indicator of the state of the market. As you can see from the chart, while overall the number of days that it has taken for homes to sell in our area has increased 7% over the past 24 months, there have been a series of peaks and valleys in the interim. One factor causing this is the seasonality of the local real estate market. The period of time before and after the Thanksgiving and Christmas Holidays, in combination with the onset of wet weather conspire to reduce the number of home showings, which in turn lengthens time on the market. Spring and fall show a corresponding shortening of time on the market. The dog days of mid-summer can keep some buyers away but July of 2009 saw shortened marketing times in part thanks to buyer incentives.

The 7% increase noted therefore may not be indicative of the overall trend but more likely demonstrates short term changes in incentives, weather or other factors. Hopefully the introduction of the $6500 existing home-owner tax credit will, by encouraging a new pool of buyers into the market, help reduce the days on market from their recent spike.

In general, pricing homes more than 5% over the sold price of comparable homes will lengthen marketing time. In a depreciating market homes may need to be priced slightly below comparable sales if a short marketing period is desired by the seller.

FHA and FNMA Paying More Attention to Details

NPR (National Public Radio) ran a story on Morning Edition (click link to listen) this morning regarding FHA’s reining-in of irresponsible vendors of it’s loan products.

This comes on the heels of tightening up of other lending practices. Yesterday our office listened to a presentation by Milly Pollock of Stanford Mortgage on Fannie Mae’s (FNMA) new loan eligibility guidelines. Here they are in a nutshell:

Residential borrowers must have a debt-to-income ratio generally no higher than 45% (50% with strong compensating factors).

Borrowers with a foreclosure on their record are not eligible for a loan for 5 years, and then must have 10% down and a credit score of 680 or above (borrowers who have given up their deed in-lieu-of foreclosure or who have filed bankruptcy are not eligible for 4 years).

Buyers of two unit properties, where one of the units is their primary residence, must have a minimum of 20% down for a fully amortized loan (25% for interest only loans). If the two unit property is strictly an investment, with no owner occupancy, the minimum down is 25% for a fully amortized loan and interest only loans do not qualify.

Additionally, there are new requirements for the amount of reserves a borrower must have available – two months reserves for the purchase of a second home, 6 months reserves for investment properties.

Recent Chico Area Real Estate Sales Trends

In keeping with our good news/bad news theme I’ve attached graphs and tables demonstrating 2 year market trends for Chico and surrounding rural areas and communities.

The news is virtually all good for buyers: the median sold price for Chico homes is 16 % lower than the median price two years ago. This doesn’t take into account the first wave of price drops in late 2006 and early 2007. By showing only the median price the chart also doesn’t illustrate the exceptionally low prices that bank R.E.O.’s (Real Estate Owned), Trustee Sales (foreclosures) and short sales (allowed to sell for less than bank is owed) sold for, but the median is dragged down by these sales. These charts only show sales in which a real estate agent participated.

For sellers who have owned their homes for more than six years or so this 16 percent drop still did not wipe out the 18 percent per year appreciation they achieved in the glory years of 2000-2006. Prices on homes rose nearly 100% (+/-) over that period so depreciation between 16-30% still leaves seasoned owners in the black. Summer 2009 was a bright spot for many sellers as home prices enjoyed a short upward run which peaked in July.

The Table gives us a slightly different view of trends. One interesting observation is that while the median asking price (FOR SALE column) has only dropped $3,450 in eighteen months, the median price that homes actually sold for dropped by $33,500 during the same period. Another informational statistic is that while the median price that Chico area homes were listed for in September 2009 was $319,000, the median price for a home that SOLD was $254,000, a significant disparity between listing and selling prices.

More on recent Chico Real Estate Market Statistics in coming posts…

Chico Real Estate Customers Now Have Access to Statewide Information

The Chico Association of Realtors is switching multiple listing services to a company called calREDD, giving you, the home-buyer or seller a larger geographic reach.

calREDD is built from cutting edge technology. It’s very fast and intuitive, and it works with all operating systems (including Apple systems). These qualities allow me as your agent to help you research real estate purchases anywhere in the state, and your Chico property for sale can also be viewed by all calREDD members, and therefore their buyer-clients throughout the state.

Imagine this scenario: Someone from San Diego puts an offer in on your Chico home, contingent on the sale of their San Diego home. As your agent I am now able to do a CMA on their home to help you make a more educated decision on the acceptance of that offer.

Additionally, by the end of the year all the forms necessary to do a transaction will be built right into the site, allowing for a more seamless and efficient use of your valuable time!

Even Better Tax Credit for Homebuyers Moving Forward

Though it still has to be ratified by full Senate and House votes, the senate has put forward a proposal to not only extend the $8,000 tax credit of summer/fall 2009, but to also make it available to existing home owners (with restrictions) and raises the maximum income levels. Read a more detailed description at http://rismedia.com/2009-10-29/breaking-news-senate-plans-to-extend-and-expand-tax-credit/ .

Homeowner's Poison is Buyer's Medicine

In the ying-yang of real estate the misfortune of a pending foreclosure means opportunities for buyers. The owner of the condominium shown in the video in this link http://www.youtube.com/watch?v=V4FAkP8cXbY lost his job shortly after purchasing the property and the bank has filed a notice of default. In order to try to salvage his credit, the owner is hoping the bank will accept a 'short-sale' - accepting less than they are owed so that they too can avoid the unknowns of foreclosure. For the homeowner and lender this may provide for a better-than worst-case scenario.

For the buyer however it's all good. The property is priced at exactly what comparable sales data say's it should sell for - no padding or inflated price to allow for negotiating room. The homeowner is generally willing to endorse any offer and pass it on to the lender, who will make the ultimate decision on what price is acceptable. If there is a drawback for the buyer it is the long processing time that it currently takes lenders to respond to short-sale offers and close - ninety day escrow (or more) are the norm.

The condominium in the video is currently for sale, please contact Scott Huber (530)321-5579 for more information.

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