First, there’s a couple of different types of properties that are commonly referred to as a foreclosure sales:

1. Pre-Foreclosure or Notice of Default - A person who hasn’t paid their mortgage in awhile. For whatever reason, the owner of the home can’t or hasn’t paid the mortgage in awhile. About 3 months after not paying the mortgage, the bank that owns the note will file a Notice of Default or a formal notice that states the bank is beginning the foreclosure process.

2. Short Sale - Most of the time, owners who can’t afford to pay the mortgage are also short sale candidates.  This just means that even if they sold the property, the money left over would not be enough to re-pay the bank what they borrowed, so they’re “short”. Many refer to these sales as short-pays. Not all short sales are pre-foreclosures and not all pre-foreclosures will be short sales. For example, an owner who loses his job and is unable to pay his monthly mortgage might still have money left over if he sells his or her home. The majority of the homes classified as an NOD or Short Sale will be either put on the open market or will eventually be auctioned off. The catch with short sales is that they often take months and months to complete, if they close at all. To keep an eye on short sales, please contact your local real estate agent.

3. Auction - If the owner of the property fails to pay the mortgage long enough, the bank will end up trying to auction the property off to the highest bidder. This is where most buyers who purchase properties in foreclosure get the deals. So why doesn’t everyone do it? There’s 3 catches. First, if the auction is a standard Trustee Sale, the property must be purchased with all cash. There’s no option to take a loan to purchase the property. The minute the auction is over, bidders hand over cashier’s checks for the full amount, and the property or possibly the note is deeded to the bidder. The second catch is that the bidder must have done research into the chain of title of the property, meaning which loans take precedent over the others. If this is done improperly or there’s a hidden lien, the bidder can risk buying a worthless note rather than buying the property. Third, there’s no opportunity to actually view the property unless it was listed on the market previously. That means bidders are buying without knowing the condition, floor plan, and amenities of the property. I’ve heard stories of buyers buying one of these properties to discover missing kitchen cabinets, counters, bathroom cabinets, sinks, toilets, windows, doors, and even air conditioning units. The owner had removed them prior to vacating the property.

4. Real Estate Owned, Bank-Owned Property - If for some reason the property fails to sell at the Auction (also known as Trustee Sale), the bank who owned the note will take ownership of the property. These types of properties are called REOs or bank-owned properties.   Eventually the property will be brought into marketable condition and listed with a real estate agent.  This type of sale process takes the standard amount of time, can be financed, and can be easily found. These are probably the easiest foreclosure property to purchase but also the most competitive. Sometimes the properties can get bid up to market value, defeating the whole purpose if you were looking to buy at a discounted price.

It might sound like I’m trying to steer you away from purchasing a distressed property but I’ve actually helped many clients sell and buy through some of these types of transactions. Just be aware that with so much to think about, it’s vital to get the right advice when looking to buying a property, whether it’s a standard sale or one of the types of sales above. So make sure to speak to a local Realtor when you’re ready to buy.

Friday, April 6, 2012
Teen Flashlight Easter Egg Hunt
The Arcadia Par 3 Golf course is hosting a special Easter Egg Hunt for teens starting at 8pm on April 6, 2012. The best thing about it is it’s free! Bring a flashlight!

Saturday April 7, 2012
Santa Anita Derby Day 5K
At the Santa Anita Derby Day 5K, you get to run alongside your favorite jockey on a beautiful course finishing at the Santa Anita finish line. Participants receive free parking, admission, race program, and a clubhouse pass for future admittance to the Great Race Place. After the run/walk, you can enjoy live music, healthy snacks, and vendors of all kinds, while you wait for the horse racing to begin. Be sure to stay and watch the “Gateway to the Triple Crown,” the Santa Anita Derby. Find out more here.

Arcadia – Eggstravaganza!
Every year, the City of Arcadia hosts a free Easter Egg Hunt for kids. This year, the hunt will start at 11am on Saturday April 7, 2012 at the County Park on Santa Anita Ave. Make sure to get there early for this exciting event!

Friday, April 13, 2012
Kid’s Night Out
Kid’s Night Out is a special event for kids to make new friends. Snacks, movies, activities, games and supervision is provided for all participants allowing parents to have an evening out or an restful evening at home. Children must be aged 4 and above.

When and Where: Community Center 6pm-11pm
Cost: $15.00 per Child

 Saturday, April 21, 2012
Arcadia Junior Golf Tournament
Like golf and want to compete on Arcadia’s Par 3 course? Admission is only $9.50 for the event. You can register at the golf course itself. Located on Live Oak and 6^th Avenue in Arcadia.

Where: Arcadia Par-3 Golf Course, 620 E. Live Oak Avenue  Arcadia, CA 91006, Phone: (626) 443-9367
Details: Register at the course. On the day of the event, check in by 1:30pm

Saturday, April 28,2012
Family Nature Hike
Love the great outdoors? Participate as a family in a Nature Hike through Eaton Canyon in Pasadena. Board a bus leaving from the Community Center at 8am for a day of fun!

Where: Eaton Canyon. Meet at the Community Center at 8am.
Fee: $15/person

The hardest hit areas were the cities of Arcadia, Pasadena, San Marino, South Pasadena, Temple City, Sierra Madre. Here are some pictures I took of the area as well as an interactive incident map (Link).

[Show as slideshow]

A few years ago, changing your address was easy for Arcadia residents – a few pieces of paperwork, a fee of about $500, and it was done. You could even change which street your house belonged on if your house was on a corner, if your home met the right conditions. Now, residents aren’t allowed to change street numbers because it creates too much burden and confusion for city officials who maintain many of their records, many that date back a few decades, using street addresses.

So why do residents care about numbers and street names? In today’s Arcadia real estate market, many of today’s buyers are foreign or immigrate buyers who either are coming directly from or originate from China, Taiwan, and Hong Kong. In these cultures, numbers play a significant role, specifically the number 4 which in most Chinese dialects, sounds like death, and 8, which sounds like prosperity. In fact, many buildings in these areas don’t have a 4th floor for this reason.

The reason residents care is that having an unfavorable number may affect resale value. With the importance of numbers being so deeply rooted in these cultures, the street number becomes part of the decision making process for these buyers, who are often the most qualified and quite often pay for homes with cash. And anytime you lose any buyer, for any reason, you lose an opportunity to attract the best possible price for your home.

But it doesn’t just affect the owners of these homes ending in the number 4. If a home down the street from you recently sold for less because of the number, an appraiser, who’s not trained to account for this fluctuation in value, may incorrectly assume that property is equal to your home, and may appraise your home for lower.

And the problem doesn’t just occur for buyers purchasing from these backgrounds. Certain numbers in American culture also have a stigma, like the number 666. Homes with this number are hard to sell for the exact same reason.

Currently, the city is evaluating a proposed solution and looking into the true cost of actually doing the street address change and if they decide to pass it, may allow homeowners to take on this expense for the city to perform the change. According to some estimates, the cost of changing the number could be as much as $2500, which in a community where most homes range from $700,000 to $2,000,000, may be a small price to pay for a chance to sell to the pickiest buyer with the highest offer.

Come out to your local event to participate in fun family activities and marvel at the spectacular fireworks shows.

San Marino

The City of San Marino will hold its Annual Fourth of July Celebration on Monday, July 4 at Lacy Park (1485 Virginia Road). This event will feature game booths and bingo, a community parade, stage entertainment and a fireworks display at approximately 9 pm.

Entrance to the activities in the park require a wristband purchase -
San Marino residents – $5; all others $15.  Children under 2 are free.

If you only want to catch the fireworks, do what other local residents do, and set up along Huntington Drive or on the median for free.

For more information about the event, please call (626) 943-2627.

Pasadena

Pasadena’s famous Rose Bowl hosts the city’s annual Fireworks extravaganza, “Family Fun on the 4th,” the 85th year for this community tradition. There will be food, activities and a Fun Zone for children, admission to the Fun Zone will be free. The show inside the Rose Bowl stadium will begin at 7:00.

Parking Lot opens at 8:00 a.m. admission is $20 per car
The festival starts at 2pm, with stadium gates opening at 6 and live entertainment including bands, motorcycle stunts begins at 7, until the main event.

Fireworks show begins at 9:05pm

General Admission Tickets $13 each, children 7 and younger are free; active military with ID FREE entry.
Preferred Admission tickets are available for $25 each.

Tickets on sale at the Rose Bowl Ticket Booth (Gate B)
Weds. June 29th – Sun. July 3rd
10 am – 5 pm
Mon. July 4th – 10 am – 9 pm

For additional Information please call (626) 577-3101

Alhambra

Almansor Park is host to the city of Alhambra’s annual 4th of July event. Admission is free, and there is plenty of room to have a picnic and several local vendors selling patriotic goods and treats.

Parking will be at a premium. Pay lots will be available at the West San Gabriel Valley YMCA and the Emmaus Lutheran Church, and limited handicap parking will be available in Almansor Park’s lower parking lot.

Most importantly, the fireworks display starts at 9:00 p.m.
Location: 800 S. Almansor St., Alhambra CA

West Covina

This 4th of July celebration is to benefit The Muscular Dystrophy Association. There will be carnival rides, games, and food from 3:00 p.m. – 11:00 p.m. There will also be live entertainment by Sangria from 6:00 p.m. – 9:00 p.m. Fireworks show to follow.
Location: 1625 W. Durness St., West Covina 91790
Entrance fee $1.00 beginning at 2:00 p.m.
For additional information please contact Community Services Dept. (626) 939-8430.

Pomona Fairplex

This fireworks show starts at 9:20, and is preceded by a wild Monster Truck and motocross stunt show.

Location: 1101 W. Mckinley Ave., Pomona 91768

General Seating $15.00
Trackside Bleachers $17.50
Reserved Box Seats $19.50

Children 2 and younger FREE
Buffet at the Top of the Park $45

For additional information call (909) 623-3111 or visit their website.

Eliminating Surprise Costs and Issues
Throughout the escrow process, sellers will provide both reports and disclosures to a buyer that are either required by law or used to ensure a safer transaction. The 3 reports that a seller will typically provide are:

1. Natural Hazard Disclosure – Consists of a series of maps showing if the property is in a special hazard zone such as an earthquake zone, a flood zone, or a high fire severity zone.
2. Preliminary Title Report – Shows any issues affecting the title of the property. This will show shared spaces (like a shared driveway), utility access, and most importantly the report will show current loans, mechanic’s liens, or judgments against the property.
3. Termite Report – A detailed report showing evidence of termite infestation. This will also show required repairs to damaged areas if there are any.

Many agents will order these reports once an offer is received or accepted but I always advise clients to complete the disclosures and to order these reports right when the property is listed, before there’s even an offer. This means that before you even begin negotiations on an offer you are aware of any issues with the title of the property and have calculated the cost of the termite work. It’s not uncommon to discover a lien that was not cleared correctly or an unexpected issue on the title of the property. Most of the time, these issues are easy to address but they require time to do so, making it essential to know as soon as possible to avoid delaying the sale. Another benefit is that you can provide these reports to the buyer the day they accept and possibly shorten some of the contingency periods. Plus, all the reports are free, even if you don’t close.

Knowing the Areas of Possible Delay
The two most common sources of delay in a real estate transaction are the loan approval process and obtaining the HOA documents for a condominium complex, townhouse complex, or a planned community. One of the most important duties for an agent is to keep the transaction progressing, especially in these two areas of delay.

Overestimate the Time Needed to Move and Clean the Property
A common issue that occurs before closing is that physically moving takes longer than expected and the owner needs additional time to move and clear the house. When that happens, it becomes messy because now the buyer is paying the mortgage and may request to be reimbursed, he may have already given notice to his landlord, or he may have to reschedule the moving vans, or even furniture and appliance delivery.

My best suggestion is to hire professional movers and to overestimate the time required to move, especially if you’ve lived in the home for a long time. My clients who sell always tell me how much stuff they didn’t know they had. Also, homeowners have a duty to leave the property clean and free from debris, so also make some time to take care of that as well. The last thing you want to do is to have to go back to haul away debris during your move to your new home. The smoothest moves have always happened slowly, with the owners starting from the offer acceptance date with throwing away or donating unneeded items until the contingency removal date when the real packing begins.

Lastly, before you leave your former home, forward your mail, stop all utilities, say goodbye to your neighbors, and if you had a good experience with your Realtor, don’t forget to recommend him to anyone you know, he’ll appreciate it.

Happy Moving!

Previous: Offers and Negotiation: How do we make the most out of every offer?
Table of Contents: Mark’s Selling Guide

The Negotiation Starts Before the Offer is Written
The truth is that even though two offers that may look exactly the same on paper, they can have very different amounts of negotiating room and very different chances of even closing. It’s important to understand the buyers who are making offers on your property more deeply than just financials and a loan approval. A couple good starting points are:

1. Why are they moving? Are they upgrading/downgrading? Why? Is it because they have a new baby on the way or because their youngest just got married and they’re downgrading from a larger home? Are they moving because of a job transfer?
2. Why did they choose your specific home? Is it the area? Are they moving for the schools or a single school in particular? Do they have relatives nearby? Maybe even on this street?
3. What do they do for work? Are they self-employed or do they work for someone? Where is their place of business?
4. Do they have a timeline? Maybe because of a job transfer or because of a new baby on the way
5. Have they made a lot of offers? On which particular properties? Why did they not get those properties? Your agent should know why that property sold, a rough idea of how much activity was on that property, and how their offer compared to the offer that was eventually accepted.

These questions can serve as a starting point for why they like your home, their motivation to purchase, and an idea of their financial ability to close the transaction. Once they do write an offer, there are a few important factors to consider when you consider an offer.

Price is Only One Factor
Most of today’s contracts are very sophisticated and usually include detailed terms that may have a substantial effect on the smoothness and ability to close the transaction. A good Realtor will address these 5 important factors when negotiating on your behalf:

1. Price, Down Payment, and Deposit – Price is always important, but the price won’t matter if the transaction doesn’t close. In today’s market, loans are much harder to qualify for, which means the amount of down payment is a huge factor in whether a buyer can even obtain a loan. Experienced agents will know down payment and income requirements for current mortgage loans and will be able to spot any red flags before you start negotiating, especially in multiple offer situations. The deposit amount also shows how committed a buyer is. If a buyer intends to complete the transaction and the deposit goes towards the down payment, why not request the largest deposit possible?
2. Contingencies – Buyer’s will have a period of time, 17 days by the standard C.A.R. contract, to inspect the property for any defects, request any repairs to be done, obtain an appraisal and to get their loan approved. During this period, the buyer can cancel the contract for the reasons above without risking his deposit. Usually, the shorter these time periods are, the better it is for the seller since once these periods are up, they can feel safe planning their next move. Sometimes buyers will make offers contingent on the sale of their home, which typically isn’t favorable for sellers.
3. Condition of the Property – The standard contract we use in my market states that all sales are AS-IS. However, in the majority of all transactions, a buyer will do an inspection and request repairs to be done on the property. Sometimes these can be minor repairs but there are many cases where these repairs will cost thousands. This is another instance where a little bit of foresight can save you money. If your real estate professional knows about the items in your home that aren’t in good, working condition, he can address those issues up front during the counter offer stages when the buyer is more willing to make concessions to save you repair costs later on. In some cases, you may even be able to have the buyer do an inspection and accept the complete condition of the house before you open escrow.
4. Closing Costs – Both buyer and seller pay closing costs to complete a real estate transaction. The common practice in my market is that the seller will pay their portion of escrow fees, owner’s title insurance policy, transfer taxes, a natural hazard report, mandatory termite work, and a 1 year home warranty for the buyer. In some cases, buyers will request the seller also credit some money for closing costs or in multiple offer situations, may even offer to pay for some of the costs that sellers typically pay, such as termite or home warranty.
5. Closing and Possession – The date you close escrow is when all the funds are distributed to sellers, buyers, the title company, and service people and may differ from the possession date, which is when you actually hand the property over to the buyer. Make sure these fit your timeline, taking into consideration the time you need to find your next home or rental, and the time you need to physically move.

So you’ve negotiated a great offer and now you want to open escrow. How does this whole escrow process work?

Next: Tips to Ensure a Smooth and Successful Closing
Previous: Maximize Your Price: It starts before you even get an offer
Table of Contents: Mark’s Selling Guide

How do I get as highest number of people through my home to get the best offer possible?
Every qualified buyer who walks through your home is a chance to sell. This means that the more qualified buyers that visit your home, the better your chances of selling and the higher price you’re likely to get. This is where your agent comes in.

A skilled professional will have a strong real estate marketing plan to get buyers excited about your property and motivated enough to make in person visits. The number of in person showings is the key number in determining the quantity and quality of offers a property will receive. Agents need to know the numbers for specific markets in order to know when to adjust. For example, in the Arcadia real estate market, that number is 5-8 showings per week for a good chance of selling quickly. Any less and the chances of getting an offer declines, but more may mean you might even get multiple offers.  My marketing plan is specifically design to encourage as many buyers to enter and tour the property as possible.

How do I make more of the buyers who visit fall in love with my house?
So you’ve gotten the right number of showings, how do you turn more of those showings into offers? I’ve had clients who listed their home with another agent and started with over 15 showings per week and finished with less than 1 per week after being on the market for over 6 months, all while receiving zero offers. A few months later, after listing with me and preparing the property for sale, the owner received a full price offer in two short weeks.

What made the difference? Pre-listing preparation. Preparing a home for sale is one of the most overlooked and important considerations before selling your home. Preparing to sell your home is much like preparing to sell a car. Before you sell a car, you wash it, vacuum the inside, remove the clutter, and show that it’s been kept in good condition, and it’s the same with a home.

Most of the homes I list, even newer ones, need some amount of preparation to be in showing condition. The exact amount varies from home to home, but you only have one chance to make that first favorable impression on a buyer’s mind, so make sure it’s completely ready before buyers see it. Otherwise, you may risk losing that buyer who would have been willing to pay the highest price. Your agent should not only provide a list of things to do before you put your home on the market but should also be able to refer you quality professionals to get the job done, if it’s required.

Now that you’ve gotten tons of visitors and an offer or maybe even multiple offers, how can you make the most of the situation?

Next: Offers and Negotiation: How do we make the most out of every offer?
Previous: Listing Your Home: How do I get started? What are the costs involved?
Table of Contents: Mark’s Selling Guide

Pricing Strategy Makes a Difference
Pricing your home correctly in today’s market is more essential than ever. If you price off a dream number, you may end up spending a lot of time on the market, hurting your chances of selling now, hurting your chances of selling later, and you’ll base your move off something that may not really work financially or logistically. No one wants to spend 6 months on the market only to realize at the end that the realistic market price means no down payment for the next home.

A real estate professional who will tell you the truth about your price, chances of selling, and possible hurdles of selling under current market conditions is doing his job. I see situations all the time where an agent will list a home too high for fear of disappointing the owner and after months and months, the home fails to sell and the owners give up on their dream. Hire a true professional who will be honest from the start so you can make the appropriate adjustments right from the beginning.

Knowing the Reasons Behind the Numbers
As you may know, appraisers, real estate professionals, and especially buyers often use price per square foot to determine the value of a home. This number is one of the most important numbers that will show up on internet sites, flyer print outs, and on the multiple listing service. BUT it’s not everything.

This is where the local expert comes in. Hiring a local expert who is fully involved in the business every single day means that he has probably seen most of the homes on the market. He would know that the Smith house down the street only sold for $310 per square foot because the living room was only 8 feet wide, and that yours might be worth $350 per square foot because you have a brighter, more open floor plan. Buyers will come in and try to mention properties that aren’t comparable to try to negotiate your price down, but the professional will be able to handle those situations because they simply know the market.

Your Bottom Line: What are the Costs to Sell
Typical closing costs for sellers include real estate commissions, escrow fees, title fees, termite work, transfer taxes, and a 1 year home warranty for the buyers. A good way to estimate it is to budget 7% of your projected selling price towards closings costs. Lastly, deduct the loans and estimated capital gains taxes to get your proceeds from the sale that you can save or put towards your new home.

How can you make sure to maximize your sales price and increase your bottom line?

Next: Maximize Your Price: It starts before you even get an offer
Previous: Deciding to Sell: What should I consider? What are my options?
Table of Contents: Mark’s Selling Guide

Many of my personal clients who waited years to move tell me afterwards that they wish they had moved sooner, especially if the move is to be closer to family, to enjoy their retirement, or even just to downsize to help pay for traveling adventures.

When to Sell and When to Lease:
If you’ve decided that now is the time to move, should you lease your home to a renter or should you sell it? The easiest ways to maximize your real estate investment is proper planning.

Why you should sell:
One of the biggest factors to consider for owners who have seen their values go up is tax-free gains. If you’ve lived in your home 2 out of the past 5 years, you can claim $250,000.00 as an individual or $500,000.00 as a couple in gains absolutely tax-free. Of course, always consult with your CPA as every situation is different. If you move out of your home and lease the home out for more than 3 years you lose the homeowner’s tax exemption gains mentioned above. If you have some gains or you’ve reached the limit, it may be a good idea to sell and re-invest the money into another property where you can hopefully do that again in a few years.

Other factors to consider include the ability to afford multiple mortgages or homes, a backup plan for setbacks such as loss of income, your desire to become a landlord, and needing the money to purchase the next home.

When it makes sense to convert your home into a rental:
If you can afford to purchase the next home without selling and you’re planning on keeping your current home as a rental, interest rates are so good these days that you might be able to refinance to a great rate, rent out the home, have someone pay your mortgage for you, and if you’re lucky or have owned the home for awhile, you may even have a little cash coming in each month.

If you’re still confused about what you’d like to do, feel free to contact me or your local Realtor and one of us will be happy to walk you through your options. Otherwise, if everything you’ve thought about still points to selling, the next step is to find out if makes sense to sell in today’s market.

Next: Listing Your Home: How do I get started? What are the costs involved?
Table of Contents: Mark’s Selling Guide