The Great Recession has hit almost everyone everywhere, and charities that serve those stricken with poverty and hunger at the proverbial “Ground Zero of need” have been hit exceptionally hard.

San Diego has a number of charities serving the poorest, but one especially close to our hearts would have to be Brother Benno’s missions. It is they who provide showers, hearty breakfasts and showers for homeless children and their families. It is the volunteers for Brother Benno who provide hot meals for the elderly and disabled, provide shelter for women and children, and run recovery homes for sober living.

In prior years, Brother Benno Charities also provided rental assistance to needy families–but hard times and rising food costs have eliminated that aid.

How Can You Help?

Donations (including money) are urgently needed NOW and might come from any corner of your San Diego home. Have extra food in your pantry? Outgrown children’s clothing, toys, school supplies, diapers, cribs or linens? Also welcome are furniture, household items, cars–and even recyclables that might be sold to help raise cash for needed supplies.

And in case you are wondering how much goes to administrative overhead, the answer is “very little>” The organization is run largely by volunteers and the executive director draws a hefty $1 per year salary, while a small staff known as “servants of the poor” receive room and board and $300 per month salary. It’s an organization with lots of heart and one that runs on a very lean budget.

Over the years, we have donated two automobiles to Brother Benno and I have committed to go through pantry, closets and garage in search of goods that might help this wonderful charity. And if you would like to support Brother Bennos Center, they are located at 3260 Production Avenue in Oceanside, off Airport Road, while ltheir Thrift Shop is located at 3965 Mission Avenue in Oceanside, open from 10 a.m. to 4 p.m. Monday through Saturday. For additional information, call 760-439-1244 or visit www.brotherbenno.org

San Diego Short Sale

If so, you are not alone.

The percentage of short sale listings that we take in our practice now approaches 50 percent in our San Diego real estate practice. Without revealing names or addresses, rest assured it is a painful acceptance and process for the burdened homeowners, who have often exhausted savings, 401k’s and other assets in an attempt to keep house payments current on their over-mortgaged homes.

They are faced with one of two choices: Short sale or foreclosure.

More than a few times, I have shared their tears–as well as their relief, when the burden of debt has been lifted from shoulders and the path is cleared for new beginnings.

If you have fallen behind on your mortgage payments and aren’t sure what to do, just watch this brief video. You’ll discover whether or not a short sale for your San Diego home may be a solution for you–or not. If you would like additional information or would like to see if a short sale would be right for you, please give us a call at 877-818-8197 or email Mike@SanDiegoPreviews.com

In the meantime, the video below explains the process well:

San Diego Creative Financing

What is Creative Financing?

It’s been a long time since San Diego real estate investors have had so much inventory from which to choose. Inventory levels are high, interest rates are low and rents are rising throughout the area. It’s a depressed market and San Diego has become an investor’s dream-come-true.

Unfortunately, obtaining a conventional mortgage loan from a bank, credit union or savings and loan can be a difficult proposition. If the real estate buyer is self-employed, has a low FICO score and/or doesn’t have substantial liquid assets and verifiable employment, getting conventional or government financing may be very difficult. That makes it a tough market for both sellers and buyers.

The is hope, though, when sellers, buyers AND real estate agents understand the options and possibilities of creative financing, which refers to non-traditional means of real estate financing. This financing is generally used to purchase or finance a property with the home buyer or investor using as little of his or her money as possible. This is sometimes jokingly referred to as using OPM or “other people’s money.”

Types of Creative Financing

As the name implies, the possibilities and ways to finance real estate are almost limitless when it comes to creative financing. Below are four ways that the San Diego real estate investor might want to creatively finance a particular property.
Installment Sale: If property is owned free and clear, the owner might want to carry the mortgage or note and collect the interest–instead of that money going to the bank. For example, a seller might sell a home, pay income taxes on part of the gain and then stick the balance of the proceeds into a CD that pays 1 percent interest. Instead, the seller might carry the note at 5 percent interest and pay taxes on a lower amount as the money is received each month. This would also benefit the borrower, who might not be able to qualify for a conventional loan.
AITD or Wrap-Around Mortgage: An All-Inclusive-Trust-Deed or Wrap-Around mortgage occurs when the seller carries the note and “wraps” it around existing underlying financing, which remains in the seller’s name. This is one way the real estate seller can make money on OPM. For example, if the seller has an original mortgage in the amount of $100,000 at 4 percent interest with 14 years remaining on the note, he or she might sell the home for $300,000 with $30,000 or 10 percent down payment. He might then carry a note for 20 years in the amount of $270,000 at 6 percent interest. In that case, seller would make 2 percent interest on $100,000 for 14 years and 6 percent interest on the balance for the 20 years. At the end of 14 years, seller would receive 6 percent interest on the full balance.
Lease Option: With this form of financing, title to the property remains in the seller’s name and does not transfer to the buyer until a mutually-agreed upon event happens at a future date. That “event” might include, for example, the buyer obtaining financing to cash out the seller, at which time title would go into the buyer’s name. Option money is generally non-refundable, but may go towards eventual purchase money for the home.
Subject-To Financing: If a seller’s underlying financing will allow for the loan to be assumed, then a buyer might compensate the seller for his or her equity and then assume the underlying loan–or taking title to the home “subject to” existing financing. The seller might also agree to “carry the note” on a second or third trust deed or note. These loans are reportedly difficult to find in today’s market because most conventional loans are not assumable.

As a Certified Investor Agent Specialist (CIAS), I am constantly on the search for good investment real estate in San Diego County–and the timing has never been better. Inventory levels of homes, condos and units are bountiful and prices are the best they have been in years. Moreover, many sellers are starting to come around to the idea of owner financing, which can help solve the potential problems related to investment property financing.

Many of our clients are surprised to find that they can even use IRA and 401k funds to purchase real estate as long as the investment is a segregated one.

Interest rates are at historic lows and there are some amazing real estate bargains available in San Diego. More and more of our clients are investing their money in real estate, as they tire of the wild stock market swings and the dreadfully low rates being paid on savings and CD’s at the banks.

Want to know a bit more about real estate investment and how you can take advantage of current market conditions? Just view this short video below and find out how almost anyone can get started today with with careful research and (relatively) very little down!

Have questions? Feel free to contact me at either 877-818-8197 or 760-613-6190 Then just call or email (Scott@SanDiegoPreviews.com)for a FREE, no-opbligation consultation and to get a list of investment properties currently available in your area.

Seaside Market in Cardiff-by-the-Sea

I don’t hate Wall Street, but am learning to distrust it thanks to the devastating financial shenanigans of hedge funds like Fletcher Asset Management and JGB Capital. Their slick and predatory lending/investment practices have left Main Street investors devastated–but that is another story.

And I have no bone to pick with the major supermarkets; rather, we enjoy local and family owned places like Seaside Market in Cardiff by the Sea and our favorite fruit, flower and vegetable stand at La Costa Farms market. And of course, who can fail to love the adventure of visiting San Diego’s colorful Farmer’s Markets that are available almost any day of the week throughout the county? As a major agricultural center, San Diego works well for small grocers and truck farmers–and is heaven for fresh food shoppers.

When local fundraisers for sports, schools and needy families are seeking support, most often it is the local markets, dry cleaners, breweries, restaurants, physicians, dentists et al who come to the aid of their communities and its causes. Check any school, Little League team or other local fundraisers and the vast majority of donations come from LOCAL sponsors.

It just so happens that we are also a small and local business serving the San Diego real estate market. San Diego Previews Real Estate is not a franchise, nor do we have “affiliated” relationships with title companies, escrow companies–or skim 10 percent referral fees off recommendations we make to local contractors. Our business is our business. We pay no franchise fees, don’t own title or escrow companies, and don’t show up as television commercials.

Instead, like Seaside Market and other local San Diego businesses, we stand alone and on our reputation. There are no “affiliated” businesses providing side profits or unions offering other protections. We make it or break it on the quality of our service–and hopefully, the loyalty of our clients.

We understand the plight of small businesses, and they will continue to earn our business. In exchange, we give thanks for the loyalty of our clients and continue to work hard to earn and maintain that trust and confidence.

Real Estate Dangers

10 Dangers of Dealing with Poorly Trained Agents

by Kim Reid

Selling or buying a home can be one of the biggest transactions you ever make in your life. That fact alone makes having a qualified and knowledgeable real estate agent critically important. However, many are tempted to deal with the less trained, hoping to save a little money.

Dealing with a well-trained and educated real estate professional cannot only save you money by making sure the deal is done right, but they can answer loads of questions on real estate and give you a better view on what to buy. Below, we have gathered ten of the things you should know about real estate agents to help you learn what to look for, as well as what to avoid.

1. Realtor vs. Real Estate Agent

– The two terms are often interchanged, but actually
mean very different things. Both hold licenses to list and sell real estate, but the Realtor is a member of the National Association of Realtors and has subscribed to a 17-point Code of Ethics. A few of the points include refraining from misrepresenting facts, cooperating with other brokers, and working in the best interest of the client.

2. Experience

– Having loads of experience is crucial to any real estate transaction. Instead of asking how much experience your real estate agent has, ask how many times they have renewed their real estate license? Many states vary within the two to four year range to renew a license and experienced real estate agents who have found success will often renew their licenses on a regular basis.

3. The Deal

– Knowing how to buy something is as important as knowing what to buy. Having a real estate agent who is highly trained can help a deal go through, as well as get you the price you want. Poorly trained agents can become emotional or irrational during a deal, as opposed to the calm that comes from experience and education.

4. Breaking up is hard to do

– Not every real estate agent you encounter will be the right fit for you, especially if a poorly trained agent. Sometimes, it is necessary to end relationships. Having a highly trained agent will make parting waysmuch easier, as no matter how good they are, they have been fired before and know how to do so professionally.

5. Take the money and run

– Did you know that all transactions involving real estate are bound by disclosure laws? If your real estate agent is poorly trained and doesn’t know, this can cause major issues in the fraud area. If an agent, seller, or buyer is offering you money under the table, don’t take it and see the above for what to do if your real estate agent thinks it’s a good idea.

6. Jack of all trades

– Real estate agents with little experience can often try and make money from other aspects of real estate such as lending and home inspections. To avoid conflict of interests and many other pitfalls, it is important to have an agent who is dedicated to his or her profession and has the freedom to fire a mortgage lender or escrow agent who does not guard the client’s best interests.

7. No surprises

– A highly trained real estate agent will ask you all the right questions before house hunting begins. They include “How much are you pre-qualified for,” “What is your time frame,” and “What neighborhoods are you interested in?” If your agent waits until the last second to ask you these and other questions, it is could lead to wasted time for both home buyers and sellers.

8. Honesty counts

– If your real estate agent offers to do something dishonest, for example lie about a loan agreement or home inspection, it can be truly dangerous. Offers of dishonesty for you are often complemented by other offers that can go against you, and it isn’t until you have gone through the deal to find out how disastrous the consequences can be.

9. Confidentiality counts

– Because real estate agents are privy to loads of important information about you, it is important to get a well trained one. Inexperienced agents can accidentally or even intentionally show your contact information, preferences, and even finances to others if they don’t know what they are doing.

10. Verify it

– If you want to do a quick search on your real estate agent before deciding on one, Google or research their name online. Your research may show reviews, community involvement and knowledge, and other information that may influence your decision on whether to hire and agent or not. In California, you can also verify real estate license and background information via the California Department of Real Estate License Check.

Kim Reid is a licensed real estate agent and owns the site Masters in Real Estate. She likes to write articles about everything related to Real Estate business and educating future agents.

What is Best for San Diego Real Estate Sellers: Short Sale, Foreclosure or Deed in Lieu?

During the real estate “Bubble Years” from the late 1990’s to 2007, many people bought homes in San Diego using 100 percent financing, exaggerated income on loan applications, and high hopes for future appreciation on their real estate “investment.” Many also jumped into products like Option ARMS, that allowed them to make variable payments on their home loan, ranging from perhaps 1 percent to 6 percent. If the one percent option were chosen, the deficit would be added to the loan’s principle balance which further added to the home owner’s debt burden.

Fast forward to today, and many struggling San Diego homeowners are agonizing over what to do with their homes, their underwater mortgages, their credit ratings, and their financial futures. Many have big mortgages and no jobs–and life goes on for others, who are transferred, divorced or face other life transitions that necessitate a move. Online and neighborly advice, government programs, and scams abound for these distressed homeowners.

Should they pay an attorney to seek a loan modification? Should they discuss a short sale with a Realtor? Should they just throw in the towel and let their home go to foreclosure? Or would they be better off just mailing the keys into the lender and offering the property on a “Deed in Lieu of Foreclosure” to the lender? These are just some of the options being considered by distressed homeowners in not only San Diego and California, but throughout the United States. Below are listed some of the alternatives that might be available to homeowners:

San Diego Short Sales

Many of San Diego’s homeowners believe they would be able to avoid a foreclosure and get out from under their upside down mortgages, where they owe more than the home is worth, with a real estate short sale. The short sale might seem like an easy out, but it can be a long a drawn-out process. In interviewing several real estate agents, I learned that most home owners involved in a short sale have stopped making payments on their mortgage–which also seems to help motivate lenders to accept less than what is owed on the property.

Many sellers feel a sense of relief when they finally make the decision to let go of their home and turn the short sale over to a knowledgeable real estate professional. They are relieved to have made a decision, they are able to save some money from not making mortgage payments, and most recognize that their credit rating may be damaged for only a couple of years, especially if they stay current on all their other bills.
One of the other advantages of a short sale is the cost savings for the homeowner compared to a regular sale. All real estate commissions and closing fees are paid by the lender, not the owner. On a regular sale, the seller bears the burden of these costs. Finally, many lenders are also offering some owners financial assistance to help with moving and relocation costs, which can make the transition to a new home far easier.

Getting approved for a short sale, though, is not guaranteed. The borrower must be able to show financial hardship, which might include medical problems, loss of employment and/or income, job transfer, death or other life calamity. Basically, what the borrower has to do is “un-qualify” for the loan they currently have. Additionally, the lender will order an appraisal or BPO (Broker Price Opinion) to verify the home’s true market value. Lenders, however, frown on “strategic” short sales, where the hardship doesn’t exist, and the owner simply owes more than the home is worth. Those types of short sales usually won’t fly, according to my research.
To start the short sale process, the home is listed and the owner writes a hardship letter detailing events that make it impossible to continue paying on the mortgage. The lender will require the borrower to provide proof of income, debt, assets, tax returns and any other documents supporting the borrower’s stated financial situation. Additionally, the owner must sign an authorization letter allowing their lender to communicate with your real estate agent, attorney or whoever is assisting you with the short sale applicaltion.

Short sales are generally preferable to Deed in Lieu or Foreclosures when it comes to the borrower being able to purchase a home again. With a short sale, conventional financing may be available again in as little as two years, while foreclosures and deeds-n-lieu could hang up the ability to get a home loan for five years or more.
Finally, the home owner who does a short sale could end up with a deficiency judgment from lien holders who suffered a loss. For example, junior (or second and third) lien holders are usually wiped out in a foreclosure and may receive only pennies on the dollar for what is owed to them. This loss could lead to a deficiency judgment against the borrower, depending on regional laws. It is always advisable to seek the professional guidance of attorneys, accountants and knowledgeable real estate brokers.

Deed in Lieu of Foreclosure

This means of property disposition basically means that the home owner is allowed to turn in house keys and sign over deed to the home to the lender. This saves the bank or lender all the fees and costs associated with doing a foreclosure, but does not relieve them of the costs and aggravations involved in preparing a home for sale, its marketing and buyer demands. For the homeowner, there is the peace of mind in knowing that they are out from under the burden of home debt and they no longer have to worry about billcollectors calling.

On the other hand, their credit rating may be damaged almost as much as if the homeowners had let their home go to foreclosure, and it could be several years before they could once again qualify for a conventional or government home loan. The credit damage could also impact their ability to lease a home if a credit check is required–and could be an issue for future or current employers who demand a clean credit report. These are all issues that should be considered before letting a home go or turning in the keys to the home.

San Diego Foreclosures

Foreclosure probably ranks just above bankruptcy in terms of being a nuclear bomb for one’s credit rating. When this occurs, the owner’s interest in the home is foreclosed upon and the bank or an investor takes title to the home. Foreclosures always occur because of a default, but there are hazards for both the former homeowner as well as the buyer who may be an investor on the courthouse steps, or conventional buyer who acquires the home from the bank as an REO (real estate owned) or bank-owned property.

For the sellers, there is the burden of a damaged credit report that could preclude them from buying a home with conventional or government financing for up to five years or more. For some, there is also the shame that can come from letting a home go to foreclosure.
For buyers, there are no owner disclosures that are typically and even legally required in a conventional sale. Did a death occur in the property? Have there been any mold or water incursion issues? Foundation failure? Slope slippage? These (and so many others) are all issues that owners are required to disclose to buyers in a normal sale. When a home is a foreclosure or bank-owned, no disclosures are given and the home is essentially sold as-is.
For this reason, it is very important for the buyer to hire professional inspectors go through the home very thoroughly before making a final commitment. It might also be wise to talk to neighbors to see if there are any other issues that might impact the desirability of the home. Finally, a home warranty can go far in providing peace of mind about the purchase of a foreclosure or bank-owned property–but they too, will often want to see the results of the professional home inspection report.

The costs of a foreclosure for a lender, though, are very steep. To begin with, they lose payments on the mortgage, have collection costs, and then must pay attorneys and filing fees to accomplish the foreclosure. Then, should they get it back as an REO, they may be faced with evicting the owners and/or offering “cash for keys” to get them to move. After that, there will likely be rehabilitation costs involved in getting the home ready to market and sell. All of these costs can run into the tens of thousands of dollars and they might net no more (and possibly much less) than they would have netted with a short sale or deed-n-lieu of foreclosure.

Conclusion for San Diego Real Estate Market

The recession and downturn in the real estate market has affected so many homeowners, lenders and Wall Street and the losses have been enormous for all. And the pain has not yet ended. According to USNews.com, nearly one-quarter of all American homeowners owe more than their homes are worth–and that statistic raises even more questions about the state of the real estate economy and even the financial state of our entire country. Will home prices deteriorate even further as more homes are sold as short sales and foreclosures? Will unemployment stay high until the building trades and suppliers can get into motion again? Will that high number of distressed homeowners create even more pessimism on the part of the American consumer?

These are questions that concern us all and volumes could probably be written (and probably have been) about possible solutions to the crippled real estate market. Some say we should just open the flood gates and let the foreclosures and short sales occur freely until the market has flushed itself of these toxic assets. Others champion the government stepping in and directing the banks to offer principle reductions on these loans. I can see both sides of the arguments, but hope more than anything that real solutions can be quickly found and implemented.

by Mark Murphy

Surge in Government Loans

During the Bubble Years, many mortgage borrowers in San Diego bought homes using 100% conventional financing, often with an 80 percent first mortgage and a 20 percent second lien. This was done to eliminate the need for expensive Private Mortgage Insurance (PMI), which helped to keep monthly payments down. Few people in our area used Government loans in those days because many of our prices were outside loan limits and conventional financing was so easy to get. Additionally, there was a perception with lenders and real estate agents alike that VA and FHA loans were just too complicated, expensive and took too long to process.

In today’s market, the tables have completely turned, and conventional loans are more difficult and expensive to obtain, especially for home buyers with limited financial resources. These days, a 20 percent down payment is almost always required for conventional loans and underwriting can be very strict. Buyers need excellent credit, employment verification, verification of funds, and properties also need to appraise at a value that will support the loan or the required loan-to-value ratio.

Currently, the two most common types of conventional loans are fixed rate mortgages where the interest rate remains the same for the life of the loan, which can range from 5 to 30 years, with 15 and 30 year mortgages being the most common. A second type of conventional financing is the adjustable rate mortgage, where the starting rate is usually lower for a set period of time, and after the first year, two or maybe seven converts to a rate that fluctuates with market conditions. Other types of conventional financing might include balloon mortgages, where for example, the full loan amount becomes due and payable at a certain point in time, while bridge loans provide money for home buyers to purchase homes before their existing home have sold.

Because I am an Army veteran, I will be able to use VA financing when I purchase a home. VA loans are available to military veterans and offer 100% financing, whereby the US Government guarantees the loan (as opposed to FHA, which insures the loan for a mandatory fee). With a VA loan, I may be able to get a seller to agree to pay my non-recurring closing costs as well as the 1% funding fee that is collected at closing of the loan process. The monthly payment on a VA loan (as well as FHA financing) will include an escrow account that budgets money for property taxes and homeowner insurance. This is done to insure that both taxes and insurance are paid in a timely fashion and that both veteran and lender are protected.

Those who have money to put down on a conventional mortgage and can also qualify for the mortgage loan they are seeking may prefer conventional financing over government loans because they are free to manage their own money and do not have to set up an escrow account if they don’t wish to do so. With excellent credit, they may also be able to get a better rate. Finally, most home sellers and their real estate agents prefer conventional financing because they feel there is less chance of a deal falling through because the buyer is putting down at least 20 percent and may not be as likely to ask for closing cost assistance.
In conclusion, both conventional and government loans have an important place in today’s real estate market. Without these mortgage financing vehicles, home ownership would be out of reach for most Americans and we would probably become a nation of tenants.

Energy-savings and recycling make sense for our planet and there is endless information we as Realtors can and do provide to our clients and communities. But sometimes our clients end up educating us–and that is what my favorite and outspoken Sacramento RealtorGena Riede explains as this week’s guest author.  And who would have guessed she would be sharing her experience with someone from San Diego seeking a place to grow cannabis in the Sacramento area?

Sixteen states and the District of Columbia have legalized  medical marijuana. California has legalized medical marijuana prescriptions for conditions such as AIDS, anorexia, arthritis, cachexia, cancer, chronic pain, glaucoma, persistent muscle spasms (including those associated with multiple sclerosis, seizure disorders and epilepsy), severe nausea and other chronic and persistent medical conditions.

But Gena is the one with the story–and perhaps a new twist in the Sacramento real estate market.

A New Green in Sacramento Real Estate

As a Realtor in Sacramento I receive a wide variety of phone calls for real estate in the area, but this year there has been a new twist to “Going Green.” I used to think “Green” had to do with solar heating, dual pane windows, water sheds and the like. I am quickly learning, though, about a new kind of “green.”

Just last week, I received a phone call from a prospective transferring San Diego home buyer who was interested in purchasing property with land for growing. It seems San Diego government had recently put a ban on cannabis dispensaries and these people felt the Sacramento area might be more “friendly” to their growing intent.

After a long conversation that involved a lot of tip toeing around, it became obvious to me that this home buyer was interested in a rural home with enough property to grow Cannabis.

Since this is not the first time I have had this same type of conversation, I simply cut to the chase and asked if Cannabis was what she had in mind for growing. That should come as no surprise in that Sacramento television stations are openly running commercials for Cannabis dispensaries and physicians who prescribe medical marijuana. Would you be surprised to know that talk-show hostMontel Williams has been in Sacramento lately to support full legalization of medical marijuana–support which has resulted from his successful use of Cannabis to treat his multiple sclerosis.

Had you told me as a Realtor® I would be having these conversations a year ago, I would have told you, you were nuts but growing the cannabis plant is becoming more accepted since there are obvious medicinal purposes for this plant which is legal in California with a medical license.

Apparently, San Diego has had some issues with the Cannabis dispensaries so growers are looking to locate where the issues are not so difficult to overcome.

So, going GREEN has taken on a whole new meaning for me in real estate, and has forced me to research the issue.  Last year, I was clueless about the medical benefits of marijuana and  had not knowingly ever met a medical marijuana patient. But openly sharing clients and my own research have led me to become more open to helping the new faces of Sacramento home buyers. –by Gena Riede

This entry was posted on Tuesday, June 14th, 2011 at 5:00 am and is filed under Best of San Diego, Relocation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Edit this entry.

1. Kristal Kraft said at June 14th, 2011 at 4:15 pmWe have medical marijuana dispensaries in Colorado too! As soon as the state made it legal we had more than you could possibily count! As time passes they are still around but now the ownership is changing. Investors with actual business plans are taking over. It’s very interesting to watch!
2. Roberta Murphy said at June 14th, 2011 at 5:19 pmKristal: Connections could probably be drawn between Prohibition and legalization of medical marijuana usage. Eventually, alcohol production and distribution was pretty much taken over by big business with government taxation and control. Would not be surprised to see the same happen with cannabis production and distribution.Just imagine: Budweiser Buds, Marlboro Munchies…Who knows where this will lead?
3. Kristal Kraft said at June 14th, 2011 at 7:21 pmRoberta you are so right! The tax increase from medical marijuana sales here in Colorado has been significant! No doubt California is experiencing the same benefit!
4. Roberta Murphy said at June 14th, 2011 at 7:51 pmKristal, I don’t think California is really benefiting from marijuana taxes, most likely because they haven’t determined whether it’s a prescription drug or something else. I’m not sure, but it seems Colorado has state-administered rules and a PLAN for taxation. California should study Colorado and how it handles medical marijuana taxation. Would imagine the income is significant–and that is something CA desperately needs!
5. Gena Riede said at June 15th, 2011 at 3:43 amAmazing the medicinal help and different varities as well as numerous ways the cannabis plant can be injested. Had I not received the calls, I’m not sure I would have taken the time to learn about mariguana.

This week we are so honored to have Tucson Realtor Dave Smith visit our San Diego real estate site and share his treasured perspective:

Is the Grass Always Greener?

Well,  in this case it is.  The grass is always greener on the other side of the Rockies.  I know I’m supposed to be writing an Ah Ha! insight into the Tucson Real Estate market in 2011.But honestly,  It’s pretty boring.

I’m following the market and provide a snippet update on the Closed transactions in the Tucson MLSsystem a few times a week for my regular readers.  Things aren’t as bad as they were a couple of years ago.  There are a lot of differences between then and now.  I’ll focus on two differences that stand out in 2011.

REO’s Stopped Selling “As Is”

The largest number of homes sold in Tucson each month are REO homes.  Yep, the banks own them. In 2009 those transactions accounted for about 17% of total sales.  Now they are about 50% or more each month.   They made a lot of rookie mistakes in the beginning. (They are still making them, just not as many or as fast)  One of the biggest mistakes they made was selling off their foreclosures “As Is”.  You see, they didn’t really think this through.  Then one day a light bulb went on and they suddenly realized what a big mistake “As Is” was.

Everyone else in a community knew the first time one sold.  They knew that when it comes to property appraisals there’s no distinction between a foreclosed “trashed” home that sells and their home that has been well maintained with TLC.  Unlike automobiles where there are “flood cars” and there are regular used cars.  No one buying or selling cars would consider the two together; but not so in real estate.  They are all lumped into one big pot for the purpose of appraisal.

Here’s the lights coming on experience.  The bank now owns 3 homes in a community.  Last year they sold 4 homes in that community “As Is”.  They were trashed, and the bank just wanted to “unload” them and get them off the books.  This year the 3 they have are in good condition.  And they have learned to come in and have those homes inspected, appliances replaced and in most cases have the homes in good working order.  But they can’t really get what they would hope for the homes.  Why?  because they won’t appraise.  Those 3 homes they sold “As Is” last year, well under market are now skewing the values in the community.  Ah, Ha!

Last year they were hurting the resale market in that community for home owners.  This year they have ruined it for “THEMSELVES.”  And no one thinks the foreclosures are going to stop any time soon.  Slow down, sure, but stop . . . we are a ways from there.  Fixing up homes, getting them ready for market, keeping the utilities on for inspection, all the things a typical home owner does to entice the highest price for their home is now what the Banks are finally beginning to do.  How long will it take . . .  stay tuned.

Cash, Cash, Cash

Even with near record low interest rates, people feel betrayed by banks.  Why?  BECAUSE THEY WERE BETRAYED BY BANKS!

Cash wins by half a length!

They don’t want a mortgage.  They want it own the home and be done with it.  No monthly mortgage payments.  No wondering if they will have some bank “Foreclose” on them even if they are making their monthly payments on time and have never missed a payment.  Yes, that is happening, NOW!

No need to risk some paper pusher at a bank putting the wrong address on a piece of paper or a file and suddenly one day the sheriff is on your door step and you are being evicted.  Cash, no monthly payments.  Cash, no Snidely Whiplash to fear.  Cash, cash, cash.

No future interest revenue for the bank on these 439 homes.  The buyers bought them and that’s exactly what they end up paying for them.

Those are two big difference in our real estate market in Tucson.

So, let’s talk about grass (the kind you mow).  I’ve been a year getting my back yard ready for “grass”.  When I moved to Tucson two things I happily gave away.  My snow shovel and my lawn mower.  Now 11 years later, my strong desire to see green grass has out weighed my dislike for mowing.  I’ll gladly water, fertilize and remove weeds.  The new bermuda grass seed I spread two weeks ago is now up and growing.  My backyard is going from brown to green.  From dead hard dirt to a living growing sponge which holds water for the aquifer instead of running it off the barren ground.

It took a lot of prep work.  A lot of planning, sweat, preparation and hard work, but finally, I’m seeing results.  I’m seeing a green future.  It’s been awhile coming, and the grass isn’t the same blue grass we had back in Iowa.  But it is growing in the environment we have.  There are lessons to be learned about real estate today from growing grass.  I’ll leave you to figure out what those are.  Thanks for reading.  Have a great week.  And if you are out mowing, and smelling that great scent of cut grass, remember there’s a guy in Tucson that can’t wait to smell it himself.

Comments

1. Gena Riede said at May 31st, 2011 at 3:56 pmFabulous! Dave does such a great job and I enjoy reading him. Such a sense of humor and what can I say…right on with the banks. It’s come back to bite them in the butt. Amazing how they did not see this coming!!
2. Kristal Kraft said at May 31st, 2011 at 4:23 pmGreat observations by Dave regarding the “as is” sale of reo’s. Sadly banks didn’t learn from our real estate cycle of the 1980′s. Of course the downturn then was much different that it is now, but the end result is the same. Values won’t go up until we sell off the inventory. We aren’t going to sell it off until it becomes so attractive to investors and regular folks that they buy it.