Foreclosures.

What? Where? How much? Any headline with this word automatically draws attention. So, the news keeps pumping it out. Articles and articles about foreclosures, what they are, how to avoid them, where to buy them, and so on, and so forth. 'Bargains', 'deals', 'discounts', are some other stop words, that get readers to do just that, stop. So amidst all this foreclosure frenzy, I thought I would take a moment to say, stop. Step back. Analyze, and take each news clipping and sound bite with a grain of salt, because although it's happening, there's more to the market than just those few and tired words

etcList
US foreclosure filings surge 48 percent in May (AP) [I figured it would only be appropriate to top the list with a foreclosure headline]
Wachovia shares fall to lowest since 1992 (Reuters)
Property-flipping rule suspended (CNNmoney.com)
6 real estate bargains (Fortune)

theMarket
Wall Street ends turbulent week with sharp gains (AP)
Dow +1.37% ][ Nasdaq +2.09% ][ S&P 500 = +1.5% ][ 10YrBond +1.33%

How to Sell in a Buyer's Market

Buyers are out there looking for deals. Left and right, buyers approach me with these words pouring out of their mouths. It's their time, so they want to take advantage. This tends to discourage sellers or would be sellers from doing what is necessary to correctly sell their home. Granted there may not be a correct way, but from what I have seen in Pasadena (and surrounding areas), is that the homes that get multiple offers, the ones that get picked off the market within the first month (or even first week), have a few things in common. Actually, one thing, price. They are well priced. Now this may mean something different from location to location, but whether the house needs work or is shiny and new, pricing under market value (typically around 10% below) gets the blood rushing in buyers. When they see this, they jump, and if enough jump, the possibility of selling it for the actual market value increases substantially. This is contrary to what most sellers think. Their automatic reaction is to price a property above market value, because they expect buyers will throw low ball offers (which they are, but it depends on which property). This rather does the opposite, deterring buyers from even putting offers, letting the property sit and lose momentum, and eventually just chip away slowly at the price until someone bites. I pass these words on to you, from the halls of my office. "you can never under price a property, but you can overprice it." The rest is up to you (Coldwell Banker Official Says Pricing Strategy Getting Homes Off Market, TBO.com)

etcList
PCC makeover moving along (Pasadena Star News)
AIG shareholders demand board changes (Reuters)
Banks giving short-term help to mortgagors (Reuters)
How HUD Mortgage Policy Fed The Crisis (Washington Post)

theMarket

Stocks tumble as oil prices surge; Dow falls 205 (AP)
Dow -1.68% ][ Nasdaq -2.24% ][ S&P 500 = -1.69% ][ 10YrBond -.63%

105% Financing, Lenders are Having Trouble Learning Their Lesson

Most of the lenders we deal with have typically said the same thing, "you'll be hard pressed to find anything under 90% financing (10% down)." Aside from FHA loans, which we have been seeing (making it possible to achieve near 100% financing, if you qualify). Granted these Freddie Mac and Fannie Mae loans have some strict pre-qualification standards, but whatever happened to the good old 20% down. Here in Pasadena, home prices are higher than the national average, and the cost of living is quite high as well, so people have trouble saving up for that down payment. That is understandable, but buyers need to take some of the responsibility here, and do their home work, make sure they can afford the property, and not over extend themselves. So yes, the 105% financing by these wonderful lending entities can be quite seductive, don't jump the gun, you might end up finding yourself where you never thought you would be, in default (Mortgages With No Money Down Still Available, Washington Post).

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More financial land mines ahead (CNNmoney.com)
Housing crunch, 90210 (CNNmoney.com)


theMarket
Wall Street ends mostly lower on economic worries (AP)
Dow +.08% ][ Nasdaq -.43% ][ S&P 500 = -.24% ][ 10YrBond +2.68%

Is it Negotiable?

It was another beautiful weekend here in Pasadena, perfect for taking a nice drive around and visiting some open houses. Which many people did, and are doing. Of the questions I get asked throughout my day (predominantly in open houses), one of the most recurring is, "do you know of any good foreclosure?" The actual foreclosure part isn't what is good, rather the expected discounted price, which is not necessarily the case every time. It tends to be more of a sensationalist tactic from the media, but still one grounded in truth. And although there are many more foreclosure properties (both short sale and bank owned), they are less prevalent in Pasadena and surrounding areas (depending on your where you are). So ultimately, I encourage clients to look through all listings, and to not only focus on foreclosures. There are many other things that can help you negotiate a better price when writing an offer (days on market, conditions, etc). But, if you do want to search for bank owned, here is a great place to do it: search BankOwned

Part of all this is also an increasing willingness of buyers to do work on a property. This can help bring the overall price down significantly, by getting a home that needs some care at a nice discount then putting in the time to get the work done themselves (Not to worry those of you who fear the DIY. You don't have to use a hammer, you can get a contractor). Here is a little story of how a couple created a lovely kitchen with a little hard work and some determination, all for $6,000 (We redid our kitchen for $6,000, This Old House Magazine).

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Pending home sales up 6.3%; prices seen falling (CNNmoney.com)
FHA chief warns on Congress housing rescue bill (Reuters)
LandSource files for bankruptcy (CNNmoney.com)

theMarket
Stocks finish widely mixed after Friday's sell-off (AP)
Dow +.58% ][ Nasdaq -.61% ][ S&P 500 = +.08% ][ 10YrBond +1.37%