Tuesday, September 29, 2009

Sold! Fabulous Townhouse in Willow Glen

We just closed escrow today on a wonderful townhouse that we had listed in Willow Glen on Delbarr Court! Offered at $549,000 and sold for $545,000. If you want us to sell yours too, please call.

Kohl's Opening 37 stores tomorrow - Mervyn's death yields Kohl's expansion

In 2003 Kohl's - based out of Wisconsin - opened 28 stores in California. A market that any retailer would want to be in. This was made possible by the bankruptcy of KMart. Kohl's bought the leases through the bankruptcy court at a discount and in bulk. Late last year, Kohl's successfully bid on 30+ leases that Mervyn's had at that bankruptcy auction. Now, tomorrow, Kohl's is having a mass grand opening expansion of 37 stores - most in California. This is a good sign that there are still good fundamentals in retail amidst all the retail store closures recently. If you can buy a discounted lease and have decent retail sales of mass market appealing wares, you can be profitable. Kohl's further steps in to the battle with market segment leader Target - who had owned Mervyn's until 2004 when it sold to a private equity partnership. Smart move Target! And perhaps a better move for Kohl's - we shall see...

Monday, September 28, 2009

Real Estate Market Segments and Good Moves

Common thought in the housing market is if you are selling a small home and buying a bigger home in the same market (let's say the South Bay) or doing the opposite by downsizing - then it doesn't matter if the market is a soft seller market or a hot seller market. High or low - you are simply trading across - a la the tide raises and lowers all boats...

True in a "normal" market. But is any market "normal"? And really - this market is not that at all. Because of specific abnormal issues affecting the market (lack of good first time buyer financing, REOs and short sales in abundance, decent financing for homes <$700,000 and ugly financing for anything above $1M, the condo market suffering HOA funding issues and lenders shying away from lending in those complexes, etc.) The market is segmented in ways that will allow certain buyers/sellers to gain over others.

The typical trade up buyer selling a small single family home or a townhome with the right criteria in the sub $700,000 range (that is not a short sale) will attract great buyer interest and sell at a very good price. That same client will also benefit very well as a buyer in the over $800,000 range due to a lack of buyers in that market and significant softness from REOs in certain areas (just look at what you can get in Evergreen/Silver Creek Country Club areas for $1M+ - VERY nice housing.

Every market has it's ideal moves, this market has ideal moves that are super-charged because of these highly unusual factors.

Friday, September 25, 2009

Loan Mortgage Update 9-25-09 from Tony Guaraldi

The Fed held the short term Federal Funds rate steady at 0.25% this week which was no big surprise. They will likely keep the short term rates low for several more months. One key piece of news from the Fed meeting this week that everyone was waiting for is their policy on the purchase of mortgage backed securities from Fannie/Freddie. They said they will extend the program through the end of March 2010. However, they will not increase the amount of dollars they will spend on the program. Instead they will slow down the frequency and volume of their purchases to allow the program to last longer. They committed 1.25 Trillion dollars for this program earlier this year, and that dollar amount has not changed. It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher…most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise.

The funny thing is the bond market had a good day on this news and continues to be in rally mode today even though the Fed did not commit any additional dollars to the program. Most likely the reason is because the headline with the word “extended” gets the people excited and the market reacted to it. In actuality it is likely that the gradual reduction in purchases will bring rates higher and produce more volatility! Rates will be on the rise soon and any delays by consumers will likely result in higher mortgage rates. I would expect that the average 30 year fixed mortgage rate will be in the low to mid 6% range by end of Q1 in 2010, and I expect a gradual rise to get there over the next six months.

Well as a result of this week’s Fed announcements and other negative economic reports rates are looking better than we have see in the past several months! Great time buy a home, great time to refinance, great time to get moving!!!

Tony Guaraldi
Mortgage Consultant
Intero Mortgage

Wednesday, September 23, 2009

Wachovia or Wells Fargo loans in default? Let's talk short sale

Wachovia bank which has approximately 25% of it's loan portfolio in default status has a very aggressive stream lined process for short sales. They are processing short sales within 10 business days of a ratified offer being submitted to the bank. Their intent is to eliminate the possibility of a future foreclosure which will cost everyone more money. Wachovia's process (which was taken over by Wells Fargo) has proved so successful that Wells Fargo is considering the use of the Wachovia short sale team to handle the Wells Fargo defaulting loans too. I wish all banks get to this state of proactive loan processing. And if you know of anyone with a loan in default (or sometimes not even in default) and they are upside down in their home, have a true hardship (now or in the future) and want to consider a short sale - call me - we can evaluate the situation and very likely provide a solution.

Tuesday, September 22, 2009

Single Tenant NNN Family Dollar Store for Sale

Just listed is a Family Dollar store in Akron, Ohio. Amazing pricing on this solid investment property. 9.0% cap rate at a $737,733 list price. Corporate leased store by a company that is doing very well in this current economy. Over 8 years left on the lease. Corporate tenant pays for taxes and insurance. The store had $1,350,000 in sales last year. $52,000 average household income in a 5 mile radius with 240,000 population in that same area. This is a wonderful investment and amazingly priced.

Now - why is it so well priced? There is a lack of 1031 exchange buyers in the market since last year. This typical single tenant net leased investment would have sold to a west coast buyer who was selling his single family rental house with $400,000 in equity. Now that same rental home has $100,000 in equity - not enough to do an exchange and with that same house rented - why sell now? The buyers went away for the low price point NNN deals - and of course that affects the chain going up to the larger shopping center investments.

This is a great opportunity for someone with cash on the sidelines or an investment property in the right location that has not lost it's equity in the last 18 months. This same Family Dollar store will sell at a 7.5 cap rate in a couple years when the market solidifies. Very good deal indeed!

Monday, September 21, 2009

3 REO Bank Owned Office/Warehouses San Jose

1198 N 4th Street @ Hwy 880 - 12,650 square feet, on .46 acre fenced lot, space can be divided into 4 units. Approximately 50/50 office & warehouse in current configuration. Offered at $1,125,000.

6150 Hellyer #100, commercial condo, 6,093 square feet, built in 2006, shell interior, gorgeous commercial park at the south end of Silver Creek Valley County Club area. Amazing price per square foot for new product. Offered at $700,695.

1939 Monterey Hwy, three side by side commercial office condos. One is plumbed for 2 bathrooms. $295,000 for each unit. Very near The Plant retail mega-center.

These are three outstanding bank owned values in San Jose. Call us to tour.
Mario Pinedo, CCIM 415-269-6249

Thursday, September 17, 2009

Cupertino Schools Bank REO Condo $278,900!

Newly listed Bank of America REO condo on Auburn Way in San Jose with Cupertino Unified School District, 2 bedroom, 1.5 bath, two story townhouse style condo, 1099 square feet - offered at $278,900! Great deal. Hurry. Two offers submitted as I write this. Although property is still available.

Tuesday, September 15, 2009

Condo Complexes in a World of Hurt

Perpetuated by rampant special assessments by Home Owner Associations that were never funded sufficiently, lenders are shying away from lending on these properties. FHA is currently revising it's guidelines with respect to "approving" certain condo complexes. The current situation is there are certain condo complexes that were built to FHA approval specifications. The one's that did not go through this process (most in the Bay Area because prices were way above what FHA would lend) had to get "spot" approvals. This took weeks and made FHA loans on these complexes far less attractive. Now it looks like all complexes will not have FHA approval and all will be required to be spot checked - ughh!!!
FHA was the one source for low down payment loans on condos recently - at 3.5%. Otherwise at least 15% down for conventional loans. If FHA becomes far more difficult to use, then far fewer buyers will be buying condos - not a good sign for a market that is already soft due to all the REOs and short sales.
Financing is key - and the single family home market is relatively firm because financing is readily available.
Is there an opportunity in the condo market - absolutely yes - but when, that's tough to say.
One complex is so underwater on Technology Drive, that listing agents are suggesting cash offers only!
That complex is 5 years old, had sold at prices above $500k for 2 bedroom units, now units are offered at $249,000, and many of the units are rentals, which is another major deterrent to lenders. Add the potential of a special assessment or HOA litigation and you have a true nightmare. Beautiful property too.

Monday, September 14, 2009

Appraisal Law Taking Values Lower

Ever since the new appraisal regulation came in to effect, it has made a significant impact on the value of homes. The law was enacted to place a separation between lender and appraiser. It was thought that an appraiser may be beholden to a specific lender who routinely gives them business. Some appraisers needed only one lender to fill their book of business. Can there be influence in a situation like this? - of course there can. Can lenders push appraisers to come in with appraisal values at or above the contract price? It doesn't seem unreasonable that this occurred.
What is happening now is perhaps backlash or maybe it is an adjustment to the right level or maybe it is a pendulum swinging way past where it should rest.
Lenders and Realtors now are at the mercy of an appraisal. These are normally completed a week or so before the purchase transaction is due to close. Now, we are crossing our fingers that the price comes in at or above the contract price (worsened by overly cautious appraisers and bank REO comps that sometimes are the only comps) and the conditions spelled out in the appraisal are not deal killers (examples - repair all termite work including Section 1, Section 2 and Further Inspections and repair/replace any and all items that the appraiser found faulty - remember we are selling homes that are 10-90 years old and then some).
How does this affect pricing? Easy - deals fall apart when a seller thought he had a home sold at a certain price and with certain repairs/costs to be absorbed. Now a week before closing, the seller is required to do major work to the property - sellers tend to object, buyers do the same and then deals fall apart. This means more time on the market, more inventory, more Days On Market, and eventually lower prices.
Was the law effective - yes - was it overly effective - probably yes too. If a lender is going to lend a home buyer a few hundred thousand dollars to buy a house - should that lender not be able to pick a trusted professional to appraise it's risk - I think so. Can this process be flawed - of course - but for a true laissez-faire believer - this is best. Ah well, we shall see how this plays out in the next year.

Sunday, September 13, 2009

Open House Short Sale Townhouse Willow Glen

Today from 1pm - 4pm. Come view this wonderful, updated townhouse near downtown Willow Glen at 2052 Delbarr Court off Malone and Bird Avenue. Check out the vitual tour then come see the real thing! $515,000. 2 bedrooms, 2.5 baths, two story, 1290 square feet. 1 car garage plus a one car assigned space in complex.

Monday, September 7, 2009

New Short Sale Townhouse Listing in Willow Glen


$515,000 for a lovely 2 bedroom, 2.5 bath, 2 story townhouse in a quiet and small complex in Willow Glen. Low HOA dues of $175 per month. 1 car garage plus an assigned open space. Great schools. Come to see this home on Sept 13th open house or sooner by calling me at 415-269-6249.

Thursday, September 3, 2009

Corole Rodoni Speaks to Intero About Housing

Listen to 10 minutes of Carole Rodoni's review of the current real estate issues of the day. She has been consulting and researching the Bay Area real estate market for decades and has always had great insight.