This is the ForeclosureRadar chart for all of San Mateo County foreclosure filings for the past 12 months and you can see the Notice of Default (NOD) and Notice of Sale (NOS) are almost equal.  Unless your head has been in the sand, you’re likely aware that the major banks stopped issuing NOD’s several months ago because of Robo Signing issues.  These issues aren’t totally cleared up the the major banks are gearing up to send out the notices in 2011.  So hold on to your hat when the flurry of NODs hits the mail.  It will be a storm of activity.

Now let’s look at the same data for  the city of San Mateo. It looks a little different than the County’s data.  More activities here but there are NO deals. Those are gone.  You can buy a foreclosed property in San Mateo under market price but not dramatically so.  The banks want to see these properties listed near to market so they can recapture as much of their losses as possible.  One really can’t blame them as they’ve lost billions of dollars due to the stupid  lending programs they pushed, can one?

What this chart isn’t showing you is that there are currently 46 properties in foreclosure in San Mateo, 134 properties that are going to go to auction sometime soon, and 136 properties in pre-foreclosure (those receiving NODs).  These are the hidden numbers for the City of San Mateo today, 450 properties that may show up for sale by banks.  I use the word may because some will find funds to pay the bank back and some will sell on the market before the bank forecloses. These properties are in all of the zip codes for the city of San Mateo and are comprised of condos, townhouses and single family houses.

San Mateo,CA – Foreclosure Filings

Let’s take a look at Burlingame and Hillsborough data.  The two towns are combined because they share the same Zip code and ForeclosureRadar’s data is zip centric for this chart.  NOD’s are up over sales by November 2010.

Now for the hidden numbers for Burlingame and Hillsborough.  Burlingame has 5 foreclosed properties, 22 going to go to auction soon, and 21 in pre-foreclosure, for a total 48 distressed properties.  Hillsborough has 3 foreclosed properties, 11 going to go to auction soon, and 7 in pre-foreclosure, for a total of 21 distressed properties.  In Burlingame there are a few condos in this total but mostly single family homes.  In Hillsborough, all are single family homes of substantial size.

94010 – Foreclosure Filings

Finally, let’s not forget Foster City. It too has had activity this past year.  NODs are up but NOS are down.  For the moment that is.  Foster City has 8 bank owned  properties, 26 going to go to auction, and 39 in pre-foreclosure status, for a total of 73 distressed properties. These properties are made up of condos, townhouses and single family houses.

The big question is what’s coming.  We know of Shadow Inventory, a term for houses that have been foreclosed and are bank owned but not on the market.  The banks are holding them off, for some unknown reason.  Perhaps it’s the same reason they’re giving for making lending so impossibly difficult today.  We also know that prices for the bank owned properties are going up from last year’s incredible bargains.  If you are an investor and have cash, you might do okay, and something pretty good deals.  If you’re the average buyer who still needs a loan, should you try to buy a bank owned rather than a short sale?  I’d go for the short sale right now.  Those prices are generally better, you negotiate with the owner and not the bank but you must be patient and be willing to wait it out for the bank to approve the offer and if there are more loans on the property than the mortgage expect it to take even more time as the listing agent must negotiate with all banks connected to the property.  It can be a great way to get a property under market value today.  As for tomorrow and 2011, my crystal balls are a little cloudy today, like the weather.

San Mateo County residents who are under water today have an additional problem to content with because banks aren’t being forthcoming with us.  Are you wondering why you can’t get your loan modified?  Are you wondering why every time you call they can’t find your file?  What  about the voices of the people you’re talking with, do they have strong accents making it hard for you to sometimes understand them?  There’s a reason this is happening and it’s not to help you, but to help the bottom line of your lender. These people you’re trying to talk with don’t live and work in the US, they live and work off shore, mainly in India, but also in some other countries, too.  The worst offender doing this is Bank of America but they’re not alone as most of the major banks are doing the same thing. They are doing this to save money but according to year end reports, almost all banks made record profits last year and off-shoring added to their profit line.

The only bank NOT doing this is Wells Fargo, who incidentally only uses US citizens and doesn’t consider off-shoring as an option.  Thank you Wells Fargo.

Right now the bankers are sitting and testifying in Washington about their obscene bonuses and this should become a part of that discussion.  These banks aren’t out to help you, they’re out to help their bottom line.  If you don’t like this, call Jackie Speier’s office if you live in her district, or your own Congressional Representative where you live.  Then call your US Senators and complain loud and clear that this must stop.

I believe the only way to stop it is to write a law prohibiting off-shoring for all banks. No matter what you are told about privacy laws,  they don’t matter outside the continental United States boarders.  You are, as they say, up a creek without a paddle should your information – think social security numbers – get lifted.   Our laws only count within the continental US border and not in another country.  This won’t stop unless we make it known.  Will you help me with this?

When Buying in a Buyer’s Market here’s What to watch out for.

So you are a buyer in a buyers market – what an excellent time to be in the market to purchase property!  Inventory is available and sellers are looking for you, however there are still items you need to watch out for to protect yourself and to make the most of your home-buying investment.

Just because it is on the market doesn’t mean it is for sale!

This can be a difficult concept for many buyers to understand but should be one you are familiar with.  While foreclosures and short sales are a great way to purchase property at below market value, the reality is that unless a qualified agent is handling these properties the chances of closing go down considerably.

When looking to purchase a short sale or foreclosure you should discuss the following with your agent:

Multiple Contracts – When you are purchasing a home and put it ‘under contract’ you should be the only buyer pursuing that property.  If the listing agent will be submitting your contract as one of many, to the lender or even worse signing multiple contracts, you are in essence entering into a blind auction for real estate.  Unless you are an experienced investor, this is likely a situation you will be uncomfortable in.  Think twice about whether you wish to be in a bidding war when you hear this is happening.

Inspection Allowances – Regardless of what type of property you decide to purchase you need to make certain you have the right to have a professional fully review the property and report to you their findings.  This is critical.

Submit a Strong Contract – treat a short sale or an REO like and other contracts and put your absolute best offer forward.  If you truly want to purchase the property in question make your offer count.  The days of low-ball offers are over.

Pre-Qualification is More Important than Ever

In today’s market any seller will want to see that you are a strong buyer and have been fully pre-qualified with financing.  You will want to meet with at least one (if not two) mortgage brokers or lenders to get pre-qualified.  You will want to make certain you are comfortable with:

• The Mortgage Program
• Your Monthly Payment
• Any Projected Payment Increases
• Payment or Interest Rate Adjustments and Time Periods
• Laying out a financial strategy prior to finding a home allows you to confidently target homes in your price range.

Hire an Educated Experienced Agent

A short sale or foreclosure purchase is not a typical real estate transaction.  They can be difficult and come with their own specific challenges however the right agent can help guide you through  this process and help you purchase the property you are looking for.  You need to have a well trained agent such as a CDPE (Certified Distress Property Expert) who has taken hours and hours of specialized training to assist you, and you need to look no further than here, as I offer this designation and background for you.  My contact information is to the right of this post and you can reach me by phone or email.  I’m here to help you through the purchase of any distressed property you see out there.

Continuing from the article I wrote last week about the 7 Most Dangerous Short Sale Myths, here’s the last 3 for your education.  I am here to assist you in helping you prevent a short sale of your property.  But if it is necessary to go that route, let a CDPE expert help you.

5. Listing my Home as a Short Sale is an Embarrassment

It is understandable that you may have reservations about letting the world know that you owe more on your home that it is worth however, understand that according to recent estimates, 1 out 5 homeowners in the US is in this situation.

With 40 to 60% of the sales in the US predicted to be Short Sales or Foreclosures you are not alone.

6. The Banks Would Rather Foreclose than Bother with a Short Sale

We know you have heard this; you may have even heard it from an overzealous collection agent working for a lender.  The reality is that banks do not want to foreclose on your property.  Banks, investors and even the federal government have all publicly said that if a person is qualified for a Short Sale the deal needs to be considered.

The qualifications are:

A.   Financial Hardship – There is a situation that is causing you to have trouble affording your mortgage.

B.     Monthly Income Shortfall - You have more month than money!  A lender will want to see that you cannot afford or will not be able to afford your mortgage soon.

C.    Insolvency - The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

7.         There is not Enough Time to Negotiate a Short Sale before My Foreclosure

This is a myth that probably hurts homeowners the most.  Many don’t realize that foreclosure is a process and there is time.

The foreclosing party (in most cases a lender) can stall a foreclosure up to the final day of the process.  These days many lenders will stall a foreclosure with as little as a phone call from you letting them know that you are trying to sell.  Almost all lenders will stall a foreclosure with a legitimate sales contract, in our view there is time until the foreclosure process is complete.

If you need more information, call or e-mail me today for an appointment to see what options you have and get on the path to recovery, there are options and I can help!

Come back next week for more information on Short Sales and Distressed properties or simply subscribe to our Blog.

Don’t let one of these dangerous myths land you and your family in Foreclosure

A short sale can be an excellent solution for a homeowner who owes more on their home than what it is worth and has to sell. Unfortunately a number of myths about short sales have developed and is important you understand the reality of this process if this is a solution that you feel meets your current needs.

1. Short sales are Impossible and Never Get Approved

Nothing could be further from the truth!

Are short sales more difficult? YES

Do you need to learn a new process? YES

Are they impossible? NO, NO, NO

I am a Certified Distressed Property Expert (CDPE) who has undergone extensive training in helping homeowners in distress and processing short sales. The CDPE membership organization nationally is made up of agents who receive thousands of short sale approvals on a monthly basis – don’t think for one minute this is an impossible process. While there are no guarantees in any transaction, more and more short sales are being approved monthly.

2. Banks are Not Accepting Short Sales; They are Waiting on a Bailout

Really? You may have heard this; the reality is that banks (and the government) are trying to do anything they can, within reason, to avoid foreclosing on property. To think that they would deny a Short Sane in hopes that some future legislation will pass and pay them for their loss is preposterous.

The reality is that more banks are aggressively pursuing Short Sales and agent (like me) who understand how to process them. Freddie Mac recently hosted a national webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale”

3. You Must be Behind in on your Mortgage in Order to Negotiate a Short Sale

While it is true that initially some lenders wanted you to be in default (missed a payment) before they were willing to consider a short sale – this trend has almost all together reversed. Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.

If you meet their three requirements and are in a position where you will soon not be able to afford your mortgage, act now! Don’t wait until the countdown clock to foreclosure has started and you have even less time left.

4. Buyers are Not Interested in Short Sales and Avoid Them

This is a myth that potential sellers here all the time – thankfully the reality is that today it is not. In fact many agents are getting calls from buyers who say “I only want to look at Foreclosures and Short Sales”

Short Sales and Foreclosures have become synonymous – not with issues – but with GOOD DEALS. International buyers specifically are interested in these properties. If you list with an educated CDPE agent such as me, you have a very good chance of seeing a contract on your property, soon.

Come back next week for Myths 5, 6 and 7 or subscribe to our Blog

For Sale by Auction

In today’s San Francisco Chronicle real estate section there were a lot of
ads for auctions for foreclosed houses and this is probably just the
beginning of this kind of thing.  Are these auctions a good deal?  Can you get a real bargain?  If you don’t know the term Caveat Emptor, you should.  Be careful since you don’t get the chance to inspect these houses prior to the auction.  Sure the address of the house is listed but you can’t get inside to inspect
it.  You might get a great buy that costs you as much as you originally paid for the house in repairs.  Poof, no longer a great buy.

Buying a house in foreclosure might be a slippery slope so make sure you understand all of the possible obstacles and have enough cash in the bank to cover any and all repairs.  Some people really tear up
their homes in anger when they lose them and there is no way of knowing that the plumbing has been damaged or there’s no furnace because it’s been pulled out.  Sure you might be able to peek into a window to see some of the house, but you can’t really see much.

If you want to consider purchasing a house in foreclosure, buy a bank owned property (BPO).  The price won’t be rock bottom, but you will be able to have a Realtor represent you in the purchase.  A good Realtor will guide you through the process making sure all inspections are done prior to your close of escrow.  That way you will know what might need to be repaired before you move in.

San Mateo County has been pretty lucky in escaping some of the large numbers of foreclosures that other counties in the bay area are experiencing.  We are seeing them in North County; Daly City, Pacifica, parts of South San Francisco, parts of San Bruno, parts of San Mateo, parts of Redwood City, and East Palo Alto. We are not seeing them  in Millbrae,  Burlingame, Hillsborough, most of San Mateo, Foster City, Belmont or San Carlos.  The prices in these cities are not dropping.  They are still sought after and there are still too few houses available for the people who want to live there.  This will not change until more people want to sell their houses and move.

What is a Short-Sale?  It is a sale of property where the owner owes more to the bank than the property is worth on the open market.  We are seeing the majority of these sales today in areas where there was predator lending practices taking place.  And, unfortunately, these predator lending practices often took place against immigrants.  People with fair income, some debt, but poor English skills who were placed into negative amortization loads that they did not understand.  They were placed in loans with sucker rates — you know the kind — 3% for the first 90 days, and then the rate escalates upward.  Some of those loans escalated up to 7 or 8%.  Some of the people caught in this net find themselves owing more each month on the loan to their house, than they take home.  So, they go to their bank for help and try to sell the house before it goes into foreclosure.  Most lenders are willing to work with the people caught in this net and have their Realtor’s go through many hoops preparing a home for market, pricing the home with the help of the bank, and then hopefully, selling the home.  The bank is in the middle of the process from the beginning because they want to get as much money back on their bad loan, as possible.  But, sometimes things don’t go smoothly for someone trying to buy a house with a short-sale.  Sometimes, even when everyone has done what they were told to do, the bank decides to foreclose and that’s the end of your hopes in buying a home under market.

Your next question should be:  Is buying a property through a Short-Sale a good deal?  Maybe yes, and maybe no.  It is a roller coaster ride for sure because you can do everything you’re told to do and find out that you won’t get the property and you have no recourse against the seller because the seller is the bank that makes the rules that we have to play by. Therefore, they can change the rules any time they like.  And they can and they do. But, if you’re lucky, you can (drum roll, please) get a deal.

So, if you decide to try to buy a home that’s “under water” be aware that you will be asked to do things differently.  You will need to have your loan or loans taken out through the selling bank.  If you’re a risk taker, it could mean the way to buy a home in our Fantasy Island, for less money than your friends spent for a similar property.  But, you must, must, must be a risk taker.  For your agent, they just hope that they get paid in the process because the bank holds all the cards — from pricing the home, to commissions.