A Piece of the Pie

New CA home buyers offered mortgage payment assistance in event of job loss

While low prices and low interest rates have recently inspired more and more people to buy homes, some would-be buyers are still spooked by uncertainty about their job security.  The California Association of Realtors is attempting to address those fears and encourage more people to buy homes by offering to pay up to $1500 per month for six months toward the mortgage payments of qualifying new home owners who lose their jobs.  More information can be found on CAR's website.

Oakland Councilman to host foreclosure bus tour May 16, 2009

Last year I wrote about REO bus tours that brokers in Stockton were hosting. Larry Reid, council member for Oakland's District 7, has taken a page from these brokers' playbook and has brought the REO bus tour to Oakland. 

On May 16th from 10am to 4pm, Mr. Reid plans to send 200 approved buyers on a tour of the foreclosed properties that are on the market in his District.  I'm not sure from the e-mail that I received where this bus tour is leaving from or whether new "riders" are still  being accepted. However, if you are interesting in going on the tour, you can get more information by sending an e-mail to this address:  vregencycr@comcast.net

District 7 is extremely diverse. This East Oakland area encompasses some of Oakland's least expensive neighborhoods, which might be most appealing to investors, and some very nice areas of the east Oakland hills, foothills and the San Leandro border.  My guess is that investors will get more out of this tour than people looking to buy a home to live in, because the most desireable homes come and go so fast in Oakland that few are available at any given time.  They are requesting that agents submit properties for the tour right now. The best homes available now will probably be off the market by the date of the tour. 

However, there are some VERY inexpensive homes in the flat parts of District 7. I'm talking less than $100,000, rock bottom cheap! If you feel comfortable enough living in or investing in that area, there are definitely deals to be found.

In case you are curious, here is a list of all of the active listings in District 7 - http://MAXEBRDI.fnismls.com/publink/default.aspx?GUID=053abf55-56d5-4416-b054-b0fc288ac9e5&Report=Yes

When to consider a short sale...

My blog readers and clients know that I generally advise against buying short sales. Short sales are often problematic for a number of reasons, the price is often deceptive and interested buyers may wait two to six months for the seller's lender to make a decision about their offer with no guarantee that it will not just go ahead and foreclose or accept another offer.

However, banks are approving more and more short sales and there are some instances where a buyer might want to consider a short sale.  Some sellers have situations where they will have fewer problems getting short sales approved and sometimes, a short sale home will be the best option for a buyer.  Below is a list that may help you decide whether you should pursue a short sale. If all or most of the criteria below exist, you might want to try your luck...

1.  You don't have to move or be in contract by any particular date.  This is absolutely essential since, no matter what the listing agent says, lenders often take months to make their decision and there is no guarantee that the lender will even allow the sale to happen.

2.  There is limited inventory or intense competition in the area or type of property that you are looking for.  Short sales are less desirable so there will be less competition. Also, short sales stay on the market longer so they disappear from the radar of many buyers.  Because you are still working with a human seller (as opposed to an institution) and at this stage the bank is more worried about getting as much money as possible than making sure the sale sticks, buyers who can make strong offers but who are using FHA or who are unable to compete with investors or buyers with stronger financial credentials may have better luck with short sales.  On the other hand, if there are tons of REOs on the market where you are looking, you should always favor the REOs.

3.  There is one loan, one lender or the sale/price has been approved by the seller's lender. In these situations, the seller's lender will probably take less time to decide whether to accept your offer because, either, they are a few steps closer to making a decision or there are fewer of the hurdles (i.e. a second lender that stands to lose out completely) that tend to trip up lenders.

4.  The listing agent is experienced with short sales, has a reputation of being hardworking or responsive or has hired a company that will negotiate the short sale with the seller's lender on behalf of the seller.  Short sales require daily contact with the seller's lender. Banks are often dealing with so many short sales that their staff often ignore the ones that they aren't being bugged about.  Someone on the seller's side, the agent or someone hired by the agent or seller, should be on top of getting the bank everything that they need to make a decision and then pestering the crap out of their contact at the bank to encourage the bank to respond quickly. 

There are some advantages to buying a short sale property. Once the seller's lender accepts the buyer's offer, the transaction proceeds as a normal deal between a buyer and a seller.  It's a lot less harsh than buying an REO where the lender will try to shorten contingency periods and will threaten to levy financial penalties if the buyer requests extra time to close.  Also, because there is less competition, buyers will have more time to view the home and decide whether to make an offer and they may even be able to get a better deal on a short sale.

I wrote this article to let buyers know that all short sales aren't evil and aren't created equal.  It's important that buyers learn about this market and the situation of sale and how it will work their their situation before they proceed.