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| Orange County’s public infrastructure system has received a C+ but the region is still faring better than the nation, which earned a D, according to a new report conducted by a group of engineers and business leaders.The Orange County Leadership Symposium will unveil the 2010 Orange County Infrastructure Report Card tonight at the Costa Mesa Hilton. The study was produced by a partnership of UC Irvine’s Civil & Environmental Engineering Affiliates, the Orange County Business Council, and the Orange County Branch of the American Society of Civil Engineers.
This is the third time that local officials and leaders have collaborated on such a project – in 2005, the last time the report was conducted, Orange County also netted a C+. The region outperforms the nation for a number of reasons. The report cites freezing winter weather in other parts of the country that causes the systems to age more quickly; a younger infrastructure in O.C.; and a willingness to set aside funding for the development of projects.
Water supply and quality: More than half of the water O.C. relies on comes from the Colorado River and the San Francisco Bay Delta. The report notes that despite reservoirs, a major disaster could lead to an interruption in the supply. Plus, an increase in beach attendance, the population, and tourism has begun to make an impact on the region’s surface water quality. The report gave O.C. a B- for its water supply and a D for its surface-water quality, which includes beaches and water parks, saying the region needs to work with the state and federal governments to receive support on new projects. Flood control: These systems need to be continually upgraded in order to provide the highest level of safety for the public, but the report notes that it is a “challenge” to do so, especially during the economic downturn. “Current flood-control funding deficiencies in Orange County for regional flood control facilities alone are in excess of $2.5 billion,” notes the report, which says that it is projected to take more than 90 years to upgrade the local system to be free from such problems. The flood control system garnered a C-. Electrical supply: The survey notes that recent rate increases approved by the California Utility Commission may not be enough to fund the needed work to replace and modernize the systems currently in place in the county and the larger region. “As the infrastructure continues to age, the potential exists for less reliable service.” The energy condition received a C+. Here’s a breakdown of the rest of the ratings: Aviation: B Ground transportation: B- Parks/Recreation/Environment: C+ School facilities: C+ Solid waste: B+ Wastewater: B Looking ahead, the report notes that local businesses and individuals can support the region’s infrastructure a number of ways, including conservation and reuse, and supporting key bond and fee proposals. “Without funding to maintain our infrastructure, the water, roads, electricity and other necessities of daily life may not be there at the moment you need it, or at the quality level you’ve come to expect,” notes the report. “Without it, the high quality of life that we enjoy here in Orange County will diminish.” Courtesy of OCMetro |
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Orange County infrastructure gets C+
Yet the county has three key problem areas: water supply and quality; flood control; and electrical supply.
Should She Worry?
I received a frantic calls the other day from a lady who came home to find a notice tacked to her front door. Her question was: “Should I be worried?”
Background:
According to the caller, her husband had stopped paying their mortgage in February 2009, but didn’t tell her until documents had to be signed by them both for a loan modification 2 months ago. Needless to say this put great strain on a long standing marriage.
The loan modification was started – or so they were told….. nothing was received in writing .
The document stated that the house was to be sold on the steps of the Courthouse on September 30th – My answer was short and sweet: YES, YOU NEED TO BE WORRIED, but she insisted that her husband had been told just that morning by the loan modifier, not to worry.
In a situation like this, the property owner should have received a running record IN WRITING, of contact that the modifier had had with the lender. After all, what proof do they have that the modifier has done anything at all? Based on the Notice of Trustee Sale, it would be a fair guess that little or nothing had been done and certainly nothing had been achieved. The home owner has the right to know what progress if any, has been made.
Another distraught home owner listed his home with me as a short sale, as he too had not made mortgage payments since February 2009. I was encouraged, due to the shortage of time, to engage the services of a short sale attorney. I was assured that neither I, nor the seller would have to pay for this service, being told that the payment would be “a line item on the Escrow statement”. This led us all to believe that the lender would cover the attorneys costs.
From the outset, this proved to be a debacle! The first person I dealt with didn’t keep me abreast of progress, and requested the same documents of me three times. Three times I sent the documents to him and finally asked my Title rep to contact him.
Having received no information for three weeks, I found that I had been passed to another person, who also relied on me calling HER! Five weeks passed, with only three successful contacts which revealed little or nothing.
Now, two months in, I learned from the attorney in a round table meeting, that if the lender refuses to pay short sale attorney costs, and the seller CAN’T pay short sale attorney costs, these costs would be tacked onto the BUYERS costs! This means that the buyer would be paying an additional 3% for the property! This fact had not been disclosed to myself, my broker, the seller OR the buyer!
At this stage, (as his deadline date was growing closer) the seller fired the attorney and I took over the negotiations at no additional cost to anyone. From my very first call with the adjuster, I discovered that the lender had sent documents of approval to the attorney who had neglected to let me know DESPITE MY CONVERSATIONS WITH HER!
Three weeks after releasing the attorney, I received an abusive and threatening call from the attorney. When I tried to speak, he simply shouted over me – I hung up! My seller received a similar call, threatening him with a lawsuit.
What right do attorneys have to bully people, when they are guilty of lack of communication, lack of performance and with holding information? Sadly, this tactic usually works with the home owners because they are scared and confused, however it is at this time when they deserve understanding and assistance.
Home owners are falling victim to this sort of dealing, on a daily basis. It is ‘easy money’ for attorneys and fly-by-night loan modifiers – many of whom are attorneys. I don’t know what the loan modifier charged, but the short sale attorney would have charged 3% of the sale price, for making a few phone calls!
Although I couldn’t help the lady whose home was to be sold on the Courthouse steps, I did put her in touch with a colleague who arranged for FHA to take over. Once FHA steps in, there is a good chance that the auction process will be arrested, while they apply for a loan modification on behalf of the home owner. This is a free service.
—Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Exit Beach Cities Realty
Your House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
http://www.BuyCheapHomesToday.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Education Chairperson – 2009 (South County)
VP of Membership – 2010 (South County)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
Short Sale Sellers Self Sabotage
When a seller requests an agent to list a short sale, they are in effect asking us to help prevent them from going to foreclosure – they are seeking a dignified way to exit their state of default.
At the outset, the seller is easy to work with and willing to do what is necessary to market the property, by de-cluttering, and allowing the REALTOR® to paint and stage the property for a faster sale. The seller is also more than willing to allow agents and buyers to preview the home and to vacate the property during Open House days.
Having spent 4 days painting and staging, the once dingy house looked magnificent – clean, tidy and perfectly color-coordinated and everyone who viewed the house during that first month commented favorably. We got a SLEW of Offers!
What mental transformation takes place in the seller from the second and third month, resulting in the total sabotage of the sale?
- The seller leaves the house with socks hanging out of draws, toothpaste ‘spit’ in the bathroom sink, remnants of last nights dinner still on the stove top and dirty dishes in the sink
- The house has not been cleaned since the first day on the market, the dog has not been bathed in weeks and is stinking up the house and his promise to not smoke inside the house has clearly been broken!
- There are ‘things’ growing inside the ‘frigerator and the garden is overgrown!
- The seller says that it is not convenient for the agent to bring a buyer at that time (ANY time)!
When my seller and I had our ‘Come to Jesus’ talk, his reasoning was simple: “While you are out celebrating at the sale of my house, just remember that I have lost everything and have no reason to be happy!”
At this stage, both REALTORS® and buyers have become the enemy and the seller believes that if he/she cannot have the house, no-one will, but sadly, they don’t consider the alternative: Foreclosure, eviction and devastating effects on their credit.
As with any loss, a short sale or foreclosure comes with a grieving process for the seller/owner and REALTORS(R) need to explain this to them at the first meeting. They need to be advised of the various levels of grieving and that each level is followed by another, but that each level does pass. If they know this up front, they will be better prepared to handle it.
—Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Exit Beach Cities Realty
Your House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
http://www.BuyCheapHomesToday.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Education Chairperson – 2009 (South County)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
Selling Your Home Yourself
The following appeared in a Blog by a Texas company:
If you’re into Los angeles California Real Estate, and if you’re selling your home, be sure to get it seen by the masses for a quick sale.
Sometimes that means you’ll want to list it with a realtor, but be sure you’re still trying to sell it privately yourselves – that means you’ll want an exclusionary clause in your contract with your seller’s agent. This will allow you to “buy out” your realtor for whatever agreed upon price if you actually sell your home yourself.
Are you dealing with Santa Monica Real Estate? No problem, LAHomeSearch.com can help you sell your home quickly and they provide you with Seller’s and Buyer’s Resources.
* Tip: Nowadays, you can pay to list your house on the MLS and not use a realtor! How cool is that?
Also, if you’re selling your home, that likely means you’re also looking for a new home to live in.
LA Home Search still has all of your bases covered because you can search their Los Angeles Homes for Sale too!
Now, you know we advocate selling your house on your own, but there are lucrative ways that could help you in the sale of your home, especially if you simply don’t have any time to put into it.
However, still try to sell your property on your own, even if you do list it…again, just make sure it’s in your realtor contract that you can and have a pre-determined amount you can give your realtor if you do sell it yourself!”
Whether this clause is in your contract or not, your REALTOR(R) is under no obligation to assist you with the documentation or the Escrow, which leaves you doing all the work and taking all the risks, while still paying your REALTOR(R)!
In addition, during the contract period, the seller is not permitted to advertise the property as a ‘For Sale By Owner’ because he is legally contracted with a brokerage.
The best scenario, would be to include a clause that permits the seller to inytoduce buyers to the REALTOR(R) and that the REALTOR(R) take the buyer to fruition.
Remember, the REALTOR(R):
- is covered by E&O insurance – the seller is not!
- pays for and does all the marketing/advertising, Open Houses, signage etc
- keeps abreast of new law changes and scams
- is qualified at negotiations
- is knowledgable about the Escrow process, what has to be done and when
- knows what CAN go wrong and how to avoid it
Remember also, that the REALTOR(R) does this day in and day out. For the seller, this is a ‘sometime’ thing!
There’s a reason that selling property requires a license!
—Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Exit Beach Cities Realty
Your House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
http://www,BuyCheapHomesToday.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Chairperson – 2009 (South County)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
Buyers: Beware Unlicensed Agents!
When an agent receives a call requesting to show buyers their listing, the rules are simple:
1) Get the buyers agent name
2) Get the buyers agent Brokerage name
3) Get the buyers agent license number
With this information, we are able to grant permission for a buyers agent and his/her buyers to enter the property.
Such was the case with my listing last week and as expected, I released the combination code to the ‘agent’, granting permission for the buyers agent to take his buyers to view the property.
My seller called me about an hour later to say that the key, together with the front of the lockbox was laying on the floor in front of the front door, and HUGE RED FLAGS went off in my mind!
I immediately called the agent (Joe Chaides) asking if he was WITH the buyers at the time and his answer was “No, I’m in Bakersfield” – the house is in Long Beach! When I questioned him, he just hung up! A second call obtained the same result.
When I called the Brokerage, the Broker was unavailable (and the e-mail address I was given, bounced – I was also told that this Broker was away and did not have a cell phone!). I was told by a man at the Brokerage, that the agent in question did not work there anymore, so I ran a check on his license and sure enough, his license had lapsed!
What does all this mean?
1) That there is an unlicensed agent in Bakersfield, posing as a REALTOR(R).
2) The buyer/s that he represents, have no qualified advisor and therefore no legal recourse.
3) The Brokerage name that the agent used is ultimately responsible – Castita Realty, Inc
4) Good agents who work according to the rules and regulations of the DRE (Department of Real Estate) are likely to be judged according to this unlicensed agents unlawful behavior!
5) Both the Buyers and the agent are guilty of unlawful entry into a private residence – breaking and entering!
As a result of the above, I immediately had the sellers home re-keyed and a new lock box applied to the property.
It was abundantly clear to me that the man at the Brokerage had contacted the unlicensed agent because I got a message on my cell phone (a message that will be retained for legal proceedings) that clearly stated “I just received a call from the office…..” . Had this man not still been working for this Brokerage, his message would likely have said: ” a call from my previous office” or “a call from Casita Realty, Inc”, but to call that Brokergae ‘the office’, indicated posession and therefore, this unlicensed agent is STILL conducting business as a REALTOR(R) AND under the umbrella of Casita Realty, Inc!
I also still have the unlicensed agents phone message from the day before which states: “My buyers would like to see your listing at [address in Long Beach]” in which he admits that the buyer is HIS client! This message will also be retained for legal purposes.
During the ensuing conversation with Joe Chiades the following day, he freely admitted that he did not have a valid real estate license and that he knew that he was doing wrong! I daresay that he did not inform the unsuspecting buyers of this fact and I wonder how many other home seekers and sellers are falling prey to this type of indiscriminate ripoff?
I have reported this man to the DRE and feel very strongly that this is a person who should NOT be allowed to hold a real estate license, because when one is an agent, we are placed in a position of trust. How can anyone (buyer, seller, Broker, REALTOR(R)) trust a man who has so blatantly and knowingly, broken the law?
So, here’s the crunch:
Joe Chaides, told me that he felt that it was OK to grant access to his ‘buyers’, because he assumed that the house was vacant. If he had been a member of his local MLS board (Bakersfield Association of REALTORS(R)) , he would have seen that the house is indeed, occupied by the owner, so now he is also not paying Board fees! A simple search of this Board, reveals that neither the agent, nor the Broker of note, nor the Brokerage, come up in the search! Why should some agents feel the need to do business honestly, by adhering to the rules and regulations of the Department of Real Estate, by maintaining a valid license and by paying Board fees, while others do not? For those who do not, is it right that they continue to conduct business in real estate?
If his buyers wanted to put in an Offer on this (or any other property), how was he going to complete the Offer documents, which REQUIRE the agents name, license number and Brokerage name and number? Very simple……. this unlicensed agent would have put the buyer in touch with someone at Casita Realty, Inc, to process the documents, which means that Casita Realty, Inc is ALSO at fault for circumventing the system.
Brokers are required to ensure that agents working under them are in fact holders of a valid DRE license. Buyers and sellers are strongly advised to perform their own due diligence in checking that the real estate individual that represents them, is in fact licensed, by going to the DRE website and searching for the name of the licensee or broker.
—Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Exit Beach Cities Realty
Your House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
http://www,BuyCheapHomesToday.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Chairperson – 2009 (South County)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
10 Ways to Spruce up Your Home for the Busy Summer Season
| (Courtesy of HomeAway.com | ||
| Redecorating your vacation rental doesn’t have to break the bank. By focusing on a few low-cost, high-impact projects, you can stretch your decorating dollars to create a dazzling “mini makeover” to impress prospective travelers and returning guests alike.
1. Slip on a slipcover. Slipcovers are a tried-and-true way to refresh tired couches and chairs — even (yes, really!) at the most upscale properties. To avoid the sloppy,“billowing sheet” effect, opt for a custom-tailored version – these can even be made with built-in zippers or Velcro to accommodate fold-outs. For beach rentals, designer KerryAnn Dame of Surfside Beach, South Carolina’s Posh Living, LLC recommends Sunbrella fabric, which stands up well to chlorine and suntan oil. Make sure to have an extra seat cushion cover on hand to rotate into the wash if one gets stained.
2. Dress down the dining area. To tone down the formality of a coordinated dining set, Dame suggests subbing in an old church pew, a vintage iron bench, or even an upholstered armchair, stool or loveseat. (Keep an eye out at tag sales and vintage shops.)Just be sure to stay in the same color family to keep the look cohesive. (Even the most eclectic group of wooden chairs can be repurposed with quick coat of white paint.) To punch up more traditional dining sets, recovering the seats of existing chairs is an easydo-it-yourself project — all it takes is a few yards of fabric and a staple gun.
3. Color, color color! Even just a little bit of color can make a big difference in a room with four white walls. If you’re worried about going too bold, start with just one brightly-colored accent wall behind the sofa or around kitchen cabinets. (Some colors to consider: robin’s egg blue, deep turquoise, terra cotta, lemon yellow, or lime green.) In more formal spaces, a painted border in a color like indigo can add depth and character to a room without molding.
4. Think outside the frame. Take down any wall art that’s been water damaged (especially in the bathrooms) or faded by the sun. How to fill that blank space? When grouped closely together on a wall, an assemblage of even the most mundane objects (wooden canoe paddles, vintage sports pennants, a pair of colorful canvas kites) can create a striking visual focal point for a room.
5. Spray-on the shine. Resurfacing can give new life to grungy bathroom tile or a shabby-looking sink for a fraction of the cost of a full remodel. Beth Williams of Elizabeth Williams Design on Cape Cod recommends a professional refinishing company like Perma Ceram. A professional can reglaze a bathtub with a spray-on finish in about 5 hours, and they guarantee it’ll be ready to use just 12 hours later. When Williams recently had the tub and bathroom tile in her vacation rental reglazed, she says the project was completed in less than 48 hours for a total cost of about $1000.
6. Focus on the details. To make any bathroom feel more luxurious, Williams recommends switching out your regular shower curtain for a curved one (the few inches of added elbow room feel wonderfully spacious), and adding larger mirrors above the sink. Consider adding a dimmer switch (especially if you have a big soaking tub), and for the finishing touch, pick up a few gleaming new switch plates in chrome, glass, or just clean, bright white.
7. Eliminate clogs. Be sure to clean out the screens on your faucets and showerheads (especially if you live in a hard-water area) and unscrew the stopper in sinks and tubs to make sure drains are clear of clogs. If kitchen back-ups are an ongoing problem, consider adding a garbage disposal to the kitchen sink. For leaks, you can easily replace old faucets and showerheads with new low-maintenance models for less than $20, or upgrade to a luxury rain-style or massaging showerhead for just a bit more. Just be sure to add those new amenities to the description of your property listings! 8. Go green underfoot. When replacing dirty or worn area rugs, consider natural fibers such as sea grass or sisal. In addition to adding great texture and a coastal flair to your décor, both sisal and sea grass rugs are durable enough for high-traffic areas. Sisal is particularly well-suited to humid climates — the fibers are resistant to stains and bacterial growth, making it non-toxic and non-allergenic. 9. Add an outdoor shower. To prevent sand and dirt getting tracked indoors, consider adding an outdoor foot shower. Although free-standing outdoor showers run in the $1000-range, wall-mounted unit can be had for less than $200. Or, to save moneywithout skimping on charm, a simple teak shower mat and an ordinary steel watering can is a great low-tech solution. 10. Banish hidden dust bunnies. Last but not least: don’t forget to root out any dust lurking among your refrigerator condenser coils, in your air conditioner filters, and your dryer vent. You’ll save yourself from future maintenance headaches and protect yourself from fire hazards while cutting your energy costs as well.
—Althea Garner REALTOR (R) MBA, MCI, e-Pro Search over 50,000 listings at my web site: Women’s Council of REALTORS(R): Orange County Association of REALTORS(R):
© Copyright HomeAway, Inc. 2009 U.090520.KM
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Follow-Up to Auction Property Fiasco
Subsequent to our purchase of two properties on a recent auction by REDC, you will recall that after signing the purchase documents, the properties were broken into – one of the properties was being occupied by transients and had suffered substantial damage and trashing.
Upon contacting the Escrow company and voicing our opinions rather firmly, we were told that the Escrow process had not yet begun and that if we wanted to get out of the purchase, we could!
Huh? The Escrow period was to be 30 days and we are now 5 days from closing and the Escrow company is telling us that nothing has been done yet? I have never heard of anything quite so preposterous!
The Escrow representative went on to tell us that there had been a delay because the seller (the lender/bank) had not yet accepted our Offer! And they were going to tell us this…. WHEN? Wait a minute……. what was all that, that we went through on the day of the auction? What was all that signing and paying of CASH. How come one seller was ready to close after a week but the other seller hasn’t had the common courtesy to let us know if they have accepted our Offer or not?
Gentlemen, can we have a level playing field, please? This seller was so confident that we had bought the property, that they disconnected the utilities and abandoned the property and now they’re telling us that they hadn’t made up their minds as to whether to accept our Offer or not?
Something decidely odd here! Is it remotely possible that they did this, in the event that they received a better Offer prior to closing but if not, they would proceed, delivering to us a trashed property?
Well, suffice it to say that the lender is now the proud owner of a property that isn’t even worth what WE paid for it, and if they hope to resell the property, they will have to dig deep to have it cleaned up first, because we signed the cancellation documents.
If you are going to buy property on an auction, ensure that you know your rights – they will tell you that the deal is legal and binding upon your signature, but apparently they can get out of it just as easily as we did.
Now, excuse me while I look for another property………..
—
Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Executive Real Estate
House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
More Property Auction Traps!
So picking up from yesterday’s blog about the tips and traps of buying property on auction, today’s article continues AFTER the documents have been signed and Escrow is opened.
Bear in mind that to bid on the REDC auction, one has to arrive with a cashiers check for $5,000 to open Escrow on the first property, $10,000 for the second property, $15,000 for the third property etc. We attended the auction, carrying cashiers checks to the tune of $30,000, planning on buying 3 properties.
One of the clauses I warned readers about is the one that binds you to NOT visit the property until Title has been passed to you – ie, AFTER close of Escrow. During Escrow, the property legally still belongs to the lender. Let’s not forget that all property purchased on auction, is bought ‘As Is’! Most people consider this to mean that the property is a ‘fixer’ and certainly in our case, the repairs were only cosmetic.
We decided to do a drive-by of the two properties we bought (both in the same area) as only my husband had seen the residential complexes – we had no intention of entering the properties. Upon our arrival, we noticed a man exiting the property and pulling the door closed behind him. As the agents sign and the auction sign were laying flat on the ground, I asked the man if he was the agent. He said that he was a prospective buyer, having been sent to preview the property by his wife. He was carrying a REDC auction book.
I thought this was strange! Why would REDC include a property, now in Escrow, on their forthcoming auction, which is only due to be held in July? As the man disappeared down the road, we noticed that the front door was not closed and we approached. The property had been broken into and the door frame was nothing but splintered match wood. As we peeked into the living area, a really bad smell became evident, empty alcohol bottles were strewn around the floor, the carpet was pulled up in various places and human feces were visible in several places on the carpet and floor!
Yuck! Upon further investigation, it was obvious that the utilities had been turned off, because the toilet was blocked with unflushed feces. A foam bed roll was in one of the bedrooms and the other bedroom boasted MANY cigarette ends on the carpet and used condoms on the floor of the closet! The wash hand basin in the vanity area was heavily laden with loose tobacco.
This is the property that we bought FOR CASH and are bound NOT to enter till close of Escrow! NOW WE KNOW WHY! As the properties are purchased ‘As Is’, and the buyer is not permitted to enter the property till close of Escrow, the lender can claim that the property was in this disgusting state at time of signature! (Note: If you plan on buying property on auction, PHOTOGRAPH every room and the exterior, on the day that you preview.)
Like I said in yesterday’s article, the purchase contract is not approved by CAR (California Association of REALTORS(R)) and there is NO protection for the buyer. Like many contracts, it is one-sided and very much in favor of the lender.
As REALTORS(R), we need to be cognizant of the message sent, when we place a ‘Foreclosure’ sign on a vacant property – this is an open invitation to vagrants and squatters to occupy the property and to use and abuse it! Every vacant property should have utilities turned on and be visited AT LEAST every other day by the agent/lender and the Police should be notified that the property is vacant. Apparently, neither REDC not the lender did this in our case and as a consequence we are contesting the purchase – if necessary, we will walk away from our $5,000 deposit, if the lender does not restore the property to the condition that it was on preview day! Clearly, Tiempo Escrow (the Escrow company for this transaction) is also content to accept closing fees for this transfer, pretending that none of this ever happened!
Where are the good old days, where service and reputation counted?
So there you have it! The tips and traps of buying on a property auction. Let’s face it: neither REDC nor the lenders really care about the property – they just want it off their books! They could care less if the property has been trashed by squatters or that it has devalued in the time it takes to close Escrow! From the time of signing the documents, they wash their hands of the property and the consequences of their lack of responsibility becomes YOUR expense!
So, do you STILL want to buy property on the auction?
—
Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Executive Real Estate
House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
What they DON’T tell you about Property auctions!
My husband and I recently bought two properties on auction run by REDC (http://www.auction.com/) and it was quite an eye-opener, let me tell you! I’d like to walk you through the various steps and point out the pitfalls and traps, so that YOU don’t fall victim at this type of sale.
The project started a few weeks prior to the listed auction date and when my husband told me of his wish to purchase property this way, I had to warn him that property auctions are NOT what they used to be – he disagreed. “Remember in the old days”, I told him, “when we could buy a house on the steps of the Court House for $500? NO MORE… those days are gone! The lender (or bank) wants as much for the property as they can get!”
Let’s start at the beginning:
Most times, before an ‘upside-down’ property goes back to the bank, every attempt has been made to sell it on the open market. More often than not, the property doesn’t sell and goes to foreclosure. When this happens, an agent is called upon to perform a BPO, or Broker Price Opinion – in other words, to price the house for market, based on comparables in the area AT THIS TIME.
Despite it being a foreclosure, the list price is much the same as any other house for sale – perhaps 10% lower in price for a fast sale.
The first job that the foreclosure agent must do, is to perform a ‘trash-out’ (to remove anything left behind by the foreclosed owner and if the house has already been occupied by squatters, all their mess, too), re-key the house and secure it, take care of necessary repairs (those that might pose a hazard), turn on utilities, make the yard inviting and plan the first Open House. This has to be done within 72 hours.
If the house does not sell in the alotted time, the lender or bank might enlist an auction company to sell it en masse with others that also did not sell. By this stage, the house may have been on the market for a year or eighteen months, because believe me, the lenders have PILES of foreclosures and short sales to process and it can be many months before they get to look at offers that have come in. By that stage, the buyers may even have ‘walked’, having either grown tired of the waiting process or found another property. Understand that during this time, the property value dropped, so it is no longer worth, what it was listed for as a foreclosure!
So, here we are… we have received the list of properties to be auctioned in a group of cities and we can see a picture of the property (one picture), the reserve price (in our case $500) and the ‘value’ of the property, according to REDC (what they term “previous sold price”). Most of what they have said up to now is true, but the reader interprets it in a slightly different way. You’ll see what I mean as we continue, as the auction company preys on the psychology of the buyer and the assumptions that the buyer makes in absorbing the information given.
I ran a search for the properties that interested my husband on the MLS, using a search program that is only available to REALTORS(R), and which gives a lot of in-depth information, such as plumbing (copper/galvanized), previous sale prices, loan information, property tax, etc etc etc.
My husband attended the Open House (and you’re only given one day to preview), but like so many of the auction properties, there was no-one in attendance and the property was locked. In this case, one has to resort to ‘previewing’ the property through the windows, so basically, you are expected to buy the property ‘sight unseen’.
One property that we were interested in, was last listed for $65,000. Now bear in mind that the property market had DROPPED since it was listed and remained in foreclosure for many months. Those who attend the auction don’t take this into consideration! What they are told is that the property was previously sold for $250,000, which is true….. but it was sold for that price at the height of the market in 2006! The bidders read this as the property being WORTH $250,000 at the LAST LIST PRICE at TODAY’S market value! The auction company deliberately trades on the assumptions made by the bidder according to the clever verbage that they use!
There is a vast difference between the two prices and consequently bidding is fast and furious.
Another trick that the auctioneers employ, is to start the bidding at the reserve price of $500 (or whatever is set by the lender) and where normally, they increase by $2,500 at a time, if you listen carefully (remember how fast the talk?), they are going up by $10,000 or $20,000 at a time. This very quickly gets the property to the price that it was previously listed as a foreclosure. When the bidding slows down, the auctioneer stops and reminds the audience, how someone ‘actually paid $250,000 for this property’ and this starts the frenzy again!
Before you know it, the property has ‘sold’ for $129,000! Hmmmm…. it was listed as a foreclosure at $65,000 and sold on auction at $129,000! And that buyer walks away, thinking that he got a ‘deal’!
On that particular property, we had a personal ceiling of $40,000 and were outbid, but the winning bidder went to sign the documents and the lender TURNED HIM DOWN at $129,000 because he didn’t qualify!
Before long, the property returned to the active screen and the bidding started again at the ‘reserve’ price. Once again we bid to slightly above our ceiling at $45,000 and were outbid at $60,000! Once again, the winning bidder was TURNED DOWN by the lender because he didn’t qualify!
We ended up winning the bid on two other properties and went to sign the documents, at which time we asked why the other property hadn’t been returned to the active screen. We were told that we could make an offer. Well, naturally, we offered $45,000! The answer came back ‘DECLINED’. Clearly, it wasn’t because we didn’t qualify because we were paying CASH, but rather that it was lower than the lender was prepared to accept!
So, here’s the recap:
Reserve price = $500
What is the point of having a reserve price, if the lender won’t accept bids that greatly exceed that? The reserve price is bogus, in many cases!
‘Someone previously paid….’
This is NOT the last list price according to a more current market, but rather the HIGHEST price ever paid for the property and then, during a peak market!
‘Did not qualify’
This basically means that the lender wants more for the property, than the winning bidder offered. Again, what is the point of a reserve price?
Now here’s something to be careful of:
If you are the winning bidder and you change your mind before going to sign documents, your bid sheet is torn up in front of everyone and you are asked to leave the hall! This happened to a couple just behind us and they were extremely embarrassed.
Signing the documents:
First and foremost, (Buyer Beware!) these are not documents which are CAR (California Association of REALTORS(R)) approved. These are documents that are fashioned by the Escrow company for the auction company and therefore do not have all the safeguards built in to protect the buyer. THIS IS A BIG THING, folks! Basically, you buy at your own risk with NO recourse!
In addition, and to give you an example, one of the clauses, which you MUST sign in agreement if the sale is to go to Escrow, stipulates that you agree NOT to attempt to enter the property until Title is transferred to you. This is a BIG ISSUE and stay tuned to tomorrow’s Blog, as I will really open your eyes as to how you can be ‘taken’ by both the auction company AND the lender, with this clause.
The bottom line on property auctions is that they DO NOT employ ‘truth in advertising’ as proven by their claim that the property was previously bought for an inflated price. Here they trade on the psychology of the bidders assumption that is was the last list price.
Further, auctioneers deliberately create a buying frenzy to encourage and push up the bidding.
Lastly, not only can a fair and reasonable winning bid be turned down, but the documents are designed to protect the AUCTION company and the LENDER – NOT the buyer!
In conclusion, then:
Most auction buyers end up paying MORE for property and it is therefore strongly advised that if you’d like to buy property at an auction NOT to go without your REALTOR(R), who has performed his/her investigations on the target property, first.
Feel free to post your questions at this Blog.
—
Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Executive Real Estate
House Of Homes Online
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
Tax Credit for New Home Purchase
Information directly from the California Franchise Board
http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
In addition to the updated items identified on this page, we have updated Form 3528-A and the instructions for line 6 and Part III. If you have already faxed a completed application, you DO NOT need to resubmit a new application. We will update this information frequently. Please check this page often.
This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. We will accept applications for allocation of credit by fax only (916.845.9754), starting March 1, 2009; however, we will not send notifications of credit allocation until we have developed procedures. Once we begin processing allocation applications, credits will be allocated on a first-come, first-served basis.
We will update this page as soon as we begin mailing credit allocation letters. We plan to begin mailing credit allocation letters no later than May 1, 2009. This delay is necessary to allow us time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. Please be patient with us and do not send applications more than one time. Tax credit amounts California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from us. Applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available.
Please check this page for updates on the allocated and remaining credits available. Total credit allocated: $0 Remaining credit available: $100,000,000
Note:
The remaining credit amount displayed above only reflects allocations processed. This amount will be updated once we begin mailing credit allocation letters, which is expected to commence by May 1, 2009. This amount does not include applications that have been received, but not yet processed.
Applications for New Home Credit received, but not yet processed as of 3/25/09
As of Applications received: Credit claimed:
3/4/09 173 $1,715,826
3/11/09 711 $6,987,515
3/18/09 1,188 $11,599,825
3/25/09 1,710 $16,647,498
This reflects the total amount of credit reported on applications received as of the date indicated. This amount has not yet been verified and may include duplicate, incomplete, and invalid applications. This amount is provided for informational purposes and does not reflect the actual amount to be allocated. We will update the amount received, but not yet processed, on this webpage each Friday.
As we approach the $100,000,000 limitation, we will update the reported amounts on a daily basis. Keep in mind, that all applications will be processed on a first-come, first-served basis, based on the date received by fax only.
California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.
How to apply Within one week (seven calendar days) after the close of escrow:
The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person. The buyer will complete Parts II & III of Form 3528-A.
The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer. Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.
Fax only one completed application per residence with all qualified buyers listed. Do not include information on nonqualified buyers. An incomplete application may delay or prevent credit allocation. Do not fax the application to FTB before escrow closes. Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible. Escrow companies should only send one application per fax transmission. The buyer keeps a copy of the completed Form 3528-A for their records. The Form 3528-A is now available online as a fillable form. Simply fill in all required information, print the form, and sign.
If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.
Application processing
The buyer will receive notification of credit allocation from us. An allocation of credit will not be issued if:
The home has been previously occupied.
The application is not received within one week after the close of escrow.
The application is received after the total credits available ($100,000,000) have been allocated.
Requirements of the credit
The home must be a “qualified principal residence” as defined under California Revenue and Taxation Code Section 17059(b)(1).
The home must:
- Be a single-family residence, whether detached or attached.
- Never have been previously occupied.
- Be occupied by the taxpayer for a minimum of two years.
- Be eligible for the property tax homeowner’s exemption under California Revenue and Taxation Code Section 218.
For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)
Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.
FTB may request documentation to ensure buyers have complied with the requirements of the credit. Claiming the credit The buyer must receive an allocation of credit from us to claim the credit. The credit allocation letter will state the amount they can claim listed by tax year. The buyer should refer to Publication 3528 (available by 12/2009) for instructions on claiming the credit.
The buyer must claim the credit on an original timely filed return, including returns filed on an extension. Special rules apply to married/RDP (Registered Domestic Partners) taxpayers filing separately, in which case each spouse is entitled to one-half of the credit, even if their ownership percentages are not equal.
For two or more taxpayers who are not married/RDP, the credit amount will have already been allocated to each taxpayer occupying the residence on their respective credit allocation letter. If the available credit exceeds the current year net tax, the unused credit may not be carried over to the following year. The credit is not refundable.
Definitions Purchase date:
The date escrow closes.
Qualified buyer: A taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowner’s exemption under California Revenue and Taxation Code Section 218.
Qualified Principal Residence/New Home:
A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowner’s exemption.
Types of residence:
Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property:
- a single family residence
- a condominium
- a unit in a cooperative project
- a houseboat
- a manufactured home
- or a mobile home.
Owner-built property:
A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been “purchased.”
Contact us Phone: 888.792.4900 (press 5) 916.845.4900 (not toll-free)
Email: wscs.gen@ftb.ca.gov This is not a secure email address.
Please do not send confidential information.
—
Althea Garner
REALTOR (R) MBA, MCI, e-Pro
Executive Real Estate
House Of Homes Online
DRE 01516817
(714) 264-3458
Search over 50,000 listings at my web site:
http://www.HouseOfHomesOnline.com
Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Committee – 2009 (California State)
Orange County Association of REALTORS(R):
Education Vice Chair – 2009
