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LA Digs - Northeast LA Real Estate Blog

Welcome to LA Digs, the real estate and Northeast Los Angeles community blog written by Realtors Tracy King and Keely Myres.

Here, we share tips, market updates, and local news bits to keep you informed on what's happening in Northeast Los Angeles and the surrounding neighborhoods. Read on to learn about the latest in your neighborhood!

How About an Inspection Before You Go on the Market?

I'm studying for my continuing education for my real estate license and I came across this paragraph:

Prior to listing the property for sale, it may be advisable for the seller to hire an independent home inspector to examine the property and prepare a report on the property. This will give the seller the advantage of correcting identified problems prior to an offer on the property which, if discovered by a buyer, might become an obstacle in the negotiation process. If problems are corrected by the seller prior to marketing the property, they should not become an issue during the sale process. However, the seller should disclose to the buyer any repairs. The seller's inspection report can also be used as a basis to complete the RETDS.

In the previous hot market, I had sellers who would take this advice. For $350 or so, you could have an inspection report that buyers could view and make an informed decision about what condition the house was actually in and how to position the price they offered. Sometimes the inspection revealed problems that the seller was unaware of and was able to either disclose it and/or repair it with a lot less drama than it would have been in escrow. I had fewer escrows fall out and much less concern over inspection negotiations. Now, with prices down and sellers feeling very poor, almost no one has an inspection before going on the market. One of the two times this year that we had an inspection done, the buyers felt that our inspection didn't turn up nearly the issues their own inspection did and asked for quite a lot. The other time we had 80 offers and a cash deal and almost no issues and we did sell for a lot more than asking--in fact, $181,000 more.

A few thoughts on all this:
1. You could have 10 inspections and each one would turn up something different.
2. The fact that the seller is willing to pay for an inspection up front should tell the buyer that the seller is not trying to hide anything.
3. Especially if a seller has lived in a house for a long period of time, many things can fall into disrepair without being noticed.

Bottom line, there is no perfect way to sell a home. After all, we are dealing with human beings who are different from each other. We are dealing with what is often the largest investment of a person's life. We are dealing with an incredible amount of fear, opinion, innuendo, myth, fable, and fear (I said it twice, I know) on the part of everyone even barely involved in the transaction. Every listing that is signed in the state of California comes with a Seller's Advisory that discusses the idea that a pre-listing inspection is a good idea. Almost no one in our area is doing this. If you are considering selling your house, you should consider having an inspection. It's a small expense that could save you some headaches. Even if you have no intention of selling, it's a good idea to have an inspection every few years just so you can make sure you have no issues that have come up.
And now I can go back to my continuing education

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Once again, a short sale is no sale

Wow, short sales have gotten such a bad reputation that Redfin has put this notice on their website:
"This home is flagged as a short sale. We're sorry, we don't tour or write offers on short sales because of the slim chance that you'll get the home."

For those new to the real estate purchasing game, a short sale is one where the sales price isn't enough to pay off the loan so the homeowner has to get the lender's permission to pay less than what they are owed. Click here to find out more about short sales. I have to say that one listing agent I know who specializes in doing short sales says he closes most of the ones he lists. So if you are a seller who might be short sale material, call me and I will refer you to him. He is one in a hundred, so it doesn't change my theory.

So if even a Redfin (read discount) agent won't show you a short sale listing, then these are not generally viable listings (which I've been saying for a long time). Therefore, if you look at the number of active listings on the market today in, say, Eagle Rock, and you subtract the number of short sales, you get a very low number, which helps explain why well-priced homes are selling with multiple offers. Today, of the 38 listings on the market including condos, single family homes and units, 8 are short sales and 9 are foreclosures. That means that 20% or 1/5 of all the listings are short sales. Another fifth are foreclosures, so 3/5 of the listings in Eagle Rock are normal sales, only 21 properties. That is not very many listings to choose from. Even if you add the foreclosures back in since it is actually possible to purchase a foreclosure if you are really determined, this buyers' market is over. The sellers' market is here. Now we have to convince lenders that they need to stop writing down values because of the fiction of a declining market. And again, go online and sign the petition regarding the Home Valuation Code of Conduct travesty (http://www.hvccpetition.com).

However, to sellers I say: don't think that because we are in a fairly hot market right now that you can go back to your 2005 or 2006 fantasy price. That is not realistic. If prices have come down 20% since 2006 in, say, Eagle Rock, which is a rough but not unrealistic number for general purposes, that means that if your home was worth $500,000 in 2006, it's worth $400,000 today. Yikes, that's painful! Let's give Eagle Rock a break and say that prices have only come down 10%. That is still $50,000 on a $500,000 property. Jumping back up to the $500,000 is not happening. However, if you price your home artfully and present it properly, you will get top dollar, whatever that is today. That, by the way, was a little shameless self-promotion, if you didn't notice.

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Why You Should Help Your Kid Buy A House This Year

I can't say it better than this mortgage broker did, so check out Janet Guilbault's blog here:
http://activerain.com/blogsview/1051983/3-2-1-LIFTOFF-Prevent-Failure-to-Launch-Help-Your-Kid-Buy-A-House-This-Year

It's a great opportunity for us parents as well as the kid. How else could we take advantage of the 3.5% down payment possibility that FHA offers? To qualify for FHA, you have to intend to occupy the property as your primary propertythat's the kid part. Plus, you can have a non-occupant co-signerthat's you. If you buy units, as long as your child lives in one, you can do that, too! The First Time Buyer Tax Credit is a bonus. If you do an equity-sharing partnership with your kid, you both can prosper. This is not coddling your kid so much as creating a dynamic investing machine.

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Buyers Market?—Sellers Market? Part 2.

Last year, when Congress passed the first tax credit for first-time buyers, raised the conforming loan limits and made FHA a viable loan option in our area for the first time in 12 years, we in the real estate industry hoped that the market could return to a more normal state. But then the worldwide economy crashed and more and more people started losing jobs, and predictions of further huge price drops in the housing industry kept the market at pretty much of a standstill in our little corner of the world. Anyone who didn’t really have to sell, didn’t. Then some of the people who hadn’t really had to sell earlier in the year could no longer hang in there or their circumstances changed, and they started to sell. There have been some gems come and go in the last few months. Case in point, 2525 Medlow, a midcentury ranch over 2000 sqft in Eagle Rock, sold last year for $575,000. 4848 Ray Court, Eagle Rock, in escrow for well over its $499,000 asking, 716 Moon in Mt. Washington, a 2-bed, 2-bath midcentury with an incredible view just sold for $567,000. All of these could have sold for more a couple of years ago, and will be worth more again in a few short years, just watch.

But right now buyers are having a hard time. The first-timers who are trying to take advantage of the $8,000 federal tax credit and everyone qualified for the new FHA loan limits are being outbid by investors and people with 20% or more down payment and regular loans. In the last few months, banks have been pricing their foreclosed inventory at fire sale prices, teasing these poor FHA buyers into believing that at last they can catch the dream, only to find their hopes ground under foot by all-cash investors and insider pals of someone who makes an offer before the property even comes on the market.
One really nasty result is that some neighborhoods have seen their price point dive because only the foreclosures at fire sale prices are selling there. Now with the market picking up, we have a new problem: obtaining a fair and realistic appraisal.
As of May 1, the Home Valuation Code of Conduct came into effect. Essentially, it makes the appraisal process for any Fannie Mae or Freddie Mac loan more expensive, cumbersome, and in the end less accurate than the former system. For a complete discussion of this, check out http://reesespiecesofrealestate.com/2009/05/02/new-rules-for-home-appraisals-went-into-effect-may-1/ . Even without this new code, appraisers have been erring on the side of being overcautious in their appraisals because of the bad press they’ve received. Also, in many neighborhoods, the sales of bank foreclosures and short sales grew to such numbers that appraisers have had to use them as comparables even though a nice home with a real human seller is generally worth more than a distress sale because of its condition. Appraisals are always difficult in an appreciating market and now they are going to be difficult no matter what market we’re in. What to do? The person who pays cash has an advantage here, but they usually want to buy the home at a significant discount. I’m in an escrow where there is no appraisal contingency, but I’m afraid we can’t insist on that every time, much as I’d like to.
One way you can help is to sign the petition on the website, http://www.hvccpetition.com. The loan and appraisal industries are overreacting to the scrutiny they’ve been under. Those in favor of stringent regulation are trying to reduce the fraud that has riddled the industry in the last few years, but the consequence to this “code of conduct” may be to grind to a halt the very loan programs that should be moving us forward. Even though FHA appraisers are not currently affected by the code, they are regulated by other restrictive rules that make it difficult for these entry-level buyers to actually buy the homes they can afford. For example, FHA appraisers are stricter with the condition of the property concerning both repairs and unpermitted space. And the topper is that the FHA loan process has been taking far too long. Every Realtor I talk to who has an FHA deal has a tale of escrow dragging on for weeks beyond the scheduled close date. The story is that the lenders are overwhelmed, but they are overwhelmed by overcautious rules more than understaffing.

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Today is Earth Day!

Today is the 39th anniversary of the first celebration of Earth Daywhy, it's as old as I am! But you know that I'm a child of the 60's, don't you. There are lots of great links to explore including http://www.stopglobalwarming.org/default.asp , www.planetgreen.com , http://www.epa.gov/pick5/ .

If you want to celebrate Earth Day with a crowd, today is the grand opening of a new exhibit in the Rose Garden at Exposition Park called Cool Globes, Hot Ideas for a Cooler Planet. Check out the details at www.coolglobes.com/la.php.

Just for fun and also because it seemed like the right thing to do on Earth Day if I were to attend a fight global warming event, I wondered if I could easily take public transportation from near my home in Eagle Rock to Exposition Park. First, be sure to go to www.Metro.Net, not www.Metro.com. After you click on Maps, the planner is very simple to use if you are open to taking the bus. Forget rail for now. Sigh. Maybe next year, if the Expo line is completed on time. But today, for $2.50 round trip, you can go from the corner of Eagle Rock and Colorado Blvd to Exposition Park in about an hour each way on Metro Local 81. The Metro Trip Planner estimates that the cost if you drove your car would be $6.82 each way if you use the estimate of 54.1 cents/mile. So you would save money as well as pollution if you took the bus.

If you want to celebrate by using rail travel, you can hop on down to Union Station and catch the free noon concert performance by Carina Ricco on the South Plaza. Check it out at http://metro.net/news_info/press/metro_063.htm

Happy Earth Day!

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How can I get the CA $10,000 tax credit in Eagle Rock?

Read my friend Kendyl Young's blog about how you can get up to $18,000 in state and federal tax credits if you buy a home soon. Briefly, if you're a first time buyer (you haven't owned a home in 3 years) you have until November 30 to close escrow on a home. You don't have to be a first-time buyer to qualify for the California $10,000 tax credit for new construction, but the money is limited and it is already 25% gone!

So where in Eagle Rock can you find a home that qualifies for the new home tax credit? Easy! The Rock Row development on Yosemite, that's where! Check it out at the website. I wrote about the grand opening that took place there a couple of weeks ago, remember?

Rock Row, 1546 Yosemite Drive, 90041

Rock Row, 1546 Yosemite Drive, 90041


If you aren't already working with a Realtor, call me if you want more information, or to see the units: 626-827-9795.

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First Time Buyers Rock!

First Time Buyers Rock!

 

 

Oh to be a first-time buyer today, you lucky folks. The American Reinvestment & Recovery Act was signed into law by President Obama last Wednesday. This bill provides for an $8,000 tax credit if you buy your primary property by November 30 of this year. This credit does not have to be paid back if you live in the property for at least 3 years. There are all sorts of details regarding this, and I will bring them to you as I discover them. Check out Kenneth Harney's column in the Los Angeles Times today.

 

 

I have begun working with several first-time buyers lately, and they have some interesting things in common:

 

They were either working with another Realtor associated with a large discount real estate firm, or with a part-time Realtor, or with a relative who had their real estate license.

 

They have written several offers that haven’t worked out and they’re not sure why.

 

They have been lurking on my website, reading my blogs and they like what I have to say.

 

They are ready and eager to buy.

 

 

First, please know that if you are ready, I am ready. There is no need to hem and haw and wonder if this is the right time or if you should call me. This is the biggest home buying opportunity we have seen in many years. Have we hit bottom yet? Who knows? If you can afford to buy now, the time is right for you. Why?

 

Historic low interest rates.

 

The above mentioned $8,000 tax credit.

 

Properties that are actually in your price range.

 

Available inventory. And on this note you should know that several of the large banks have again announced a moratorium on foreclosing on owner-occupied homes. This part of the inventory is going away, and quickly.

 

 

My question to you is, are you ready to buy now? As the story President Obama told during his campaign, you need to be fired up and ready to go! What else would you like to see here to help you get ready?

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