Real estate, like death, has three lives … buyer’s market, seller’s market, and a balanced market. But which one can we count on to show up today?

Current wisdom says it’s a buyer’s market. This might be true because Moreno Valley currently has 11 months worth of unsold inventory. The most recent national figures show price declines unseen in the last 20 years!

But lurking in the shadows is a more balanced market. If you don’t count short sales (which rarely close), Moreno Valley currently has only 7 months of unsold inventory!

Prices in Moreno Valley are down about 42% from May of last year, but sales are up 128%! And both of those are largely because of bank owned foreclosures.

If you’re considering a real estate purchase you need to do your work up front to be competitive in the Moreno Valley real estate market. Here’s a short checklist for you to consider:

1. Work with a reputable Lender to get what’s called Direct Underwriter (DU) Approval.
2. Be prepared to submit proof of funds for your down payment.
3. Consider writing an offer that includes 10 days for contingency removal (instead of the usual 17 days).
4. If you’re putting more than 5% down, consider offering to bring it in to escrow after you remove contingencies, instead of waiting until the very end.
5. Know what you want and be prepared to write offers as soon as possible. Waiting even an extra day can mean that you’ll face a multiple-offer/highest-and-best-counter situation.
6. BONUS TIP! Write several offers to ensure that you get one of them.

I don’t claim to know everything. What’s worked for you in the past? Have any stories to share with us?

My phone rang this morning.  A buyer wanted to know, “Should I buy a short sale or a bank owned home?”

I hate these calls because short sales are like the Temple of Doom … alluring, but booby-trapped.  Consider the latest proof.

If you are a Seller facing foreclosure, by all means list your house and try to sell it short.  You should also consider a deed-in-lieu.  Make sure the agent you select knows what he’s doing (contact me direct at 951-571-9229 or sean.giorgianni@gmail.com for a list of questions to ask).

If you’re a Buyer and a short sale is EXACTLY what you want, then write a fair offer and be patient.

But the truth is, short sales are not closing in this market.  Bank owned homes are, but not short sales.

32 of the last 100 listings in Moreno Valley are short sales; only 4 of the last 100 sales that closed were short sales.  Your chances of closing on a short sale are even worse though!

If you do the math you find that only 1 of every 167 short sale listings in Moreno Valley closes. That’s better than the odds of getting a royal flush in Vegas, but not by much.

What do you think?  Share your thoughts by sending me an email directly or, better yet, post a comment right here on the blog.

A first-time buyer asked me on Trulia Voices, “Is this the best time to buy in Moreno Valley?”

Here’s my answer: That depends.

Do you want to catch a falling knife or follow the yellow brick road to real estate wealth? I don’t mean to be flip, but a fair answer to your question depends on many factors.First, the facts.

Moreno Valley has a 14 month supply of homes (2,094 to be exact) for sale. That means that if the current pace of closings continues and no other homes come on the market, it’d take 14 months for every last home to sell.

Many define the bottom of a market when sales exceed listings for three consecutive months. The trend for new listings is increasing, but not to the degree that it is for closings. So I suspect we are nearing the bottom, but we aren’t there yet. The next 30 days will tell us a lot.

In Moreno Valley we are seeing rabid competition for bank-owned homes below $250k. These homes are seeing multiple offers. You can help yourself by working with a Buyer’s Agent who knows how to write an offer that the Bank will accept. Things to consider are escrow length, contingency length, ability to close as communicated by your agent, and some other ways we can tweak the purchase agreement.

Only pursue a short sale if it is THE home for you. 50 of every 100 listings is a short sale, but only 4 of every 100 short sales actually close. Listing Agents like short sales because they can use them to lure Buyers and switch them to other properties.

I suggest you spend some time reviewing the California Residential Purchase Agreement. I give my clients a copy and have them mark it up and ask questions BEFORE we write an offer. There are over 100 different forms that can be used in a real estate transaction in CA and you want to be sure your agent adequately understands the forms and how to use them.

The bottom line is it’s never a bad time to buy real estate. You just have to decide what price and terms are acceptable to you.

My experience is that it’s helpful to ask, “How will I feel if I don’t get THIS house?” The answer to that question usually reveals your negotiating limits.

I am currently personally working with 29 buyers and have many satisfied clients. Let me know and I can put you in touch with any of them so you can hear for yourself how a professional treats his clients.

182 new bank owned foreclosure listings came on the market in Moreno Valley in the last 30 days.  Here’s a free map of new bank owned listings in Moreno Valley.

See the table below for a quick analysis.

New Foreclosure Listings - Last 30 Days

It’s a little long, but here’s a nice slideshow with pictures of all the new listings:

Created with Admarket’s flickrSLiDR.

This is a great new foreclosure listing in Chino, CA. It has 3-bed/3-bath, 1543 sq. ft., and is listed at $384,900. It’s close to the 71 Freeway and has an awesome backyard.

from animoto.com posted with vodpod

“A poor thing, a poor thing, says he who is giving money for goods: but when he has gone on his way, then he makes clear his pride in what he has got.”

– Proverbs 20:14

I’m a real estate geek.  Unlike some agents, I pore over new listings, sales, and historical data to uncover trends that might help my clients.

Look at this chart of Moreno Valley real estate sales. It compares the last 30 days with the same period last year. What do you see?

Here are the facts: Sales are down 36% and prices are down 29%.  That’s a “poor thing, a poor thing,” right?

 Or is it?

A closer look at the facts shows

• The bottom of the market has dropped 53%.
•  A year ago you’d  pay about $3,153.41/mo. PITI for the average 1,707 sq. ft. house in Moreno Valley.  That’s $1.85/sq. ft. on average.
• Today, that same Moreno Valley real estate would cost you about $2,207.01/mo. PITI for a 1,885 sq. ft. house. 
• That’s $1.17/sq. ft. … a 37% increase in affordability!

Let’s recap: in today’s Moreno Valley real estate market you can get MORE house for LESS money at a more AFFORDABLE rate.

Perhaps it’s time to show a little pride?

[note: The lawyers forced me to say, “All figures are based solely on my research and calculations. There is no warranty, express or implied, as to their reasonableness or efficacy.You should consult a professional and satisfy yourself before making any decisions.]

An agent in my office swears by short sales because you’ll see the low price and call him.  He doesn’t care about selling THAT house. All he cares about is getting your number so he can “drip” on you until you buy another house from him.

Short sales don’t close … bank owned foreclosures do.  If you want to buy a house, don’t waste your time on short sales.  Find a reputable agent to represent you and go make your dreams of investing in a home come true.

380 resale homes came on the market in Moreno Valley in the last 90 days.  32% were short sales, 37% were bank owned foreclosures, and 31% were regular sellers.

Here’s a graph.

Think 90 days isn’t enough time to sell a house these days? You’d be wrong.  9 have sold and 37 are pending.  See the graphs below.

But that doesn’t tell the whole story.

76% of the pending deals are bank owned foreclosure listings.  But 89% of those that sold were REOs (REO and bank owned are synonymous)!  The discrepancy is because all those offers you write on short sales aren’t closing.

Take a look at this map of new foreclsoures in the 92557 zip code of Moreno Valley.

 
View Larger Map

The math is clear, you could pay a regular seller $296,041; make an offer that won’t close on a short sale for $257,609; or you could save an average of $15,250 and buy one of these lovely homes.

Of course, an experienced buyers agent for REO properties could save you even more.

What affects how quickly your home sells more: number of photos in the multiple listing service (MLS) or price? I recently did a regression analysis to find out. Surprisingly, the strongest correlation is between how long it takes to sell your house and the number of photographs you have in the MLS (email me and I’ll send you the MS Excel data).

In 2007 someone paid $3,346,456 for a photograph called 99 Cent II Diptychon by Andreas Gursky.

So, is a picture of your house in the MLS worth $17,079? Apparently so.

Here’s the worst photograph in our local MLS for a house over $500,000. For $526,979 I’d expect the picture to be in focus.

On the other hand, here’s the - ahem - picture the seller of this house listed for $509,000 got.

So, which of the three would you buy? And would you have answered the same two years ago?

Please excuse me, I gotta go take pictures of the Dollar Tree.

No, not THAT kind of salt … the OTHER kind of salt.  Whether we’re talking table salt or cryptography, too much salt is bad for you. But in the right amounts, it’s vital to a successful life.

That’s why I wanted to share a few insights with you:

1. Most reports of foreclosure activity report defaults on LOANS, not properties. That means that a Moreno Valley house with a mortgage and a line of credit is reported as TWO foreclosures.
2. A single property can generate a Notice of Default, several Notices of Trustees Sale, and foreclosure notices. Again, this skews the numbers.
3. The only way to see EVERY bank owned property for sale in Moreno Valley is to manually search the database of homes (MLS) because there is no single way to identify them.
4. This mess is far from over.

Share the info in this post with everyone you know. Email it to family and friends. Post it on the bulletin board at church.  Talk about it in the grocery line. Don’t keep it a secret!

Fannie Mae (FNM) and Freddie Mac (FRE) insure your home loans.

If you default, they pay your lender. But did you know that they encourage your lender to avoid foreclosure whenever possible? In fact, they actually grade lenders on how well they work out delinquent loans.

“We not only rank them, we pay them to do workouts. They get a certain dollar amount for every workout type. We spent $7 million in cash bonuses” on the program last year, explained Robin Stout Migala, senior delinquency resolutions manager for Freddie Mac.

Sadly, most homeowners are clueless.  Most don’t know the work out options available to them.  Even worse, 20 percent of people say nothing would happen after missing three or more mortgage payments because “it takes a while for anything to happen if a person is late on a mortgage payment.”

You could also wind up being snared by scam artists in a foreclosure rescue scam. 

There’s a great song called, “You’re the reason our kids are ugly.” Don’t be the reason for an ugly mess when it comes to your home.  Check out Loansafe.org for the best collection of information about the foreclosure process in the Inland Empire.

What should you do if you can’t pay your loan?

1. Call your lender immediately (look for the toll-free number on your monthly statement).  Ask for the loan mitigation department.  The sooner you contact your lender, the more options will be available to you.

2. Call the Homeownership Preservation Foundation (toll-free 888-995-HOPE) or find a local HUD-approved counseling agency (toll-free 800-569-4287 on weekdays).

3. Know your loan modification options. Depending on how quickly you call your lender, the following loan modification options may be available to you: forbearance (an agreement to temporarily let you pay less or nothing while you get back on your feet); reinstatement (pay the total amount you’re behind in a lump sum by a certain date); repayment plans (you’ll be given a fixed amount of time to repay the amount you’re behind by combining a portion of what’s past due with your current payment); and, loan modifications (a written agreement between you and the lender that permanently changes one or more of the original terms of your loan to make it more affordable, such as extending the loan term or lowering the interest rate).

If your financial circumstances have changed so much that you can no longer afford to keep your house, your mortgage company may offer you one of the following options to forestall the foreclosure process:

• Loan assumption. Even if your mortgage isn’t assumable, your lender may allow someone else to take over the payments and bring the loan current. This may allow you to sell your home.
• Short sale. This option lets you sell your house for less than the amount that is owed on it. Recent, but temporary, changes to the IRS tax code mean that the difference between what you owe and the amount you’re selling for may no longer be taxable as income.
• Deed-in-lieu of foreclosure. You may be able to transfer title to your property to the mortgage company in exchange for the complete cancellation of your mortgage debt. In most cases, your lender will have required you to try to sell the house for 90 days before a deed-in-lieu will be considered.