Forecasters Say Recession Nearing End

More than 90 percent of economists think the recession is nearing its end, but they don't expect the economy to soar anytime soon.

Nearly 75 percent of economists, surveyed by the National Association for Business Economics, say that the recession will end in the third quarter. Another 19 percent think the turnaround will come in the fourth quarter. The rest are betting on the first quarter of 2010.

Americans seem to believe that things are getting better too. The Conference Board's Consumer Confidence Index rose 14.1 points in May to 54.9, the second month in a row in which there have been an increase.

Forecasters say that home sales will bottom out in the second quarter, an important stabilizing factor.

Source: The Associated Press, Jeannine Aversa (05/27/2009)

SINGLE FAMILY RESIDENCE VS. TOWNHOUSE VS. CONDO - PART I

When I am working with first time homebuyers, most want to know the advantages and disadvantages of different house types. The decision to buy a condo, townhouse or a traditional single family house is one that takes much consideration. Each brings its own set of advantages and disadvantages. One type may be better suited to your budget and lifestyle than another. Also, depending on your location, you may find more choices of one particular type of home than others.

1. Single Family Homes

By far the most common form of housing, the most important distinguishing factors that determine a single family residence are that it sits on its own piece of land and it is not attached to anyone else's residence. Restrictions about what you can do with your property are primarily dictated by the city in which you live, but for the most part you can do with it as you wish. You will probably have a yard of some sort-from very small up to multiple acres-and your ownership will include all of it. 

Advantages of a SFR

• You can modify or improve it as you wish
  
• Re-sale value is generally the highest on a single family home
• You can add on to the existing home if more room is needed
• Generally there are no property management fees as there are in condo and many townhouses 

Disadvantages of a SFR

• All maintenance and repair costs are your responsibility including electricity, gas, water, sewer and trash removal
• Lack of amenities (for example, community pools, gym, playgrounds, etc.) that you may find in a condo or townhouse
• You are responsible for upkeep and landscaping
• In most areas, SFRs are more expensive

Is a Single Family Residence the Right Fit for You?

You like your own "space"

You like modifying your home, making it your own-changing the color, the appearance, the size.

You like the idea of maintaining your own lawn, and the home's surroundings

You like the idea of being able to build your house

2. Townhouses

A townhouse is a home that is attached to one or more other houses, but which sits directly on a parcel of land that you also own (if you don't own the land, it is a condominium). Townhouses can ranges from duplexes and triplexes all the way through huge townhouse communities consisting of hundreds of similar homes. Townhouses to some degree offer attributes of both SFRs and condominiums. 

There is a good degree of variance in the way townhouse communities are structured. It may be a simple agreement (as is often the case of duplexes and triplexes) that each parcel of land and the home that sits on it is separately owned. In the case of larger townhouse communities, you will generally have an additional shared ownership in the common areas of the complex as well as any amenities such as swimming pools, park areas, etc. This ownership you will share jointly with all other townhouse owners in the complex. 

In any townhouse purchase that involves an Homeowners' Association, it is critically important to get as much information as you can, since the association can have a considerable impact on your ownership experience! (we'll explore Homeowners' Associations in a later post)

Advantages of a Townhouse

• Less exterior maintenance and repairs
• There may be amenities in the community such as pools, tennis courts, playground, etc.
• Sharing common walls with neighbors may bring a greater sense of security

Disadvantages of a Townhouse

• You are responsible for Home Owner's Association fees (which cover common areas and other "perks" of community living)
• Your options for changing the exterior look of your house will be limited
• Sharing common walls with your neighbors, you give up privacy as compared to SFRs

Is a Townhouse the Right Fit for You?

You like your own "space" but not having to deal with all of the exterior maintenance

You don't mind having neighbors close to you.

You like the idea of a small yard 

3. Condominiums

Condominium ownership is basically an apartment you own (in fact, many condominiums are apartments that have been converted over the years). Your ownership extends inward from your interior walls, floors and ceilings. In addition, you are a partner, with all of the other owners in the complex, of the exterior structure (the foundation, exterior walls and roof) as well as any common areas and amenities (for example, swimming pools, clubhouses, tennis courts, play areas, etc.) One of the requirements of condominium ownership is the payment of a monthly condo fee, which covers general repairs and maintenance to the common areas of the complex as well as (hopefully) build up a cash reserve for future needs. In general, all exterior maintenance and repairs are the responsibility of the condominium association, although you will be charged for them, either through your association dues or a special assessment (a one time charge assessed to all owners for, as an example, a new roof). The normal day-to-day maintenance of the grounds (some examples are cutting the grass and maintaining the pool) are also the responsibility of the association. Interior maintenance and repairs (for example, replacing a dishwasher) are the responsibility of the individual owner. 

In some areas, a condominium may be the only consideration that fits within your budget. The reason for this is simple. In general, the same square footage will cost less in a condo setting than it will in a single family home or townhouse, due mainly to land cost--you can build many more condos than you can single family homes on the same amount of land. 

Advantages of a Condominium

• Little or no exterior maintenance or repairs
• Many condo communities offer amenities such as pools, tennis courts, playground, etc. 
• Condos are often more reasonably priced and are good entry level homes for first-time homebuyers or excellent for empty-nesters looking to downsize 

Disadvantages of a Condominium

• You are responsible for Home Owner's Association fees Less privacy
• Resale of a condo is harder and often takes longer to sell  

Is a Condominium the Right Fit for You?

You do not want to do any exterior maintenance or repairs

You like the idea of amenities

You don't mind having neighbors close to you.

All three forms of ownership are good options...it's a matter of finding the best fit for you. A house gives you more independence, but also greater responsibility. A condo or townhouse has the security of more regular expenses and freedom from maintenance and repairs.

Happy House Hunting!

So What's the Deal with those REOs?

Although most buyers are excited about the opportunities REOs (REO stands for Real Estate Owned by the beneficiary/lender that foreclosed) present in today’s real estate market, I find that many are also concerned about purchasing a home that can have many unseen problems which may not show up until long after escrow closes. This post is dedicated to addressing some of those concerns. 

How Does a Home become an REO

An REO is a foreclosed property. In California, when you buy a home, unless you pay cash for it, chances are you will have to finance the purchase. A home is financed in much the same way a car is financed - you sign legal documents called “a note” for a loan. The lender gives you the money which you agree to pay back with interest over a term of (usually) 30 years. If you default on the loan, the lender can then take the home back and sell it to someone else. The legal process of taking the home back for default on a note is called foreclosure. Although the process in California includes a trustee (a neutral third party-typically a title or escrow company) who is given the note and who is notified by the lender to begin foreclosure proceedings in the event of non-payment the basic idea remains the same: don't pay the mortgage (or property taxes or Homeowner's assessments) and lose the home.

In order to begin the foreclosure process, the lender is required by law to send a homebuyer who has defaulted on the loan a Notice of Default. The lender notifies the trustee in writing that the trustor (borrower) is in default, and instructs the trustee to initiate foreclosure proceedings. This notice is recorded at the county clerk recorder’s office in the county where the property is located and is a document of public record. This means that anyone with an interest in the property may see it. The notice states when the lender is planning on foreclosing, ie. the date of the trustee’s sale and the outstanding amount the homeowner can pay to cure the default and stop the trustee’s sale.

More often than not, the default is not cured and the trustee auctions the property to anyone who will buy it. If there are no buyers at the trustee’s sale, the house becomes a foreclosed property and is referred to as an REO - real estate owned by the lender.

What you should know about an REO as a Homebuyer

Most lenders are not in the business of real estate; they are in the business of finance. And so, the house acquired by a bank through a foreclosure is usually put back on the open market. To come up for a sales price for the property, the bank hires a Realtor® and asks for a BPO - a Broker Price Opinion. The Realtor® appraises the property based on similar properties also known as “comps” and offers to list it. Since most foreclosures are fixers, they are usually placed on the market for a substantially discounted price.

As a home buyer of a bank owned home, your concerns are justified. An REO is usually a fixer. The most obvious reason for this being the family that was foreclosed upon was low on finances. If they didn’t have enough to make their mortgage payments, chances are there are quite a few things about the house that went unrepaired. This is also called deferred maintenance. Deferred maintenance can be a small problem, like a leaky faucet, or can hide bigger problems, like a leaky faucet that rotted the bathroom sub-floor.

You should also be aware that as a purchaser of an REO, you don’t receive full disclosure about the house. The bank is not required to provide you with a Transfer Disclosure Statement, partially because the lenders have never been in the home and are unaware of what exactly is wrong with it. 

Resolve your Concerns

So is purchasing a foreclosure the best bet? Sure, the price is deeply discounted, but does that make up for everything else? While that's a question only you can answer, the one thing I stress to take the pain out of any future problems: Always, always, always get a physical inspection!

Brokers recommend a variety of inspections, including pest, roof, septic system and a complete home inspection. Disregarding any of these inspections can be a big mistake on the part of a homebuyer. While most banks will not repair any items listed as potential or real problems during these inspections, you can get an idea of how much work is involved in making the home as habitable as you want it and decide if the asking price is worth the risk and work involved. The price you pay for the inspections is well worth its weight in gold.

You, The Homebuyer

With so many bargains out there in short sales, REOs and pre-foreclosures, if you are serious about buying a home at a deeply discounted price, chances are you will find what you are looking for. Do yourself a favor and get all the facts, look hard and long and don’t be scared to make an offer when you find the right one!

The Property Source is now supported by the Anderson Realty Team. 

Meet the Team

Maurice Anderson-Broker, REALTOR, GRI

Sharing his father’s passion for helping people realize their real estate objectives Maurice Anderson obtained his Brokers license and joined the company in 1976 after graduating from the University of Oregon with a BA degree in Finance and Business Economics.

Maurice is an expert in the southern california real estate market. Always willing to share his experiences and knowledge, he has taught courses at the local community colleges helping others realize their potential in becoming real estate agents.

His professional goal is to serve the client first. Clients who are seeking to purchase a home appreciate the dedication and commitment he shows in partnering with them to view and understand what the current market offers. He takes the time needed to help clients realize their dreams, and works diligently to attain the highest price and best terms for his sellers and the best deal possible for his buyers by providing unique negotiating strategies that have proven successful on homes in every price range.

Susan Anderson- Office Manager

As an active member of the Long Beach community, Susan has a deep understanding and appreciation for the areas she serves.

After earning her BS degree in Psychology and a Masters in Public Affairs-Business Management-Curriculum and Instruction at the University of Oregon, Susan moved to the Long Beach area and raised three children here, gaining an even better insight into local communities, entertainment, services and schools.

Since 1979, Susan has been effectively representing both sellers and buyers in purchases of single-family homes and condominiums, as well as investment properties. She loves what she does and enjoys greatly the interaction and relationships with both clients and other real estate professionals. In addition, Susan works as the office manager, helping to guide other associates through their transactions.

 

Andrea Bolder-REALTOR, REO Buyers Agent

Andrea is the newest addition to the Anderson Realty team. A former professional track & field athlete and Olympian, Ms. Bolder has nearly eight years of professional sales experience.

Andrea holds a BS in Biochemistry from the University of California, Los Angeles where she attended on a full scholarship and was awarded multiple honors, including All-American, three-time Pac-10 Champion and NCAA National Champion. Upon graduation, she traveled the world running professionally for two years before entering the business arena.

Andrea worked as a sales account manager with a major corporation before committing full time to real estate. The same professionalism and dedication that made her successful in the athletic and corporate world she now brings to her real estate clients and customers.

Let Anderson Realty be your partner in Real Estate!