I hope to have the new system up and running within 10 days.

If you need a home search set up for you, please let me know and I can set one up for you.

Recently I have come across a few agents representing traditional sellers that are treating the offers and contract terms like they are a foreclosed or short sale property.

Examples include inspection and loan contingencies short time frame.  For inspections 17 days is standard, 10 days is ok, 7 is very tight if buyers work or are out of town.  Loan contingencies typically are also 17 days, anything less is hard to do.  I am seeing 7 day time frames for inspections and 12-15 days for loans.   These listing agents are requiring the buyers to sign an amendment stating the contingencies are automatically removed on day 7 for inspections and 15 days for loans.  Standard for this area, contingencies have to be removed by written documentation.  (written is always best in my opinion so there is no misunderstanding)

Another example is where the listing agent requires the potential buyer to be “qualified through the agent’s preferred lender” prior to making an offer.  Even if the buyer has a well known lender approval!  I think the listing agent does not want to take the time to call the buyer’s lender to confirm with a conversation that the buyer is qualified.

In my opinion to treat the negotiations on your home just like the foreclosures and short sales is the wrong strategy.  I can tell you from experience there are buyers who are out there who do not want to deal with buying a foreclosed home.  You are alienating a whole group of buyers who would want your home, but because an agent recommends these “tightened” restrictions, and treat the negotiations like it is their way or no way, will not make an offer or will not move forward during the counter process.

In this Folsom real estate market, with so many short sales and foreclosures, if you are selling your home as a traditional seller, you should negotiate terms like a traditional seller.  You will have more interested buyers.

What does the median price home here in Folsom look like.  In August there were 8 homes sold priced between $302,000 and $322,000.   The average size was 1,984 square feet, with 1,640 square feet being the smallest and 2,470 the largest home in that price range.  The oldest home was 1986 and the newest was 2005.   The average price per square foot for the 8 homes in the median price range was $161.12, and on average the homes were on the market for 59 days.

A year ago, 6 homes sold in this price range, averaging 2,018 square feet, and $162.08 per square foot.

The most homes being sold are priced between $201,000 and $300,000(80).  Folsom homes priced between $301,000 and $400,000 are the next largest group with 47 homes sold. Of the 187 Folsom homes sold, 38 sold over asking price and 34 sold at list price.  38.5% of homes sold in June and July were sold at or above list price.

If you are considering selling your home, it can be a good time to sell if the home is priced right, staged and marketed properly.  Not as much competition and so far, we continue to have lots of buyers.

If you are a buyer, you should realize that you are looking at the same home other buyers are looking at.  If the home is priced well, you may be offering list or over list to get it due to multiple offers.

The median price of a home in Folsom for July 2011 was $300,000.  If that number looks familiar to you, it is, May 2011 also saw the median home price in Folsom at $300,000.  In the month of July, 7 homes sold between $290,000 and $310,000.  The average size of the home was 1873 sqft, a bit larger than average in May.  The largest was 2,213 sqft and the smallest was 1,595 sqft.  They averaged $159.36 a square foot.  Average days on market for the 7 homes were 30 days.  Four of them under 15 days on market.  The oldest home was built in 1979 and the newest was 2005.

A year ago the same price range  only 2 homes sold averaging 1,875 sqft, at $164.92 a square foot.

New California Short Sale Law

Typically, in a short sale with 2 loans, the first usually offers $1000-$3000 to the second to agree to the short sale.  The second, unless there was settlement language that included that the loan was paid in full, and there would be no deficiency judgement, would reserve the right to come after the seller later for the remaining money owed.  Sometimes they would require a seller to sign a promissory note for the difference of what they were getting and what was owed.  The second loans are almost always the hardest part of a short sale.  Most sellers will not agree to additional monies owed, when they won’t even own the home.

SB 458 now extends the law towards junior lien holders.  If the junior lien approves the short sale, they can not come after the seller for a deficiency judgement or a promissory note.

Now before everyone gets all excited about this new law, in my opinion there are some possible side effects to this law.   I think the banks that have junior liens, may just decide not to do short sales.  If the home they have a second on, is foreclosed on, they can still go after the owner for the money owed.  If they agree to the short sale, they get the $1000 – $3000 and that is it.  If sellers are lucky, the first will decide it is worth it to offer more than they have in the past to the junior lien holders.  It is too soon to see how the banks are going to react.  I have heard of two short sale approvals that were approved, were pulled because of the new law.

Whether you are a buyer or a seller, if you are dealing with a short sale junior lien, I advise patience.  This will probably slow down and stall the process for a while, during which time the banks will be deciding how to deal with the new law.

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The graph below shows the past year’s Folsom foreclosure filings;  Notice of Defaults(1st step to foreclosure) and Notice of Trustee Sale(when it is schedule to be sold on the courthouse steps).  As you can see by the numbers, while the Notice of Defaults are down from last month and last year, they are not down by much.  The number of  Notice of Trustee sales, when the home actually is foreclosed are up, both from last month and last year.

The next chart shows the actual outcomes of the Trustee Sale (auction).  The average amount that are foreclosed on in a month here in Folsom is 21(Back to Bank).  You can also see that several are getting sold on the courthouse steps, typically investors and flippers.  And a few each month are cancelled.  This usually means that they may be working out a loan modification or short sale.

Recently my short sale manager, who had just come back from a national short sale meeting, (including lenders that attended) gave me some information that I wanted to pass on to you.  Banks are carrying about a 36 month inventory of properties in foreclosure, meaning if they did not file another Notice of Default, we still have 3 years of inventory to burn through.  The banks will not over saturate the market with foreclosed homes, when they sell a foreclosure, they take a foreclosure.  The banks have a common formula; 1 foreclosure for every six jobs that are lost.  The banks are VERY concerned about a third wave of foreclosures due to the Adjustable Rate Mortgages due to readjust.  The banks are concerned that even with lenders trying to mitigate the ARMS, home owners will use this as a reason to walk away.

What does all of this mean?

If you are a seller or are considering selling, things are not going to change anytime soon.  You will be competing with REO’s, take advantage of that by offering what they don’t have. Be a turnkey home, with a competitive price.

If you are a buyer, it is a good time to buy, IF, you find the right house that fits your needs and you plan to live in the home for at five to six years.  Buyers need to make smart moves when it comes to location, floorplans, etc.

Folsom Median Home Price for May 2011

What kind of home did $300,000 buy in Folsom during the month of May?  There were 10 homes that sold in May priced between $290,000 and $310,000.  The average size of the home was 1,765 square feet, with the largest one being 2,008 square feet and the smallest at 1,607.  All but three of the homes sold in less than 60 days, 4 of them under 20 days.  The oldest home was built in 1976, three were built in the 1980′s, three in the 1990′s and three in the 2000′s with the newest being 2004.  The average price per square foot was $169.67 and the homes on average sold for 99.96% of list price.

A year ago the same price range would have bought you 1,527 square feet and you were paying on average $198.39/square foot.