Oakland, CA

Why do we work with team? Simply that you get to know what to expect and know that the other team member will be doing their part to see that the deal gets closed. Once in a while you get reminded that not all teams are equal and you may have to work with a team member to get them up to speed.

I've just spent the last 3 hours writing a rather larger project work write up, Sent one of my team members a note to get some missing info when I was told the borrower didn't qualify and the deal was effectively dead. Wow, too much, too late. I could have spent those three hours more productively had I been kept in the loop.

The idea of using teams only works well if the team keeps you informed, we'll be working on that aspect of this team, lol. It is all good, this team has several 203k projects underway and will be a contender this year for sure.

Consultant sees the property and finds the property needs lots more work than the budget will allow, we notify the other team members so they can adjust their plan. In many cases we turn it into a "feasibility" and give the buyer's agent a tool that allows them more data to help get the purchase price down so the deal can fly. It is important to work with your team to keep these deal alive and well to the closing. Sometimes that isn't possible but you want to know before you have allot of work into them.

Lender sees the client doesn't qualify for some reason after the order is placed, maybe something came up that wasn't apparent early on... put the brakes on the project.

Agent learns something that might affect the deal, share it with the team. We may be able to offer some assistance. Who knows? Teams really work well when you allow them to.

<!--[endif]-->Streamlined “k” (started in 2005) and was intended to make the program easier to use for the majority of the lighter renovation projects. The significant thing with this one is that it cannot have any “structural” component. It is intended for smaller projects and though the maximum construction costs are limited to $35,000 per the Guideline in reality it is only $30,000-34,200. If you come up with Streamlined “k” loans where the work is $35,000 and your lender only does the Streamlined “k” you will be disappointed most of the time. The $35,000 must include the costs and fees associated with it. The $30,000 figure is due to the requirement of many lenders to maintain a 10% contingency reserved which takes a $30,000 right to $33,000 immediately.

The big thing here is that there is “up front” money for the contractor of 35-50% of the construction cost. The project must be completed in no more than 60 days, and there is only one final draw at the completion. No other interim draws.

The scary thing about a streamlined k loan is that the payout isn’t as easy as it was intended. Yes, the contractor gets 35-50% of the money up front, or in reality about 2-4 weeks after it closes escrow if you are lucky. When the job is completed, the Contractor turns in a final invoice, if the owner signs the paperwork then the lender will send the appraiser out to inspect. What, you say “If the owner has signed the paperwork?” Yes, IF they did, if they are disgruntled they might not and they may waste another week or two till they realize they have to sign it off.

Then the appraiser gets out there and fills out the paperwork then sends that to the bank. The bank reviews it and if it seems in order they seem to put it in a pile that might get to the check writing stage in about 3 weeks from the time the contractor said the job was done and the borrower agreed.

So, if you are a contractor and can’t wait for that additional 3-weeks after you completed the project, you may want to stay away from the Streamlined k.

The FHA 203k to the rescue again.

That is correct, and if you purchased a 1-4 unit property that you are living in or want to live in, within the last six months and can close the new loan prior to that six month anniversary you get to include the money you already put down as though you had just put it down now. If it was after that anniversary and you put 20% or more down you may still be able to get your construction money with no more money out of your pocket. This is a wonderful refinance and renovation program.

Remember that refinances can only go up to 100% of the appraised value and not the 110% like purchases can. If you need a refinance and renovation loan we can recommend Danny Fitzpatrick of Wells Fargo

This loan program is also an excellent way of financing construction when contractors need to assist the borrower in finding the money to pay them. There are also programs for investors (not FHA 203k)

Now and then someone will ask me, “What’s a trustee sale like?”

Trustee Sales or Foreclosure Trustee Sales in Alameda County are held at 1225 Fallon St. Oakland CA Monday through Friday from noon to 2 pm.

It’s another real estate market, the last step in the foreclosure process.

The investors gather at the courthouse steps. The auctioneer calls out the properties and begins the bidding. It’s hard to hear the auctioneer but the investors can hear him just fine. The buyers are savvy investors resembling a group of Vegas gamblers. In a sense they are gambling, and they are addicted to the thrill of the auction.

The investors walk around with their papers letting no one see their numbers. Their homework done, they mill around waiting for the right deal. Each one has a way of checking out the properties. Some subscribe to special research services. These guys are serious. Many of them have been doing this for 10 to 20 years.

Most of the properties go back to the bank. The bidders know what’s a good deal, and it’s all about the bottom line. If they don’t get something today, they’ll be back tomorrow.

You need to bring cashier’s checks in denominations of ten thousands and twenty thousands. How would you feel carrying a load of cashier’s checks in Oakland?

For most buyers this market is not an option. It takes guts to plunk a hundred or two hundred thousand dollars on a house you know very little about, and once the bid is accepted the buyer can’t back out…not with the deposit anyway.

For curiosity, it’s good to see the trustee sale process, but I don’t recommend it for rookies or for people with low tolerance for risk.

On a side note, just this past month in Alameda and Contra Costa counties, three investors pled guilty to collusion and twenty other ones will be indicted by the FBI for participating in private auctions. Kind of paints a dark picture, doesn’t it?

How can I help an investor? By giving my opinion as to whether or not it’s a good deal and an idea of resale value.

Got a a short sale house listed for $299,000 and an all cash offer for $310,000. One lender. One loan. Bank of America, BAC and Freddie Mac. Bank foreclosed at the trustee sale for $277,000!

The owner had tried to refinance, and to loan mod. Nothing worked, so he was advised by the bank to do a short sale. The owner thought that was best too.

Got an offer for $300,000 all cash. Great.

Bank wanted all the documentation from the seller, income taxes, W-2s, checking and savings bank statements, pay stubs, hardship letter, Request for Income Tax Transcripts (4506-T), Conviction Certification (Dodd-Frank), Request for Mortgage Assistance (RMA), Borrower Financial Information, utility bill, Authorization Letter, Freddie Mac Short Sale Addendum notarized by ALL parties, Estimated Settlement Statement (HUD-1).

From the buyer the bank wanted the offer, earnest money deposit, proof of funds. The usual stuff.

Two months later, the appraiser values the house at $375,000.

Bank counter offers at $350,000 minimum. Buyer raised his offer to $310,000 but bank said NO.

Trustee sale date was coming up and there was no postponing it. At the courthouse steps, the bank took the house back for $277,000.

From my perspective it didn’t make sense. But I know that banks have their own logic…like the horse in the picture.The horse will drink the water when it's good and reay and not before, you know?

What I would like to see in the future: The bank saying what is an acceptable amount from the start or appraising the place right away after an offer has been accepted to determine if the amount is good for them.

Nice going Freddie Mac.