About Big Bear Lake's Sugarloaf

There isn't a day that goes by that I'm not on the phone talking to clients about Short Sales. Today's buyers spend a lot of time on the internet looking at cabins for sale in the Big Bear area before they ever come up and look around. Between the bank owned, REO properties and the Short Sales, the buyers are seeing some very attractive prices. One question that is asked more and more is what a Short sale is, and how is it different from a bank owned property?

Because I'm asked that question so often, I thought it would be good to take a look at the differences between the REO property and the Short Sale.

What Is An REO Property?

REO stands for Real Estate Owned or simply put, a bank owned property. The banks have been overwhelmed with foreclosures and have become the owner of a lot of properties. When they get these properties back, they want to sell them as quickly as possible. When you look at the bank owned property inventory, you will undoubtedly see some very attractive prices. Some of these homes are in move in condition and others are going to need a tremendous amount of work before you can use them,

What to Expect If You Make an Offer on A REO Property?

Making an offer on a home that is owned by the bank is no different than making an offer on a home that is privately owned. However, the response you get from a private seller is going to be much different than you're going to see from a bank. I don't care if you offered the bank what they were asking for; you are still going to get an addendum from the bank. This addendum is much like a counter offer that you would get if you were buying a cabin from a private buyer. This addendum is going to spell out what they will agree to and what they won't do. Termite work is normally rejected by the banks. They will usually pay for the Termite Report, but generally they won't do any of the Termite work. When you buy a cabin that is owned by a private party, you normally ask for and receive a one year home warranty. That won't happen with the banks. I've yet to see a bank pay for the home warranty. Along with a list of things the bank won't pay for, the banks like to shorten the inspection and loan time frames. Normally, a buyer is given 17 days to do his inspections and to get his loan in order. He is asked to sign off the loan contingencies at the end of the 17 day time frame. Banks, on the other hand will give you 5 to possibly 10 days to do all of your inspections and to get the loan in place. I have seen banks word the addendum in such a way that the contingencies are automatically waived if nothing is said within the time allotted.

If you are going to buy a bank owned property, I strongly recommend that you use the services of a qualified Realtor who specializes in this area. I also recommend that you take the time to read and understand the addendum that the bank sends over. Don't be afraid to ask your Realtor questions if you don't understand what the bank is doing. Make sure that you understand all of the terms of the contract before you sign off on it.

What Is A Short Sale?

Simply put, a Short Sale is a situation where a home owner is selling his home for less than he owes the bank. Even in the best of circumstances, a short sale can be a long and difficult process. If the buyer has a lot of patients and doesn't mind the wait, he stands to walk away with a good deal on a cabin. The flip side to that is while the buyer sits and waits, he or she can be passing up some great deals that come up on the market.

As an example of what I'm talking about, I will run down the highlights of a Short Sale escrow that I closed recently. My buyer fell in love with this property in Big Bear Lake and had to have it. I explained to her that it was a Short Sale and if she was serious about buying the home, she will be in for a long haul. Needless to say, she just had to have this property.

In speaking to the listing agent I was informed that there was a First, Second, and Third mortgage on the property. Fannie Mae held the first; a local bank held the second and the third was private money. The biggest obstacle we had with this escrow was that there was enough money coming in from the offer to satisfy the first and second mortgage, but the guy holding the third mortgage was out of luck. He wasn't going to let this escrow close unless he got something out of the deal. Fortunately, the bank holding the second was getting enough money back that they were happy to pay the guy holding the third off This escrow took three and a half months to work and when it was all said and done, the buyer got the home that she so desperately wanted. But, in those three and a half months, there were many ups and downs along the way.

If you are going to buy a home in Big Bear that is being offered for sale as a Short Sale, you want to make sure that you have an experienced Realtor like me working for you.

It seems that everyone is doing Brokers Price Opinion's for the banks these days. Unfortunately, I just recently lost one of my short sale listings to the bank. What was sad about this situation was that I had a very good offer on this property to begin with. Once the offer was presented to the bank, the BPO was ordered and the process began. In just a few short weeks, the bank came back with a surprising response. Based off of the numbers that came in from the BPO, this bank felt that the property was worth more than the offer. The only way that they would eccept the offer if the seller contributed $6,000.00 to the deal. Now, I feel very comfortable with my knowledge of the inventory in this part of Big Bear and was surprised with the stand that the bank was taking. There was no way that the bank was going to get as much as they were asking for. My belief was supported by the fact that once this offer fell apart and the property went back on the market, NO ONE showed it.

There is no doubt in my mind that by trying to squeeze the $6,000.00 from the seller it will end up costing the bank more money in the long run. To start with, the foreclosure process is not a cheap process. Add to the equation the fact that the real estate market in Big Bear continues to fall, and by the time the bank gets this property back on the market, the value will be even lower. What is the bank thinking?

In my conversations with the bank, I was able to find out that the Realtor contracted to do the BPO wasn't even from Big Bear! I asked for and was given a copy of the BPO and was shocked at what I saw. To start with, the property that I'm talking about is in Sugarloaf. This out of area agent used comparable sales numbers from areas outside of Sugarloaf. The comparable sales that he used were from Big Bear City and Big Bear Lake. By using comparable sales numbers from these outside areas, it gave the property in Sugarloaf a false and inflated value.

In another situation that I'm dealing with, I had a dialog with the listing agent on another property that was listed for sale in Sugarloaf. In this conversation, the agent told me that the bank would accept an offer of $140,000.00 for the property in question. My client liked the property and wrote an offer for $140,000.00. Yet, two days after the offer was presented, the bank countered with a price that was $20,000.00 over what I was told they would accept. The listing agent felt bad about this and asked the bank why they changed their position on the price. The bank told the listing agent that they had another BPO done and based off of those numbers; they decided to raise the price. The BPO was again, done by an agent who has no idea of values in Big Bear. This is another property that was listed with an out of area agent who isn't even a member of the local Multiple Listing Service. She quickly confessed to me that she was only able to find one comparable sale for the property. I quickly rattled off five comparable sales from properties that I knew were similar to the property in question and sold within the past six months. She asked me to fax them over to her so she could get them over to the bank. Stay tuned for the outcome as this is still going on.

What are the banks thinking? Why are the banks hiring real estate agents from out of the area to do these BPO's? In fact, what are these agents thinking by taking these BPO orders for properties that are in areas that they are not familiar with? The reason that I don't do BPO's on properties in Newport Beach is because I don't know the area. I don't feel that I can give the bank an honest assessment of the property when I don't know the area or the market conditions. My question is this. Why are these agents taking these out of area BPO orders when it is obvious that they have no idea what they are doing!

The question, My home is not worth what I owe, can I short sale it is asked quite frequently in today's market. In the past, most home owners had a tremendous amount of equity in their homes. Things would come up and they pulled the money out for one reason or another. Many of them are now in a situation where they owe much more on their home than it is worth in the current market. But just because you owe more on the home than it is worth, that alone does NOT automatically qualify you to short sale your home.

What is a Short Sale?

A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale.

As you can see from the definition of a short sale, the key to the whole process is there being a economical or financial hardship. Just owing the banks more than the home is worth is not going to be enough to qualify you for the short sale. There must be a economic or financial hardship in order to qualify for a short sale.

How do I start the process of a Short Sale?

The first step you want to take if you find that you are going to have to sell your home as a Short Sale is to find an experienced Real Estate Agent who specializes in the Short Sale Process. Your Real Estate agent will be able to negotiate with the bank or lender on your behalf. An experienced Short Sale agent will give you a much better chance of a successful short sale.

An experienced Short sale agent will tell you what you need to do to get the house ready for sale. Don't get to worried about the price he places on the home. There is a reason for that. Short Sales can go as long as four months and you want a buyer who is willing to stick around through a long escrow.

You will want to get all of the documentation together for the bank. From my experience, every bank has their own requirements, so you want to talk to the loss mitigation department. They will send you a Short Sale package. In that package, the bank will be wanting a hardship letter explaining your financial hardship. They will want to see your bank statements, tax returns, and pay stubs from your current employer. They may want to see your current budget as well a financial statement. The bank may have you send all the information in to them, or they may ask you to give it to your Real Estate agent. If the later is the case, then the Real Estate agent will submit all of your information with the offer. In some cases a release of second trust deed may be required. This normally comes into play if you have a second mortgage and that loan is not with the lender who holds the first.

As I mentioned earlier, don't get to worried about the price that your Real Estate agent places on the house. If he is an experienced Short Sale Specialist, he has done his homework and he knows where the home needs to be priced. His goal is to price the home so that it stands out against the competition as being a great value, but is still a price that he can support with comparable sales.

The first thing the bank is going to do it to order a BPO (Brokers Price Opinion) and so it is important that the price can be supported by the comparable sales.

If the BPO comes back to the bank at a price that is very close to the offer, it is normally accepted. But both the buyer and seller needs to be aware that the back doesn't pay the fees that are considered normal and customary. An example of this is a bank may only offer $1,000.00 towards any second mortgage and that is all they will pay. Another fee the banks don't normally pay for is the buyers home warranty. I know, this is only a few hundred dollars but the bank is taking a loss and won't pay for anything that they don't have to.

If you find that you are having a financial hardship holding on to your home and it is located in the Big Bear Valley, I can help you. Simply email me at tony@tonycard.comor call me at 909 229-5326. I will be happy to assist you with the sale of your Big Bear property.

If you are a buyer or investor looking to take advantage of the the short sales or bank owned, REO properies in the Big Bear Valley, please give me a call or send me a quick email. There are some great deals in the Big Bear valley and I would be happy to help you with them.

As long as I've been selling Real Estate in Big Bear, land has always sold well. It was not unusual for the neighbors to start calling in as soon as the sign was placed in the ground. In a lot of cases, the neighbor would jump at the opportunity to buy the land next door. He may have wanted it for a expansion, maybe a garage, or just so no one could build next to him. It didn't matter, land sold and it sold quick!

That was until this year. Very little land is selling in the Big Bear Valley. The land that has sold this year was sold at a substantially reduced price.

In 2006 a total of 365 parcels of vacant land were sold in the Big Bear Valley. As of today, September 17, 2008, there have only been 56 sales of vacant land.

What does this mean for you the consumer? It means much lower prices! I could give you examples all day long, but I won't. I'll just give a couple that show the savings that are just sitting there waiting to be taken advantage of. In 2006, you were seeing asking prices of $349,000.00 for an acre of land in the Meadowbrook Estates. Today, that same parcel of land is listed for $199,000.00. In 2006 there were 38 lots sold in Sugarloaf. As of today, there have been 4 sales. 5000 square foot lots, while listed at $50,000.00 and up, are not selling this year. The only land that has sold in Sugarloaf have been 2500 square foot lots. These are lots that were selling for $35,000.00 to $40,000.00 in 2006 and are now selling for as low as $15,000.00. There are many more examples that I can give you, but I think these make my point.

So many of my clients that bought land from me were contractors. Contractors, who would buy the land, build a spec home and sell it. In today's market with bank owned properties (REO) being sold for less than replacement value, it is hard for a builder to come out ahead with a spec build. Here is a good example of what I am talking about. A local builder bought a parcel of land in Big Bear City for $58,000.00 He then built a very nice spec home on the land. That home listed for $325,000.00 and sold for $310,000.00. About eight weeks ago, that home came on the market as a bank owned (REO) for $214,000.00. That home sold for less than replacement cost! This is a great example as to why the builders are not buying land and building.

While the builders are holding back on buying land, their loss can be your gain. Have you been thinking about how nice it would be to have your own cabin in Big Bear? Why not take advantage of the low land prices and buy your lot now while the sellers are ready to deal. You don't have any time frame that is going to force you to build, so you can buy the land and just sit on it. Once the market turns around, you will then have some options. Maybe you will want to build that dream cabin. Perhaps the idea of having a builder build a spec for you to sell is something that interests you. Or, maybe you sell the land and enjoy the profits from a smart investment.

In time any land investment in Big Bear will pay you dividends. There is only so much land left in Big Bear and once it is gone, well.... it's gone! The market may be soft now, but just give it some time. It will turn around!

You read about them in the newspapers, you hear about them every day on the news, but where are all of those bank owned properties that are supposed to be such a great deal. Starting this Saturday, June 5, 2008 and every Saturday after that, I have put together a tour of all of the Foreclosed (Bank Owned) properties throughout the Big Bear Valley. We will be leaving the office at 10:00 A.M. every Saturday morning and the tour will cover all areas of the Big Bear Valley that have bank owned properties. We can stop and looks at every one of them if you want.

There are a lot of agents offering to send you a list out there. But then you have got to go and find them yourself. Are you familiar with the areas? Are the REO's still on the market? Are there any offers on them? Are any of them screaming deals? How are you going to know any of this from a list!

Currently, the Big Bear Valley has bank owned (REO's) starting as low as $85,000.00 and going up from there. From small one bedroom 1 bath cabins to large scale homes in a gated community, Big Bear Bank Owned REO's has it all.

Big Bear Lake, a four seasons resort is centrally located in the San Bernardino Mountains. Whether you're in San Diego, Los Angeles, Orange County, or Ventura, you're only about 3 hours away from clear blue skies, fresh air and a breath taking lake. Big Bear Lake is open to the public. You don't have to own lake rights in order to use the lake. Unload your boat or jet ski from the either of the two public launch ramps and enjoy all that Big Bear has to offer.

Currently, space is limited, so please contact me to make a reservation.

Tony Card Big Bear REO Real Estate