Peter Nielsen

Today we closed escrow on a nice 2BR/1BA home at 100 Allyn Ave in San Anselmo. Hallelujah! This sale was a bear! We listed the home in September for $715,000 and received an offer for $695,000 within 2 weeks. Unfortunately, it was about that time that the stock & credit markets collapsed and the buyer backed out, fearing that he might get laid off if the start-up company he worked for didn't get a 2nd round of venture funding. (Later, it turns out, he did lose his job.)

At the end of October, we lowered the price to $699,000, in November lowered it to $679,000, then took a bigger adjustment in January to $649,000. That attracted Buyer #2, who later backed out after high estimates for repairs of a parking deck from a termite company. (A second estimate came in much lower.) Finally, in February, after another price correction to $629,000, we hit the sweet spot and received 2 offers, one of which was above the asking price. The other signed on in back-up position when the accepted offer started to look like it might not close due to inability to get financing approved.

In a declining market, both lenders and appraisers appear to be more conservative. The first appraisal that the lender ordered came in well below the offered price. A second one was ordered, and it came in right on the money. (Obviously, doing appraisals is not an exact science.) That was sent to FHA who required yet another appraisal, since 2 are needed when a loan exceeds $417,000. This 3rd appraisal became the subject of weeks of back and forth between FHA and the appraiser. Meanwhile, the seller lost her job, making the close of this transaction even more urgent. To keep the transaction together while waiting for financing, the buyers agreed to cover the seller's carrying costs for her principal, interest, taxes and insurance, costing them over $170/day and ultimately over $7000 in additional cost for the delay. After having entered escrow on April 27, it took a full 2 months before the loan was funded and escrow was able to close.

Clearly we had been "chasing the market down", always a step behind the falling market value curve. In a declining market, if a property doesn't get an offer after the first 3 weeks on the market, it probably indicates that it was priced too high and the seller is likely to be better off taking significant price reductions over a short period of time to get ahead of the falling price curve. They may well sell quicker and for a higher price than suffering "the agony of a thousand cuts" over an extended period of time.

In the end, this property sold for $645,000 with a $12,000 credit for repairs, making it essentially a $623,000 sale.

Peter Nielsen, Peter@MarinRealtyExperts.com, 415-472-6243.

Money Magazine has listed Vallejo, CA as the 9th most undervalued city in the U.S. with an average home price of just $196,300, which it considers to be undervalued by 34.3%. Merced and Stockton are also on the Top 10 list. For the complete article, go to http://money.cnn.com/2009/06/04/real_estate/home_affordability_soaring/index.htm?postversion=2009060412.

Peter Nielsen, Area Pro Realty, Peter@MarinRealtyExperts.com 4150-472-6243.

Today the proverbial "bluebird" of sales landed on my desk. I have a home co-listed in San Rafael, CA for $995,000 that went on the market May 26. Three days later, it was in contract. Now, 15 days later, the inspection contingencies have been lifted and the buyer has asked that the close of escrow be moved up by a week, making it less than a month from going on market to (hopefully, if all goes well), close of escrow.

Of course, the sellers think we've had to do very little to earn a large commission, but I think they understand that they got lucky on this one, since no other offers have come in since the original one that they accepted. Realtors don't work by the hour, but by the results we achieve and for every home that sells quickly, there are others that can take months, with hundreds of hours and thousands of dollars spent to get to this point.

I have just such a situation with a property in San Anselmo that went on the market August 30th, and had 2 buyers back out of contract before getting the 3rd one to get to the point of releasing contingencies -- nine months later! And that one is still a nail-biter day-to-day as we wait for FHA approval for the buyers' loan, which required 2 appraisals, the 2nd of which is still being reviewed.

The husband that is selling the home in San Rafael has owned an independent recruiting agency, and understands that this is how commission-based selling works. He told me that he would tell his staff never to apologize when a bluebird lands on your desk!

If you have been following this story, after months of attempting to get a short sale approved by two lenders, when the second, Countrywide, since acquired by Bank of America, finally approved it, it was too late, since the seller had accepted a loan modification from the first lender. Two days later, BofA called her and offered her a loan modification, that she agreed to. So it appears that she won't have to sell after all. She still doesn't know the terms of the loan mods, since the way they are set up, she needs to make 3 trial payments and if she successfuly does that, they will tell her the exact way that they intend to modifiy the loan - whether it is just to apply a reduced interest rate, to write off a portion of the principal or some other strategy.

In any case, since she now has agreement from both lenders, this owner should be able to stay in her home, and she signed the Cancellation of Purchase Agreement which I then sent on the the Buyer's agent, since the short sale now appears to conclusively be off. A week later, the owner sent an email to tell me that she had purchased a Lotto ticket for me, but it didn't win... And that concludes my 5-month long saga of the short sale that didn't happen. After seeing what is involved in working with the lenders and clients in a short sale situation, is it any wonder that buyers don't like to make offers on them, and agents don't like dealing with them?

This is the second one I've been involved with as the listing agent. In both cases I was able to help the homeowners -- in the first case to successfully conclude the sale by among other things, getting a delay the day of the foreclosure auction and in this case avoiding foreclosure via loan modifications. And in both cases it was a long and arduous path with seemingly unending delays, loss of information previously supplied to the lenders, getting a different person on each call to them and along the way, decisions by the lenders that were clearly against their own best interests. I won't say that I'll never take on another short sale listing, but if I do, I will consider all of the excess time I put into it to be my pro bono contribution to solving the housing crisis one unfortunate homeowner at a time.

Peter Nielsen, Area Pro Realty, www.MarinRealtyExperts.com 415-472-6243

When we left off on this story, the Seller had told me that she was accepting a loan modification from her first mortgage holder, so the short sale to the Buyer would not happen, that she was not going to pay a commission and for me to stop work on her behalf. Well, the next day, she reconsidered and decided that, since she had no luck previously attemping to get a loan modification from the second mortage holder, she wanted me "back on the case" to negotiate on her behalf with Bank of America. Meanwhile, she had signed up with a debt consolidation company, Care One, and said that she would turn over my request for a modified commission of $1200 to them. She pays them one monthly sum which they divy up among her creditors, with the intent that all get paid off or settled in the next 5 years.

Since I'd worked this long in trying to solve her housing problem, I agreed to continue my efforts on her behalf. That same day, I got a call from BofA saying that her short sale was, finally, approved! I told them thanks, but it's too late, since she has agreed to a loan modification from the first mortgage holder instead. She then gave me the number of their loan modification department. I told her that what would be most affordable would be for the owner to simply not start paying on the 2nd again, since she hadn't paid since last fall and they wouldn't foreclose in any case, since then they would have to assume the burden of the first mortgage. To that she laughed and said "I'll pretend I didn't just hear that."

I then called the BofA loan modification department. They of course had none of the financial information I had sent to the short sale department and asked for an updated income and expense statement which I got the next day from the seller and faxed to the bank. Along with this, the seller told me that Care One would be paying me $36/month towards my commission and thanked me for the excellent work I was doing on her behalf.

Peter Nielsen, Area Pro Realty, www.MarinRealtyExperts.com, 415-472-6243.