Michael Kelly,CDPE,CIPS,CRS,SRES

The alledged and much ballyhooed "Shadow Inventory" has not surfaced here in Sonoma County, California. WHY? I recently interviewed Ivan Choi, current President of REOMAC, former Sr. VP for REO sales at Bank of American and now with Prospect Mortgage, Ivan stated we should be in a market with thousands of REO properties flooding our price points but we are NOT! Why--"Government Intervention" Ivan states.

He related how our real estate market, in its greatest decline since the "great depression", has massive government intervention with many attempts to halt this huge slide of home owners into foreclosure. The HAMP program and now the new HAFA program taking effect April 5th, are examples of why the great "shadow inventory" is NOT flooding the marketplace. Though modifications are hardly "sticky" with 60-70% default rates, lenders are allowing great latitude in foreclosing on these home owners and are allowing forbearance for thousands more.

If you wish to hear Ivan's complete interview which was conducted on the "Real Estate Hour", Sundays, 9 to 10am, PST, locally at 1350AM,KSRO or via the web at www.KSRO.com, please go to www.TheRealEstateHourBlog.com and click on the old fashioned radio icon in the upper left hand corner. Ivan's talk was done March 6th and runs for an hour. Other noteworthy observations by Ivan, the ending of the Federal Tax Credits and the Fed not buying Mortgage Backed Securities all have him a bit scared!! But go to the blog and listen in. I'm sure you'll find it very revealing.

Our theme this year on the Real Estate Hour, Sundays, 9 to 10am PST, www.KSRO.com or locally at 1350AM,KSRO radio, is going "Green" for fun and profit! All this year we will be advising our listeners how to reduce their energy consumption then "produce" their alternative energy for additional savings!

GO TO OUR PODCAST LINK for our radio show file and then click the third item stating: "Green Show #1. You will then be able to hear the entire show discussing the progressive "Sonoma County Energy Independence Program" or SCEIP. This is a terrific program and consists of:

NOT a "point of sale" program--Voluntary on all parties! Realtors can breathe easy on this one!

1. Voluntary Contractual Assessment Program-AB811 authorizing Cities/counties.
2. Must be permanently affixed to res,comm.,industrial property
3. Request and Consent of the property owners-Energy AND Water Conservation
4. Payable semi-annual installments with Prop. Tax Bill
5. Serves Multi-faceted Purpose: provides homeowner energy/water conservation to reduce utility bills, boosts local economy-contractors to work, allows Son Cty to fulfill energy/water/climate protection commitments
6. Goal-Cities within & Sononoma County-reduce greenhouse gas emission 25% below 1990 levels by 2015. Santa Rosa, Rohnert Park,Cotati,Sebastopol,Healdsburg,Sonoma,Petaluma,Windsor!
7. Program financing-no money down, fixed rate financing, over a number of years. Rate now at 7%.
8. Requirements: Property vested in applicants, Curent on taxes, not in bankruptcy, current on mortgage, Improvements "reasonable to prop. Value", not exceed 10% of assessed value
9. Covers: Water Conservation-low flow toilets, tankless water heaters, irrigation controllers, Energy-windows/doors, attic insulation, HVAC equip, Solar-solar energy generation/solar hot water systems
10. Onsite survey by hiring a "Home Energy Rating Systems (HERS) rater. Cost included in the application for financing
11. Commercial properties qualify similarly.
12. Min Financing amt: Min-$2,500.00. 10-20 year assessment repayment period $5,000 below. No "Cap". However, cost exceeding $60,000 will need approval of the "Program Administrator. Excess of $500,000 need Board of Supervisor's approval.
13. County initial outlay-$45,000 Bond money.
14. Go to: www.Sonomacountyenergy.org for application. Or call: 707-521-6200 or email: energyinfo@sonomacountyenergy.org for all the details.

Don't forget to visit our real estate show blog: www.TheRealEstateHourBlog.com

Sonoma County, California--Home sales overall down over the past two years while the median, absent its free-fall, has been making strides over the past 5 months. The median year over year is up 10%. For the first time in recent memory my Broker Price Opinions, when concentrating on the Sub-$400,000 market I report "Stable--if not improving!". This is huge! We had regular months of 20-30% drops in the median.

I did a recent Broker Price Opinion and one question asked"When was the last sale of the subject property?" I check the count tax records and the price was $317,000, sales date May 2002. My BOP price came in at $289,900!! Gulp! Gasp!

We see the REO market down over 40% from last year at this time. Sales, compared to the low of two years ago, a paltry,meager 200+ units, is now hovering around 400-450 mark but REO/Short-Sales still accounting for 50%! Biggest month in Sales over the past two years? How about October 2007! 600+ units. What drove it? Yup! REO sales.

The Short Sale is prooving to be somewhat problematic (now That's an understatement but this is a family post!)! We have seen a doubling year to date over the amount of closings for this strange creature but nothing to really hang your hat on unit wise. Our biggest month ever for Short-Sales was July 09 with just a tad over 100 units. But we are now down around 65 but HEY! It's THAT time of the year for all sales to wane.

Our "under contract" statistic is bloated with "Short-Sales" that go in but NEVER come out. Many of us call Short-Sales--"REO Preview"!! Of the 890 continue to show properties IN ESCROW-575 are Short-Sales with an average time on the market of 160+ days! Now I know folks who get them done a lot shorter but I also know those agents and buyers waiting FOREVER!! 6+ months! How do you possibly structure a life around short-sales and their iffy outcomes? We've been hearing all sorts of gossip about a "more humane and friendly" disposition to these escrow but the light at the end of the tunnel appears to be a NEW TRAIN!!

Good news is my tracking of the "Normal" market--those NOT selling REO or Short-Sale. The sales for these folks is up a whopping 30% over last year. What's up with this? We've had 3 years of NO appreciation, huge drops in pricing, folks clinging to the theory, "My neighbors home went down in value--mine didn't!". Well after three years of this many folks, their lives having been put on perpetual hold, have decided to pull the trigger and just get on with their lives! Add the first time homebuyer's credit extension and the new "move-up" homebuyers credit and we are seeing a rebounding and awakening of this market. Their pricing is a bit "sticky" as many need to be led down the path kicking and screaming to a successful pricing strategy! The disparity between List price vs. Sales price is a big chasm! Education and paitience the best policy!

The best tool I find for this is "Foreclosure Radar". I pull up a map of their neighborhood and show them the action in the Pre-foreclosure, Auction and Bank Owned areas and they either see the light or must face the certainty down the road of competing with the big banks on price! And the chances of competing with the banks on price is slim to none and slim JUST LEFT TOWN!! I'm going to do a separate post on how to use Foreclosure Radar in the listing presentation. No stock in the company just a terrific tool for proper market pricing!

Don't forget to tune us in Sundays, 9 to 10am PST, "The Real Estate Hour", the NorthBay of San Francisco broadcasting to Marin, Sonoma, Clearlake, Mendocino,Napa, Contra Costa, Solano Counties for 15+ years. WWW.KSRO.comor locally on 1350AM,KSRO Mike Kelly and Allison Norman, "Two of Sonoma Counties Natural Resources".

Here in Sonoma County I have had great success with my "leads" or "Tips" club-The Sonoma County Executive Association (http://scexecs.com/).

When it comes to Business to Business leads and quality professionals to refer to incoming and resident clients in my area I have a ready list of not only contractors and professionals but raving fans and friends!

My question to the AR community: "How many of you are currently enrolled in such a group and what is your experience and successes?" I've met some of my best clients through my association with my "leads club" and always encourage other Realtors to find a club in their City or better yet START a club!

Walter Sanford had a freebie tip he shared some 20+ years ago at one of his seminar, on how to form a "Diamond Club" or "leads group". I've passed his ideas along to Realtors throughout the nation over the 20+ years since first hearing Walter. In Santa Rosa, California we have many "tips" clubs including the nationally recognized; "LeTip". However many other independent clubs exist as well. Our group is the OLDEST in Sonoma County and one of the largest with close to 60 members. I feel the bigger the club the better quality and amount of leads generated and the bigger referral pool for your client's benefit.

And while the leads are our reason for being, one can't ignore the ready referrals at your fingertips for the aid of your clients AND your real estate practice. I have my "power group" within our club which consists of businesses I use on a regular basis-contractors,handyman,carpet cleaner, carpet/vinyl company, pool service, Interior Designer, Insurance, Mortgage Broker,banker,Appliance company, auto detailing, Marketing expert, property manager, etc, etc, etc!

Plus THESE folks are also looking out for me! I can't encourage you enough to form your "Tips", "Leads" or "Diamond Club" soon. You can seek one out in your area or start one. Imagine the "lead generation" possibilities of calling "power partners" to form your own club and therefore gaining more and more "raving fans" ! I look forward to your comments and thoughts! If anyone wishes to see discuss this further I can be reached at: mkelly@realtour.com And good luck for a prosperous and fruitful 2010! I hope you make a "tips" Club work for you this year! One caveat though! "It works if YOU work it!"

Santa Rosa, California Home Sellers--Can you qualify for a Short-Sale? The big 3 questions asked up and down the Hwy 101 Corridor! Home Value leading the pack!

The qualifications for a short sale include:

1. Financial Hardship - There is a situation causing you to have trouble affording your mortgage. This could be all manner of issues; losing your job, one of the household bread winners losing a job, your Sonoma County company decides to relocate to Texas and you need to follow them there, you have huge medical bills for a family member, perhaps you need to now care for a parent or relative and need to move? All of these issues should be presented and DOCUMENTED in writing and sent to the lender. AND the biggie-how much is your current value of your house! Your Realtor can help you here! What we do on the Kelly-Norman Team at Keller Williams Realty is not only providing our clients a Broker Price Opinion on the home's value but pull a www.ForeclosureRadar.com map on their immediate area. This will show us the extent of the foreclosure present and future inventory in our clients Petaluma, Rohnert Park, Cotati, Santa Rosa, Windsor or Healdsburg Home.
2. Monthly Income Shortfall - "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage. This is where you sit down and write down your monthly budget. If you have more "month" than money the lender will need to see this in hard numbers. And you need to be thorough and detailed. The more information you can provide to your lender the better off you'll be. However, if you write down the payments for your two cars, motorcycle, powerboat, horse boarding, they may look askance at THOSE expenses as somewhat not in keeping with someone who NEEDS to downsize! Just be aware of this.

I once saw a short-sale listing which featured a complete and FULL wine cellar! Do you think the lender might take a slight offense to a borrower saying they need to sell their home short because they have NO MONEY and there sits $10,000 worth of wine in a temperature controlled wine cellar?!!

3. Insolvency - The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage. This does not MEAN retirement funds in a Keogh or IRA. However, having a large savings account means you have money to "bring" to escrow to make up a short-fall discrepancy. And be careful of playing games with a lender. Don't make a huge withdrawal and give the funds to your parents for "safe-keeping"! Fraud is still fraud. Also, if you purchased your house with some creative loan application and/or financing, you may wish to think twice about calling attention to your previous lender's hanky-panky!

So those are the three primary qualifications. Here are some additional tips: Make a pdf of all of the information need; tax returns, bank accounts, work related information, hardships reasons and documentation and keep it on your desk top. The lender will ask you to send it to them. Then they will tell you they don't have a record of it being sent, or they lost it, or the guy or gal working on it is no longer here and went back to Home Depot!! Don't get crazy, don't yell and scream (or at least put the cell on mute-scream and yell, then come back all calm and composed!) but ask for an email address where you can send it. Keep a folder in Outlook or Gmail on correspondence with your lender.

If they won't give you an email address get a first and last name. Emails for the big banks are based on their names usually with a dot between the first and last: Bill.Smith@bigMegaBank.com if they want it faxed, keep the receipts, time sent, etc. Also, buy one of those composition books and label it: "My Loan Mod" and keep a phone, correspondence log with date/time and notes as to what was said, what was required, when you fulfilled your task, and WHAT will be happening next! Also ask them, "What's going to happen next?" Keep, keepin' on and remember the squeaky wheel gets the grease! Good luck and remember-- advanced fees paid are NOW ILLEGAL! If someone wants money up front to get you a loan modification they are NOT to be dealt with!! Good luck!