Caroline Tsou Chai

Below is a chart showing the number of houses sold in Phillips Ranch from 2006 to 2009. In April 2009, 7 properties were sold and 19 properties went into escrow. Of the 7 properties sold, 1 is regular sale at bargain price, 2 short sales and 4 bank owned properties.

17 properties went into escrow in March and only 7 were sold in April showing the level of difficulty to close escrow successfully. Unless the property is an outrageous deal like the bank owned or short sales selling 10% to 40% below market, buyers are not that desperate to get the deal through in today's buyer's market.

Transactions could easily fall apart in escrow due to buyer's inability to secure a loan or buyers' change of mind. Unless the escrow is closed successfully, sellers need to psychologically prepared for the worst scenario to put the house back on the market if buyer back out from the deal.

The sales volume is almost double this April comparing to last April in 2008. We are continue seeing market price rebounding rapidly for about 10% to 15% since January.

Since the interest rate is still below 5% for 30 year fix rate loan, it is great time for buyers to secure good deal at low interest rate.

Home warranty is normally purchased by the seller for the buyer covering a year after close of escrow.

It covers most interior problems that is not covered by the homeowner insurance policy including electrical, plumbing, A/C, water heater, pool and spa equipment depending on the type of coverage purchased.

If not sure about the coverage, it is always a good idea to call the home warranty company to find out if that particular defect is covered. Here's how it works:

1. If a home system or appliance breaks or stops working, the home owner calls the home warranty company.

2. The home warranty company calls a provider with which it has a business arrangement.

3. The specific provider calls the home owner to make an appointment.

4. The provider fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance.

5. The home owner pays a small trade service fee about $50 to $60.

Home warranty provides a peace of mind especially for the first-time home buyer with no experience maintaining a home. It will help take out the headache of finding the right contractor and get the problem fixed by licensed professionals promptly.

After escrow opens, seller shall expecting the followings:

1. Visit by a termite inspector.

2. Visit by a property inspector that is send by the buyer.

3. Visit by an appraiser who will is send by the buyer's loan agent.

4. Receive escrow paper, sign it and send it back to escrow.

5. Respond to buyer's repair request.

6. Make an appointment with the escrow officer to sign and notarize the grand deed.

7. Receive a check from escrow.

After the passing of the new federal tax credit of $8000 for first time buyers, we are seeing a crazy frenzy of buying in Phillips Ranch and neighboring cities. Buyers with large cash down payment of $100,000 to $250,000 saved in their CD accounts are coming out to make purchases now.

Above is a chart showing the number of houses sold in Phillips Ranch from 2006 to 2009. In March 2009, 15 properties were sold and 17 properties went into escrow.

March sales volume is 3 times more than last March in 2008 and is highest since 2006. We are also seeing rapidly market price increase of 10% to 20% since December 2008.

Since the interest rate is still below 5% for 30 year fix rate loan, this may be the last opportunity for buyers to capture excellent deal with low interest rate.

In order for lender to issue a loan to buyer to purchase a property, lender hires an appraiser to evaluate the market value of the subject property to ensure lender's interest. Only comparable market sales (comps) of local properties sold within the last six months are allowed to value your home.

In today's down market, appraisal can come in low due to the fact that our market is foreclosure driven and the bank owned and short sale properties are selling 10% to 40% below market. The value of those short sales and bank owned homes could affect the value of standard sales tremendously.

In order to avoid appraisal problem, home owners need to either bring their price down to the bank owned price level or deal with the appraisal problem after escrow opens.

If the appraisal value comes in too low, there are several possible solutions to the problem:

1. Ask for another appraisal.

2. Protest the appraisal with documentation of your upgraded expenses.

3. Have the buyers make a larger down payment.

4. Lower the selling price to meet the appraised value.

If option 1 and 2 do not work out, combined solution of option 3 and 4 will be the most common practice. Buyer comes in with a larger down payment and seller lower the price by meeting each half way between the sales price and the appraisal value.