Nikki Aguirre

To put things into perspective, my husband - Alex, ran an analysis on our clients who have given up on their home search due to the competition in buying a houses and waiting for Bank owned homes to hit the market. He was up until 3am, God bless him, doing the business recap. 16 Client gave up on their dream to buy a home...and we are just one team. I can't imagine the number of people who have given up.

Like many others, we are looking for some relief in a a drought of a market. We have heard that a new wave of bank owned homes will be coming to the market...but when? We have been told the same story over and over since March of this year. Can we truly expect a wave of foreclosures to provide an opportunity to first time that are bidding on multiple houses just to get one accepted? Yes and No...

We have to look at it from the Bank's perspective. Are they in a business to take huge losses simply to provide homebuyers with opportunities? No...unfortunately. They are in this to make money. The banks are currently getting government subsidies to TRY and modify loans, so as long as they are getting monies, they will be reluctant to foreclose on more homes. One of our clients vacated her house in July of 2008 - She had not paid her Mortgage 6 months prior to that. The house is still vacant, and the lender refuses to take it back. Instead they are sending her possible workout options...(grain of salt). These options are not very good one, but nonetheless they are offering something, and receiving bailout money as a result.

Secondly, bringing a large wave of foreclosures with tight lending guidelines is a recipe for disaster. This would cause the market to dip down again, and create greater uncertainty in the market. Remember, banks hire the smartest people to run their operations and mitigate losses. They are not going to cause more losses for banks. They are brought in to bring them back to a profitable level. Until something changes, I do not see banks flooding the market with homes for sale.

Now for the silver lining; On January 1st 2010 - the FHA guidelines are changing. No longer will brokers be responsible for making sure that the borrower meets all the FHA guidelines. This responsibility will fall solely on the banks giving out the loans. Some speculate that this will make it easier for brokers who were not FHA approved before to fund these types of loans. Some others say that the lender will be much stricter than they are right-now, so it will be more difficult to obtain financing than before.

Here is what I think: Banks are not in the business of losing money. Right? The are in the business of making money. They have convinced the FHA that it is for the Greater Good to turn over the FHA guideline review requirements to them. In doing so, they have full control of which loans to approve. Let me ask you - if you had hundreds of thousands of homes to liquidate, would you make it harder or easier to get a loan? My thoughts exactly! We anticipate that the banks will loosen their guidelines in a self-serving purpose to clear their inventory.

A few years from now, when people default on their mortgages, they can blame the low level staff for incompetency, and request the government to bail them out- again. Does the story sound familiar?

All in All, I think that banks will start to release more inventory when they feel that they are in a position to profit from it. Until then, they will allow home-buyers to bid the prices back up to reduce their losses.

We will see you here next week

As we mentioned last week, Buyers have been dying of thirst in this market that has been drying up in inventory for the last 4 months. Over the last couple of days, We have received some breaking news from several sources that the forecast for next week it looks like RAIN!! Here is how the forecast developed.

It started with a simple conversation with an agent looking to join Exit Realty. As we talked about Exit, she asked a very important questions. She said does Exit Realty have an REO Account and are we ready? I told her that we have been partnering with America Buys Foreclosures to receive listing since January, but the banks keep putting off the releases of bank owned properties due to moratoriums and other business decisions. I told her that we have heard this many times from the rumor mill, and were turning blue from Holding our breath!! She said " Well, I heard from a friend of mine who owns a brokerage in Long Beach that Bank of America will be starting to release more properties into the market next week". We told her that we would certainly hope so as we have many buyers who gave up because they were tired of getting beat out in this market.

So as I went to make some Coffee to wake up, My husband calls me and says " Did you get the email from ABF?". (By the way, that is America Buys Foreclosures). So I said, what does it say - that they are still working on getting us listings. Heard it all before yada yada yada. He said "no this is different!! Come look! read it". So I began to read the email, and it said that they were in FULL LAUNCH and have ramped up their customer service in order to fields questions from REO brokers on the listings they will be assigned...Okay, I will bite...is this just a hook to keep us hanging on a little longer? Then I scrolled down the email. On the left hand side was a list of partners:

Bank of America
Capital Lending Direct
Fidelity Escrow
Fidelity National Title

The one that stuck out for me was Bank of America of course because I just spoke to someone about them. More convincing though was the fact that ABF provided a list of their partners. This list was a hush hush secret that no one had access to or would disclose. Hmmm....maybe there is something going on here?

I told my husband, well if the listings are released then GREAT! We can get our buyers in houses that they have been working so hard to get into, and if ABF assigns us properties to List, then it will be that much sweeter.

Again, I sat down and started working on my To Do lists, and drinking my Coffee. Ring ring ring..."Hello this is Nikki". It was one of our Loan officers who just so happens to work for Bank of America. He was providing us with updates on some pre-approvals he was working on. After getting the updates, he said " Listen guys, I heard from Above - not from the rumor mill - that BofA along with Wells Fargo and GMAC are getting ready to release REO homes next week". As you can imagine...I started getting freaked out. Weird!! Twilight zone!!

Could it be?? Were we seeing rain clouds on the horizon moving towards us!! I sure hoe so because I am going to go out on a limb and forecast that Rain is own the Horizon, and bringing some much needed relief. While the weather man is not always right, when he is - you better have your umbrella with you.

I will close with this Caveat. We are not sure if the banks are releasing slight rain or a full blown storm of properties.My suggestions is to make sure you have prepared in any case. Be ready to act and be ready to move forward so that you do not miss your opportunity.

Until Next week! We wish the you success!!

The bottom came and went here in Murrieta, Temecula, Winchester and the surrounding cities. The local Real estate market to sharp turn this spring as Bank Owned inventory dried up. Well, not exactly dried up, being held back. Many anticipate the market to be flooded with a new wave of foreclosures. While rumors abound of the next coming wave to be greater than what we are currently experiencing, we are still waiting for it to come. We have been anticipating this since March, and could have benefited from a little splash during this Hot summer!!

For now, we have to keep cool and take a very different approach to buying a home. I will break down each buyer distinction, the challenges we face and share what would be the most tactical strategy to take.

Let's start with our most regarded:

The things that make a Cash Buyer so attractive is the ability to close quickly, low risk to the sellers in failing to close( to get a loan really) and their decisiveness. In a normal market Cash is King as my professor use to tell us. Not in today's market. We are seeing cash buyers being beat out by Cash Buyers who are paying a premium or Conventional buyers who are willing to step up the price even more. You see, the competitive market we are in combined with bank taking huge losses has created a unique situation. In order for banks to mitigate their losses, they have to go with the HIGHEST bid with the LOWEST risk of not closing. This has allowed the conventional buyer who is willing to pay a 10% premium to beat out cash offers at asking.

CASH BUYER
- Tactical Advantages:
As a cash buyer, you will have to use options that are available to you that are not available to financed buyers.
1. Appraisals are part of getting a loan - So make your offer without an appraisal contingency. Have your Realtor do a broker's price opinion for you as part of your service.

2. Increase your deposit to 10% of the purchase price. Most financed buyers will traditionally go 1-3%. The higher the deposit, the more serious the seller thinks you are, and the less likelihood of pulling out of the deal

3. Time: A loan takes time regardless of how much down-payment is brought in. Shorten your timeframes to 10-15 days from acceptance. This gives you enough time to do your discovery. Your Realtor should be in close communication with you upon acceptance to schedule all necessary inspections and review reports and disclosures.

Last but not least:
4. Your offering price should be at the BPO value. Why? Most cash buyers want a discount for going all Cash right? Well, the Conventional buyer will offer the maximum the appraisal will support and sometimes a premium or no closing costs. You have to make the bank think twice.. Should I go with this financed offer at 10,000 over asking , or this ALL CASH at Asking?

Strategy: When you put all 4 together, you will increase your chances of getting accepted.

Onto our Conventional Buyer:
The conventional buyer is a mixture of a cash and financing. With high enough Fico scores and at least 20% down, these are sometimes regarded as good as CASH.

- Tactical Advantages:
1. Financing. Since a large part of the purchase is financed, a Conventional buyer can easily increase the purchase price to go above asking. How? Easy, they switch over from Conventional financing to an FHA loan with a high down payment. This allows you flexibility in your offer.

2. On FHA and VA buyer, you have the advantage of time also much like the cash buyer. Although you still have to get a loan, our experience has been that a solid Conventional buyer has no problems closing within 30 days. While FHA and VA sometimes go 45-60 Days.

3. Closing Costs. While most buyers, are still asking 3-4% in closing cost concessions. Make sure to use some of the Cash to pay for your own closing costs. Do not stack closing costs on top of your offer it weakens it. This all has to do because your offer may be contingent on the appraisal. If the appraisal comes in low, and you asked for closing costs, the seller believes that you are going to ask for a price reduction and still expect the closing cost concession.

4. Earnest money deposit. You are coming in with at least 20% on your offer, so make your offer with at least 5% earnest money deposit.

Strategy: Make offer 5-10% above the BPO Value ( what the house is actually worth), 5% Earnest money deposit, and carefully consider your closing costs. Make it a sliding scale. In other words, do not ask for a fixed amount - Ask for a percentage of the purchase price. IF the price is negotiated down, then the cost will be automatically be reduced - no need to renegotiate.

FHA Buyers:
An FHA buyer is one who is seeking FHA financing that only requires a minimum of 3.5% down payment. Because FHA is less restrictive on their lending guidelines, the sellers sees this buyer as being more risky. Not to mention, that since the FHA will be insuring against default by the borrower, they need to make sure the home is in liveable conditions. if they are not, they will require the seller to make repairs before approving the loan. So to start, you are already behind the other two types of buyers just mentioned.

- Tactical Advantages:
1. You really only a couple advantages over the Conventional buyer. The appraisal!! You see, a lot of escrows have fallen out due to the appraisal guidelines HVCC that passed on May 1st. The loan officer can no longer choose a local, experienced, and knowledgeable appraiser. They are chosen at random, and sometimes have no clue as to what the local market is doing. As a result they bring in a LOW Value, and kill the deal. NOT YOU THOUGH - You can still have your loan officer choose the appraiser, and thereby give the seller a better assurance that what you are offering is what they are most likely to get.

2. Trade Time for a Better deal. Most Cash and Conventional buyers want quick decisions and quick escrow....Well, we all do. But if you are willing to trade time for money, you can a propery below fair market value!! That is correct!! Under market. You pursue short sales instead of bank owned. They take longer, but are sweeter deal when they get approved.

Strategy: Do not get into a bidding war with Cash and Conventional buyers unless you are prepared to pay your own closing costs. Pursue better deals by going after Short Sales. If you want to reduce the time you have to wait, then ask your Realtor to check on seasoned SHort Sales. If they do not know what those are, have them contact me. I will guide them in the right direction. Also, remind the listing agents that your offer is NOT subject to the HVCC, so their seller will max out with your offer.

VA Buyers:
Having family members who have served, these buyers deserve to use their benefit for serving our country. I blogged on the discrimination we are seeing in our industry. A true disservice to our military personnel.

http://activerain.com/blogsview/1211457/military-personnel-left-out-in-the-cold

- Tactical Advantages:

1. Flips: Because of the FHA anti-flip policy, Properties purchased by investors, fixed, and being resold on the market cannot be sold for 90 days to a buyer obtaining FHA financing. VA buyers are not subject to this limitation

2. 100% Financing and Closing costs. Since you are financing the entire loan, you can used the money you have saved to pay closing costs.

3. Same as the FHA buyer. You have the advantage of time. Trade time for a better deal. Remember the sayings "Hurry up and wait" - this is the same. You can get more house for the same money if you are willing to wait for an approval.

Strategy: Look for flips to buy rather than bank owned, they are just as quick and usually in better condition. Offer above asking like the FHA and Conventional buyers, but most importantly use the money you have to pay for your own closing costs, and plan to get into a house 4 months down the road. You can get a nice home for less money if you are willing to wait. Ask your Realtor to remind the listing agent of your dedicated service to our country. If they do not know how to tell them - just ask them to forward our BLOG.

While the market has turned and become highly competitive, there are still opportunities to capitalize on good deal if you have the right approach. We hope our blog help you get into a home faster and easier. Good luck and God Bless!

My heart is heavy this morning as I struggle with something. Maybe you can help!!

Having Served in the US Marines Corps myself, I know the commitment and sacrifice one makes for his/her country. To be ready to take action at a moments notice, and lay you life on the line to protect the right and freedoms of Americans and Democracy both on foreign and domestic soil!

Now, our service men and women are returning home from tours around the world, and they are seeking to find a home to provide some stability and security for their family. As they go out into the Homebuying trenches, they are looking to use their 100% financing that we as Americans have given them as a benefit for risking their lives to protect us and our freedoms. Get you tissues out - because in our local market they are being left out in the cold - abandoned- alienated and homeless if you will.

Our military personnel are being put at the bottom of the pecking order when submitting offers on homes.

The perception from seller's is that they do not have any money which is why they are going 100% financing. We need to educate seller's better that maybe - just maybe - they are using their government benefit for risking their lives.

The second response is that a buyer with a higher down payment has a higher chance of closing. What a bunch of Baloney!! The problem is that we have lot of loan officers in the industry that are not familiar with VA loans, and do not know exactly how to handle them. This is a disservice to Military buyers. Loan officers without experience in VA loans need to leave this to those who specialize in this type of loan. I have always used specialized loan officer for this type of financing, and if they say the loan if doable - it is as good a gold.

Lastly, our Military personnel are ready willing and able to pay above asking just to secure a safe environment to raise their family. They are being disregarded by fears of the appraisal not coming in. Since when have we let a third party decide what a buyer is willing to pay for a home. While some may argue it is for their protection, I would beg to differ. It is doing more harm than good. A home is bought and sold when ther buyer and seller have a meeting of the minds. When a buyer says I am willing to pay X and the seller says I am willing to accept X. With the ridiculous amount of documentation needed to make sure the buyer can afford the home, if they can afford it, and are willing to pay for it - who is the appraiser to tell them NO? Is the lender worried about Job security?? Can we make an exception for Military personnel that so long as they can afford the payment, they should not be subject to the appraisal.

I want to make this Call to Action. While we may see a conventional or cash buyer as a quick way to make a buck, and assure a closing, we have a right to get the seller the most we can for his home. By doing some extra work and educating ourselves and sellers on VA buyers, we can make sure that our service men and women have a place to come "HOME" to, and that they are not being left out in the cold. Have they not seen enough? Have they not been through enough for us?

Please Take this on: I think our Military personnel deserve it!!