Beautifully fully renovated unit! – Custom kitchen and bathroom cabinets, granite counters, stainless steel appliances, recessed LED lighting, new bathroom hardwood – marble and designer carpet floors. 2 new custom baths. Washer & dryer hookups in unit. Large patio. Gated community, pool, tennis courts, clubhouse, secluded setting. 2 dedicated parking spaces, plus guest parking. Antoine Pirson, Director Investment Properties at Caldecott Properties represented the seller.
Spacious upstairs unit in duplex + house on one lot, in Mulford Gardens area of San Leandro. This condo is close to San Leandro Marina. This property JUST SOLD for over the asking price! Antoine Pirson, Realtor®/Director Investment Properties at Caldecott Properties, represented the seller.
Is it possible there is a corrupted process at the very top (wall street executives, wall street investors, bank executives, hedge funds, etc.) Here is a thought: We know banks are not willing to reduce the principle loan amount for owners under water. That can easily be measured by the number of completed loan modification that include a principal reduction. Very (very) few: About 49,000 of all the proprietary modifications completed reduced both
the loan principal and monthly interest payments. Out of how many foreclosures again? About 1.2 mil? The ones that are done are merely to keep the politicians at bay so the banks can say they are following their guidelines.
But…….banks are very willing to foreclose on any property, and sell the properties in REO bulk at 55-60% of current market value. This allows rich “investors” to buy these properties, and then turn around and sell them back to the consumers market at 85% of value and make 20-25% of the investment in about 4 months. We are talking about $60 – 100 million REO investment per deal (read “tape”) . You and I cannot take advantage of these incredible returns, as we have no “insider” at the bank who will give us that opportunity. These opportunities go to “connections” so they can make a ton of money on foreclosed properties. Pretty easy money, no? Then here is this question: If banks are willing to write down the REO to 60% of value, then why can they not do a principal forgiveness for say 25% to the home owner? The write off to the bank is the same “loss” no? The big difference is that in the first scenario, the profit goes to the big investors at wall street. In the second scenario the “advantage” goes to the home owners.
So what would be the difference in the real estate market today (read values and prices), if we had used the second scenario? Well for sure there would be a lot less “distressed” properties. The home values would not have declined as much, which also means there would have been much less of a “recession” in real estate, and home owners would have felt very good about staying in their homes, so no strategic defaults, and thus a much “happier” consumer who might have been able to spend money on the economy.
When will we learn to do the right thing for all Americans?
Antoine E. Pirson, MBA, CCRM
Broker and Investment Consultant
Caldecott Properties
5251 Broadway, Oakland, CA 94618
Office: (510) 594 2400 x 234
www.investmentpropertyfirst.com
Fax: (510) 594 2424
Lic Nr: 01372814
I am sure we all have experience in selling or buying short sales and REO’s. Maybe in your neck of the woods, it is different, but here in California’s Bay Area, it seems that banks are not making the right decisions and are not capable of communicating between departments and are indeed preventing real estate values from stabilizing or appreciating. Here are two examples:
1. I was representing a buyer in short sale, and had an accepted offer from the seller and bank approval. Two before close of escrow, the bank foreclosed, and the property was bought at the county court house steps for $50,000 less than the accepted short sale offer (this is a loss even with the costs of the sale). This is an example of a lender’s inability to communicate between departments. Not only does this not make sense from a business / financial perspective, it also lowers the area prices by $50,000 on equivalent homes.
2. I was representing a buyer in a REO condo purchase. I had an accepted offer from the bank, and was going through the mortgage underwriting. The lender (for the buyer) decides NOT to do the loan, even after appraising the property at value, because the building does not meet a Fannie Mae guideline that was not designed for new construction. The original developer (whose name is on the Final Public Report issued by the California Department of Real Estate) still owns 40% of the total number of units. This resulted in the buyer walking away after spending $400 for appraisal and $400 for inspections. The condo unit sold for $75,000 less than the short sale offer. All the condo owners in this complex were negatively impacted by this sale which may result in these owners “strategically walking away” furthering the challenges faced in the current real estate environment.
You tell me the banks are NOT preventing real estate to rebound?
Antoine E. Pirson, MBA, CCRM, CCIM (candidate)
R.E. Broker and Investment Advisor
Caldecott Properties
5251 Broadway, Oakland, CA 94618
Office: (510) 594 2400 x 234
www.investmentpropertyfirst.com
Fax: (510) 594 2424
Lic Nr: 01372814
Taken from Carolyn Said’s article, Chronicle Staff Writer
Sunday, April 10, 2011
Times are tough all over in the housing market, but perhaps toughest of all in the world of condominiumsThese individually owned multi-unit complexes are suffering through a perfect storm of circumstances that have undermined values and left remaining homeowners to pick up the slack for defaulting neighbors.
In a vicious cycle, lending restrictions bar potential buyers from getting a mortgage in complexes where too many units are behind on homeowner association dues, are not owner-occupied or are concentrated in one party’s hands. Units in such complexes must sell for all cash, which drives down their price.
Kalyn and Noah Farris are moving from Sacramento and trying to buy an East Bay condo after she got a job as a project manager at Kaiser. They’ve run into the mortgage barrier.
“On the one hand it feels like you’re getting a deal compared with what prices used to be, but you have to eliminate whole buildings as options because they can’t meet the (lending) requirements,” she said. The couple were in contract for an Emeryville condo built in 2006, but four different lenders refused to give them a mortgage because the developer had kept half the units as rentals.
In complexes where mortgages aren’t available, “obviously those prices tank because who has $250,000 cash, for instance, sitting on their night table,” said their real estate agent, Antoine Pirson of Caldecott Properties in Oakland.
Lower values mean more owners are underwater, which increases the chance they’ll walk away from their units – and stop paying their HOA dues. Loss of HOA income means the association must cut back on services, amenities and maintenance, and often must charge remaining owners more to make up the difference.
Mature complexes, where many owners bought years ago and thus have mortgages they can afford, are likely to be in better shape than complexes built and sold in the peak bubble years. But even they can have some issues.
For instance, Debra Britton, president of a homeowners’ association in Pleasant Hill, said her 20-year-old complex “is likely weathering the storm a bit better than most. Because we’re a more mature property we didn’t have a lot of new owners (with possibly more risky financing) or a lot of people who took out large second loans putting them into dire shape.”
Many bankruptcies
Still, the 114-unit property has experienced an unprecedented number of foreclosures and bankruptcies – an average of 5 percent in the past three years versus only one bankruptcy and no foreclosures in the prior two decades.
“If people don’t have a job or are walking away from their property, or the bank is foreclosing, the dues are often the first thing they stop paying,” Britton said. “Additionally, it can take the banks or lending institutions many months or even a year or more to foreclose, which means dues might go unpaid for some period of time.”
To compensate for shortfalls, her HOA imposed a special assessment on all owners in 2009 and 2008. In 2010 a cooler summer reduced its energy expenses and water usage so it didn’t need an extra assessment. This year, it has asked all its service vendors to cut costs by 3 to 5 percent and plans to use some of that savings to help cover anticipated HOA dues delinquencies in 2011.
New units underwater
By contrast, owners at the newer complexes are likely to universally be underwater since prices have plunged since that peak. If they bought with the no-money-down loans common in those frenzied years, then they don’t have much incentive to stay put and are more apt to walk away and let their lender foreclose.
“Foreclosures are definitely having a bigger impact on condos than on houses,” said Andrew LePage, an analyst with DataQuick Information Systems, a research firm in San Diego.
About 17.2 percent of the Bay Area’s 1.8 million homes are condos, according to DataQuick. Meanwhile, about one-quarter of all foreclosures earlier this year were condos, showing the disproportionate impact the downturn has had.
On the plus side for condos, “there’s still big demand out there for cheap housing and the rental market is fairly promising,” LePage said. “There’s a sizable investor appetite (for condos).”
Cecily Tippery, an agent with Coldwell Banker, has seen the upside of condos’ falling values as an investor. She and her husband bought two units in the Contra Loma complex in Antioch, where units sold for $220,000 to $250,000 a few years ago at the market’s peak.
“You can buy for from $22,000 to $45,000, and can rent them out for $850 to $1,000 (a month),” she said. “HOA dues are $350. It’s a better investment than a CD and you can pay for it in a few years.”
It’s not a quick turnaround, though.
“You can’t fix and flip those because the market is so depressed for condos,” Tippery said. “You’ve got to hold on to them. Our plan is to hold for 10 years at least and then see where the market is. It’s a long-term investment.”
DataQuick said that about half of condos in Contra Costa County sold for all cash earlier this year, higher than the statewide average of about one-third selling for cash. In Solano County, all-cash transactions account for about three-quarters of condo sales. In Alameda County it’s about 42 percent.
Owners foreclosed on
The downturn has engendered some new trends, such as condo associations foreclosing on homeowners who don’t pay their HOA dues. In California, condo owners must be more than 12 months behind or $1,800 in arrears on dues before the association can foreclose.
Association foreclosures “used to be very, very rare,” said Lisa Esposito, president of Massingham & Associates, a Concord company that manages more than 300 homeowners associations in California. “Homeowner associations now proceed with foreclosing on homeowners who are delinquent because they have a duty to the rest of the (homeowners). Otherwise the homeowner lives there scot-free, uses the pool and tennis courts and amenities. There’s an understandable resentment. Many associations have 10, 20, 30 or 40 percent of owners who are not paying. That leaves the others having to pick up the difference.”
But foreclosing doesn’t bring the association any money, because the primary mortgage holder is first in line. It just gets the bank’s attention to get it to foreclose more quickly, so the unit will get resold to a new owner who will pay dues.
“The foreclosures are to force the lenders to act to stop the bleeding,” Esposito said.
Raising HOA dues
When a bank forecloses on a condo in California, it is not liable for past-due association fees. The shortfalls from defaulting condo owners has led to lots of belt-tightening at condo complexes.
“First, associations will stop funding their reserves” money for long-term repair and maintenance, said David Levy, a partner at Levy, Erlanger & Co., a San Francisco CPA that works for about 2,000 California homeowner associations. “Next, they’ll shut down some of the amenities – a clubhouse or pool if they have it. They’ll mow the lawn less often. If they don’t have the money, they can’t spend it.”
The other strategy is to raise HOA dues or impose special assessments. “That’s not popular, but the alternative isn’t rosy either,” said Esposito. “If this doesn’t get turned around, their property has less value.”
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/09/BUHC1IRH7P.DTL&ao=all#ixzz1JQipdCgG
When: Tuesday, April 19th
6:00 – 8:00pm
Where: Rockridge Library
5366 College Ave, Oakland, CA 94618
Why: To Make Good Investments!
Presented by:
Antoine Pirson, Broker/Investment Advisor (Caldecott Properties)
and
Ed Diaz, Mortgage Advisor (FirstCal)
Some Topics We Will Discuss:
1. Residential Realtors vs. Commercial Agents
2. Financial / Mortgage Decisions: Ed Diaz
3. Caldecott Properties: Antoine Pirson
4. Why am I doing this?
5. Multi-Unit Properties vs. Single Family Residences
6. Rent vs. Own
7. Short Sales, REO’s + Foreclosures
8. The Economy + GDP
9. Value vs. Cash Flow
10. Investing vs. Flipping
11. Tenant management and screening
12. Sell or Refi?
Invest in your future and come to this event!
RSVP here or email apirson@caldecott.com – hope to see you there!
Antoine E. Pirson
MBA, CCRM, CCIM (candidate)
R.E. Broker and Investment Advisor
5251 Broadway, Oakland, CA 94618
Office: 510.594.2400 x234
www.investmentpropertyfirst.com
Lic #: 01372814
Ed Diaz
Mortgage Advisor
Corporate Accounts
ediaz@firstcal.net
Cell: 415.368.1149
Fax: 877.834.6357
Visit me on LinkedIn
NLMS#249808 DRE#01313063
Where will the Housing Market go in 2011?
Tomorrow evening (January 4th, 2011) from 7 – 9 pm, Antoine Pirson (our Director of Investment Properties) will hold his regular monthly investment meet-up meeting at our Oakland office (5251 Broadway, Oakland, CA 94618 – the corner of Broadway and College Avenue)
Anyone who would like to join in the discussion is welcome to come and hear what Antoine and others have to say about the housing outlook for 2011.
Hope to see you there tomorrow night!
Antoine E. Pirson
MBA, CCRM, CCIM (candidate)
R.E. Broker and Investment Advisor
Lic #01372814
apirson@caldecott.com
Office: 510.594.2400 x 234
www.investmentpropertyfirst.com
caldecottproperties
East Bay Real Estate: Caldecott Properties 