John Ruzicka\’s Blog

1.    It’s only fair!   The seller has an agent, why shouldn’t you?   You  wouldn’t go to divorce court and let your wife’s lawyer represent you.   Buyers agents negotiate the best price and terms for you, help gather information and disclosures, and have a fiduciary  responsibility to act in your best interest… always.

2.   This stuff is complicated.   Changes in recent years, legal issues, paperwork  - all of it can be daunting even if this purchase isn’t your first.   Having an agent on your side can help you learn more about the process and be more in control of your decisions.

3.   No conflict of interest.   If you call the agent who lists the property for sale, you’re calling a person who has a legal responsibility to represent the best interests of the seller.    You think  they’ll work to get you the best price, terms, etc – especially since they’ll be double-dipping on the commission?

4.   More choices.   As a buyer’s (only) agent, I don’t list property for sale.   Therefore, I won’t try to unload my inventory of listings on you.   You’ll get to see any homes that fit your needs and I’ll work to make sure you have a complete picture of the market.

5.   You get 100% of me.   Without having to deal with fussy sellers, I can dedicate more time to your home search.

6.   I work with your lender.   Getting a good loan is tough these days.   If you already have a lender, that’s great.   I can work with them to ensure the process goes smoothly.   I can also recommend several lenders who can help you get the best rate and terms for your loan.

7.   I’m free.   The seller (typically) pays the commissions for both agents from their proceeds on the sale.   So my expert service and care  cost you nothing.

If you’re looking to buy, my advice is to find someone you trust to help you through the process.   You’ll be glad you did.

This week I had the privilege of attending the 10th annual Residential Real Estate Outlook at the University of San Diego’s Burnham Moore’s Center for Real Estate. This was the fourth year in a row that I’ve attended and found some surprisingly positive comments from the presenters. This year, I decided to send a few Twitter updates during the conference. You can follow me here: http://www.twitter.com/johnruzicka.  

First up, was Jay Brinkmann, who is chief economist and senior VP of research and economics for the Mortgage Bankers Association. His presentation focused on national research for the entire US housing market, but he did have some breakout figures for CA and other states. Bottom line from his talk was that California will see a different type of recovery due to our unique economy and continuing local and state government problems.  

One interesting figure he mentioned was that in CA, 80% of all mortgages that are 30 (or more) days late end up going into foreclosure (at least beginning of the process). That number was significantly higher than any other states. So it sounds like CA (or Californians or CA lenders) are not doing such a great job of saving folks (or themselves) from foreclosure.
Ryan Ratcliffe, an economics professor from the University of San Diego School of Business, was up next and talked about the dim light that he sees at the end of the economic tunnel. Many of his graphs showed plummeting figures, followed by more recent upturns in some cases. Basically, there are some slight improvements in leading economic indicators. Ryan mentioned that he predicts a “jobless recovery” due to the numerous manufacturing jobs lost during the recession that will likely not be replaced.
Finally, rock star USD econ professor Alan Gin made an appearance. Alan is probably the most-quoted professor at the university. Union Trib, NPR, local news outlets, national media – you name it. If it has to do with San Diego real estate, they’re likely calling Alan.
Dr. Gin’s leading economic indicators for San Diego are always interesting. He takes into account a number of factors and his overall assessment was that 2010 will simply have, “less bad news.” He did point out a couple of bright spots – housing starts are slightly higher and consumer confidence is rising.

His tally is that San Diego will lose a total of 50,000 jobs in 2009. Most of those were in the construction and tourism/hospitality industries. That’s the bad news. Good news is that he’s predicting a marked improvement in 2010 and the county will actually gain about 2-3k jobs. So, in Dr. Gin’s view, we’re actually stabilizing and will hopefully see some improvement by the end of 2010.

As a potential buyer, the market in 2010 should stay relatively the same in terms of home prices. However, there was talk of interest rates and the probable end of the first-time home buyer credit. Thanks for reading – please contact me if you have any questions or want to go take a look at homes!

This month I’m highlighting a recent short sale that actually went quite well.   In a sea of bad news, there are some short sales that actually go well.   Here are a few of the details and reasons why I think it went well.

A troubled homeowner found himself in a familiar position for many where he owed much more on his loan than his home was worth.   Unable to refinance, his loan was set to adjust at the end of 2009 and the rate could have gone up to as much as 9.8%!   Armed with this knowledge, the homeowner started early in 2009 to get a loan modification from his lender.   Several letters and pay stubs later, the lender denied both his request and appeal for modification.   Since our dear homeowner could no longer afford the mortgage, he had no other option than to attempt a short sale.

The first good move by our troubled homeowner is that he found out how the lender wanted the short sale process to go.   He called the lender and although he was not able to get a desired sales price for his property, he did get some good information on what the lender needed to make it happen.   Since most lenders have a different process, it’s important to find out what YOUR lender needs.

Next, our troubled homeowner found a broker who was experienced with short sales and the negotiation process.   They listed the property at a fair price without really knowing if the lender would accept it.   Based on the broker’s experience and current market conditions, they had a good idea that the home was priced well.   With a little luck and some good marketing, the seller got a full price offer within the first week of listing.   The buyer had a great financial profile and easily qualified for the loan.

Here’s yet another key point to this particular process.   Rather than accept a lower offer from a less-qualified buyer, the broker ensured that this buyer was both motivated and qualified to close the sale.   Since some short sales can take 3-6 months, a patient and motivated buyer is worth a lot.

Finally, the seller and broker continued to communicate with the lender throughout the entire process.   Knowing the steps involved and what was remaining, the seller and broker worked directly with the lender and everyone was up to date with the sale.

The result was a smooth, on-time close that got the seller out of a jam, got the buyer a great deal, and everyone was happy in the end.   Of course not all short sales can be so easy, but there are several points here to remember in case you find yourself in a similar position.

If you haven’t heard already, new rules go into effect on July 30 that will do more to protect buyers and home loan applicants.   The Federal Reserve regulations require lenders to provide consumers with initial disclosures of their mortgage costs within three business days of their loan applications, among other changes.   Read the entire LA Times article here: http://www.latimes.com/classified/realestate/news/la-fi-harney19-2009jul19,0,1179820.story

Many of you well know that I was a Naval Officer in a former life. Hard to believe, but June marks my 5 year anniversary from leaving active duty! One more year and I’ll be “out” as long as I was “in.” I stumbled upon a webpage that shows a good bit about what I did in my second sea tour as the Beach Party Team Delta Commander for Beachmaster Unit ONE.

We were in charge of all ship-to-shore movement of vehicles, gear, and personnel – among other things, along with being responsible for surf rescue and boat salvage (getting stuck boats unstuck!).

Take a look at an exercise from last year that is very similar to what I was doing in S. Korea in 2001: http://www.cnbg1.navy.mil/JLOTS08.html

Not quite as sexy as Top Gun, but pretty cool that the Navy can essentially create a pier to move mass amounts of stuff from the sea to land in a relatively short amount of time without needing an established port. It was a fun job and always something going on.

I feel like much of what I learned in the Navy has been beneficial in real estate as well.   Every day there was a new and different problem to solve (kind of like during a transaction!).   Patience, leadership, forward thinking – those are all things I learned in the Navy.

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a œfirst-time home buyer the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer™s tax credit is determined by two factors:

The price of the home”the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer’s income”single buyers with incomes up to $75,000 and married couples with incomes up to $150,000”may receive the maximum tax credit.

If the Buyer(s)™ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income”over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

Source: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

Here’s a great new initiative from the California Association of Realtors that will actually help you make your mortgage payments should you lose your job (under certain circumstances, of course).   Read more below…

March 31, 2009

Dear C.A.R. Member,

I am very pleased to announce that this Thursday, April 2, C.A.R. will launch a new program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss, and subsequently being unable to meet their monthly mortgage obligations.

Through the C.A.R. Housing Affordability Fund Mortgage Protection Program (C.A.R.H.A.F. MPP), first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss. Program benefits also include coverage for accidental disability and a $10,000 death benefit.  C.A.R.™s Housing Affordability Fund is dedicating $1 million to the program this year, and estimates that as many as 3,000 families will benefit from the program throughout 2009.

To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer “ someone who has not owned a home in the last three years
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR ® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)

First-time home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR ®. For applications and other information on this exciting new program, go to www.car.org/aboutus/hafmainpage/ or contact Monica Rodriguez at (213) 739-8380 or monicar@car.org.

The Mortgage Protection Program is a proactive approach by C.A.R. to address consumers™ concerns about the real estate market and their ability to make their mortgage payments should they loose their jobs. I encourage you to take full advantage of this new program by sharing information about the C.A.R.H.A.F. Mortgage Protection Program with your clients. There is no cost to either you or your clients to participate.

Sincerely,

James Liptak
2009 C.A.R. President

As I mentioned in my September blog last year, sometimes the best deals out there are not the distress sales (foreclosures, short sales, REOs, etc).   This article actually says it better than I could and raises a lot of good points on the subject.

http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/should-you-buy-a-foreclosure.aspx?page=1

 If you’re looking for a home, be sure you consider all sources – not just the ones that have traditionally been good deals.   Just a quick story to illustrate my point:   I was recently looking at a home in Bay Park with an investor.   It was very well-priced, in a great neighborhood, had a view – the classic ‘worst house in the best neighborhood.’   It definitely needed work – there was literally no kitchen (no cabinets, no sink, no appliances) – and there were other things that would need to be replaced.   But at the list price, it was certainly a steal.

Our offer was one of nearly 25 on the property in the first two days.   There’s the competition that the article mentions.   The super low price  created a frenzy and we weren’t even in the running for the property.   My guess is that there was an all cash offer for well over the list price.   We’ll see when the deal closes.

Happy house hunting if you’re in the market.   It’s still a great time to buy in San Diego, so please contact me if you know of anyone ready to start the process.

The title of today’s post may be a question that you’ve asked yourself after hearing the news that Congress passed the newest version of the stimulus bill worth more than $780 billion.

But first, Happy Valentine’s Day!   If you’ve ever wondered about the origins of this “holiday,” wonder no more – just check out this article from Wikipedia:   http://en.wikipedia.org/wiki/Valentine’s_Day

Ok, back to the economy.   If you’re considering buying a home, you may be eligible under the new stimulus bill to receive a one-time tax credit of $8000.   To qualify, you must be a “first time” buyer, meaning that you have not owned a home in the past three years.   Always consult your tax preparer for exact details on IRS rules, but that’s a pretty good deal.   If you’ve been sitting on the sidelines waiting for a better opportunity, this is a pretty good motivator.

It seemed that it was politics as usual on Capitol Hill regarding the debate over this particular bill.   It should come as no surprise that the votes for the bill followed closely down partisan lines.   Seems republicans were fighting the bill just to be fighting it and the democrats were supporting it just to support it.   I heard some sound bites from the arguments for and against the bill and it’s hard to figure out who’s right and who’s wrong.   As Obama’s first major move, it will be interesting to see what kind of long-term effects this really has on the economy.

As I’ve said all along, if you’re in a position to buy a home and expect to be in that home for 5 years (or can rent it if you move out), then now is a good time to start looking.   Give me a call if you’d like to get started or if you just want to talk about the process.

Thanks for reading – feel free to email me any questions you’d like to see featured in my next post!

John
www.youandjohn.com

Ok, so I know that “You get what you pay for” is improper grammar, but this is a blog after all.   And you know exactly what that phrase means.   Maybe I’ll sprinkle in a couple of other cliches just for fun!

Let me start with a short story.   I got a call from a client recently who described a problem his friend was having with another real estate agent.   He and his wife found the agent online with a discount broker and the hook was that they would receive $2,000 cash at closing.   Sounds like a great deal, right?    Well… it’s not such a great offer when the transaction doesn’t actually close and you get little or no help from your agent when the deal starts to  go south.

It seems that only two days before the scheduled close date, the seller decided that they did not want to move and claimed that they would stay put, even if the deal closed.   The buyers got no support or sympathy from their discount agent and were left wondering what to do.

In the end, the buyers bypassed their “agent” and went directly to the seller’s agent for help.   They were able to salvage the deal, but not before they went through a lot of stress and effort on their own part.   Due to lack of support from their agent, they risked losing their deposit, possibly paying attorney’s fees if they had to sue, and could have had a long delay before actually getting to move into their new home.

The reason I post this story is because there are a lot of agents out there who promise a lot of things, including cash back at closing.   With this much money at stake, why would you risk working with a discount agent?   Would you go to a doctor who promised to give you money back if you had him  perform your surgery?   Probably not.

The other point I’d like to make is that normally the buyer does not pay any part of the agent’s commission.   In all the deals I’ve ever done, the buyer comes out of pocket for closing costs only – which do not include any part of my paycheck.

Be wary of anyone who is quick to give up part of their paycheck.   If they’re willing to give up their own money so quickly, how hard do you think they’ll fight during negotiations  when it’s your money on the line?   If it sounds too good to be true, it probably is.   Remember what happened with companies like Help-U-Sell and iPayOne?   Discount brokers who didn’t provide good service to their clients – now out of business.

Here are a couple of recommendations before you decide on an agent:
1. Find out how long they’ve been in business.   If they don’t have much history, it’s hard to be confident in their experience.
2. Ask friends/family for referrals – most of my buyers come from referrals from satisfied  past clients.
3.  Before you decide on an agent, do your research.   You can search the CA Dept. of Real Estate website at www.dre.ca.gov to find out of they’ve had any complaints filed against them, if their license is valid, etc.   All you need is the agent’s DRE number, which they should be happy to provide if they have nothing to hide.
4. Consider the total value of the agent – in the case I presented above, the $2,000 looked like a good deal.   However, when the agent goes underground when you really need him, he’s not fulfilling his fiduciary duty to the buyer.   I’m willing to bet that the buyer would gladly  do it  again  and forget about the cash back  if they could  get an agent who would be supportive through any type of problem.

Buying a home is a big step – there are a ton of great agents out there and I’ve had the pleasure of working with many of them.   Just be sure to do your homework.   Don’t be afraid to ask specific questions and get the answers you need before entering into an agreement.

I’m happy to talk more on this subject and happy to help you if you’re looking to buy a home in the San Diego area.   Email me at ruzickaj@msn.com or call me at 619.957.8030 and we can chat.   Thanks for reading!