East Bay Russian Roulette Home Sales

East Bay home owners continue to gamble and lose more money on the sale of their homes than many U.S. citizens earn in a year.

Sellers refusing to face the reality of a housing market that is continuing to settle and a lending and mortgage industry that is experiencing weekly kaleidoscopic change are losing tens of thousands of dollars chasing the market down.

Without a doubt, our biggest challenge these days is trying to get sellers to face the reality of their local real estate market. Over 90% of the sellers we talk to want to over price their home for existing market conditions.

Sellers are holding on to their wishful thinking that there is that one “magic buyer” that will appear, fall in love with their home and pay more than market value to own the seller’s dream home. In most life situations 2 out of 3 isn’t bad, but with  dreaming sellers – it’s 3 out of 3 or hit the road Jack.

Mortgage Industry Continues to Change

WASHINGTON — U.S. federal regulators, in a dramatic move highlighting the
tenuous state of global credit markets, outlined a takeover of Fannie Mae and Freddie Mac on Sunday morning, including giving control of the firms to their regulator and allowing the Treasury Department to purchase billions of dollars of the firms' senior preferred stock.

What’s this mean to YOU the local home buyer/seller? According to Dan Green of The Mortgage Reports – As of today, mortgage debt is government debt and by the transitive property of risk premiums, mortgage debt is now risk-free.  Therefore, conforming mortgage rates are down.

Wall Street Journal – The government takeover of Fannie Mae and Freddie Mac likely will help ease mortgage rates for home buyers, say economists, home builders and housing experts. But it won't cure the housing markets biggest ailments: falling home prices and rising foreclosures.

Are there any glimmers of hope? The National Association of Realtors said on Tuesday that pending home sales dropped again in July, dashing expectations of a continuing rebound after positive results in June. And prices of existing homes fell 7.1% in July.

Mortgage Rate Mania

I make no bones about it – Dan Green of The Mortgage Reports produces one of the most informative blogs on all things mortgage. Dan’s also a great guy. Through his savvy blogging and business efforts, he has become something of a celebrity in news circles.

This past week, Dan Green, wrote two posts that help to explain some of the challenges that exist today in getting a home sold and an escrow closed.

How To Avoid Paying Jumbo Mortgage Rates On A Jumbo-Sized Mortgage – explains what jumbo loans are and the predicament high-end buyers are finding themselves in when purchasing million dollar homes. It seems their friendly “Big Bank” banker can’t always take care of the buyer’s needs.

There's Only An 18.60% Chance That A Morning Mortgage Rate Quote Will Be Honored By The Afternoon – talks about loan rate volatility and what buyers can do to lock in loan rates.

Escrow Hell

More and more, I hear reports from fellow Realtors about how difficult it is holding deals together. Getting a transaction through the escrow process is not only challenging, it’s full-time work and baby sitting.

One Danville, California real estate agent commented to me that the 8 deals she had in the escrow process are all in jeopardy. They’re in jeopardy, not because of a lack of skill or experience on her part. They’re in jeopardy because the real estate, mortgage and lending rules are changing daily. AND because buyer/seller dynamics are at a place that make many transactions take on the appearance of a Mel Brooks film.

 Sellers That Need to Sell, Need to Sell Now

It’s becoming an epidemic. It may be worse than the bird flu – sellers ignoring reality and chasing the market down.

It is absolutely mind-boggling to hear all of the stories surfacing at the local Realtor marketing meetings about sellers who were offered reasonable prices for their homes 2 to 3 months ago and refused to entertain them.

“We won’t sell for less than…” is a common seller battle cry these days. To a person, these same sellers (there are hundreds of them locally) are now wishing they had entertained those offers as interest in their properties has evaporated and the market has continued it’s slide.

Here’s an example we know of: House priced around $800K. Two offers in first two weeks around $740K. NO THANK YOU! House around the corner with same floor plan sold at $700K. $740K offer could probably have been negotiated back to $760K, but not now – with a comp around the corner at $700K.

Looking at the reality of the situation, $800K was wishful thinking by sellers looking at their situation, needs and wishes.

To sell a home, the reality of the market needs to be considered. Buyers aren’t looking to “make the seller’s day.” They want the seller to – make my day.

Here is the reality for sellers – The market is still slowly sliding down and ALL housing market forecasts call for flat to sluggish growth through 2010.

Sellers in Alamo, Danville, Dublin, Pleasanton, San Ramon and Walnut Creek California that need to sell in the next couple of years need to consider selling now. 

Our FREE Market Reports are updated weekly. These reports are the best source of local real estate information for buyers or sellers wanting to track local real estate trends with current information – not information that is 30 to 60 days old.

Thinking about buying a home or refinancing?

Business as Usual does not apply to the lending business these days – especially the home mortgage business. In case you haven’t noticed, lending standards are changing everyday, banks and other lending institutions continue to try, die or sigh.

If you don’t read Dan Green regularly, give it some consideration – if you’re interested in what’s happening in the mortgage industry. Dan doesn’t serve up canned goods. His Daily Mortgage Reports offer real time, real person insight and analysis of what’s happening with YOUR potential to buy a home – in plain English.

Here’s part of what he is saying today:

If you plan to buy a new home in 2008 or 2009, give a lot of thought to moving up your time frame. 

Mortgage approvals are about to get more scarce and more expensive for everyone.

The Supporting Evidence From The News

1. FHA is increasing its mortgage insurance premiums and up-front loan fees for a lot of borrowers
2. With IndyMac's demise, other banks should follow and Alt-A loans may go the way of Sub-Prime
3. Fannie and Freddie are in financial crisis again and may be forced to add mandatory loan fees for everyone
4. Banks are doing the unthinkable just to get suspect loans off their books
5. Wall Street is losing its appetite for "guaranteed" mortgage bonds

California Mortgage News

Yesterday Governor Schwarzenegger signed a California Mortgage Bill.

Lenders must now call California homeowners or visit them in person and explore restructuring options before foreclosing on their homes under legislation signed Tuesday by Gov. Arnold Schwarzenegger.

The new law also doubles the amount of time tenants have to relocate from a foreclosed property to 60 days and requires owners to maintain foreclosed properties.

Dan Green over at the Mortgage Report has two great posts on the continuing subprime loan saga. This post simply and elegantly explains why subprime and Alt-A loans are increasing in cost. This post continues to keep us informed of the unfolding subprime loan story and the implications for the industry and the consumer.

For those following the ramifications of the subprime meltdown, there were a couple of stories in the Wall Street Journal a couple of weeks ago on the developing issues facing the Collateralized Debt Obligation (CDO) market.

The subprime apocalypse, as Dan Green calls it, may soon be upon us. We are reaching the point where the big investment institutions will no longer be able to sweep the problems under the rug. The chickens may soon be coming home to roost as massive write offs from subprime losses have to be taken and acknowledged.

The end result, undoubtabley, will be a further tightening of credit for the consumer and thus a continued slowdown in the housing market. It makes me wonder if the NAR is actually following the subprime issues, as they continue to forecast an improving housing market, though they keep pushing the date out into the future as events continue to unfold.

The import of all of this for the consumer, especially first-time buyers - is lock in your loan now. Everyday, we hear more and more stories about buyers losing their financing at the last minute due to new, tighter credit standards being imposed or loan products being withdrawn from the market.