So with all this doom and gloom, time to avoid real estate, right? Time to panic and start unloading your investments? Head to the hills and bury yourself in that bunker your crazy uncle built back in 60’s during the nuclear weapons craze?

Sorry, it’s too late to panic now. Actually, about 5 years too late. Checkout this graph. It’s self-explanatory (you can click on it to make it larger).

A good time to panic. You just bought a $500,000 property in 2005, and things never looked better! There was 20 percent year-over-year appreciation for the previous several years. Heck, at this rate, you could double your investment in less than 5 years…without doing a single thing.

A good time to be sane. You’ve been sitting on the sidelines, watching property values decline. At the current rate, and with recent news, it seems like prices are just going to spiral down into an abysmal pit of despair…all without you doing a single thing. So be sane! Take advantage of the decline!

Could prices drop further? Absolutely. How much of a drop? That’s the thing, nobody knows by how much and when it will happen. Prices will not decline forever. This also, is an absolute.*

It’s just like other investment vehicles out there. For example, if you’re going to buy and sell stocks. You can never nail the top or the bottom.  As long as you get close, consider yourself lucky. Otherwise, you’ll be on the sidelines watching others make the profitable moves.

*(My personal opinion: looking at market statistics, I believe we hit the market bottom sometime around March of 2009. So far, that number has been holding… Have a different opinion? let me know.)

Additional Anti-Deficiency Protection is Almost Here!

Ok, in plain english: Most people don’t realize, that when they’ve refinanced their existing mortgage to get a lower payment, that mortgage now becomes hard money. It’s considered purchase money when a buyer takes out a loan to buy a home. Purchase money for a personal residence in California is not subject to a deficiency judgment. But the rules change when an owner refinances. Hard money loans are subject to deficiencies. This means if an owner who has refinanced does a short sale, that lender can come after the owner to collect the difference between the amount the bank received and the amount owed. In a word, that sucks.

So…If signed into law, this would be a stop to deficiencies on California home refinances, where the owner only refinanced the purchase money loan and didn’t take out cash for any other purpose (except for home improvement).

To make this the law, Governor Schwarzenegger needs to sign it into law. His office has indicated which way he’s leaning; to sign or not to sign. So, at this point, it could depend on what he has for breakfast that day .

Personally, I say it’s time for the Governator to say “Hasta la vista, deficiency judgement!”

(feel free to comment with your cheesiest Schwarzenegger-movie-line-infused idioms

Check-out the substantial changes it makes to the higher end of the spectrum (those in highest tax-brackets). Actually, that’s kind-of to be expected. Hey, how are we going to pay for the war(s) and all these bank bail-outs anyways?

On the other hand, if you’re flat-out broke, now you know where future benefits will be coming from (in part).

On the bright-side, perhaps this may further stimulate Real Estate activity amongst investors, looking to lock-in more profits and pay less homage to Uncle Sam. Can’t say I blame them!

Here’s a handy chart for reference:

Thank you Wikipedia

Not a short sale or REO. Excellent condition with many upgrades: granite counters in kitchen/baths, upgraded tile throughout & upgraded cabinets.

REO/Bank Owned. Large 4 bedroom home with 3 full baths. Hardwood floors. Skylights. Walking distance to BART and BayFair Mall (3-4 blocks)!

Attached garage. A little rough around the edges, but great value!

Bryant Park, midtown Manhattan, just behind the main NYC public library. (Panorama via the Autostitch app on the iPhone)

Posted via email from SFBayRealtor (aka Michael Koenig)

Just wrapped a property inspection at a home in Fremont, CA with Glen Stewart, the House Whisperer, and my clients.

No matter how nice a home looks, it’s ALWAYS a good idea to get your potential investment reviewed by an independent professional.

Thanks again Glen!

Posted via email from SFBayRealtor (aka Michael Koenig)

It’s a natural extension of the mature, well manicured neighborhood. Las Brisas, by Summerhill Homes, is located in the quiet family community of Blossom Valley.

Beautiful family-friendly parks and nearby schools enhance the ideal setting.

Easy highway access connects you to everything in and around San Jose in a matter of minutes

According to Glenn Curtis, freelance financial writer and analyst, here are five easy steps that will help make the renting process easier and more profitable.

Study the market: Check local newspapers and with local Realtors to see what comparable homes/properties are renting for in the neighborhood. Craigslist can be a great resource as well. This should help you establish a fair rental price.

Prep the home: Renters may not take care of the home or its furnishings; therefore, the owner might consider removing breakables and personal items in order to avoid damage and potential arguments.

Find a renter: Consider advertising in local newspapers, in the brochures and bulletins found in supermarkets and on website classifieds. The idea is to try to get as many people to view the rental details as possible, so that you are left choosing your renter, rather than having to go with the only renter who expresses interest in your place.

Interview: Consider meeting with the potential renter rather than simply dealing over the phone. Knowing who will inhabit your home may put your mind at ease and help you weed out unsuitable candidates.

Spell out the deal: You should consider contacting an attorney (particularly one that specializes in real estate) to help see you through the rental transaction. The lawyer should be able to provide or help draft a rental agreement/contract. Consider any stipulations you want in the paperwork (like late fees, lease terms, payment due dates, etc.) and make sure the attorney includes those items.

Credit to RisMedia, Paige Tepping.

Fannie Mae and Freddie Mac are now on board the HAFA train!

When the HAFA program launched (on April 5, 2010), Fannie Mae and Freddie Mac weren’t on board with it. And that was a shame, as they are the two of the largest organizations that guarantee or own loans in the country.

Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac last week released guidelines for implementing the Treasury Dept.’s Home Affordable Foreclosure Alternatives Program (HAFA).  The new guidelines apply to loans owned or guaranteed by the GSEs; servicers are required to implement the new policies no later than Aug. 1.

While largely consistent with the HAFA guidelines for non-GSE mortgages, both Fannie and Freddie have implemented changes. To qualify for the Freddie Mac HAFA program, borrowers must be more than 60 days delinquent and have cash reserves of less than $5,000 or three times the current monthly mortgage payment, whichever is greater.  Similar to the non-GSE HAFA program, Fannie Mae allows borrowers to qualify if they are at imminent risk of default.  However, Fannie prohibits borrowers from participating in HAFA if the borrower: Has the ability to continue making mortgage payment, but chooses not to do so; has substantial encumbered assets of significant cash reserves equal to or exceeding three times the borrower’s total monthly mortgage payment or $5,000, whichever is greater; or has high surplus income.

Fannie and Freddie both allow the real estate commission in the listing agreement, but not more than 6 percent.  Consistent with the non-GSE HAFA program, Fannie and Freddie guidelines do not permit subordinate lien holders to require contributions from the real estate agent or borrower as a condition for releasing its lien and releasing the borrower from personal liability.

More info on Fannie Mae guidelines

More info on Freddie Mac guidelines