Patty Manzi's Tri-Valley Real Estate Blog

There is now a new name for people who voluntarily default on their mortgages.  The ’selective defaulter’ is someone who has a stable income and can more than afford their mortgage payments & monthly expenses, but because their home has lost value and is worth less than is owed on the mortgage, the homeowner decides to default voluntarily and walk away from the home & mortgage. 

I can think of many other things in our lives that lose value and we as a society dont give it a second thought.  But when our home loses value we dump it and run?   This is very puzzling to me.

When we buy a new car it loses value the day we drive it off the lot because it is now a ‘used’ car, but we keep making our monthly payments and drive it until it falls apart.  We spend thousands of dollars on electronic equipment (computers, TV’s, PDA’s),  and rooms full of expensive furniture.  These things lose their value, but we dont stop paying for them and dump them on the local street corner because of it.  I have heard people complain that they couldn’t get $50 dollars for their coffee table at a garage sale so they kept it because it ‘was expensive’ when they first bought it, but they will turn around and walk away from their HOME because their equity has devalued.  Personal property almost never increases in value no matter how long we keep them, but our real property – our homes –  eventually do if we hold on to them long enough.  That’s why real estate is called an investment.  Just like the stock market, the prices go up and down.  If we stay in for the long-term, at some point we will see a return on our investment.

For some there is a belief the banks need to be responsible for the loss of value in their homes, and this is just not true.  Just like credit card companies and auto-loan companies are not responsible for the devaluation of our personal property and vehicles.  On the contrary, consumers have a responsibility to follow through on our financial commitments.

I do understand there are many people who are upside down on their mortgages that truly cannot afford their monthly payments due to a financial hardship like the loss of a job, or the death of a spouse.  In those cases walking away from one’s home and morgage is unavoidable and not really a choice.  For those people loan modification programs, HAMP programs, HAFA programs,  short selling the home, or ultimately foreclosure are all valid and viable choices.

Pleasanton Real Estate Update

 As of Today, July 3, 2010 there are 248 Active listings on the Multiple Listing Service (MLS) in Pleasanton.

 There are 166 Pending sales (61 of which are Pending Subject to Lender Approval as they are a Short Sale/Potential Short Sale). 

 From the period of June 1-June 30, there were 89 Sold transactions (escrow closed)) with an average time of 32 Days on Market (DOM) and an average sales price of $862,150 (lowest sold = $194,000 / highest sold = $2,800,000)

 The lowest priced home in Pleasanton is at 2419 Smoketree Common; it is a 1 Bedroom/1 Bathroom, approx. 648 sq.ft. Condo offered at $149,900 (DOM 142). 

 The highest priced home in Pleasanton is at 1515 Germano Way; it is a 6 Bedroom/6+ Bath, 6-car garage home, approx. 12,570 sq.ft., Single-Family residence offered at $7,499,999 (DOM 113).

 If you are looking for Pleasanton rental properties there are 10 rental properties on the MLS in Pleasanton. They range from a 680 sf, 1 bedroom, 1 bath near downtown for $969 month, to a 9,327 sq.ft, 6 bedroom, 6  bath home in Ruby Hill for $9,500 month.

 As a California licensed real estate Broker & Property Manager I am constantly researching the market and analyzing home prices so I can serve you with the latest and most accurate information. As always, I offer my services to you as your Home Research specialist.  For more information, contact me, or visit my website at:  www.PattyManzi.com

I’ve been hearing a lot lately about banks trying to evict tenants from a home after the bank has foreclosed on the property.  Offering them ‘cash for keys’ and REO agents using bullying tactics to force them out.  What we all need to remember is that Tenants do have rights and cannot be forced from the home. 

In May 2009, the federal government enacted the “Protecting Tenants at Foreclosure Act” giving tenants new protections, such as the right to stay in their homes for at least 90 days after receiving an eviction notice. While state and local laws also contain strong protections, unlawful evictions and harassment of tenants continue.

Tenants should know their rights under the law. These rights include:

- Tenants cannot be required to move out of their homes for at least 90 days following an eviction notice.
- Tenants can insist on staying until the end of their leases. The only exception occurs when the new owner of a single-family home wants to move in.
- Tenants can require banks and their agents to put all communication in writing.
- Tenants are not obligated to accept “cash for keys” money to move out sooner than the law prescribes.
- Harassment, such as improper entry into a person’s home, shutting off water and lights, or changing the locks without a court order is illegal.
- The above rights extend to tenants living in government-subsidized Section 8 housing, who may also have additional protections under state and local laws.
- If a city has a just cause for eviction law, a landlord must have a specific reason to evict a tenant, and foreclosure may not be recognized as a legitimate basis for eviction. Tenants should check local ordinances.

Sixteen cities in California have just cause for eviction ordinances: Berkeley, Beverly Hills, East Palo Alto, Glendale, Hayward, Los Angeles, Maywood, Oakland, Palm Springs, Richmond, Ridgecrest, San Diego, San Francisco, Santa Monica, Thousand Oaks, and West Hollywood.

For more information about fair housing laws in California, contact the Department of Fair Housing. 

I was watching a TV show this evening, you know those shows where the TV real estate agent helps someone sell their home.  This young couple inherited a small home and subsequently took out an equity loan to remodel the whole house.  After a few years and children on the way they purchase a newer bigger home to accommodate their growing family.  They now had two mortgages and were faced with a major decision; rent out the house for more money than their mortgage payment, or sell the home for the same amount of money they owe on the mortgage. 

Seems like a no brainer to me, rent the house out and make a few bucks.  I was very surprised when they chose to sell the house, and I was even more surprised when the real estate agent agreed with them (well, not really that surprised at the latter, afterall it is a TV show about selling homes!).  Their major reason for not renting out the house was their perception that it was a “hassle to be a landlord”. 

The home was listed just above what they owed on their mortgage and after several weeks on the market the home wasn’t getting many showings.  In comes the TV Agent suggesting the reason the home isn’t selling is the decor so he brings in someone to stage the home – which the buyer pays for.  A few weeks later with still no offers the agent suggest a price reduction.   They get an offer but its a low offer and after a few counters back and forth, the buyer walks away over $5,000.  So the house sits a few more weeks, another price reduction….you get the idea.  After 3 months they’ve paid for a stager, reduced the price to below their mortgage balance, made 3 mortgage payments, paid for utilities and yard maintenance and are very, very. frustrated.  The next offer that comes in they accept immediately just to dump the home and move on with their life.  They end up  $35,000 out of pocket to walk away from this whole mess!

Their initial reason for not renting the home was they perceived it to be a ‘hassle’.  I’m not sure what they really meant by that.  Did they mean its a hassle finding a tenant, keeping a tenant, keeping it rented, collecting rent, performing maintenance and repairs, or what?  If they had had a ‘real’ agent maybe they would have been advised that they can advertise for free on many websites to find tenants, they can pre-screen their tenants by doing credit, criminal and eviction history checks, get employment verifications and proof of income, call previous landlords, and have their tenants sign a written, legally binding lease agreement.  By doing this a landlord can ensure they are protecting themselves and helping to ensure they are getting a good tenant who will pay their rent on time and follow through with their lease agreement.   Another option is to enlist the services of a property management company.  They typically charge a percentage of the monthly rent, or a flat fee to conduct all the services necessary to manage the property leaving the owner free from the day to day responsibilities.

The really sad thing is that it will take this poor couple years to make up that $35,000 deficit from the sale.  If they had rented out the home from the beginning, they would have had a positive cash flow instead of a negative and over time would be building equity.  Equity they could use in the future to send their kids to college, or use for their retirement, or both! 

If you are facing the same situation or thinking of purchasing rental properties, make sure you are being advised properly by an experienced real estate professional who has your best interests in mind.

I’ve heard it, you’ve heard it, many people in the real estate industry are talking about it.  The banks are sitting on this huge reserve of foreclosed homes that are going to hit the market all at once and take down what’s left of our economy!……..  ~NOT! ~ Its a myth.

Last February, HUD instituted the Home Affordable Modifications Program (HAMP) which would allow a borrower to contact HUD and apply for a loan modification.  Many people jumped immediately on this opportunity, however, many banks did not have guidelines in place to be able to service the requests.  So the requests piled up until the banks were on board with the property guidelines.  Once the guidelines were received, banks were able to proceed with the modification request and there are many currently in process.

What one must realize is that the modification request is just that – a request.  There is a three month ’trial  modification period” where the borrower does pay a reduced amount on their mortgage.  It is during this trial modification period’ that the bank has to review all of the borrowers financial inforamtion to determine if they qualify, and if they qualify, they are subject to underwriting review for approval.  

The myth of the banks sitting on these reserves comes from the fact that many modifications were delayed from the beginning because the banks were not prepared with the proper guidelines, thereby delaying the beginning of the trial period.  This created an over abundance of  mods to process when the banks finally got up to speed.  The borrowers that will not be granted a modification may lose their homes to foreclosure if they have no other option.  And those homes will be hitting the market .

Yes, there may be alot of them hitting the market at the same time, but not becuase the bank is holding onto them for some arbitrary reason. Banks are required to sell all foreclosed properties to repay their investors.