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1. Know the market – do a thorough comparative market analysis on the subject property prior to writing the offer.  Look for trends – is the market steady, declining?  Look at the last 2-3 months solds as well as the current pending sales. Many banks are using a tactic that results in a lot of activity and multiple offers.  They get two appraisal values (market and liquidation).  Then they have the REO listing agent list the property at the lower appraised value which attracts multiple offers and ultimately drives the final sales price up and sometimes over the market value.
2. Verify availability and multiple offers.  Obviously it is important to determine whether or not the property is still available or if there are multiple offers before writing the offer.   Counsel the buyer accordingly and let them determine if they want to compete for the sale.  Read any agent to agent remarks in the MLS for any specific instructions when writing and presenting your offer.
3. The actual offer package.  Legibly write the offer– or better yet, use typed or online forms.  Ensure your offer is complete and spells out in clear, concise language the terms and closing costs.  Consider scanning and emailing your offer vs. faxing it for the better readability factor.
4. Seller concessions and closing costs.  Encourage the buyer to write his/her best offer first.  It really is all about the final net to the bank.  If the buyer is requesting closing costs, prepare the buyer that to compete with multiple offers she may need to write an at list price or above offer.  Some banks are only willing to pay certain closing costs and are countering with the buyer to pay for what would normally be considered customary seller costs – In Nevada - transfer tax, CIC fees, title insurance, for example.
5. Inspections and repair costs.  Write the offer with a reasonable due diligence period (5-7 days but no more than 10 days).  The bank may limit or counter repair costs.  We recommend including this clause or something to the same effect:  “Seller to make, at their expense , any lender-required repairs as a result of the inspection or appraisal.”
6. Earnest money.  Have the buyer write the EM check for at least what is requested in the MLS.  Ensure you have a current (not stale-dated) check if you have been writing a lot of offers and in the REO game for a while.
7. Buyer Pre-Approved for Financing.  Pre-Approval (not pre-qualification) of the buyer is a must and proof of funds letter can also strengthen your offer.   Don't waste everyone's time if the buyer is not willing to get the financing in place and approved first.
8. Seller/Bank addendum.  REO Properties are sold as-is, no warranties or guarantees.  You may be able to get the seller to pay for a home warranty – it depends on all other concessions, costs and net to the bank.  We are finding many banks will not complete disclosures required by Nevada statutes:  Seller’s Real Property Disclosure for example.  Be prepared to carefully review all of this with your buyer and other language in the bank’s addendum to the purchase agreement.   
9. Time frames.  Allow a minimum of 1 to 2 weeks to hear back from the listing agent regarding a response from the bank.  If the bank accepts your offer, expect that you may only receive a verbal or email counter and/or acceptance subject to the buyer executing the bank’s addendum and accepting any other terms.  Once you have approval, open up the escrow and get the buyer going on their due diligence.  Also be prepared for a closing time frame of 45-60 days or more depending on whether or not there are any issues to deal with like liens, judgments, or other clouds on title.
10. Communication.  Saving the best for last!  Here is where your patience, tenacity, positive attitude, communication skills, knowledge of the REO process and how well you have educated your buyer will come into play.   Communication, or rather the lack there of, is the biggest complaint and issue of everyone diving into the REO market.   
    
    OK everybody, let’s face the reality of “what is”  concerning the current real estate market...

• Some REO agents are overwhelmed and may have bitten off more than they could chew too fast
• Some of the seasoned REO veterans are experts on the process and working diligently to improve and expand their services as their business has grown exponentially
• Still other REO agents have broken the code and have excellent systems in place to handle all the additional tasks and requirements for success
• Many agents are aggressively trying to break into the REO market and may be relatively inexperienced – learning as they go or on their first batch of REO listings
• Many buyers agents are not educated to the process and may be writing their first REO deal with an agent who may or may not understand the process themselves
• Not everyone is equally schooled and skilled at educating the buyer on the REO process
• We are all doing the best we can with what we know and what we've got... practice patience, compassion and focus on solutions.

The bottom line… if all of the above statements are true then in the infamous words of Forrest Gump – “Life (REO) is like a box of chocolates, you never know what you are going to get.”  Each REO experience has the potential of being anywhere from a dream to a nightmare.  I for one believe we can all make the experience more of a dream by the way we handle ourselves personally and professionally. 

Educate yourself and your buyers and, if necessary, the other agent!  Set realistic expectations – and focus on what you want, not on what you don’t want.

Call Colin Delaney at 714-743-9882 for more info about buying a bank-owned or REO property in Costa Mesa or e-mail me at colin@verandahomes.com.

I think everyone is familiar with some of the issues we have with our schools in the Newport Mesa School District, and while there are definitely blue ribbon and outstanding schools in Newport and Eastside Costa Mesa, a good deal of our schools in the western part of Costa Mesa flat out stink. 

I've had issues before selling homes in better neighbohoods like Mesa Verde because our public school options are so poor. Granted, recent attempts by Principals D'Agastino at Estancia High and Pricipal Bauermeister at Tewinkle Middle School are leading a very positive mission to promote change, forward reputations and enrich learning. However, the main problem that we have to deal with as Realtors is the elementary level schools - if it's not right at the most basic levels, what incentive is there to stay around for the "higher" education. It's one of the fist three or four questions we deal with as a Realtor - How's the neighborhood? How big is the house? What's the price? and inevitably, How are the schools?

I've had a couple people come to me in the last couple of years and tell me they wish their Realtor at a local Realty had not lied to them about how great the schools were - they said they took her word for it because she was "the neighborhood expert".  Obviously, they should have looked into it as well, and not just taken her word for it, but lying about the quality of the elementary school just makes no sense.

Last year I was part of a group that helped to establish a dialogue with Newport Mesa Superintendent Dr. Hubbard and others to try to reinvigorate Adams elementary.  After a lot of work and a promising start, Dr. Hubbard blew off our group for no good reason. He said since we didn't have any kids in the school, he didn't really need to deal with us.

Oh well, so much for open dialogues.

If you are considering living in Costa Mesa, and especially the neighborhood of Mesa Verde, give me a call- there are lots of good work-arounds (thanks to the districts existing policies of complacency) that will let you live in this wonderful neighborhood and go to great schools; it's still a great neighborhood with great neighbors, and it is definitely one of the best places to call home.

Colin Delaney      colin@verandahomes.com        714-743-9882

©Colin Delaney 2008

Waiting is not the cure...I often point out to my clients that now is a better time to buy real estate in Costa Mesa because the interest rates have been at such a reasonable level. Today, interest rates for Costa Mesa Homes are at approximately 6 1/8 with no points.  Inflation in the economy creates more problems than a buyer can see at the surface.

Of course, inflation is particularly bad from a buyer's point of view, because the Federal Reserve's main weapon against inflation is higher interest rates. Anybody remember buying a home in the 70's and 80's at double digit rates?

Well, guess what? The way the economy is going, the Fed will undoubtedly be forced to raise short term interest rates. Now, think about the other side of the buyers/sellers fence.

Inflation is not entirely bad from a home owner's perspective- it would help stop the drop in home values for one thing, at least on a nominal level- on the whole, inflation is a specter we want to avoide. It erodes confidence and prooductivity in the economy and distorts the allocation of capital.

However, with oil prices continuing to rise, the Fed will have little alternative but to tighten its monetary policy, raising its target interest rate before the year's end.

Do the math- a quick calculation at today's rate (6.25%) on a 30 Yr. fixed mortgage on a $400,000 loan amount is $2462 and change.....Were the interest rate to rise in the same scenario to 7.25 %the same paymnet would be$2728, nearly $275 higher.

With a near bottom on real estate prices, you are better off buying today and going for the lower interest rate. Call or e-mail me (714-743-9882 or Colin@VerandaHomes.com) to ask for even better ways to lower your rate below  todays current 6.1875%.  I just found a home for a buyer and obtained a 5.375 interest rate with a little know buyer's tactic I often use.

Happy house hunting!!

What an interesting dilemma- like The Clash sang in their song “Should I Stay or Should I Go?”, real estate has a similar question – “Should I Sell first or Should Buy First?”.

The answer? It’s tough- the answer is actually, “What’s your situation, and can you swing ownership of two homes at the same time? Buying first, is, well, easy to put it simply. Once you can identify the property you would like to buy, it is fairly straightforward to purchase the home after price, details and contracts have been negotiated. From that point it is just a waiting game for inspections, appraisals and loan details to come into place. Most good lenders can get a loan together within about 21 days, so that is a fairly quick timeframe to purchase a home.

Now, back to the original question- do you buy first? Here’s the other answer- can you handle it? Currently the market is somewhat overwhelmed by bank-owned homes, short sales, and other standard sales. Your home must be two things to sell quickly right now: 1. Well maintained, with high upgrades, designer quality staging, and great presentation, and 2. Well-priced. If you have those two ingredients, I would say you could make the jump to buy prior to selling. Regardless of how ”bad” the market is, there are always people looking for homes that have good locations, the right upgrades, and that designer like living style.

Now, if your home has average upgrades, a poor location, or features that have become obsolescent (like only 1 bathroom in a 4 bedroom house), then I would definitely say- sell first, don’t buy before you get something in place on your current home.

I know of a sale this year where an agent advised homeowners who were downsizing to buy first (the agent’s own listing) because there was so much equity in their current home, and surely they could sell for a price much higher than they were buying for. The agent incorrectly told them they could get over $1.4 million, while purchasing for just over $700,000. The numbers seem to work, but guess what happened? The agent told them incorrectly what their house was really worth- it only sold for just over $1 million. That’s a pretty big mistake, wouldn’t you say? After the buyers put over $200,000 into their new purchase they were left with….wait for it…..no equity. The market moved so quickly downward that the small home they purchased and upgraded is now not worth what they paid and their $200,000 upgrades will take a long time to be realized.

Moral of the story….get a couple opinions from realtors in your area, not just the one you are buying the listing from.

I recently represented a buyer in the Mesa Verde neighborhood of Costa Mesa who was in the same dilemma- their dream home just came on the market on the golf course, and they wanted to sell their house prior to buying. I advised them it would not be likely to sell their home prior to buying the first, but felt confident we could sell within a 60 day timeframe. They went for it- their house had great upgrades, we staged it with our in house staging team, then put it on the market at what we thought was a reasonable price. Whoops! The market moved down a bit right after we started, but we quickly adjusted the price and had multiple offers after a couple of weeks on the market. We closed escrow on their purchase in late July and sold their current home in the second week of August. All told, they were on the market for about 33 days and found a highly qualified buyer, and the home closed escrow in 30 days in a tough real estate market.  Not bad to get them into their dream home!!!

Call or e-mail Colin Delaney @ Veranda Homes (714-743-9882) for a quick opinion about the best approach to your Costa Mesa Real Estate questions. No hassles, and definitely the truth!!

New Costa Mesa Obnoxious Dog Law

The Costa Mesa City Council passed a law last week that will administer fines on owners of Costa Mesa Real Estate's dogs who make excessive noise.

Under the law, a dog disturbance is defined as barking, banging, howling or crying that lasts for 30 minutes continuously or for 60 minutes over a 24 hour period. The fines on the dog owners are on an escalating basis by offense, starting at $200 and increase upwards of $403.

Scary, huh??? Obviously those dog owners will have to keep an eye (and an ear) on their favorite canines. This is a welcomed development to many Costa Mesans, there are lots of offending dogs out there, to be sure…..hopefully residents will take a kind approach to their neighbors with dogs before they bark at the city........now if we could only do something with those pesky possums and Racoons.....

For more details, read about the law at the Daily Pilot article.