Beware of Rental Scams

This scam is going on with regard to rentals right here in Gilroy! We ALWAYS show the rental home to prospective renters BEFORE we give out an application. Rental agents ALWAYS have access to rentals. It's by appointment, but it's never a step to be skipped. Here's more information:  http://gilroy.patch.com/articles/santa-clara-county-renters-alerted-to-avoid-imposter-landlord-scam

The Advantages of Home Loan Pre-Approval

Brought to you by the California Association of Realtors.

The housing market is warming up in many areas, with multiple offers becoming more commonplace.  Buyers who want an advantage in the bidding process will need more than a mortgage prequalification – they will need a preapproval.

• The differences between mortgage prequalification and preapproval are significant. Prequalifying for a mortgage is based solely on what a borrower discloses to the loan officer or broker about his/her earnings, credit score, and total assets, including what is available for a down payment. By contrast, a preapproval requires a borrower to provide documentation of his/her income and assets.

• The lender typically pulls the borrower’s credit report and score, while the borrower gathers together almost everything else needed for the actual mortgage underwriting: W-2 wage statements; 1099s; recent pay stubs; bank statements; and statements from Individual Retirement Accounts and 401(k)s; and other assets that could show the borrower has the resources to buy and maintain a home.

• At one of the country’s largest mortgage lenders, Wells Fargo, the first quick review provided by an underwriter constitutes an agreement to lend.  Other lenders may treat preapprovals as more of an opinion on the person’s ability to borrow, not a guarantee to lend.

• With so many homes receiving multiple offers, a preapproval is more important in today’s marketplace. 

• The preapproval letter should include the amount a borrower is qualified to borrow, as well as the loan officer’s contact information.  Some letters may have an estimated monthly payment, but details about the loan time and interest rate are not included.

• Timing also is important.  Buyers should aim for obtaining a preapproval letter from a lender within 30 to 60 days of the expected purchase date.  That is because some letters expire in 90 days.

Digging Deeper Into Negative Equity Situation

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

This past week, Zillow released its latest Negative Equity report, giving some numbers on the percent of homeowners who owe more on their mortgage than their homes are currently worth. Nearly 16 million homeowners were underwater on their mortgages in the first quarter of 2012, owing a collective $1.2 trillion more than their homes were worth, according to Zillow. That's nearly a third of all homeowners with mortgages, which sounds pretty bad if you ask me.

However, this is just the type of statistic that needs some digging to fully interpret and understand before allowing it to upset you or affect any buying or selling decisions.

As Zillow points out, despite being underwater, foreclosure is likely not imminent for most of these homeowners as 9 out of 10 continue to make their mortgage payments on time without any problems. Only 10.1% were more than 90 days delinquent with mortgage payments during the data period.

But let's also not forget that time can and will change things for homeowners. Being underwater is only a serious problem if a homeowner suddenly is unable to pay their mortgage and needs to sell, needs to sell for some other reason such as job relocation, or is facing a market and situation in which his value has dropped severely below market value – to the point in which the home is likely to not recuperate value over the homeowner's lifetime.

For most underwater situations, the owners will likely stay or want to stay in their homes for a long period of time, which gives the market a chance to recuperate value, in many cases. Not that long ago, people expected real estate values to move only in the long-term. In other words, no one was expecting to double their money in the next five years – or, by that same sentiment, to recuperate a dip in value in the next five years either.

In fact, if you apply the same principles as stock market investing, which requires more time to see increases in overall value of the original dollar put in, it feels more "normal" to take a long-term view on real estate values. Not many stock investors, which tend to be everyday workers who invest their retirement savings in portfolios that, by design, take at least 10 years to produce a meaningful investment outcome.

Another good point to the negative equity report is that many homeowners in negative equity are not deeply underwater, according to Zillow's numbers. Nearly 40% of underwater homeowners owe between 1 and 20% more than their home is worth. Of course, some owe much more and markets vary in severity of the problem, with Las Vegas, for instance, being a metro in which more than one quarter of homeowners with mortgages owes more than double what their home is worth.

As with all real estate statistics, it's important to construct the context around the negative equity report to get a clearer picture of what is happening and who is affected. Just because a homeowner is pronounced underwater doesn't mean he's in dire straits – or that his home will blight his neighborhood. A rise in negative equity wouldn't even necessarily mean there's an impending rise in foreclosures. Dig deeper to understand what is going on, folks!

Memorial Day in Gilroy

Open House

Open House Today! Come by and see this great house.

Importance of Inspections

By Chris Moles
Brokerage Counsel, Intero Real Estate, Inc.

A frivolous small claims complaint recently gave me opportunity to look up the law concerning agent indemnity when it comes to making disclosures to a buyer via a professional property inspection report.


Cal. Civ. Code § 1102.4
According to §1102.4, brokers and agents are not liable for any “error, inaccuracy, or omission” of any information conveyed by a public agency or a licensed contractor to the buyer. §1102(b) states that the conveyance of information from a contractor or public agency to the client relieves brokers and agents of any further duty to convey the same information.

This means that agents are generally held harmless for facilitating the transfer of inaccurate information from the inspection report to the buyer, so long as the agent is acting in good faith and the agent does not know the information is false. This also means that agents have generally met their duty to disclose certain information so long as the inspector included that information in his report.

Limitations
Of course, if the broker or agent has information that is not discovered by the contractor, and the broker fails to hand that information over, then the broker and agent may still face civil liability for fraud and negligent misrepresentation. So agents should always disclose and hand over the information they have, regardless of whether it is disclosed somewhere else.

Even with that limitation, the presence of a thorough property inspection report often ends up being a brokerage’s best defense when a disgruntled buyer starts to complain about non-disclosure and misrepresentation.

Help for Underwater Homeowners

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

Despite the recent bout of good news that's spreading through some real estate markets in the U.S., the word "underwater" is still part of the vocabulary in many others. In fact, the problem is still so widespread that Freddie Mac, the U.S.-supported mortgage company, this week announced it will drop a fee associated with refinancing deeply underwater mortgage loans.

The fee drop signals that the government and its mortgage giants Freddie Mac and Fannie Mae are determined to make the Home Affordable Refinance Program (HARP for short) work. Freddie Mac said it will eliminate a fee of 0.5 percentage point, known as a "cash adjustor," on home loans that are refinanced under HARP and have balances greater than 125% of the property's current market value.

The move aims to help underwater homeowners refinance their mortgages, thus enabling them to stay in their homes (as opposed to foreclosing or walking away). Freddie Mac officials said that they hope the drop of the fee will encourage more homeowners to take advantage of HARP.

There were 11.1 million homes with negative equity at the end of the fourth quarter 2011, according to a report from CoreLogic. The number of homes with negative equity (or that were "underwater") was up from 10.7 million the previous quarter, showing that the problem had not stopped growing at last tally.

Many underwater homeowners do wish to stay in their homes. Refinancing and taking advantage of HARP can help. But some good old motivational math can also help tremendously with moral, which is why I thought these calculators developed by HSH are interesting and potentially helpful:

KnowEquityWhen is a calculator that aims to help underwater homeowners answer the question, when will I be above water again?

KnowEquityHow is a calculator that aims to help underwater homeowners what it will take to reach equity within a specified time frame.

Both calculators are helpful if you are trying to set a goal to stay in your home. Knowing what you need to do to get there is a powerful motivator.

Unfortunately, when looking at the numbers, underwater mortgages will not be disappearing anytime soon. While some markets are seeing values increase, it's just not enough to offset the lost equity that spans 11.1 million home loans. So seeing a bit of positive news in the form of help and motivation on this front is worth flagging.

4 Signs It's Time to Buy a Home Now

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

If ever there was a fantastic time to buy a home, it's right now. Never mind the fact that I head a leading real estate brokerage company. Let the statistics show you why now is your best bet to get into the housing market:

1. Home values are recovering U.S. home values rose 0.5% from February to March, the largest monthly increase since May 2006, before values at the national level peaked, according to a recent report from Zillow this month. In addition, the company said in its home value forecast that it expects 19 of the 30 markets it covers will reach a bottom in values this year. Phoenix and Miami-Ft. Lauderdale are expected to see significant home value increases.

2. Interest rates are still extraordinarily low The cost of borrowing is still extremely attractive for buyers who qualify and are ready for the financial responsibility of a home mortgage. Saying mortgage rates have hit a new "record low" has become a bit of a broken record. At an average 4.04% in the latest Mortgage Bankers Association survey, rates on the standard 30-year fixed-rate mortgage are almost too good to be true. While there's no sign from the Federal Reserve that rates will increase significantly anytime soon, it's definitely a great condition for buyers right now.

3. Multiple offers are back
Demand for housing is starting to outweigh supply in some markets across the country. We covered the return of bidding wars this spring in markets like Silicon Valley, Miami, Seattle and Washington, D.C. Even despite the presence of "war" like situations, multiple offers are once again a fact of life in markets with strong economies and job prospects.

4. Rents are rising with no end in sight The median U.S. rent was $721 per month in the first quarter, up 5.6% from the same period a year earlier, according to the Commerce Department. Altogether, rental income has increased 12% in the year ended in March. In addition to rising rent, the supply of units is the tightest in more than 10 years, with 8.8% of units vacant in the first quarter. This at a time when the demand for rental units is at the highest in 15 years. This means more buyers likely will continue to jump from that tight market into owning while the numbers make sense.


As you can see, the buyer market is about to get more crowded than it's been the last few years. These are each solid market forces that could push more and more buyers off the fence, creating more transactions and helping to lift home values this year and next. If you think you want to buy – or know buyers who are testing the waters – now is your chance to take advantage of prime home-buying conditions. 

Open House Extravaganza Week-End

Lots of opportunities to see homes that you could own this week-end. We're going to be at 1201 Lerma Lane, Gilroy. Stop by and see the house - it's spacious and has a lot of potential. We'd love to see you.