Buyer Cheat-Sheet: Foreclosure, Bankowned, Standard

The other day I had an illuminating communication thread with a person looking to relocate to California from the East Coast. In the course of our conversation, the Inquirer expressed that she was especially interested in Foreclosure properties that met her requirements and as a reputable agent in the area of her interest, she contacted me for assistance and advice.

From her perspective, a "foreclosure" home should be a bargain, easily attainable. After all, she and her spouse had purchased a "distressed" home in foreclosure about a year ago, back east. It took awhile, but after about nine months they made a successful purchase. And now they need to relocate back to Southern California.

Ah, you purchased your current home as a foreclosure a couple of years ago, more or less? Unless you have considerable equity in this market, I would consider renting it now, mainly because if you've owned it less than 2 years you won't be able to take the capital gains exemption on any profit from sale. If you live in in for 2 out of 5 years, according to current tax regulations, you can sell it in the 5th year and still use the cap gain exemption benefit. So you could move in the meantime. Check with your accounting professional - I am not an accountant and can't give advice - but this is my understanding.

Regarding purchase of Foreclosures, Short-sales and bank-owned properties - it is NOT likely that the bank will like to see an offer "contingent upon sale" of current home. Banks need to move these real estate assets that they've already lost money on, so they don't want to have another contingent deal holding up their sale. Bank-owned sales are usually not willing to offer other concessions, either.... and they still expect to get current market value for the property. Sometimes there exist other circumstances with the property that would prevent YOUR lender from loaning for the purchase. So there are a lot of potential factors in a bank-owned sale.

By contrast, individual sellers with equity ("standard sale") can often be more flexible with their buyers, so I always recommend looking at ALL available property types that fit your needs. Have you spoken with a Realtor in your area to get some ideas? If you need a referral, just let me know - I network with other Realtors all over the country and can recommend someone with experience and professionalism.

Although real estate statistics continue to dominate the financial news these days, all that data on the web is just that... a lot of numbers, and little context. There's a lot of often bewildering information regarding Foreclosures, "pre-Foreclosures", Short-sales and REOs (Bank Owned) vs. "Standard Sales". Aggregating websites like Trulia.com, Zillow.com, Redfin.com, BlockShopper.com, and many others just grab publicly recorded information for properties and populate their respective websites with that information. See for yourself, go ahead and google your address, check it out.

Then come back and see what I have to say. I do this every day.

Buyer's Market? - First Principles Apply Now More Than Ever

With so many good deals on California real estate right now, in every price range and neighborhood, and with interest rates holding around historical lows, why are so many homes languishing on the market for months.... or more?

In a word, MONEY. In two words, TIGHT LENDING. Sure, there are other factors, but none as pertinent as this in today's housing market. I can use many more words to describe the myriad and constantly-changing conditions, programs and other variables, and I probably will do that in future posts. This is about First Things First, about preparation and setting realistic expectations in order to be able to take advantage of today's "Buyer's Market".

To begin, I beg your indulgence for a little rant of my own. I hope you'll bear with me.

The same institutions that brought us the fast and loose cruddy-loans-bound-to-fail a several years ago - even going so far as to hedge their bets against the surety of said loans - have taken their bailouts, and apparently, invested them elsewhere. Since 2007, the pendulum of home-lending has swung to and remains at the other extreme of the reckless "Bubble Years". Among other things, we're now looking at a federal bill proposing minimum 20% down-payment across-the-board, and barring something just shy of Divine Intervention, we will see a significant decrease in conventional loan limits come October 1, 2011 in Los Angeles and an even deeper reduction in many other California markets. Currently available specialized loan-programs can be helpful for some buyers, but as much depends on the specific property in question as it does the good credit and other qualifications of the prospective buyer. The institutional hedging of loans (simply stated, insuring against failure) is a game they can't play the same way anymore, and without that insurance, banks have tightened up in a major way and this continues to strangle the real estate market, even as their own repossessed real assets increase, ticking-off their shareholders and blighting neighborhoods in the long and painful wake.

End of my rant for today. My mission is to find the work-around, the solution. Motivated buyers, this is for you.


Recent experiences with my purchasing clients has been that even the most sophisticated and qualified home buyers, those with impeccable credit and substantial down-payments, have been made to jump through Kafkaesque hoops to secure a purchase loan. It can be even more discouraging for new homebuyers who may be shocked to learn that though so many properties are available, a labyrinth of lender conditions can frustrate their search and ultimate acquisition. Fact is, unless you have a big wad of serious cash to buy something outright, you are going to need a mortgage loan to buy that house or condo.

So today's buyer needs to limber-up before jumping in. It's not quite yet impossible to get a loan and make a successful purchase as long as the buyer is prepared. To address that, I offer the following suggestions - First Principles - to observe before shopping for your first, next, or second home:

1. DO - Get pre-qualified by a Bank or a reputable Mortgage Broker. (If you need a recommendation, just write or call me, I work with the best.) At minimum, you will need to prove your income and expenses in the form of recent pay and bank statements and 2 or 3 years of Federal Tax returns. This will establish the limit of a mortgage loan available to you and your eligibility as a borrower for any federal loan program, such VA, or FHA-backed loans that can minimize your down-payment requirement.
2. DON'T - Buy a new car or boat or other major purchase once you've got your loan pre-qualification. The terms of your per-qualification are based on the information you provide at the time of applying and any significant changes (read: additional debt responsibility) will affect the amount, or even your ability, to secure that loan when you find a property to buy. Make that car/boat/whatever purchase, if you absolutely must, before shopping for a loan! 
3. DO - Select an experienced, full-time Realtor to work for you, if you haven't already done so. Feel free to contact me if you are not sure where to start. I may be able to help. There is no cost or obligation to find out, and you'll never have to wonder if things could've worked out better for you if only you'd called me first!
4. DO - Be prepared to adjust your expectations. Depending on the cash you have available to put down, you may qualify for a federally-backed loan program, but the property you were hoping to purchase - bank-owned, fixer-upper, and many condominiums, to name a few - may not qualify. Here again, your Realtor can help you sort out the available properties appropriate to your needs and ability to purchase.
5. DON'T - Plan on borrowing the maximum amount of your pre-qualified loan. Consider a  purchase with comfortable payments, if your dream home is out of reach today, buy something else if you are able. The worst that can happen is that you'll either make it the home of your dreams over the next few years or it will simply increase in value, and you can move up then. Meanwhile, since you have to live somewhere, you'll be paying yourself in home-equity and building personal wealth in the time-honored American tradition. We're in one of the most desirable places in the world, Southern California, and last time I checked, this state isn't manufacturing more land. 

Trust Issues: Real Estate IS Different

Many Californians have their assets protected with a Revocable Living Trust. It's a great way to preserve and assign assets, especially for keeping family wealth in the family by legally avoiding probate. When it comes to selling real estate owned by a Trust and depending on other factors, unexpected issues may be lurking... and could put a wrench in the transaction. This is especially important in today's market where competition for a limited number of qualified buyers is high. It's wise to address potential issues BEFORE they threaten to unravel a deal in escrow.

Disclosure: I'm talking Real Estate here, as an agent for Sellers and Buyers. I AM NOT a lawyer.

I have tremendous respect for those working in the legal profession, and especially those working on the behalf of consumers, protecting and upholding our rights of property ownership in this country. Here I simply want to talk about a recent real estate experience I had with Trust Seller clients. They were confident that the Durable Power of Attorney for All Assets, prepared by their family's legal firm, was sufficient for their objective: to sell real property held in title by their family (living) trust.

The clients are sophisticated people, their attorney, experienced, and yet when it came to selling a property owned by the Family Trust.... the title insurer required MORE.

Thus, Real Estate is Different. Read on.

The Family Trust Sellers believed they were prepared to sell the property because

• Successor Trustee was also the surviving spouse of the living Trust AND
• Successor Trustee assigned Durable Power of Attorney for All (Trust) Assets to the next Successor Trustee 

The Seller parties to the Trust expected that all was in order, having been prepared by their attorneys well in advance of listing the property for sale. The Survivor (spouse) of the Trust moved away after assigning the next-in-line Trustee identified in the Trust to manage, reinvest or liquidate any assets held in the Trust for the benefit of the Trust. The Durable P.O.A. was for "all assets" and indeed, a variety of assets were identified; investment accounts, bank accounts, and real estate owned by the Trust. It was expected that the real property, in this case the Survivor Trustee's primary residence, was included.

And yet, all this diligent preparation was not enough for the Title Company to insure title because

Real Estate is Different!

A contract of sale was made and escrow opened. Title Company required a Substitution of Successor Trustee for the sale of this particular property in order to insure title. Really?

Shouldn't that all-encompassing Durable Power of Attorney for All Assets have covered this?

Well, according to the Title Company - the required insurer of ownership of real property (for real estate sales in California)-- uh, No. Durable Power of Attorney for All Assets.... not enough!

The result for the Sellers in this case basically amounted to a "do-over" with considerable inconvenience and frustration to them. They'd anticipated that the Durable Power of Attorney would cover the transfer of title of real estate to the next-in-line Successor Trustee, alleviating that burden from the primary Successor (in this case, the surviving spouse of the Trust, who had already relocated) from further responsibility. Instead, additional time, travel, and notary costs were incurred in order to meet the requirements of the Title insurer to complete the sale and ultimately transfer title of the property to the new owners.

Not every sale of real property held in title of a trust will experience the scenario just described. I bring this to the attention of those who may have assignment as Successor Trustee/s for a Living Trust and for their consideration. I advise consultation with an attorney for legal advice in any matter. Should questions remain regarding real property sale process and requirements for successful sale of real estate owned in a living or family trust in California, consult an experienced, professional Realtor®.

You can do that without leaving this page.....I invite questions and comments and am here to assist. You can also call me: 310-433-3349.


I am a fan of the California Living Trust. I've represented too many probate sales and witnessed the results (i.e., in a probate sale, most often the greater amount of proceeds are paid to the State, and heirs divvy up the remainder...) to have any other opinion. For the majority of Californians that own their homes, the real estate that they own, most commonly their home, is their greatest financial asset. I am continually amazed that after four decades of the California Living Trust provision, there are still California homeowners (and/or their heirs) that have not  bucked up the nominal legal fee to set up a Living Trust and avoid state probate.

If you don't have a Living Trust and need more information, contact a good trust attorney for details. If you don't know a trust attorney, contact me and I'll be happy to refer you to a reputable attorney with experience.

If you do have a Living Trust, or are involved as a successor trustee to a living trust, you should know that Real Estate is Different from other assets when the Trust goes to sell that real estate in California.

Underwater?

This lone, abandoned house-boat in an otherwise floating neighborhood of luxury yachts, elegant sailboats and university rowing teams, caught my imagination today. Though it sinks slowly alone in Marina del Rey, for me it is a most obvious, and poignant, metaphor for the predicament that many - very many - homeowners are experiencing today: carrying a mortgage balance that is more than their property is worth. Sometimes also referred to as "being upside-down", I feel that the term "underwater" is more accurate.

As a nation I don't need to tell you, we're three years into a huge financial crisis that has most notably affected employment and real estate for the worse. For those who've suffered the additional financial fall-outs of health crises, divorce, elder care and/or death of their partners, and more, the suffering has been magnified, often forcing liquidation of assets, or drawing on real estate equity.

Thus we have two type of homeowners with mortgage obligations greater than their property value.

"Up-side down" suggests that nothing less than a polar reversal, a total revolution, would set the situation "right-side up" once more. This is accurate for some homeowners. They cannot make their payments and they cannot sell to repay the full-debt owed their lenders. A few have successfully modified the terms of their home-loans, but many more have tried and failed, or more sadly, not tried at all and let their mortgages lapse into default, a.k.a. Foreclosure. If they haven't already walked away, the Short-Sale is their best option. Yes, it will hit their credit rating.... but not nearly as hard as bank repossession.

But "Underwater" describes a growing number of homeowners. "Stuck" might be an apt term for some of them, who would sell and move if they only could. These people meet their monthly loan obligations, but any equity they may once have had has been wiped out. They owe more than their home is worth. They are stuck. For those in this situation, let me extend the maritime metaphor further and offer this message of hope: tides change. In real estate, not nearly as often as the sea, so here are some tips for coping:

• Rennovate. Now's the time to do it. So this was the starter home? Make it your dream home now, so it will be someone else's passion when(if) you decide to sell later.
• Remodel. Also a good time. You'll be surprised how quickly you get a call-back from that contractor that didn't acknowledge you 4 years ago.
• Rent. You want to move up and elsewhere? Consider renting. You rent, and you rent your current home to someone else. Under current regulations, you can still take the tax advantages of selling your primary residence if you lived in it 2 out of the most recent 5 years. Check with your tax professional.

I would love to hear any other ideas on this topic. And, as ever, I welcome readers' questions!

Harbor commission moves forward on plan for art facilities in port warehouses - The Daily Breeze

I like this idea. I've always felt these old warehouses could be used more creatively. It'll be interesting to see if and how this works out:

Harbor commission moves forward on plan for art facilities in port warehouses - The Daily Breeze

Speaking of Portugeuse Bend and the Vanderlip Estate....

In  my excitement over Catalina View properties just listed last week (and under $1M), I neglected to mention in my last post that a piece of Palos Verdes history is on the market now, for the first time ever. The L.A. Times beat me to the punch by featuring the 1916 Vanderlip "Cottage" as its Home of the Week last Sunday. I grabbed the photo (credit:  Emily Cristiano) at left from the slide-show featured in the lovely article by Mary Forgione.

For your pleasure, I invite you to take a few moments to sit back, relax and enjoy the Virtual Tour of the 4-bed, 4-bath + maid's quarters "Cottage" at 99 Vanderlip with its sumptuous decor, landscape, and views. Price: $2,500,000. - I think it's a steal, then again I have penchant for early 20th century California homes and am well aware that this kind of thing is just not just anyone's cup of tea. That said, if ever a cup might be enjoyed best in Southern California, I'd suggest it might be done here.

As ever, I welcome all interested parties, be they Temperance Society members, or not. Otherwise, please enjoy at your leisure. Salut! - Andrea

Catalina Viewed from the Palisades Today

Striking Views from a very interesting Palisades house - a fresh listing, just put on the market. Not only are the views spectacular, but the home itself is very enchanting for artsy types - in fact it's been the home of a painter for years.

San Pedro is and has been home and refuge to artists for more than a century. From the 1930s and '40s, actors such as Charles Laughton and Elsa Lancaster partied at the old Vanderlip  Estate , which was way out in the middle of nowhere at that time and provisions had to be secured in San Pedro.

Since that time, artists have thrived in the area. These days the Art Party is celebrated in old downtown San Pedro every First Thursday with open galleries, shops and restaurants, a variety of live music and the occasional scandalous antic. It's got to be experienced to be appreciated.

First Thursday Art Walk takes place tomorrow, June 2. On Friday, all the artists, real and imagined, presumably return to their work. Soon someone lucky will be able to return to this Palisades after an art-intensive night out! 

(Credit to RedondoWriter for her blog post, Bucket List Event Fulfilled: A Visit to the Vanderlip Estate. Nice article, and her blog looks very interesting also!)

Standard and Poor River View Living

Just in time for those of us with the luxury of a job that allows us a paid holiday and/or with a home, to dig in and prepare the Outdoor Living Space for the Summer that should arrive any day now, the Price Shiller Index reported its U.S. real estate market report for the first quarter of 2011.

It may be my love of literature and metaphor, it may be my quirky sense of Serendipity....it may be that I am armed with a camera when I bike around, looking at interesting real estate. You decide. For for your consideration I offer an image of Los Angeles Riverfront Real Estate that is not for sale... yet.

It appears to be a darned-well-constructed abode on the east bank of the Los Angeles River in Long Beach. The site was clearly chosen with consideration for comfort and some elemental protection from the river, the bike-highway up the bank, and some neighboring campsites. My picture is a bit grainy, but there is a large-brimmed hat casually hanging from a nail on the visible north side of the structure. The property also features a cozy outdoor kitchen and dining area, with a few of the Palos Verdes hill in the distance. Convenient to shopping and public transportation. No known APN.

Biking around San Pedro

The past weeks have been optimal for casual biking around town and I recently cruised over to the "new" Cabrillo Way Marina to check out the progess of that project. It's beautiful, and I'm very happy to see that the same thoughtful and elegant design theme of the Harbor Walk from the base of 5th Street going north to the Cruise Ship Terminal has been continued in the Cabrillo Way development. At last.

I spoke with someone on the phone when I called the Cabrillo Way Marina for more information. I learned that the project is scheduled to be completed at the end of  Summer 2011. In addition to the beautiful landscaping and fun pavement accents, a number of marine services will also be available including a pulbic boat hoist, which I personally very much looking forward to. Their website is up, but at the time of this writing, not yet fully linked. I recommend a phone call for anyone seeking additional or specific information.

On my bike ride earlier this week I noticed a number of slip tenants already with boats in the water. I don't know how many are still available or will be.... the project is still underway at the south end with lots of heavy equipment.

I'll continue to cruise this area on my bike and report on progress. This project is truly something we can proud of - a meaningful, well-designed outdoor recreation area that, in my opinion, puts the unique geography of our Harbor and Peninnsula town to its higest and best use.

Old School Ink

The Daily Breeze recently interviewed me for their "Meet the Agent" series of the weekend Real Estate insert. My article was published April 2, 2011.

In case you missed it, you can read it here.
http://www.dailybreeze.com/business/ci_17751981

I've been following the series with interest.

Local Business News - PC Nerds

Carter Calhoun, President - PC Nerds, San Pedro

This has story has everything I love: travel, adventure, business development, Local Hero and, above all, character. It  just hit my in box and I've got to share it.

Carter Calahoun and his company, PC Nerds, have been servicing computers for me and my family from the beginning of his business. As PC pros, I cannot recommend them highly enough. That this San Pedro businessman had the will and the humanity to undertake such an extraordinary adventure makes me feel honored to know and so business with him.

Check out today's press release:

PC Nerds President completes year-long humanitarian aid mission in Kenya, East Africa

L.A. Times Reports - Fewer Californians grappled with foreclosures last year....

Home seizures by banks decline in state - Fewer Californians grappled with foreclosure last year, bucking a national trend and giving homeowners fresh hope that the state's housing market could be on the mend.
Read the full story