Archive for the ‘Marin Real Estate’ Category
Our team has been having some really interesting discussions about short sales lately, and how little consistency there seems to be in how they’re being handled. At this point most people are familiar with the term, but for those who aren’t, a short sale can be an option when a homeowner needs to sell but owes more than the property is worth. The owner accepts an offer pending approval by the bank, which must agree to take a short payoff to make it happen, and that approval depends on the seller demonstrating financial hardship and the lender’s acceptance of the sale price as market value. It can be a great alternative to foreclosure for both sides, but by nature there’s a lot of room for ambiguity and no real standard for the process.
What got us talking about this recently was how we sometimes see a short sale listing come on MLS that is either already contingent with an accepted offer, or that goes contingent right away, and then ends up closing a few months later with the listing agent (or another agent in that same office) representing the buyer too. That means the property wasn’t exposed to the market and other buyers weren’t given a chance to make offers, and the offer that’s being sent to the lender for approval may not be the strongest that might have been out there.
Lenders don’t generally scrutinize the marketing of short sale listings like they do with foreclosures. For example, with an REO they often require the agent to expose the house to the market for a minimum number of days before taking offers, in an effort to ensure they’re getting the best offer rather than taking the first one that happens to come in. This isn’t normally the case with short sales. The lender might require the property to be listed on MLS, but it’s not common for them to ask for specifics about when the offer came in or how much actual market exposure the property was given.
Of course, with an REO the bank is actually the seller of the property, whereas with a short sale the owner of the home is the seller and the bank is just approving the sale, since they’re the ones taking less money than they’re owed when the lien is payed off at closing. This is an important distinction since it brings up the question of fiduciary duty and who’s calling the shots.
Agents have this fiduciary duty to their clients, meaning an obligation to represent their clients’ interests above all others, especially including their own. And in a short sale since the client is the homeowner, not the bank, the listing agent’s duty is to help the seller get the short sale approved and avoid foreclosure. In many cases the seller doesn’t really care what price the house sells for as long as the bank approves it and the deal closes (assuming they have no tax consequences or deficiency judgement), so it may seem like a good idea to just take whatever offer the agent has and send it off to the lender for approval to get that process underway, which can take months. But we think it’s fair to question that strategy.
Barring special circumstances, like an imminent auction date, we think it can be in the seller’s best interest to see what might be out there by putting the home on the market, at least exposing it on MLS for a week let’s say before accepting anything, rather than letting the listing agent pre-sell the home to his or her own buyer client. The strongest offer will have the best chance of getting approved by the bank, and that offer from the agent’s in house client might be “good enough” in the agent’s eyes but might not be the strongest. We’re not fans of agents “double ending” their own listings in general, but there seems to be even more potential for conflict of interest where a short sale is concerned. And if the listing agent has a willing buyer all ready to go, then it’s likely that buyer will still be there a week later if it turns out he’s actually bringing the best offer.
Short sale sellers are typically in stressful situations and just want to get the house sold and move on, and we don’t like to see agents taking advantage of the situation, either out of laziness or because they want to get a good deal for a buyer they’re also working with. There is also the neighborhood to think about. If you sell a home for less than it would be going for on the open market then that can affect prices in the area, as that sale will be used as a comp for other homes. Some sellers may not care, but we’ve worked with many who don’t want to hurt their neighbors’ home values if they can help it. Why not expose the property to market for even a minimal number of days if you have nothing to lose by doing so, and potentially much to gain for you, the neighbors, the bank, and the housing market in general?
2011 is ending with a continuation of the trend we’ve been talking about all year: low inventory and strong demand in many areas and segments of the market. As you can see for the chart below, some Marin towns are fairing much better than others. Fairfax, Corte Madera, and Greenbrae, for example, are very different markets than Belvedere and Ross.
And pending rates go down dramatically as price range increases. Things are going to slow down overall as always as we head into the holidays, but it’ll be interesting to see what happens after the first of the year. Drop me an email at george@sfnorth.com if you’d like market stats for your area or price segment.
This 2 bedroom, 2 bath townhome at 67A Lovell in Mill Valley is a great opportunity for those who like to be close to everything. It’s literally around the corner from restaurants, shopping, and nightlife, yet it’s really peaceful and private. A two-car garage and low HOA dues to boot.
More info at www.67lovell.com
Yes! We just brought on a 2 bedroom house in Santa Venetia, with charm, a nice yard, and a 2-car garage, with an asking price of $279K. It’s a smaller house–950 square feet by the tax records–and it’s a short sale so the lender will have to approve any offer, but a nice opportunity for someone who wants to buy in Marin at a price point that’s rare for a nice house in the area. More info here.
The Federal Housing Finance Agency announced today some changes to the Home Affordable Refinance Program (HARP). Basically, the idea is to make it possible for more people with loans backed by Freddie Mac and Fannie Mae to refinance to take advantage of low interest rates. The program has been limited to those who owed up to 125% of their home’s value, but they’re removing that limit so homeowners who are substantially underwater will be able to refi into lower payments, hopefully letting more people stay in their homes.
Of course if your loan isn’t backed by Freddie Mac or Fannie Mae, if you have a jumbo loan for example, this won’t be such exciting news.
You can read the official press release here.
This week we brought on this super cute cottage just over the San Anselmo/Fairfax border. It has a flat lawn, tons of charm, and the location is great. A stone’s throw to downtown and a block from the new Good Earth grocery store, but just far enough from Sir Francis Drake to avoid the road noise. First Sunday open house tomorrow! www.20willowave.com
Here are the pending rates for August. It’s traditionally a slow month, with people out of town, but there’s still been strong activity in some parts off the county. Corte Madera, Greenbrae, and Fairfax continue to show a lot of demand relative to a small supply.
And here they are by price range. No surprise that the lower end continues to be stronger than the luxury market.
We brought on a really cool new listing in Fairfax this week. An updated, open floor plan, mid-century home in a beautiful setting. Only a couple minutes up the hill from downtown. We’ll have it open both Saturday and Sunday this weekend, Aug. 13th and 14th, 1:00-4:00 pm. www.30mountainviewroad.com.
An interesting year continues, with things still a little wacky in the Marin housing market. We’re still seeing multiple offers on some homes, and then there are some listings that are sitting for months. At the risk of sounding like a broken record, one thing that’s pretty glaring is the continued lack of inventory, especially really desirable houses. Looking at the stats for June, the number of residential properties in Marin is the lowest it’s been in any June in at least the last five years. And the months supply of homes based on pending sales is the lowest it’s been in any month since 2007. It’s 45% lower than this time last year, and 17% lower than June 06!
The conventional wisdom says that July and August aren’t the best time to list a home since people are on vacation, but this could be a good time for sellers to throw that thinking out the window and take advantage of the lack of competition.
Looking at the Marin County stats across all residential properties and price ranges through last month, pendings (houses going into escrow) ticked back up and inventory remained lower than any May since 2007. With all the doom and gloom in the media lately about the housing market nationwide, I guess we should feel good that Marin is looking like a different story right now.
With relatively low inventory and sales still pretty brisk the months supply is as low as it’s been in quite a while. It was at 3.4 in May, meaning at the current rate of homes going into escrow it would take 3.4 months to exhaust the current supply. That number was 4.9 in May 2010, and 3.1 back at this time in 2006.
As always, if you’d like stats for your particular town or price segment feel free to drop us a line at info@sfnorth.com.