by Roberta Murphy

Years ago, when we put our first home on the market, I insisted that the Realtor put NO SIGN in our yard.

I did not want neighbors to know that we were selling or cause any disruption in our neighborhood. Our agent tried to explain the importance of a sign, but I was the incalcitrant client–and we ended up selling the home with NO SIGN. This of course, was before the internet and Realtor.com, Zillow, Trulia and all the other listing aggregators. And in those days, the wish for privacy was something that was understood by almost all.

At that time, I mostly wanted to protect our privacy–and didn’t want to have to answer questions or be the subject of neighborhood gossip.

Fast forward to 2012 and grocery shoppers have not only to contend with the revelations of rags in the checkout lines, they can also hop onto to the Trulia or Zillow sites and see which of their neighbors have fallen behind on house payments and could be facing foreclosure. Or, equally likely (and rarely assumed by the real estate novice), they may simply be trying to negotiate a loan modification with their lender WHO MAY HAVE ADVISED THEM THEY NEED TO BE DELINQUENT IN THEIR MORTGAGE PAYMENTS before they will be considered for a modification in the terms of their loan. Equally possible, the family may simply have fallen on hard times and are suffering enough embarrassment and pain without Zillow and Trulia posting up their delinquent mortgage status for all to see. Moreover, their home may already be listed as a short sale with their Realtor.

It seems these national aggregator sites who list homes for sale, provide market advice and offer slick mapping services feel this information might bring more eyeballs to their sites. Real estate agents already pay hefty sums to be the advertised “representative” of local zip codes. In further monetizing their sites, will these same agents be enticed to be the “local expert” for pending foreclosures in their purchased zip codes?

It’s not the business model that bothers me; rather, it is the brazen publication and monetization of personal pain. If parents discuss their neighbor’s published and pending foreclosure at the dinner table, is there not a chance that this juicy tidbit becomes an embarrassing morsel of school gossip the next day?

These commercial listing aggregators might try to convince real estate agents that they are offering a real opportunity to agents: They will now know who might be interesting in listing their home, and the more passive agents can $ign on to passively be the face to call when times get tough.

What’s next?

Let’s see, who else might be interested in listing their home when:

1. A loved one dies
2. Divorce proceedings are filed.
3. Someone is arrested (might need to sell to pay attorneys and bail?)
4. Birth announcement (need a home–or a bigger one?)

These are just a few examples of times when privacy might be appreciated and strongly desired. And of course, it is all public knowledge if one searches hard enough–and that is one of the arguments proffered by those who commercialize this information. And from this Realtor’s point of view, it’s pretty convenient information to have–if I’m inclined to pester people in their times of pain–or deep personal pride.

I guess one of the things I liked so long ago when I refused a lawn sign was the sense of control I had over my privacy. These days, a listed home wouldn’t stand a chance of being so obscured from looky loos and prying eyes. The listing would appear not only on hundreds or thousands of Realtor websites, but would also likely appear on Realtor.com, Zillow, Trulia, Movoto, Redfin and innumerable other listing aggregators and national sites.

At a minimum, these sites should allow the homeowner the opportunity to opt out of publication–especially when the information published could cause personal pain and harm.

In exchange for this, as a San Diego Realtor, I would be gladly willing to forego any gain I might achieve from this information–and optimistically believe other real estate professionals would feel the same.

There was a time in our society when privacy was an assumed and granted given. These days, it appears to be a luxury afforded a privileged few.

The post The Luxury of…Privacy appeared first on Luxury Home Digest.

We list and sell real estate in good, bad and indifferent markets. Short sales are becoming common, though. So is blood in the streets.

People move up, down and out all the time because life is about change and transitions. And each time the real estate market shifts, we regroup and modify strategies for buyers and sellers. There may be some inconveniences and pricing adjustments for our clients, but only once every decade or so does the process of buying or selling a home become a very worrisome or blood-filled experience.

Our usual focus centers on the luxury home market, but we end up working in many arenas, especially when asked to do so. And though our San Diego luxury real estate market is doing fairly well (with a few casualties), other fringe markets are suffering–and even bleeding into the streets. But that is the nature of short sales and foreclosures.

A week ago, I received a call from a  25 year-old San Diego real estate investor who was underwater on both a townhome in South Bay and a property in Las Vegas. These were investment properties purchased when both cities had started their upward price spirals. The San Diego investment property was purchased with 100 percent financing in 2003. It was refinanced in 2005, with enough money pulled out to purchase the Las Vegas property, along with another San Diego flipper in 2005. The latter was sold at a small loss a year later; in the meantime, the second lien interest rate on the San Diego townhome had spiked to an intolerable interest level.

Oddly, it is the Las Vegas investment that may survive, because HSBC Mortgage Corporation took the initiative to call this client and ask if he would like a one year extension of his very low entry interest rate. The investor breathed a sigh of relief and was reasonably assured that his Las Vegas rent would continue to cover the mortgage payments–at least for another year. (Three cheers for HSBC for taking that initiative)

Tomorrow, we will be calling GMAC and Countrywide Mortgage Companies to see if they might offer similar relief for the San Diego property.

Otherwise, this investor (who now has a family to support) will either be forced to sell under short sale conditions (where the lender accepts less than what is owed on the property) or allow the property to go into foreclosure. The outstanding mortgage debt on the San Diego townhome is $337,000 and its value in today’s market is something less than $275,000.

It is so difficult to advise the young father and husband who can no longer afford his mortgage payments and wants out from under the maintenance headaches of his investment properties. Though I suggested we try and seek a loan modification with GMAC Mortgage that might allow him to hold onto his investment, he seems inclinded to take his punches and let it go.

Whether he chooses a short sale or foreclosure, it will bloody his credit rating and could leave him with either a hefty 1099 tax bill, or judgment lien for the losses suffered by the lender on the San Diego home. These are things we will attempt to negotiate on his behalf, once we have his bank statements, tax returns and hardship letter ready to submit.

This is not a singular situation. We receive calls weekly with similar stories. These people either purchased their homes in the last three years with one hundred percent financing, or refinanced their properties to the limit during the same timeframes. The anguish in their voices is real. These homeowners don’t want ruined credit, they fear huge tax bills, and wonder if they’ll ever be able to sleep through the night again.

This is a story that will continued—along with suggestions for possible resolution. The repercussions from these failed loans reverberate through all economic levels—from the borrower to the investor who bought the loan to the real estate market as a whole. It is an issue none of us can ignore. There is truly blood in our streets–and, I suspect, on the hands of some folks on Wall Street.

The post Short Sales and Blood in the Streets appeared first on Luxury Home Digest.

It is difficult to avoid the subject of  short sales and foreclosures when discussing real estate these days.

We receive ongoing emails and calls from people wanting to buy short sales and foreclosures because they want the best deal possible. They believe that the best buys can only come from bloodied sellers and lenders and that somehow real estate agents are the best bloodhounds of all (which is often true).

Theres this misconception floating around that if a lender is willing to shave off some of the debt owed on the property and sell it for less than what is owed, it must be a good buy. The same logic is also applied to foreclosures.

But reality sometimes paints a different picture.

Many of our San Diego clients have been able to get outstanding buys on real estate not through short sales or foreclosures, but from the best kept secret of all:

Motivated sellers.

And it makes a lot of sense. If, as a savvy real estate agent, I decided to sell my own home in todays market at the best price and within the shortest time frame possible, I would:

1. Stage the home.

2. Price it 3 to 5 percent under the competition. (Hear that, Freakonomics?)

In short, I would compete with any short sale or foreclosure competitors in pricing because I can, and thats because I have enough equity in my home to do so. There are also more sellers in my position than those who are in over their heads.

Hence, it makes good sense to work with a Realtor who is in tune with seller motivations and local market conditions and who keeps an ear to the ground to hear market rumblings as well as occasional agent gossip that doesn’t appear in MLS descriptions.

In times like these, working with a knowledgeable and wise real estate professional may be one of the best investment decisions you could make. And when looking for the best buys in real estate, pay attention to short sales and foreclosures and look even more closely at seller motivation.

Read also:

Short Sales in the Luxury Home Market

Short Sale Trauma Drama

Home Pricing Dangers

Real Value in Real Estate Gossip

San Diego Home Home Losses Hit New High

Search San Diego Real Estate

The post What Could be Better than Short Sales and Foreclosures? appeared first on Luxury Home Digest.

Some of the more difficult listing appointments our group encounters these days are ones that involve short sale conditions. In this situation, the seller owes more on the property than what it is worth in the current market.

A year or so ago, we were having to explain how short sales worked to anguished sellers. These days, sellers call us, say they are underwater with their mortgages, and ask if we can help get them out from under crushing and/or mounting debt. And contrary to popular belief, short sales are not only occurring in condo conversions and lower end properties, but in the luxury home market as well.

How and why do short sales present such potential for real estate investors and home buyers? Most short sales situations we encounter in San Diego involve homes that were purchased in the last two years with 100 percent financing, or homes that had been refinanced—often a number of times. Many of these properties are also encumbered with Option ARM mortgages, whose rates have reset to unaffordable rates and may have negative amortization.  

No well-advised buyer would ever pay an inflated price for a home to accommodate a home seller’s inflated mortgage debt.

In fact, we routinely check the outstanding mortgage debt on properties we show to home buying clients to check short sale potential. Many buyers don’t want to go through the protracted hassle of waiting for lenders to respond to offers. Others are willing to trade time for opportunity. Regardless, we feel compelled to advise buyers of the possibility.

It may be anecdotal evidence, but we seem to be encountering more homes at the low end of the luxury market that will likely be sold under short sale conditions. In the San Diego market, many of these properties are newer tract homes that are in the $1 to $1.5 million range. These sellers have also had the added burden of having to compete with builder’s inventory that is/was being sold with ultra-generous incentives.

And what does the near-term future hold for short sales in the luxury home market?

Difficulties will arise with some of the luxury home purchases and refinances that were accomplished with Option ARMs and their “teaser” entry rates. A million dollar mortgage that originated 30 months ago and had payments starting around $2600 per month could now be readjusting to just under $7000 per month. And refinancing out of these products is often daunting, because of hefty prepayment penalties.

It is a story that is still under development.

The post Short Sales in the Luxury Home Market appeared first on Luxury Home Digest.