What will it take to get people to buy houses?

The government keeps trying to jump start the economy. This is the lowest our interest rates have been since 1951. So why aren’t people buying houses?!

I think we need to try to opposite tactic. Raise the interest rates and then people will scramble to buy before they go up again.

What do you think will get people to buy in this low cost market?

Posted by:  Judy LeMarr

Remember Nicolas Cage and his troubles last year? Here is a tale of woe for another star struggling to make house payments. It can happen to anyone.

The 75 year old “Smokey and the Bandit” star, Burt Reynolds, was hit with a foreclosure lawsuit on behalf of Merrill Lynch Credit Corp. last Tuesday that claims he’s in arrears to the tune of $1.2 million on his Hobe Sound, Florida home. The suit claims that Reynolds hasn’t made a payment on the estate, dubbed “Valhalla,” since September 2010.

Reynolds and ex-wife Loni Anderson initially took out a $1.5 million mortgage on the home in 1994. A second loan for $750,000 was also taken on the property.

Reynolds put the 12,500-square-foot home on the market in 2009 – asking price $8.9 million – but the depressed housing market made it difficult for him to sell the residence. Of course, it probably didn’t help that he was asking $8.9 for a house valued at $2.4!

Posted by:  Judy LeMarr

For many Baby Boomers, changes in life – a sudden empty nest, divorce, retirement, death of a spouse – can bring about new priorities and may spark the need to move to a new home. This is the time when some people consider this their last home purchase.

Whether the change in homes brings one warmer weather, lower costs, or closer to family and services, the goal is a more manageable lifestyle. This final move can also bring about some tough decisions. Selling a larger home and buying a smaller one would make sense for this last move.

If this is your situation, you may have to purge a home of decades of family collectibles. Deciding what to keep and what to discard is difficult. What do you need to take to your new home? How will you actually pack and move everything or get the kids to take a good deal of it?

Two good books to help with this process are On The Road Of Life, Drive Yourself and Moving Mom and Dad by Donna Robbins. If you need any help with creating a plan to make this last move, I am happy to provide information, ideas and support.

Posted by:  Judy LeMarr

Zillow is an automated valuation model (AVM) that determines residential property values using county tax records. It has proven to be very inaccurate in Marin County. Zillow claims on their website to have a margin of error of 12.5%. In Marin, Zillow is much further off. For example, I took Frank Howard Allen’s last 20 sales (from our two Mill Valley offices) which ranged from Sausalito to Novato with selling prices from $299,000 to $3,000,000. The variance from Zestimate to sale price was off on average over 22%, with several off by 50% or more. One property had a Zestimate of $1,000,000 and it closed for $1,500,000 (a 50% variance). Another property had a rent zestimate of $6,950, which subsequently rented for $18,000 per month. A Mill Valley property is about to close for $1,825,000 with a zestimate of $1,416,000. This same property previously sold for $2,200,000 in 2007.

The problem with Zillow and other AVM’s are that many tech savvy buyers are using these sites, and in some cases using zestimates, to determine their offer price. In the first example above for the $1,500,000 property, one buyer offered $1,400,000 initially (expecting to negotiate) and the second buyer using the zestimate offered $1,100,000. The second buyer was not even remotely close to fair market value (FMV), and consequently the sellers negotiated the sale with the first buyer. Property values are determined by comparable sales which are then synthesized and analyzed by experienced agents to determine the best price given current market conditions. It is a combination of intuition and analytics that seasoned agents use to determine FMV. AVM’s do not consider condition, major improvements, views, lot utility and overall desirability. AVM’s take an overall price-per-foot including lot value, based on tax records which are not always accurate, and assign a value. This is way too simplistic in areas like Marin. In Marin, we have lot values assessed between $1 and $3 million is some cases. There is no way the AVM’s can factor that into their valuation. Zillow works well in areas rolling with very similar tract housing.

Get in touch with your Frank Howard Allen agent/broker or another local real estate expert for accurate assessments of local values. A local realtor can give the inside scoop on the desirability of a neighborhood, quality of the schools, microclimates, traffic patterns and ultimately, the overall value of a desired property.

Posted by:  Andy Gellepis

I have clients from Washington, D.C. who have fallen in love with Bolinas. Of the houses they have seen, many need major remodeling. That is a problem because even if they can get permission from the necessary authorities – Public Utilities District (BPUD), the county of Marin and in some cases, The California Coastal Commission.

Bolinas is a true throw back to the tie-dye days of the protests on the campus at Berkeley. The locals don’t want their town changed. That can be good in keeping the sleepy village feel but it can be bad for it is virtually impossible to update what is there.

According to yesterday’s story in the New York Times it will cost you if you want to build a house in this country hamlet in West Marin. And if you do, it will take 4-7 years of planning and the approval process to get a project finished. Bottom line, if you love Bolinas that much then you have to have a lot of patience and deep pockets to live the quiet, hippy inspired life in Bolinas.

Posted by:Judy LeMarr

For potential homebuyers who are still unsure about making a move, the next few months signify a countdown of sorts.

The first countdown is the extension of the federal tax credit for first time buyers (see my previous blog post about this) and the expansion of the credit to include move-up buyers as well, which both expire April 30, 2010. For more information, visit www.federalhousingtaxcredit.com.

The second, and relevant to all buyers, is that the Federal Reserve (the Fed) will soon wind down its program to keep home loan interest rates low.

Here’s how we got to the current low home loan rates: the Fed purchased Mortgage Backed Securities (MBS) in 2009; this helped to keep prices of the MBS high and push home loan rates low.

The good news is that the Fed continues that program through March 31, 2010. But…here is the alert. The Fed’s purchase of the MBS peaked in May 2009 at an average of $25 Billion per week. In November, the average dropped to $14 Billion per week. By the end of that month, the Fed had used over 80% of their allocated funds for the program. There is not much left, especially since the tax credit program has added new loans to the pool.

So why sound the alert? As the Fed’s program winds down, we will likely see higher levels of volatility with shifting rates and since MBS will have less support from the Fed (i.e. they won’t be buying them), other investors will have to buy the securities, and as industry observers believe, rates are likely to rise.

The Wall Street Journal published two pieces today on this matter:

From WSJ / Economy: Bernanke: Low Rates Still Needed

From the WSJ Developments blog: Analyst: Pressure Will Build on Fed To Extend Mortgage Program

So what to do? Beat the spring rush, get qualified and buy while home loan rates are at an all time low.

Posted by:Judy LeMarr

One of the many reasons that Marin continues to enjoy high real estate values is due to the many county, state and national parks in our area. Marin County is dominated by 70-80% open space, which includes this network of parks, many of which are suffering due to the California budget crisis.

There is a proposed state ballot measure, sponsored by the Marin Conservation League, which would create the State Parks and Wildlife Conservation Trust Fund Act of 2010. The purpose of the measure would be to protect state parks and conserve wildlife where, by law, the funds could only be spent on state parks, urban river parkways, wildlife, natural lands and ocean conservation programs. These funds would come from an $18 annual State Park Access Pass surcharge added to the license fee on all California vehicles annually. Vehicles subject to the surcharge would receive free, year-round admission to all state parks. This fee is expected to generate $500 million a year and take the funding of the state parks out of the state general fund.

To learn more about the measure and how you can help gather signatures to ensure its place on the November 2010 ballot, log on to the California State Parks Foundation website. You can also learn more about this issue locally on the Marin Conservation League website or email subvw@yahoo.com.

Posted by:Judy LeMarr

The Home Buyer Tax Credit, initially set to expire on November 30, 2009 has been extended into this year. Additionally, the tax credit has been expanded to include current homeowners looking to purchase a different home. The key points of the tax credit bill is as follows:

• First-Time Home Buyer Credit
  The $8,000 credit is available to first time buyers defined as a person who has not owned a principal residence for three years prior to the purchase. This applies to both parties in a married couple as well. If one spouse has owned a home for three years, but the other has not, then neither can qualify for the credit.


• Current Home Buyer Credit
  The tax credit has now been expanded to include current homeowners who wish to purchase a different home. To qualify for the $6,500 credit, a current homeowner has to have owned and lived in their home for five consecutive years of the last eight. Current homeowners do not need to sell their existing home to qualify for the credit. They may hold onto it as a rental property.


• Timeline
  The credit is available for homes purchased between November 7, 2009 and April 30, 2010. Home purchases in a binding contract by April 30, 2010 will qualify for the credit as long as closing occurs by June 30, 2010.


• Income Limits
  Single taxpayers with incomes up to $125,000 and married couples with joint income up to $225,000 qualify for the full tax credit. Partial credits are available to single taxpayers with incomes between $125,000 and $145,000 and married couples with earnings between $225,000 and $245,000.

Under the new bill, the tax credit may only be issued for homes purchased for $800,000 or less. The tax credit is a true credit and does not need to be repaid, provided the homeowner stays in the home for at least three years The credit will be paid to eligible taxpayers even if no tax is owed or the credit exceeds the tax owed.

For more details on the Home Buyer Tax Credit email me at jlemarr@fhallen.com.

Posted by:Judy LeMarr

HVCC stands for Home Valuation Code of Conduct . Effective in May of this year, the HVCC was established to change appraiser selection criteria that will help eliminate conflicts of interest on mortgage appraisals. Consequently, many lenders are required to source appraisals through an appraiser network. This is where it is important to use a lender who has more options than just contacting a call center in Minnesota and being assigned an appraiser who happens to be the first to respond and may not even live in the area.

According to the USPAP, Uniform Standard Professional Appraisal Practice, an appraiser should have competency in valuing property in the local market. Unfortunately, under the new HVCC regulation, this doesn’t always happen.

If you are in the market for a new home or are looking to refinance your current home, here are some very important questions to ask an appraiser:

1. Do you have access to local MLS data?
2. How far is your office from the subject property?
3. Are you familiar with the area?
4. When was the last time you were in the area of the subject property?
5. How frequently are you in the area of the subject property?
6. How long have you been appraising?
7. What are your credentials?

And be sure that you know what the following “codes” mean when you ask that last question.

AT: Trainee

AL: Appraiser does not do FHA loans and only loans under $1 Million

AR: Certified Residential Appraiser who can appraise any value

AG: Commercial Appraiser who also can do residential appraisals

If you have any concern about the appraiser assigned to your loan, call the lender and immediately ask for someone qualified to evaluate the property. Any flag at all and you should get reassigned.

Let me know if you have had any bad experiences with the HVCC.

Judy LeMarr, 415 793-5030

Posted by:Judy LeMarr