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Short Sales for Buyers is Not Cut and Dry

12/28/2012

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Many people think that any realtor can do a short sale.  Why this maybe true, technically, it is like saying oh any doctor can amputate a limb, but if I am going to have a limb amputated I want a surgeon specializing in that area before I go under.  There is a reason that only an estimated 1/3 of short sale deals get completed. 

Some of the nuances of a short sale are:
1) Preparing the clients
2) The process takes 3 months or longer (the bank servicing the loan(s) of the seller first has to agree to the offer, then the investors have to agree)
3) Identifying the number of lenders (if there are more than two you are probably going to have problems)
4) Knowing if the current seller is delinquent, has received a Notice of Default, etc (if a bank has started the foreclosure process there may not be enough time to complete the short sale)
5) The property is usually going to be required to be taken "As-is" and this causes
6) The property will often have deferred maintenance so there will be additional costs
7) If the property is missing appliances such as stoves, and the buyer is going to have to get a loan from a bank, the bank often will require that there be a working stove in place before closing and if the seller doesn't have money to put in a new stove this is going to cause problems
8) Pest reports, if pests are found and the buyer is getting a loan, the Bank will usually require that the pest damage be remedied before closure and the seller will often times not have the money to do so
9) Inspections need to be more careful than usual as all the maintenance costs and repair costs will be born by the new buyers
10) Delinquencies in HOA dues are often a problem and sometimes the buyer may have to pay them off

These are just some of the challenges of a short sale transaction.  I can tell you from experience that these challenges can be overcome and result in some great deals for buyers.  I have had clients receive properties which have appraised $50,000 to $100,000 higher than the prices they paid.  After having done some short sales I can tell you that they are anything from a typical real estate transaction and if you want to have a successful short sale, I would definitely only use a realtor who has at least some experience with short sales.


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5 Things to Note When Buying A Condo in San Francisco

8/24/2011

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I have been in the real estate business for many years and just thought I would write something that buyers should pay close attention to when purchasing a condominium that many realtors and buyers often overlook.

1. The Condo Plan or Tract Map
The Condo Plan and Tract Map will show you exactly what you own versus what is a common area. This should clarify what parts of the property you are personally liable for and what you have to pay in dues to your Home Owner Association (HOA) to maintain.

2. Covenants, Conditions and Restrictions (CC&Rs)
Make sure you have read through the CC&Rs and are comfortable with accepting all their terms before you close escrow. Once you have closed escrow you are legally assumed to have accepted each CC&R term.

3. Articles of Incorporation of the HOA
The Articles of Incorporation will give you an idea of what the HOA is authorized to do.

4. By-Laws and Operating Rules
The By-Laws and Operating Rules are important to you as they determine how the HOA members are elected and what your rights up front when dealing with your HOA.

5. Reserves
HOA Reserves are something you should pay special attention. Given the current economic environment, some HOAs are not receiving all their dues.  This is causing a short fall in revenues. Those that are not well funded are increasing their HOA dues or charging owners assessments. Also, many banks are no longer lending to potential buyers in buildings where there are significant HOA delinquencies or large assessments.

I hope these tips help you and if ever I can be of any assistance just contact me, Greg Bryan, your San Francisco Real Estate Solution Specialist.

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Is Paying Above 2009 Prices Normal For SF?

7/25/2011

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So I was recently asked the question of is paying above 2009 prices normal for San Francisco.  I can tell you from experience here in San Francisco that prices vary considerably and that many different factors determine what a property sells.  Some of the factors that I consider when looking at a property for determining if it has been priced correctly are the following:

• Neighborhood/Location
• Condo v. Single Family Residence
• View v. Non-view Unit
• Price Range
• Condition and if it was recently updated or built
• Number of Bedrooms
• Parking
• Amenities/Unique Attributes

Every property is different and if your realtor should be able to provide you with numbers, trends and market conditions that let you decide for yourself that the value is there.  If they can't you should consider getting another realtor who can.
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Buying v. Renting

5/12/2011

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There was an interesting article in the New York Times a couple of weeks ago about Renting v. Buying.  What they did was they took the Sales Price of a home and divided it by the annual rent that someone would pay.  If the ratio came out to be less than 15, they concluded it was a good time to buy.  If the ratio came out over 20 they concluded it was a good time to rent.  If the ratio was somewhere in between it was debatable. 

Anyway this article seemed kind of fascinating so I thought I would share it.  It also pointed out that most of the Silicon Valley and the East Bay most property ratios are above 30 making it a better time to rent then buy. 

Although no formula I have found is perfect other than actually crunching through all the numbers ones self according to ones exact financial situation.  I did find this interesting and a good for ball parking if you are making the rent to own decision. 

In addition at a recent meeting of the INCOME PROPERTY MARKETING GROUP we discussed rents and for the Northern part of the city (where a lot of people want to live) the rents have gone up significantly and there are much less vacancies available.  If you are looking to buy often times the costs are 3X or greater in mortgage payments than rent.

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    Greg Bryan is a realtor and an attorney in San Francisco

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