San Jose Real Estate * REALTOR ® * Richard Gonzalez

One of my agents came to me who has buyers looking for an affordable home in the San Jose area only to find that they are competing with multiple offers and dealing with frustration. The price range tends to be between $250,000 and $300,000.

Our buyers are making a competitive bid in some cases $40,000 over asking price only to be blown out of the water by a competing bid with an all cash offer. Apparently there are buyers and investors with access to large quantities of cash.

My suggestion to any buyer would be to be persistent and vigilant when looking for a home. Rumor has it that by the middle of the year we should experience a flood of bank owned properties (REO) in these affordable areas and as such may end up either stabilizing the need for affordable homes or continue to impact the values in these affordable areas.

One last thought is that there will be a deliberate low ball listing price to generate the multiple offer frenzy we experienced in 2005 at the height of the market. This is a listing technique that is frowned upon by the real estate community but ultimately difficult to control let alone police.

2009 sales chart

Those of you looking to time the market should take a look at this article from the Mercury News. Affordable homes in Santa Clara County have once again become a reality. Combined with all time low interest rates and first time home buyer programs we have the makings of a combination buyers should not overlook.

Read Mercury New Article

I recently had a client stop by my office after receiving a modification agreement with very aggressive terms. A few months ago I was referred to a client who was on the verge of losing his home. When we met he shared his dismay and at the same time his willingness to hang on to his loan even though the value of the homes in his area have dropped by 40%.

After reviewing this clients situation two options were available, either apply for a loan modification or short sale and try to mitigate the legal and credit challenges of a foreclosure.

What I found interesting was a common theme among the lenders and that is as follows;

• Homeowners late on mortgage payments tend to receive priority during the loan modification process.
• Lenders are likely to modify as long as you are able to show the ability to continue to make the modified mortgage payment (It has to make sense).
• Banks are taking a “waterfall” approach when modifying a loan by reducing interest, extending loan terms(30yr to 40yr), and lastly freezing part of the principal balance thus reducing loan payment(Forbearance).

What I also found was that in the last 30 days alone lenders have begun to change their policies and procedures when modifying loans. Technically speaking you can modify your own loan which was the case of this client. Paying someone to modify your loan is a personal preference, it is a time consuming process and a good portion of homeowners do not have the time to have their day consumed by modifying their loan.

Persistence is key, Homeowners and banks are increasingly closing the gap; I have seen it and am happy to report that banks are modifying loan terms.

Those of you interested in taking advantage of the Obama Foreclosure prevention initiative should download the attached document to see if you qualify.

Download the guidelines here