San Jose Real Estate * REALTOR ® * Richard Gonzalez

The California Association of REALTORS® have released the affordability numbers for the state of California and among  them is the very expensive bay area and Santa Clara County is among them. Here is what they found.

• In Santa Clara County only 37% of the population can afford to buy a home at the $545,000 median range.
• The required take home to purchase is $117,630.
• Your monthly payment will be around $2,940.

The Chart below shows the cost of home ownership in California.

Related articles

• C.A.R. releases Q1 2011 Housing Affordability Index (car.org)

The Department of Real Estate has made a shift in their staff workload from licensing to fraud prevention and protection of the pubic. One of the areas that has become a priority has become short sales and how licensees are offering services to the public to deal with short sales.

Flipping Short Sales

A trend that has become an issue has been buyers who entice listing agents to submit their offers only to the lenders for approval.  The issue is with regard to agency(who the agent represents in the transaction) and it can create a legal problem with the listing agent and the homeowner. The banks want the best offer the market supports. Flippers are more likely to make an offer lower than a competing offer. This presents a problem for the homeowner and the listing agent. Homeowners must submit highest and best to protect themselves.

Negotiators must be licensed

The primary requirement for negotiating a short sale is that the individual performing the negotiation must be a licenced real estate Broker or a salesperson supervised by a broker. Sellers must verify the negotiators licence status on the DRE website dre.ca.gov.

Paying a Short Sale negotiation fee

A listing agent that requires the buyer or buyers agent to agree to pay a short Sale negotiation fee on behalf of the seller is in violation of real estate law. An update published in September goes into detail regarding this issue. ConsumerAlert_ShortSalesUpdate

The DRE has recently issued a consumer alert with the intent to assist homeowners navigate through the short process.

DRE_ConsumerAlert_ShortSales

The California Association of REALTORS latest report tracks entry level housing requirements for the state of California over the second quarter of 2010. Santa Clara County has slipped slightly in the affordability index from 55% in Q1 2010 to 51% in Q2 2010.

The report also tracks income requirements for entry level housing and monthly  principal, interest, taxes, and insurance (PITI) payments a buyer should budget towards housing. A first time home buyer would need to make a PITI payment of $2,940. This is taking into account a Santa Clara County median purchase price of $535,500.

Read report here

Until November of 2009 Bank of America / Countrywide short sales were difficult to navigate and a communication challenge to say the least. Our average time to receive an approval ranged from four to six months. As a result Bank of America created a partnership with equator.com thus reducing the short sale approval timeline from 6 months to 45 days.  For this reason and because there continues to be confusion with the process I decided to provide 3 steps to successfully initiate a B of A short sale and navigate through this new system.

One small task at a time

Step 1 . Listing agent must Register on equator.com  once your REALTOR has informed B or A that you are short selling your home. B of A will then assign the short sale to your REALTOR in the equator.com system. Your REALTOR will then upload a laundry list of documents one task at a time. Tasks are the basic process initiated by B of A to ask for the necessary documents needed to start the short sale. Your REALTOR will be asked to upload the following:

• Purchase contract
• MLS information
• Buyer Pre-qualification including social security numbers
• Picture of home
• Authorization from seller to allow REALTOR to talk to B of A

Step 2. Seller needs to notify B of A that they want to start a short sale. equator.com will provide a password to the seller and the seller must have an email address of their own to access the system.

Step 3. Seller must upload independent of each other (one task at a time) the following documents.

• 2 yrs tax returns
• 2 months bank statements
• Pay stubs for the last 30 days
• Hardship letter
• Financial statement

Challenges:

• There are still many people who don’t have an email address or are not comfortable uploading documents into the system.
• Sellers will get blocked out of the system if they have too many failed attempts at accessing with an incorrect password(it happens all the time).
• Sellers must respond as quickly as possible when given tasks. Failure to do so will slow the process down and may stall the process until requested documents are uploaded.

Goal:

Once B of A receives the information they will begin processing your short sale. 2010 is primarily expected to be a short sale year as banks begin to develop new processes to handle the paperwork involved.  Knowing what to expect and being prepared is key when navigating the B of A short sale system.