Realty World – Franklin Real Estate Group – Ed Favinger

What do you mean I don’t qualify for a loan…

Are you crazy…?

I make over $100k a year,  have an 800+/- FICO,   AND…  Several Million in the Bank!

That’s just exactly what Mr. Phillips was told by Wells Fargo Bank  recently.  He’s in contract with us to purchase a duplex in the area and while waiting for the Short Sale approval,  was going through a “refinance” on a duplex he paid cash for about 6 months ago.

Because of the “new lending rules” regarding investors, Mr. Phillips had to wait 6 months just to be able to even put in an application to borrow some money on this property.

The property was appraised at over $230,000 and he only wanted to borrow 60% of this amount.. about $138,000 maybe a little more and use this money for a down payment on a new investment.

Wells Fargo is offering fixed rates at about 6%,  30 year fixed or maybe a little lower, but Mr. Phillips doesn’t qualify because his income is all passive.

Let me tell you that Mr. Phillips has had this problem in the past because I have described him in earlier posts to this blog.

By the way… He can get a loan… but it won’t be at the rates a person who has a W-2 type employment would ordinarily qualify for.   No,  Mr. Phillips, inspite of his net worth, low debt and high FICO scores doesn’t qualify for the “best available” rates.    Mr. Phillips deserves 12% and higher in loan rates..!  Isn’t that amazing…?

What is the “effect” on the Real Estate Market when this occurs hundreds of times over in this area..?

Well… someone once told me the average income multiplyer that occurs for every real estate transaction is around $30,000 and higher.   Because, not only are commissions paid to real estate agents.. fees go to title insurance and escrow companies, city & county taxes & fees,  loan companies , pest control companies, roofers, furniture companies, movers, inspectors and appraisers, contractors, and suppliers are all a part on just one deal in most cases.

In Mr. Phillips’ case, he’s taking a 2nd look at this new deal because his rate of return of his investment  is being devalued only because he’s been a success.

When you slow down people like Mr. Phillips…?  you slow down the recovery of the Real Estate market and the rest of the economy.   Ask around you’ll hear lots of stories like these.

Does that make sense to you…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI         favinger@rwnetwork.com 916-203-1260

Participate in a Short Sale and We’ll give you some $$$ back was the message to a Home Owner…

So What Happened…?

I approached this particular Owner in my capacity as a “Home Retention Consultant” under a contract with Titanium Solutions Inc. Titanium Solutions, if you didn’t know,  has been retained by several Lenders to help keep people in their homes if possible and to assist the Banks and Home Owners in keeping the lines of communications open.

If a Modification can’t be worked out, we as Agents and Brokers are encouraged to get the Home Owner to participate in a Short Sale because the banks know it costs them more to go all the way to foreclosure.  We pay a referral to Titanium if we successfully close a Short Sale lead provided by them.

They will also pay us a small fee just to help the Lender and Home Owner keep the lines of communication open.

I can not tell you who the Lender was but they were ready to offer this particular owner  $2,500 if he’d participate in a Short Sale.

He just turned it down flat.!!   Not interested.. Not motivated at all.   Why…?   Because, in his opinion,  he had put so much money into the house that if he took the $2,500 from Wachovia he’d “lose money”.   His rational was that he knows what the homes in his neighborhood are selling for and he wants a decent loan modification that lowers his payments and does not have negative amortization.

He also wants his loan amount lowered.   If he doesn’t get it his way he’s prepared to go all the way to foreclosure but then take everything he’s put into the house with him.  In short gutting it.   He’s installed over $13,000 just in a patio cover, new granite counters and new kitchen cabinets, new appliances and a new bbq island in the back yard.

I think this is an indication of the “cynism” that is in the minds of many people, who for whatever reason, find themselves in this situation.

In this case the young man got divorced and the only way he could stay in his home was to ”refinance” into one of these loans that have been the subject of many a news article.

Just another story in a frustrating year of Short Sales and Foreclosures that are everywhere.

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI     favinger@rwnetwork.com 916-203-1260

On the market for just a day or so…I walked inside and saw an Agent writing up an offer.

Click here to view what I saw and let me know what you think.

Make it a great day

Ed Favinger, Broker CRS, GRI      favinger@rwnetwork.com  916-203-1260

Rental Market Update  –  Is it picking up or not ?   Phone Traffic is the Clue !

As a whole our phone traffic has been a little better this week.   Prospective tenants have been searching new places to move to and we’ve noticed they ask a lot more questions regarding amenities and rental terms such as who is responsible for water, sewer and garbage fees. 

We’ve had calls on a condo that’s been vacant for about 45 days that was finally shown today for only the 2^nd time.    We’ve had several new inquiries on a duplex in Roseville that’s also been vacant about 45 days or so and we’ll be showing this weekend to a couple of potential tenants.  We’ve had a decent amount of showings for a Town House Apartment in an 8 unit complex in Cameron Park… one gal has looked at it 3 times now.  We’ve rented up 2 of them in the last 2 weeks after we lowered the rent schedule.

We took a Holding Deposit on a Town House apartment in a small 13 unit complex in Roseville the day after the other tenant moved out.    We’re now in the process of getting it “rent ready”.    On this complex, we had to lower the rents to a new “price point” that finally worked.   Since then, we have rented up 3 units in this complex that were vacant for over 45 days.

A small amount of calls have come in on some  2 bedroom 1 bath flats in Citrus Heights that have been vacant for 2 months…but no applications to rent.    The reason for this in their case is because of a lack of “amenities”, in my opinion.   So when you couple that with a “tenants market”, you’ll find that good prospective tenants are looking for more value and utility for their money..

The only way to compete is to offer a “rent special” at move in, or perhaps lowering rents if you have an extended vacancy period.

Make it a great day….

Ed Favinger, Broker, CRS, GRI

favinger@rwnetwork.com    916-203-1260