NASCAR Weekend

August 31, 2007


Labor Day weekend has become THE WEEKEND in the Inland Empire of California. If you are a NASCAR fan, and it seems this is a growing group, the California Speedway in Ontario is the place to be. Today, Friday, August 31, the FanZone gates opened at 8:00 A.M. From 8:30 A.M. to 11:20 A.M. the Busch Series practice will be testing the track. From 11:30 A.M. to 1:00 P.M. the Nextel Cup Series drivers will practice followed by the Nextel Cup Series qualfying round at 3:10 P.M. The final run of Friday will be the Busch Series qualifying round at 5:10 P.M.





On Saturday, September 1, the FanZone gates will open at noon. The scheduled Nextel Cup Series practices will begin at 4:00 P.M. and end by 6:10 P.M. At 7:00P.M. the Busch Series race will begin. It is a 300 mile race of 150 laps.





On Sunday, September 2, the FanZone gates will open at 10:00 A.M. The Nextel Cup Series race will start at 5:00 P.M. It is a 500 mile race of 250 laps.





Lots of fun and excitement going on for 3 days. For non-race fans, pay attention to the above times as traffic on I-10 and I-15 will certainly be impacted until the races start and then when the fans leave at the end of the day. If you attend the races, put on the sun screen, take lots of water and enjoy Southern California.

Didn't Sell? Time to Renovate?

August 30, 2007
You really wanted to sell your present home and buy one of the brand new homes with all the modern improvements. For whatever reasosns, your present home did not sell and you have decided to stay put until the roller coaster mortgage and real estate markets stabilize. Recognizing that it might be awhile, you decide to do some renovation and improvement to your present home.

I would suggest that you check out the benefit that a particular improvement might bring to your property. Some improvements are done just because the homeowner has always wanted a pool, a gazebo, a tennis court, a red carpet, etc. If your ultimate goal is to sell your property, there are some improvements that actually lower the marketability. So be cautious!


Here are two books that offer good advice and are worth the $15-20 that they cost. Published in 2004, "How to Increase the Value of Your Home" by Vicki Lankridge and Daniel J. Nahorney is filled with facts, not just opinions.
Published more recently, "The First Time Homeowner's Survival Guide" by Sid Davis. This book is great in that it explains both home repairs and home renovations. There are probably other books that you might find by going to Amazon or just googling home improvements.


Bottom line, however, the criteria for deciding on whether to make a home improvement should be how much you will enjoy it as a homeowner, not just
how much return will I get on my investment.

Guess What's Returning to the Mortgage Marketplace?

August 29, 2007

I am not really sure exactly when lenders and borrowers transitioned out of loans that required mortgage insurance. In the past 3-5 years as the price of housing rose, FHA loans which require monthly mortgage insurance generally capped out at $362,500 or a maximum purchase price of $374,000 with a 3% down payment. Loans with more than an 80% loan to value required private mortgage insurance. Because consummers did not like the additional monthly charge of mortgage insurance, the mortgage brokers became creative and 100% financing was obtainable through a first trust deed and a second trust deed. In a market of rising home prices this financing worked and generally the borrower had to have good credit in order to qualify.

In today's real estate loan environment, second trust deeds have become harder to obtain and loans with mortgage insurance are becoming a more attractive option for buyers who do not have the cash to put 20% down.

There are other advantages to the borrower to explore the option of a 95% loan to value mortgage with mortgage insurance. First, there is only one loan origination fee rather than the two that would be required for the first and the second. Secondly, it was not always the case that mortgage insurance was tax deductible, but it now is.

The mortgage arena is currently receiving lots of publicity. Is there money available to make loans? What are the guidelines to qualify? Each lending scenario is unique and the very best choice for a borrower's situation is to call a loan officer and explore the options that suit your situation.

I know that Financial 2000, Century 21 Lois Lauer Realty's affiliated lender has experienced changing lending markets in the past. A personal consultation will give you a much better understanding of the complex mortgage marketplace.

Selling 101

August 28, 2007

The first headline I saw as I opened the San Bernardino Sun Newspaper this morning was "How to Sell a House". The article references a number of strategies that agents and sellers are using to entice buyers to make an offer on a listed property. Some of the incentives mentioned are gift certificates, new paint, new kitchens, new carpet, paying buyer's loan costs. Probably all of these work some of the time, but there are no guarantees that any will, in fact, sell the house. The benefit to the seller of doing home improvements is that the seller can enjoy the new kitchen, new carpet and fresh paint. One of the reason, sellers like offering gift certificates and loan buy-downs or loan costs is that there is no out of pocket expense if the house does not sell.

Unfortunately, we are entering a selling environment in which price is the most attractive incentive. Seemingly the incentive for which buyers have been waiting is the drop in prices. Exactly what the magic percentage drop will be is an open question.

It is interesting to me that back in the mid 1990s when the market was equally difficult, an author came out with a book that suggested that if your agent did a market analysis, you looked at the comparable sales and listed your house at 10% under the most comparable sales price. The theory was that ultimately you would get multiple offers and would be able to sell at the comparable value.
I have seen this technique work, however, sellers are often reluctant to try it.

They will reduce what seems like a great reduction ($10,000 or $20,000) and are disappointed that the buyers still do not come forward and write offers.

Take for example: Comparables show a comparable market value of $450,000.

Seller reduces by $20,000. thinking that is huge. $430,000.

Another seller reduces by 10%. $405,000.

Which will attract more attention?

To be able to use this strategy, a seller will need to have enough equity to pay off his loan and to pay sellers costs. The question in this market is whether sellers have enough equity to reduce the listing price to reach the competitive advantage.

Reconveyance Deeds

August 27, 2007





Because we use the 3 party trust deed in California, the deed used to return the legal title to a borrower is a reconveyance deed. Any time a trust deed is paid in full the beneficiary will request the trustee to issue a reconveyance deed. This deed must be recorded to clear the public records of the recorded trust deed.If a property is sold and the underlying note and deed of trust are paid by the escrow handling the transaction, the escrow will order the reconveyance and will send the reconveyance deed to be recorded when the transfer of title occurs at the close of the sale escrow.


Occasionally, it happens that a preliminary title report will show that there is a recorded trust deed against the property that the seller says was previously paid off. This seems to be a more frequent occurrence when there has been a home improvement loan or a pool loan. The loan is paid off. The lender requests the trustee to issue a reconveyance deed. The trustee follows the instructions and sends the deed directly to the borrower who files it away. Without recording a reconveyance deed, the original loan will still be an encumbrance against the property.





Deeds are the vital part of real property ownership and it is important to understand what deeds do or not do.

Trust Deed and Trustee's Deed

August 24, 2007

A trust deed (or deed of trust) is the most commonly used document to secure a loan on real property in the state of California. It differs from a mortgage deed in that there are 3 parties, a trustor (borrower), a beneficiary (lender) and a trustee (holder of the legal title to the property). A mortgage deed has 2 parties, a beneficiary (lender) and the borrower.

The trustee holds the legal title in trust for the beneficiary and has the power to sell the property if the trustor (borrower) does not fulfill the obligations that are required under the deed of trust; i.e. make payments in a timely fashion. The trustee also has the power to reconvey the legal title to the trustor if the beneficiary so requests. This request is made when the promissory note underlying the deed of trust is paid in full.

A trustee's deed is a different type of deed. It is issued by the trustee under a deed of trust when a property is sold at a trustee's sale (foreclosure sale on the court house steps). This deed conveys title to the successful bidder but it does not contain any warranties or covenants or guarantees as to any other encumbrances that might exist of record against the property. In other words, I might successfully purchase a foreclosure property at the court house sale and later discover that there are back taxes owed or other liens against the property for which I have now become responsible. What looked like a great deal on the court house steps now turns out to be a financial disaster. Trustee's deeds do give the buyer title, but they absolutely make no guarantees as to the condition of the title.

Quit Claim Deeds

August 23, 2007

I had a query this week regarding a quit claim deed. The individual had not previously heard of this type of deed. I suspect that many individuals have not really paid much attention to the different types of deeds that are used to transfer real property.

A quit claim deed is a legal document by which a person releases or"quits" any claim that he/she may have had to the property described in the deed. The person receiving the deed may, in fact, not receive any title or rights to the property being deeded through a "quit claim" deed. The "quit claim" deed merely provides that whatever interest I may have had in the property, I am conveying that interest to you. Example: I can give you a quit claim deed to the Brooklyn Bridge. Since I never owned the bridge, you will receive nothing. I have just said that if I owned a part of it, I am giving you that part.

In California, most property is transferred using a "grant deed." To warrant that a good title is being transferred, a policy of title insurance is used. Without the title insurance the receiver of the grant deed does not have absolute assurances that the property is without encumbrances. It is implied that the title "warranted" but the warranties are not explicitly stated in the deeding document.

I will continue the discussion of deeds tomorrow.

The Roller Coaster Ride

August 22, 2007

The news media have described the week of August 13 to 17 as a roller coaster ride. They were referring to the dizzying ups and downs of the stock markets.

In a market economy such as the United States, it became obvious that problems in one sector (housing) could lead to problems in another sector (mortgage and banking). It was, and still is, hard to keep up with all the reports and rumors and editorials regarding the strength or weakness of the economy.

For a short time last week it was somewhat scary to listen to the commentators. I went to our loan reps and asked what they were experiencing. The market has tightened up, but there are still loan products out there. There are still investors willing to fund home loans. Conventional 95% and 90% loan to value is still possible financing. The investors are now requiring that the borrower have mortgage insurance. There are FHA and VA loans available.

Buyers who are interested in taking advantage of the large selection of properties that are on the market would be well advised to sit down with a lender and explore how best to finance a purchase. We are counseling buyers to get preapproved not just prequalified. Make certain that the lender you select has a proven record and can tell you where they might go to obtain funding.

Needless to say, I recommend the loan reps with whom our agents are acquainted. We have worked with them for over 15 years and have developed confidence in their ability to get the job done!

Q&A Responses

August 21, 2007


I reader of the blog on tilt-up construction raised the question regarding how the wall slabs are attached to the foundation. Obviously my knowledge of construction in general and tilt-up construction in particular is extremely limited. However, I am always willing to do a little research and learn a little more about subjects that capture my attention and/or imagination.


There is a great deal of tilt-up construction occurring on the corners of West Redlands Blvd. and Nevada Street. Since I drive by this corner several times daily, I slowed down and tried to see how the wall slabs were being attached.


I could not really tell for sure, but I could see that there is a trench surrounding the foundation slab. The trenches are filled with rebar and concrete. The slabs, when lifted by the huge cranes, sit, I think, in these trenches.


I also queried a contractor friend who described the rebar that was also embedded into the wall slabs at both the top and bottom. The top to attach to the crane, the bottom to attach to the rebar and concrete in the trench (I think).


If you are as fascinated as I am by this type of construction here is a web site that was really helpful to me. http://www.tiltupnews.com/. Go to the "Tilt-up Construction Process" and you will have a great description and some pictures.

Development Marches On

August 20, 2007


On my way to the office this morning, in the southbound lane there was a parade of earth moving trucks. By a parade, I counted at least twenty. All of them rattled along the street, not yet filled with dirt. It was pretty impressive. Obviously they were on their way to a new development site.


I am somewhat amazed that developers continue to move forward with plans for new construction. I know that some new home developers are offering the unbuilt lots for sale rather than building out the rest of their homes. I recognize that if a developer has an approval of a tract map, the approval will someday run out. Perhaps that its why they proceed. or perhaps developers are like most entrepreneurs, an optimistic bunch.



In the present real estate environment, a dash of optimism is needed. There is a lot of doom and gloom and it is good to know that there are those who still those who believe that great opportunities are still around and are willing to invest their money for the future.

Movie and Popcorn on Us

August 17, 2007


During the summer in Redlands, there are many wonderful opportunities for family outings. Tonight, there are at two fun events - no ticket purchase is required.

The Redlands Bowl will feature the Vanaver Caravan in a program entitled "Pastures of Plenty". This is a tribute to Woody Gutherie in dance and in music. The program will start at 8:15 P.M. at the Redlands Bowl which is situated between Eureka and Grant Streets just south of Brookside Avenue in Redlands.

http://www.redlandsbowl.org/.

The other fun event is directed more to our younger citizens and is a movie in the park. Pre movie activities start at 7:00 P.M. at the Brookside Park in Redlands. The movie starts at 8:00 P.M. The park is located on Brookside Avenue just east of Terracina Boulevard. The movie is being sponsored by CENTURY 21 Lois Lauer Realty, 909-748-7002, http://www.loislauer.com/.

Bring your blankets and lawn chairs and family and have a great evening.

P.S. The movie is Monster House.

If You Have a Septic System

August 16, 2007

In our market area, many homes are still on Septic systems. Some of the older ones are just pits or leach lines, but most consist of a large tank and one or more seepage pits or leach lines.

I had a question this week about whether a seller had to have an inspection and certification of the septic system when a property was sold. My answer, like so many answers in life, was "It depends."

The state of California and ,I believe, most municipalities do not require that the septic system be inspected and certified. However, the C.A.R. Purchase Agreement that is used by agents to write most offers on property does have a clause which references "Other Inspections and Reports." Item, (1) states "Buyer or Seller (Check the appropriate box) shall pay to have septic or private sewage disposal systems inspected." Most buyers' agents will check that it is the sellers obligation and many will add "certified and pumped, if necessary." Common practice generally believes that a seller should deliver the property to a buyer with a properly functioning septic/waste disposal system. The buyer's lender will also require the system to be inspected. (I did check with a loan officer and the lender may not require it if the buyer and seller did not make an inspection part of their purchase agreement. This is also true for pest control inspections.) The reality is that whether an nspection is required and who will pay is one of many negotiable items in a real estate purchase agreement.

Unscrambling the Mortgage Mess

August 15, 2007

Hardly a day goes by that the news media does not have a scary headline about the current state of the lending industry (or profession, whichever you prefer).

Subprime has become a buzzword, with a bit of confusion as to what exactly a subprime loan is. The common belief seems to be that a subprime loan is a loan made to a borrower who otherwise could not qualify for the loan necessary to purchase the desired property. The question asked: What standards did the mortgage broker use to approve the borrower? I am not a lender and do not know the answer. What I do know is that in the past 6 or 7 years, lenders have come out with a myraid of new loan types. They saw their task as finding a loan type to assist a would-be home buyer to purchase a home.



It seems that with so many different loan products and an explosion of newly formed morgage brokerages, borrowers sometimes were hoodwinked. Apparently there was no rating system to separate the good guys from the bad guys.



I was reading the Inman Blog last week and came across a guest post that suggested a way to choose a lender. Ask the lender if they are FHA approved. FHA lenders go through a rigorous audit. They have their own credit history checked along with the busines itself. They must establish and file a quality control plan and provide pictures of the brick and mortar facilities.



After reading this blog, I went to our local lender, and confirmed that not only did the above apply, but that had to have an annual audit. To be an FHA-approved broker or banker, the business must go above and beyond the minimum standards of the industry. A lender that has been in business for 15 years established the practices the FHA approval required. They have maintained their status as an FHA approved mortgage broker.



As a borrower, it is important to be able to trust the mortgage agent who is assisting you through the loan process. Even though you are not wanting an FHA loan, ask if your broker is FHA-approved. You can then be more confident that you have received the information you need to select the loan appropriate to your situation.

The Historic J. Fillippi Winery

August 14, 2007

We hear a great deal about California's wines, but many people do not know that by 1917 the Cucamonga-Guasti vineyards spanned over 20,000 acres, more than Sonoma and twice as many as in Napa in 1920 when prohibition arrived. The josephfillippiwinery.com web site gives a great history.

This Saturday, August 18, 2007, a tour and barbecue will take place at the winery from 10:00 A.M. to 1:30 P.M. The winery is located at 12467 Baseline. Tickets are $55 for general admission and $38.50 for wine club members. For information call 909-899-5755.

Also at the winery is a great fiber art show. The Chaffey Community Arts Association has a wonderful gallery space at the winery. I attended a reception for the artists a week ago and this fabric art is quite wonderful.

A trip to the winery is a great experience!

Isn't It Amazing?

August 13, 2007
It is amazing to me how quickly the summer of 2007 is passing. Here we are at mid-August and I still have "to-dos" that are undone. How about you?
The headline in the San Bernardino Sun over the weekend reminded me that I had carefully researched earthquake preparedness. I ordered some "squeeze" flashlights which have never come. I checked Home Depot and Lowes for earthquake kits and found none. I did purchase a strapping kit for my china cabinet, but it is still in the box.
Maybe the whole preparedness thing was too overwhelming. So I am redoing my list of the essentials.
1) Flashlights and plenty of batteries or battery-less flash lights;
2) A battery operated radio;
3) A carton of bottled water for each family member (including pets);
4) A pair of heavy gloves (rubber or leather);
5) Sterile gauze and band-aids and disinfectant;
6) Energy or granola bars, canned soup, etc.;
7) Extra set of clothing per person.
Perhaps even more important, check your rooms to see what can fly off the walls and fall on a person.
Make preparedness a top priority. Once you gather supplies, you need only check them to be sure they are not out of date. An interesting and informative web site is usgs.gov/hazprep.

Solds in Selected Inland California Cities MLS

August 10, 2007

As a response to the continuing question "What's happening in the real estate market?" I prepared a comparison of properties reported through the IMRMLS as sold in July 2007 with those reported sold in July 2006. This report will not include the sale of new housing, nor of for-sale by owner properties. It is only as accurate as the information reported by agents to the IMRMLS.

(Unfortunately, I have not yet mastered the ability to format columns when I post my writings on blogger.com.)

Beaumont/Banning - 2007:49homes...2006:69homes....36% unit decrease

Fontana - 2007:71homes....2006:196homes...64% unit decrease

Highland - 2007:26homes...2006:44homes....41% unit decrease

Loma Linda - 2007:14homes....2006:18homes.....22% unit decrease

Moreno Valley - 2007:69homes...2006:198homes...65% unit decrease

San Bernardino - 2007:86homes...2006:188homes...55% unit decrease

Redlands - 2007:44homes...2006:69homes....36% unit decrease

Riverside - 2007:151homes..2006:326homes..54% unit decrease

Yucaipa - 2007:34homes...2006:57homes....41% unit decrease



In addition to the number of units reported sold, I also calculated (fairly roughly) the changes in the median price of the homes sold.

Beaumont/Banning - 2007=$320,000.....2006=$315,000

Fontana - 2007=$409,000.....2006=$420,000

Highland - 2007=$344,000.....2006=$395,000

Loma Linda - 2007=$388,000.....2006=$495,000

Moreno Valley - 2007=$350,000.....2006=$390,000

San Bernardino - 2007=$290,000.....2006=$311,000

Redlands - 2007=$400,000.....2006=$430,000

Riverside - 2007=$410,000.....2006=$440,000

Yucaipa - 2007=$355,000.....2006=$395,000

As has been reported in the media the pace of real estate sales has slowed, but prices have not yet shown that sellers are in a panic to sell at any price. Tune in for the next report of the August market.

Tilt-up Concrete Construction

August 9, 2007

About a week ago, I wrote about all the tilt-up construction that is occurring along my route to work. It fascinates me how these giant slabs of concrete are formed on the ground and lifted upright and pieced together to form buildings.

I have very good friends who are in the commercial construction business and I cornered them to give me a quick description of how tilt-up construction is done.

In my drive-by, it looked like the slabs were just poured in frames on the ground. My curiosity was how the slabs could have such smooth surfaces, if they were just formed over dirt. In fact, they are not formed directly on the ground even though it looks that way.

The first step, after proper grading of the site, is to pour the foundation slab for the building.Once this foundation has been poured and allowed to cure (usually several weeks), the slab is treated with some sort of resistor chemical. The frame for a wall is then built on the slab, complete with windows, doors and any decorative elements that were called for by the architect. Concrete is then poured into this framework and again allowed to cure. Next, huge cranes are brought in and they lift the slabs into place. (Oh, I forgot to mention that the frames for the walls have to leave about a 3 foot border all around on the slab.)

My little quickie lesson did not make it quite clear how the corners are tied together, but I believe some metal welding occurs. The wall slabs are really stabilized by the roofing structure which ultimately keeps the created box stable.

That's what I have learned about tilt-up construction.

Mortgage Meltdown ???

August 8, 2007

As I drive to work, I listen to KNX or KUSC radio. The classical music on KUSC keeps me out of the mundane, nitty, gritty that sometimes rules the work-a-day world. KNX keeps me up-to-date on current issues and news items. When the stories are repeated too often, I go back to the music. These 2 stations shape my driving environment.

The past several days, KNX has been focused on the "mortgage meltdown". With the announcement of the bankruptcy filing of a major lender, they have interviewed a number of financial professionals. They also made the startling anouncement that Wells Fargo had increased the interest rate on their jumbo loans to 8%. This startled me because for such a long while, interest rates have been below 7%. KNX was looking to interview other lenders to see if they would also raise their rates. In fact, rates are rising, but I have not heard that other institutions have gone to an 8% rate.

I checked this morning with our affiliated lender, Financial 2000 and here are the current rates that they are offering:

Jumbo loans=$417,001 or greater

30 year fixed = 6.875% at par

15 year fuxed = 6.375% at par

Conforming loans = $417,000 or less

30 year fixed = 6.375% at par

15 year fixed = 5.875% at par

The mortgage market is very volatile these days and no one can assure me that these rates will be the same tomorrow. Investors who put up the funds for home loans are nervous, but money is available to the credit worthy home buyer.

Inland Orange Conservancy

August 7, 2007

Yesterday evening on KCET, Huell Howser visited the Inland Orange Conservancy on his "California Green" program. The Inland Orange Conservancy (IOC) is the brain child of Bob Knight. As more and more of the area's orange groves were purchased by developers and the citrus trees were replaced by houses, he created the IOC as a plan to preserve some of the remaining citrus groves in Redlands, California.

The basic premise is that to save a grove, it must be economically worthwhile. That meant that the owner needed to profit from growing the fruit. Prices in the open citrus market fluctuate and the grower did not know how much the packing house would pay until the season was over and picking and packing and shipping costs were deducted. Bob came up with the idea that the grower would be paid up front, and all picking and packing would be done by the conservancy with no additional charges to the grower. The conservancy hired pickers and packers and delivered the citrus to local distribution sites. The result was that the grower made a profit.

How did the IOC obtain the funds to operate? They incorporated as a not for profit organization (501C3). They then solicited members who pay $65 for a season membership. In exchange, the members can pick up 2 bags of fruit at a distribution center during the picking season.

The citrus that is not of sufficient quality is given to Inland Harvest, an organization that delivers food to various charitable organizations that feed the needy.

Huell's show was wonderful and Bob Knight and his wife, Aki and all the growers and volunteers and members are to be congratulated. Those of us who love the citrus landscape, the fantastic aroma of citrus in bloom and the healthy fruit need to support this endeavor wholeheartedly.

Learning to Use the Web or Real Estate in the 21st Century

August 6, 2007

If it had not already become clear to me, the Connect 2007 conference in San Francisco last week illuminated the growing role of technology in the way we do business. Not just in the world of real estate transactions, but in the entire global economy.

I now have the somewhat awesome task of sorting through my notes and selecting which of the web tools I will incorporate in my business and in this blog. The first one will be something that has been around for sometime, but since I am relatively tech unsavvy, I have not figured out how to use it. What is it? Incorporating photos and pictures in the blog. I went out this weekend and took some pictures and plan to find a tutor to show me the steps for uploading them into the blog.

I have high hopes that over time you readers will begin to respond and we can begin to have a dialogue concerning the local real estate market and the issues that are of local and regional concern.
Be back tomorrow.

Blogging 2007

August 3, 2007

I attended the Inman News "Connect 2007" in San Francisco for the past three days. The focus this year was on blogging and it was such a great experience to meet real estate agents who have blogs and hear how they are using their blogs.

I started blogging last year after the Inman conference. I hoped that readers would ask questions and I could respond. So far I've received very few questions from readers but I do receive real estate questions from clients and friends. I am excited about the potential to connect with the public that a blog offers.

At the conference, I heard Craig from craigslist reiterate that his site was still offering free ads to west coast posters and no he didn't plan to change the format. I heard that Reology (the parent company of CENTURY 21 REAL ESTATE LLC.) has made a deal with Yahoo Classified to place listings on that site. I heard the executive director of N.A.R. talk about the new customer oriented initiatives that the real estate industry is implementing. I heard young innovators describe the technology that is changing the way real estate agents do business.

The conference was a great opportunity to learn what is happening in the world of real estate outside the Inland Empire.