Carl Medford's East Bay Focus

I frequently encounter those who want to buy a home. As soon as they discover I’m a Realtor, they sigh and say, “Someday.” I’ve bumped into some of these same individuals year after year and their response is always the same … “Someday.” When I ask them, “What about NOW?”, I hear the same answer every time.

“We don’t have the down payment.”

To which I ask, “If you didn’t have the down payment a few years ago, and don’t have it today, what are you doing to have it by next year?” And the inevitable response is, “Gee, we just can’t seem to save anything.”

Let me help.

Here are the Top 10 ways to get started:

1.   Take stock of your current situation.

This is the hard part – examining the “whys” behind your finances. You need to be brutally honest with yourself. Finances that are out of control can actually contribute to depression. If married, they can add considerable stress to the relationship. You may need to identify and come to grips with obsessive or compulsive behaviors either in you or others who have access to your finances. And you may even need to get professional help. The biggest question to answer is, “Why do I spend money the way I do?” Follow up with the question, “How does spending make me feel?”

2.   Write out a plan and stick to it.

In fact, there’s a Proverb that states, “The plans of the diligent lead to profit.” Sit down and write out your target WITH those who need to participate in the plan with you (e.g. spouse), and someone who can give you constructive input (lender, financial adviser, friend with wisdom, etc.). Once your plan is written, post it in a very visible place and stick to it. Open a savings account and set a target amount every month.

3.   Take the emotions out of your spending.

Purchase things because you need them, not because you “want to” or it “makes you feel good.” Sentences like, “Oh, I just HAVE to have it,” need to disappear from your vocabulary. This goes back to your plan: what do you need? Buy only your needs and put the rest of the money in savings. It’s tough at first. It’s called self-denial, and it is the “secret sauce” behind successful financial planning. Go to stores … ONLY when you have a list of items and ONLY buy what is on the list. NO IMPULSE PURCHASES ALLOWED! Can’t do it on your own? Bring a friend with you who will slap your hand when impulses kick in. And avoid the Shopping Channels at ALL cost …

4.   Research your purchases.

A little research goes a long way: as an example, what’s the difference between a store brand’s sugar and a national brand? Other than a lot of money, nothing. As for large purchases such as a refrigerator, don’t go for the “chrome” – get the basic model (they ALL keep your food cold), and carefully research for the best price. Buy the fancy fridge AFTER you have your new home. IF you have the money.

5.   Evaluate your wheels.

It’s so nice to have a fancy ride, but SO unnecessary. After all, the purpose of a vehicle is to get you to your destination, not communicate to others you have arrived. In fact, most that own upscale cars and don’t own a home have only arrived … in debt. And debt is the number one enemy of owning a home of your own. The primary item keeping many from owning a home? You guessed it … their car(s). And hold off on the shiny rims while you are at it. Boat? Harley? Don’t be silly.

6.   Develop better food habits.

Start keeping track of the money you spend on food. Most spend WAY more on food than they realize. Change your food purchasing habits. Learn to cook! Buy less processed food and more basic items. Avoid the fat – buy chicken! Stop lining your larder with junk food, and if your REALLY can’t live without soda and chips, save them for parties. Buy from stores that offer bulk discounts off the items you truly need (not a seven year supply of Mostustostideritos). Eat in more often (and out less). There are two reasons for this: the more processed your food is, the more you pay for it and, typically, the higher the fat content. The last time I checked, restaurants score high in both categories. Not good for your wallet, not good for your gut. If you TRULY want to save money, eat at home. And that goes for Starbucks as well …

7.   Keep tabs on your energy output.

If you are responsible for paying for energy and fuel, be aware of how it is being used. Look for ways to improve the energy efficiency of your home AND vehicle. This might mean weather stripping your digs and moving down to a smaller ride (see #5 above).

8.   Evaluate your insurance.

Life insurance is not a good vehicle for saving: go with cheap term insurance and invest the remainder yourself. Evaluate the deductibles you are carrying on auto and residential insurance: set your deductibles higher and put the difference in savings.

9.   Reward yourself … carefully.

The long-term goal is to save enough for a down payment for a house. Set short term goals or milestones as well and, when you’ve reached them, reward yourself! Go out for an inexpensive dinner or buy something you’d like but don’t really need (set a budget limit and don’t exceed it!). Enjoy yourself, then get back on track to achieve the next milestone.

10. Use credit cards wisely.

We personally use credit cards for everything. EVERYTHING. And we pay them off ENTIRELY at the end of every month. WITHOUT EXCEPTION. Even if it means eating saltine crackers for a month. Why do we use credit cards instead of cash? Convenience AND … air miles! Since we are going to be spending anyway, why not get a benefit for it as well? And you can use the air miles for #9 above.

Did I mention that you have to pay your cards off EVERY month?

We can help. We've counseled many and have watched them go from despondent to owning their own home. Call or email - we'd love to work with you or recommend you to someone who can get you going in the right direction.

Some only need a gentle nudge and minor direction to reach their financial goals. For others, it will be Battle Royale – and will involve blood, sweat and tears. BUT … it will be worth it – the reward will be a home you can call your own and, more importantly, the financial skills to STAY in your home once you achieve it. Many lose their homes because, once they’ve arrive, they lose their minds, completely forget the financial sacrifices they made to get there and spend themselves …

OUT of house and home.

2009 was certainly one of the most bizarre years we’ve ever seen. And in the words of ‘70’s song by Randy Bachman, “You Ain’t Seen Nothin’ Yet,” there’s even more craziness coming to a 2010 near you.

Guaranteed.

2009 was what we call a “transitional” year – the market shifted from one type of market to another – in our case, from a buyer’s market into a seller’s market. Reacting to the long slide in home values, the Alameda County housing market finally bottomed out in April, 2009, then began to slowly rise. Catching many by surprise, the transition happened much faster than anyone imagined.

Contributing to the uptick were record low prices, rock-bottom interest rates and the $8,000 tax credit. These factors combined to produce thousands of buyers that hit the market like a flood of ants. They stripped market inventory clean and left it looking like the left-over bones of your Christmas turkey. And there’s been no rush of sellers stepping up to replace depleted inventory: buyers looking to get into new digs for the New Year currently have almost nothing to choose from.

I predict that 2010 is going to be a revolutionary year, but that it won’t be from any single item or issue.

It’s going to be the result of many small things compounded together. If you’ve ever tried to go to sleep with a mosquito buzzing around your ears, you know the power of small things. Add a couple of small things together and suddenly you have something significant.

A few years ago, I visited war-torn Northern Uganda. There was no power in my hotel room in the afternoon, and so, without knowing it, I inadvertently left the lights on. Power came on later that evening and, since the room was directly ventilated to the outside, I came back late to a room that represented the only light source for miles … and walls completely covered with every insect in Northern Uganda. To say I was horrified would be a HUGE understatement. One or two bugs I could handle … hundreds of unknown potential terrors was more than I was prepared for. Did I mention that some of the bugs were extremely large? I shook the insects off my mosquito netting, hastily crawled underneath and prepared for the bug version of Armageddon. Sleep did not come easy that night.

There may be a few sleepless nights ahead of us in 2010 as well.

Add up all the “little things” that could be coming down the pipe in 2010 … and it is starting to feel a bit like that hotel room in Uganda. Although we live in an economic region that differs substantially from much of the remainder of the country, external forces still shape local economics and will continue to do so into 2010. Real Estate columnist George W. Mantor has outlined 9 national trends for 2010 that will undoubtedly impact Alameda County.

I believe 5 of these represent the TOP 5 National trends that will affect local housing:

1.    Rising Interest Rates:

Two wars and massive bailouts have produced unprecedented Federal borrowing. Historically, soaring national indebtedness has always led to increases in interest rates. Think “Jimmy Carter.”

2.    Rising Energy Prices

If you’ve lived any length of time, you’ve discovered that nothing gets cheaper. Fuel is no exception. Low reserves and worldwide “green” initiatives will lead the pack in 2010 to ensure that we never see cheap fuel again.

3.    Rising Food Prices

This is Economics 101: take the first two items, add in rising costs of labor and … you do the math. You also have to factor in efforts to provide more stringent food production regulations due to the recent salmonella issues. It’s going to add yet another layer of expense to food production costs and you know it will be passed along to consumers.

4.    Rising Inflation

No rocket science required: higher interest rates, energy costs and food prices coupled with wage freezes … and most will experience less bang for their spending buck. Where I come from, that’s the basic definition for inflation.

5.    Rising Taxes

Even as the economy appears to be turning and corporate profits are starting to increase, the damage has been done. Many predict that the only way out of the hole is increased taxes across the board. If you’ve been watching the rhetoric coming from Sacramento, you gotta know what is coming. And with Democrats in control in Washington … raising taxes is their birthright. Even local cities and municipalities are looking for ways to get more money - many local agendas are being crowded with proposed point-of-sale ordinances.

Will these TOP 5 trends affect local housing?

Absolutely. With local housing prices (at the bottom and middle of the market) on the rise and inflation predicted to increase, local housing hopefuls may find themselves squeezed out as the year progresses. We’ve already seen one layer of buyers pushed out of contention – it’s very likely that another stratum will find themselves priced out before too long. This WILL mean higher prices and rising loan rates.

Couple this with the current lack of inventory and we could have some tough sledding ahead of us.

While some are predicting a glut of REOs to hit the market soon, I do not believe this is going to happen in the Bay Area any time soon. I’ve discussed that in other posts and will continue to in the days that lie ahead.

While currently conjecture, these trends could easily become reality in short order. As we welcome 2010 into being, we can only wait and see …

And hope it ain’t so.

It’s been suggested, by some very close to me, that if caffeine somehow disappeared from planet earth, no one would ever see me again. I’m not alone, evidently. Methods for ingesting caffeine seem to be growing by leaps and bounds on a daily basis. In addition to the multitudinous beverages (coffee, tea, energy drinks and beer), it can be found in gum, candy, soap and other carriers. However, I was not prepared for an article in last week’s newspaper about a new vehicle for the drug-of-choice for untold millions:

Beef Jerky.

Who knew? That’s all we need … juiced up deer hunters with too much coffee, RockStar, brewskies and … caffeinated Perky Jerky pounding through their systems. Midwest hospital emergency rooms are already too full during hunting season as it is.

I prefer espresso.

LOTS of espresso. I confess: I’m a caffeine junkie. I self-administer it in doses strong enough to curl your toes – my brew of choice comes straight out of the Pasquini espresso machine in my kitchen, and, in true Italian style, is down the hatch before the cup knows it was there. It comes in small cups and has enough punch to keep a small flock of fireflies going for a week. Some call it “rocket fuel,” others call it “high-octane-go-juice” … I simply call it …
 
Necessary.

In fact, if not for caffeine (and, of course, my strong belief in God), I’m not sure how I’d have made it through this past year. It’s been a BIZARRE year to say the least, but we are extremely grateful as well. In a year that’s seen thousands of Realtors firing up their exit strategy and heading out, our business has grown. In fact, it’s been the best year we’ve ever had. And we are VERY grateful.

Truth is, if it really gets down to it, our success hasn’t been the result of caffeine at all. It’s fun to joke about it, but there is a far more fundamental ingredient to our business that has helped us carry the day. Without this key factor, we wouldn’t be in business. It’s the fundamental element in our business, and to it we really owe our success. We extremely grateful for it, tremendously blessed by it and seriously humbled by it all at the same time. And we want to say THANK YOU for it!

So without further adieu, the secret of our success is …

YOU. THANK YOU! 

The holiday season is upon us! Although wonderful because of the opportunities to visit with friends and loved ones, the holidays can actually induce stress. Many, self-conscious about the state of their homes, shudder at the thought of opening up their house to entertain holiday guests. Others, desperate for a new look, don’t have a clue where to start.

Some are even paralyzed with fear at the prospect of … decorating.

One of life’s little recognized secrets is that MANY people are seemingly born without the “designing” gene. Say it ain’t so. Although Martha Stewart wannabies, they’ve secretly concluded that no matter how many decorating magazines they subscribe to, they couldn’t rub two decent decorating ideas together to save themselves. For these folks, the skill-set required to decorate their living room is right up there with putting men on the moon. It can be done, but only by highly skilled “others.”

I have a practical suggestion for you. Give YOURSELF a gift this year. Hire a stager to help you set the stage for the holidays.

One of the groups hit hardest by the market have been staging companies. We’re not talking scaffolding here: these are the individuals that come in and make an ordinary, cluttered room look like a centerfold from HG. With so many foreclosed homes on the market sold “AS-IS”, “normal” sellers have been reluctant to put their homes on the market. Although staging homes has proven invaluable and can actually help increase a home’s value, REOs (foreclosed homes) usually aren’t staged. Same with short sales. They’re sold on price alone and, since they’ve represented so much of the market, demand for staging is down. WAY down. In fact, many stagers have seen dramatic decreases in business over the past two years.

With the market rebounding, staging demand is starting to pick up. However, many staging companies are actively looking for business.

And the price can be right – with work levels down, stagers are willing to negotiate fees.

“We’d love to help you decorate your home for the holidays!” declares Sheryl Medford, ASP, IAHSP, professionally stager with The Next Stage. With the motto, “Facilitating the next stage in your life,” Sheryl points out that many of her clients aren’t selling a home. “They either staged their previous home for sale or bought a home that was staged; they loved the look and feel of the staging and made a decision to live that way every day,” she states. “Instead of ‘Staging for Sale,” we call it ‘Staging for Life’.”

I’d call it, “Setting the stage for the holidays,” and it might be the best gift you’ve ever given yourself: the confidence needed to welcome your loved ones into your home this holiday season. Or the rest of the year, for that matter.

First it was TARP (Troubled Asset Relief Program). Then HARP (Home Affordable Refinance Program), HAMP (Home Affordable Modification Plan), Canadians have HEMP* … and now ...

FAP?

Announced just last week, the Treasury Department has unveiled new guidelines for short sales that, at first blush, provide relief and hope for those faced with selling their home “short.” Originated in May, 2009 with the seriously unfortunate acronym FAP (Foreclosure Alternative Program), the first short sale relief plan did not facilitate smoother short sales transactions as anticipated. In fact many were less than excited by the plan.

Will these new guidelines fare any better? Don’t hold your breath.

The concept is full of good intentions and is welcome news: Alameda County is full of those who, because of adjusting mortgage rates, loss of jobs and more, can no longer meet monthly mortgage obligations. Many have tried loan modifications to no avail. The next alternative, in lieu of being foreclosed, is to opt for a short sale. If successfully negotiated, a short sale can reduce the hit to their credit AND save the banks the cost of foreclosing.

If only it were that simple.

Short sales are anything but short: they’re long, arduous processes which, in our own experience, can take up to nine months to complete and historically have no more than a 20% chance of success. It’s an extremely invasive and demeaning procedure for sellers (right up there with a colonoscopy) and has been known to be excessively frustrating for buyers. As popular as wasps at a picnic, short sales are avoided by many Realtors because of the complexity, aggravation and low odds of success. We’ve had a good deal of success with short sales, but can verify that the process can be VERY frustrating to all parties concerned.

For sellers to qualify:

· The property must be the homeowner's primary residence.

· Loan(s) must have originated before Jan. 1, 2009.

· Loan(s) cannot exceed $729,750.00.

· The owner’s total monthly mortgage payment obligation(s) must exceed 31 percent of their pre-tax income.

· The homeowner must be delinquent on the loan or default imminent.

The new plan standardizes timelines, documentation and processes and even provides cash incentives for participation. $1,500.00 is even included to assist the seller with moving costs.

And loopholes could render the new help powerless.

First, lenders do not need to implement the plan until April 5, 2010. IF they implement at all. If history is any guide, that’s a big IF. So if you were looking for something to brighten the Holiday Season … scratch that. Secondly, the plan only allows $3,000.00 for second lien holders. That might work if the second is a small loan. However, if it’s a large loan, no lender is going to be very eager to settle for only $3,000.00. We’ve personally seen many creditors in the second position hold out for more, try to hit up the buyer for funds OR … short-circuit the entire process in order to be able to go after the borrower.

While too soon to really tell, we can only hope that the new guidelines will actually help. It would add injury to insult if the promised assistance looked good on paper, but, when put to the test, actually comes up … short.

* (Me being TOTALLY silly … Canadians have been trying to legalize the weed d’jour for years)

 


Since many have asked me to put these in one “easy-to-access” place ... 

Here they are ... the top 10 posts for Sellers … including our ALL-TIME “most-read” post (close to 10,000 hits and climbing!).

1.    Top 15 Things A Listing Agent Won’t Tell Sellers … (But REALLY Should …)

The title says it all … 15 things you REALLY need to know if you are selling your home … (this is our #1 post - EVER!!)

2.    Testing The Market NOT A Good Idea: Top 4 Reasons Explained

I’ve heard this concept from SO many sellers – this explains why it is a TERRIBLE idea …

3.    When Does A Home For Sale Resemble A Snow Ball In Orbit Around The Sun?

As in … when your sale doesn’t have a CHANCE of succeeding … a critical fact you need to know …

4.    How To “Play” Against REOs With Your “Normal” Sale – A Critical Factor Required To Win

With so many REOs on the market, how can you compete? We explain how in this post …

5.    How Does Your Listing Compare With a Banana?

What do you do with ripe bananas? How about bananas that have gone black? How this applies to your listing …

6.    What Realtors HATE When Showing Homes To Buyers – Top 10 List

10 practices you need to avoid when selling – and as you’ll see from the comments, plenty of Realtors agree …

7.    Price It Right or Pay The Price! (Part 1)

Why pricing is critical … and why you cannot afford to start too high …

8.    Price It Right or Stay Home! (Part 2)

Why pricing is critical (Part 2) … and why you still cannot afford to start too high …

9.    Failure To Disclose a Low Appraisal Can Cost You Plenty: 5 Critical Conclusions

With the new appraisal guidelines (HVCC), many are trying to hide low appraisals. This explains how this practice could harm you badly …

10.   Artificially Low List Prices Are Wreaking Market Havoc: 6 MAJOR Emerging Problems

REOs and short sales are typically priced artificially low … this explains how this practice can do serious damage to your listing …

I decided to make it easy for you to find all of these without digging back through the archives.

Here are the top 10 posts for Buyers.

1.    Use The Gut, Luke (The Most Important Thing To DO When Buying A Home)

How do you make difficult decisions when buying a home? We provide practical suggestions …

2.    Why You DON’T Want A Dedicated Buyer’s Agent

A dedicated buyer’s agent can actually prevent you from getting the best deal possible …

3.    Top 10 Things I HATE About REOs: AND 3 Startling Consequences

Buying an REO can be like walking through a minefield blindfolded …

4.    Artificially Low List Prices Are Wreaking Market Havoc: 6 MAJOR Emerging Problems

Think you can buy a foreclosed home for the advertised price? That’s silly … here’s why …

5.    I WISH You Would Use My Lender - 6 Critical Reasons Why You Should

What else can I say? If you plan on using me to help you buy a home, you REALLY need to read this …

6.    How To Buy An REO – Top 17 Questions Answered

Answers to the top questions when buying an REO. Everything is here except …

7.    Lookin’ For an REO? 8 Things to Expect When You Open the Front Door.

This will help prepare you for your first visit to an REO … sort of …

8.    What Do REO Lowball Offers Have In Common With Tyrannosaurus Rex?

I still bump into buyers who think they are going to offer $100,000 less than the asking price for an REO …

9.    How Good Is YOUR Timing? 3 Important Reasons NOT to Time the Market

Waiting for the bottom of the market? Trying to hit it on the head? Is your name Rip Van Winkle …

10.   You TOO Can Purchase A Ticking Time Bomb! One Easy Step!

Buyer beware … it looks good at the beginning, but could cost you BIG TIME down the road …