You clung to your Laguna Beach home like glue. No way were you leaving the place you so dearly cherished. But the stack of delinquent mortgage payments got too heavy. Pushed you straight through a trap door. Now you’re in the pit. The mortgage pit. Debt collectors are hissing like snakes. Foreclosure fiends are clawing at you. How will you get out of this trap?

Luckily, there’s an escape route. It’s called short sale – a program that lets you sell your home for less than the total amount owed. Protects you from the hissing debt collectors and foreclosure fiends. Frees you from the pit. Get ready!

Launching Your Escape

Remember, a short sale isn’t a magic amulet. Plan on digging in your heels and expending much personal energy. You’ll begin with three documents, all of which should be signed and dated.

• A financial worksheet listing all of your monthly expenses. The more, the merrier.
• A hardship letter explaining why you got behind. You’re making your case here, so let the details flow.
• A letter authorizing your Realtor to access certain account information. The letter should include the last 4 digits of the borrower’s social security number, the complete account number, and property address.

What Else You Should Know

• The clock is ticking, so dawdle at your own risk. If the short sale doesn’t close within 30 days, chances are you’ll need to start the approval process over. Now wouldn’t that be a hoot.
• Send all inquiries, (and if necessary, bribes), to the assigned negotiator. The identity of this individual will be revealed during the introduction call.
• A short sale is never an inside job. This means, the property may not be purchased by anyone with close ties to the seller. This includes but is not limited to family members, friends, neighbors, personal trainers, and bookies.
• In certain cases, investors and mortgage insurance companies require lenders to sign an unsecured note for part or all of the difference between sale proceeds and the total amount due. This information is specified as part of any response to a short sale offer.

Well there it is. You see? There is an escape from the mortgage pit. And if you’re considering a short sale for your Laguna Beach home, I want to make sure you’re good and prepared for the journey.  I’ll make certain you get started on the right track. And stay on the right track. As an experienced professional well-acquainted with this prime beachfront community, I can answer all of your questions and help you discover the numerous opportunities the Laguna Beach Real Estate market has to offer.

Feel free to contact me at 949.922.8490 or hillary@thecoastalpropertyexperts.com.

Until next time, keep it classy, Laguna.

We have talked often about getting your financial ducks in order before hitting the pavement to find your Laguna Beach Dream Home for Sale. It’s always nice to look and dream about a life at the beach. But it’s even nicer to make that dream a reality.

I know that it’s hard to look past the forest of economic news that is in front of you and see the opportunities. But the fact remains that we are seeing prices of Laguna Beach Homes for Sale that were last seen in 2002! Plus, the interest rates remain at historically low levels.

Lenders are more cautious with some of their underwriting criteria for various reasons. Don’t let this keep you from doing what you can to position yourself to grab your dream home when the right opportunity and circumstances collide.

One of the entry level thresholds of obtaining a loan has always been your credit score. Understanding what is factored into this score will help you to create habits that will give you the best chance at the highest score available for you. Here are just a few tips:

• Bill payment history accounts for about 35% of your FICO Score. Paying your bills on time each month is important.
• Outstanding debt accounts for about 30% of your FICO Score. This is an interesting mix. The lenders want to see that you have other credit and you know how to use it wisely, but they don’t want you to use too much of it by maxing out your cards. Most experts advise to use less than 30% of the total credit limit. For example, if you have a credit card with a $5000 limit, then keep your balance at or below $1500. Unfortunately, if you have a card that you max out but pay off in full each month, it doesn’t always reflect in your favor on your report, even though paying the balance in full each month is a good practice. If you plan to apply for a loan in the near future, start getting your credit balances down to favorable levels.
• Credit history accounts for about 15% of your FICO Score. So if you are just starting out, you won’t get too many points here. However, it is a small percentage of the total score.
• The remaining 20%…well, that’s still a bit of a mystery!
• Don’t apply for too much credit in a short period of time since it may look as if you are desperate. If you are shopping for a loan, you get a little break since credit pulls from mortgage companies over a period of several days will count as a single credit inquiry.
• If you have been approved for a home loan, don’t make any major purchases, additional credit inquiries, or changes to your credit report. Lenders are pulling credit reports for approved borrowers right before they fund the loan (which could be after you have signed loan documents and think that it’s all over but the singing). Don’t get caught with your household belongings in the moving van and no place to go!

The good news is, wherever you are at right now in terms of your credit score, credit scores are salvageable. With the right information about what will give you the most bang for your buck, and a little determination, you can get your score to a level that the banks will approve.

Take action today with the following steps:

• Get a copy of your credit report. Call your lender and have them pull it for you or get a copy from the credit companies for free.
• Take the time to review the information to make sure that it is accurate.
• Correct any errors by writing to the credit bureaus and notifying them that there is an incorrect item on your report.
• Finally, make a list of steps that you will take to improve your score (i.e.…start paying bills on time, reduce the balances to less than 30% of the limit per company)
• Take action on the steps, little by little, consistently, each week.

Remember…nothing happens until something moves…so, get moving!

See you at the beach!

Until next time…

1) Information on 8 Home for Sale in Laguna Beach that have had significant price reductions since they were first listed. Many of these are priced under $1 Million which can be considered a fabulous deal for this coastal beach community in Orange County.

2) From our archives of information, we pulled up an article from 2008 discussing what real estate REO and Short Sale investors were looking for at that time…what they considered to be a bargain when buying a home for sale.

Price Reductions: If you would like to see details on any of these Laguna Beach Homes for Sale, click through to the website.

Discover What Some Real Estate Investors Consider to be a Bargain:

I have often mentioned that we are seeing prices in Laguna Beach that haven’t been seen since 2002 – this is good news for buyers. Add to that, historically low interest rates and you should keep your eyes open for your next home.

I ran across an interesting article that appeared in Investor’s Business Daily in July, 2008. The article was titled “Investors Hunt for Bank-Owned Property Bargains in Packs”. The article explained how investors were pooling their money to buy defaulted loans in bulk directly from the banks rather than trying to negotiate properties just one a time, a process which they felt was too pricey, and too slow.

The interesting thing was what these investors were looking for in regards to price rollbacks. It stated, “Some want only homes with prices cut to 2001 sales values…People who have cash positions now are going to do very well….”

So where are these investors looking? “Some investors say a key to this type of purchase is focusing on spots with strong rental markets. Some buy strictly in the Sun Belt – Texas, Florida, California – citing the region’s long-term desirability”

Location is always important in real estate. You may be able to get a lot of house in a place such as the Inland Empire; however, the better value may be near the coast.

In the past, the entry level cost of a home in this area has pushed people further inland for a home purchase. What was true in the past may not be true today if you are paying attention to the prices.

Keep your eyes open for your opportunity and if our team can be of assistance to you, give us a call.

I just wanted to take a minute to share an article that I recently read from Rismedia. For our investors out there, these are some pretty good rules of thumb. This article references basements being “a must”; however the author is located outside of California. For our California and Laguna Beach Real Estate market, basements may be nice…but would not be considered “a must”.

Another thing to point out is that investors ARE buying homes in this market. Some are still waiting on the sidelines; however, for a well-priced investment home a good time to jump in is when YOU are ready and the RIGHT deal is found. And trust me, deals can be found every day somewhere in the country.

Know the risks….know the rewards.  Enjoy the article!

Seven Tips to Profitable Investing in Foreclosures

RISMEDIA, May 18, 2010– Have you been thinking of investing in a foreclosed home? The game plan sounds simple enough: purchase a foreclosure at pennies on the dollar, cover the mortgage by renting the property to tenants, and then sell it at a tidy profit when the economy recovers.

Unfortunately, when it comes to buying foreclosures, “things are not as simple as they appear,” says Jim McClelland of Mack Companies, a Tinley Park, Illinois firm with a portfolio of 365 previously bank-owned homes under management.

McClelland knows foreclosures: he buys two or three each week. Most of his homes are located in Chicago’s south and west suburbs, such as Dolton, Olympia Fields, Homewood and Glenwood. Mack’s in-house contractors redevelop these often badly run-down homes so that they can be rented out.

Foreclosures can be either a financial boon or a boondoggle. To help smooth out the inevitable bumps in the road to real estate riches, McClelland offers this advice:

1. You are investing in a community, not just a home. The neighborhood in which the foreclosure is located will ultimately determine its long-term appreciation. Before being lured in by a low price, do your homework. Is the town investing in new infrastructure, roads, schools, libraries and public parks? Is the downtown area thriving or declining? Bottom line: if the local government or businesses are not investing in the town for the long-term, neither should you.

2. Stick to REOs: A “Real Estate Owned” (REO) property is a safer way to purchase a foreclosure. Unlike a home sold at auction or purchased during pre-foreclosure, its title is held by a bank or lender; there are no other liens against the property. While an REO’s price discount is typically less than a foreclosure sold at auction, there is also less financial risk. Inspections are allowed. No evictions are required. Plus, the bank will see that the property is cleaned out before you take ownership, saving you potentially thousands of dollars in labor cost and dumpster rentals.

“Investors should know that homes sold at public auctions are the leftovers of an inventory picked over by professionals,” warns McClelland. “Buying one sight unseen is a gamble.”

3. The more bedrooms the better. “Three bedrooms is good, four is better,” says McClelland. Other features that will help you charge higher rents are garages, basements (a must), and at least one-and-half bathrooms. In general, steer clear of wood frame homes. Brick is a better investment.

4. Know when to walk away. There are hard fast rules as to when to pass up on a foreclosure. For example, if total repair work is more than $30,000, it is unlikely an individual investor will recoup their money. Damage to the foundation is another serious red flag, as is mold infestation or extensive plumbing repairs that will require breaking open floors and walls. It is crucial that you hire an experienced home inspector before making a bid. Otherwise, a foreclosure that seemed like a good deal could end up costing you more money than the home is worth.

5. Use the one percent rule for rents. McClelland recommends that investors charge a monthly rent of approximately one percent of the value of the home, i.e., $1,500 rent for a home valued at $150,000. While there are exceptions to this rule, collecting one percent per month should cover mortgage, insurance and taxes, plus provide a small profit that he recommends be held as a reserve for home repairs or other emergencies.

6. Skip the flip. “Real estate is slow,” advises McClelland. In other words, don’t quit your day job. Plan to hold your foreclosed properties from ten to fifteen years, just as you would a mutual fund or other retirement vehicle.

7. Consider a passive investment: Buying a foreclosure on your own is a major commitment. If you are not ready to become a landlord, McClelland offers an alternative. He has sold a limited number of his redeveloped properties to investors. For a small monthly fee his staff continues to maintain management responsibilities on the property. This way investors can take full advantage of foreclosure opportunities without wearing a landlord’s many hats.

Boston Fed President, Eric Rosengren said that he believes mortgage rates will rise about three-quarters of a percent to about 6 percent as a result. Things may be a little “wobbly” at first; however, there is an acknowledgment by Fed Vice Chairman Donald Kohn that “We are still in unchartered waters…We will need to be flexible and adjust as we gain experience.”

It is anticipated that the Fed is unlikely to step in again unless a renewed crisis occurs, such as a sudden and destabilizing rise in mortgage rates. There seems to be an indication that the Feds would like to move away from their reliance on unconventional policy measures.

In a policy statement issued after the Fed’s December meeting, the central bank reiterated plans to finalize the program by the end of March and was planning to continue to close down other emergency measures as scheduled.

Said Torsten Slok, senior economist at Deutsche Bank,” That was a fairly strong signal that they will not continue the purchases later on”.

Read the full story…

So, let’s take a look at what options are still currently available for folks interested in purchasing a home in the Orange County Real Estate Market in the next few months:

• Home prices that have been adjusted lower from their market peaks
• Low interest rates
• Tax Credits for both first time home buyers and existing homeowners
• Buyer protection programs offered by some banks and some Real Estate Groups, such as California Association of Realtors
• A large inventory of homes from which to choose – with many custom homes in the Laguna Beach Real Estate Market

Everyone seems to be in agreement that we need to get the inventory of distressed homes off the market before we see overall market recovery in prices. The question is, are you ready to be one of those new homebuyers that will benefit from the current market and the government incentives?

Take the time to review your personal financial situation, talk to your lender, and be certain that you are not missing a rare opportunity. Don’t be concerned if you are not quite ready to make that purchase, find out what you need to correct, improve, or save, in order to get yourself ready to purchase that home you’ve had your eye on.

Until next time…

It was recently reported that actress Halle Berry listed her Beverly Hills home for $5 million. There is no story of woe in this selling…just possibly an example of a smart business decision.

Note that Berry purchased the home in 2001 for $2,275,000 and is now selling it – just 8 years later for $5,000,000…more than doubling her money….in this economy!

True, we don’t know what this home will finally sell for. However, take note that she is following a time tested wealth building plan. Purchase low, sell high. Following the “rule of 72” – this transaction puts her rate of return in the 9% range, doubling her investment in roughly 8 years.

Not bad.

So, what could you buy in Laguna Beach today for less than $ 2.5Million?

The answer is – lots! To see all Laguna Beach Home listings – Click Here.

Currently, there are approximately 128 properties listed in Laguna Beach priced between $1million and $2.5 million.

Could one of these homes be your opportunity to double your financial investment while you enjoy a lifestyle investment in Laguna Beach?

A recent report by First American CoreLogic list California as #5 of the list of states where mortgages are “underwater”, indicating that 35% of homes with a mortgage in the state have mortgage balances greater than the homes current value. The list is as follows:

1. Nevada – 65% underwater
2. Arizona – 48% underwater
3. Florida – 45% underwater
4. Michigan – 37% underwater
5. California – 35% underwater

Now, before you are tempted to enter a doom-and-gloom state of mind about the nation’s economy, be sure to note what all these states have in common. Do you know?

For those that have been following real estate for the past 8 years or so, you will recognize that these are the same 5 states that had the greatest gain in value during the housing boom.  Nevada, Arizona and Florida had a lot of investor activity; Michigan has been affected by a loss in their jobs base; and California had a combination of heavy investment activity in the inland areas and current job struggles in some sectors.

This works out to about 5.3 million U.S. household with mortgage at or close to being underwater, owing at least 20% more than their home is worth. However, this same report also indicates that nearly 24 million U.S. homeowners have no mortgage at all.

But as you breakdown the numbers, you will also see that certain cities and certain price points may be toying with the idea of stabilizing. It is this part of the information that may help you decide if it is time to get off the fence if you are considering properties in Laguna Beach. From a report issued by the reporting agency, Altos, Laguna Beach Condos may be worth watching.

As stated in relation to supply and demand, “Home sales have been exceeding new inventory for several weeks. However because of excess inventory, prices have not yet stopped falling. Should the sales trend continue, expect prices to level off soon and potentially to resume their climb from there. Watch prices as the market transitions from a Buyer’s market to a Seller’s Market.”

Translated, that means that people are buying Laguna Beach Condos. It is still a buyer’s market, but as the number of condos available changes, where there are fewer available and more willing buyers, the market trend could shift to favor sellers.

I’m also attaching a few properties of interest to this blog entry. From an interesting Tri-plex opportunity for the investors among you, an Auction-ready estate, to beautiful, deeply discounted resort-styled properties.

To look at more details on any of the homes, visit our website at: http://www.thecoastalpropertyexperts.com/available-listings.php

So what do you think?….could the purchase of a Laguna Beach Condo be a good investment right now?

Until next time…

 360 Y Place, Laguna Beach

This is a single family detached home that is shown as a triplex that

has been used as a single family home for the last 10 years.

Perhaps you could put it back into use as a triplex rental…or

continue to use it as your own single family home.

Either way, this short sale property has just been reduced and

is now less than $1million – currently priced at $990K

 28 Monarch Beach Resort, Dana Point MLS# U9003719

AUCTION! This short sale is in the Must Sell Auction Program and could fulfill

your dreams of resort-style living for a reduced price of $1,699,000.

Located adjacent to the St. Regis Monarch Beach Resort, you have

direct access to all resort amenities including golf, pools, golf, fitness,

Spa Gauchin and restaurants. Luxury living…bargain priced!

31423 Coast Hwy #55, Laguna Beach  MLS# L31206

Attached condo just reduced $100K to $1,499,000 enjoys fabulous

Catalina Island and Ocean views. Located in Laguna Royale.

625 Avenida Acapulco, San Clemente MLS# S594287

An entertainer’s delight, this remodeled Palacio Del Mar home

has been reduced $124,000 and is now listed at $1,175,000.

 1987 Port Trinity Circle, Newport Beach  MLS# L24556

Originally priced at $5,200,000, this home is now listed at $3,995,000.

Located on a double lot of 17,000 square feet, in one of the most sought

after cul-de-sacs. Retractable glass walls open completely to reveal a

resort-style backyard.

Read the full report…”Heated First-Time Buyer Market Changes Strategies for Buyers and Sellers”

Many have speculated that this drive in sales at this price point is a result of the Buyers Tax Credit, which seems to have a good possibility of being extended.

What do you think? Has there been a shift in the market?

It’s the end of another great week here in beautiful Laguna Beach! 

It seems that I continue to get the same question from my clients and friends, and that is: Should I Buy a House Now or Wait?

 While I don’t claim to hold a crystal ball, and cannot see the future of the economy,

I can give you the Top 5 reasons to buy a California home right now.  Consider

this as you enjoy your weekend and as always, feel free to call me with any of your

real estate questions!

The National Association of Realtors is running advertising right now asking the question, “Why are you sitting on the fence?” For the cynical out there, you may be thinking that this is a shameless way for the Real Estate industry to drum up business. After a few lean years real estate agents are hungry for a sale, you may think.

Well, while it may be true that some agents have dropped a few pounds and have had to tighten their belts just like everyone else, the good agents are keenly aware of the great deals that are out there. They are on the phone, sending emails, and educating their clients about what is happening in the industry and in the real estate market.

There are fantastic deals available, and the smart money is investing in these deals as a way to expand their wealth base and take advantage of the opportunities right now, while others are still sitting on the fence.

Is this the bottom of the real estate market? Well, nobody knows for certain, and pundits on both sides of the issue make a strong case for whether or not we have seen the bottom. While it’s interesting to hear what “they” have to say, at the end of the day it is your family’s financial well being and quality of life that should determine if you are ready to buy a home. Most often, the bottoms are not recognized until we are well on our way back up and many opportunities are missed.

Affordability: Across the nation for various reasons, prices have declined.  The counties that experienced the greatest increases in prices are now experiencing drops in prices which are starting to look like great buying opportunities.

Low Interest Rates: True, lending standards have tightened up; however, there are still loans to be made. Buyers are taking advantage of conforming and FHA loans where rates can still be found in the 5% interest range. With FHA financing available in the Orange County area, the increased loan limit of $729,750 is looking especially attractive. Even borrowers with a credit score as low as 580 can consider a home purchase in today’s market. It is best to talk to your lender or mortgage broker to get the most recent information on the loans available to you.

Government Incentives:  Don’t miss out on this one. Many homeowners have claimed that it is the $8000 tax credit offered for 2009 that prompted them to take the step into home ownership. This tax credit expires December 1, 2009 so don’t wait if you want to qualify for this benefit.

Mortgage Protection Programs: For those that may be concerned with the viability of their employment, there could be a program to assist with your mortgage payment if you become unemployed. The California Association of Realtors (C.A.R.) offers the Housing Affordability Fund Mortgage Protection Program for first time home buyers who lose their jobs due to layoffs. There has also been mention of some lenders that are offering similar programs so be sure to ask your loan specialist about this option. Also, another insurance program that has always been available is through disability insurance which applies if you become disabled. Be sure to check out all your insurance and “safety net” options so that you can weather out the storm of any unforeseen event.

Choosing to live the life you want in an area you choose: Do you love your neighborhood, your school district, your commute, your view, your community, the size and “feel” of your house? If you cannot answer with a strong “Yes!” to any of these questions, then now may be the perfect time to step up and live the life you’ve always dreamed of. For the coastal communities of Orange County and Laguna Beach, that means waking up to the smell of the ocean and cool ocean breezes; a year-long temperate climate; great restaurants, entertainment and schools; a short drive or walk to the beach to surf or sun. It’s a lifestyle choice…is it yours?

As always, feel free to request a Market Snapshot of the areas that interest you most!