Saturday, January 31, 2009

Economic Recovery Package

$819 Billion Stimulus Package Approved!

Last week, the US House of Representatives passed the current Economic Recovery Package(HR 1). The California Association of Realtors totes this as good news, as the bill contains a number of issues critical to our industry including extending all 2008 Metropolitan Statistical Areas' Fannie Mae, Freddie Mac and FHA loan limits throughout the end of this year.

The extension prevents an MSA's 2008 loan limit from being reduced in 2009 for Fannie Mae, Freddie Mac and the FHA. Language in the bill also specifies that if an MSA's loan limit is set to change, it can increase, but is prohibited from declining.

The proposed legislation also will eliminate an existing payback requirement on the first-time home buyer tax credit for qualified buyers who purchase a home between December 31st 2008 and July 1st 2009.

Next week, the Financial Services Committee will meet and review other housing issues.

Wednesday, January 28, 2009

FICO Update

Understanding FICO Scores -

We all know how important FICO scores are so here are some basics to enhance your FICO knowledge. Good borrower credit scores help make it possible to qualify at better rates. For those with lesser FICO scores, FHA loans are available as an option.

This is how FICO Scores are weighted and structured:

35% by Payment History
30% by Balances Owed
15% by Length of Credit History
10% by New Credit
10% by Types of Credit in Use

And the overall calculated ranges:

720 - 850 Excellent, A-paper credit, the "good-guy" rates available;
680 - 719 Good, not much of a compromise on rates;
620 - 679 OK or Fair, clearly in range for FHA consideration;
580 - 619 Low, bottom of the range for FHA consideration, "alternate credit" comes heavily into play;
500 - 579 Poor, truly nothing can be done without credit rehabilitation.

Feel free to contact me for more information.

Tuesday, January 27, 2009

Behind the Scenes with Interest Rates!

Loan Update

Today at my Tuesday office meeting, there were 2 mortgage brokers giving us updates on loans. Most rates these days are based on owner occupied purchases with 20% down, 720 or higher credit scores and 30 day pricing plus 1 point. Given that, a 30 year fixed conforming loan (under $417,000) is about 4.875% as opposed to a super conforming loan ($417,000 to $625,000) which is 5.625% and a jumbo loan ($625,000 to 3 million) which is 5.75%. Jumbo rates are currently down.

Gary Foydl from Loan Source, gave some behind the scene info on lending. #1 - Late last year the "Feds" began buying mortgage backed securities which resulted in lower interest rates. A lot of folks applied to refinance their homes which ended up clogging up the system which caused rates to go up. #2 - Lenders encouraged Buyers to pay at least 1 point (which can buy down an interest rate between 1/2 to 1 1/8 pts currently) and get more invested in holding onto their loans. #3 - As we know from getting a new loan, our loans are soon sold to other lenders in a package deal. Only 10% of those loans were able to be jumbo - which impacted the jumbo rates and availability. The result was to artificially raising rates due to clogged pipelines. Rates would vary due to timing.

Let me know if this is interesting or confusing. I like knowing the behind the scenes info - especially as it affects our market.

Monday, January 26, 2009

Good New Deal!

New Bank Owned Property in Morgan Hill

This 4 Bedroom home at 14855 Native Dancer just came on the market a couple of days ago and I don't think it will last very long. Located on a 20,700 square foot lot, this one story home has a formal tiled entryway, hardwood floors, bright kitchen with newer cabinets and tiled counters, brick fireplace, tiled bathroom floors and large master bedroom. On the market for $675,000 and priced well for this market. If you are looking for a one story with a large lot then this might be the home for you!

Feel free to contact me if you would like more info on this property.

Monday Morning Update!

Monday Statistics

Good morning South County! Here are your weekly updates on what is happening in your neighborhoods. Feel free to contact me if you want more specific information. As of this week:

Morgan Hill has 223 active listings and 61 sale pendings

Gilroy has 285 active listings and 153 sale pendings

San Martin has 37 active listings and 13 sale pendings

Area 1 (all of the above) has 536 active listings and 224 sale pendings plus 66 closed sales in the past month

We are down a little in inventory but moving up in sales. Interest rates are also still good although higher than they were. I’m seeing lots more movement in the market right now – good start to the year!

Stay tuned for regular updates!

Friday, January 23, 2009

Bank Owned Duplex in Morgan Hill

Bank Owned Duplex for Sale!

Check out this duplex in Morgan Hill, located at 105 Spring Avenue for only $410,000 and includes 2 Bedroom/1 Bath unit on each side with updated kitchens and baths. Worth checking out for it's investment potential. Located on the west side of Morgan Hill and been on the market for a little over 3 months. I'll keep you posted on this and other REO properties.

Thursday, January 22, 2009

Tax Relief for Homeowners?

The following article is taken from my C.A.R. (California Association of Realtors) Newletter and I thought it was very interesting as well as worthwhile to know. I recently posted some information about loan modifications as one of the emerging solutions to our current economic issues but never expected the government to offer the following relief - read on!


The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With more than one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don't have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate, or secondary, to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS's processing time for subordination or discharge requests has been about 30 days. The IRS currently is working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to IRS Publication 783 for discharges and Publication 784 for subordinations at

Monday, January 19, 2009

Monday Morning Update!

Monday Statistics

Good morning South County! Here are your weekly updates on what is happening in your neighborhoods. Feel free to contact me if you want more specific information. As of this week:

Morgan Hill has 227 active listings and 55 sale pendings

Gilroy has 289 active listings and 151 sale pendings

San Martin has 37 active listings and 12 sale pendings

Area 1 (all of the above) has 501 active listings and 214 sale pendings

We are holding steady in inventory but moving up a little in sales. Interest rates are also still very good. I’m seeing multiple offers and more movement during January than I’ve seen in a while.

Stay tuned for regular updates!

Wednesday, January 14, 2009

Beautiful Cordevalle Property!

Gorgeous Cordevalle Vineyard Estates Property

One of the fun aspects of my work is getting to see a variety of homes (including seeing how the other half lives). This is a beautiful home located at Cordevalle in San Martin. Located at 1285 Lions Peak Lane, some of the highlights include a French Clay Roof, Copper Gutters & Trellis, Vineyard, Stone Courtyard with Pond, Mahogany Floors & Cabinets, Gourmet Kitchen (of course), Master Suite with His & Her Bathrooms & Closets, Detached Gym, Oversize Garages plus more in this 4 Bedroom, 4 Bath Home with 4132 Square Feet and lot size a little over 2 Acres. Plus this Private Gated Community also offers Tennis, Gold, Spa & Fine Dining. Could be yours for $1,999,999! Some homes just have that special feel to them and this is one of those - shows beautiful with a comfortable, well thought out floor plan.

Tuesday, January 13, 2009

Loan Modifications

Great Article in the Mercury News

We are seeing the evolution of different solutions to our mortgage crisis. Lately you've probably been hearing more about 'loan modifications'. Loan modifications have evolved as another alternative to having a mortgage that is too much to handle. Lenders are renegotiating with some borrowerers in order to salvage what they can, making the loan affordable to the borrowerer and thus avoiding the foreclosure route.

Counseling is available by contacting the lender directly or going to a HUD approved non-profit counceling agency (might be the smarter first step). There are also private loan-modification services that will help with the process for a fee.

This article in the Mercury gives resources and some good common sense advice in dealing with options. To read more, go to:

My 2 Cents - Let's not make the same mistakes that got us into this mess. Do your homework, do your research, ask trusted professionals and most of all - deal with it! Problems won't go away by not looking at them.

Monday, January 12, 2009

Monday Morning Update!

Monday Statistics

Good morning South County! Here are your weekly updates on what is happening in your neighborhoods. Feel free to contact me if you want more specific information. As of this week:

Morgan Hill has 221 active listings and 53 sale pendings

Gilroy has 299 active listings and 149 sale pendings

San Martin has 39 active listings and 9 sale pendings

Area 1 (all of the above) has 541 active listings and 208 sale pendings

We are holding steady but moving up a little in both inventory and sales. I think a lot of people are waiting for the inauguration coming soon before they make any decisions.

Stay tuned for regular updates!

Thursday, January 8, 2009

New & Interesting Bank Owned Property in Morgan Hill

Great location with beautiful views from this property!

I have been inside this home located at 397 Wright Avenue. It is surrounded by lovely large homes for the most part and has great vistas from the property. I know it needs work as well as updating but because of the location, could increase in value substantially given the right attention. Details - 4 Bedrooms, 3 Baths with 2910 Square Feet and located on a 28,440 Square Foot lot (mostly unusable). It is 31 years old and pretty much everything is original with its share of wear and tear. Priced at $802,900 - maybe a little high but I suspect it will come down in price before too long. This would be a great personal home for a contractor or someone who is handy.

Wednesday, January 7, 2009

Investment Case Study on Gilroy Property

Investment Property Case Study by Gretchen Merrick

Gretchen is a colleague of mine who did a case study on my listing at 9110 Church Street in Gilroy. I thought it was not only interesting but well done and she has given me permission to reproduce this study on my blog. It is as follows:

It has been quite a few years since a Bay Area residence could be purchased for investment purposes and have a positive cash flow from the income received from rent. But with the large drop in real estate sale prices, it appears that not only will there be great potential for gains in equity appreciation, but that the property will have a positive cash flow.

Let’s look at an example case study on a real property currently for sale in Gilroy. I chose this property because the Multiple Listing Service states that it is currently rented for $1900/month. This property is located at 9110 Church Street, has 3 bedrooms and 2 bathrooms, is 1132 sq.ft. and is on a 5227 sq.ft. lot. The list price is $279,000 (originally $369,000), and this property is a short sale.

Although we are given the current rent amount, there are other assumptions that must be made in order to analyze this potential investment. Here are the assumptions that I made:

Purchase price = $250,000, 25% down payment = $62,500
Loan: 6% interest rate with 1 1/2 discount points, 30 year loan, monthly payment = $1124.16, total acquisition cost = $5000 (including closing costs)
Utilities paid by tenant
Self-managed (no property management costs)
5% vacancy allowance
Annual property taxes = $3125
Annual insurance = $800
Annual maintenance costs = $2500
Investor’s federal tax bracket = 25%, California state tax = 9.3%
Holding period = 7 years
Annual appreciation, average over 7 years = 3% (hopefully this is a very conservative number)
Projected sales costs = 7%

Using the above assumptions, the property can be analyzed as an investment, taking into account tax depreciation, cash flow before and after taxes. We will also look at the eventual sale of the property, looking at taxes due upon the sale and the after-tax rate of return.

Income - Vacancy Allowance = Gross Operating Income = $21,660
GOI - Operating Expenses = Net Operating Income = $15,235
Subtract Mortgage Payments = $13,490

Looking at my assumption of selling the property in seven years with a conservative guess of 3% appreciation in value per year:

Projected sale price in 2016 = $307,468
Subtract cost of sale = $21,523
Add 7 years of cash flow = $12,215
Subtract remaining loan balance = $168,073
CASH OUT ON SALE = $130,087
Subtract initial investment of $67,500

This example shows a viable real estate investment in south Santa Clara County with a before-tax rate of return of 8.55% on the investor’s initial $67,500 investment. Please consult your tax advisor for more information regarding the tax implications of buying, leasing and selling investment real estate.
(Thanks Gretchen!)

Tuesday, January 6, 2009

More Harriet's Picks - Gilroy this time!

Gilroy Favorites -

My last pick’s blog started with sushi and so shall this one. For a good sushi meal and fun atmosphere, go to Ninja Sushi, located at 715 1st Street in Gilroy. We’ve always had great food there and I enjoy the upbeat, friendly energy of the place. I also like finding (& telling people about) restaurants and places that would be hard to find on their own especially as someone new to a community. O.D.’s Kitchen is one of those places and it is “unassuming with no real atmosphere” but has great breakfasts and lunches with excellent burgers. It’s located at 28 Martin Street and it is a find. Also does take out. Victoria’s Mexican Restaurant can be found at 757 1st Street for excellent Mexican goodies. Although for super quick, we go to Super Taqueria which can also be found in Gilroy (and Morgan Hill and Hollister) at 401 East 1st Street. Their homemade beans and green & red chili salsas are excellent. Try a super burrito for a filling meal and good buy. I love a lot about Gilroy, but especially the feel of the wide streets and the mature trees. Also, there is also a lot of effort going into building up the downtown area. One of Gilroy’s big attractions of course is the yearly Garlic Festival. You have to go at least once especially if you are moving here because once you live here, you will probably end up volunteering for this event (it's a huge fundraiser for our communities). Coming this summer July 24, 25 & 26th and who doesn’t enjoy garlic? And speaking of coming soon, Gilroy will have its own Gilroy Dog Park. This is due to be finished this summer and will be located at the Las Animas Park.

Stay tuned for more area picks!

Monday, January 5, 2009

Monday Morning Update!

Monday Statistics

Good morning South County! Here are your weekly updates on what is happening in your neighborhoods. Feel free to contact me if you want more specific information. As of this week:

Morgan Hill has 215 active listings and 54 sale pendings

Gilroy has 297 active listings and 146 sale pendings

San Martin has 39 active listings and 8 sale pendings

Area 1 (all of the above) has 532 active listings and 205 sale pendings

Inventory is continuing to go down which is typical for this time of year as are sales BUT not by much. During December 2008, closed sales were as follows:

Morgan Hill had 32 closed sales

Gilroy had 43 closed sales

San Martin had 4 closed sales

Area 1 had 79 closed sales

Compared to last year at this time, there were 696 active listings in Area 1 BUT only 63 sale pendings with only 40 closed sales for the month of December 2007.

My 2 Cents – I’m seeing much more buyer activity and multiple offers on the properties that are attractive in both price and condition and location. Time to get off the fence or you’ll be waiting in line.

Stay tuned for regular updates!

Saturday, January 3, 2009

Beautiful Bank Owned Homes New on the Market!

Beautiful Gilroy Bank Owned Home (on the lower left) -

New on the market this week and located at 1059 Welburn Avenue in Gilroy. This 3 Bedroom/2 Bath home has 1532 Square Feet with an updated kitchen and new paint & carpets. It is located on a 7405 Square Foot Lot. Currently listed for $349,000. Worth checking out!
Beautiful Morgan Hill Bank Owned Home (on the upper right) -
New on the market this week and located at 18130 Stoney Creek Way. Only 5 years old with 5 Bedrooms/3 Baths and 2088 Square Feet, this home is listed at $579,000. Gourmet kitchen, Huge Master Bath with Jacuzzi, Spectacular Entry, Balcony with Views - sounds like it's not going to last long on the market.