Serving real estate needs in San Clemente, Laguna Beach, Laguna Niguel, Dana Point, Monarch Beach and more.   Call for pricing, inventory information, and to arrange showings on any listing:  (949) 290-5974








Fast Facts COURTESY of California Assoc. of Realtors

Calif. median home price: September 2015:

  • California: $482,150
  • Calif. highest median home price by region/county: San Mateo, $1,200,000
  • Calif. lowest median home price by region/county: Tehama, $188,890

Calif. Pending Home Sales Index
September 2015: Decreased 1.5 percent from a revised 112.4 in August to 110.8 in September.

Calif. Traditional Housing Affordability Index: Second Quarter 2015: 30 percent (Source: C.A.R.)

Mortgage rates: Week ending 11/5/2015 (Source: Freddie Mac)

  • 30-yr. fixed: 3.87% fees/points: 0.6% 
  • 15-yr. fixed: 3.09% fees/points: 0.6% 
  • 1-yr. adjustable: 2.62% Fees/points: 0.2%










Does the Housing market have hopeful signs?  Has the market gained momentum?  Yes!  

Nationally, finalized sales of previously existing homes were up 4.7%, compared to a year earlier.  This is a good sign that the home selling season is off to a promising start and gaining momentum. (source: Wall Street Journal).

Pent-up demand is expected to increase home sales for the remaining months of 2015.   There have been job gains and improving housing markets.  Mortgage rates have remained low, and real estate resales continue to have low levels of inventory.  

Mortgage rates are expected to increase in the next year.  They may rise slowly in the next six months and then pick up their rate of increase the following six months.


Buying cheaper than Renting for most people

Is "buying" cheaper than "renting?"  It is in 3 out of 4 real estate markets.  

According the a story by California Assoc. of Realtors HousingWire report, fair market rents represented 28% of income while monthly house payments represented 24% of income.  This was across 461  California counties, as the affordability was researched.  

If home prices rise  7% and wages rise 3% annually, it is more attractive to own a home, at least in the 56 counties where prices went up 7%.  

If renters have saved enough to make a 10 percent down payment, they are usually better off buying in the majority of markets across the country, according to RealtyTrac.

I always encourage potential buyers to check in with a few lenders to find out what their options are, and to get pre-approved before spending time looking at homes.

Call me for more details!

A Short Summary of the Offer & Escrow Process

Here is the OFFER process, summarized:

1.  We write the offer and present it with the pre-approval letter.  That is done after you have found the home you want, and gone over the ten page offer form.

2.   Proof of Funds.  That is the next step.  It shows you are a solid and true buyer.  You provide a financial statement with a balance that is at least the amount you say you will bring to escrow to close the deal.  Usually this is the 20% down amount, for example.  Black out the account numbers and your address, is my personal opinion.  They only need to see your name and the balance and it is in a reputable institution.

3.  The seller and agent review the offer and get back to me.  We hope to hear from them soon and many times have the offer expiring in two days to speed up the process.  As soon as I do, I will let you know.   They may accept your offer OR they may send a Counter Offer.  We will discuss their response and figure out our strategy.  If they accept, then you have a deal and you will have 17 days to "inspect" it and get your lender all your paperwork, etc.  If they Counter Offer it, we review and decide what to do.

4.  Assuming we come to a deal, with a fully signed contract (buyer and seller) we would OPEN escrow.  This may take a few days before they accept the offer.   But once we have an executed contract, I will let your lender know to start working on the loan, and I will send the contract to escrow to open escrow. You will have three days to get the deposit money into escrow.

5.  First 17 days:  The first 17 days of escrow is when you get all your inspections done and you make sure you want the property.  The seller provides all DISCLOSURES, you look the home inspection, and you know everything there is to know about the property.  Most important period.  It is the buyers duty to ensure the property is in the condition that you are satisfied with.  So buyers must do their due diligence and have inspections and look around.

6.  The escrow, usually 30 days, is when you sign MANY disclosures, inspect the property, and do a lot of paperwork for your lender.  You will also sign escrow documents and review title reports. I can walk you through all documents and I will let you know if we see any red flags.  Look for liens on the title report, for example, or if the property is in a high fire severity zone.  You just need to know exactly what you are buying.

7.  After 28-29 days, you have signed 100 documents, you have answered 100 questions, you have asked 100 questions, and we are good to close.  The lender says everything is perfect and you sign loan documents.  Then you wire your cash into escrow to close.  The lender sends the funds.  The County records the sale.  Escrow gives us confirmation. The keys are yours after you have closed.  

​I hugely summarized and may have missed some details, but that is the general process.​  Let me know any questions.  Thanks!  Good luck!


Here are ten things to do to improve your property value before listing your home:

1.  Paint the outside of your home.  This is important if the home has not been painted in more than 5 years.  You want your paint color to fit with the neighborhood and not stick out like a sore thumb.

2.  Curb Appeal:  Look at  your home from across the street.  Really look at it.  Does it have curb appeal?  Figure out three things you could change, and change them.  Pull out the half dead plant, cut down the over grown bush that a coyote could live in, and make it look civilized.  Maybe even wash the dirt off your front door, add some potted plants by the front, and a wreath.  Wreaths are seasonal so find a one that matches the month we are in.  

3.  Oil the front door hinge: especially if it creaks or makes any noise when opened.  If you have time, take that can of WD-40 and go around your whole home and oil all the squeaky doors. As a tip, I usually put some old cardboard under neath the spot I oiled, for about 12 hours, in case any oil drips.  

4.  Spring for a new door bell look.   Improve it.  The problem is, half of the homes never replace their broken doorbell and it says something about your "pride of ownership".

5.  Add some succulents to the areas in the yard where everything dies. It probably died because it needed more water, and succulents can thrive with less water.  Voila.  Problem solved.

6.  Figure out where your screens get beaten by the sun and replace them.  It is very inexpensive to take them to your local hardware store and have the same frames used, replacing just the screens. And it makes the home have that "new" and "fresh" look.    

7.  Smell your home.  And tell me what you smell.  Is it the fish you cooked last night?  Or your pet?  Or what?  Every home has to be aired and this is the time to let the fresh air in and the stagnant air out.  Open the windows.  Clean around the kitchen trash, and the trash drawers, and try a nice candle.

8.  Fix all plumbing issues.  If your faucets drip, or if the toilet runs, have a professional plumber come in and take care of all of these items.  

9.  Change out a light fixture.  Update it.  Look on some websites that you like, or that have a trendy fresh look, and change out the fixtures that get the most notice.  I recently changed the pendant lights over my kitchen island.  It was easy, since I already had them, I just replaced the glass and the light bulbs.  It gave the room an updated look.

10.  Get new kitchen towels and have a full container of liquid hand soap, if you use them, in the guest bathroom and by the kitchen sink.  Nothing says opulence and high quality more than some nice items hanging around.   And when I show a home and the soap dispenser has 1/3 of an inch left in it, it looks like the owner doesn't take care of things.  

At the end of the day, make your home look so attractive, that you don't want to move.  Then you know it is ready to be sold for the best price!  

Good luck selling!  Call me for more tips.

Mortgage Delinquencies are Down

Mortgage delinquencies are down.  This is the percentage rate of borrowers who fall 60 days behind on their mortgages.  This rate has dropped below 4% for the first time since 2008.  Source:  TransUnion.

Why the decrease in mortgage delinquencies?  In my opinion, most borrowers have been able to either obtain refinances on their loans or they have obtained loan modifications.  Many borrowers have more solid employment, as the economy shifted.  And others have rented their higher cost homes and down sized, renting smaller homes, until their finances improve.  

This is good news for the real estate economy.  The less short sales and foreclosures, the more stable the home prices become.  As values stabilize and appreciate, owners with financial issues can finally sell at better prices.  Home appraisals are easier, when the prices are not varying to high degrees.  Lenders are happier.  Buyers are happier.  Sellers see stability.  

It is a win-win.

California Propositions

Many buyers and sellers ask me about two propositions, Prop 13 and Prop 60.  

I want to explain them briefly, and also add information on Prop 90.

Proposition 13 is a California proposition created by the people of California to limit property tax.  It was approved in Jun 1978.  There used to be no limit on property tax increases and each County could set their own property tax rate.  This was a problem for the homeowner whose income did not change but their property value increased.    It rolled property taxes back to 1976 and then limited increases to no more than 2% per year.  Prior to this Prop 13, your property could be assessed as having a value 50% higher than what you paid, and then you would get a much larger tax bill.   For more details see

Propostion 60 is a California a constitutional amendment approved by the voters of California in 1986. It is codified in Section 69.5 of the Revenue & Taxation Code, and allows the transfer of an existing Proposition 13 base year value from a former residence to a replacement residence, if certain conditions are met.  So if you are a seller 55 years and older, occupy your home, and want to move to another home at the same or lesser value (basically downsizing), then you can transfer your tax basis.  This helps seniors keep their expenses down and still be able to downsize their home.  At the time this proposition came to be law, the seller had to stay within the same County. See for more info.

Proposition 90 Proposition 90 has the same provisions and qualifications as Proposition 60.  The difference is that it allows base year transfers from one county to another county in California.  The only counties that have adopted an ordinance to allow values from other counties are:

  • Alameda
  • El Dorado
  • Los Angeles
  • Orange
  • Riverside
  • San Diego
  • San Mateo
  • Santa Clara
  • Ventura

The proposition 90 allows sellers to move Counties.  So this works well if the seller wants to move closer to their children who happen to live in another county.  It became law September 19, 2013.

Detailed rules apply.  This is just a quick summary.  Please go to your Tax Accountant and Tax Attorney to see if these rules could apply to you.


Thank you for coming to my blog.


First Quarter Projections are good.

* December 2013 unemployment rate of 6.7 percent remains high compared to historical standards.  Continued improvement is expected.

* Mortgage delinquency rates at 5.88% are almost half of what they had been.   They continue to fall amongst a housing market that is appreciating and lenders who are working with owners to do loan modifications.  We have seen a great improvement in this indicator in the past few years.

* Mortgage payment to income ratios are lower, suggesting room for continued house price growth.

*  Many housing markets are continuing to recover at a steady pace.  We are seeing a higher level of home sales, and an increasing level.

Source:  Freddie Mac's VP and Chief Economist Frank Nothat

Interest Rates January 2014

Interest rates fluctuate weekly.  This last week we saw Conforming loans with 20% down and loans up to $625,000 loan amount have these rates with most lenders:

30 Year Fixed -   4.5 %
15 Year Fixed -   3.625%
10 Year ARM   -   4.5%
7 Year ARM    -   3.375%
5 Year ARM    -   3.75%

Jumbo loans varied a little from this. 

As always, speak with a lender and get pre-approved for a loan before you go out and look at homes.   You want to ensure you are looking at the correct price range when you spend time searching for homes.


Good news in 2014!

Real estate news is good for 2014!

Last December, 2013 the FHFA was raising guarantee fees on Fannie Mae and Freddie Mac loans and last week they are putting their plan on hold.  They are now assessing the effect on the housing market.  Home buyers will not see these fees increase as expected.

The 2014 new laws improve buyer protections:  Sellers must now disclose known construction defects on the Transfer Disclosure Statement.  And sellers must disclose whether the seller is aware of certain construction defect litigation. (Senate Bill 652).

Another new 2014 law: Adjoining owners are equally responsible for shared fences and boundaries.  So both owners must maintain fences unless otherwise agreed to in writing.  There are details of the law the owners must abide to such as 30 day notice on intent to incur costs for a new fence.   This law does not does not help if one homeowner wants an expensive fence and the other wants to replace with a cost effective fence--some things still have to be worked out with tact and negotiation.

Assembly Bill 346 is new 1/1/2014.  It covers Group Homes definitions and Group Homes for Runaways and Homeless Youth.  Buyers should beware that licensed care facilities serving 6 or fewer persons is not considered a material fact that must be disclosed upon transfer of real property.  This definition now included Homes for Runaways and homeless Youth.     Sellers do not have to disclose Group homes within the neighborhood.

As always, I recommend that you use a licensed REALTOR for all  your real estate transactions.  Please call me with any questions!

Lily Jackson


Many buyers and sellers ask me when they really have a contract.  Is it when the offer is sent and the seller is reviewing it? Is it when a Counter Offer is out and the buyer is reviewing it?

The answer is: Real estate contracts must be in writing to be enforceable.   The USA Statute of Frauds requires all real estate transactions to be in writing. 

So if you have an offer signed by one party, it is not yet an executed contract and therefore it is not yet valid.  This also applies to Counter Offers.  The Counter Offer has to be signed by both the seller and the buyer in order to be a valid contract. 

So if you are a buyer or seller, keep your expectations in order.  If you are the buyer with an offer out, and another offer comes in, the seller can accept it, if the buyer does not have a fully executed contract.  This has been a source of disappointment in the past two years for many buyers when there have been multiple offers.  The seller's obligation to sell and the buyers obligation to buy must be in writing, signed by all.  Otherwise there is no contract.

In November 2013, the California Association of Realtors will introduce a new Seller Multiple Counter Offer form (SMCO).  Many realtors are hoping this clarifies the position the buyers are in when there are multiple offers. 

As always, have an experienced and knowledgeable Realtor on your side when you get into a contract.   It is the best way to stay informed and have a smooth transaction.

Lily Jackson



Short sales in California are generally not subject to state or federal income tax for cancellation of debt. The Franchise Tax Board (FTB) issued a letter yesterday stating that, as nonrecourse obligations, short sales in California are not subject to state income tax for cancellation of debt. The FTB's position conforms with the federal treatment of short sales stated in an IRS letter as we previously reported on November 15. These letters will provide welcome relief for short sale sellers given that the tax break for a qualified principal residence under the federal Mortgage Forgiveness Debt Relief Act of 2007 will expire at the end of this year, and similar protection under California law already expired in 2012. The FTB letter includes transactions that closed in 2012 but, as always, sellers should consult with their own tax professionals.

According to the recent FTB letter, “a California taxpayer would not have cancellation of indebtedness where the taxpayer was involved in a short sale pursuant to CCP section 580e.” Section 580e of the California Code of Civil Procedure (CCP) generally protects borrowers from owing a deficiency after a short sale of a residential property with one-to-four units, including both first and junior trust deeds. Exceptions include fraud, waste, cross-collateralized loans, and borrowers that are corporations, LLCs, or limited partnerships. For more information, C.A.R. members may refer to our legal article on Short Sale Deficiencies.

As with the IRS letter, the FTB letter states that even if no cancellation of debt income is owed, a taxpayer may nevertheless have capital gains to the extent that the outstanding debt exceeds the tax basis for the property. A principal residence, however, is generally excluded from capital gains tax up to $250,000 for single taxpayers and $500,000 for married couples filing joint returns (under 26 U.S.C. § 121).

Questions about Escrow in California?

Many buyers and sellers ask me what escrow provides.  So here is my explanation:

Escrow is a service that handles the documents and funds for a real estate transaction.  Escrows are the neutral party between the buyer and seller.  Realtors take the contract that is fully executed, already negotioated, and then escrow has the duty to assure that the property and funds change hands per all the instructions in the contract.

Most contracts I am referring to are for selling real estate.  The buyer and seller rely on escrow to ensure the transaction proceeds as instructed in the purchase contract.

Escrow will send out instructions that the buyer and sellers sign, based upon the contract.  The escrow officer is trained and a professional, who must determine if all the conditions of escrow have been met, and if the transfer of the property can be exchanged  on the close of escrow date.  Items such as financing must be handled, a clear termite report may be required per contract, and a home warranty plan may be ordered by an agent, and paid through escrow, as instructed in the contract.

When your escrow instructions have been prepared and sent to you, read them carefully to determine if they are correct and per the contract you negotiated.  The escrow instructions should reflect the entire contract.   

In the event all conditions have been met, the escrow officer will notify all conditions have been met, and escrow can close.  All outstanding funds are collected at this time and all costs must be paid.

Close of escrow signifies that the property and funds will be exchanged.  Escrow sends paperwork to the County Recorders office, and once it is recorded with the County, it is official.  Escrow then sends everyone their final statements, checks or wires, after all charges and fees are paid.

When a property is purchased, you may have escrow fees, title fees, lender fees, recording fees, transfer taxes, real estate taxes prepaid, termite inspection fees, insurance, and homeowners association transfer fees.   Most people pay their fees via wire transfer or a cashiers check.  Personal checks may have to be presented far in advance, so they have time to clear the bank.

After escrow closes, be sure to open the envelop you receive from escrow.  Many times escrow has you bring in more money than is spent, so you may have a refund check.  Also, review the closing statement and ensure that the costs were allocated in accordance with your contract.

If an escrow fails to close, an escrow officer has to write up cancellation instructions, an agreement between the buyer and seller.  This cancellation agreement specifies who gets the buyers deposit, or earnest money, or how it will be distributed.  Both buyer and seller must mutually agree to the instructions, for the disposition of the deposit to be completed. 

Many times, escrow has incurred costs of ordering reports, such as Homeowners Association documents, sometimes these fees are over $600.  When an escrow is canceled after these costs have been incurred, the buyer and seller have to agree who will pay these fees.

Escrow is a means to help the public handle funds and/or documents.   In addition to helping with real estate sales, escrows can help put your real estate into a trust.  Call me today to learn more. 

Lily Jackson  949-290-5974

US Government Shut down affecting Housing Recovery?

As many people watched the Federal Government shut down October 1st, they wondered how it would affect them.  Especially those of us in California, who have more services from the state and County.   So here are a few ways we will be affected by the US Government shut down.

Most of us realize the IRS is closed, so we do not expect audits any time soon.  No one is working at the IRS to verify past tax returns, so any one trying to get a loan, may in fact, have a delay.

The FHA - Federal Housing Administration- has had significant staff  reductions, and they handle about 15% of the mortgage market.  So loan quality and loan policing may be affected.

About 800,000 Federal employees are now "out of work" and any housing they were planning on buying will probably be put on hold.  Most people need a current job to qualify for a loan.

Lastly, consumer confidence may be shaken due to the shutdown.  Many people wonder how the shut down will affect the economy.  Experts do not know for sure what effect to expect.

Concluding, we are all hoping the shut down ends soon.  We do not want this shut down and hope it does not affect the housing recovery which has been strong and steady.  Most realtors are so happy to see equity increasing again and interest rates low, it would be incorrect and tragic to have political fighting affect housing nationally.

Please write your government leaders and let them know your thoughts on the shut down. 

Mortgage Rates Fall to 9 week low - 9/28/2013

Home buyers can enjoy the drop in interest rates, as rates hit their lowest level in two months.

The decline is primarily due to last week's announcement that the Federal Reserve would continue its massive economic stimulus program.  Economists are still forecasting rates will climb over the next year.  But for now, buyers may now enjoy lower interest rates in the wake of sharp home price increases.

The weekly rate report from Freddie Mac comes on the heels of recent data showing housing markets in Southern California and nationally have stabilized some after months of sharp increases.

The Freddie Mac survey, which asks lenders about the terms they are offering to solid borrowers, established the 30-year fixed-rate mortgage averaging 4.32%, down from 4.5% a week earlier. It was the lowest rate in nine weeks,  though still about a percentage point above where it bottomed out in May 2013.

The Fed announced last week that the economy was still not strong enough to allow the central bank to slow down its purchases of Treasury and mortgage-backed bonds. The effect of the massive stimulus is to keep interest rates down, and it is working.  Buyers are able to keep buying homes with lower interest rates and real estate is maintaining prices.

Economic Update - 9/23/2013

According to Bank of America's economic summary:


In housing news, research firm CoreLogic reported that 2.5 million more residential properties returned to positive equity in the second quarter, although 7.1 million mortgaged residential properties still have negative equity. The recent uptick in home prices is the catalyst behind the positive numbers. By August’s month end, RealtyTrac reported that foreclosure filings in the U.S. declined by 34 percent year-over-year. The decline is due in part to an improving housing market, job creations and fewer troubled loans. 

What does this mean for home loan rates? Weak economic reports can often cause investors to move money out of stocks and into safer investments like bonds, including mortgage bonds to which home loan rates are tied. We saw some of that dynamic late last week, as bonds stabilized after weak data was released.

All eyes will be watching the Fed meeting this week to see if the Fed announces that it will start tapering the $85 billion in bond purchases it has been making each month to stimulate the economy and housing market. These purchases have helped home loan rates remain attractive, so the decision is important to watch. With some economic reports still weak, and with inflation currently non-existent as evidenced by the wholesale-measuring Producer Price Index for August, the Fed has many factors it must consider in making its decision. 

Home loan rates remain near historic lows, meaning now is a great time to consider a home purchase or refinance.

Prudential renamed: Berkshire Hathaway Home Services

Today September 23, 2013 we are officially renamed Berkshire Hathaway Home Services California Properties.   Good bye to the name Prudential California Realty.  We have the same agents, same marketing department, and improved name recognition.  

Berkshire Hathaway Home Services is a world recognized name and everyone is really excited!

Real Estate prices are on the Rise

South Orange County is seeing prices rising in the past six months.   As the prices have gone up, so has inventory levels.  Sellers are once again putting their homes are the market, increasing the number of homes buyers can choose from.  

Generally the number of properties sold is greatest in the summer months.  Many families want to move during the summer and get settled before school starts again.  However, with a larger inventory, buyers are interested in seeing their buying options.  Many buyers think this is when they will get a good home with the features they are looking for.

Due to the rise in prices, we are seeing very few short sales.  A short sale is where the seller owes the bank more than the sales price, so the bank has to approve the"short" on the bank loan (forgiveness).   We are seeing a large majority of the sales are standard sales.  

So it is a great time to buy or sell.  The interest rates are right around 4.2%, depending upon your credit rating and loan amount.  For information on Orange County real estate prices, call me or send me an email.  I will provide the most comprehensive analysis of the housing market in Orange County.

Appraisals - affects on buyers and sellers

Appraisals can be hard in today's real estate environment.  A buyer needs the appraisal to come in around contract price, so they can obtain the loan they need.  Sellers need the appraisal to be representative of current values, so the deal stays together.


For buyers, the lenders appraisal may included distressed sales, which may bring the comparable sales price point down.   If the lenders think the property is valued at less than contract price, the buyer may be stuck coming up with more money at escrow.  Many distressed sales have occurred, often selling at prices below what equity homes values.  When buyers are unhappy with a bank appraisal, they can contest the appraisal.  It often takes a well written letter, with sold comps that support the current value, in order to have a chance at getting the appraisal changed.   Many agents will offer to show up when the appraiser arrives, so they can point out the key features of this home.  Pointing out improvements should add to the home's value.


For sellers, the current market in their specific area is the problem, or it could be.  If home prices have decreased 30% since 2005, but distressed sales are selling at 45% less than 2005 prices, their pricing is very tricky.   A good agent should be able to print up a list of items that their home has, that the distressed sales did not, to really substantiate their price and value. 

Summarizing, the borrower can ask to review the appraisers report.  Some items to double check would be the square footage, number of bedrooms, and adjustments made for key features of that particular property.   If the borrower believes the value is unreasonable, they should let their lender know.  As in most items in real estate, any letter to the lender about a low appraisal report should be presented in writing.



A Great Time to Sell Your Home, Buy another

Per cnn money            May 2012

It’s safe to sell your home again

While analysts debate when the housing market will hit bottom, for a surprising number of cities the turnaround has already begun.  In December, prices rose in 109 of the 384 metro areas tracked by data firm CoreLogic.  

Making sense of the story

  • There are certain signs to help determine if a particular neighborhood is on the verge of a rebound.  For instance is local employment on the upswing?  That’s a critical factor for a region to get itself on the path to recovery.  Improving jobs picture has led to shrinking housing stock across the country, as investors and bargain hunters have started buying up foreclosures that have been preventing a recovery.

  • For years, buyers were scared of overpaying for a home, but less so now.  Many buyers have grown accustomed to thinking they’ll score deals, so they tend to act slowly, and typically start bidding around 10 percent to 15 percent below list price.  However, a growing number of buyers are beginning to realize that if they wait too long in this market, they may miss out.

  • Sellers can hold firm on price if they’re patient.  The days of having to deal with low-ball offers are coming to an end.  The higher the price, the more patient the seller must be.  Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there.  

  • Sellers should keep in mind that while they don’t have to placate low-ball offers anymore, they also can’t shoot for the moon either.  Working with a REALTOR® and setting a realistic price from the get-go is key.

  • Sellers should know what they’re competing against.  Homeowners should let their home’s value dictate the price.  While this may seem self-evident, some owners may have lost sight of it during the bust.  On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high.  Others may have gone too far the other way, and set their price too low.

  • It’s also important that sellers understand they’re no longer competing with gutted foreclosures.  Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up.  REALTORS® often report their clients are willing to pay a little more for a home that’s ready to move into.


Short Sales have become common across the country.  We need to keep up to date on the truth of short sales.  There is a lot of false information out there.  Here are ten items to clarify how they work:



Myth #1: The homeowner must fall behind on mortgage payments in order to qualify for a short sale.   

Debunked:  Years ago this may have been true, but not in 2012.  

  • A financial hardship must exist, such as the ARM (Adjustable Rate Mortgage) increasing in monthly payments. 
  • Loss of job or income.  
  • Health or medical issues.
  • Extraordinary loss in home value (which may be considered a hardship).

Note: Agents should not advise a homeowner to miss a mortgage payment. 


Myth #2: Banks would rather foreclose on a property than approve a short sale.

 Many still believe this myth to be true, but more accurately, banks would prefer not to foreclose on a property due to the $50-70k it may cost the bank per transaction. Banks lose less money on a short sale than on a foreclosure.  

Note: In California, some lenders may pay owners as much as $25,000 to opt for a short sale. 

Myth #3:
 Homeowners must be pre-approved by their lender to be eligible for a short sale.

Debunked:  Absolutely not true. By and large, most lenders will consider short sale offers. However, each lender may have unique and specific processes to follow, from listing the home to the acceptance of a short sale. Bypassing any part of this process may result the sale not closing, so be sure to follow each lenders’ processes closely. 

Myth #4: Short sales never close.  

Debunked:  Obviously not true. In some areas of the U.S., nearly 50% of all closings are considered to be “distressed” properties, meaning REOs and short sales. 

Myth #5: Short sales take months (and months) to close.  

Debunked:  The short sale processes must be learned. Once mastered, it may not be uncommon to close a short sale in 30 days.  However, certain idiosyncrasies may slow the process and each lender presents their own unique set of specific challenges. No two short sale transactions are identical. 


Myth #6: Damage to the homeowner’s credit standing is comparable in a short sale and a foreclosure.  

Debunked:  In many cases, credit repercussions and deficiency protections are more damaging with a foreclosure. Short sale transactions can often lead to faster financial recovery for the homeowner and should be carefully considered.

Note: If the homeowner missed no mortgage payments, they may be eligible to finance the purchase of a home immediately following a short sale transaction.  


Myth #7: Following a short sale, the homeowner will be ineligible to purchase another property for the next 5-7 years.  

Debunked:  Not true. Using conventional lending guidelines, some consumers may obtain a Fannie Mae backed mortgage a short 24 months after the close of their short sale. 


Myth #8: After a short sale transaction, the homeowner will receive a 1099 and be forced to declare the loss as income.

Debunked: The owner may indeed receive a 1099, but due to the 2007 Mortgage Forgiveness Debt Relief Act, among other considerations, the homeowner may not owe any taxes on their transaction.*

Note: This Act is due to expire at the end of 2012.


Myth #9: The lender will sue the homeowner after the close of a short sale (or foreclosure, or deed in lieu of foreclosure) for the deficiency.

Debunked: California has certain anti-deficiency protections in place for short sales and foreclosures, depending on the circumstances.*  Sellers must consult a Professional Tax Accountant or Attorney to find out how their specific circumstances will be taxed.



The real estate market price recovery may continue to take some time. 

Tax Benefits of Refinancing

There are many tax benefits of having a mortgage. 


1.  You have the tax deductions of the mortgage interest.   And the interest on this qualifies as an itemized deduction on line 10 of your Schedule A.    Your lender should send you a statement as back up for your annual taxes.

2.  The points you pay are also a deduction.  Talk to your tax accountant about how to deduct this.  It may be amortized over the life of your loan.  But if you refinanced, in 2011, for example, the original loan points can be fully ammortized in 2011. 

3.   The IRS only recognizes home-equity loans up to $100,000; you can't deduct the interest paid on principal above that figure. 

To maintain these deductions, please write your local and state and Federal politicians to ensure homeowners do not ever lose these write offs.  The squeaky wheel gets the grease.



Key Real Estate Terms

Everyone in real estate should know about these key terms:


Amendments- A change—either to alter, add to, or correct—part of an agreement without changing the principal idea or essence.

Appraisal - An estimate of value of property resulting from analysis of facts about the property; an opinion of value.

Assumption - Taking over another person’s financial obligation; taking title to a parcel of real property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the real property.

Beneficiary - The recipient of benefits, often from a deed of trust; usually the lender.

Close of Escrow - Generally the date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.

Comparable Sales - Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”

Deed of instrument - used in many states in place of a mortgage.

Deed Restrictions - Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.
Earnest Money DepositDown payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.
EasementA right, privilege or interest limited to a specific purpose that one party has in the land of another.

Hazard Insurance - Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.

Impounds - A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.

Legal Description - A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

Lien - A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.

Mortgage - The instrument by which real property is pledged as security for repayment of a loan.
PITIA payment that combines Principal, Interest, Taxes, and Insurance.

Power of Attorney - A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”

Purchase Agreement - The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.

Quitclaim Deed - A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title by the grantor.

Recording - Filing documents affecting real property with the County Recorder as a matter of public record.



Positive Economic News

Positive news lately.  Unemployment rates are lowering.  The Kiplinger Letter (Nov.23, 2011) states that "housing prices will stop sinking next spring.  Come 2013, a modest 3-4% average gain. "

The homes are looking affordable again, in Southern California.  In many newly built areas of Orange County, the short sales and bank owned dominate the sales.  In places like Talega, San Clemente, these distressed sales represent about 80% of the sales.  But most older established neighborhoods have lower distressed sales, 20-30%, for example.

Are there millions of households waiting to buy?  Many recent college graduates and newly married couples have been waiting to buy.  As the job market stabalizes and improves, I am expecting to see many more buyers emerge.


Legal Issues in Real Estate

There are many legal issues in real estate.   Many times, you may need to get a real estate attorney involved.

For example, what if the property is in a family trust, and the family member says they have authorization to list it for sale.  The listing agent needs to see documentation that there is written permission for that family member to list the property.  You do not want to get into escrow and find out the rest of the family members in the trust do not agree to the sale.

A good Realtor should offer you referrals to real estate attorneys when you need it.


Buyers Need to get Pre-Approved with a Lender

In today's real estate market, there are many Realtors ready to take Buyers out to look at homes.   However, many times the Buyers have not spoken to a lender to find out exactly how much they can borrow.  Why is this important?   Many buyers are finding it harder to get a loan than in the past.

Many lenders have pulled back the easy loan requirements we saw up to 2006.  Most buyers think that if they have a job and about 20% in the bank, they can go out and look at homes to buy.  The trick is when it is time to write an offer.

Most listing agents require a lender letter, showing some sort of Pre-Approval, before they present the offer to the Homeowner.  This display of the Buyers seriousness and true intent to close the deal goes a long way in making the Buyers offer look solid.   If a Buyer has not talked to a lender, the best time is not when it is time to write an offer.

Most lenders ask for some documentation, tax returns, bank statements, pay check stubs, and credit reports.  These items take time for the buyer to get to the lender and also take time to be reviewed.  And of course, most agents are writing offers on weekends and at night

So, is the best time for a Buyer to find out what they can borrow before they go out and look at homes?  YES!   If a Buyer is asking a lender after they have picked out their home, we are just asking the lending institution to go back to 2005, when lenders made loans for what you wanted, not what you could afford.

For the sellers, a pre-approved buyer is a sign that the loan will probably be approved, since it was well thought out and the buyer can actually afford the loan.  So, get the buyers to the lenders, before going out in a car with a Realtor!

 So, Buyers, please get Pre-Approved with a lender.


Interest rates and the economic factors that affect rates.

Risk factors which cause interest rates to move:
- Inflation: High inflation, high interest rates. Low inflation, low rates
- Unemployment : low and full employment, rates tend to raise. High unemployment usually means lower interest rates.
- Stock Market : Bullish stock market, lower interest rates. Strong stock market, strong economy interest rates move higher.
- Consumers: Economies are driven by the consumer, if they are spending, the economy is doing well and rates tend to increase. If the consumer is not spending, interest rates tend to move down.
- Turmoil and uncertainty: Outside, unforeseen and unusual events tend to drive interest rates, in the USA, down. Depending on the event, investors usually gravitate to “safe haven” investments in times of uncertainty. The US Bond market is that place. When investors buy US Bonds, interest rates decline. When these events pass or the market feels comfortable with a perceived or real outcome of these events, investors tend to sell bonds and move into other investments, which increase rates.
- Gross Domestic Product (GDP), Gross National Product (GNP), Consumer Price Index (CPI): Strength in any of these indices tend to move interest rates higher, weakness tend to move rates down.
- The Government: Monetary Policy can cause movements in rates. Tight policy means rates should increase, loose policy means the government is trying to generate a demand for money and rates tend to fall.
-Lastly, with all of this said, rates also move based on expectations/ rumors and realities/ facts. These can move a market for a short period but do not change the overall direction of the interest rate market.
(In other words, information deemed reliable but not guaranteed)

Or as I like to summarize, uncertainty drives interest rates down. 

Save Money on Mortgage Insurance

Save Money on Mortgage Insurance

When borrowers do not have a 20% down payment they are required to have mortgage insurance on their loan. With FHA, the government insures the loan. When purchasing Conventional, private mortgage insurance companies insure the loan. Either way the additional monthly cost limits the borrower’s purchasing power or for how much they qualify for.

 As an example, on a sales price of $400,000, the monthly mortgage insurance premium for a 3.5% down payment with FHA is $370.  For a 5% down payment with Conventional financing, the payment is $298. These payments require the borrower to earn an additional $8,800 a year in order to qualify for the loan as opposed to a loan in the same amount without mortgage insurance. The solution is to pay up-front mortgage insurance on Conventional loans eliminating the monthly payment.


Private mortgage insurance companies allow a one-time up-front lump sum to be paid to them which will allow the borrower to not have the monthly mortgage insurance premium. The amount is considered part of the closing costs and can also be paid by a credit from the seller.


Typically, monthly mortgage insurance remains on the loan until the principal balance is at 78% of the value of the home down, from the original 95%. One could assume that would take a minimum of 5 years. If the monthly premium is $298 the amount is almost $18,000 in mortgage insurance paid in the first 5 years.


The one-time up-front lump sum premium in this example is $7,410. This is less than half the cost of paying it for at least 5 years. There would be no monthly payment of $298 increasing the borrower’s buying power by $60,000 on a sales price and allows for easier qualifying by $8,800 less income required. The cost of paying the up-front insurance is recouped in 2 years with this savings.

Of course, talk to your lender to confirm how this affects you.



Governor Brown signed into law on July 15, 2011 a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior (1st and 2nd lenders) lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.

Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.


Essentially, what this means to sellers is that the law now prohibits any lender from pursuing the seller for the deficiency after the sale closes. In the past, the 2nd (or junior) lienholders would often try to collect on their loss by selling their note to a collection agency. This will now become an illegal practice and will provide sellers with peace-of-mind that the transaction is a closed chapter once the sale is complete. This law is fully set forth as Senate Bill 458 (Corbett)

San Onofre Nuclear Generating Station (SONGS) San Clemente,CA

What is in place for San Onofre Nuclear Generating Station (SONGS) to deal with a Earthquake or a Tsunami?

The plant has reinforced sea wall 30 feet above sea level.  The largest recorded Tsunami in California was 21 feet in Crescent City in 1964.

Topography and Geography:
Tsunamis from distant sources affect northern California more than Southern California.
Local Tsunamis are unlikely to be caused by the major faults of San Andreas.  Only earthquakes in the "transverse ranges off Santa Barbara are thought to cause local tsunamis due to the verticle sea floor placement.

Automatic Shut Down: mechanism in response  to movement.  

Containment Vessel at SONGS: outer layer is 3-7 feet of reinforced concrete lined with 1/2 inch steel liner.  In Japan, this layer is 18 inches and hold a much smaller volume.

Power Plant Design: Songs produces power in a different design than the plants in Japan.  Inherent to their design, SONGS reactors are at much lower risk  of core exposure and radiation release.
Back UP Generators:  Diesel generators are designed to provide power for seven days.  

Short sales & buyers satisfaction

California Association of Realtors reported that fewer than 3 of 5 short sales close in California.  (03-08-2011).   Many REALTORS report that the lenders are difficult or extremely difficult to work with, while few reported it was easy.

The lenders have a lack of standardization.  The lender approvals for short sales have been "evolving" for about four years.  They are not streamlined.  The lenders are not ready to work on short sales.  This leads to frustration for the buyers, sellers, and Realtors.

Hello world!

Keep It Smooth with Difficult Clients

In the real estate business, you're bound to come across clients and customers with challenging personalities.  Here's how to stay cool and make sure those difficulties don't jeopardize the transaction.

1.  Learn your customers objectives.  That will give you a better perspective.

2.  Make a plan to learn their expectations.  Does the buyer expect the home to be delivered in pristine condition?  Does the seller think that it is a "fixer" and is expecting a construction crew to show up the day after close?  

3.  Review all details of upcoming steps of the escrow process with your client.  A properly detailed plan achieves the best results.  Everyone likes to be kept informed, too.