Mykel's Blog

 Welcome to Rialto!

Rialto-- The City of Rialto can be found in the heart of the fastest growing metropolitan region in the United States...the Inland Empire. Rialto is the area's transportation axis and has a growing industrial base. Rialto's industrial parks have access to four major freeways, rail service,and UPS regional headquarters is only minutes away. Rialto has one of the lowest crime rates in the Inland Empire, and is rated one of the Inland Empire's least expensive cities in which to do business. 

Welcome to Ontario!

Ontario-- Welcome to the City of Ontario, one of California's first planned communities. Our City's Canadian founders arrived in 1880. Nourished by their business bravado and engineering brilliance, the City of Ontario grew to become an economic leader in Southern California. Today, growing recognition of the City of Ontario's prominent role in Southern California and increasing importance to the state, national and international economies is greatly attributable to the Mayor and City Council's aggressive economic development strategies, vision and determination to shape events and create Ontario's future.

If you are a California REO agent, the following is a list of some of the California cities that are have or are adopting new ordinances and enforcing existing ones requiring the registration and maintenance of vacant REO properties. 

Sacramento, Stockton, Merced, Fresno, Chula Vista, Santee, Palmdale, Murrieta, Temecula, Lake Elsinore, Hemet, Indio, Desert Hot Springs.

These Ordinances are not just California specific. Under these new ordinances the beneficiary of an abandoned property is required to inspect and register the property, within 10 days of vacancy. Registration fees can range from $75.00 up. If the lenders fail to comply with the ordinance they could face civil penalties of $100 per day for failing to register, $250 for allowing the lawn to die and $500 for having green swimming pools. Some of the city ordinances allow fines to go as high as $100,000 and could be used to issue a lien against the property.  

The threats of imposing significant civil penalties tend to provide significant motivation to lenders and dissuade the neglect of their REO homes.  Cities hope that maintaining the empty homes will help keep property values high, avoid blight, discourage criminal activity and reduce the amount of calls to code enforcement departments.

If you are an REO agent, it's important to keep your REO asset manager up to date with the rapidly changing Vacant Home Registration and Maintenance requirements so they can keep their lenders in compliance with the provisions of the ordinance to avoid large tax lien assessments against their REO properties.

We've all seen advertisements in the paper, the mail and online about properties being sold to the public at "auction". These ads entice buyers to attend by advertising unrealistically low prices; then after you've registered, they disclose the advertised price is simply the starting bid. What they don't reveal is that the seller's Reserve Price (The lowest price they will sell for)  is substantially higher.  Some auctions also require you to make a non-refundable deposit immediately after bidding and pay an additional ‘Buyers Premium' that could add up to 6% or more to your purchase price. These ‘auctions' are nothing more than advertising schemes designed to entice buyers into participating in the "auction experience".  The more people that attend these "auctions", the more the excitement; the more the excitement, the higher the bidding.  

These auctions are great at creating huge profits for the auction company and the seller, but rarely prove profitable for the average buyer.  Most buyers have found that they could buy a similar property, without all the hype and additional buyers premiums and fees directly from a real estate agent and may even get the bank to pay for their closing costs, repairs or other credits and provide for inspection periods and your initial deposit is fully refundable.

There is no mystery to the REO market. There's no ‘secret' or ‘system' that you need to buy on TV. Any experienced REO agent can provide all of the "inside information" you'll ever need. Developing a good relationship with one is your best way to buying the best homes at the best price. They'll be able to provide access to available REO properties and provide advance notice of properties soon to become available.

The very best deals are long gone before most even know they are available. The properties that remain are left for everyone else to sift through. How do you get access to the best properties?  By making your first step finding an experienced REO agent.

Find the Right REO agent

Finding the right agent to represent you may be the most difficult part of the process. Keeping a good agent is even harder. Good agents, that are really familiar with the REO market, will typically have a long list of clients looking for a particular type of property. The very best homes, at the very best prices go to, wouldn't you guess, their very best clients. It takes a huge investment of their time to scour through all of the properties entering the market and these agents and their clients will need to make immediate, educated decisions or . . . you may end up last in a long list of offers. The early bird truly gets the worm!  If your agent has called you about multiple properties and you have not responded immediately or you are indecisive, you may just end up on the bottom of their list of clients to call.

What to Expect

An experienced REO agent will ask you more questions than you ask them so, be prepared.  Having a pre-approval through a direct lender or, proof of available cash will be on the top of their list of things for you to have. Other factors they'll consider are whether the home will be your primary residence or a rental.

If an agent doesn't interview you before taking you on as a client, you may want to stop and ask yourself why.  Even if you're their only client, how can they find what you're looking for if they don't know what you're looking for.  The time to ask questions about your motivation and goals is not during the process, but before it!  A well qualified REO agent will know this.

Where to Look

Active Rain has a great selection of qualified REO agents.  While you're here, give yourself the ultimate advantage by finding one now. 

Over the last couple of weeks, I have had a lot of visitors and a lot of phone calls.  The subject always got around to the market and everybody had an opinion (you know what they say about that :-)  But there was a commonality in it all.  Everybody agreed that for the housing market to rebound, three things have to happen:

Supply Must Meet Demand

The present inventory of unsold new homes must be absorbed. Single family housing starts are now running at less than 500,000 a year. The normal demand, based on the emerging market, is closer to 1 million units a year. As the first time homebuyer's market heats up the National Association of Homebuilders anticipates sales to rise to about 700,000 by the end of '09. This means that demand will soon exceed supply by as much as 250,000 a year. This will create a downward pressure on comparable existing homes that are listed at a higher price.

Affordability Will Need to Meet Demand

There is a growing demand for housing.  Over the past decade lax financing guidelines have shifted the new home market to upscale housing, but Affordability is the new emerging market that promises to reenergize our current housing market.  Historically, First time buyers have always been the foundation for the housing market and much of the housing supply has always come from affordable new home construction.   Pick up any New Home magazine to see how the home building industry is responding to the dramatic shift in demand; discounting existing inventory through incentives and building a smaller more affordable product.

For example: Very few 4,500 square foot homes and many more 1,800 square foot models.

Interest Rates Need To Remain Low

The Feds hold this wildcard!  Economists feel that if rates stay low, housing will win. If inflation starts to creep in and the Feds are forced to raise the rates, all bets are off.

The upside to all of this is that for the first time in over 10 years we're reaching a first-time buyer's equilibrium, where the payments on a new home could equal the cost of renting one.

Well after attending last year, I posted this to Dan Waterman's Universal REO blog.

 "Dan, I just returned from the Annual Five Star Default Servicing Conference and Expo in Dallas last week. It was an incredible education and networking event and was attended by Loan Servicers, Loss Mitigation professionals, Auction companies, Appraisers, Title companies, REO Preservation companies, brokers/agents and lenders. It was truly the 5-star event expected.

The first 2 days our team spent attending three of the six Five Star Certification Classes, ‘Providing Broker Price Opinions,' ‘Home Retention' and ‘REO A - Z.'

The next 2 days offered a myriad of informative 2-hour sessions. We took advantage of attending classes such as ‘Setting Up Shop,' ‘Occupied REO and Personal Property,' ‘Facilitating Successful Short Sales,' ‘ REOTrans Certification' and ‘Auctions, Alternative Disposition.'

On Wednesday, we attended a 4th Five Star Certification class on ‘Real Estate and the Government: Making It Work For You.' The first part of the class we learned the specific steps necessary to work with HUD. The second part of the class provided some invaluable information about working with Freddie Mac REOs.

The highlight of the Five Star Conference for me was the Lender/Servicer Open House that ran all day Tuesday. This Open House gave the attendees an up close and personal, straight from the Servicers insight into what it takes to get their business. It was a phenomenal meet-and-greet opportunity for anyone looking to develop new business leads and stay in the know.

I gained so much knowledge and made so many professional contacts at the conference that I know will enhance my business. I can't wait to attend again next year!"

It's next year and I am extremely excited to attend.  Still not sure if it's worth your time and money?  Well, let's recap - my ex team members now collectively work with over 8 different REO sources and have well over 100 REO listings.

All I can say is that it was definitely well worth the money we spent!  Looking forward to hearing your success stories this time next year.

BPO is the acronym for Broker's Price Opinion, a term that refers to an evaluation report of a residential property that is usually conducted by a local, licensed real estate professional. The report combines information from a drive-by exterior examination, external data sources, previous sale data, property assessment data, recent comparable sales and current neighborhood listings, as well as a photograph of the subject property.

I have a newfound true respect for a well prepared BPO and having done a ton of them when I was a Realtor looking to break into REOs, I also have a real respect for the Agent that takes the time to prepare a good thorough well documented report.

The BPOs you provide have a significant impact on the value at which REO lenders market their property. Every effort should be made to provide accurate and detailed information in your evaluation of a property and its local market.

The Sales Specialists expect each and every Broker Price Opinion they receive to include narrative comments related to local market conditions; the subject location; property habitability comments; marketing recommendations; broker's conclusion of 90-120 day suggested list and sale price;  descriptive data on the advantages/disadvantages of the subject property condition and immediate neighborhood characteristics; additional comments that include sales trends and recent sales prices of similar properties;  property images; as well as an analysis of three current listings and three of the most recent sales of comparable properties.

Final analysis of all this applicable data results in the ability of the Sales Specialist, to determine a suggested list and sales price on the Client's asset. 

Preparing a good BPO could get your foot in the door of an REO and can definitely keep it there once you've arrived. Check out these resources to sharpen your skills-

• Agent's looking for a Free step-by-step on doing BPOs, check out Dan Waterman's Universal REO blog's  Performing a Broker Price Opinion (BPO): Step 1
• First American Residential Value View offers training and certification.  They have an excellent BPO manual that serves as an invaluable resource. 
• Increase your BPO credibility by obtaining NABPOP BPO Certification. Learn the complete BPO process in detail. 
• Five Star Institute offers an online BPO certification course. This one-day course is presented in a fast-paced, advanced format, showing you how to correct common errors using practical case studies.

Agent's looking to really step up their game should plan on attending this year's Five Star Conference in Dallas...more on that in my next post.

    Map of Neighborhood            School Reports for Terra Vista

Victoria Gardens . . . It's A Great Place To Live!

Built in a setting that is reminiscent of a traditional main street, Victoria Gardens retail district is the keystone of this master planned community (located between Base Line Road, Foothill Boulevard - Route 66, the 15 Freeway, and the Day Creek Channel). Victoria Gardens excellent location and accessibility from all of the major freeways within San Bernardino along with its unique mixture of regional and neighborhood shopping, restaurants, entertainment, professional, civic and cultural activities makes it one of the most desired addresses in the Inland Empire.

A new Cultural Center, comprised of a library and children's theater, is coming soon and will overlook the town square and form the centerpiece of this project. This community represents a distinct departure from all other communities in the surrounding region and is a leading example of the smart growth Rancho Cucamonga has become known for.

Total build out of the community will be comprised of retail stores, shops, restaurants, cafes, bookstores, theaters, a Town Square, homes and professional offices all located within easy walking distance from each other and will take place over a 10 year period. Victoria Gardens promises to provide a truly unique lifestyle for its residents. This comprehensive master planned community will ultimately consist of a mix of single and multi-family homes with residential prices in the community currently ranging from the low $400,000 for condos to the mid $800,000 range for single-family residences. Victoria Gardens will provide a strong emphasis on the community and a perfect atmosphere to stroll, shop, enjoy fine dining, and participate in civic and cultural events.

        Map of Neighborhood                                                           School Reports for Victoria Gardens