Real Estate Investing with Short Sales

Now is the time for folks who can take advantage of today's real estate market to beef up their investment portfolios with short sales. Banks are closing them faster than ever before and, from start to finish, it’s not as painful anymore. There are plenty to choose from, and short sale homes make good investments because they are priced at or below market. As a general rule, short sales take a little longer to buy than the foreclosed homes (but not always) and they are in much better condition most of the time.

As agents, it’s important to remind our buyers not to be afraid of short sales. In many cases, the banks will pay closing costs and an HOA transfer fee. This is not always the case in a foreclosure sale. Some of the home foreclosures are in pretty rough condition and they will cost some cash to fix up enough to be rented or lived in.

Consider talking to your investors and buyers about short sales as we’ve seen a jump in short sale purchases by investors which is great news for short sale agents.

For more information on purchasing short sale properties as an investment please contact me directly.

Toni Patillo & Associates
Broker Of Record l DRE#0313287
Keller Williams Realty Santa Monica
2701 Ocean Park Blvd., Ste. 140 • Santa Monica, CA 90405
Office (310) 482-2035 • Fax(424) 744-4148

Report: Distressed Homes Accounted for Nearly Half of January Sales

The percentage of distressed properties in home purchase transactions climbed to its highest level in nearly a year last month, according to a report released Tuesday by Campbell Surveys in conjunction with Inside Mortgage Finance.

The distressed property index tracked by the two companies’ HousingPulse survey indicates that the share of sales transactions involving distressed homes – generally REOs and short sales – climbed from 47.2 percent in December to 49.6 percent in January. In November, the distressed sales share registered 44.5 percent.

According to the report, at the current rate of increase, distressed property transactions could account for the majority of home sales within just a few months.

Already, in the key state of California, the survey found distressed property transactions account for 66 percent of the market. In Florida, distressed property sales are making up 63 percent of the market, while in the combined area of Arizona and Nevada, distressed property transactions are a staggering 72 percent of home sales, according to the industry report.

Comments from real estate agents collected as part of the HousingPulse survey confirmed the growing share of distressed properties.

“I have noticed that less than 40 percent of what is on the market is property that is just ‘For Sale’ and not a short sale or REO,” commented one agent in California.

“We are primarily an REO/short sale market with [only] about 20 percent conventional sale[s] at this juncture,” added an agent in Nevada.

“Short sales occupy 65 percent of market share, REOs occupy 30 percent of market share, non-distressed are 5 percent or less,” reported another agent in Nevada.

The latest HousingPulse survey also found a sharp dip in first-time homebuyer activity last month. The drop came at the same time long-term mortgage rates climbed to above 5 percent and the Federal Housing Administration (FHA) increased the fees associated with low down payment mortgages.

The first-time homebuyer share of home sales was 35.0 percent in January, according to the report, down from 37.7 percent in December. The survey found that FHA lending also took a tumble, falling from 30.2 percent of financing options in December to 27.7 percent in January
Campbell Surveys says the increase in distressed properties, combined with a reduction in first-time homebuyers, is causing downward pricing pressure to build in the market, especially for the categories of damaged REO and move-in ready REO. Over the past 12 months, the report says time-on-market for the REO categories has strongly increased while the average number of offers has decreased.

Also over the past 12 months, the firm’s market data shows that average prices for damaged REO have declined by 16 percent while average prices for move-in ready REO have declined 20 percent. Non-distressed prices have declined only 4 percent while the prices for short sales have been nearly flat.

The HousingPulse survey polls more than 3,000 real estate agents nationwide each month to provide market data on home sales and mortgage usage patterns.

Source: DSNEWS

Million Dollar Home Sales on the Rise

Despite a decline in California home sales last year, the number of homes sold in the Golden State for $1 million or more in 2010 rose for the first time since 2005, according to a study from San Diego-based DataQuick Information Systems.

The research firm notes that California experienced a 9 percent year-over-year drop in total home sales in 2010, including all price levels.

Million-dollar sales peaked in 2005 at 54,773 and then declined each year through 2009. In 2010, 22,529 homes sold for $1 million or more in California, a 21 percent increase from 18,621 in 2009.

DataQuick says about one in 20 homes sold for a million dollars in 2010. It was one in 25 in 2009 and one in 16 in 2008.

“Prestige home buyers respond to a different set of motivations than the rest of us,” said John Walsh, DataQuick president. “Their decisions are less dependent on jobs, prices, and interest rates and more on how their

portfolio is doing. When the financial world was full of uncertainty a couple of years back and the jumbo loan market dried up, luxury sales plummeted.”

Walsh continued, “As the economy started its top down recovery, some wealthy buyers went looking for a bargain. Additionally, there has always been a safe-haven component in the million-dollar market that attracts wealth.”

The vast majority of California’s million-dollar-plus home sales last year were in San Marino in Los Angeles County, Los Altos in Santa Clara County, Atherton and Hillsborough in San Mateo County, and Rancho Santa Fe in San Diego County.

According to DataQuick’s report, statewide 463 homes sold for more than $5 million last year, 304 were in the $4 million to $5 million range, 782 were in the $3 million to $4 million range, 2,333 were in the $2 million to $3 million range, and the rest-nearly 79 percent-sold for between $1 million and $2 million.

Based on public records, the most expensive confirmed purchase in 2010 sold for $50 million. The Bel Air residence was the state’s largest million-dollar home sold last year at 35,378 square feet with 15 bedrooms and 7 bathrooms on about 2.2 acres.

Newly built homes accounted for 5.9 percent of last year’s $1 million-plus sales, down from 6.5 percent in 2009. Condo sales made up 8 percent of the million-dollar category last year, down from 8.3 percent the year before.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies, and industry analysts.

Source: DS News

Planned Luxury Development Opens in Western Malibu

A luxury planned community has opened at the western end of Malibu and listed its beachfront showcase home at $17 million.

Called MariSol Malibu, the gated community will contain 17 properties on 80 acres. The 13 oceanfront estate sites have beach frontage ranging from 130 to 210 feet.

The showcase estate, sited on an acre, has 6,800 square feet of living space containing a 60-foot-wide great room with 14-foot ceilings, two bars, a refrigerated wine cellar, a gym, two master bedroom suites, two additional bedrooms and six bathrooms. Outdoors is an additional 3,000 square feet of sheltered courtyard space. There is parking for 10 cars.

For more information please contact Toni Patillo directly.

Toni Patillo & Associates
Broker Of Record l DRE#0313287
Keller Williams Realty Santa Monica
2701 Ocean Park Blvd., Ste. 140 • Santa Monica, CA 90405
Office (310) 482-2035 • Fax(424) 744-4148

Press Release: Los Angeles Short Sales Bank Negotiation Expert Launches Nationwide Service For Real Estate Agents

Short sale negotiation firm L.A. City Short Sales launches nationwide service to help real estate agents close more deals and save time by handling bank negotiations for them.

Online PR News – 09-February-2011 –Santa Monica, CA - Short sale negotiation firm L.A. City Short Sales launches nationwide service to help real estate agents close more deals and save time by handling bank negotiations for them.

Toni Patillo, owner and principal Broker of L.A. City Short Sales and Toni Patillo & Associates in Santa Monica, says that if agents are not doing short sale transactions, they are not doing as much business as they could be these days. The problem is that short sales are much more difficult and time consuming than most agents realize.

While she says that handling distressed properties can be a time killer for most real estate professionals, she has proven ways to achieve a much higher success rate than most agents acting alone.

"Our mission is simple: To close more deals between banks, sellers and buyers while removing the headache of the short sale process for referring agents."

She says that as a result of her firm's high success rate, agents who refer short sales to her firm L.A. City Short Sales can still earn a great income. Commission splits are generous and vary from 25% for straight referrals to 50/50 co-listing arrangements depending on the experience and desired involvement of the referring agent.

“We work with a lot of agents who have short sale experience and want some involvement in the transaction, but a large percentage of our affiliate agents simply refer their short sale listings to us. We just write them a check when we complete the deal.”

"We work with a lot of agents who have short sale experience and want some involvement in the transaction, but a large percentage of our affiliate agents simply refer short sale listings to us. We just write them a check when we complete the deal."

Elizabeth Stein of Team Stein in the Pacific Palisades, one of Patillo's referring agents, agrees. Stein is a believer, and says that for them, there's no better way to make a living helping people in the reality of today's difficult real estate market.

"Referring short sale business to Toni has been very rewarding. When I come across a seller that is behind on payments or even a competing agent that needs assistance, she's the first person I call to step in and save the day for them."

As an experienced short sale negotiator and expert co-author of the book "Should I Short Sale My Home," Patillo has an intimate view of the short sale process from the points of view of the distressed property owner, the listing specialist and the negotiating agent. She says her compassion for the seller's predicament drives her to get the best deal possible from banks.
"With the poor job market and arguably the worst real estate market in history, homeowners who are behind on their mortgage payments and need to sell their home are in a very vulnerable position. It's easy for them to be taken advantage of, and our job is to help them avoid that."

About Toni Patillo

Ms. Patillo is currently the Broker of Record for the Keller Williams Santa Monica and Pacific Palisades Market Centers and is a member of the Beverly Hills Board of Realtors, Southland Regional Association of Realtors, California Association of Realtors, Malibu Association of Realtors, South Bay Association of Realtors, and the National Association of Realtors.

She is also a member of PartnersFirst, a Nationwide Real Estate Network that specializes in Pre-foreclosure. Toni has multiple certifications and designations in Loan Modifications, Pre-Foreclosures, REO’s (Bank-Owned Properties), and Short Sales.

At the KW Market Centers, she oversees the sales production of over 250 sales agents. Toni has consistently achieved the top 3% of all Sales Professionals within both the Prudential and Keller Williams, real estate networks nationally. While her specialty is listing residential housing with a strong focus on distressed properties, including short sales, pre-foreclosures, and bank-owned properties, she's expanding her mastery into the Luxury Home & Commercial marketplace.

For more information, please contact:

Toni Patillo, CLMS, CSSS, CREOS
L.A. City Short Sales
Toni Patillo & Associates
2701 Ocean Park Blvd, #140
Santa Monica, CA 90405
310-482-2035

http://calltoni.com
http://lacityshortsales.com
http://tonipatillo.com

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California AG to Use $6.5M Settlement to Help Foreclosed Homeowners

California Attorney General Kamala Harris announced Friday that the $6.5 million settlement from two former Countrywide Financial Corp. executives will be used to establish a fund to help foreclosed homeowners.

The settlement comes from a litigation that began more than two years ago against Angelo Mozilo and David Sambol. According to the lawsuit, Countrywide lured buyers with low teaser rates, sometimes as low as 1 percent, and failed to inform them of the downsides of adjustable-rate loans, which included rapidly rising rates after the teaser rates expired, big prepayment penalties, and negative amortization that caused a borrower’s total loan costs to rise even when additional payments were being made.

The lawsuit alleged that Mozilo and Sambol knew of these practices and did nothing to stop them.

The suit also alleged that Countrywide loosed its mortgage standards and verification procedures in order to make more loans in an attempt to increase its share of the nationwide mortgage market.

“Our prior settlement with Countrywide provided restitution for foreclosed homeowners and set in motion loan modification programs that have helped tens of thousands of consumers,” Attorney General Harris said.

She continued, “We will use the current settlement to help Californians affected by the mortgage crisis by providing grants to agencies that help homeowners facing foreclosure with relocation assistance and providing money to state and local agencies to prosecute mortgage fraud.” 


According to the attorney general’s office, during the 18 months ending last September, 282,000 California homes went into foreclosure, and in the last three months of 2010, notices of default were filed on another 70,000 homes in the state. 
The California Foreclosure Crisis Relief Fund will combat the effects of California’s high rates of foreclosure and mortgage delinquency.

Bank of America acquired Countrywide’s loan portfolio and assumed responsibility to make restitution to mortgage holders who qualify under the terms of the Attorney General’s 2008 settlement.

Source: DS News

Another Decline in California Foreclosure Activity

Another Decline in California Foreclosure Activity

The number of California homes going into foreclosure dropped again during the fourth quarter of 2010 to its lowest level in more than three years, the result of shifting market conditions as well as evolving lender and mortgage servicer policies, a real estate information service reported.
A total of 69,799 Notices of Default (NoDs) were recorded at county recorders offices during the October-to-December period. That was down 16.2 percent from 83,261 for the prior quarter, and down 17.5 percent from 84,568 in fourth quarter 2009, according to San Diego-based DataQuick Information Systems.

Last quarter's activity was the lowest since 53,943 NoDs were recorded in the second quarter of 2007. It was just over half the record 135,431 default notices recorded in the first quarter of 2009.

"We don't know how much of the decline is due to less household financial distress, and how much is due to shifts in lender and servicer foreclosure policies. The level of default activity would certainly be higher if it weren't for alternative strategies such as short sales, or even lengthening grace periods," said John Walsh, DataQuick president.

"The institutions that hold these loans in their portfolios will do whatever it takes to lessen their losses, including waiting. An additional factor is all the turbulence when it comes to the formalities of the foreclosure process," he said.

While most of the loans that went into default last quarter were originated during the 2005-2007 period, the median origination quarter for defaulted loans remained third-quarter 2006. That has been the case for over a year, indicating that weak underwriting standards peaked then.

Most of the loans made in 2006 are owned and/or serviced by institutions other than those that made the loans.

The most active "beneficiaries" in the formal foreclosure process last quarter were Bank of America (16,199), Wells Fargo (10,287), Mortgage Electronic Registration Systems, also called MERS (5,315) and JP Morgan Chase (5,258).

The "servicers" (or the Trustees in the formal foreclosure process) that pursued the highest number of defaults last quarter were ReconTrust Co (mostly for Bank of America and MERS), Quality Loan Service Corp (Bank of America and JP Morgan Chase), Cal-Western Reconveyance (Wells Fargo) and NDEx West (Wells Fargo).

California's priciest zip codes collectively saw mortgage defaults buck the market-wide trend and rise slightly quarter-to-quarter, while their defaults fell less on a year-over-year basis than in the overall market. The state's 82 zip codes with median sale prices of $800,000 or more in 2010 logged a 2.0 percent quarter-to-quarter increase in default notices and a 9.3 percent year-over-year decline.

At the other end of the price spectrum, zips with 2010 medians of $200,000 or less saw fourth-quarter defaults drop 22.2 percent from the prior quarter and drop 19.5 percent from a year ago.

But the concentration of defaults remains much higher in lower-cost areas: Last quarter, zips with medians of $200,000 or less collectively saw 11.3 default notices filed per 1,000 homes. That compares with just 2.8 default notices filed per 1,000 homes in zips with $800,000-plus medians, and 8.0 filed per 1,000 homes for all zips statewide.

On primary mortgages, California homeowners were a median six months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $16,368 on a median $325,775 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $3,759 on a median $66,653 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

San Diego-based DataQuick Information Systems monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 69,799 default notices were filed last quarter, they involved 68,338 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).

Mortgages were least likely to go into default in San Francisco, Marin and San Mateo counties. The probability was highest in Madera, San Joaquin and Stanislaus counties. Those patterns are consistent with the historical norm.

Over half of the homes statewide that received an NOD in a recent 18-month period have since been foreclosed on or sold (e.g. short sales).

Of the homes that received NODs between January 2009 and June 2010, 39 percent have been foreclosed on and about 13 percent avoided foreclosure but were sold. The status of the remaining 48 percent of those NOD recipients isn't clear, but would include those attempting short sales or who brought their loan payments current or got loan modifications, and those whose foreclosures are still in process.

At this point one year ago, looking back at the January 2008-through-June 2009 period, a higher percentage - 46 percent - of the homes that got NODs had been foreclosed on, and a lower percentage - 9 percent - had avoided foreclosure and been sold on the open market.

Trustees Deeds recorded (TDs), or the actual loss of a home to foreclosure, totaled 35,431 during the fourth quarter. That was down 21.9 percent from 45,377 for the prior quarter, and down 30.6 percent from 51,060 for fourth-quarter 2009. Last quarter's total was the lowest since 31,676 TDs were recorded during fourth-quarter 2007. The all-time peak was 79,511 in third-quarter 2008.

In the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter 1996. The state's all-time low was 637 in the second quarter of 2005, DataQuick reported.

There are 8.6 million houses and condos in the state.

As with mortgage defaults, the filing of Trustees Deeds tended to fall the most in the lower-cost areas, where foreclosures had soared in recent years. Collectively, zip codes with medians of $200,000 or less saw the number of homes foreclosed on drop 25.6 percent from the prior quarter and 33.8 percent from a year earlier. That compares with a 16.1 percent quarter-to-quarter drop and a 17.1 year-over-year drop for California zip codes with $800,000-plus medians.

But just as with mortgage defaults, foreclosure concentrations remain far greater in the lower-cost areas: Zips with $200,000-and-below median sale prices logged 9.5 foreclosures per 1,000 homes last quarter. That compares with 5.4 foreclosures per 1,000 homes across all zip codes statewide and 1.0 foreclosures per 1,000 homes for the group of zips with $800,000-plus medians.

Foreclosure resales accounted for 37.5 percent of all California resale activity last quarter. It was 35.5 percent the prior quarter, and a year ago it was 40.6 percent. It peaked at 57.8 percent in the first quarter of 2009. Foreclosure resales varied significantly by county last quarter, from 11.3 percent in San Francisco County to 57.4 percent in Merced County.

On average, homes foreclosed on last quarter took 8.8 months to wind their way through the formal foreclosure process, beginning with an NOD. That's up from 8.7 months for the prior quarter and 7.0 months a year earlier. The increase could reflect, among other things, lender backlogs and paperwork problems and extra time needed to pursue loan modifications and short sales.

Of the 282,643 homes foreclosed on statewide in an 18-month period ending September 2010, about 77.0 percent have been resold. At this point a year ago, the comparable number was about 85.0 percent. It cannot be determined from public records how many of the unsold foreclosed properties are currently for sale, not for sale or have been made rentals (and therefore shouldn't be expected to sell anytime soon).

At formal foreclosure auctions held statewide last quarter, an estimated 22.1 percent of the foreclosed properties were bought by investors or others who don't appear to be lender or government entities. That was down from 22.7 percent the previous quarter and 25.0 percent a year ago, DataQuick reported.

Notices of Default (first step in foreclosure process)
houses and condos

County/Region 2009Q4 2010Q4 Yr/Yr%

Los Angeles 16,595 14,188 -14.5%
Orange 5,555 4,388 -21.0%
San Diego 6,536 4,917 -24.8%
Riverside 9,188 6,885 -25.1%
San Bernardino 7,290 5,744 -21.2%
Ventura 1,657 1,470 -11.3%
Imperial 503 376 -25.2%
SoCal 47,324 37,968 -19.8%

San Francisco 465 435 -6.5%
Alameda 2,806 2,660 -5.2%
Contra Costa 3,501 2,931 -16.3%
Santa Clara 2,816 2,325 -17.4%
San Mateo 903 820 -9.2%
Marin 305 276 -9.5%
Solano 1,652 1,441 -12.8%
Sonoma 878 884 0.7%
Napa 268 226 -15.7%
Bay Area 13,594 11,998 -11.7%

Santa Cruz 346 293 -15.3%
Santa Barbara 589 509 -13.6%
San Luis Obispo 436 364 -16.5%
Monterey 874 632 -27.7%
Coast 2,245 1,798 -19.9%

Sacramento 4,742 3,954 -16.6%
San Joaquin 2,513 1,989 -20.9%
Placer 1,118 988 -11.6%
Kern 2,602 2,011 -22.7%
Fresno 2,220 1,944 -12.4%
Madera 394 402 2.0%
Merced 876 645 -26.4%
Tulare 1,037 874 -15.7%
Yolo 373 319 -14.5%
El Dorado 475 463 -2.5%
Stanislaus 1,908 1,469 -23.0%
Kings 201 232 15.4%
San Benito 155 130 -16.1%
Yuba 213 210 -1.4%
Colusa 50 52 4.0%
Sutter 228 245 7.5%
Central Valley 19,105 15,927 -16.6%

Mountains* 816 663 -18.8%

North Calif* 1,484 1,445 -2.6%

Statewide* 84,568 69,799 -17.5%
includes additional counties

Trustees Deeds Recorded (signal homes were lost to foreclosure)
houses and condos


County/Region 2009Q4 2010Q4 Yr/Yr%

Los Angeles 8,467 5,597 -33.9%
Orange 2,235 1,693 -24.3%
San Diego 3,786 2,433 -35.7%
Riverside 6,472 3,942 -39.1%
San Bernardino 4,994 3,272 -34.5%
Ventura 761 630 -17.2%
Imperial 359 243 -32.3%
SoCal 27,074 17,810 -34.2%

San Francisco 174 156 -10.3%
Alameda 1,576 1,362 -13.6%
Contra Costa 2,151 1,559 -27.5%
Santa Clara 1,244 901 -27.6%
San Mateo 383 302 -21.1%
Marin 123 129 4.9%
Solano 1,087 786 -27.7%
Sonoma 541 443 -18.1%
Napa 185 126 -31.9%
Bay Area 7,464 5,764 -22.8%

Santa Cruz 162 134 -17.3%
Santa Barbara 325 250 -23.1%
San Luis Obispo 245 217 -11.4%
Monterey 589 353 -40.1%
Coast 1,321 954 -27.8%

Sacramento 3,365 2,398 -28.7%
San Joaquin 1,978 1,264 -36.1%
Placer 632 548 -13.3%
Kern 1,777 1,286 -27.6%
Fresno 1,520 1,159 -23.8%
Madera 395 256 -35.2%
Merced 856 453 -47.1%
Tulare 610 505 -17.2%
Yolo 219 158 -27.9%
El Dorado 264 213 -19.3%
Stanislaus 1,474 956 -35.1%
Kings 78 132 69.2%
San Benito 106 65 -38.7%
Yuba 191 135 -29.3%
Colusa 47 25 -46.8%
Sutter 199 105 -47.2%
Central Valley 13,711 9,658 -29.6%

Mountains* 482 373 -22.6%

North Calif* 1,008 872 -13.5%

Statewide* 51,060 35,431 -30.6%

* includes additional counties

Source: DataQuick Information Systems

In today's challenging Los Angeles real estate market, selecting the right real estate agent is crucial. It can make all the difference in the world. Whether you're planning on buying, selling, or you just have a question, feel free to call Toni Patillo. We service the Greater Los Angeles, the Westside, Beverly Hills, and more.

Toni Patillo & Associates
Broker Of Record l DRE#0313287
Keller Williams Realty Santa Monica
2701 Ocean Park Blvd., Ste. 140 • Santa Monica, CA 90405
Office (310) 482-2035 • Fax(424) 744-4148

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