Rising prices created a sense of urgency; buyers couldn’t buy fast enough. They wanted to own as soon as possible in order to take advantage of home-price appreciation that was rising rapidly in many areas.

This resulted in the housing bubble that burst in 2007. The housing market has been struggling ever since.

Nationally, home prices have declined 30 percent to the level they were in 2002. Even low interest rates, coupled with low home prices, haven’t been enough to ignite home sales.

Part of the problem is that there is still too much inventory of unsold foreclosure properties, mostly located in areas where people can’t find work.

Another factor holding the market back is the stringent mortgage qualification requirements. In the San Francisco Bay Area in 2006, more than 50 percent of home purchasers bought using loans that didn’t require conventional qualification, such as stated-income or no-cash-down mortgages. Those loans aren’t available today.

Many lenders today require a cash down payment equal to 20 percent of the purchase price. To get the best interest rate, your FICO (Fair Isaac Corp.) credit score needs to be 720 to 740. Before 2007, 620 got you a good rate. You also need to be able to verify a meticulous employment history.

The pool of qualified buyers has diminished significantly due to tightened lending criteria. Equity loss has kept many would-be trade-up buyers from moving forward. Of those who can afford to buy, many are nervous about buying now because of recent economic news indicating that the economy is slowing and unemployment is rising.

HOUSE-HUNTING TIP: This doesn’t mean that all homes aren’t selling, just a reduced number. This is because, in most cases, sellers are marketing their homes to fewer buyers. To be a successful seller in this environment, the goal is to create a sense of urgency by preparing the listing for sale and pricing it right for the market so that buyers feel that if they don’t buy it now, someone else will.

Sellers are often in denial about how much a buyer will pay for their home.

They have difficulty seeing their home from a buyer’s perspective. This is unfortunate, because buyers know current market value better than most sellers do.

Today’s buyers study the market carefully before they buy. They know the sale price of recent listings in the area that sold. They know when a listing is priced at, under or over market.

Sellers whose listings aren’t selling should ask their real estate agent to give them feedback about buyers’ reactions to their home. If the objections are about features that can’t be changed, like a location on a busy street, the list price will need to be adjusted to account for the incurable defect.

During a hot seller’s market, buyers often overlook incurable defects because they don’t want to miss out on swift appreciation. Affordability is motivating today’s buyers. They don’t expect to see appreciation soon.

In some places, prices could decline further before turning around. Low interest rates make homes more affordable for buyers. So do lower home prices. Overpriced listings reduce affordability, and they don’t sell.

THE CLOSING: The best time to reduce the price of an overpriced listing is as soon as the market indicates that it’s priced too high.

They are getting married in June and would like to purchase a home before then, so they have a home to move into after the wedding (they both still live with their parents). Is there anything they can do to resolve this problem?

A: Being a buyer in today’s market is nearly as frustrating as being a seller. You read and hear all day long about what a strong buyer’s market it’s supposed to be and what great deals there are to be had via foreclosures and short sales.

But when you start making offers on properties, you find that the banks are nowhere near as willing to negotiate as you expected, and that many of the bank-owned homes cannot be bought without prevailing over a sea of other offers.

Depressing and frustrating — yes. But there are some strategies they can and should put into play to better their chances going forward.

With an individual seller, you can minimize the chances of being outbid unawares in a couple of ways. You can put a very, very short time frame on your offer, eliminating a window of opportunity for other buyers to swoop in on the property.

Also, most listing agents in “regular” sales want their clients to get the highest possible price for their home, so it’s common for them to ring up any previous offerors to let them know when additional offers have come in, to give them an opportunity to increase their offers or otherwise make them more competitive.

You can’t force a bank to respond to your offer in a very short time frame, or in any time frame at all, for that matter.

But what your daughter and future son-in-law can do is go into these transactions with the lessons they’ve learned thus far.

Whatever it is that caused them to be interested in this property at this point in time could very well be inspiring other buyers to make an offer at the same exact time. So, even when their agent is told that there are no other offers at the time they make theirs, they need to do several things.

First, they need to enlist their agent to stay in very close contact with the listing agent — as often as two or three times a day is not overkill — once their offer is submitted.

Your daughter’s agent should not only be calling the listing agent frequently to check and see whether other offers have come in — they should also be asking the listing agent upfront to notify them if additional offers come in. That way, your daughter and her fiancé may at least get the chance to try to compete with the other offers.

Additionally, your daughter should consider changing her approach to formulating the price she offers for a home. She will have a better shot at getting a home if she offers a price more in line with the recent sales in the area, versus just offering something below or even at whatever the list price is on the assumption that she has no competition.

Every time she wants to make an offer, she and her mate should sit down with her agent and get an analysis of the recent sales of similar properties in the area. If she’s making an offer on a bank-owned property, she should look at those sorts of sales. It’s critical that she not only look at the recent comps’ list price, or sale price, but their list-price-to-sale-price ratio.

For example, if a home’s list price is $100,000 and it sells for $110,000, the list-price-to-sale-price ratio is 110 percent.

From what you’ve said, it seems that it’s pretty common for these homes to sell over asking. If she can work with her agent to determine how much, on average, over asking these homes typically sell for, then she can apply that ratio to the list price of the home for which she wants to place an offer.

So, for example, if the other homes are selling for 107 percent of their asking price and she is seriously interested in buying a home that is listed for $125,000, she would multiply $125,000 by 107 percent and consider an offer price of $133,750.

Yes, that may mean that she goes in with an offer over the asking price, even in a situation where she has been told there are no other offers. But if the recent comparable sales justify that value, and it is within the price range she can afford to pay, that may be necessary to avoid being chronically overbid and secure the home in which to start her family.

Some buyers get hung up on the idea that they are “overpaying” if they make an above-asking offer, but the reality is that the list price is not the actual price of the home — it’s a starting point for upwards or downwards negotiations, depending on the local market dynamics and how the list price was set vis-à-vis the fair market value of the home.

Getting a great deal is not necessarily the same as paying at or below asking; just think — if the list price is set too high, then offering to pay it isn’t a better deal than if you offer above-asking on a place where the list price is set way too low. This is why it’s so critical to rely heavily on an analysis of recent comparable sales to drive your offer price, rather than just on the list price or what the listing agent tells you.

Further, no house is a good deal if you don’t get it, which may be the learning that your daughter and her fiancé are experiencing. And given that prices have rolled back to 2003 levels in many areas, whatever they pay will undoubtedly be a great deal, from that perspective.

C.A.R.’s pending home sales index surveys more than 70 REALTOR® associations and multiple listing services, and uses 2008 sales levels as a benchmark. An index reading of 100 is equal to the average level of sales contract activity in 2008.
The index climbed to 93.6 in January, up from 82.4 in December, but down 2 percent from a year ago, CAR said, noting that pending sales typically rise after seasonal slowdowns in November and December.

“January’s pending sales should be reflected in higher existing sales activity in February and March and serve as a precursor to the spring home buying season,” C.A.R. President Beth L. Peerce said in a statement.

Distressed properties — short sales and bank-owned (REO) properties — accounted for 54 percent of pending sales statewide, up from 50 percent in December but down from 56 percent a year ago.

Distressed properties accounted for 70 percent or more of all sales in Kern, Sacramento, Riverside, San Bernardino and Solano counties.

REO properties accounted for 32 percent of pending sales, up from 30 percent in January but down from 37 percent a year ago, C.A.R. said.

Short sales, which accounted for 19 percent of pending sales in January 2010 and 20 percent of sales in December, represented 22 percent of last month’s pending sales.

Looking at all sales of single-family homes that closed escrow in January, the median price was $278,900 — down 8.6 percent from a revised $305,020 in December and down 2 percent from a year ago.

But at $265,500, the median price for short sales closing escrow in January was 28 percent less than the $367,150 median price for “conventional” properties. The median price for REO properties, at $198,000, was 46 percent less.

C.A.R.’s pending home sales index surveys more than 70 REALTOR® associations and multiple listing services, and uses 2008 sales levels as a benchmark. An index reading of 100 is equal to the average level of sales contract activity in 2008.
The index climbed to 93.6 in January, up from 82.4 in December, but down 2 percent from a year ago, CAR said, noting that pending sales typically rise after seasonal slowdowns in November and December.

“January’s pending sales should be reflected in higher existing sales activity in February and March and serve as a precursor to the spring home buying season,” C.A.R. President Beth L. Peerce said in a statement.

Distressed properties — short sales and bank-owned (REO) properties — accounted for 54 percent of pending sales statewide, up from 50 percent in December but down from 56 percent a year ago.

Distressed properties accounted for 70 percent or more of all sales in Kern, Sacramento, Riverside, San Bernardino and Solano counties.

REO properties accounted for 32 percent of pending sales, up from 30 percent in January but down from 37 percent a year ago, C.A.R. said.

Short sales, which accounted for 19 percent of pending sales in January 2010 and 20 percent of sales in December, represented 22 percent of last month’s pending sales.

Looking at all sales of single-family homes that closed escrow in January, the median price was $278,900 — down 8.6 percent from a revised $305,020 in December and down 2 percent from a year ago.

But at $265,500, the median price for short sales closing escrow in January was 28 percent less than the $367,150 median price for “conventional” properties. The median price for REO properties, at $198,000, was 46 percent less.

First consider where you want to be in 10 years. How do you envision your lifestyle? Is your current home too big, too small, or in the wrong location?

Homeowners intent on moving from one house to another can take advantage of low interest rates, if they are able to sell their current home. You’ll probably sell for less than you would have several years ago, but you may get a deal on the home you buy.

However, if you don’t plan on living in your next home for the next eight to 10 years, this might not be a good time to make a move.

For sellers who purchased in recent years, selling requires a huge readjustment in their expectations. Many probably will sell for less than they paid; in some cases, a lot less. If they highly leveraged the purchase, or refinanced and pulled out equity, they may need to contribute cash to close the deal.

Sellers who have no cash reserves and need to sell for less than the amount of the loans secured against the property will need lender approval to complete a sale. This is called a short sale. In this case, or with a foreclosure, sellers don’t have the option of buying another home until their credit is restored, which takes about two to three years for a short sale and five years for a foreclosure.

Some listings in prime, high-demand markets come on the market and sell quickly, leaving other sellers in the area perplexed. Why isn’t their home selling? Why aren’t they receiving bids from multiple buyers?

Listings that sell quickly are priced right for the market. They are homes that will work long term for the buyers, which means 10 or more years; they don’t need updating; they’re in move-in condition; and, they are usually located in high-demand, low-inventory neighborhoods. Buyers are waiting for these prime listings and will move quickly when they come along.

HOUSE HUNTING TIP: It’s frustrating for sellers whose listings don’t receive an overwhelmingly positive response, especially if they put time and money into fixing them up for sale, and they thought they priced right for the market. Motivated sellers will need to accept the probability of a longer marketing period and a lower price.

Expect low offers if your home has been on the market awhile. It’s natural for buyers to try to buy a home as inexpensively as possible to cover for the possibility of a further downturn in the market. Don’t take it personally; counter any offer from financially qualified buyers who make a clean offer that’s not encumbered with complicated contingencies.

It may take several offers and failed attempts to find the right buyer. It isn’t easy for most sellers to reach a successful closing in this market. But those who stick it out can reach their goal.
Waiting to sell could net you more for your home, but it’s impossible to know when that better time will arrive. The market will be volatile. Good economic news will trigger a pickup in the market. Bad news will cause buyers to pull back.

THE CLOSING: To take advantage of a pickup in the market, your home needs to be on the market or ready to go on a moment’s notice.

For all your real estate needs, call North State Real Estate in Oroville, Ca.  Serving Oroville, Chico, Paradise, Durham, Palermo, Gridley, Biggs, Live Oak and surrounding areas of Northern California.

There are exceptions: Relatively hot neighborhoods surrounded by areas of sluggish sales. But, typically, negotiations between buyers and sellers are lengthy and tedious — neither ending up with exactly what they want, but something they can live with.

The negotiations often don’t end when the contract is ratified. Ratification occurs when the initial offer and all counteroffers are signed and accepted by both parties. The buyers’ lender can be the source of problems like refusing to lend the amount the buyers need to close the deal, either due to a low appraised value of the property or a problem with the buyers’ credit.

A major cause for further negotiations is inspection-related issues. This can encompass a broad range of problems from physical defects with the structure itself, like faulty electrical wiring, to discovering something previously unknown about the neighborhood like the fact that it’s zoned for multi-dwelling housing and the house next door is being converted into a 12-unit building.

HOUSE HUNTING TIP: Do as much due diligence investigation as you can about a home you’re seriously considering buying before you make an offer in Oroville, Paradise, Chico, Durham, Biggs, Gridley and Live Oak, Ca. It’s time consuming and emotionally draining to make an offer. If you can discover in advance that there is something about the home or neighborhood that you can’t live with, you come out ahead.

Some sellers provide a disclosure package about their home that provides presale inspection reports and information about the property. If so, read and understand these before you make an offer. A seller’s disclosure package should not be viewed as a substitute for doing inspections once your offer is accepted. You should include an inspection contingency in the contract.

There is a certain amount of subjectivity involved in home inspecting. One inspector might say the roof needs to be replaced; another could think the roof is serviceable and will last another few years with maintenance. One inspector might see a crack in the foundation as a big deal; another could find it typical and not affecting the integrity of the building.

Usually home inspections recommend further inspections for such systems as the furnace, hot water heater and drainage system. Few sellers take the steps to have all recommended further inspection done.

During the buyers’ inspections, issues that the buyers thought wouldn’t be a big problem can turn out to require expensive fixes. Or new defects are uncovered of which neither buyer nor seller was previously aware. These situations can lead to further negotiation.

Buyers should be aware that a contract may not permit you to simply cancel without penalty if you decide you don’t like the house after taking a serious look at it. It depends on the wording of the inspection contingency. Make sure you understand this before you sign the contract. In some cases, the buyers are required to request that sellers make repairs. The seller may have no responsibility to do so.

However, buyers should consider how long they have looked and how difficult it will be to find another house like the one they’re trying to buy. Sellers need to realistically assess how difficult it might be to find another buyer if they have to put their home back on the market.

THE CLOSING: It’s usually in both parties’ interest to try to reach a mutually satisfactory solution, either in the form of a credit to the buyers, the sellers getting work done, or a price reduction.

One of the ways to do that is to have a home inspection prior to closing the deal on the purchase. A home inspection will give you a lot of information about the physical condition of the home you’re considering buying, and should alert you to any potentially serious problems.

But as a potential home buyer in Oroville, Gridley, Chico, Paradise, Gridley and Live Oak, Ca, it’s important that you understand what a home inspection includes and doesn’t include. There are certain things you legitimately can expect your inspection to provide for you, and certain things that it won’t. And you also need to understand that the more you participate in the inspection process, the more you’ll get out of it in return.

Finally, understand that just like there are good and bad contractors, there also are good and bad home inspectors. Expect to have to do a little homework to find one of the good ones.

What is a home inspection?

A home inspection is a visual inspection of the home you’re thinking of purchasing, performed by an objective third-party inspector. The inspector will examine the physical structure of the home from top to bottom, as well as the home’s operating systems. Typically, a home inspector will look at the following things:

• Outside: The exterior home site; general condition of the foundation and basement walls; condition of the exterior walls, including the siding, exterior trim, windows, exterior doors and exterior paint; type and condition of the roofing; condition of gutters, downspouts, flashings, and vents.

• Inside: The condition of the attic, roof support structure, attic insulation and attic moisture issues; condition of the basement and crawl space, including insulation and moisture issues; garage and carport; electrical system; visible plumbing system; heating, cooling and ventilation system; general interior condition of the home.

A short time after the end of the inspection you’ll receive a written report detailing the inspector’s findings. Any defects the inspector identified will be noted. Inspectors never should attempt to sell you anything, such as their services to come in and fix anything that was identified in the report. To do so would be a clear conflict of interest.

It’s important to understand that inspectors do not do what is known as “destructive testing.” In other words: they don’t cut holes in walls or otherwise open up inaccessible areas to look inside. Everything is based on their visual inspection of whatever they can access. They’re also not there to comment on anything that’s readily apparent from a cosmetic standpoint, such as a sloppy paint job.

What types of things does the inspection not cover?

It’s equally important to understand what a home inspection doesn’t cover, because this is where you need to be sure that you continue with your due diligence when you’re buying your home.

For example, your home inspector will point out any obvious signs of visible mold or mildew in the home. However, he will not be performing any type of actual mold inspection. If you suspect a mold infestation in the home, you need to have testing done by a trained hygienist.

Home inspectors will point out structural problems that have been caused by insect damage. But they’re not there to perform a complete termite inspection. They also don’t do inspections for the condition of the well, septic tank, or any type of soil contaminants.

You also need to be very aware of the fact that a home inspection has nothing to do with code violations or zoning issues. You need to check those things out for yourself with the local building and planning offices. It’s up to you to assure yourself that any prior work on the house was done with the necessary building permits.

It’s also up to you to check that there are not any issues when it comes to how the house is currently zoned, or how the current zoning might affect your use of the property in the future.

What do you need to do?

You have a couple of other responsibilities in this process as well. First of all, know who your inspector is, and what’s required of him. Different states have different regulations pertaining to how home inspectors are regulated, so find out what’s required when buying in Oroville, Chico, Paradise, Gridley and Live Oak, Ca.

Interview the inspector before you hire him. Be sure he complies with all those requirements, including whatever license, insurance and bond is needed. Ask for and verify references.

So when buying in Oroville, Chico, Paradise, Gridley, Biggs and Live Oak, Ca, make sure you know what you are buying.

Detaching yourself emotionally from your home is difficult. Clearing out years of clutter, depersonalizing your home by removing personal memorabilia, and staging your home for sale can help you step back and view the home as a commodity that needs to be sold rather than as your personal sanctuary.

Putting your home on the market, in Oroville, Chico, Paradise, Gridley, Biggs and Live Oak, Ca,  at a price that reflects what you want and not what the market will bear can cost you time and money as it sits on the market unsold.

The home-sale market is a localized phenomenon. The only way to get a clear picture of what your home is likely to sell for is to find out which listings are selling in your neighborhood and for how much.  So contact North State Real Estate when wanting an educated and honest opion whether buying or selling in Oroville, Chico, Paradise, Gridley, Biggs and Live Oak, Ca.

The most recent sales — those that closed within the last three months — will be the most informative. Be sure to take a hard look at the list prices of homes that are new on the market.

If the list prices are lower than they were two or three months ago, this indicates that prices are declining. This needs to be taken into account when you select a list price.

HOUSE HUNTING TIP: Pay close attention to your competition. Don’t fall into the trap of pricing your home higher than your neighbor’s home because yours is better. If your neighbor’s price is too high for the market, neither of your homes will sell.

Ask your listing agent to call the listing agents of properties similar to yours to find out what kind of showing activity they are receiving. Have they had offers? If so, why weren’t they accepted? Were the offers too high? If so, you should set your sights lower.

Some listing agents recommend that you list considerably under market value in order to stimulate multiple offers. In some cases, this can be an effective strategy.

For example, in the low-end foreclosure market, this was common practice at the end of 2009. Some listings priced way below market value received more than a dozen offers.

However, it can be risky to price significantly lower than market value on a more expensive property for which the demand is lower. You could end up with more than one offer, but you could also receive under-market price offers.

Your home needs to be perceived as a good value to a buyer to sell in this market. However, you could shortchange yourself by discounting the price too much.

Your home is most marketable when it is new on the market. Buyers wait anxiously for the new crop of listings. Listings that don’t sell relatively quickly often languish on the market.

Price reductions often follow as the sellers try to find market value. A listing that has been on the market for months is likely to receive a low offer — if a buyer makes any offer.

A listing that receives a lot of showing activity when it first hits the market but gets no offers is probably overpriced for the market. In this case, it’s best to lower the price to market value as soon as possible while the listing is still fresh in agents’ and buyers’ minds, even if this is within two to four weeks of the listing date.

So if you buying or selling, contact North State Real Estate at (530) 693-1566 at 603 Luds Way, Oroville, Ca for homes in Oroville, Chico, Paradise, Gridley, Biggs and Live Oak, Ca.

Karl Case, co-creator of the widely followed S&P/Case-Shiller Home Price index, thinks there’s a 50-50 chance that we’re at the bottom of the market and that we’ll see improvements in the months ahead.

Unemployment remains a concern. An increase in the number of new households is predicated on an increase in jobs. Even if we have seen the worst of the recession, most analysts believe the housing recovery could be rocky for years. A quick turnaround is probably not on the horizon.

The home-sale market is generally better this year than it was last year at this time. Interest rates are lower by about 1 percent. Mortgages are much more readily available. Home prices have dropped significantly, making it possible for buyers to afford to buy a long-term home.

An increasing number of fence-sitters have turned into motivated buyers. However, they are focused on value, condition and location; they aren’t overpaying, as they did in 2006. It’s still a buyer’s market and could remain so for some time to come.

Sellers who purchased within the last five years might need to sell for less than they paid. One couple bought a home in Crocker Highlands, a coveted Oakland, Calif., neighborhood. They paid just over $1.1 million in 2005 and made improvements to the property. They sold in 2009, after investing more to prepare the property for sale. They received multiple offers, over the list price. The home sold for $905,000.

These sellers weren’t happy about the loss. But, their goal was to own only one home. They bought a retirement home near Sacramento and were spending most of their time there. Holding onto the Oakland home was a financial drain, particularly since they were there only part time. They couldn’t rent the property out for enough to cover the ownership costs.

Another homeowner realized before the recent economic downturn that she couldn’t afford to continue to make hefty mortgage payments due to a drop in her income. Emotionally attached to her home that she’d improved over time, she decided not to sell then, which would have resulted in a profit. Instead, she rented the property for a few years and moved in with a friend to lower her overhead. Although the rent reduced her monthly debt load, it didn’t cover the carrying costs.

When she finally sold in January 2010, prices had dropped to a point that the property sold for less than the amounts of the mortgages secured against the property. To get lender approval on a short sale, the seller had to contribute cash at closing. Clearly, she would have been better off financially if she had sold years earlier.

HOUSE HUNTING TIP: Deciding whether to sell now and take advantage of an improved home-sale market or wait for a better time is complicated. First, you need to know the approximate selling price of your home in this market. How much work needs to be done to get the property ready to sell? Does the house have any defects or deferred maintenance that will impact the sale price or make the property harder to sell? If so, this would negatively impact the price. This information can be obtained through your real estate agent.

THE CLOSING: Low inventories of good homes in some niche market gives sellers an edge. Even so, you’ll be successful in today’s market only if you are realistic about the current market value of your home.

Lets remove the house and replace it with a big box of cash filled with $100 dollar bills.  Would you go to a Walmart cashier for advice… your hair dresser…maybe the counter person at the hardware store or maybe the guy that sells used cars.  When I ask this question, I’m always told NO!  But, thats exactly what most are doing.  What would be wrong, the next time you buy or sell a home, with asking for a resume from your potential agent/broker or looking for someone with a degree in business or finance, someone who has experience with investing, home building, lending, banking, financial planning, mortgage banking or some type of professional experience/education that would qualify them to help you make one of the biggest financial decisions in your life.

Buying a home is very serious and, as we have learned from the past 5 years, you need someone who understands the economy, the bond market, financial trends and will tell you NO!  Your agent is paid a lot of money to help you make a finacial decision and part of that help is being honest enough when to let you know if they think its a bad one…commision be damd!

Next time you go to buy or sell a home, ask for referrals and then ask questions.  Ask them what there education is…ask about what jobs they have held…ask them if they know what the current market (not just homes but the stock market and the bond market) is doing and ask them what/where they see it going.  Don’t be impressed with the fancy SUV or the suit or skirt…be impressed (or not) with whats in their head.  They are being paid a lot of money to advise you…ask enough questions so you know they have the experience, education, knowledge, integrity and honesty  to stear you right in your home buying or selling decision.