Along with their two children, three dogs and a cat, they had sold their house in Atlanta and were all packed, with the moving truck scheduled for late May, ready to move to the Bay Area for a job transfer.

When conventional house hunting with a real estate agent didn’t work out, Kevin Silva placed a detailed Craigslist ad describing their target neighborhood, price and house size. He netted five responses, one of which led to making a deal to buy a San Anselmo house directly from the owner.

While having all the stars and planets align so perfectly is rare, the Silvas’ story illustrates how many house hunters are coloring outside the lines to land a place in the overheated real estate market. Whether it be cold-calling homeowners with offers or placing ads in search of potential houses for sale, being creative is key, experts say.

Of course, the top strategy is both the simplest and the hardest – pay way over asking, in all cash.

Short of that, there are a variety of ways prospective buyers can find a house as well as rise to the top of the offer pile:

Placing an ad: Swooping in with an offer before a home is officially posted for sale is a top tactic, and it worked for the Silvas.

After being consistently outbid, they considered renting, but that market was too competitive. “I realized unless we got really aggressive, we would end up in my parents’ basement in San Mateo with the kids, the dogs, the cat and a really unhappy wife,” Kevin Silva said. In the end, a simple online ad labeled “Wanted to buy: House in San Anselmo or Fairfax” did the trick. A $1 million budget undoubtedly helped. He got one response from a man who, like Silva, was of Portuguese ancestry. They quickly bonded on the phone. Silva visited the three-bedroom house and liked it, and returned with a real estate agent friend who advised him that $1 million was a reasonable price. Attorneys helped draw up the paperwork in an amicable deal.

Both parties agreed that if the sale fell through, the Silva family would rent the house. “That took off a huge amount of stress, knowing we had a place to land,” Silva said.

Pocket listings: Many buyers are taking advantage of “pocket listings” – a heads-up within a brokerage or an informal notification network of an upcoming sale – that have been growing in popularity in recent months.

“We see pocket listings more especially in the upper end,” said Patrick Leaper of Red Oak Realty in the East Bay. “Generally, it’s someone across the aisle (in a real estate brokerage) who says, ‘Look, I have a three-bedroom house in the hills for $1.2 million and the owners don’t want the hassle of publicly marketing it.’ “

Such tips are generally within bigger brokerages, but agents at smaller firms can call friends at the larger brokerages to seek them out.

“I got my buyers in because we responded to a pocket listing e-mail within our own company,” said Simon Shue of Zephyr Real Estate in San Francisco. “We were able to negotiate and save the seller money through not staging, painting and (refinishing) floors.” Located north of the Panhandle, the property sold in March for $760,000.

Zillow’s Make Me Move feature: Real estate site Zillow.com has a feature called Make Me Move for homeowners to post what price they’d accept to sell their house.

That’s how one couple from Newark finessed their move to the Peninsula. Doris and Charles (they asked to withhold their last name for privacy reasons) faced the usual discouraging situation of being consistently outbid – in their case, five times.

That’s when Doris decided to check out Make Me Move. She saw a house in San Carlos asking $950,000.

“If we hadn’t gone through those bids, I would have thought that was crazy,” she said. “The house is not quite 1,500 square feet, one story, an old house, nothing spectacular like you’d expect for almost a million bucks.”

They contacted the owners and visited the house several times. While it had some deferred maintenance issues, it met their needs, and the price was in line with similar properties.

“We thought, ‘Do we want to keep being outbid by other people or take this house?’ ” Doris said. They ended up buying it for $925,000, negotiating money off for a new roof.

Both Doris and Charles are attorneys, so they prepared the paperwork themselves. The sellers were real estate savvy as well, she said.

“We were happy with each other. I gave them a good deal – they lived there rent free for two months after the sale – but they gave me a good deal, too,” Doris said. “If they’d put the house on the market, they probably could have gotten a little bit more, but paying the real estate commission would have eaten that up.”

Target a neighborhood: Real estate agents and would-be home buyers sometimes contact owners in target areas directly.

Randy Brase, who owns a modest two-bedroom bungalow in San Bruno’s Huntington Park neighborhood, said he was surprised to receive unsolicited calls and letters from Realtors and house hunters expressing interest in buying his house. At the time, he was in the midst of some repairs and remodeling so the house appeared run-down.

“A man and his wife wrote me a letter saying they wanted to relocate from San Francisco and wanted to buy my house,” he said. “They said that they’re not afraid of doing work to fix up the house; they’ve done stuff like that to their house they live in now.”

While representing clients hoping to buy in the Eureka Valley/Castro area, Scott Yarmack and Dan Bunker of Zephyr wrote to local property owners looking for potential sellers. They got one response, and after viewing the house decided to pursue it. Yarmack lined up a contractor for an informal inspection before the house hit the multiple listing service.

As soon as it was listed, he convinced the listing agent to present his client’s offer immediately after the first Sunday open house, rather than waiting to market the house for several weeks. The all-cash offer with no contingencies and a 14-day close was accepted.

Getting an offer accepted: Finding a suitable house is only part of the hunt. Getting an offer accepted is the next big hurdle.

Prospective buyers often write a heartfelt “love letter” describing their family and their positive feelings about the house. While that alone won’t land a place, it can keep the buyers in the game.

“The personal component has an impact,” Leaper said. “If the letter paints a sweet picture of a buyer who (the seller) feels more attracted to, but their offer isn’t as good, often sellers will give the buyers a chance to improve their offer to match a better offer.”

Offers with as few contingencies as possible are more attractive to buyers. Getting inspections in advance to forestall an inspection contingency and having enough cash to avoid either financing or appraisal contingencies are ways to ensure a deal will close quickly.

“Do your homework,” said Red Oak’s Larry Benedetto. “My clients closed in late July. For every property they considered purchasing, they went to the city to check out permits, they got disclosures from the listing agent and they read everything. When there were any unknowns, they would get an engineer to check things out. Only then, when they were confident they fully understood the property, were they able to write clean offers with a quick close.”

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid

Article source: http://www.sfgate.com/realestate/article/Creative-ways-to-buy-a-house-4806993.php

Along with their two children, three dogs and a cat, they had sold their house in Atlanta and were all packed, with the moving truck scheduled for late May, ready to move to the Bay Area for a job transfer.

When conventional house hunting with a real estate agent didn’t work out, Kevin Silva placed a detailed Craigslist ad describing their target neighborhood, price and house size. He netted five responses, one of which led to making a deal to buy a San Anselmo house directly from the owner.

While having all the stars and planets align so perfectly is rare, the Silvas’ story illustrates how many house hunters are coloring outside the lines to land a place in the overheated real estate market. Whether it be cold-calling homeowners with offers or placing ads in search of potential houses for sale, being creative is key, experts say.

Of course, the top strategy is both the simplest and the hardest – pay way over asking, in all cash.

Short of that, there are a variety of ways prospective buyers can find a house as well as rise to the top of the offer pile:

Placing an ad: Swooping in with an offer before a home is officially posted for sale is a top tactic, and it worked for the Silvas.

After being consistently outbid, they considered renting, but that market was too competitive. “I realized unless we got really aggressive, we would end up in my parents’ basement in San Mateo with the kids, the dogs, the cat and a really unhappy wife,” Kevin Silva said. In the end, a simple online ad labeled “Wanted to buy: House in San Anselmo or Fairfax” did the trick. A $1 million budget undoubtedly helped. He got one response from a man who, like Silva, was of Portuguese ancestry. They quickly bonded on the phone. Silva visited the three-bedroom house and liked it, and returned with a real estate agent friend who advised him that $1 million was a reasonable price. Attorneys helped draw up the paperwork in an amicable deal.

Both parties agreed that if the sale fell through, the Silva family would rent the house. “That took off a huge amount of stress, knowing we had a place to land,” Silva said.

Pocket listings: Many buyers are taking advantage of “pocket listings” – a heads-up within a brokerage or an informal notification network of an upcoming sale – that have been growing in popularity in recent months.

“We see pocket listings more especially in the upper end,” said Patrick Leaper of Red Oak Realty in the East Bay. “Generally, it’s someone across the aisle (in a real estate brokerage) who says, ‘Look, I have a three-bedroom house in the hills for $1.2 million and the owners don’t want the hassle of publicly marketing it.’ “

Such tips are generally within bigger brokerages, but agents at smaller firms can call friends at the larger brokerages to seek them out.

“I got my buyers in because we responded to a pocket listing e-mail within our own company,” said Simon Shue of Zephyr Real Estate in San Francisco. “We were able to negotiate and save the seller money through not staging, painting and (refinishing) floors.” Located north of the Panhandle, the property sold in March for $760,000.

Zillow’s Make Me Move feature: Real estate site Zillow.com has a feature called Make Me Move for homeowners to post what price they’d accept to sell their house.

That’s how one couple from Newark finessed their move to the Peninsula. Doris and Charles (they asked to withhold their last name for privacy reasons) faced the usual discouraging situation of being consistently outbid – in their case, five times.

That’s when Doris decided to check out Make Me Move. She saw a house in San Carlos asking $950,000.

“If we hadn’t gone through those bids, I would have thought that was crazy,” she said. “The house is not quite 1,500 square feet, one story, an old house, nothing spectacular like you’d expect for almost a million bucks.”

They contacted the owners and visited the house several times. While it had some deferred maintenance issues, it met their needs, and the price was in line with similar properties.

“We thought, ‘Do we want to keep being outbid by other people or take this house?’ ” Doris said. They ended up buying it for $925,000, negotiating money off for a new roof.

Both Doris and Charles are attorneys, so they prepared the paperwork themselves. The sellers were real estate savvy as well, she said.

“We were happy with each other. I gave them a good deal – they lived there rent free for two months after the sale – but they gave me a good deal, too,” Doris said. “If they’d put the house on the market, they probably could have gotten a little bit more, but paying the real estate commission would have eaten that up.”

Target a neighborhood: Real estate agents and would-be home buyers sometimes contact owners in target areas directly.

Randy Brase, who owns a modest two-bedroom bungalow in San Bruno’s Huntington Park neighborhood, said he was surprised to receive unsolicited calls and letters from Realtors and house hunters expressing interest in buying his house. At the time, he was in the midst of some repairs and remodeling so the house appeared run-down.

“A man and his wife wrote me a letter saying they wanted to relocate from San Francisco and wanted to buy my house,” he said. “They said that they’re not afraid of doing work to fix up the house; they’ve done stuff like that to their house they live in now.”

While representing clients hoping to buy in the Eureka Valley/Castro area, Scott Yarmack and Dan Bunker of Zephyr wrote to local property owners looking for potential sellers. They got one response, and after viewing the house decided to pursue it. Yarmack lined up a contractor for an informal inspection before the house hit the multiple listing service.

As soon as it was listed, he convinced the listing agent to present his client’s offer immediately after the first Sunday open house, rather than waiting to market the house for several weeks. The all-cash offer with no contingencies and a 14-day close was accepted.

Getting an offer accepted: Finding a suitable house is only part of the hunt. Getting an offer accepted is the next big hurdle.

Prospective buyers often write a heartfelt “love letter” describing their family and their positive feelings about the house. While that alone won’t land a place, it can keep the buyers in the game.

“The personal component has an impact,” Leaper said. “If the letter paints a sweet picture of a buyer who (the seller) feels more attracted to, but their offer isn’t as good, often sellers will give the buyers a chance to improve their offer to match a better offer.”

Offers with as few contingencies as possible are more attractive to buyers. Getting inspections in advance to forestall an inspection contingency and having enough cash to avoid either financing or appraisal contingencies are ways to ensure a deal will close quickly.

“Do your homework,” said Red Oak’s Larry Benedetto. “My clients closed in late July. For every property they considered purchasing, they went to the city to check out permits, they got disclosures from the listing agent and they read everything. When there were any unknowns, they would get an engineer to check things out. Only then, when they were confident they fully understood the property, were they able to write clean offers with a quick close.”

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid

Article source: http://www.sfgate.com/realestate/article/Creative-ways-to-buy-a-house-4806993.php

advertisement

Ricardo Rodriguez, a San Francisco resident who has been fighting to save his home from foreclosure, has received some good news from Bank of America. After unsuccessfully applying for at least 10 loan modifications since 2009, Rodriguez was accepted by Bank of America last week for a trial loan modification.

He has made his first payment and will get to stay in his home. If he makes his payments on time during the three-month trial period, he may qualify for permanent loan restructuring.

“We’re just happy we get to keep our house after more than three years of this stuff,” Rodriguez said Monday. He said he is optimistic that he can meet the requirements to make the trial loan permanent.

NBC Bay Area and the Center for Investigative Reporting highlighted Rodriguez’s case in a joint report in April on questionable foreclosure practices in the Bay Area. The investigation found that thousands of homeowners were fighting in court to save their homes from a foreclosure system filled with mistakes, mismanagement and, on occasion, fraud. The report also found that in some cases, Bank of America was skirting proper foreclosure procedures, leaving Rodriguez and other borrowers unsure of the status of their loan modifications or who owned the rights to their home.

When Rodriguez lost his job delivering newspapers in 2011, he had trouble making the payments on his mortgage. He repeatedly applied for loan modifications but said Bank of America lost his paperwork and shuffled him among account managers, despite a state law requiring banks to provide homeowners with a single contact. Rodriguez became fed up and joined a local advocacy group to fight foreclosures in his neighborhood.

Bank of America spokeswoman Jumana Bauwens said in April that the bank previously had worked with Rodriguez and reduced his interest rate to 2 percent, but he was unable to pay the lower amount.

“If even the lowest possible payment is not affordable for a borrower, homeownership may not be the best or most responsible option for them,” the bank said at the time.

Bank of America plays the largest role of any bank in Bay Area foreclosures. From July 2008 through October, Bank of America’s foreclosure trustee, ReconTrust, handled 1 in 5 defaulted properties in the Bay Area, roughly 70 percent more than the next biggest trustee, according to RealtyTrac Inc., a real estate information company.

Article source: http://www.nbcbayarea.com/news/local/Homeowner-Fighting-Foreclosure-Wins-Trial-Loan-Modification-210295101.html

Treasury’s data shows that the longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program. As of March 31, 2013, the oldest HAMP permanent modifications, from the third and fourth quarter of 2009, are redefaulting at a rate of 46.1 percent and 39.1 percent. HAMP permanent modifications from 2010 also had high redefault rates, ranging from 28.9 percent to 37.6 percent.

The report directs Treasury to study why these modifications are failing and to come up with some kind of early warning system in order to help borrowers.

(Read More: Despite Rising Demand, Some Builders Slow Production)

“Redefaulted HAMP modifications often inflict great harm on already struggling homeowners when any amounts previously modified suddenly come due,” according to the report.

One of the architects of HAMP, Michael Barr, former Assistant Secretary for Financial Institutions at the U.S. Treasury, is not surprised at the numbers.

“The redefault rates are still below current industry averages, and below the conservative case we used in program design, which was the then-existing rate of 50 percent,” said Barr.

Troubles with HAMP are not new. Initially it did not offer principal reduction on loan modifications, and so far, under a revised HAMP, just 82,813 borrowers received any principal reduction. Banks doing their own loan modifications have wiped away far more mortgage principal, a strategy that has proven far better results. The nation’s five largest banks were required to write down some principal under the National Mortgage Servicing Settlement signed in early 2012, after the so-called “robo-signing” foreclosure paperwork scandal.

The Treasury need not look far for HAMP’s shortfalls.

(Read More: Mortgage Mods Doomed by Back End Debt)

Back in May of 2012, bank representatives complained that the back end debt-to-income ratios (DTI), (which include all debts upon which a borrower pays) for HAMP modifications were far too high. That is, borrowers were paying far too much of their incomes on debt, and the numbers were only rising.

At the time, mortgage analyst Mark Hanson said, “A 64.3 percent DTI is so far out of scope with the pre-bubble years safe-and-sound 36 percent total DTI — and even typical bubble-years full-doc DTI’s of 50 percent — it is absolutely irresponsible. Servicers are pushing the envelope with respect to getting people to qualify.”

Today Hanson is the least surprised of anyone at the failure of HAMP modifications. “Because if you look at them structurally — sky-high DTI, LTV [loan to value] and low credit score — they make legacy Subprime loans look sane.”

Hanson predicts that these bad modifications will come back to bite the banks and the economy.

(Read More: With Home Listings Low, Spec Building Is Back)

“People read headlines that ‘foreclosures are at 2005 levels’ and cheer. I say the high-risk distressed loans and foreclosures are still out there. They have just been called something different by banks and the government and kicked down the road a few years,” says Hanson.

862,000 homeowners are currently in permanent HAMP modifications; 312,000 have defaulted on permanent modifications. In the next two years, many HAMP modifications will re-set to higher interest rates, and that could produce more defaults.

Banks have been doing more modifications on their own, with these proprietary fixes up 55 percent in the fourth quarter of 2012 from the previous year, according to a recent report from the Office of the Comptroller of the Currency. Meanwhile HAMP modifications are down 31 percent for the same period.

Given delays in the foreclosure process in several states, and the risky quality of these early HAMP modifications as well as other proprietary modifications done without principal reduction, it is safe to say foreclosures may rise for a time next year before finally falling back to normal levels in the next three to four years.

As home prices rise, more borrowers will come out from underwater on their mortgages, and that will reduce the risk of new defaults, but the pipeline of distress is still long and far from lean.

Article source: http://www.cnbc.com/id/100674924

While the percentage jump is large, in a twist, some argue the foreclosure delays still persist and are hurting the recovery.

(Read More: No Money? No Worries. Home Lenders Ease Rules)

“While policy makers state that the purpose of government intervention is to help homeowners by delaying foreclosures, instead they have created an artificial shortage in bank-owned inventory (REO). The combination of the decline in REO inventory and lack of motivated sellers has left the California real estate market with an acute lack of inventory, which is putting upward pressure on prices,” say analysts at ForeclosureRadar.

(Read More: REO: CNBC Explains)

While price gains help recovery, if they happen too fast, they price would-be buyers and investors out of the market, which slows sales again. Price recovery has many believing that housing is suddenly not just back on its feet again, but surging ahead—much of the price recovery is based on lack of inventory of homes for sale, which in turn is due to foreclosure delays, which as we now see, can turn very quickly.

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100553116