Hello....I thought I would write a little something about the area I live and service...Eureka, California is a beautiful part of the country located in the northwest part of California about 275 miles north of San Francisco (a beautiful 6 hour drive on highway 101 or a 1 hour flight), and around 80 miles south of the Oregon border.  Eureka is Greek for "I have found it!"   There are also direct flights to LA (hell A) from the local airport on Horizon Air.  Eureka is coastal and is located near the ocean and Humboldt Bay.  The main industries historically have been lumber and fishing, both of which are declining sad to say. There are a lot of cattle and dairy ranches, with grass fed beef being a big seller.  The cows must love it here because the water and air is clean and its always green.  The weather is temperate on the coast all year round.  Eureka is the county seat for Humboldt County.  The county has a population of around 130,000 people covering 3400 square miles...compare that with Orange County, CA (where I moved from), only 800 square miles but over 3 million stuck in traffic souls) not counting the other 1/4 million who commute from neighboring counties LOL).  The people live mostly in the Eureka, Arcata, McKinleyville and Fortuna areas. There are many microclimates in this area.  For example you could be on the coast near Humboldt State University (located in Arcata), and drive 5 miles east to Blue Lake.  It may be 20 degrees warmer there in Blue Lake in the summer.  You could go cross country skiing about 45 minutes away in the winter.  It rains about 40 inches a year, (same as Houston), but clean air and no humidity. The ice cubes are clear that come out of the tap!

The main lumber export here has been redwood.  Sequoia sempevirens.  The redwood tree is an amazing tree.  It is the tallest living thing with trees known to be close to 400 feet in height, and one of the oldest, with some trees over 2000 years old.  Its seeds are only a few centimeters... It is only found in the northern part of California along a strip that runs roughly from Santa Cruz in the south to Crescent City in the northern most part of California, a distance of around 450 miles or so.  Redwoods State and National Parks are visited by many...check out the Lady Bird Johnson or Rockefeller groves if you plan a visit.  Fern Canyon is also spectacular.  The small coastal city of Trinidad is one of the most beautiful in this country, and only about 30 minutes north of Eureka.  There are three Indian casinos in Humboldt County,  located in Trinidad, Blue Lake and Loleta.

There are many families that have lived here for generarations.  The first known expidition of this area was around 1806 by a Captain Winship, and around 1850 the gold rush in neighboring counties started to bring the white man in.  The gold in Humboldt turned out to be in redwoods, not rocks.  The area was and still has many native American tribes such as the Wiyot and Yurok.  Humboldt County was named after a famous German explorer of the era, a Mr. Humboldt, who to the best of my knowledge never visited his namesake county.  There are several counties in the United States named Humboldt, closest in Nevada and many cities named Eureka in the US. 

One of the most unique characteristics of this area is the Victorian architecture.  This area is totally unique to California and probably on the west coast given the amount of homes still standing homes that were built from the 1880's through the 1940's.  Some are in wonderful restored condition, and some have been converted into apartments in years past, and some have vanished over time.  Some need TLC...  Entire cities such as Ferndale, CA have been designated a national historical landmark.  Ferndale was founded around 1852 by the Shaw brothers, and their original home is now a beautiful bed & breakfast.  There was an article in the Auto Club magazine this month featuring Ferndale.. The city of Arcata is celebrating its 150 year old birthday this year.... I really appreciate the history, and in many areas in southern California and other parts of the country, the "history" has been obliterated in the name of "progress." My office is located in a 1900 Victorian with a view of the boats on Humboldt Bay, and the most amazing gingerbread craftsmanship.

What drew me to this area is the idea of small town living, quality of life, excellent schools, the weather, and the real estate is the lowest priced coastal area in California. I was tired of the whole so Cal lifestyle.  Many transplants live here from southern Cal or San Francisco bay area....  There is a tremendous arts and music scene.  I have heard that Eureka has been named one of the 100 best small town arts destinations in the country...First Saturday night of each month is Arts Alive in Eureka and the streets of the Old Town area fill with people and music  Lots of artists drawn by the spectacular natural beauty.  Humboldt State University is the oldest university in the state system, with around 7000 students.  Surprisingly we get many great musicians visiting the area.  Last fall the great BB King played at HSU.  I saw Joan Baez a few years ago, and many talented and famous musicians find their way to this part of the world...small town living with bigger city amenities.

I can go on and on and no, the chamber of commerce is not paying me to write this.....I wanted to write something different other than real estate, although I must add the market here is a lot better than in so cal and many other places because it has not been overbuilt. One house in Arcata sold last week had 7 offers in 24 hours after hitting the market.  I had to say that, LOL!

A few good websites to check out if you want to learn more about Humboldt County:

http://redwoods.info

www.humguide.com

http://co.humboldt.ca.us

www.humboldthouses.com

I have had a few people email me regarding the story of the transaction that started out as a short sale - and closed as a regular sale last week.

How did that happen?  The deal started out as a short sale - the seller owed more on the house then the sales price, thanks in large part to a nearly $10,000 prepayment penalty (more on that later).  With most prepayment penalties, they are typically put on some loans (usually the infamous sub prime variety) to discourage payoffs or refinancing.  Most prepayment penalties are equivilant to 6 months of mortgage interest.  In this case, that prepayment penalty, which Countrywide refused to remove, was the difference between the short sale and a regular conventional sale.  The fact the seller had a unique property on land in what is a lower price range in this area worked in the sellers favor.

Luckily, the seller's two year limit on the prepay was up, so during the course of what turned out to be a 90 day escrow, that was removed.  In the meantime, it was my opinion the seller would be able to sell the property for more than the original price, and in fact given the number of calls I received on this particular property during the escrow period, that the seller was justified in asking for a higher sales price, not to make money, but to eliminate the need to go short sale.  I know this is an unusual situation that would not happen to most properties.

Long story short....the buyers to their credit who hung in there, agreed to a higher price, and with the skills of two very experienced professional Real Estate Brokers, an easygoing seller, and patient buyers, we were able to close what turned out to be a learning experience for all involved.

If you are a buyer reading this, my advice is make sure the loan you get DOES NOT HAVE ANY PREPAYMENT PENALTY attached to it.  Ask your loan officer, and make sure when you are signing loan papers at the closing, that you read the fine print.  I have heard stories of buyers finding out the hard way what they were told and what they signed were two different things.

The other piece of wisdom I want to impart to buyers:  Get preapproved, and you were preapproved already, contact your loan officer again because the financing world is upside down at the moment and loan programs are vanishing; buyers that were qualified a month ago are finding that loan programs are no longer available.  Stated income loans are still there (minimum 20% down and 700+ credit) but going bye-bye.  Stated income, stated asset, gone.  100% financing, going, going...

Thanks for reading my blog.

It's 8:00 AM and I had my first call of the day from an inquiring buyer of one of my listings that is pending and scheduled to close tomorrow (that story will be my next blog).  I get lots of calls from prospective inquiring buyers on my listings.    All the doom and gloom one reads about the world of real estate and two facts unarguably remains: 1).  People have to live somewhere  2).  They ain't building more land, especially along the coast. 

I understand people are nervous about the economy.  Gas today is $4 a gallon in Humboldt Co. Food prices going up.  War, economy, unemployment going up.  Lots of negative press. Financial markets in turmoil.  Is this the first recession in the 232 years since our country was founded?  NO.  Will it be the last.  No way.  It was much worse in the 1990's in so cal....people were losing their jobs by the thousands and subsequenty losing their houses....different dynamic today.  Agree with me or not, its all about confidence in the economy.  I sense the country is tired.  It needs new energy.  My humble opinion is no matter who gets elected, a fresh change will help get the confidence level back and right the economy.  As I say to buyers, buy in a buyers market now because prices are down and interest rates are still very attractive.  Financing has dried up for marginally qualified buyers but that means lenders are going back to basics of credit, income, and down payment....that will help the real estate market in the long run once this sub prime mess washes out, which it eventually will.  Am I unrealistically optimistic?  No.  I have been around long enough to remember different ebbs and flows of the economy and real estate markets, unlike many in this business who never experienced a "buyers" market.  I just fall back to points one and two above, and add a third:  The population in California is getting bigger, not smaller.

 Thank you for reading my blog.

I have been following a little bit of the politics behind the foreclosure "crisis."  While I have empathy for people who lose their property because of circumstances sometimes out of their control, is it reasonable and fair to expect the government to bail people out?  In an election year I guess the answer falls somewhere between maybe and yes.  Hillary proposed spending $30 billion so the government could buy back foreclosed properties and as I recall, she did not say whay they would do with those properties, how they would maintain them, who would buy them, and how the sale of government owned properties would affect (it would kill) property values in surrounding areas.    Every bargain hunter would salivate at the thought of government owned repos.  I have not followed what the others have said because I am fundamentally against the idea of government bailouts of any kind in any industry.  Bear Stearns CEO earned $38 Million in "compensation" in 2006.  Government bailed out Bear Stearns recently cost tax payers $30 BILLION.  The average person could'nt be happy with that trade.

In the real estate business like many sales jobs, we work on straight commission - if we don't sell we don't get paid.  If we have a bad few months and no income coming in, does anyone feel sorry for the realtor?  I doubt it. I don't expect or want sympathy.  Would I expect the government or my mortgage company to bail me out?  Hardly?  What happened in southern California in the early to mid 1990's is happening nationwide today - people in foreclosure losing their home, markets soft, and things in some turmoil.   What will happen eventually:  Markets will recover, confidence will improve (watch after the election for confidence levels to go up - the people want change), sellers will be able to sell and buyers will complain that prices are too high and that homes are unaffordable.  The one big difference I note between so Cal and now is back then people were losing their jobs and losing their house.  From what I have read, many of the people losing their houses these days are still working (exceptions in Midwest), they just got bad loans.  I do like the idea of people in these sub prime loans being able to refi into an FHA government insured loan.  That would be an excellent option. 

One bit of advice I give to buyers who are nervous and influenced by the negative press: Buy in a buyers market like today's market, plan to hold the property for 3-5 years minimum.   

Thank you for taking the time to read my blog.

Most Realtors in today's market at one time or another will get requests for foreclosure properties.  The vast majority of people who ask about foreclosures have little to no experience about the nuts and bolts of the foreclosure process and assume that foreclosure property is the equivalent to stealing property or at least getting it dirt cheap with little to no cash out of pocket.

This blog is meant to be a quick primer on foreclosures.  In California, the timeline on getting a house foreclosed in goes like this:  1). Owner misses payment.  2). Company servicing loan send out Notice of Default (NOD) letter to owner. 3). NOD letter starts 90 day clock ticking.  4). If owner does not pay back payments within the 90 days then. 5).  Lender or servicing company sends another letter, a Notice of Trustees Sale to owner starting another 21 day clock and. 6). After 21 days if owner has not paid back what is owed then lender takes back or forecloses on property.  So there is a 90 day clock plus a 21 day clock in the foreclosure process in California.  That timeline can get delayed if the owner files Bankruptcy or is trying to work out a repayment with the lender.

So, how does one purchase foreclosed properties?  There are typically 3 ways to do this.  The riskiest way by far is at the end of the 21 days at the Trustee's Sale, which is typically held on the courthouse steps in public or at the offices of the title company, and another way is through the typical channels of a local realtor and the third is directly from the bank.

Buying a property at a Trustee Sale is not for inexperienced buyers and requires a great deal of homework and knowledge of the market in the area as well as cash on the barrelhead.  First of all, let's say the foreclosed property has a market value of $250,000 and there was a loan balance of $300,000, the negative equity is <$50,000> and no one will bid on the property at the Trustee's Sale since more is owed on the house than its worth.  If no bids are received, the property reverts back to the lender who eats the $50,000.  The lender will typically list the property with a local Realtor.   Most foreclosed properties are subsequently purchased this way because once the lender takes the property back then sometimes they clean it up, title is clear, and the house becomes easier to market and sell and conventional financing is available at this point.

Here is the other scenario.  Trustee Sale, loan balance of $250,000 and house worth $300,000, so there is positive (+) equity of  $50,000.  Saavy investor's look for properties like this to bid on at Trustee's Sales, although most properties that are foreclosed on have negative equity. 

At the Trustee Sale (which is held the same as an auction) the bank representative will announce whether anyone is there to bid on the property.  Since it is an auction format, one or more bidders could bid, raising the price and lowering your return quickly since in this example the starting bid was $250,000.  Let's assume there is only one bidder.  Congratulations.

Here is where buying a property at a Trustee's Sale requires a great deal of experience, knowledge, and cash.  Using the above example, the winning bidder must procure a cashier's check on the spot for $250,000, since properties bought at a TS can't be financed (unlike properties purchased after they are listed).   So you must pay with cash.  Unless the property had been on the market, you are buying the property sight unseen.  What if the foreclosed parties are still in the house?  Now getting them out is the buyer's problem.  You can see buying property this way at a Trustee Sale auction is not for the faint of heart or inexperienced or undercapitalized.   

There are many books and websites on this subject.  In most areas there are Realtors who work REO's (real estate owned) bank properties.  There are buyers who track REO's and then try and contact the lender directly before it goes to a Broker for sale.  Unless the foreclosing lender is a small local bank, it's hard for the public to get to the decision maker, and easier to wait for the properties to get listed or sale.  I could write a lot more on this but this is a basic primer on different ways to buy REO's.

Lastly, if you are a buyer in this or any market, getting pre-approved is more important than ever.  Don't even consider making an offer on a bank owned (or any property) unless you have done your homework, because there are a lot of buyers looking for "deals" and the ones who get the deals are the ones who are prepared and ready and qualified. 

A few folks have been following the saga of a short sale transaction I have been involved with since January....what makes this unsual is the seller was short but not tens of thousands short which is typical.  In addition, the seller had a prepayment penalty which expired giving the seller more wiggle room to negotiate.  The bottom line was in order to avoid the short sale altogether required renegotiation and flexibility on behalf of the buyers and their agent.  Luckily also the market in Humboldt County is better than most and the property is unique enough that I could resell it if need be.  Maybe the moon and stars will align on this deal.

So the bottom line is we are back in escrow as a standard transaction and can hopefully close in 30 days.  Waiting on appraisal and inspections.  I hope this has a happy ending. I will keep y'all posted.  What this deal reminds me of brings back memories of the 1990's real estate in southern California when short sales and difficult transactions were the norm.....This is my feeling regarding working short sales:  I like helping people as much or more than the next guy, but I also want to get paid for my work.  I don't think that is unreasonable.  My plumber makes $75 an hour, a good attorney in this area makes $300-$350 an hour.   I have 21 years experience in the real estate business and offer clients a great deal of skill at what I do. With short sales, the odds of getting paid as well as the odds of closing the short sale for the buyer are against them.  Personally, if a buyer wants to make an offer on a short sale property against my reccomendation, I believe the buyer compensate me for my time and expertise if the deal does not close.  Its only fair.  Who wants to work for free?  I would be interested to hear what buyers and other agents think.  Thank you for reading my blog and visit my website www.humboldthouses.com to see great listings in Humboldt County, CA.

The news about real estate seems to be less than positive these days.  If you live in Michigan where the state is shrinking in population, that is a long term concern (I'm originally from Michigan by the way).  If you live in many areas in California the news is a concern if you have to sell.  If you don't have to sell than what happens in the short term to the real estate market is irrevelant.   What scares me more than the short term issues of the economy here in California is that according the the US Census, the current population of California is 37 million people (more than all of Canada) and by the year 2025 is projected to be at 50 million people.  That is a scary number.  Luckily in Humboldt County behind the Redwood Curtain the population is currently at around 130,000 people over an area covering 3400 square miles and won't grow significantly.  Compare that to Orange County, 800 square miles and over 3 million souls fighting for space.  The point is people will always need somewhere to live and unless someone finds a way to grow land in the Pacific Ocean, the short term pain the real estate market is experiencing will have long term gains due to the increase in the population.

There was one house in Eureka that came on the market last week, a bank repo, and within 3 days there were 7 - count 'em - seven offers...just like 2004 redux, so don't tell me buyers aren't hovering looking for deals.  Talk to agents including myself whose buyers have lost deals on multiple offer situations recently or talk to buyers.  My short sale deal in escrow (still hanging in there and we are now in the process of renegotiating the deal) - the phone is ringing off the hook, people inquiring about that property.

Here is a pitch to see my website www.humboldthouses.com for some interesting deals.   Thanks for reading my blog.  Comments and feedback is appreciated.

It has been awhile since I last posted an entry because it has been awhile since anything progressed even one step.   The seller had been assigned a "negotiator" and was given a laundry list of items to submit to Countrywide, including tax returns, bank statements, hardship letter, comparable sales info.  Some of those items had previously been submitted to Countrywide but apparently one department does not talk to the other.  I had questions for the negotiator who is based out of Plano, Texas (remember no one goes to school to become a short sale negotiator).  After calling and leaving a message, I waited a few days, no return call back.  I know they are probably inundated so I e-mailed the questions.....wait a few more days....no e-mail....e-mailed questions again...no e-mail response.  Call seller who still does not have everything they need to submit to Countrywide.  call buyers agent...buyers getting antsy....in a nutshell this deal has been under contract since around the end of January - with the exception of getting a negotiator assigned to the property, we are no closer to closing this deal than we were 2 months ago.  I'll keep y'all posted on this deal.

I have had some people who read the blog e-mail me about their frustrations about this process.....I understand....let me tell you my frustrations:  I have been selling real estate since 1986.  I survived the horrible market in southern California in the 1990's (stay alive in '95).  Short sales were common then, too.  You would think with the advent of the internet and technology since that time, these imbicile lenders would be better prepared to deal with the situation as it presently exists in most markets in this country.  It is 1992-1996 deja vu all over again.  None of the lenders were seemingly prepared for the eventual "crisis" (by the way, fewer than 5% of mortgages are in default).  From my experience back then banks were not set up to deal with short sales.   They are better prepared to deal with foreclosed or Real Estate Owned (REO) properties.  Big difference.

If you are a buyer reading this and want to get involved in a short sale, my advice is if you find a property you like, wait for it to actually become foreclosed on (REO).  This way you avoid the short sale process, its a much cleaner deal because at that point, you get clear title and the bank has already eaten the loan and any back taxes and they (the bank) OWN the property instead of a short sale where the bank DOES NOT own the property but is calling the shots.  There are ways to track the property throughout the foreclosure process (in California you have a 90 day notice of default (NOD) and a 21 day notice of Trustee Sale). Plus you can likely get a better deal after the bank owns the property. Plus you know what the house looks like and the condition since the former owners would be gone at that point, having been foreclosed on and possibly evicted.  Another important point to ponder, since most short sales the sellers are walking away with zero cash and their credit gets screwed anyway, what is their motivation to go through all the hoops and bells they are being asked to go through in order to cooperate with a short sale?  Since in most cases they are probably not making payments, its in their interest to drag out the process and live payment free in the house as long as possible. Also make sure your agent can explain the nuts and bolts pros and cons of a short sale and is not just looking for a sale.  Most agents don't know what they need to know to advice their clients about the risks of a short sale if they have been in the real estate business less than 10 years.

Other points I want to make and for the buying public to consider: From a buyers perspective, I could see absolutely no benefit to playing the waiting game hoping to close a short sale.  If you wait, you risk losing other opportunities or perhaps interest rates going up.  You also don't know what the house will look like (assuming you are able to close a short sale) at the end of a short sale since its not a happy move for the seller.  Let me put in more bluntly:  I have sold real estate 21 years.  I have sold hundreds of properties over the years. I have bought plenty of real estate for myself.  I know the ins and outs.  I know the game.  I worked REO's in the 1990's with Freddie Mac, GE Capital, and others.... If I was looking to purchase a property I would NEVER get involved in the purchase of a short sale, and that is given my level of experience!  Its dirty real estate.  Each lender is different and the frustration level may vary depending on the lender involved.  Best advice is:  Find a seller with equity who is motivated to sell.  That is the key to getting deals in this market.  I don't recommend lease options or assume existing seller loans...stay away from those "creative" approaches....big time risks....those topics will be for another blog.

This area is called the "Redwood Curtain" the reason is the distance (and some would say isolation) from the large metropolitan areas.  Because of that, the real estate market here, while not without its issues and problems (like anywhere), the market here is much smaller and therefore not as impacted bu the high foreclosure numbers seen in other parts of this state.  I went to a seminar recently and 5 of the 10 cities with the highest foreclosure numbers were in California, including Sacramento (300 miles from Eureka), Stockton (even further), and various places in southern California.  All 5 of those high foreslosure cities had the same thing in common - massive amounts of new construction driving down prices.  There is very little new construction in this area and while prices have dropped, certain areas like Arcata which is home to Humboldt State U. have held their value, and that is typically true of college towns and coastal areas.   Eureka, Arcata, McKinleyville are coastal areas.  There are also many older houses that could be bought and with sweat equity and some work upside value increased....you won't find many fixer upper opportunities in newer areas.  I have sold several properties recently that had multiple offers, something buyers are surprised to learn.   The median home price here is around $300,000, way less than other parts of the state, and as someone who moved here from Orange County, a much better place to live and raise a family (in my opinion).

FYI - there are direct flights to this area from LA on Horizon/Alaska Airlines.  The curtain is open!

Find out more about Humboldt County by going to www.humguide.com or view more real estate at www.humboldthouses.com

Each Monday for the past 3 Monday's I have called the lender, Countrywide to get a status.  Today I called one number I had, was transferred to a second department before being told I needed to talk with the "workout department".....all the paperwork they had requested has been received (until they ask for something else, of course), and the nice lady in the workout department I finally got to speak with said that the file has not yet been assigned a "negotiator" yet however she said she would walk the file over to her boss and she if she could move it along and get it assigned, because the sales process is in a holding pattern until the negotiator get the file....I spent about 30 minutes on the phone today to find all this out...

Next Monday I will make the call again to see if the negotiator has been assigned.  For any Realtors or buyers who might be reading this, if you get into a short sale transaction, keep in mind each lender is different....the seller also has to be willing to cooperate...I read that Countrywide has 3000 employees assigned just to doing workouts like this, and I guarantee that 3 years ago they probably did not have 300 who were doing this.  You would think with so many people it would not drag on like this.....but......we will see what happens.

One other bit of news regarding short sales:  I read the new tax law offers sellers involved in a short sale a big break:  No 1099 from the lender as debt relief....talk with your tax advisor to learn more if you are in that situation.