Real Estate Information Archive


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Buying Bank Owned Property

by Dean Kessler

Some Thoughts About Buying Bank Owned Properties

1. Look for BANK OWNED homes in the Winter! Looking to buy a Eureka, Arcata, Fortuna or McKinleyville REO (Bank Owned) home? REO homes are often “winterized” with the power & water off. This makes them COLD and DAMP during the winter. Hearty souls can beat the competition by shopping mid-winter and get a bargain.

2. DECORATE LATER. Purchase at significant savings then bring in your contractor after closing. REO homes are sold AS IS (torn carpeting, water damage, missing appliances, etc.). Occasionally you can negotiate for repairs on major issues (leaky roofs for example).

3. Easy close. Close in a month. REO homes can close quickly. Purchase is much easier than you might think! FHA financing is available and title is clear. Liens that might have been a problem at auction are cleared out. The home is ready for you to buy.

4. NOT ALL REO HOMES ARE CREATED EQUAL Because a home is Bank Owned, doesn’t make it a bargain. Be sure to evaluate WHY the home didn’t sell before the bank took possession, or took it thru foreclosure. Does the home back to a busy road? Is it sitting in a hole? Under large power lines? Careful not to buy a home that will be hard to sell later!

Want to get on my "Hot list" of Bank Owned Homes? Starting next week I will be emailing a weekly update. Just let me know if you would like to be added to the list.


by Dean Kessler

Real estate investors have consistently been responsible for 15-20% of the single family home purchases in our community over the past 5 months.


Many of these investors execute a typical “fix and flip” plan. They buy a distressed home, invest capital to make it marketable, and then place it back up for sale as quickly as possible. This is a tried and trued plan with numerous TV shows, infomercials and “how-to” books littering the landscape for investors to peruse.


Yet I recently heard about an emerging hybrid of this plan where the investor purchases with the intent of renting the property for three to five years and then selling it.


A brief overview of this plan starts with a property purchase well below retail value. In addition, the investor includes for a 2-step repair expense. The 1st step happens at the time of purchase and pays for repairs sufficient to make the house rentable. The 2nd step occurs after 5 years of being a rental when improvements are made to the property in preparation for being marketed. The idea is to delay the sale to a time in the future when the market is stronger and a higher return can be achieved.


One example I’ve studied is an investor purchasing single family homes in the Bay area for 50% of retail value, paying $80,000 to $90,000 per unit. He budgets $9,000 towards repairs necessary to attract a tenant. He achieves $1,200 a month in rent. He has included in his five year budget a $10,000 expense to make improvements desired to achieve competitive market value prior to selling the house. In five years he believes the houses should sell for $200,000 or more.


This type of investment plan is very focused on a niche market. To apply such a plan to our market would require a careful study of present and future market conditions and our evolving demographics of Eureka, Fortuna, Arcata and McKinleyville areas. And this would not be a passive investment with up to five years of property management. Yet the yield would appear to be very attractive and its risk tempered by time.


And it’s the laser focus into a niche strategy that makes this plan so unique. And every successful investor will tell you that the most important part of your investment strategy – is to have a plan, and then go execute your plan.



Interest Rates Remain at Lowest Levels

by Dean Kessler

Great news for all home buyers. For the 5th week in a row, interest rates have again been reported to be at their lowest levels.


Nationally, the 30-year fixed rate mortgage average interest rate is 4.91 percent. This is .07 percent lower than the previous week. Last year at this same time the interest rate hovered at 6.13 percent.


Locally in the Eureka, Arcata, McKinleyville and Fortuna markets we’re seeing interest rates average right around 5 percent.


For our Humboldt County home buyers this is an awesome time to be purchasing. The Federal Government’s extension of the $8,000 tax credit for 1st time home buyers and the $6,500 credit now being offered to the repeat home buyers, this is a great time to be making a move. And home prices are at their most competitive levels in a decade.


Buyers need to watch out as it appears we are seeing the bottom in sales prices for homes priced below $250,000. For homes priced higher than $250,000, there is still softness in market value. And in the $450,000 price range and higher, this market is still spiraling downward as it aggressively searches for its bottom. Our Humboldt Bay area home buyers are finding some tremendous values across the price range spectrum.

Home Buyer Tax Credit Extended

by Dean Kessler

You probably have heard the Home Buyer Tax Credit has been extended thru June 30, 2010. Here are the details:


1. The $8,000 tax credit is available to “First Time” Home Buyers who have not owned a primary residence in the past three years.


2. A new $6,500 tax credit is available to “Current” Home Owners who have lived in their primary residence for 5 consecutive years of the last 8 years.


3. Although the $6,500 has been labeled a “Move-Up” credit, there is nothing in the law forcing anybody to buy a bigger or more expensive home. You can downsize or upsize and still get the credit.


4. Your adjusted Gross Income cannot exceed $125,000 if you file taxes as a single, or $225,000 if you are married filing jointly.


5. You must be under contract to purchase by April 30th, 2010 and will need to close by July 1, 2010.


6. The cost of the purchased home must be less than $800,000.


7. This is a tax credit. If the home buyer owes the IRS zero dollars, they will get a check for $8,000 (or $6,500) from the IRS. Pretty nice!


Contact us if you would like to learn how these tax credits can be used to help you.

Market Trends - October 2009

by Dean Kessler


As predicted in my last report, sales soared to new heights in October unseen in many years. The number of homes going under contract are at new highs, fueled by the 1st time homebuyers lined up to take advantage of the $8,000 tax credit set to expire 11/30/09. And for the third month in a row we’ve seen the “domino” effect of where 1st time homebuyers are buying the homes move-up buyers are selling, allowing move-up buyers to purchase larger homes.

I remain very optimistic our Congress will extend the 1st time homebuyer $8,000 tax credit. And, the popular rumor circulating for the past few months is that Congress will add a tax credit for the “move-up buyers”. It may be a great opportunity for current homeowners at a time of historically low interest rates to shed the home they’ve outgrown and receive a tax credit, also. You should give some thought to becoming a “move-up buyer” if;

1) You have more children than you have bedrooms, or

2) Your family room used to be the garage, or

3) You’re renting multiple storage units for all your stuff


The top 3 groups of homebuyers:

  • 52% were 1st time homebuyers
  • 17% were move-up buyers
  • 17% were investors

 Distressed Home Sales

  • 4 were REO, or bank owned properties
  • 2 were distressed sellers, or Short Sales
  • 20 homes went into pre-foreclosure
  • 4 homes were auctioned

 If you have questions about how this tax credit could work for you or someone you know, drop us an email or give us a call.


1st Time Home Buyer Tax Credit Extended

by Kristi Machado, Buyer Specialist

Awesome news this week. Congress has approved an extension of the first-time home buyer tax credit through April 30, 2010. It also provides new incentive for move-up buyers. 

The new tax credit extends the existing credit for first-time home buyers, worth up to $8,000, and offers a new credit of up to $6,500 for some existing homeowners.

Click on the link below to learn more about the specifics.

If you would like to take advantage of this credit contact me at I can set you up on our automatic home finder search and you will have new listings emailed to you as soon as they come on the market.

Foreclosure Lenders to Be Held Accountable?

by Dean Kessler

I caught a news article recently in a nationally syndicated web service that will be of interest for Humboldt County and Californiadistressed homeowners going thru a foreclosure process. A law firm in Southern California representing distressed home owners in foreclosure and home owners who had been foreclosed on is now taking the foreclosing lenders to court, challenging the lenders right to a non-judicial foreclosure.


California is one of the few states that allows lenders to foreclose on homes without a court proceeding. A lender can initiate a Notice of Default, wait 90 days, send out a Notice of Sale, and then 21 days later take the property back at auction. The process is systematic, efficient, and requires no judicial interaction.


The problem develops when a homeowner is attempting to pursue a loan modification. How many times have I spoken with a distressed homeowner who was thinking that the lender was working on a loan modification and auction day arrives. The lender forecloses and takes back the property. When challenged by a frustrated, distressed homeowner, the customer service rep typically responds under the guise of missing documentation or “non-responsiveness” from the homeowner. In many cases, it’s the lender at fault because of there keen ability to lose documents, failure to communicate with the homeowners, and the rampant turnover of employees in the lender’s loan servicing departments.


The law firm is attempting to demonstrate in court how lenders need to be held accountable for their actions, or some cases, their inactions. In some cases, the lender has ignored a home owner who may have qualified under Obama’s Home Affordability Stability Plan (HASP).


It will be interesting for Eureka, Arcata, Fortuna, and McKinleyville area distressed homeowners working thru the foreclosure process to see how the courts respond to this legal action.

Displaying blog entries 1-7 of 7

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