Ask the Expert: Failed Short Sale; Two Sides of Appraisals
March 27, 2010 by Debbie Bremner · View Comments
Q. I know from your blogs that you work with home retention and short sales. What are my if my pre-foreclosure home doesn’t short sell?
A. Not all lenders will cooperate with a short sale, nor do they have to. Your options, at the point of pre-foreclosure, are to complete a loan modification, payoff the loan, reinstate the loan, transfer the deed to the lender through a deed in lieu of foreclosure or sell the property (either short sale or normal sale). Otherwise the lender will foreclose.
Most important in a evaluating your options in short sale and foreclosure is: What are the specific time frames?
When was the Notice of Default (NOD) filed by the bank? When is the scheduled date for the trustee sale? Have you discussed a short sale with the lender’s Loss Mitigation Department? Was a complete short sale package submitted? Was a loan modification attempted?
Remember that as per HAMP (Home Affordable Modification Program) regulations, lenders must document all attempts at home retention, and certain time restrictions and written notices, specifying the borrower’s rights and responsibilities, must be adhered to.
A Deed in Lieu of Foreclosure is a another option, if the impact on the borrower’s credit is negligible and there aren’t any other liens or encumbrances against the property.
There are too many factors for me to list here, but suffice it to say that there are many obstacles to short sale, beyond just pricing and market conditions. But under the right circumstances, it is reasonable to expect a short sale to be successful.
If you want to read more about this, I have prepared a FREE 32 page booklet on “How to Avoid Foreclosures” which details all of the processes for you. I will send it to you with absolutely no obligation, just to do my part in helping with home retention. Just contact me below.
Q. My house appraised for more than what I bought it for. What does this mean?
There are two different occasions when the appraised value is potentially higher than the purchase price. One is at the time of purchase, the other is at the time of refinance.
If it’s a refinance, it simply means that an appraiser’s opinion of its market value today is higher than a different appraiser’s opinion of its value at the time of your purchase. The new lender will consider that you have built equity in your home, and will lend money on the refinance based on the higher value. (More on market value below)
If you are purchasing a home a a retail purchase (seller to buyer), your lender simply wants to be sure that their investment (i.e. the loan money) is supported by other comparable homes. They use this method of approximating value to determine what dollar amount, based on percentage of value, that they will lend on the property. Only on very rare occasions does the appraised value come in higher than the purchase price, because the appraiser knows the purchase price at the time he performs the appraisal, and therefore looks at the property with a somewhat tainted eye.
If you purchased a retail property and it appraised over value, it’s a rare bird. But appraisal is SUBJECTIVE; the real (market) value of a property is what a willing buyer will pay, and what a willing seller will accept. That is the definition of true market value. So in reality, for you, appraisal is irrelevant. And so it will be, to the next buyer. It is simply an approximation of value at a given time made by looking at various market conditions. It does not necessarily mean the property was undervalued by the seller.
It also does not mean you “got a great deal”. It means your appraiser looked at things differently than you and the seller did. And one post script: This is by no means instant equity.
The definition of equity is: the difference between the market value of a property and the claims (liens) held against it.
The important words: MARKET VALUE. As I said before, market value is what a willing buyer will pay, and what a willing seller will accept at a fixed point in time.
When you purchased your home, YOU defined its value, not the appraiser. Your sale is now a comparable that the next appraiser will rely on. That sale is a matter of record.
Q. I finally found a home I really want to buy, and made a fair offer. Now the appraisal has come in low. What does this mean?
A. In today’s market, yours is by far the more common situation. As said above, if you are purchasing a home a a retail purchase (seller to buyer), your lender simply wants to be sure that their investment (i.e. the loan money) is supported by other comparable homes. Very commonly, the property will appraise under the purchase price, which will require you to get a second, and sometimes third appraisal, in order to obtain your loan. This is due, in large part, to new appraisal regulations.
The appraisal regulations have changed dramatically over the last year, and outside appraisers who are assigned jobs in areas with which they are unfamiliar are causing the appraisals to come in below market value on a much more frequent basis. Also, the lack of comparable retail sales and an abundance of distressed sales are making it harder and harder to appraise retail properties.
This is the time to take a deep breath, and IF you believe the property is worth what you offered, take the following steps:
1. Talk with your lender about ordering a reappraisal. Listen to their advice.
2. Have your Realtor prepare a good set of comparables to give to the new appraiser.
3. Have the Listing Agent meet the appraiser and do their due diligence by asking about the appraiser’s qualifications and LOCAL experience. If the appraiser is not familiar with your area and type of property, you have the right to ask for a different appraiser. DO IT!
If you believe you overpaid, then you can use the appraisal contingency to get out of the transaction; you can re-negotiate the purchase price with the seller (although the seller will usually want 2 appraisals before they will renegotiate), or you can make up the difference by adding to your down payment.
But rest assured, a low appraisal is VERY COMMON in this marketplace, based on new appraisal guidelines. It simply does not mean you necessarily overpaid. As I said in the question above, it means your appraiser looked at things differently than you and the seller did.
Posted via email from Debbie Bremner’s posterous
UPDATE: Appraisals compromised due to lack of comps
September 14, 2009 by Debbie Bremner · View Comments
In March, I started writing about the fact that home appraisals, and therefore home purchase transactions, were being compromised by the lack of recent sales comparables in the higher end price range on the Westside. The situation has become even more complicated, due to the fact that major lenders are now sending out appraisals to a network of appraisers, some of whom have little or no experience working in a market like this one.
In an attempt to eliminate a perceived conflict of interest, on May 1, 2009 Fannie Mae and Freddie Mac began requiring that the appraisals be ordered from a neutral third party called Appraisal Management Companies (AMC). As these AMCs were hastily set up they took on many appraisers, who are inexperienced, geographically undesirable and/or not as conscientious as we have become accustomed to. To further aggravate the situation, the AMCs are taking a substantial cut from the appraiser’s fee, so not only are the appraisers only making about 60 to 70% of the amount that they used to make but now they have no local business relationships, which makes them less inclined to be service oriented. Additionally, appraisal services used to be a two or three day turn around, where no real communication was necessary because local appraisers would simply do the job based on their experience and familiarity with the local market. We now see appraisals often stretched into a 10 to 14 day ordeal, where communication is dismal, at best. All of this has been done in order to avoid even the appearance of impropriety on the part of lenders and appraisers.
Finding the right house to buy is never easy; selling a home today is also challenge. It’s best to prepare yourself for obstacles that could cross your path so that you’re prepared should they arise.
In some markets, one in three transactions doesn’t close. This is a high ratio compared to the fallout ratio in previous years when the housing market was stronger and financing options were plentiful. In past years, most transactions fell apart over inspection issues. The biggest hitch today is financing, which is not to say that property defects don’t come into play.
For some time, lenders have tightened up on their qualifying criteria, making it more difficult for buyers to obtain the financing they need to close a sale. Recently, appraisals have become problematic, particularly in low-inventory, higher-priced neighborhoods such as Brentwood, Westwood, Little Holmby, Bel Air and Beverly Hills.
There are three components to lender approval. The borrower must be financially qualified. This requires a good credit score, sufficient cash for a down payment and closing costs, as well as verifiable income. The lender also needs to approve a title report on the property to confirm that the seller has marketable title to the property. And, the lender needs an appraisal of the property to confirm that the buyer is not overpaying.
Previously, lenders’ underwriters required three comparable sales in the area that occurred within the last six months to validate the purchase price. Due to the declining housing market, lenders now want to see comparable sales information on listings that sold and closed within the past 60 to 90 days. The number of high end sales in Little Holmby in particular has been very low in the past 9 months, making it difficult for appraisers to come up with enough comparable sales information to satisfy the lenders.
To complicate matters, some appraisers and lenders automatically lower the appraised value by a certain amount if the property is in an area that is deemed as a declining market. (Any time a property has been on the market for more than 180 days, the lender automatically deems it is a “declining value” property. Since market times in our higher end neighborhoods have been steadily on the rise, many comparables are already labeled declining value by the appraisers, affecting the properties they are being used for comparables.) This can result in an appraised value that is lower than the price the buyer and seller agreed to in the purchase contract.
What can you do if an appraisal comes in under the negotiated price? We will talk to the lender to find out which properties were used as comparable sales. We may be able to augment their report by providing the appraiser with comparable sale information that can support the contract price, particularly on private sales and especially if the appraiser is from out of area.
The most accurate appraisals are done by appraisers who know the local market well. Unfortunately, changes in the lender’s practices are resulting in more appraisals done by appraisers from outside the local area. Many lenders no longer have their own, in-house appraisers; many are relying on large nationwide appraisal services to provide appraisal services. In addition, be prepared that the appraisal times are longer than even 60-90 days ago, and make sure your Realtor® adjusts the contingency periods appropriately.
If the appraiser can’t be convinced that the appraised value is low, and the buyers and sellers want to make the transaction work, it requires a compromise. Patience and creative problem solving, in conjunction with the buyer, seller, and mortgage broker, will often yield good results. Sometimes the purchase price can be adjusted, a new appraisal can be ordered, or secondary financing from the seller may be an option.
If you would like information on your particular situation, either as a buyer or seller, please contact us at The Bremner Group.
Loan Modifications- How Realtors Can Help
September 12, 2009 by Debbie Bremner · View Comments
As homeowners and Realtors know, foreclosure are eating away at the fabric of the local real estate market, putting families on the street and wreaking havoc with the values of properties in their neighborhoods. In many areas, whole blocks have been decimated by foreclosures. The mortgage industry has responded to skyrocketing foreclosure rates by increasing their outreach efforts and offering loan modifications prior to foreclosures.
For the last few months, I have had the pleasure of working with a homeowner counseling firm in addition to my work as a Realtor. We work with many of the nation’s largest mortgage servicers, primary mortgage insurers, government agencies and counseling agencies to facilitate communication with homeowners facing foreclosure, before it is too late. As an experienced real estate professional who cares about my community and has a vested interest in preserving home ownership, my job is to help the homeowner explore the option of loan modification with their lender. I am part of a nationwide network of Home Retention Consultants (HRCs) that ensures that homeowners understand their options to avoid foreclosure and help them through the process. There is absolutely NO COST INVOLVED for a client to work out their loan with any of the major lenders we represent (Wells Wachovia, CitiMortgage, B of A, etc)
Mortgage servicers are experts at managing loans and the related collections process. However, homeowners often view communications from servicers as rigid and intimidating. As a result, many homeowners never recognize the servicer’ desire to avoid foreclosure, and thus evade communications and never pursue an alternative to losing their home.
Homeowners want to stay in their homes. Servicers want homeowners to stay in their homes if at all possible. The realty is thousands of foreclosures every year that could have been prevented if only the proper doors were opened.
Home Retention Consultants are experienced, highly-trained real estate professionals who live in the communities they serve. The HRCs follow up with the process to make sure the borrower’s needs are being met.
Last week I met with a gentleman who was told, erroneously, that he needed to hire a third party firm’s service, at a cost of $2500, to complete a loan modification that the lender would have done FOR FREE. As a Realtor and a Home Retention Consultant, I am appalled that there are firms out there taking advantage of families in financial crisis, and extracting money from them, at a time when they don’t have it to spare. Shame on you!
As an HRC, I see clients at the most stressful of times, and I am able to help them. Lenders are reducing mortgage balances, interest rates, terms, and payments. Yesterday I met with a homeowner who was ecstatic to learn that their were options for his family that he had not begun to explore. I came to his home with a bona fide offer of a balance reduction of his loan, which lowered his monthly payment as well. He hugged me and said that this was one of the best surprises he had had in a long time. We called the lender, he accepted their offer, and the process was started, right then and there.
I plead with all homeowners to speak with their lender now while loan modifications are being done. Contact your Realtor, who can put you in touch with the right party to get the process started. Avoid third parties who will charge you fees for services that lenders are performing for free. Your Realtor will have the expertise to assist you in this, and will be happy to do so.
As Realtors, we have a vested interest in serving our community, not just when we take a listing or make a sale, but at any time when homeowners need our service. We can help stem the tide of foreclosures, and change our markets for the better, helping everyone in our community. Speak to your clients, and help them weather this financial storm. They will really appreciate you, and so will the community you serve.
UPDATE: Appraisals compromised due to lack of comps
May 23, 2009 by Debbie Bremner · View Comments
In March, I started writing about the fact that home appraisals, and therefore home purchase transactions, were being compromised by the lack of recent sales comparables in the higher end price range on the Westside. The situation has become even more complicated, due to the fact that major lenders are now sending out appraisals to a network of appraisers, some of whom have little or no experience working in a market like this one.
Finding the right house to buy is never easy; selling a home today is also challenge. It’s best to prepare yourself for obstacles that could cross your path so that you’re prepared should they arise.
In some markets, one in three transactions doesn’t close. This is a high ratio compared to the fallout ratio in previous years when the housing market was stronger and financing options were plentiful. In past years, most transactions fell apart over inspection issues. The biggest hitch today is financing, which is not to say that property defects don’t come into play.
For some time, lenders have tightened up on their qualifying criteria, making it more difficult for buyers to obtain the financing they need to close a sale. Recently, appraisals have become problematic, particularly in low-inventory, higher-priced neighborhoods such as Brentwood, Westwood, Little Holmby, Bel Air and Beverly Hills.
There are three components to lender approval. The borrower must be financially qualified. This requires a good credit score, sufficient cash for a down payment and closing costs, as well as verifiable income. The lender also needs to approve a title report on the property to confirm that the seller has marketable title to the property. And, the lender needs an appraisal of the property to confirm that the buyer is not overpaying.
Previously, lenders’ underwriters required three comparable sales in the area that occurred within the last six months to validate the purchase price. Due to the declining housing market, lenders now want to see comparable sales information on listings that sold and closed within the past 60 to 90 days. The listing inventory in Little Holmby in particular was very low from October 2008 through March 2009, making it difficult for appraisers to come up with enough comparable sales information to satisfy the lenders.
To complicate matters, some appraisers and lenders automatically lower the appraised value by a certain amount if the property is in an area that is deemed as a declining market. (Any time a property has been on the market for more than 180 days, the lender automatically deems it is a “declining value” property. Since market times in our higher end neighborhoods have been steadily on the rise, many comparables are already labeled declining value by the appraisers, affecting the properties they are being used for comparables.) This can result in an appraised value that is lower than the price the buyer and seller agreed to in the purchase contract.
What can you do if an appraisal comes in under the negotiated price? We will talk to the lender to find out which properties were used as comparable sales. We may be able to augment their report by providing the appraiser with comparable sale information that can support the contract price, particularly on private sales and especially if the appraiser is from out of area.
The most accurate appraisals are done by appraisers who know the local market well. Unfortunately, changes in the lender’s practices are resulting in more appraisals done by appraisers from outside the local area. Many lenders no longer have their own, in-house appraisers; many are relying on large nationwide appraisal services to provide appraisal services. In addition, be prepared that the appraisal times are longer than even 60-90 days ago, and make sure your Realtor® adjusts the contingency periods appropriately.
If the appraiser can’t be convinced that the appraised value is low, and the buyers and sellers want to make the transaction work, it requires a compromise. Patience and creative problem solving, in conjunction with the buyer, seller, and mortgage broker, will often yield good results. Sometimes the purchase price can be adjusted, a new appraisal can be ordered, or secondary financing from the seller may be an option.
If you would like information on your particular situation, either as a buyer or seller, please contact us at The Bremner Group.
New Westwood Listings and Price Reductions, Open House
April 26, 2009 by Debbie Bremner · View Comments
New to market this week are three Little Holmby homes: 765 WESTHOLME AVE , LOS ANGELES ,CA 90024 is a newly constructed home in the Mediterranean style, with a two story entry, living and dining rooms with floor to ceiling windows that open out to a small but lush backyardd. Spacious kitchen, with granite countertops & top of the line appliances, opens to a breakfast area and family room. Wonderful library/ office. Upstairs has a master suite with a private deck, plus 2 additional bedrooms and the laundry rm. The main has a media room, wine room & 2 bedrooms w/full baths. Hardwood floors throughout. No expense spared. Offered at $4,299,000.
259 CONWAY AVE , LOS ANGELES ,CA 90024 is a mid-century home that was sold to be developed in 2005. The home has been virtually vacant during that time (and suffered some vandalism), while the owner drew up plans for a large 8000+ square foot home. After having a change of circumstances, the owner has decided to sell. The house is not in livable condition as is, even as a rental or temporary house. The lot is flat and approximately 11369 square feet, and irregular. There is a pool, which will probably need replastering. Plans (approved city plans for living area and underground garage totally 8,994 sq ft. available) will be included with the sale. This is a great opportunity to build on Little Holmby’s premier street. Offered at $2,950,000.
10425 CHARING CROSS RD , LOS ANGELES ,CA 90024 occupies a corner lot Charing Cross & Conway in upscale Little Holmby. Spacious family home with newer kitchen, some hardwood floors & copper plumbing installed and large swimmer’s pool. Upstairs includes 3 en suite bedrooms and another that could be a gym or office. Spacious entertaining areas include: living room, formal dining room and family room. This home needs updating. Lot size is 11,560, and the owner lists the square footage as approximately 4000 in the house. Offered at $3,395,000.
Also new to market this week are the following Westwood properties:
2257 MANNING AVE , 4+4.5, 1,695,000
10539 ILONA AVE, 2+1, $849,000
10307 EASTBORNE AVE , 3+2.5, 1,995,000
2010 BENECIA AVE , 2+1.5, 1,129,000
10525 WELLWORTH AVE , 3+2.5, $1,449,000
10707 WELLWORTH AVE, 3+3, $1,900,000
10528 Le Conte Ave., LA CA 90024, a remodeled Traditional home in lower Little Holmby, received a price reduction $200,000, down to$2,495,000. This is the 2nd price reduction during the listing term, which started 90 days ago with a list price of $2,995,000. According to the MLS, the home is a 4 bedroom, 3.75 bath on a 7,890 sq ft lot. From the outside, a traditional style gives way to an interior with clean, crisp lines, open floor plan, great light and ideal indoor/outdoor flow. The living room has a soaring ceiling, and opens off to a formal ding room and an intimate den. Nice guest quarters or maids downstairs is quite cozy. Fabulous eat-in cook’s kitchen has been updated with higher end stainless steel appliances, newer cabinetry and stone countertops; the kitchen and family room open to patio and a small but private grassy yard. 3 bedrooms up, along with an upstairs kid’s play area and separate office.
The Westwood Little Holmby Mediterranean home at 911 Hilts Ave., LA 90024 received a price reduction this week of 8.31% or $241,000, down to $2,659,000. The home was listed in early March for $3,150,000 and this is the second price reduction of the listing term. The seller is relocating. The property is a 6 Bedroom, 4400SF custom built home; newer construction was designed by the seller. Cook’s kitchen with granite counters. Large deck overlooks grassy yard with room for pool. The first level has a guest suite plus maids and library. Four upstairs bedrooms include a master bedroom with fireplace, a marble bath, and a balcony with city vus. Appraised in ’08 for 3.6 million. The MLS lists the home as a 6 bedroom, 5.5 bath, 4,400 sq ft home on a 7,623 sq ft lot.
10326 Strathmore Dr., LA CA 90024, a Traditional style home in Little Holmby, received a price reduction of $500,000, down to$3,999,999. The home has been on the market about 4 months and started with an asking price of $5,595,000. This is now the third price change during the current listing period. The home is a 5 bedroom, 7 bath, 4,610 sq ft home on a 14,984 sq ft lot. This is a traditional center hall floor plan home with a wonderful living room, formal dining room, gourmet kitchen, large breakfast room, and family room. Upstairs rooms include a master suite with his & her baths, large closets throughout and three family bedrooms.
This Tuesday you’ll have the opportunity to view 16 Little Holmby properties during a special Open House from 11 AM to 2 PM.
If you would like a copy of the listings, above, you can download a copy here.
Sold Properties and Pocket Listing Update
April 23, 2009 by Debbie Bremner · View Comments
The Brentwood home at 650 Firth Avenue has entered escrow for the third time. Listed originally for 9.2 million in January of 2008, the property sold twice previously, after 3 major price reductions brought the asking price down to $5,000,000. Both of those escrows did not result in successful closings. The estate, designed by Paul Williams, was built in 1939, a wonderful example of the design and vision of this now-well known architect. The home sits on over an acre of prime land, on one of the most desirable lots in Brentwood. Signature Williams’ floating staircase. Grounds are equally impressive with mature trees and unobstructed views.
11256 Homedale St., LA CA 90049, an unusual Westwood Hills mid-century home finally sold after 152 days on the market The home was listed on 9/3/08 for $1,680,000 and received 2 price reductions during the listing term. The house closed at the end of March for $1,370,000. According to the MLS, the home is a 4 bedroom / 5 bath, 2,289 sq ft home on a 9,420 sq ft lot. Floor to ceiling windows had views of a Japanese garden with tea house, stream, waterfalls, koi pond and mature landscaping. The living room had a fireplace and opened to a large rooftop terrace. Serene master suite opened to a garden, and the master bath looked out to a private garden with waterfall. Two additional bedrooms and bath. There was a separate maid’s plus bath downstairs with outside entrance. Also, there was a large room with bath and outside entrance, which could be ideal for at home office/gym. This is a clear example that homes are selling once the pricing gets to the right level.
The following POCKET LISTINGS are available now:
Little Holmby:
Remodeled 4 bedroom, 5 bath 4,294 SF Pool, Nice! $3,695,000
New Construction, Mediterranean, 6 bedroom, 6.5 bath $4,299,000
Santa Monica:
Gorgeous 4 bedroom, 3+ bath, single story, 1 block from Montana, with pool $2,300,000
Brentwood:
Remodeled 1 story, 10,000 sq ft lot, 3 bedroom, 3 bath $1,799,000
Lower Mandeville, fixer, 12,000 lot with views, 4 bedroom, 2.5 bath, $1,699,000
Bel Air:
1 story Traditional, remodeled, with views, 3 bedroom, 3 bath $2,399,000
For information, contact Debbie Bremner at The Bremner Group, 310-571-1364.
How Much Will it Cost to Refinance?
March 28, 2009 by Debbie Bremner · View Comments
Finding a good mortgage broker is a matter of asking for referrals from people you know, doing due diligence on every broker you consider, and finally doing the research to find someone who has a good reputation and does not charge unnecessary fees. (See my blog post, Should You Refinance Now?) Now that I have you thinking about the benefits of refinance, I’m getting a flood of emails asking, “How much does it cost?”
So now you’ve decided to refinance your home, and you’re going to use a mortgage broker. You’ve done your homework, and gotten recommendations from your Realtor®. You’ve chosen a well-known company, and you feel confident you’re making a good decision. However, there are some brokers who will charge you fees you shouldn’t have to pay, and who are not very forthcoming about how much they’re charging you or what the fees are for. What are some of the typical fees you might expect to pay?
This question is a tough one, because fees from one lender to the next will vary quite a bit. Some may be negotiable and some may not. So I feel the best way to answer this question is to tell you that you should ask your loan originator what each fee is for.
In the past some lenders were told to show the customer the least amount of fees that needed to be disclosed up front. However with the new regulations in place we are finally seeing a level playing field. If a fee is not disclosed up front it cannot be charged on the Final HUD1 (that’s the form that represents the lender’s fees and approximate closing costs) at closing. The main reason this needs to be regulated is because time after time lenders were rewarded with business by providing the lowest quote, only to increase the fees at the last moment, essentially holding the client hostage in order to close the loan.
Examples of typical closing costs might include:
Escrow) fees, for the preparation and recording of official documents. Typically required by institutional/commercial lenders to ensure documents are prepared correctly.
Title service cost(s), paid for title search, title insurance, and possibly other title services. In some cases the attorney may do the title search or the title service and attorney fees may be combined. Required by institutional/commercial lenders.
Survey fee for a survey of the lot or land and all structures on it to confirm lot size and dimensions and check for encroachments. Required by some institutional/commercial lenders.
Recording fees, charged by a governmental entity for entering an official record of the new trust deed of the property. Required by the government for recording the deed.
Document or Transaction Stamps or Taxes, charged by a governmental entity as an excise tax upon the transaction. Required by law.
Mortgage Application Fees, paid by the buyer to the lender, to cover the costs of processing their loan application. In some cases, the buyer would pay the lender the application directly and prior to closing, while in other cases the fee is part of the buyer’s closing costs payable at closing.
Points, paid by the buyer to the lender. The single largest refinance cost. Points are a form of pre-paid interest, charged by the lender as an alternative to charging a higher rate of interest on the mortgage loan. One point equals one percent of the loan principal.
Appraisal Fees, charged by a licensed professional appraiser. Many lenders will require that an appraisal be performed as a condition of the mortgage loan. The purpose of this appraisal is to verify that the amount of the new deed of trust on the property (upon which the underwriting of the loan is based) is equal to or less than the fair market value of the property.
Pre-paid Property Insurance Lenders will typically require that a mortgaged property be insured at all times throughout the life of the mortgage, and will usually require that the first full year’s property insurance premium be paid in advance by the buyer. If the buyer has not already paid the insurance company directly, this would become another closing cost payable at closing.
Pro-rata Interest The monthly mortgage payment is calculated and payable on a specified day each month. If the closing does not actually fall on that specified date (which is usually the case), then an adjustment must be made to calculate the interest on the loan for the number of extra days until the first payment is due.
Other items in addition to the above may be common in some jurisdictions, and some transactions may include unusual or unique items as closing costs. In the United States, Federal law requires that all residential transactions financed by a mortgage have all closing costs documented in detail upon the standard HUD-1 form. This information must be provided to the principals but does not have to be sent to the government. If you’re not sure what fees you’re going to be charged by an online broker, ask. If a fee sounds suspicious to you, check with other local mortgage brokers to see if this is a reasonable fee.
Should I pay points? Does a zero-point/zero-fee loan really exist?
The best way to decide whether you should pay points or not is to perform a break-even analysis. This is done as follows:
♦ Calculate the cost of the points. Example: 2 points on a $100,000 loan is $2,000.
♦ Calculate the monthly savings on the loan as a result of obtaining a lower interest rate. Example: $50 per month
♦ Divide the cost of the points by the monthly savings to come up with the number of months to break even. In the above example, this number is 40 months. If you plan to keep the house for longer than the break-even number of months, then it makes sense to pay points; otherwise it does not.
♦ The above calculation does not take into account the tax advantages of points. When you are buying a house the points you pay are tax-deductible, so you realize some savings immediately. On the other hand, in the case of a refinance, the points are NOT tax-deductible, but have to be amortized over the life of the loan. This results in few tax benefits or none at all, so there is little or no effect on the time to break even.
If none of the above makes sense, use this simple rule of thumb: If you plan to stay in the house for less than 3 years, do not pay points. If you plan to stay in the house for more than 5 years, pay 1 to 2 points. If you plan to stay in the house for between 3 and 5 years, it does not make a significant difference whether you pay points or not!
Would you like an estimated cost analysis for your refinance? Contact us at The Bremner Group. 310-571-1364.
Heffner, Spelling List Holmby Homes, New Little Holmby Listing
March 27, 2009 by Debbie Bremner · View Comments
Pocket Listing in Beverly Hills Flats, 2 Celebrity Homes, and 3 New Westwood/ Bel Air listings
Spelling Holmby Hills Mansion
This week saw lots of activity in listings on the Westside.
Hugh Hefner and his wife, Kimberley Conrad Hefner, who have lived in adjacent mansions since their 1999 separation, are listing Ms. Hefner’s Los Angeles home for $28 million. Located in Holmby Hills, the house stands next door to the Playboy mansion, Mr. Hefner’s massive, Tudor-style party-friendly home since the 1970s. Ms. Hefner, 1989’s Playmate of the Year, says she and Mr. Hefner bought the house about 10 years ago so that she could raise their two sons there, who are now college age. There’s a door in the wall between the two properties for easier access back and forth. The 1929 brick and wood English manor-style house, on 2.3 acres, measures 7,300 square feet and has a pool and a three-car garage. There’s extensive original wood paneling and a hand-carved staircase. Playboy Enterprises owns the Playboy mansion, but Mr. Hefner owns the house across the street, which he calls the Playmate Mansion.
Candy Spelling, the widow of television producer Aaron Spelling, is offering her Los Angeles mansion for $150 million, apparently the most expensive home for sale in the U.S. Ms. Spelling’s current, 57,000-square-foot house, dubbed “the Manor” and featured on guided tours of Hollywood mansions, includes a bowling alley, a beauty salon, a gift-wrapping room and a screening room whose screen rises out of the floor, with paintings moving up to reveal the projector.The Spellings bought the nearly five-acre property, at one time the home of Bing Crosby, in the early 1980s, tore down the house and rebuilt. When completed in 1991 it was considered the largest home in Los Angeles by far. Mr. Spelling, who produced a string of hits over five decades from “Charlie’s Angels” to “Beverly Hills, 90210,” died at the 123-room house in 2006 at age 83.
New to the market today are two Westwood homes, and one in lower Bel Air.
214 Ashdale Place
214 ASHDALE PL , LOS ANGELES ,CA 90049 is a newly constructed Mediterranean Revival Villa, and is a rare opportunity to own a lavish estate in Bel-Air. Old World charm built to exacting modern standards. Sited at the end of prime Bel-Air cul-de-sac & offers head on views to downtown in a lush canyon setting. The estate is very private, situated behind high walls & gates. All rooms are open onto a central courtyard or out to the pool. Amenities include a screening room, billiard room, gym & attached guest house.Spectacular master suite features sumptious finishes & all the trimmings. 6 Bedrooms, 10 Bathrooms, approximately 11,000 sq. ft. on a 32,890 sq. ft. lot. Offered at $9,350,000.
10715 Le Conte
10715 LE CONTE AVE , LOS ANGELES ,CA 90024 is a chrming country English home with wonderful details, located in Little Holmby. Built in 1933, the home is 3477 square feet on an 8189 square foot lot. The living room has high beamed ceilings and hardwood floors, and there is a formal dining room, 5 bedrooms and 5 baths. There are authentic Art Deco tiles in the guest bath. Remodeled kitchen is light and airy, and the downstairs also boasts a family room. The garage is currently used as a playroom. This is a truly elegant home, offered at $2,275,000.
2146 GLENDON AVE , LOS ANGELES ,CA 90025 is an immaculate 3 Bedroom, 1¾ Bath Spanish home that perfectly blends original charm with modern upgrades. North of Olympic Blvd and located in the Westwood Charter School District. Beautifully landscaped yard in desirable neighborhood. The living room has coved ceilings, hardwood floors and original fireplace and fixtures. Dining room with picture window. Kitchen and baths have been remodeled with Travertine tile and stainless steel appliances. Spa tub in redwood deck. Offered at $1,225,000. Also offered for lease for $4,950.
New Pocket listing in Beverly Hills Flats: A one story Spanish designed by noted architect Paul Williams is available in Beverly Hills. The property is 3 bedrooms plus a den, 2 baths, and needs updating. There is little yard. Offered at $1,400,000.
The home at 2207 Camden Ave., LA CA 90064 received a price reduction of 9.11% or $99,850, down to $995,900. The home was listed 2 months ago on 1/28/09 for $1,095,750 and this is the first price reduction of the listing term. According to the MLS, the home has 3 bedroom and 2 baths, on a 6,500 sq ft lot. It was previously purchased in 5/17/06 for $1,215,000. With this new reduction, the home is now listed 18% lower than the purchase price in 2006.
The property at 2201 Manning Ave., LA CA 90064 received a price reduction of 4.4% or $50,000, down to $1,079,000. The home was listed 3 weeks ago for $1,129,000. According to the MLS, the home is a 4 bedroom / 3 bath, 2,182 sq ft home on a 6,750 sq ft lot.
New Listing, Lease, & Price Reduction in Westwood
March 26, 2009 by Debbie Bremner · View Comments
Charming Spanish Detail
New to the market today is 2372 Overland Ave,Los Angeles, CA 90064, a 1508 square foot Spanish style home with 3 bedrooms and 2 baths (total). Lovely details and a bright color palette make this a completely charming home. The home, built in 1930, features an updated kitchen with white double ovens, a breakfast area, and many cabinets. There is a formal dining room, a step-down living room with a fireplace, hardwood floors, and one remodeled bath. Double paned windows. 52×135 lot with a yard large enough for gracious entertaining and a child’s swing set. The garage has been converted to a one bedroom & bath plus bonus area without a permit. This property lies in the district for Westwood Charter School.
Westwood Tudor
The Westwood Tudor home at 2040 Linnington Ave, Los Angeles CA 90025 received a price reduction of 2% or $20,000, down to $979,000. The home was listed over one month ago for $999,000. According to the MLS, the home is a 955 sq ft, 2 bedroom, 1 bath on an 8,755 square foot lot. Attached to the garage is a 2 story guest house and office, complete with a spiral staircase, vaulted ceilings and a 3/4 bath. The house sits on the east side of Linnington, backing on to Beverly Glen.
10724 Lindbrook Drive
I withdrew the listing at 10724 Lindbrook Drive, LA CA 90024 yesterday, which was for sale at $1,649,000. The property was also listed for lease at $5000 per month, and leased immediately at that price. It was interesting to me to see how many calls I received from families living south of Wilshire in lower Westwood, wanting to move up into Little Holmby now that homes in the lower end have become more affordable. The reasons they stated are: 1. Warner Avenue School; 2. The quality of the neighborhood; 3. Affordibility and possible appreciation; and 4. Holmby Park.
If I can be of any assistance, or if you would like an updated Comparative Market Analysis on your property or to discuss Refinance or Loan Modification options, please don’t hesitate to call. 310-571-1364
NEW BHPO POCKET LISTING
March 26, 2009 by Debbie Bremner · View Comments
Architectural Mini-Estate
Circa 1960 Architectural International style home done to the nines. Situated on a private, walled and gated lot. This home featured 2 bedrooms and a den (approximately 1,887 square feet, 2 updated bathrooms, a large living room, open dining room, sheets of glass, soaring, open entry, skylights, white hardwood floors, new top of the line with professional appliances and stainless steel counter tops, large deck, entertaining patios off the public rooms, and a modest, terraced grassy yard. A hip yet serene jewel surrounded by lush landscaping and located on a quiet cul de sac in prime lower BHPO. Wonderful condition, finishes and sophistication. Not to be missed at this price. $1,379,000
