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What if Long Beach had a Real Ocean Front?

What would a Real Beach do for Long Beach?

 Have ever thought what impact a real Beach might have on Long Beach?

Seriously, do you think have a natural; un-obstructed ocean would be good for us?

 I do!

 I was just up in the Marina Del Rey / Venice Beach Area doing an appraisal of an Oceanfront Condo. As I stood there and looked out the window, I thought how great the view was. No Breakwater, the real sound of waves crashing on the beach.  Then, when I was outside, there were people all over, walking, jogging, surfing. I walked down to the Venice Pier and looked around at all the activity. I thought of Belmont Pier and what a waste of a good thing it is.

 Just think if we had that kind of activity here. If Long Beach actually became a destination location for its beach. Wow! Crazy!

 What do you think this would do to real estate values?

 I would love to have your comments.

Here are a few shots I took of Long Beach this past December, 2010

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February 22, 2011   No Comments

Double Dip?

There is a lot of talk about a “double Dip in the Housing market over the past few weeks.

Here is a Link to a story on CNBC.  Price Drop Points to Likely Double Dip in Housing Market.

So this got me think about the overall market here in Long Beach.

First, I wanted to look listings this year to new listing last year. As we can see, the chart shows that listing in the early part of this year were above the previous years, but the past 60-90 days we have seen a drop in new listings below the previous year.

This next chart really shows us something. This is the median price compared to a median price compared to the previous year.

If you would like some information like this or assistance on any Appraisals in the Long Beach/Lakewood Area, give me a call. Craig 562-673-1138 or go to www.wallaceRES.com

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February 2, 2011   No Comments

Comparable Selection

When you provide appraisers comparables, make sure that is what they are. If the subject house is 3 bedroom 2 bath, 1,600 sf in Lakewood Please don’t hand the appraiser a home that is 4+ bedrooms over 1,900 sf and over a mile away in Long Beach, and over 6 months old.

Current underwriting has changed for loans. Lenders want to see a minimum of 3 sold comps within the last 90 days. As well as 2 Active or Pending sales.

I typically try to stay as close to the subject as possible for starters. If the house is 3/1, I will focus one finding other 3/1’s first, then expand t 2/1’s and 4/2’s. I want to bracket the square footage. If the subject is 1,600 sf, I want comps that are less and more then 1,600 sf. Remember, we are trying to find the best match to the subject if possible.

Also, tell the appraiser was comps you used in determining the list price. The more information you can provide to the appraiser the better.

Sometimes, the best thing you can do when you think it might not appraise for the price your sellers wants to list is for, call me. I can help, by providing an objective opinion from a third party. I can do this for a small fee.

If you have any Apprasial Needs in Long Beach/Lakewood or surrounding areas, call me at 562-673-1138 or go to my website www.wallaceRES.com

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January 31, 2011   No Comments

Current Long Beach Real Estate Market as of 1/24

The current Long Beach Market remains sluggish, we are still in a “Buyers Market” . The Market Action Index(MAI) is still below 30, anything below is a buyers market, anything above is a sellers market. The 90 day MAI stands at 17.20. The inventory has been tightening and the days-on-market has been increasing to an average of 165 days. This is not good for the overall market.

Agents, these reports from an appraiser, along with your CMA are a great tool to bring to a listing interview.  An added feature would be a Desktop Appraisal of the subject house.
If you are interested, please call Craig Wallace at 562.673.1138

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January 25, 2011   No Comments

Pre-FHA Appraisal Inspections

[Read more →]

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December 2, 2010   No Comments

Turn Around Times and Weekends

Turn around Times and Holidays.

By Craig Wallace – Long Beach Appraiser

I was logging on to appraisal port the other night, and looked at the recent survey they have up. AP does a new survey every few weeks. This one was about turn around times.

The question was “Do you believe that turn-around times should not include weekends and Holidays?  Out of 4,350 respondents, 4,371 said “Yes, appraisal turn times should be based on the regular work week”

I kind of agree, but the reality of residential real estate is that it is a non-stop process. The Agents work weekends, the home inspectors. But, what about mortgage, escrow, title?

Appraisers are a vital part of the real estate transaction, and that transaction is time sensitive. We have to get the report done and no one cares if we have family commitments, holidays or what ever else. I called an agent on the Wednesday before Thanksgiving ,to set an appoint for the Friday after Thanksgiving. This guy was a little upset, and asked why it took so long for me to call. I had to explain that this was a FHA appraisal, the order did not have a case number, and per the lenders instructions, appraisers are not to proceed without a case number, so I had to wait. He then asked, if  I can come out today, Wednesday and have the report in by Friday. I kindly told him “No” and mentioned the due date is the following Wednesday. He then went on to tell me that this was not good, they needed to close, blah, blah, blah….. I kindly told him again that I would be out Friday and turn in the Report next week, and that I would be not working over the long Holiday. In reality, there is no incentive to turn the report in any earlier, if they really needed it that fast, a rush fee would work just fine.

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November 29, 2010   No Comments

Reasonable and Customary Fees for an Appraisal

Reasonable and Customary Fees for an Appraisal.

By Craig Wallace, Certified Appraiser.

What are Reasonable and Customary Fees for an Appraisal?

That seems to be the question that many in the Real Estate Industry are trying to figure out. Prior to the HVCC, the Fees I would charge for a standard 1004 on a home under 2,000 SF was $375-$400. FHA was $450+. Since the HVCC, the fees dropped to $200 -$335. I was no longer able to collect COD, could no longer market myself, and lost all of my long term clients.  But a funny thing happened to fees being charged to the borrower, they went up.

What did you pay for an appraisal on your last refinance or purchase? Was it over $500? Most likely. The appraiser only received 50% to 65% of what you were charged; the bank pocketed the rest as profit. So, I think a reasonable and customary fee is what the borrower has been paying. This shows up on your closing statement, form HUD1. This is what the market is; this is what the end user is accustomed to paying. The fee for the appraisal management company should be separate fee from the appraisal fee. The next time you have an appraiser over, tell him what you have been charged for the fee, but don’t expect him to tell you what he is receiving, because he is forbidden to tell you that. We can get removed from the list.

Some Agents and Homeowners think we are paid too much, but let’s look for a moment at what we have to do, and the hours involved. Personally, I spend about an hour doing the comparable research before I even leave the house. I can spend about an hour driving to the subject neighborhood and photographing all the comps. I can spend about 15 -30 minutes at the subject, more for larger homes. This includes measuring and inspecting. Then the drive back. Once in the office a typical report can take me between 2-5 hours to write. So, we have a total of about 5- 8 hours. A typical AMC fees is $295, so that is between $36 – $59 per hour. This does not include the cost of Gas, E&O insurance, MLS Dues, Continuing Education, Office Expenses, etc. So, this is at the low end of every other party involved in the transaction, but we have the most liability and the most oversight.

I personally feel we should charge by the hour and miles

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November 22, 2010   No Comments

Year to Date October Real Estate Trends in Alamitos Heights, Long Beach

The following Chart shows the Real Estate Market  year to date for October in Alamitos Heights area of Long  Beach.The Price per Square Foot ahs risen slightly, while the median sale price has declined over the past year.

Oct 2010

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November 8, 2010   No Comments

A note about The Foreclosure Mess, from John Mauldin’s weekly E-Letter

Gary Shilling thinks prices are likely to fall another 20%. Given what I am writing about in the next section, that is a possibility. There is certainly no demand pressure to push up housing prices.

The Foreclosure Mess

OK, in a serendipitous moment, Maine fishing buddy David Kotok sent me this email on the mortgage foreclosure crisis just as I was getting ready to write much the same thing. It is about the best thing I have read on the topic. Saves me some time and you get a better explanation. From Kotok:

“Dear Readers, this text came to me in an email from sources that are in the financial services business and with whom I have a personal relationship. The original text was laced with expletives and I would not use it in the form I received it. Therefore the text below has had some substantial editing in order to remove that language. The intentions of the writer are undisturbed. The writer shall remain anonymous. This text echoes some of the news items we have seen and heard today; however, it can serve as a plain language description of the present foreclosure-suspension mess. There is a lot here. It takes about ten minutes to read it. – David Kotok (www.cumber.com)

“Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper…only the note-holder has legal standing to ask a court to foreclose and evict. Not the mortgage, the note, which is the actual IOU that people sign, promising to pay back the mortgage loan

“Before mortgage-backed securities, most mortgage loans were issued by the local savings & loan. So the note usually didn’t go anywhere: it stayed in the offices of the S&L down the street.

“But once mortgage loan securitization happened, things got sloppy…they got sloppy by the very nature of mortgage-backed securities.

“The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.

“Therefore, as everyone knows, the loans were ‘bundled’ into REMICs (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then “sliced & diced”…split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.

“This slicing and dicing created ‘senior tranches,’ where the loans would likely be paid in full, if the past history of mortgage loan statistics was to be believed. And it also created ‘junior tranches,’ where the loans might well default, again according to past history and statistics. (A whole range of tranches was created, of course, but for the purposes of this discussion we can ignore all those countless other variations.)

“These various tranches were sold to different investors, according to their risk appetite. That’s why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.

“But here’s the key issue: When an MBS was first created, all the mortgages were pristine…none had defaulted yet, because they were all brand-new loans. Statistically, some would default and some others would be paid back in full…but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads…but what will the result be of, say, the 723rd toss? No one knows.

“Same with mortgages.

“So in fact, it wasn’t that the riskier loans were in junior tranches and the safer ones were in senior tranches: rather, all the loans were in the REMIC, and if and when a mortgage in a given bundle of mortgages defaulted, the junior tranche holders would take the losses first, and the senior tranche holder last.

“But who were the owners of the junior-tranche bond and the senior-tranche bonds? Two different people. Therefore, the mortgage note was not actually signed over to the bond holder. In fact, it couldn’t be signed over. Because, again, since no one knew which mortgage would default first, it was impossible to assign a specific mortgage to a specific bond.

“Therefore, how to make sure the safe mortgage loan stayed with the safe MBS tranche, and the risky and/or defaulting mortgage went to the riskier tranche?

“Enter stage right the famed MERS…the Mortgage Electronic Registration System.

“MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac (yes, those two again …I know, I know: like the chlamydia and the gonorrhea of the financial world…you cure ’em, but they just keep coming back).

“The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds. MERS was essentially where the digitized mortgage notes were sliced and diced and rearranged so as to create the mortgage-backed securities. Think of MERS as Dr. Frankenstein’s operating table, where the beast got put together.

“However, legally…and this is the important part…MERS didn’t hold any mortgage notes: the true owner of the mortgage notes should have been the REMICs.

“But the REMICs didn’t own the notes either, because of a fluke of the ratings agencies: the REMICs had to be “bankruptcy remote,” in order to get the precious ratings needed to peddle mortgage-backed Securities to institutional investors.

“So somewhere between the REMICs and MERS, the chain of title was broken.

“Now, what does ‘broken chain of title’ mean? Simple: when a homebuyer signs a mortgage, the key document is the note. As I said before, it’s the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a mortgage-backed security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the ‘chain of title.’

“You can endorse the note as many times as you please…but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically, on the note, one after the other.

“If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

“To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.

“Read that last sentence again, please. Don’t worry, I’ll wait.

“You read it again? Good: Now you see the can of worms that’s opening up.

“The broken chain of title might not have been an issue if there hadn’t been an unusual number of foreclosures. Before the housing bubble collapse, the people who defaulted on their mortgages wouldn’t have bothered to check to see that the paperwork was in order.

“But as everyone knows, following the housing collapse of 2007-’10-and-counting, there has been a boatload of foreclosures…and foreclosures on a lot of people who weren’t sloppy bums who skipped out on their mortgage payments, but smart and cautious people who got squeezed by circumstances.

“These people started contesting their foreclosures and evictions, and so started looking into the chain-of-title issue, and that’s when the paperwork became important. So the chain of title became crucial and the botched paperwork became a nontrivial issue.

“Now, the banks had hired ‘foreclosure mills’…law firms that specialized in foreclosures…in order to handle the massive volume of foreclosures and evictions that occurred because of the housing crisis. The foreclosure mills, as one would expect, were the first to spot the broken chain of titles.

“Well, what do you know, it turns out that these foreclosure mills might have faked and falsified documentation, so as to fraudulently repair the chain-of-title issue, thereby ‘proving’ that the banks had judicial standing to foreclose on delinquent mortgages. These foreclosure mills might have even forged the loan note itself…

“Wait, why am I hedging? The foreclosure mills did actually, deliberately, and categorically fake and falsify documents, in order to expedite these foreclosures and evictions. Yves Smith at Naked Capitalism, who has been all over this story, put up a price list for this ‘service’ from a company called DocX…yes, a price list for forged documents. Talk about your one-stop shopping!

“So in other words, a massive fraud was carried out, with the inevitable innocent bystanders getting caught up in the fraud: the guy who got foreclosed and evicted from his home in Florida, even though he didn’t actually have a mortgage, and in fact owned his house free -and clear. The family that was foreclosed and evicted, even though they had a perfect mortgage payment record. Et cetera, depressing et cetera.

“Now, the reason this all came to light is not because too many people were getting screwed by the banks or the government or someone with some power saw what was going on and decided to put a stop to it…that would have been nice, to see a shining knight in armor, riding on a white horse.

“But that’s not how America works nowadays.

“No, alarm bells started going off when the title insurance companies started to refuse to insure the titles.

“In every sale, a title insurance company insures that the title is free -and clear …that the prospective buyer is in fact buying a properly vetted house, with its title issues all in order. Title insurance companies stopped providing their service because…of course…they didn’t want to expose themselves to the risk that the chain of title had been broken, and that the bank had illegally foreclosed on the previous owner.

“That’s when things started getting interesting: that’s when the attorneys general of various states started snooping around and making noises (elections are coming up, after all).

“The fact that Ally Financial (formerly GMAC), JP Morgan Chase, and now Bank of America have suspended foreclosures signals that this is a serious problem…obviously. Banks that size, with that much exposure to foreclosed properties, don’t suspend foreclosures just because they’re good corporate citizens who want to do the right thing, and who have all their paperwork in strict order…they’re halting their foreclosures for a reason.

“The move by the United States Congress last week, to sneak by the Interstate Recognition of Notarizations Act? That was all the banking lobby. They wanted to shove down that law, so that their foreclosure mills’ forged and fraudulent documents would not be scrutinized by out-of-state judges. (The spineless cowards in the Senate carried out their master’s will by a voice vote…so that there would be no registry of who had voted for it, and therefore no accountability.)

“And President Obama’s pocket veto of the measure? He had to veto it…if he’d signed it, there would have been political hell to pay, plus it would have been challenged almost immediately, and likely overturned as unconstitutional in short order. (But he didn’t have the gumption to come right out and veto it…he pocket vetoed it.)

“As soon as the White House announced the pocket veto…the very next day!…Bank of America halted all foreclosures, nationwide.

“Why do you think that happened? Because the banks are in trouble…again. Over the same thing as last time…the damned mortgage-backed securities!

“The reason the banks are in the tank again is, if they’ve been foreclosing on people they didn’t have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for.

“And it won’t matter if a particular case…or even most cases…were on the up -and up: It won’t matter if most of the foreclosures and evictions were truly due to the homeowner failing to pay his mortgage. The fraud committed by the foreclosure mills casts enough doubt that, now, all foreclosures come into question. Not only that, all mortgages come into question.

“People still haven’t figured out what all this means. But I’ll tell you: if enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loans and keep their houses, scott-free? That’s basically a license to halt payments right now, thank you. That’s basically a license to tell the banks to take a hike.

“What are the banks going to do…try to foreclose and then evict you? Show me the paper, Mr. Banker, will be all you need to say.

“This is a major, major crisis. The Lehman bankruptcy could be a spring rain compared to this hurricane. And if this isn’t handled right…and handled right quick, in the next couple of weeks at the outside…this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don’t need to pay their debts?”

(I am not sure who wrote this, but if you want your 15 minutes of fame, I will be glad to credit you next week. – John)

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October 17, 2010   No Comments