My last article on foreclosures stated that there are only five foreclosures in the 92037 zip code for sale.  This is correct but after researching Realist.com there actually are 240 La Jolla foreclosures in different stages.

Here are the statistics on the three stages of foreclosures:

115 Preforeclosures

76 Auction

49 Bank Owned

During the preforeclosure the homeowner is given a grace period of three months from the filing of the notice of default to cure the default.  This gives the homeowner time to reinstate his loan by paying back payments and penalities.  If the homeowner does make his payments current then the foreclosure is stopped.

Simply stated, the next step is the bank puts the home up for auction.  Sometimes the home is not sold by auction and the bank becomes the owner and the home is held by the bank.  This is called Real Estate Owned or REO.  Many banks are holding their REO for more information on foreclosures in La Jolla go to http://www.answers.com/topic/real-estate-owned-1 or www.realist.com

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Foreclosures in La Jolla are on the decline and almost non-existent.  Base on the statistic on SDAR, MLS and www.Redfin.com there are a total of five foreclosures in the 92037 zip code.  They range from $650,000 to $3,300,000 with an average of $1,795,000 and the average 76 days on the market.  This is excellent news.

All indicators show that the market is picking up and the lower priced homes in La Jolla are starting to sell.  In fact there are some multiple offers on the properties that are priced right.  With that said there are approximately 32 short sales with the average price being $773,400 and the highest priced at $1,995,000.  These short sales have offers on them and are contingent to the lender’s and seller’s approval per SDAR MLS.

The difference between the short sale and foreclosure is that the short sales not only have to have the lender’s approval but the seller approves the price they want to sell the home for because sellers still owns the home.  Foreclosures are owned solely by the banks.

For more information about the foreclosures that are available in La Jolla email snystrom@san.rr.com or mbmercedes@earthlink.net.

Recourse: www.Redfin.com

When a luxury homeowner decides to list their home in today’s market, the price is the key to success!!  La Jolla sellers who own a home of $2,000,000 or more and who want to sell are more than likely needing to sell within six months. Homes that are listed properly with today’s prices are selling quickly and in some cases with multiple offers. Some of the multiple offers can go over the asking price.

The homes that are not selling are the ones that are considered “over price”. Unfortunately the sellers with an overpriced home will not only find that they will get much less for the property, but it will take much longer to sell.  Chasing the market down is the kiss of death.

What I have found is that buyers who are really in the market to buy will not make an offer on an overpriced property. They will sit on the sidelines and wait for the price to drop.  In the mean time the seller takes the risk that the buyer will buy another home more realistically priced.

Sellers should consider doing the following before they put their home on the market:

1.      Go to www.Zillow.com and see what price range this internet site suggests

2.      Invite 1-2 agents to do a Comparative Market Analysis

3.      Have an appraisal done from a licensed Real Estate Appraiser

The internet site www.Zillow.com sometimes is not as accurate in pricing luxury homes because luxury homes in La Jolla are in neighborhoods with new, old, small and large homes. Zillow draws from only the homes within a small radius and sometimes it will pick up lower priced homes.  If your home is surrounded by two homes that are in the range of $1,600,000-$1,800,000 and your home is much larger and worth $5,000,000, Zillow will value your home much lower.  Buyers do use Zillow though and you need to be aware of that.

If you are only interested in listing your home with the “top agent”, be careful because you may not get top billing. Top agents with multiple listings are spending tremendous amounts money on advertising and sometimes they cut way back on the dollar amount that they spend to give the listings exposure. Many top agents have several assistance and sellers find they are working with them and not directly with the agent. Look for an agent who will give you the best service and marketing exposure.

An appraiser will price you home more realistic because they use the most recent sales and comparable homes to your luxury home.  They take into consideration the style of the home, the square footage, the location, the details included in the property and much more.

The most important aspect of listing a home in today’s market is to price your home realistically.  If you don’t, you will loose money in the end.  If you can hold on for the absolute bottom, you will more than likely get what you want for the property.  If you have to sell just be aware of what you need to do; price your home right.

Real Estate Magazine Aug. 2009, Luxury Lowdown, page 14; www.carrealtor.com

www.Susannystromwalsh.com

There are about 35 Luxury Condo/Townhouses ranging from $1,500,000 to $8,500,000 for sale in La Jolla today and only 2 pending sales.  In the second quarter of 2009 April-June only 5 units actually sold.  Buyers, who typically would move to a luxury Condo/Townhouse because they want to downsize and make their lives less complicated, are not doing so because they can’t sell their homes.  Luxury homes for sale in La Jolla above the $4,000,000 range are sitting and very few sales are closing.

Buyers who are interested in purchasing Luxury Condo/Townhouses in La Jolla and have cash are finding that they can get good deals. But many buyers are sitting on the sidelines waiting to see when the bottom hits. Out-of-state buyers are waiting too.  On the other hand buyers who want to finance their Condo/Townhouse have found that the lenders have tightened the loan to value rules, qualifying rules and the appraisers are much more conservative.  With this combination it makes it very difficult to get a Jumbo loan.  This is why the market is slow to improve for the Condo and Townhouse market..

Sellers who of Luxury Condo/Townhouse are very frustrated with today’s market because they want to sell their properties and get on with their lives. The lack of buyers makes it difficult for the sellers to sell. The sellers are finding that buyers who have all cash will offer up to 25% below the asking price making the sellers very unhappy.

Both buyers and sellers of lower priced Condo/Townhouses are experiencing the same problem.  The advice I have for buyers is if you are a buyer with cash, make an offer today and if you are a seller, counter the offer. If both sides are serious they will come to the meeting of the minds.

The Federal Reserve Board under the Truth and Lending Act has come up with new disclosure time limit for The Regulation Z, (the lender disclosures all of the cost of the loan including how much interest will be charged on a loan). Now, fees for a real estate  loan cannot be collected by the lender until 4 business days after the initial disclosures are issued to a borrower.

Borrowers are given a Regulation Z upon the receipt of the loan application by the lender and the borrower has a three day right of recession upon receipt of the disclosure.  Then the borrower receives another Regulation Z just prior to the close of escrow.  Now, if the Annual Percentage Rate (APR) changes by more than 0.125% of the first Regulation Z given to the borrow initially, a new Truth and Lending disclosure will have to be generated and the closing will have to wait 7 business days.  In addition, the appraisal cannot be ordered until the 4th business day after disclosures are mailed to the buyer. These changes may cause the loan approval and funding to be delayed. This means there will be no “quick close” or even a normal 30 day close of escrow anymore.

With this new regulation, our company is requesting that the purchase agreement be written up with at least a 45 day close of escrow. Both the buyer and seller should know this be aware of these changes.

In today’s market it is also important to know that when applying for a conforming loan $697,500 or a jumbo loan (loans larger than the conforming), the lenders today determine whether the loan will be approved based on three factor:

1. The Income to debt ratio

2. The amount of verified down payment the buyer has or the Loan to Value (LTV)

3. The credit scores typically reported by the credit companies like Experian, TransUnion or Experian.

All lenders use a “guideline” when reviewing a loan package but they vary from each institution. There are also government requirements that the lenders have to follow.  Some lenders will consider a loan if the income is not quite high enough, if the down payment is larger, making the LTV lower and if the credit scores are high.  Both buyers and sellers should keep up on the latest mortgage changes so there are no surprises.

In real estate, the highest value paid for a property is typically tendered from an entity we call the owner/user.  Simply put, he/she is buying a La Jolla home to live in and, theoretically, the can afford to pay “retail” or the highest market price.  The developer is a wholesale buyer and is often-times competing for properties which “need work”, or are otherwise candidates for redevelopment.  Here is how a La Jolla developer calculates or “backs-in” to value.

Often-times, a residential site in La Jolla is under-developed relative to modern upgrades and to what we call FAR (floor area ratio).  This is the total amount of square footage which can be developed on the site per its zoning designation.  Frequently, existing sites may be underdeveloped by as much as 50% in La Jolla.  The developer would calculate the greatest FAR for a La Jolla development:  let’s assume the FAR is 60% and the lot is 5000 square feet.  The maximum developable space is 3000 square feet not including the garage. .  If the market price for a new home in this area is $800/SF for example, in this case a completed value of $2,400,000.  Sales and transaction expenses (title/escrow/taxes etc.) might total 6% or $144,000, leaving net proceeds of $2,256,000.  Construction costs, architectural fees, engineering fees, city permits, bank interest etc. would be at least $400/SF for high-end construction or $1,200,000, leaving $1,056,000.  Let’s further assume that the developer is not a philanthropist and anticipates making a profit…let’s say $300,000, which would be minimal for the risk of taking on a two-year project.  In our fictitious example, the developer should pay no more $756,000 for the existing property.  Property in La Jolla requires coastal permits which lengthens the development process.

Even if this underdeveloped La Jolla property were but 1500SF, in original condition, and worth but $600/SF, an owner user might still pay $900,000 for the property…more than the above developer could afford to offer.  Then how does the developer compete?  He looks for properties with challenges that tend to scare away owner/users… properties that have complicated problems.  The developer does his best in a rising market, where the value-ad is assisted (sometimes dramatically) by inflation.  In a down market, the developer is lucky to break even.  For more information contact Sue at snystrom@san.rr.com

The current trend in La Jolla luxury home sales is that buyers are offering much lower prices for an all cash deal. Agents are generating offers with shorter contingency removal time periods and, in some instances, no inspections at all. The normal contract includes a 17 day contingency time period for which the buyer can get any and all inspections, a loan approval and review any disclosures and an property appraisal if they so choose. Now the cash buyers are offering the sellers a very quick close and waiving inspections and or appraisals.

Sellers at first are reluctant to counter the offers but if they don’t, could stand to take a chance of losing the very well qualified buyer. Those sellers who decide to counter the initial low-ball offer at least keep the dialog going and in some instances when there are counters to the counter the sellers have sold their home close to where they want the final price to be. It is always a good idea to counter any offer because you never know where or when the next buyer will surface.

There have been 22 Luxury sales between the prices of $2,500,000 to $6,000,000 since January in La Jolla. The average price is $3,700,000 and the highest price was $5,800,000 and with the average $987.00 per square foot. Some of the homes closed escrow 2% below the asking price and other sold 28% below the asking price. There are 105 luxury homes for sale in La Jolla and most of the homes are owned by very motivated sellers. Currently there are 7 pending sales in La Jolla with the average price of $3,631,000.

Buyers who have cash have an advantage because they can be aggressively make offers. Sellers should really consider countering all offers because they may possibly get close to the purchase price that they want. For more information go to my website www.susannystromwalsh.com and look for luxury properties for sale.

Townhouses and Condominiums are selling in La Jolla and it is partly due to the fact that seniors are downsizing. Downsizing can be overwhelming but now is the time to begin looking. There are plenty of listings on the market and a wonderful variety of townhouses and condo complexes available in La Jolla.

I started working with seniors who wanted to sell their home and move to a smaller place. During the process, I assisted my clients in disbursing household items that they didn’t want to keep, staged their home with what was left and gave them the necessary tools so they could transfer their property tax base to their new smaller home. Many times my clients moved into a Townhouse or Condo Complex.
One of the benefits downsizing in La Jolla is the property tax transfer. In order to transfer your tax there are some rules you must follow in California and not all counties offer the transfer. If either spouse is over age 55 (when the old home is sold), PROP 60 allows replacement of a primary residence with a new home of equal or lesser value within the same county and transfer of the Prop 13 assessed valuation from the old home to the new property. This is allowed once in your lifetime, and a spouse who has done it before ‘taints’ both spouses. San Diego County is one county that allows the transfer.

PROP 90 allows California counties to elect to accept transfers of Prop 13 values for moves from other counties when a primary residence is replaced with a less expensive home. If you are over 55 and move into a county which accepts Prop 90, you may take your old, lower Prop 13 value, regardless of from which county you move. La Jolla accepts the transfer of property taxes. Transferring you property tax base to a Condo or Townhouse in La Jolla makes the process worthwhile!

Online: Forms are available from the Assessor’s website, or you can email them: helpdesk@assessor.lacounty.gov

One way to own property in La Jolla is to invest in a townhouse or condominium.  When you own a condominium you share common areas such as the staircases, hallways and the roof.  In a condo you own the space within the unit as well.   With a townhouse you own the ground below, the roof, the interior of the unit and the common areas jointly with others in the complex. It is possible for a townhouse to have the same amenities as a single family residence but you share the common area.

There are several complexes in the town of La Jolla. Here are here are a few examples of townhouses and condominiums that you can find in La Jolla:

Many first time home buyers have enjoyed living and owning condos and townhouses in La Jolla. It is a wonderful first investment. Those who want to downsize and retire have found that condo or townhouse living give them the freedom to come and go without worrying about safety.  Either way it is a good investment.

The fact is that La Jolla is one of the most sought after cities to live in the greater San Diego area and the real estate there has maintained an increase in prices in this economy. Although the inventory has increased since November 2008, the price of La Jolla Real Estate has gone up 11%. Per the information received from the San Diego Multiple Service (MLS) La Jolla is still a good investment.