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Douglas Pemberton
949-273-0018
Showing posts with label Capo Beach. Show all posts
Showing posts with label Capo Beach. Show all posts
Wednesday, June 27, 2012
Monday, June 4, 2012
How to purchase distressed homes and property
Purchase opportunity
A purchase opportunity arises because many potential buyers don't want the hassle of fixing up a house in poor condition, which means that there are fewer competing buyers. In addition, those who sell houses "as is" are frequently in a hurry to get it done, which means that they are disinclined to wait for a higher offer.
The buyers in the best position to take advantage of such opportunities are those with the skills and knowledge required to assess what needs to be done and how much it will cost.
Risk of value uncertainty
But purchasing a house in poor condition has serious risks. One risk is the greater uncertainty connected to its value. The worse the condition, the more costly the improvements required to make the house livable, and the larger the potential error in judging in advance what these costs will be.
The appraisal may reduce but not eliminate the uncertainty connected to the property's value. Appraisers mainly rely on the sale prices of comparable properties, after adjusting for the differences between the subject property and the comparables.
But because information on the condition of comparables is often difficult for appraisers to obtain, the error in making price adjustments is relatively large when the property is in poor condition.
Risk of not finding a mortgage
But today the greater risk in buying a property in poor condition is that the buyer will be turned down for a mortgage or forced to find a lender who will make the loan but at a premium price.
This problem seldom arose before the financial crisis because there were very few foreclosure sales, and lenders generally operated on the assumption that valuation errors would be erased by property appreciation. Today, those looking to buy a house in poor condition need to consider this risk very carefully.
Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) recently developed a classification system for housing condition ranging from C1 (the best) to C6 (the worst), but only C6 is unacceptable to the agencies in "as is" condition. Nonetheless, many lenders require a C4 or better.
Rationale for condition requirement
It is understandable why the agencies that bear the risk of default would either require that the condition of mortgaged houses meet some minimum standard, or base their purchase prices or insurance premiums on house condition.
As noted above, the potential error in appraisals is larger for houses in poor condition, which would result in greater losses on loans that default. When defaults occur early, furthermore, the house that was in poor condition when the loan was made is very likely to be in poor condition at default, which increases marketing costs.
Why some lenders are stricter than the agencies, however, is not clear. Presumably the servicing of loans on properties in poor condition is less profitable, perhaps because these loans have relatively short lives. It is also possible that the cost to servicers of managing foreclosures of properties in poor condition is relatively high.
Whatever the reasons for lender caution, homebuyers looking for bargains in the sale of distressed properties need to take it into account in planning their purchase strategy.
A purchase strategy for distressed properties
An inspection report from a licensed expert will help in the decision as to whether to buy the house but will not eliminate uncertainty regarding how an appraiser will classify the condition of the house. If the house is classified C5 or C6, a loan may not be available.
If the sales contract has a mortgage contingency clause, which is a standard provision in some states, the buyer who can't get a mortgage because the property is classified C6 or C5 will get his earnest deposit back and the deal is canceled. However, the thwarted buyer will not be reimbursed for the cost of the inspection or the appraisal, which might total about $700.
If a property is being sold "as is" and the standard sales contract does not have a mortgage contingency clause, I would pass unless the seller agreed to return my earnest deposit if the property is classified C6 by the appraiser. You could be more conservative and require the return of the deposit with a C5, which would avoid a mortgage problem because most lenders will accept a C4 or better, but it may substantially reduce the number of sellers who will deal with you.
While accepting a C5 will give you access to more houses, you must find one or more lenders who will accept a C5. You would be well advised to do this in advance of purchase.
Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania.
Contact us with any questions you may have about purchasing any distressed property
www.oc-coastalhomes.com
Douglas Pemberton
White Water Realty Inc.
608 Avenida Victoria
Across from the San Clemente Pier
dougpemberton@gmail.com
949-273-0018
Monday, December 26, 2011
Thursday, September 29, 2011
San Clemente 90 Day Market Data on Single Family Homes
Whether you are a first time home buyer or an Investor, San Clemente has what you need.
The Beach, The lifestyle, The attitude, The Entertainment and of course The Friends.
Come live in San Clemente you will love it..
| 90-day Market Stats for Single Family properties in SAN CLEMENTE, CA as of September 23 2011 |
|||
| Median List Price: | $738,740 | Average List Price: | $1,030,560 |
| Total Inventory: | 420 | Price Per Square Foot: | $288/SqFt |
| Average Home Size: | 2,932 SqFt | Median Lot Size: | 7,070 |
| Average # Beds: | 3.92 | Average # Baths: | 3.48 |
| Homes Absorbed: | 22 | Newly Listed: | 19 |
| Days on Market: | 170 days | Average Age: | 23 years |
| Data provided by and ©2011 Altos Research LLC | |||
Call me today for your free customized list of properties.
Wednesday, September 28, 2011
VA Loans are now less expensive for our Military.
The VA department of housing will be reducing their Funding Fee starting October 1st 2011.
See the new schedule of fees below
| Purchase Loans Funding Before October 1st, 2011 | ||
| Down Payment | Active Duty | Reserves/NG |
| 0% to 4.99% | 2.20% | 2.40% |
| 5% to 9.99% | 1.50% | 1.75% |
| 10% + | 1.25% | 1.50% |
| Second time use, purchase of an eligible property | ||
| Down Payment | Active Duty | Reserves/NG |
| 0% to 4.99% | 3.30% | 3.30% |
| 5% to 9.99% | 1.50% | 1.75% |
| 10% + | 1.25% | 1.50% |
| Purchase Loans Funding On or After October 1st, 2011 | ||
| Down Payment | Active Duty | Reserves/NG |
| 0% to 4.99% | 1.40% | 1.65% |
| 5% to 9.99% | 0.75% | 1.00% |
| 10% + | 0.50% | 0.75% |
| Second time use, purchase of an Eligible Property | ||
| Down Payment | Active Duty | Reserves/NG |
| 0% to 4.99% | 2.80% | 2.80% |
| 5% to 9.99% | 0.75% | 1.00% |
| 10% + | 0.50% | 0.75% |
Friday, July 22, 2011
Saturday, April 17, 2010
Rare shark sighting close to Laguna shore
DANA POINT About 80 people on a noon Friday whale watching trip out of Dana Point harbor came upon a rarely sighted 20-foot basking shark, according to Dana Wharf Sportfishing and Whale Watching. 
"I have never seen a Basking Shark this close to shore in 90 feet of water off the coast (of) South Laguna Beach," said Capt. Tom White in a news release.
About 80 people on a noon Friday whale watching trip out of Dana Point harbor came upon a rarely sighted 20-foot basking shark, according to Dana Wharf Sportfishing and Whale Watching. "I have never seen a Basking Shark this close to shore in 90 feet of water off the coast (of) South Laguna Beach," said Capt. Tom White in a news release.
PHOTO COUTESY OF DANA WHARF SPORTFISHING AND WHALE WATCHING; TEXT BY VIK JOLLY, THE ORANGE COUNTY REGISTER
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The Encyclopedia Britannica describes the shark as a "huge, sluggish shark of the family Cetorhinidae. ... Named for its habit of floating or slowly swimming at the surface, the basking shark inhabits temperate regions of the Atlantic, Pacific, and Indian oceans."
The encyclopedia says the giant shark grows as long as 46 feet and "is exceeded in size among fishes only by the whale shark."
Basking sharks are not considered dangerous. They eat plankton.
Capt. Larry Hartmann, who was also on the boat, characterized the encounter about a half mile off the beach across from Three Arch Bay as "off the charts."
"It was amazing," he said. "It took us about two hours to decompress."
"You don't expect to see something enormous like that that weighs about 6,000 pounds this close to shore," said Hartmann. "And then he decided to swim right in front of the boat and had his mouth wide open. He then swam under the boat and popped up on the other side."
Hartmann scrambled to get a camera and started snapping pictures.
"The tail was so enormous that it was just sort of shocking actually," said the 46-year-old captain. "It was nice to see such a beautiful animal."
The noon whale watchers also found gray whales, dolphin, and sea lions on the trip, the news release said..
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CLICK TO SEE VIDEO, courtesy of Dana Wharf.
Friday, April 16, 2010
Laguna Beach Living
LAGUNA BEACH – After months of 15-hour work days, Michael Weiss was eager to host friends and family at the completed Sands Café at Aliso Beach.
Weiss and a partner leased the concession stand property in March 2009 from the county with plans to turn it into a year-round café, offering a full menu doesn't work.
Unlike a traditional walk-up concession stand, Weiss aimed to create a dining destination. The café would have served daily beach goers, but the tables in the sand enabled a full menu, including breakfast, with a higher price point and quality. With a café, Weiss said he could count on enough business to stay open ten months out of the year. A concession stand, Weiss said, could only stay open 5 months yearly, which would ultimately lose money.
With its custom décor, quality meal choices and family-friendly atmosphere, Weiss said he hoped the café would draw people to Aliso Beach.
"They were going to have a memory to take home with them," Weiss said.
Orange County owns the land at Aliso Beach, which is a county park. After requesting proposals, the county approved Weiss' business plan and offered a lease, allowing for the beach seating area and storage containers.
Weiss continued to work to get the café ready for opening, when a local activist pointed out the outdoor seating and storage containers needed a new coastal development permit.
The Coastal Commission, a state agency which supersedes county authority, oversees any development that could affect beach access or use. Rich Adler of OC Parks said the county interpreted development as new structures – not moveable tables and storage containers.
"In most cases, we are fully aware of all the issues that relate to what we're doing in our beaches and parks," Adler said. "This is new."
The county saw the café as a positive use of the beach that would encourage more people to come. And since the tables would go into storage at night, Adler said it seemed no more dramatic than other day uses, like weddings or a junior lifeguard program.
"We never really thought twice we couldn't do it on our own sand," he said.
Laguna Beach's planning commission, which handles coastal development permits through the city's local coastal program, approved of the café, said city manager Ken Frank. But the storage containers and tables in the sand were another matter, he said. Though Weiss could go back and apply for a new permit, approval is unlikely.
"We don't approve those types of uses on the sandy beach," Frank said, adding the city was unaware of the tables and storage containers when it approved Weiss' business.
Now, Weiss knows his plan to create a destination café won't happen. When he walks through the building, he points out items that are now unusable if the café reverts back to a concession stand – breakfast foods, a convection oven, extra refrigerators, appliances and of course, the tables.
Unsure when or if he'll be able to continue at the location, Weiss laid off 13 employees, two who had left other jobs to work at the Sands. He doesn't know if the business can be salvaged or if the county can help. Weiss estimates he spent $250,000 building up the café, money he thought would be an investment. Though his four children are all under 6, he hoped they would grow up to help run the family business.
"Lots of mouths to feed with no business," he said. "It's a bad situation."
Contact the writer: ckoerner@ocregister.com or 949-454-7309
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