29. September 2008 by Burbank Real Estate.

Many homeowners of Burbank real estate or Toluca Lake real estate are now faced with very high mortgage payments they can’t afford.  If you are one of these homeowners and are looking to sell your home in a short sale transaction, before you go into foreclosure, there are a few things you should know.

Use a real estate agent who is familiar with the process and who knows what lenders are looking for in order to negotiate a successful short sale.   Also be prepared for the process to take months, the average short sale transaction seems to take an average of 3-4 months, sometimes much longer depending on the lender.  One of the things that helps speed the process along is knowing what information needs to be submitted to your lender.

What to submit:

• W-2 forms or 1099 forms for the last 2 years.
• Federal tax returns for the last 2 years.  (Possibly state tax returns as well).
• The 2 or 3 most recent pay stubs, if any, even if the seller is collecting unemployment or disability.
• Bank Statements for the last 90 days.
• Letter explaining the seller’s unemployment status if applicable.  The seller will have to demonstrate that their unemployment was involuntary on their part.
• Hardship (SAD) letter.  This can be combined with the letter of unemployment but the seller must elaborate on why they are in their current situation of being financially insolvent.  They must demonstrate to the lender that the circumstances which led to their situation were beyond their control.  Typically lenders prefer that this letter be hand-written in the seller’s own words.
• Broker Price Opinion (BPO) on the property.  

These are just some of the many details your agent should be familiar with…..for more information, please call me at 818-795-8474.

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18. September 2008 by Burbank Real Estate.

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18. September 2008 by Burbank Real Estate.

1. Caulk gaps and cracks
2. Switch to Energy Star qualified compact fluorescent light bulbs (CFLs)
3. Install a low-flow showerhead
4. Go for double paned or triple paned windows
5. Insulate your home
6. Turn off or unplug products that are not currently in use
7. Purchase ENERGY STAR appliances
8. Install solar panels
9. Use drought resistant landscaping
10. Tank-less water heaters
11. High efficiency gas furnaces and air conditioning systems
12. Install motion sensor lights
13. Install solar tubes

These are just a few ideas to help you improve your home’s energy efficiency, for more energy saving tips, check out Burbank Water and Power.

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17. September 2008 by Burbank Real Estate.

In certain cities and in the County of Los Angeles when a home sells  a transfer tax is levied upon transfer of the property.

LA County charges $1.10 per $1000 of purchase price, Burbank charges $ .55 per $1000 and City of Los Angeles charges $4.50 per $1000 or purchase price.

While the county tax is not a huge amount, the LA tax can add up.  For example……on a $400,000 home:

LA County Tax……………………….$  450

LA City Tax(if applicable) ………$1,800

In this example if you purchased a home in the city of Los Angeles both taxes would apply and add $2250 to your closing costs.

Normally the seller covers this cost.

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13. September 2008 by Burbank Real Estate.

Part 2 of this real estate series was dedicated to pointing out some interesting national statistics. While these statistics may have applied to the local market in some ways, the reality is that each market behaves differently based on local trends. In order to understand this relationship let’s look at the real estate downturn of the early 90’s in Burbank  and the San Fernando Valley.

We experienced a national recession in the early 90’s which affected us locally, but more importantly,  Lockheed downsized and closed it’s Burbank operations(Lockheed Skunk Works, home of the F-117 Aircraft) and 12,000 jobs were lost.  This was a significant impact not just on Burbank real estate but surrounding areas as well.  In addition many local businesses that provided services and goods were negatively impacted, which added to the depressed prices of San Fernando Valley real estate and Burbank real estate.

The other significant event was the closure of GM’s Van Nuys Assembly Plant.   This closure, which resulted in several thousand job losses,  added to the Lockheed and related industry job losses, and the impact was relevant.

Subsequently we experienced the Northridge earthquake in January 1994.  This devastating catastrophe caused over $12.5 billion in damages, some estimates had it as high as $18 billion.   At the time, was the second costliest natural diasaster, behind Hurricane Andrew.   Many people walked away from their homes and many moved away from fear of another major earthquake.   There were certain neighborhoods that were completely devasted and others where only certain homes or apartment buildings were affected.  Either way, real estate values in the San Fernando Valley plummeted.

All told, from 1990 to 1997 San Fernando Valley real estate experienced a 30% decrease in prices.  In that depressed market scenario we had a few years for the economy to start rebuilding and for the psychological impact to subside.  Compare that to our current real estate cycle, where in just one year, we’ve experienced a 30% decline due to the subprime debacle.

Given that our current situation is still playing out, there are several things to keep in mind.  First, let’s take into account that banks are still taking some major writedowns on loan losses, in fact many banks are being taken over by the Office of Thrift Supervision due to insolvency.  Recently Fannie Mae and Freddie Mac have been added to the list of failures.

Secondly, more foreclosures are coming on the market.  Defaults in mortgage payments have jumped this year and the unemployment rate is at a 5 year high.  While banks are being incented to negotiate loan modifications, the reality is they are understaffed and overloaded.  Given this reality don’t plan on seeing a recovery until next year at the earliest.

Having said all this I still have to come back to the old wisdom that all real estate is really a local affair, meaning there are many bargains to be had…….especially when factoring in our current interest rate environment.   Your cost of carrying the loan needs to be part of the equation as well as price discounts and repairs.

Whether you are looking at San Fernando Valley foreclosures or specifically Burbank foreclosures, don’t forget to factor in the value of the property relative to your needs, as well as the price.

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