Jeffrey Marples San Francisco Real Estate

The Elephant in the Room: Looming Foreclosure Epidemic

Jeffrey Marples — Fri, 30 Mar 2007 04:06:00 GMT

By Ralph Roberts

RISMEDIA, Jan. 11, 2007-At industry events lately, real estate professionals gather to talk shop and discuss market trends for 2007, but I notice that nobody's talking about the elephant in the conference hall. We're predicting the health of the market. We're exploring new technologies. We're trading secrets. We're swapping ideas and business cards. But the silence over what I believe is a looming foreclosure epidemic, is deafening. Nobody utters the words-"flipping," "fraud," or "foreclosure." It's almost as if these three words have been banned from the industry.

I've attended dozens of conferences, and very few of them schedule sessions devoted to real estate and mortgage fraud. The topic tends to have more of a following at conferences for mortgage bankers. Perhaps real estate professionals are simply too busy helping their clients buy and sell houses, or they find the topic less stimulating than others.

By not paying sufficient attention to real estate and mortgage fraud, however, we've become blind to the fact that illegal flipping, cash back at closing, and other forms of real estate and mortgage fraud are chipping away at the very foundation of the real estate industry, leading to shameful foreclosure rates that only promise to become tragically worse. While we're discussing lead generation, marketing techniques, and the power of blogging, absent from our discussion is any mention of what to do to protect the homeowners, our clients-the people who butter our bread.

What is currently happening in the real estate and mortgage industry can only be described as the perfect storm. Fraudsters are ripping off lenders and homeowners with impunity. Artificially inflated housing values are soaring, and with them, so are property taxes and insurance premiums. Lenders are losing billions to fraud and then turning around and ripping off homeowners by selling them adjustable-rate mortgages and other high-interest loans they can't possibly afford. And personal income just isn't rising fast enough to keep up with the market. Strapped-for-cash homeowners are beginning using their homes as ATMs, mortgaging themselves into foreclosure and bankruptcy.

Yet, few real estate professionals express any concern. They continue to carry on business as usual, and often "business as usual" includes actively participating in the fraudulent activities that threaten the American Dream of homeownership. In fact, the FBI (http://www.fbi.gov/publications/financial/fcs_report052005/fcs_report052005.htm) estimates that 80% of all real estate and mortgage fraud involves industry insiders!

We need to turn these numbers around in a hurry before our entire industry collapses. We need to wake up and realize that our clients-average homeowners-are hurting. We need to recognize that fraud is destroying the very industry that feeds our families and that it directly contributes to the rising foreclosure rates around the country. We need to educate ourselves and our clients, and then take action to spot, stop, and post fraudulent transactions that we witness, regardless of whether the person committing fraud happens to be a client, colleague, friend, or family member.

If we fail to take action now, none of us will have the right to complain when our children and grandchildren cannot afford to purchase a house, when our friends and relatives have their homes stolen right out from under them, and when our businesses crumble because the average citizen cannot afford a home.

I would like to see future conferences focus a little more on that elephant we all seem to be ignoring.

Ralph Roberts is a real estate fraud expert and activist and author of Flipping Houses For Dummies. Visit www.FlippingFrenzy.com or contact Ralph at RalphRoberts@ralphroberts.com or 1-586-751-0000.

RISMedia welcomes your questions and comments. Send your e-mail to realestatemagazinefeedback@rismedia.com.

Cash Flowing Property in the Bay Area

Jeffrey Marples — Fri, 30 Mar 2007 04:05:00 GMT

In looking at the property in the San Francisco Bay Area real estate market, I would have to say as we move forward into 2007 and over the next few years, there will be some great deal to be had, that is for sure. Your success will depend on where you are as a property investor, as well as your acquisition strategy, how long you will carry the property before you exit out of it.

Once you have a number of people providing you with listings of homes that are in distress, that are either facing foreclosure or is a (REO) banked owned property. There are opportunities to purchase property subject-to, or possibly short-sale opportunities with certain lenders. Regardless. you will be able to find deals in the coming markets.

My problem is, in the Bay Area where appreciation and prices have gone so high. Rental prices and incomes have not kept up with property appreciation. So even when I can purchase property below market value in the East Bay, I really have to be sure I can handle the negative cash flow after I rent it out. What makes sense is to do a lease option with a non refund able deposit. That way I can get some money back as well as a little higher monthly.

As I said earlier, it is all about the exit strategy, so since the vast majority of lease options never exercise the option, I figure I'll get higher rent, a deposit and a great tenant who will take care of the property. I'll still control the property and take the taxes, if the tenant exercises the option then it is a win-win. Because I'll be cashing out on my profit, unfortunately not worthy of a 1031 exchange. If they don't then I'm in good shape and can do the exact same thing.

What I think is important here is the strategy. By giving the lease option, I can recoup some of my initial investment amount, and have funds to cover any negatives in the cash flow.

How Bad Will the 2007 Property Market Be?

Jeffrey Marples — Fri, 30 Mar 2007 04:05:00 GMT

Economists predict that next year will be tough, but some metros will hold up nicely and the future may not be as gloomy as some fear

by Maya Roney

Americans are increasingly nervous about the real estate market in 2007. They have good reason to be. But the news isn't all bad: Interest rates will remain at historically low levels, homebuyers will see more opportunities, and, best of all, for those planning for the long term, 2009 could be primed for a comeback.

To gauge what the next 12 months might look like, though, BusinessWeek.com asked economists at leading real estate research firms to provide their outlooks for the housing market in 2007. The less-than-festive consensus: Home prices will continue to fall in some markets, and the rate of price appreciation will slow in most places. Declines in homes sales, which directly influence price trends, will set the stage for another year of price decreases in 2008. Foreclosures will continue to increase. For those struggling to hold onto their homes, their net worth will shrink as these homes lose value. Long-term mortgage rates will rise. Housing starts will see double-digit depreciation, the sharpest decline since 1991, the worst year for housing starts on record.

Grim as that might sound, there are some bright spots. Nationwide, home prices will be flat to up slightly in 2007, with many large markets seeing small increases. While new home sales will be down for the year, existing home sales will also be flat. And housing starts won't see as sharp a decline as they did in the early '90s or early '80s.

Self-Cleaning Market

Another reason for optimism (keeping in mind that expectations are somewhat lower this year): For many, the ongoing market correction will make the dream of buying a home a reality.

"In so many of these markets, housing became extremely unaffordable," says David Stiff, chief economist at Brookfield (Wisc.)-based financial data processor Fiserv Lending Solutions (FISV), who expects average U.S. home prices to appreciate only 0.1% overall in 2007. "Prices moving back in line with household income sets the stage for price appreciation in the future."

Blame the rapid runup in prices on speculation. Taking advantage of low interest rates and good economic conditions, investors drove prices to new heights in the first half of the decade, so they could flip purchases for profit. Some markets saw price appreciation rates of as much as 50%, vs. the average annual rate of about 10%.

But as interest rates rose and the gap between income and housing costs widened, homebuyers never materialized as expected. Investors have now been forced to dump their property on the market, flooding many places with homes for sale and forcing prices to a more realistic level.

Price Your Home Correctly the First Time.

Jeffrey Marples — Fri, 30 Mar 2007 04:04:00 GMT

Are you thinking about placing your property on the market and want the single best piece of advice to sell you home. This is not brain surgery now, take a guess. Yes its price. As a practicing real estate investor and agent, I can't tell you how many times a seller simply did not take the advice of the agent. People always think their property is better then everyone else's. They have better this, or bigger that, or their home is simply far superior to all the other active and sold properties. Here is the secret, get a clue, listen to your agent, and list your property correctly the first time. Remember, it is not what you think the value is, it is what the value to the buyer is? If you place the property listing price to high, buyers can't value the property. And if the property sits on the market for a period of time, the buyers are also going to question the value of the home. Why else isn't it selling, there has to be something wrong with it..right. Also, as an active investor in real estate, aren't I looking for the best possible price when I purchase. Think about it, if you were a seller which wold you rather have. An aggressively price home that will beat the competition, possibly get over bid and drive the price higher and sell quickly. Or would you rather have a languishing listing that no one is writing offers on except to low-ball the purchase price. The sales data does not lie, know the listing prices and price/sq. ft. of the competition and create a pricing strategy based off of them.

Buying a Dog Apartment Building for Big Returns

Jeffrey Marples — Fri, 30 Mar 2007 04:02:00 GMT

It is known throughout the investment community that you make money in real estate when you purchase the property. The biggest challenge for apartment building investors over the past few years is the decreasing cap rates. Cap Rate simply cannot be ignored when purchasing property in an inflated market and where money is widely available. There have been plenty of buildings being sold to novice investors over the past few years. Investors dreaming of big profits as they pluck down 20% or more to lock in an apartment building. In San Francisco and around the Bay, Cap Rates are very low. Meaning that people are purchasing these properties at higher then normal valuations and ultimately squeezing the profit right out of the deal from the start. Many investors that I've met have put down enormous amounts of cash into the deal to break even on cash flow. They also are overpaying to get into the market and believe the sky high days inflated values will continue.

So the question is where can you make your money on owning apartment buildings. The answer is simple, add value to the build and increase the gross rents. So, find an apartment building that has lower rents that can be increased, increase the occupancy and reduce the vacancy factor, and make capital improvement on the building. Typically these can be harder to find in the Bay Area vs. in other markets because in counties around the Bay we have tough rent control ordinances that hurts property owners. Also, rent controlled tenants kill opportunity to increase the value of property by simply increasing the rents and creating turnover in the building.

Click Here to visit all the available mult-unit property in San Francisco

Read the artciel Here: http://nreionline.com/property/multifamily/real_estate_mr_fix/

Declines in the Market

Jeffrey Marples — Fri, 30 Mar 2007 03:57:00 GMT

You can still be in an appreciating market, a decline does not necessarily mean you are losing value, it could mean (in some circumstance) that your appreciation rate is declining since the last measurement over time, say last year. We have obviously seen over the past few years a ridiculous rise in real estate values throughout the San Francisco Bay. It is just inevitable that it will continue to become soft during this next year.

If you are considering buying in todays market, then buy at a discount add value during ownership. If you are going to hold the property for 7-10 years, then find what you like and buy it! Take advantage of the rates. Because if you hold off to long, rates go up, and the lower your buying power.

For consultation and just plain advise, call me at 415.336.9695, or at jeff@jeffmarples.com, read the entire article: http://www.breitbart.com/article.php?id=D8MSCVBO0&show_article=1

Declines in the Bay Area Market

Jeffrey Marples — Fri, 30 Mar 2007 03:57:00 GMT

For consultation and just plain advise, call me at 415.336.9695, or at jeff@jeffmarples.com, read the entire article: http://www.breitbart.com/article.php?id=D8MSCVBO0&show_article=1

Bay Area home prices flat, slow sales

Jeffrey Marples — Fri, 30 Mar 2007 03:55:00 GMT

Dataquick has reported the Bay Area real estate market was a tough one last month. Sale are down to a decade low. Buyers a still waiting for home prices to come down and sellers become increasingly more open to price reductions and getting serious about selling their homes. In certain counties the news is troubling as inventory still sits and buyers wait on the sidelines. It is just inevitable we will continue to see a slowdown when we have such a discrepancy between property values compared to rental income. Some people will say we are at the bottom of the market, be weary of such bold claims. We are at a slow seasonal point in the market, but buyers are out looking at homes. Are they writing offers, well some of them are and some are getting great deals on property.

This market you will have to look at the pros and cons, look at your holding and exit strategy. If you are looking to be in a property for a long time then take advantage of the low interest rates and make sure you get a loan that makes sense. A 30 year fixed is a great option if you are holding for the long term, 7 years plus. See if you can get an assumable loan so you can pass that loan to another buyer when you sell. That will help you generate a higher sales price on the resell. The higher monthly payment will be worth it since the differnce between a 30 year fixed and a 5year ARM is less then a point.

If you are looking to get into property for just a short time, make sure you buy into equity. This guarantees you that if the market declines in values, then you are not taking any losses on the cash equity you put into the home. Remember, typically the lender will not take it in the shorts, you do. And the losses come from the equity you have in the property. So buy smart and buy into equity.

For more information to buy or sell in this market, call Jeff Marples at 415.336.9695. or go to www.propertyinsanfrancisco.com. Read the entire article here: http://www.dqnews.com/RRBay0107.shtm

Here Comes the Foreclsoure Tidal Wave

Jeffrey Marples — Fri, 30 Mar 2007 03:53:00 GMT

In a recent article from DataQuick shows that California Notice of Defaults are up almost 37% last quarter from the previous quarter. This goes to show that the housing market will be at a low for some time. When you have a multitude of foreclosure and REO property, those high numbers keep the rest of the market flat. read the article here: http://www.dqnews.com/RRFor0107.shtm

LOW, LOW, LOW Rates for Years to Come?

Jeffrey Marples — Fri, 30 Mar 2007 03:51:00 GMT

For those who are interested in a global perspective then this article in Business Week is very interesting and a must read. Financial experts always watch the 10-year Treasure bond market as an indicator of how the economy is growing, if the bond market raises too high does it mean a recession is coming? Well it doesn't seem so today or in the near future according to financial experts. The US economy is moving strongly forward as well as other global market players. The global economy as a whole is also very strong with record growth. Many experts are predicting that money is going to say very cheap for a prolonged period of time. Which is good for the real estate market, and business growth.

So this is a Housing Bust

Jeffrey Marples — Fri, 30 Mar 2007 03:50:00 GMT

"Existing-home prices are as high as they were a year ago, while sales have receded only to 2003 levels. The credit goes, at least in part, to low interest rates. Fixed-rate 30-year mortgages averaged a modest 6.2% in the last quarter of 2006—well below a decade ago. That, combined with income growth, means houses in most areas remain affordable even though prices rose more than 50% nationally in the past five years. The surprise is that low rates are still keeping a floor under housing. Thirty-year mortgage rates are no higher than in June, 2004, even though the Fed has since pushed up the federal funds rate by 4.25 percentage points."

Buy now? Or wait for a price drop?

Jeffrey Marples — Fri, 30 Mar 2007 03:48:00 GMT

This recent article, from CNNMoney.com, is perfect for residential buyers contemplating buying a primary residence now while rates are low vs. waiting for a bottom in the market. The long and the short of it is this. If you planning on living in the residence for 5 years then any short term stagnation in the marketplace will have little effect. If you are concerned about getting a good deal on property then be aggressive, look for the motivated sellers and purchase property below market value. If you can purchase at lease 8% below market value, then if you needed to sell quickly you can cover all your selling cost, plus build in equity in the deal at closing to handle any short term dip in the market.

Smaller kitchens are just as good

Jeffrey Marples — Fri, 30 Mar 2007 03:45:00 GMT

Bigger doesn't always mean better when it comes to good design. It's the way you use your space that matters. This is true especially in the San Francisco Bay, where space is a premium and size is sometimes restricted. A well thought out design can make a world of difference. I recently remodeled my kitchen and bath, I didn't pay an expensive architect to do it either. I actually got the best service at Home Depot Design Center. A customer can pay $100 for HD to come to your home to measure and put the numbers in their system. From there you schedule an appointment to design your kitchen. I must have revised my kitchen 4 time with my design consultant before committing to purchase the cabinets and appliances. I also recouped the $100 because I purchased the major ticket items from HD. This is by far the best money spent on my home thus far.

If you are in the Bay area and would like to speak with my design specialist, cal me and I'll be glad to forward the details. She was great and I would recommend her always before any one else.

Low prices, mired sales lead to good opportunities

Jeffrey Marples — Fri, 30 Mar 2007 03:42:00 GMT

Price appreciation in the Bay Area and California has ground to a virtual halt after a five-year real estate boom during which housing prices generally posted double-digit annual gains. With appreciate at 1.7%, which doesn't beat inflation, the housing market is poised to bottom out in 2007. Sellers are pricing homes more aggressively and yet buyers are still holding off waiting for the bottom of the market. With appreciation at a standstill, buyers who are looking for the bottom better start opening their eyes. There are deals to be had in this market. If you are planning on purchasing with the intent to hold for the long term, at least 5-7 years, then now is the time to get in the game. Take advantage of the low interest rates and motivated sellers, buy into equity and be happy with your home purchase.

New housing declines, opportunity for long term investors

Jeffrey Marples — Fri, 30 Mar 2007 03:39:00 GMT

People who know me, know that I don't conform and follow the herd mentality. New home developments posted declines that are the worst numbers in 13 years. To me that screams of opportunity. New home developers need to off load their inventory because it effects their bottom line, much different then resale homes that are on the market and owners don't need to push as hard for a quick sale. As an active investor, I'm looking and procuring property for long term holds. I identify areas across the county that have long term stable appreciation and a growing economy, cash flowing property with as little as 10% down and are affordable. Always buying into equity and make aggressive offers to secure a great deal.

So in conclusion, if you are looking to get into the real estate game, want a secure investment, get in at the ground floor with long term appreciation, then contact me and we can talk about different markets to buy into. Jeff Marples 415.336.9695 or email at jeff@jeffmarples.com.

The Housing Market Puzzle

Jeffrey Marples — Mon, 05 Mar 2007 21:30:00 GMT

Prices are falling slowly. But no sign of a dangerous pop. What's the outlook for the rest of 2007? There are areas around the San Francisco Bay that have see dramatic price declines, particularly in the bedroom communites in the deep East Bay. In the San Francisco we have seen a stabization on values, in Marin we have seen a stight increase.