patrick.net

Whether you use a realtor to buy or not, I VERY STRONGLY RECOMMEND also engaging a real estate attorney on your side. At least the first time you buy, you should have a lawyer represent you, so you learn how it works.

At what point do you bring the real estate attorney into the deal? Is it at the very beginning when you pre-qual for a mortgage? Is at the end for closing?

In the east coast, using a real estate attorney is practically standard. I was really surprised to find that its not here.

Of course, there's the question on where to find a good attorney. On the east coast, there were a lot of not great ones. :(

Of course, there’s the question on where to find a good attorney.

What is astrid?

s/What/Where

OT, but it looks like they are moving forward with disbanding the SJ flea market in order to..... BUILD HOUSING!

http://www.mercurynews.com/ci_5745238?nclick_check=1

Yippeee! More developments for everyone! Isn't that sort of a sketch part of town, BTW?

OT, but it looks like they are moving forward with disbanding the SJ flea market in order to….. BUILD HOUSING!

Great! Triumph of the market! (The free market, not the flea market.)

I recommend finding and forming a relationship with an attorney before starting anything. I wouldn't pay a retainer, if you can get a good attorney through referrals who will just charge hourly.

HK:

Yes, we used a lawyer. We had been trained to use one in IL, where one is required. We tried to not use one when going through our first CA purchase, but at the end of the deal I got a funny feeling because of some arm waving and don't look here or there from both agents to both us and the sellers -- all surrounding financing, and rent-back agreements.

I brought in a lawyer then, who insisted on 48 hours hold to read everything, including the loan documents. He found something like 23 items to question, a dozen of which were sloppy mistakes (that were nonetheless relevant should something bad have happened later) and 2 real whoppers. Those would have allowed the seller - if they were subversive - to force us to rent back to them for the "discounted" agreed upon rate, for an undetermined period. In other words, we'd have had to go through a bunch of crap to kick them out, while we paid mortgage, and they lived for $750/month. That would have put us technically in violation of our mortgage covenant, by the way.

We did find out when we changed the rent-back to a solid 45 days (as verbally ensured it had been all along by "expert professional agents") the sellers went into hyper-panic mode. Apparently they'd made no plans or provisions, had no home to move to yet, and were probably not planning on moving for at least 3 months.

To my eyes, the "standard forms" looked like the seller only got 45 days. The lawyer showed me that, in fact, the rent-back period was not contractually defined in a binding manner.

On another OT note, it looks like they ARE building more land, after all:

http://www.mercurynews.com/ci_5745254

It's on another planet, though.

It’s on another planet, though.

Other planets and virtual worlds do not count.

The only good thing a buyer's agent can do for you that you can't really do yourself or with the help of a RE attorney is let you in to see houses that aren't 'open'. Lockboxes are the last bastion of the Realtors. Without a buyer's agent, you have to call and set up appointments for every house you want to look at.

Now... if you've done your research and know what neighborhood and type of house you want, you can easily get away with this. But honestly, my wife and I had no idea what we were looking for when we started, and seeing 100 plus houses in 8 towns really helped out. Because of that, I will almost certainly use that realtor to do our actual transaction. She also never even mentioned buyer's agreements, and is quick to badmouth shady realtor tricks when she sees them, even 'multiple bids'. She even said "Sometimes when there are multiple bids, they'll tell the highest bidder there are multiples and ask if he wants to go higher." Although... to be fair she didn't admit to phantom bids existing. :D

Also, I've never heard of anyone who had an attorney review the loan documents, when a mortgage broker was involved, who didn't find numerous "mistakes". (quotes intentional)

They'll say, well of course attorneys find mistakes, they're paid to do so. My answer is *exactly*. If they aren't *mistakes*, then they wouldn't have found them as *mistaken*.

The only good thing a buyer’s agent can do for you that you can’t really do yourself or with the help of a RE attorney is let you in to see houses that aren’t ‘open’.

Don't forget a "good" buyer's agent can get you "in" to see "pocket listings" (see previous thread). All mechanisms to keep the concept of a Realtor (TM) "necessary."

Hey Randy, I sent you an email. Did you get it?

Of course, there’s the question on where to find a good attorney.

This is something I could use some help with myself. I have rarely dealt with attorneys and tend to avoid them like the plague. Do you just go on personal recommendations or call the local bar association for a referral? As eburbed mentioned, there are a lot of not-so-good ones out there. How do you pick out the better ones from the dishonest, incompetent louts (no lawyer jokes, please :P )?

+1

Wow, I didn't realize an attorney was so necessary.

My wife and I know the neighborhood we are going to buy in. (Far northern area of Los Angeles - commonly called Stepford Wives area aka Valencia) We've seen dozens of open houses in the neighborhood and we have a good idea of which houses on which streets we want to make an offer on.

The lockboxes are the last vestiges of RE agent power. The internet has changed the game.

Side question: My account on Foreclosure.com shows a lot of houses in California with Tax Liens on them for thousands of dollars. What's up? Are these owners distressed? Will this muck up a sale? Some of the Liens date back to 2004. Does the government ever go after their money? I don't understand how so many households can get away with not paying their taxes.

@harm

www.lawyers.com has a free service to chat nitely with different lawyers who really seem to care about their specialties - divorce-realty-family law - in a great forum.
for more specific questions you can post your question and soon recieve very pertinent answers to law questions.
They helped me immensely in a matter concerning rights of 1st refusal and were worlds ahead of the local lawyers I had been in contact with. Great site for free as a reference with legal matters IMHO . Well worth a perusal .

@bruceb,

Thanks --I'll check it out!

SFBubbleBuyer Says:

J. Pake, get pre-approved through a credit union. They usually hold their mortgages instead of reselling them, and have more ‘conservative’ lending standards, consequently, they have fewer retard loans out there, so they actually have money to loan. Also, they don’t make you sign ‘exclusivity’ crap, etc.

@Randy H (and anyone else whose been through the buying process multiple times),

Do you agree with the above? Is this is the overall blog consensus on financing? Based on the innumerable crooked mortgage broker horror stories we've all read and posted about, plus, the overall blog bias against middle-men/pro-disintermediation, I would guess "old school" credit union financing would be the clear winner. Anyone happen to know what John T. Reed (who seems well respected here as the "anti-guru guy", despite not recommending using RE attorneys) has to say about it?

HelloKitty Says:

> He (the guy selling his home across the street)
> leaves a really really nasty letter at my house
> (where im renting) complaining about how this
> is their ‘prime window’ to sell and how trashy I
> make the neighborhood look by working on my
> truck and/or motorcycle where they can see out
> their kitchen window!

Then skibum Says:

> If you have a tricked-out car stereo, start
> blasting it during the guy’s open houses.

Back when I was a Senior in High School the old people that lived next to a friend died and since they were a PITA (always complaining to his parents about noise) he decided to scare away any old people that came to look at the house…

When old people came to look at the house he would open the windows and point his Dad’s big Klipsch speakers toward the neighbors and crank up the McIntosh stereo with something like Agent Orange, Circle Jerks or Black Flag on the turntable…

The plan worked and songs like “Blood Stains Speed Kills” scared away the old people and a family with cute daughters ended up moving in (when young families came by he would come over and say hi as the “charming preppy kid on his way to Stanford”)…

SFBubbleBuyer Says:

> Get pre-approved through a credit union.
> They usually hold their mortgages instead
> of reselling them, and have more ‘conservative’
> lending standards, consequently, they have fewer
> retard loans out there, so they actually have money
> to loan. Also, they don’t make you sign ‘exclusivity’
> crap, etc.

Then HARM Says:

> @Randy H (and anyone else whose been through
> the buying process multiple times),
> Do you agree with the above?

A credit union “may” have the best overall loan at any given time so I would always gat a quote from them.

> Is this is the overall blog consensus on financing?
> Based on the innumerable crooked mortgage broker
> horror stories we’ve all read and posted about, plus,
> the overall blog bias against middle-men/pro-disintermediation,
> I would guess “old school” credit union financing would
> be the clear winner.

I’m not much of an expert on home loans since I’ve only had two of them (both with Wells Fargo Bank). I did get Credit Union quotes both times and Wells Fargo had lower rates. As a rule of thumb you can almost always get a better rate working directly with a lender (vs. a Broker who needs to get paid in fee or spread)…

> Anyone happen to know what John T. Reed (who seems
> well respected here as the “anti-guru guy”, despite not
> recommending using RE attorneys) has to say about it?

Does John T. Reed have any books on home loans? I have all his apartment books on a shelf at home but can’t remember any overall financing recommendations. If anyone is looking for apartment/investment property loan advice I can point them in the right direction…

Thanks, FAB. I always figured disintermediation was the best way to go on financing --just like it is with buying/selling.

Anyone see this gem?:

Taxes rise as house prices fall

"Among the few who may benefit from falling values: People who bought recently at the market peak, only to see prices drop.

"To get a tax cut, you have to buy a home at the peak and have it lose value quickly," Assessor Dan Goodwin said. "You can't enjoy double-digit increases in your home value and then expect a tax cut when the market dips."

"Woweee!!! Marge, we just got ourselves a property TAX CUT! We've only had the place six months and it's already lost a THIRD of its value --and more to come! Yippeeee!!!!!"

J. Pake Says:

> Side question: My account on Foreclosure.com shows
> a lot of houses in California with Tax Liens on them for
> thousands of dollars. What’s up?

The people are not paying their taxes…

> Are these owners distressed?

Probably since it is usually cheaper to take a credit card cash advance than pay the late fees on your taxes (when I was a kid the late fees were real low and lots of people just let the taxes roll for years)…

> Will this muck up a sale? Some of the Liens date back
> to 2004. Does the government ever go after their money?

The Title Company will make sure the government gets their money before the property sells (so someone needs to pay the taxes prior to COE)…

Good Post on HousingPanic that Says”

“There are over 2 million vacant unwanted homes in America today. There's a 6% vacancy rate in apartments. There are millions of screwed desperate homedebtors ("Floplords" - hattip sac landing) desperately trying to find renters to cover (some of) their second home mortgages. And the housing-led economy is quickly going into the crapper. If you try to raise our rent, there's millions of other places for us to go. You have no pricing power. And you don't set the rent - the market does.”

I love the term “Floplords” but the increasing number of rental homes and condos in Sacramento at great low prices (as Flipper/Floplords wait for the “Spring Bounce” that will never come) has been keeping rents flat (even for units I’ve upgraded)…

@HelloKitty, corrected bank name.

HelloKitty Says:

> OOPS I said WaMu above I MEANT TO SAY ‘Wells Fargo’.

Year after year Home Savings and now WaMu has been the top lender (with the best rates and terms) for small MF (2-6 unit) loans in CA...

If you want to know where to get the best loans and who to deal with/not deal with talk to an escrow officer.

What's the escrow officer's role in all of this? Who does he work for?

HARM,

I'm not suggesting that you'll always get the best deal from a CU, but for the most part you CAN get a reasonable approval letter from them. And honestly, I'd probably be willing to pay an extra eight of a percent for a loan that I knew wasn't getting sold downstream. Then, if I ever DO have issues, I know who to go to talk to, and they have a reasonable chance of being able to actually discuss it with me.

I assumed the drop would be higher at the upper-middle range (1-2M) than at the lower range (0-1M).

Why? When price compression unwinds the lower range will naturally fall more than the upper-middle range.

Also, get your FICO scores yourself, so you know what's up. Banks HATE letting you get your mitts on the scores they run on you because then you can 'shop around' without massive credit checks popping up. They'll still do a credit check before the final approval, but you should get pre-approved without them having to rerun the FICOs. (Somebody correct me if I'm wrong, here.)

I think some "trophy" properties may even appreciate.

You cannot go wrong betting against the middle class. Lower to middle range may fall hard.

I don't know about credit unions. I have heard great things about them. They do tend to hold onto a lot of their loans, but that doesn't necessarily mean they're in any "better position". Most of the retail banks will hold onto their prime, low risk loans, and places like Wells Fargo will go around paying a premium to buy top tranche from other banks. I'm sure a lot of CA mortgagees have found every loan and refi they've had end up right back at Wells Fargo (or equivalent) after 6 months.

@HelloKitty,

Thanks for sharing your list --very helpful.

And honestly, I’d probably be willing to pay an extra eight of a percent for a loan that I knew wasn’t getting sold downstream.

@SFBB,

I agree, and would further ask: Is it possible to know which lenders are most/least likely to securitize and re-sell your loan downstream as MBS/CMOs? If so, that might significantly change MY list of "HARM-approved" lenders.

True story: I have a friend who had his mortgage re-sold recently and the lender never bothered to inform him of it and --importantly-- where to send the payments. So, he goes on sending his monthly mtg payments to the old address, blissfuly unaware they are no longer his lender/servicer (and them blissfully continuing to cash his checks). Until a few months later, he gets slapped with a NOD. Then the "fun" really starts, as he not only has to make good on all the "missed" payments, he also has to fight the old lender to get HIS money back.

Ahhhh... the many joys of "pass-through risk" mortgage-backed securities. Truly one of the great "inventions" of the 20th century.

In between these two ranges, he expects a solid 30-35% correction in most of the 1.0M-1.5M houses - particularly those which have quarter-acre or smaller lots.

I would think with today's prices, there aren't that many houses between 1 and 1.5M will have a lot bigger than 1/4 acre.

Here's an extreme example: http://tinyurl.com/2lmjgs
For McMansion haters, fire away :)

HARM,

If you've got the time to check with Chase, WaMu, Wells, the CU and a host of other banks (and like aggressive negotiating ala HK), I say go for it. A good mortgage broker, though, does earn their pay -- especially if you've got a second or other interesting circumstances. Like I've said before, I'd go into combat with my mortgage broker (as long as, ya know, he walked in front of me).

As far as I'm concerned, one of the key players in the home buying process is the home inspector. You don't want some dofuss that rubber stamps the deal -- you want the guy your Realtor(TM) doesn't want involved in the transaction (usually nicknamed something like "the deal breaker"). He is the one who will tell you your furnance could go up in a ball of flames -- and if you are not the panicky type, you won't let this bother you as you use the furnance the next couple of years. But it can then get you some dollar$ knocked off the price during the contingency phase. Oh, and by the way, a sweet tongued Realtor may be more effective at writing the letter to get the seller to lower the price a bit than your rent-by-the-hour lawyer. The lawyer ain't going to mince words and will tell the seller their house sucks -- which might lead to the whole deal not going through. Someone more adept and experienced in these negotiations could do better (then again, what do I know as I have not used a RE attorney). I do know that my Realtor(TM) wrote a heck of "we don't mean to nickel and dime you" letter to get the price lowered without pissing off the seller (enough) to cause the deal to go sour.

Then again, having been through the whole process, I would probably go the RE attorney route the next time and do that 6% commission jujitsu that Randy and FAB talk about :-)

HARM

The best advice I can give for finding a lawyer is referrals. Honestly, I've had the fortune of being an entrepreneur and using lawyers extensively for the past 15 years, so I have always been able to get referrals. I have a good one in Palo Alto for anyone in that area I'd be happy to refer. He still helps me with RE even while I'm up here in Marin. He also helped me extensively in a property line and easement/adverse possession issue I had on my last home's property.

I'd say for your area talk to friends who use family attorneys they like, and get referrals from them. Some family attorneys used to be commercial re lawyers too, and know enough for residential standard purchases. You can also ask around for small business attorneys who will know commercial re types also.

CB :

--Edited out rude remark involving lowballing and the listing agent--

I absolutely abhor that kind of development community. Ugh.

For McMansion haters, fire away

5 bedrooms with only 3113 sqft?

There should have more new 3 bedroom condos with 3000+ sqft if they ever want SF to become a true international city.

True story: I have a friend who had his mortgage re-sold recently and the lender never bothered to inform him of it and –importantly– where to send the payments.

Aside from problems like that - it can't be that common - I'm not sure why it would matter to you the borrower what happens to the loan. Right?