Houtan Hormozian, Author at Blog

Code of Ethics Violations Running Rampant

by Houtan Hormozian | Oct 18, 2024 | CRESTICO

Ever since I decided to buy a home for myself, I have noticed more and more the increasingly unethical manner in which agents deal with their listings. Withholding offers, artificially inflating prices and then selling to their own buyers (so they can increase their own commission) at LOWER prices! It makes me wonder how this market is ever going to get fixed. In 2006, the problem was predatory lending practices, unscrupulous loan officers and unethical notaries. Today, it seems as if Real Estate Agents are making up for lost time and joining in the game. With today’s shortage of inventory, it’s not uncommon for an agent to sell a house within days of listing it and more and more, listing agents are holding out to find their own buyers so they can feed their greed.

The only way to remedy this situation, IMHO, is for sellers and homeowners to wake up and be a more active part of their home-selling process. Make sure that you clearly tell your agent you want to see all offers presented within a reasonable time of being presented to the agent. Make yourselves aware of the rules and regulations concerning listings and agency agreements with your listing agent. Below are a few sections of the MLS rules pertaining to offers.

9.4 Presentation of Offers. The listing broker must make arrangements to present the offer as soon as possible, or give the cooperating broker a satisfactory reason for not doing so. In the event the listing broker will not be participating in the presentation of offers, the listing broker shall clearly indicate this fact in the listing information published by the MLS.

9.5 Submission of Offers and Counter-Offers. The listing broker shall submit to the seller(s) all offers and counter-offers until closing unless precluded by law, governmental rule, or expressly instructed by the seller(s)/landlord(s) otherwise. The cooperating broker acting for a buyer(s)/tenant(s), shall submit to buyer/tenant all offers and counter-offers until acceptance unless precluded by law, governmental rule, or expressly instructed by the buyer(s)/tenant(s) otherwise.

9.6 Right of Cooperating Broker in Presentation of Offer. The cooperating broker has the right to participate in the presentation of any offer to purchase he or she secures. The cooperating broker does not have the right to be present at any discussion or evaluation of that offer by the seller(s) and the listing broker. However, if the seller(s) give written instructions to the listing broker requesting that the cooperating broker not be present when an offer the cooperating broker secured is presented, the cooperating broker shall convey the offer to the listing broker for presentation. In such event, the cooperating broker shall have the right to receive a copy of the seller’s(s’) written instructions from the listing broker. Nothing in this section diminishes or restricts the listing broker’s right to control the establishment of appointments for offer presentations.

In today’s economy you have to be your own best advocate and know your rights! If you want top dollar for your home, you have to be proactive and informed!

Mortgage Debt Forgiveness Act: Expiring Soon!

by Houtan Hormozian | Oct 18, 2024 | CRESTICO

These days, it seems like there are no homes for sale in Los Angeles. The end of the year though, has and continues to be a great time to buy because although most people are busy with the holidays – you can capitalize on a great deal! Another driving force is the expiration of the Mortgage Debt Relief Forgiveness Act. This Act is set for expiration at the end of the calendar year.

The federal government created this Act in 2007 to allow struggling homeowners to avoid being held responsible for the “income” they received when they managed to get out from under their heavy mortgages through short sales and other transactions. The Mortgage Debt Relief Forgiveness Act exempts current homeowners from the hidden income taxes that are normally incurred when mortgage debt is forgiven. With this Forgiveness Act not in place the IRS will consider the mortgage debt wiped out without actually being paid back as income and tax it as such.

Struggling homeowners now have another reason to try and sell their homes in short sales and other sales before the end of the year. This could create the right opportunity for a buyer looking to move before the end of the year. Some short sale servicers are even expediting these transactions to get a short sale closed before year’s end.

In this market where many homes are still underwater and retiring seniors are relying on the profits from the sale of their home, as a buyer, you might stand to benefit from the inventory changes. Contact your local Crestico office today for more information.

Should I Buy A Home?

by Houtan Hormozian | Oct 18, 2024 | CRESTICO

The question that I get asked most often from client is “Is it a good time to buy a house?” Well, the answer to this question almost always depends on who is asking and what his/her reasons for buying a home are. Often people fall into the traps of wanting to buy a home so badly that they overlook many of the dangers and potentially stressful things that could happen down the line.

Many of my short sale clients have made themselves “house poor” (as the Department of Housing and Urban Development calls it). This is something I often warn my clients about. Being “House Poor” means that “… by putting too much emphasis (and income) into your housing expense, you may be forced to cut other expenditures, whether it be for travel, entertainment or some more important needs, such as education expenses or retirement funding.”

By making inappropriate housing decisions, many have exposed themselves to a great deal of financial exposure. By pushing themselves to their financial limits, they find themselves unable to meet their mortgage payment obligations as that payment takes a higher percentage of their income. When funds get short, other loans and obligations (and credit ratings) can and will suffer.

Additionally by not completely understanding the economic state of the nation, often homebuyers ignore housing values. Economic downturns are often accompanied by, at the very least, stagnation in housing values. And, even though it sounds crazy in markets that have seen double-digit annual appreciation in recent years, occasionally housing values will decline (as they have in recent years). Worse than a situation where it is difficult to pay the mortgage is one where there is the prospect of losing a home–or trying to sell it in a distressed market.

However, for savvy buyers with steady incomes, good credit and supple savings – this is a great time to buy a home. Firstly, mortgage Interest Rates are at their lowest levels years, meaning lower payments and the ability to devote less income to housing expenses. However, buyers should be warned against buying more house than they need simply because they can afford the payment.

Because less people are getting qualified for loans, there is less competition. As the market softens, less buyers will be in the market, meaning that negotiating position will be enhanced–and, it is unlikely that buyers will have to pay thousands of dollars over the listing price in order to get the home they want. More negotiating power usually means lower prices and lower monthly payments.

All in all, it can be a good and a bad time to buy a home depending on who you are and your financial health.

For more information, please visit www.crestico.com.

Attention Future California Homeowners! Loan limits are dropping!

by Houtan Hormozian | Oct 18, 2024 | CRESTICO

Areas that will be affected in California are Riverside, San Bernardino, San Diego, Orange, or Los Angeles county. Starting October 1, 2011, temporary conforming and FHA insurable loan limits will be lowered nationwide.

HUD has also announced new (lowered) FHA insurable loan limits across the nation. California has several counties that will be negatively affected and potentially impact home buyers who have not saved a large down payment.

"Temporary loan limits" were enacted as part of the government’s 2008 economic stimulus package. At the time, the financial sector was entering its crisis and private mortgage lending was practically done. Financing was scarce for both homeowners and home buyers for whom loan sizes exceeded Fannie Mae and Freddie Mac’s national $417,000 limit — even for those with excellent credit and income.

Riverside and San Bernardino will no longer be considered a high cost area by Fannie Mae or Freddie Mac…which will affect you if you are looking to buy a home in the $350,000 to mid $450,00 price range.

County New FHA loan Limit New Conforming Limits will be as follows:

Riverside County $355,350 for FHA and $417,000 for Conforming

San Bernardino County $355,350 for FHA and $417,000 for Conforming

San Diego County $546,250 for FHA and $546,250 for Conforming

Orange County $625,500 for FHA and $625,500 for Conforming

Los Angeles County $625,500 for FHA and $625,500 for Conforming

The max conventional and FHA loan amount in Riverside and San Bernardino county is currently $500,000, but starting October 1st, 2011, it will drop by $144,650 for FHA , and for conventional loans, it will drop $83,000.

If you live in a high-cost area, or a former high cost area, mortgage rates may be low, but the amount of loan for which you qualify may be much less than you expect. You may find yourself ineligible to use a low down payment FHA loan to purchase your home, thus requiring you to with a HUGE down payment.

Whether you’re planning a refinance or a purchase a home, keep an eye on the calendar and act sooner…..contact Crestico today!

www.crestico.com

Is Buying A Home Still a Good Investment?

by Houtan Hormozian | Oct 18, 2024 | CRESTICO

Lately, many of my colleagues and friends have been asking me whether I think buying Real Estate is still a good investment. While it may seem like renting a property that is easier to get out of, costs less to maintain and is more easily negotiable to get into is a better choice than dealing with selling agents, competitive cash offers from investors and escrows and taxes; I firmly believe that it is NOT. You may think, “Sure, of course SHE doesn’t want us to rent, she wants us to buy – that’s how she makes money” so keep reading and decide for yourself.

First we need to define what is considered a “good” investment. There used to be a time when people would see huge returns on their investments, be they in stock, bonds or real estate. In a recession however, all kinds of earnings and returns are diminished. This leaves investors to re-define their idea of a “good” investment. Sometimes, they may consider an investment that does not lose value as a “good” investment, other times nothing less than doubled value would be considered “good.” Generally speaking, according to most economic theorists and financial advisors, any investment that is yielding a 5-8% annual return is considered a “good” return. This leads us to a discussion of ROI.

Often you will find people talking about ROI. Historically, ROI (Return On Investment) has been a common method for individuals and companies to measure how “good” of an investment they have made, based on the rate of return that they have enjoyed. When trying to determine whether a particular real estate purchase is a good one – one would need to consider a few things. Real estate’s value depends mainly on its location. (I know you’re heard it “location, location, location”) Often, communities that are built to support big educational institutions or employers (think big name colleges and the neighborhoods close to them, or big factories and suburbs created to house the families of the workers) tend to enjoy more stability in terms of price and rate of return than others, even in times of depression and recession. By looking at the location of the real estate, you will have more information about whether or not it is a good investment. Surveying historical values over time in the area will allow you to see the retention of prices in the area.

Ultimately, as an investor you will need to gather information not only about the property you are considering purchasing, but also the surrounding neighborhood, historical values and proximity of institutions that can contribute to the stability in price. Overall, investing in a home, even at this time in our economy can yield the same (if not better) return as investing in stocks or other types of investments. The key difference would be that you can live in, build a home in, create a family in and achieve your dreams in a piece of real estate whereas a stock certificate can not provide these intrinsically satisfying things for you.

Mitra Karimi

Realtor – Broker

Crestico Realty

www.CresticoRealty.com