Santa Clarita Short Sale or Standard Sale Debate

Our Santa Clarita homebuyers are always asking us what’s a better deal to pursue, a short sale or standard sale. In the end, as it turns out, there is no right answer, and it’s simply a case by case situation. You may however, be curious to know how the stats play out  when you dive into them. The stats exist.

Who wins? Santa Clarita Short Sales vs Santa Clarita Standard Sales

To determine this, I looked back at the closed sales only, over the last 60 days. While there were more standard sales closed than short sales closed during that time period, the sample for each, was large. Also, please keep in mind that a standard sale consists of both bank owned foreclosure sales, and equity sales where an owner has equity! Or in other words, it’s not a short sale.

Here’s what I found…

The average sq ft of short sales closed in the last 60 days in Santa Clarita, was 1,852.

The average sq ft of standard sales closed in the last 60 days in Santa Clarita was 1,784.

The average sales price of a standard sale in the last 60 days in Santa Clarita was $327,305.

The average sales price of a short sale in the last 60 days in Santa Clarita was $313,727.

More square footage for less money

Those figures would have any would-be homebuyer put a heavier weight on short sales. The get more house for a price less than that of standard sales, when going for a short sale. On the average of course.

It’s also interesting to note that while short sales on average sold for 1% below their asking price, standard sales sold for 1.9% below their asking price.

Math is money…

We could also put it like this. Based on the last 2 months of home sales in the Santa Clarita Valley, short sale homebuyers received on average a home 4% larger than that of standard sale homebuyers, and they purchased those homes for 4.1% less in price (on average).

So, are short sales a better deal?

Not exactly. As mentioned, it must be analyzed on a case-by-case basis, and any homebuyer entering the Santa Clarita real estate market must be cognizant of the pitfalls that can accompany a short sale. In the end, the potential wait time and or hidden costs in a short sale transaction, may not be worth the headache. Pursuing a short sale in Santa Clarita requires patience from the homebuyer, and some kick-butt real estate agents at the helm!

Canyon Country condos - Confetti community

If you’ve been thinking about entering the Santa Clarita real estate market, as an investor, you may have excellent timing on your side. The entry point at which you can purchase a condo, for instance, is incredibly low.

Check out this example. 

Let’s say you’re in the market to purchase a 1 bedroom condo, in Canyon Country, and turn it into a rental. You can find one of those for about $65,000. They’re not available often, and when they do hit the market, they sell! They do exist however. That type of pricing can be found at the Confetti condos in Canyon Country. They are directly behind the Edwards Cinema shopping center. It’s a very well kept community, the landscaping is spotless, and it has a great location off of the Santa Clarita trail that skirts along the Santa Clara river.

Pardon the math…

If you were to nab a 1 bedroom condo in the Confetti community for $65,000, that would mean your 20% down payment would only be $13,000.  That would leave you with a loan of $52,000. You can rent out a condo like that for approximately $1,000/mo. right now. That would leave you with an annual gross rental income of about $11,500 (taking some vacancy into consideration). After monthly payments (including interest) on your $52,000 loan, property taxes, HOA dues, estimating $350 for annual repairs, and even 8% of your monthly rent going toward property management fees, that would equal approximately $8,000 a year in out of pocket expenses. Here, you can see that $8,000 out versus $11,500 in, equals a smile for any would-be real estate buy and hold investor.

There are 3 factors that make this the right time to purchase a Santa Clarita rental property:

1. Home values have declined tremendously
2. Interest rates for home loans are at all-time lows
3. Due to financial circumstances and deteriorated credit ratings, the quantity of people in the renter pool has swollen, and subsequently increased demand for rental homes. Rental prices have been increasing as a result (in sharp contrast to the drop in cost of owning a home).

We’re helping investors, and many of them have different strategies. Some want to buy and hold for 3 years. Some want to hold for 10 years. Some say they’ll never sell. And then there are those that are buying to flip for a quick profit, and move onto the next property.

There is no right answer, as to how to enter the Santa Clarita real estate market as an investor. The question is, will you enter it?

Curious about the condos currently for sale in the Canyon Country Confetti community, discussed above? Below is a list of any and all Confetti condos, currently for sale. If none are available, none will show. Thanks for reading!

Showing properties 1 - 7 of 7. See more Confetti (conf) (confetti (conf)) tract real estate.
(all data current as of 2/5/2012)

1. $70,900 : 18820 Mandan Street #408, Canyon Country
   
   1 bed, 1 full bath

   Home size: 635 sq ft

   Lot size: 4.33 ac

   Year built: 1984

   Days on market: 5
2. $72,000 : 18808 Mandan Street #314, Canyon Country
   
   1 bed, 1 full bath

   Home size: 635 sq ft

   Lot size: 4.33 ac

   Year built: 1984

   Days on market: 19
3. $60,000 : 18806 Mandan Street #213, Canyon Country
   
   1 bed, 1 full bath

   Home size: 652 sq ft

   Lot size: 4.33 ac

   Year built: 1984

   Parking spots: 2

   Days on market: 95
4. $69,000 : 27240 Luther Drive #509, Canyon Country
   
   1 bed, 1 full bath

   Home size: 652 sq ft

   Lot size: 4.33 ac

   Year built: 1984

   Days on market: 126
5. $69,000 : 27240 Luther Drive #512, Canyon Country
   
   1 bed, 1 full bath

   Home size: 635 sq ft

   Lot size: 4.33 ac

   Year built: 1984

   Parking spots: 2

   Days on market: 127
6. $69,900 : 18820 Mandan Street #414, Canyon Country
   
   1 bed, 1 full bath

   Home size: 635 sq ft

   Year built: 1984

   Days on market: 133
7. $67,900 : 27240 Luther Drive #506, Canyon Country
   
   1 bed, 1 full bath

   Home size: 635 sq ft

   Lot size: 1,346 sq ft

   Year built: 1984

   Parking spots: 4

   Days on market: 229

Listing information deemed reliable but not guaranteed. Read full disclaimer.

For the second year in a row, Santa Clarita homebuyers utilizing FHA insured mortgages will be relieved to know that the Federal Housing Administration has extended the waiver of their anti-flipping policy.

The anti-flipping policy affected FHA homebuyers who wanted to purchase homes that had been owned for 90 days or less. The government wanted to protect themselves with such a policy, from insuring loans on homes that were just being flipped, and not necessarily rehabilitated.

That policy made it difficult for many first-time homebuyers to have access to a growing inventory of flipped homes. It’s beneficial not only to first-time homebuyers to have those types of homes as options when house hunting, but it helps the investors who own them by broadening the buyer pool that much more. It helps the greater real estate market overall by stabilizing home prices through increased buyer competition. No doubt that the communities harder hit by foreclosures welcome this news of the anti-flipping waiver by the FHA.

The majority of our clients that are Santa Clarita first-time homebuyers utilize an FHA insured loan. With more and more investors flipping properties, it will remain important for the government to continue this policy of waiving the anti-flipping policy.

341 Santa Clarita Flip Homes in 2011

From data available to us via our Santa Clarita Foreclosure Radar tool, we can see that in 2011 there were 341 homes purchased by 3rd party investors at the trustee sales, for properties located in the Santa Clarita Valley. Not all of these properties were flipped, but it’s likely, that the majority of them were. If 200-300 of them were flipped, that’d mean that FHA insured homebuyers wouldn’t have access to that many of these types of sales, were the anti-flipping policy not waived.

On October 1, 2011, the maximum loan limits for conforming FHA/Conventional loans will change. The Santa Clarita real estate market will be impacted. But how much? Fannie Mae and Freddie Mac, at he directive of the US Government, can no longer buy loans that have a loan amount more than $625,500. This is a change, a decrease, from $729,750. Some areas of the country never went as high as $729,750. Their decrease will vary. It depends on what county it is, which state, and the home values there.

For instance Los Angeles County is by in large a more expensive area for homes, in contrast to other parts of the State or Country. The maximum loan limit here was $729,750. It will be decreased to $625,500. Santa Clarita specifically, however, has a median homes sales price of just over $300,000. We won’t feel the impact here, as much as other areas of Los Angeles County, where median home sales prices can reach well over $500,000.

For a homeowner, who might have been contemplating moving up, from their $350,000 house, and buying a $700,000 house in Santa Clarita, this might impact their decision to make that move. By deciding not to, that decision could impact the inventory available for entry level homebuyers, that may have been interested in their entry level home they were moving from. There is a domino effect. None-the-less, the high majority of home sales in Santa Clarita are well below the $625,500 loan maximum, as it will be starting October 1, 2011.

This should have a minimal impact to the Santa Clarita real estate market. With the quantity of short sale listings, and bank owned homes still to hit the market, they should keep a somewhat healthy inventory in place, here in Santa Clarita.

On our latest episode of SCVRealEstate360, our Santa Clarita real estate YouTube channel, I went into detail about this subject of changing loan limits that the Government is putting in place, come October 1, 2011. We’ve been waiting to see if they extend the current loan limits, but that’s not likely to happen at this late hour.

Enjoy the episode below.

Interested in speaking with a lender about how much a home you qualify for, and what loan products best suit your needs? Give us a call, we’ll refer you to one of our trusted lending partners.

Interested in discussing the details of a home you saw listed for sale here in Sata Clarita? We can help you with that. Contact us, here at The Robert and Brian Team!

It doesn't have to be this way...

No doubt, if you’ve shopped for a house over the last 4 or so years, you’ve ran into Santa Clarita bank owned homes. Also known as foreclosures. Ok, or REO’s. For the buyer who must finance their purchase (isn’t that almost all of us?) you may run into an annoying bump in the road, of which there can be quite a few when buying a home. This bump, I speak of, is with regards to the common requirement many banks place upon their foreclosure listing agents. And that is, they are to not accept any offers for review, without a loan pre-approval from their preferred lender, which is usually themselves.

Take for instance, Bank of America foreclosures. They tend to require that you get qualified for a loan, through a Bank of America loan officer. Take for instance, Wells Fargo. They tend to require that you get qualified for a loan, through a Wells Fargo loan officer. So on, and so forth. You don’t want to comply? Well they won’t look at your offer then. Sucks, huh?

I can’t stand it, when our clients have a strong loan approval, from a reputable lending institution, and in the midst of the stress of finding a house, and consequently writing an offer on their home of choice, they then have to jump hoops to get approved for a loan – AGAIN. The banks that require this, of course do this to simply ensure that the offers coming in are from creditworthy buyers, etc. We also know that they do this to try, and earn more business. Even if they end up “earning” it, by holding the offer in the queue, until a loan pre-approval has been processed.

Want numbers? I have numbers!

Of the 150 bank owned and homes currently for sale in Santa Clarita and it’s various neighborhoods, 35% of them require the buyer to get pre-approved for a loan through a specific lender in order for the offer to be considered. That’s 53 out of the 150 bank owned homes for sale, today.

How can you avoid this?

Focus on Fannie Mae and Freddie Mac type properties. From my own experience, and my research into the numbers, these government sponsored entity (GSEs) foreclosure homes don’t require or have preference as to who your lender is. They may however require that your loan approval is from a direct lender, and not a broker.

How can you find Fannie Mae and Freddie Mac foreclosures? Ask your Realtor. They can find them. These homes often times have closing cost incentives with them.

You are never under any obligation to use the specific lender of choice for the seller of a bank owned home. You can still use, your preferred lender. You never know, you may find that their lender, is offering you a better deal, and it would have been worth the extra due-diligence. The interest rate could be better. There may even be a financing-with-them type incentive, such as no cost for appraisal, or other waived lender closing costs.

Just be prepared. Our buyers, searching for homes here in the Santa Clarita Valley, love to focus on foreclosures. Many of them think, that the financing battle are hurdle is over, once they get approved through their lender of choice, only to find out, they have to go through the process again so their offer might be considered.

In the end, we think, in order to get the best deal, you may have to jump more hoops that you prefer, but it’s probably worth it. Being prepared for the process of buying a home, is key. If you have the information, you’re in control.

Want a team to help you obtain the most information, so you can make the right decisions for your next home purchase, or sale? Hire us, The Robert and Brian Team!

SCV condos for sale priced under $100,000

Why, yes, there is! Condos in Santa Clarita are currently at super affordable prices, and one could easily find an SCV condo for under $100,000.

We recently just sold a condo to a very happy client, who bought the Canyon Country condo from a bank who had foreclosed. He paid close to $80,000! It had granite counters, a remodeled bathroom, and tons of other great features that most would expect to pay more for.

Perhaps it’s time to take a look at buying your first home? A condo? Maybe purchase as an investment and rent it out? Quite a few investors have been doing just that, in the Santa Clarita real estate market. Positive cash flow is not hard to come by, these days. Of course, it’s all case by case, and often depends on what kind of a down payment you’re working with.

Today, when I searched for condos in Santa Clarita that were priced under $100,000, a huge list returned. I was a bit surprised. Some of them are short sales, some are bank owned, and the others regular standard equity sales.

Here ‘s what I found, today:

CLICK HERE TO VIEW A LIST OF SANTA CLARITA CONDOS PRICED UNDER $100,000!

If you find this blog post months down the line, the above list will be outdated. Click here to view an up-to-date  list of condos and homes in Santa Clarita that are currently priced below $100,000.

House bargain hunting? In the Santa Clarita real estate market, just as in any market, there are homes for sale that are over priced, fairly priced, and there are those that are great buys.

If your goal is to buy a home in Santa Clarita, and buy on the cheap, then one of the best methods and sure-fire ways to ensure you’re looking at potentially great bargains, is to look at the total days on market (DOM).

Days on market is just that – how many days a home has been listed for sale. It can get tricky and information isn’t always what it seems. It’s best to always consult with a Realtor prior to forming any final conclusions about a particular deal. For instance, when a home has been listed for sale for 30 days, then enters escrow, but then subsequently falls out of escrow 45 days later, it may be possible that the days on market will reflect much higher, than the actual real amount of days the home has been for sale (available). In that situation, the seller won’t likely be as ripe to discount from their asking price, as other homes that have actually been sitting, for real, much longer.

So what are these 32 homes?

Running a simple search that any Realtor can do for you, I found 32 bank owned homes in Santa Clarita, that have been listed for sale, for at least 90 days. And you know what? All but one home, of these 32 homes, have had their price reduced. I suspect many of them will sell for less, than their current asking price, too.

That’s right, bank owned, they want to sell, and have wanted to so for at least 90 days! Homes like this, should draw the attention of any Santa Clarita house hunter that’s out for a bargain.

Typically, bank owned homes in Santa Clarita tend to be priced fairly, at market value, or somewhat below. The great thing about bank owned homes is that there is no one living there. The seller (bank) must sell! There are holding costs, such as property taxes, hoa dues, maintenance issues, and other liabilities that these banks incur while the home is owned by them.

Take the above info, and imagine how antsy a bank gets, when their home listed for sale sits for 30, 60, or even 90 days. They usually begin reducing the price after 30 days. For sure by day 60. And by day 90…they usually begin replacing their listing agent with a different one! They need it sold!

There are multiple other ways to find deals in Santa Clarita…the above method, is just one of them.

Here’s the list of Santa Clarita homes I found today that have been listed for at least 90 days, and are bank owned!

CLICK HERE FOR SANTA CLARITA BANK OWNED HOMES LISTED FOR 90+ DAYS

Here is the latest list of Santa Clarita FHA approved communities. This list was updated in late June 2011, and has been very helpful. It was produced and updated by Mike Meena and his team at Augusta Financial.

Looking for a community in Santa Clarita where you can buy a home, and utilize an FHA insured loan? It’s only getting more difficult as approvals have been sunsetting all year. Once the FHA approval status expires within a community, that community must be re-approved. And that is no small task!

If you’re in the market for a condo, check out this list below of FHA approved Santa Clarita condo communities. It also notes which communities have already expired, and which ones are about to expire.

Santa Clarita FHA Approved Condo List:

CLICK HERE TO OPEN PDF

The first week of the month always brings with it something new, and old. In this instance, we’re talking about the old. June 2011 statistics in the Santa Clarita real estate market are out, and ready for consumption.

Click here to view the Santa Clarita Real Estate Statistics summary for June 2011.

The noteworthy statistics from these fresh stats, are as follows. In June 2011:

• There were 589 residential properties that opened escrow – a 9.3% increase over May 2011
• There were 397 residential properties that closed escrow – a 9.4% increase over May 2011
• There were 1,116 active homes for sale in Santa Clarita at the end of June – a 7% decrease from May 2011
• The median price of homes sold in Santa Clarita in June was $310,000 – an increase of 9.9% over May 2011
• The median price of a homes sold in Santa Clarita in June decreased by 4.6% from June 2010, where it stood at $325,000

The month to month numbers, and even a few year over year numbers, are quite positive and bullish figures for the Santa Clarita real estate market.

The inventory has dropped, median price has increased, and year over year, in a rough economic period and real estate market, the median price has only slightly dropped overall. Of course, after the hot spring and summer months, comes the fall and winter. Who knows what that will have in store for our local real estate market. You may want to stay tuned!?

Not all home sales are created equal. Certainly, Santa Clarita short sales, would fail a hot or not test when it comes to real estate sales in the Santa Clarita Valley.

Sure, short sales are popular. They’re all the talk. Perception, however, starts to change, preferences for sale types, begin to alter, once you start digging into the details of what a short sale entales (generally). Information is King.

Short sale homes in Santa Clarita are indeed selling, but not in the percentages one would think, especially when you look at the percentages they make up of the SCV real estate maket.

Here are some important stats for Santa Clarita short sales through today, July 6, 2011 (excluding Agua Dulce and Acton numbers):

• There are 469 short sales in Santa Clarita actively for sale
• Short sales make up 40% of the Santa Clarita real estate active inventory
• 59% of short sales are single family, detached homes in Santa Clarita
• Average listing price for an detached single family short sale home in Santa Clarita is $383,630
• Average listing price for an attached condo short sale in Santa Clarita is $188,732
• Over the last 30 days (from July 6, 2011) 75 short sales closed escrow in Santa Clarita
• The average sales price of short sale homes in Santa Clarita that closed escrow over the last 30 days, was $370,243
• The average listing price for those short sale homes in Santa Clarita that closed escrow over the last 30 days, was $376,243
• 28% of the short sales in Santa Clarita that closed escrow over the last 30 days, sold at a price higher than their asking price
• 27% of all closed escrows in Santa Clarita over the last 30 days, were short sales

It’s interesting to note, that while short sales in Santa Clarita make up about 40% of the active inventory of homes for sale, they only make up 27% of the homes that actually closed escrow over the 30 day time frame being looked at. This is to be expected, getting a short sale to close escrow is no small task. It’s the approval process that usually presents the problem, rather than the somewhat typical escrow process.

Remember, a short sale can only open and close an escrow (ie move forward after offer acceptance by seller), after the lenders involved approve the sales price, and the sale itself. That process can take weeks, months, or a year or more. It just depends. As you can imagine, if you have an offer in on a Santa Clarita short sale, and you’re entering month 2-3 of waiting for an approval from the bank to allow the seller to move forward, you may get a bit antsy. Perhaps you’d consider backing out of the offer, and pursue a non-short sale (aka Standard sale or even bank owned sale).

The stats are the stats. If you pursue short sales in your search for a Santa Clarita home, then you’ll want a lot of patience, and some pretty thick skin. Don’t get attached to the home, until you close that escrow!

Need help searching for your next home, here in Santa Clarita? The Robert and Brian Team are here for you. Call on us – 661-964-1760. Start your home search over at www.TheScvAgents.com, and don’t forget to check out our search page for short sales in Santa Clarita.