Mark Wisterman's Paradise & Lake Oroville Real Estate Blog

Having spent a part of my working life, in the Lake Oroville real estate market, as a financial consultant with a major Wall Street brokerage company I was always entertained by, not only the jargon of the industry,  but also by some of the odd, or some might say superstitious, ways that pundits use to predict the next direction that the market or the economy might move.

For example, the Super Bowl Indicator theorizes that the year in which a team from the AFC wins the Super Bowl the stock market will fall, but if an NFC team wins the market will rally. Amazingly, this “predictor” has been right 80% of the time over the years. Another of these anecdotal predictors is the Hem Line Effect. This theory says that as hem lines move up so does the market and when hem lines get longer the market drops.

So, what does this have to do with anything related to the real estate market in Lake Oroville, Paradise and Chico, you say?

As to those theories, nothing. But I think we unintentionally swerved into the first real estate industry anecdotal predictor of the real estate market, in our office. I call it the Redenbacher Effect.

I discovered this theory while Steffan, one of the associates in my office was popping his $1.00 bag of popcorn ( that he bought at the Dollar Store, because that is where REALTORS® shop these days) in our microwave oven. You might imagine the quality level of $1.00 popcorn is not quite the same as the good stuff you get at the movies for about $5.00 a bag.  The fact that Steffan eats at least a bag a day of this stuff has leads me to believe that he is quite the popcorn connoisseur.

I will never forget the profoundness of the words that eminated from his lips as the Redenbacher Effect was born:

 ”I sure will be glad when the market gets good again so I can afford to buy something better than this $1.00 popcorn c*@p.”

With the suddenness of a light bulb being switched on to interrupt the darkness of an empty room, it hit me that we may finally have an accurate way to forecast the pending direction of  not only the Lake Oroville real estate market, but the real estate markets of all 4 corners of the world!

The Redenbacher Effect is defined as this: Read the rest of this entry »

As a reader of this blog you know that the market guidance I give for the Lake Oroville real estate market and Paradise real estate market is intended to provide a forward looking perspective to where the market is going.

Attempting to take into consideration all the factors that affect the market and trying to provide accurate guidance into the future is a balancing act to say the least. The biggest challenge in trying to do this is in separating the hype from reality.

Every day you hear the hype but rarely the reality.

I think the reason this Lake Oroville real estate blog is so popular is that readers have realized that the perspective and advice I give is based solely what I see the realities of the market to be. For example, if you go back to some of my previous blog posts you will see that I was maybe the only REALTOR you heard saying that the tax credits would not help the market in the long term; that the market cannot recover until we find a way to get some of the 8 million or so who have been foreclosed on back into the market; and that government “purchase incentives” will only prolong the pain homeowners and sellers are going through with regards to home values.

My contact with two separate buyers in the Lake Oroville real estate market over the past couple of weeks has led me to believe that we are about to see the very small beginnings of a truly sustainable recovery in home sales and home values.

This belief is based on the fact that each of these buyers were coming to me following their homes being foreclosed upon in late 2007 and early 2008.  With FHA lending standards allowing a borrower to get a loan with a foreclosure of 3 or more years old on their credit report, these buyers are poised to get back into the market and find another home to purchase.

With the first big wave of foreclosures rolling through the real estate market in 2008 it stands to reason that there should be the beginnings of an uptick in real estate transactions sometime in the middle of 2011 as many of those who lost their homes may possibly qualify again for a loan.

And as corny as this may sound, with the much lower prices and the almost free, fixed interest rates, many of these buyers may look back on their foreclosure with fond memories as it enabled them to get out of a house they most likely over paid for and which they financed with an adjustable loan with a top rate that would make a loan shark blush.

Time is a great healer, isn’t it?

Today’s news that new homes sales are at their worst level in recorded history comes on the heels of yesterday’s report that existing home sales we down more than 2% while the “experts” were expecting an increase of almost 6%, is great example of what I am afraid is going to be another 6 months to a year of pain for sellers and homeowners.  I hope I am wrong , but I fear that I am not.

But, wait!! I thought the government’ s tax credit program was supposed to stabilize the market. If you listened to, and believed what,  the National Association of REALTORS® and the California Association of REALTORS® have had to say about the credits, you should be seeing a recovery by now. But, what we are beginning to see, on a National basis, (which is what most of us read and hear about) is a rapid move of the market toward the place it would have already gone,if  the people who should know better would have been honest about the ultimate impact of these credits they were supporting.

Instead these groups landed on the side of  getting a quick “fix” instead of thinking long term. Now we have to look even longer term because the inevitable has been prolonged.

Now let’s be honest here. I and my office associates, here in the Lake Oroville and Paradise real estate markets,  no doubt benefited from the temporary increase in sales that resulted from the credits. Our sales numbers increased like everyone else’s.  I would, however, have gladly sacrificed the short term benefits in order to re-establish a viable, vibrant and free real estate market. One that has staying power.

As it is we are saddled with the hangover from the housing version of  Cash For Clunkers, or as I prefer to call it:  “Funds For Foreclosures”

If you think that I am all gloomy and doomy about this market you are wrong. I think that expiration of these tax credits now allow us to come back to reality and now focus on the real cause of this market today. UNEMPLOYMENT!!!!!!!!!!!!!!!!

Maybe a softer real estate market going into election season will be one more reason to finally get us the changes we need in order to get  our country’s, and our state’s, economic engine restarted.

As they say, Everything Happens for A Reason.

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Have you ever had one of those days, weeks, or years when you finally get so fed up with something that your head almost explodes. Well, I am having one of those moments right now, in good old Lake Oroville, CA. and I guess I am going to have to be the first one to do something about it since it seems that nobody else wants to.

Below is a letter I just mailed off to the California Department of Real Estate, in the hopes that something can finally be done to bring some of these REO agents back to reality. I am absolutely tired of these agents hiding behind the excuse that a bank owned listing exempts them from doing their job. They must be held accountable for their inaction.

February 16, 2010

California Department of Real Estate

Attn: Enforcement

P.O Box 187000

Sacramento, CA 95818-7000

Dear Sir/Madam:

Over my nearly 16 years in the California real estate business, I have seen a continuing deterioration in the care that many licensees take in the performance of their duties as required by the laws and regulations under which they operate.

With the enormous numbers of foreclosures that have come to the market over the past 3-4 years has come a likewise increase in the number of licensees who fail to fulfill their duties under their license. The biggest violations have to do with the lack of disclosures being made by listing agents for their bank owned listings.

In the past, if an agent neglected to provide me with the appropriate disclosures, a simple phone call to the agent fixed the problem. The missing disclosure would either be faxed or e-mailed to me promptly. This is not the case in today’s market environment. There are an ever increasing number of agents who either refuse, or ignore their duty of disclosure. In particular, many agents are not performing any type of diligent visual inspection, and the problem seems to be growing.

Enclosed are three examples of what we have received in our office lately from agents who have neglected, or ignored their duty to disclose. Each of these from agents representing REO listings.

While it gives me no satisfaction to resort to lodging this complaint with your department, I feel I can no longer sit silently by while our industry continues to shoot its reputation in the foot. I am sure that I will most likely suffer some repercussions from my fellow REALTORS for lodging this complaint, but at some point someone has to stand up for the right thing; not the popular thing.

If there is anything I can do to shed further light on these cases please do not hesitate to contact me.

Yours truly,

Mark S. Wisterman

Broker/Owner

DRE# 01181168

We’ve all heard the old saying , “Give them an inch and they will take a mile.” Right?

Well, this has never held more true than it does today in this age of bank owned properties. No, this is not another one of those bank, bashing blog posts that seem to be everywhere these days. Quite frankly it is difficult to tell if the expanding trend of banks REQUIRING  more and more of a potential purchaser before accepting an offer, is the work of the banks or of some of the bank-employed REALTORS® that have hitched their fortunes to their bank-employer.

Let’s take a little walk down memory lane to see what I mean.

Inch #1-In the beginning, banks that owned foreclosed homes simply required that a buyer present a loan prequalification letter with any offer that was made on one of their homes. This seemed fair, as no seller wants to be dealing with a buyer that is not qualified for a loan.

Inch #2- It was then not good enough that the purchase contract stated that the buyer had given a deposit check to their agent. The bank wanted a copy of the check.

Inch #3-Next the major banks required that any prospective buyer be loan prequalified with their bank before they would consider the buyer’s offer. Great way for the bank’s loan officers to try and persuade a buyer to swtich their business to them. Yes, it is happening! Read the rest of this entry »

Today marks the first day of the waiver of FHA’s “anti-flipping” or as I call it, the “anti-free market” rule. Under the ill- advised rule a home that was purchased with the intent of being “flipped” has to be held by the owner for at least 90 days before it would be eligible to be purchased with an FHA-back loan. The effect of the rule was to cause an unnecessary obstacle to a real estate investor purchasing a “fixer,” renovating it and putting it back on the market for a profit.

 In the days of the flaming real estate market, FHA’s motive was to slow down the rate of home price increases and profit taking by homeowners who wanted to take advantage of the current market conditions.

With the number of foreclosed properties on the market, many of which are in such bad condition that they would not qualify for any type of loan, the FHA is now looking for real estate speculators and investors to help bail out the market. With the 90 day holding period waived for the next year, investors can now snap up some of the great deals that are available, renovate them as quickly as they can so that they will qualify for a loan, and get them back on the market so buyers can take advantage of the available federal homebuyer tax credits.

This should significantly increase the number of turn-key livable homes on the market in the Paradise &  Lake Oroville real estate market,  something that is sorely needed right now.  Going forward I would like to see FHA permanently rescind the regulation as it interferes with the free market. Only when the government gets out of the way will the market repair itself.

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A little while back I posted a blog article regarding the lack of attention that many REALTORS® are paying to their obligation and legal requirement to provide the proper disclosure documents to clients and cooperating agents in a transaction. Not much has improved since then. The biggest violators of the disclosure laws seem to be those agents that are working as agents for the banks.

Before I continue let’s make one thing clear: Not every REALTOR® who is working for a bank is ignoring the law. Most of them are doing what they are supposed to be doing.

There does, however, seems to be a growing number of  bank-hired agents in our area that have somehow come to believe that they are above the law, in fact REFUSING to comply with disclosure requirements. And to be totally blunt about it, I am tired of it. So tired in fact, that it is time to do something about it. Maybe it is time to start naming names on this blog site of those agents who seem to have acquired the arrogance of the banks to whom they have pledged their allegiance, and refuse to do their jobs. Or maybe the Department of Real Estate would be interested in seeing what some of these “agents” are doing; I mean, NOT doing.

Here is an example of what I am talking about:

I e-mailed the local listing agent for the Department of Housing and Urban Development (HUD) last week to ask her to provide me her inspection disclosure. She is the listing agent for all of the HUD owned homes in Northern California. As an agent for the seller she is required to perform what the real estate law calls a “diligent visual inspection” of the property and provide a written disclosure of her findings to my buyer. As the agent of the buyer I to am required to do the same.

Her response to me was that she “normally” does an inspection when she is representing the buyer. But because I was representing the buyer she did not feel she was required to do the lawfully required visual inspection.

We currently have another transaction with an agent from S. California who has a bank owned property in Oroville listed. He too is refusing to provide the results of his visual inspection. Know why? He has never seen the home and has no idea what condition it is in. Being an agent from out of town DOES NOT exempt him from performing his duties. It seems that the longer this foreclosure market continues the more these type of agents cut corners and violate thier ethics. Can you imagine what it is going to be like by the end of the year if something isn’t done to fix it?

So here is how I am going to help YOU become part of the solution. Beginning this week I will be sharing with you the disclosures you can expect to see during your Lake Oroville, or Paradise, real estate transaction. With this knowledge in hand you can begin to demand the proper disclosures from your agent and have just that much more piece of mind about the purchase of your new home.

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 Here is this week’s report, dear readers. Really nothing in this week’s numbers of any major note for the Lake Oroville real estate housing market. We did, however have only 4 business days of data this week as a result of the county recorder’s office being close in observance of Martin Luther King Jr.’s birthday. REO/Short sales returned to their post holiday average with over half of the weekly sales attributed to “distressed”  sales.  

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 Could it be that time is proceeding faster this year than last? It sure feels like it here, in the Lake Oroville real estatet market as this is already the second weekly market report of the new year.

The trend towards lower inventories continued last week as the number of home on the market ticked down another notch. This week’s stat of the week is the number of sales that involved a “distressed” home, those that are either bank owned or short sale priced, has shown a significant decline for 3 of the past 4 months. I don’t think this is any type of trend, but is an interesting stat, I think. 

Those of you who know me, whether you are a client, or another REALTOR®, or a friend, know that I take the business of negotiating and successfully completing real estate transactions very seriously. You also know that I do not believe for a moment, that just because someone may have a real estate license or calls themselves a REALTOR®, means that the particular someone is competent, or educated enough to properly represent their clients best interests. Let’s face it, it is way too easy to get a real estate license in this state.

It takes more than a license or the paying of dues to the National Association of REALTORS® (NAR)  to acquire the proper level of competence to do the job. Above all else it takes education and the desire to stay informed of the latest trends, rules, laws, etc.

This is why I am very pleased to announce that each of my associates have thought it important enough to spend the time necessary to join me in completing the educational requirements set forth by NAR  in order to obtain our Short Sales & Foreclosure Resource Certification. This is the ONLY “distressed property” certification recognized by NAR. A certification that, at the time we received ours, had been attained by only 2,500 of the nearly 1 million REALTORS® nationwide.

Through the attainment of this certification we have gained valuable knowledge and have access to the resources necessary to counsel and better guide our clients through the foreclosure and short sale processes. In fact, (here comes the commercial), we are the only office in the Lake Oroville real estate market, and maybe the entire Butte County real estate market, where every associate in the office has earned the certification. Are we “experts” yet? Nope. But, knowing my associates as I do, we are going to be as close as you can possibly be as this market begins to move away from foreclosures and more into the short sale arena.

Oh, just a side note regarding “experts”  in this business. If someone calls themselves that, in most cases you should probably run away as fast as you can. Case in point-There is one REALTOR® in town that claimed in her advertising that she was a “Short Sale Expert” and yet had never, ever negotiated a short sale transaction of any kind.!!!!!!!!!!!