Living in Contra Costa County

Let me start of by saying that this is satire. And this should be read with that idea in mind. It is intended to be humorous. Nothing more. Ok?

As long as we understand one another, you can keep reading...

If not, please push ALT + F4 now. :-)

Common Man's Dictionary to Real Estate Advertising

1 car garage: Sure, you can drive your Ford Escort into the garage but there is no room to open the door.

Advertisement: A tool used by business to get money out of people that don't have it for something that they don't really need.

And much, much more: Truthfully, nothing else comes to mind. But, we can't tell you that.

Auditor: Person that arrives after battle to finish off the wounded.

Bank: Loan shark.

Beachfront property: No hurricane insurance available at any price.

Bedroom in basement: The basement has a 1' by 2' window you might be able to squeeze yourself through as an alternative to burning to death in a structure fire.

Bright and sunny: No window treatments or venetian blinds are included because previous owners simply nailed Pikachu blankets to the window frames.

BRILLIANT CONCEPT: Do you really need a two-story live oak tree in your 30-foot stained-glass sky dome?

Broker: What buying a house is going to make you.

Budget: Written proof that you can't afford the things you want.

Build sweat equity: The house is not habitable currently and unless you plan on working your hind end off to make it livable, it would be easier to bulldoze this place and live in a tent.

Cape Cod: Stylized after a 74 yr old lobster fisherman's garage.

Cash Flow: The movement your money makes as it disappears down the toilet.

Cathedral Ceiling: You will go broke trying to heat this place. It would be easier to set fire to the couch.

Charming: Small. See also, "Tiny". Snow White might fit, but five of the dwarfs would have to find their own place. See also "Cute," "Enchanting," and "Good Starter Home."

Close to all amenities: The backyard is a shopping mall parking lot.

Close to Schools: You will spend a generous portion of your morning and evening commute stuck behind buses in just about every street you attempt to take to avoid them.

Comfortable: One coat closet larger than the "Charming" home.

Commuter's Dream: Located at the bottom of an off-ramp right beside a truck stop.

Completely Remodeled: Not only does this statement give the company attorney a stroke, it also usually means new kitchen counter tops and a vanity sink in the bathroom.

Complete remodeling in 1992: Hurricane Andrew...'nuff said.

COMPLETELY UPDATED: At the advise of the listing agent, the seller has decided to remove the metallic gold shag carpeting from the living room and replaced the avocado colored stove.

Contemporary: The house is at least 15 years old.

Country living: Too far from anywhere to drive to work...or to shop...or get to an emergency room in time to prevent bleeding out from a paper cut.

Country in the city: A grotesquely overpriced large lot with a 2 bedroom house built before World War I that used to be on 100 acres that have been split off and sold to a Home Depot and a car dealership. Yes, there is a Starbucks in the parking lot.

Cozy: Not a single room could fit a full sized bed. And, the toilet doubles as a kitchen counter when you close the lid.

DARING DESIGN: It's a warehouse.

Desirable neighborhood: This "charming" house is extravagantly overpriced thanks to being located next to a neighborhood where the snobs live.

Doll-house: Tiny place filled with ugly knick-knacks.

Easy Care Yard: Acres of Red or White rock used to systematically cover actual useful space.

Easy freeway access: Located right on the noisiest arterial street closest to the freeway.

Easy to heat: See “cozy”.

Efficiently designed kitchen: The kitchen is too small to fit two people at the same time and everything you need to reach is simply done so by turning around. The down side is that in order to open the stove, you have to step into the living room.

Everything's Been Updated: Sure, they updated all the things inside the house...but the house itself has been condemned.

Executive neighborhood: Everyone's last name in this area is Jones. And yes...you are required to keep up with them.

Extra Storage: Four coat hooks nailed on the back of the front door.

Gated Community: There is a reason it is gated...Every seen 'District 9'???

Great Starter Home: House has 4 rooms. Two of which are additions.

Handyman Special: Forget It! You don't have the skill required to make this home livable.

HI-TECH/CONTEMPORARY: Lots of steel shelving with little holes. You know...the kind your dad used to store tools on in the basement. There is also a lot of glass in places most people wouldn't put it.

Wont last long!: This home hasnt sold in 374 days after two price reductions and the sellers have finally given up hope on making any money on this sale so they dropped the price another $20K.

Immaculate: Remove your shoes. Chances are the carpet is white along with the walls, furniture, cabinets, appliances, and the family pet.

In-city living: The house comes with a deadbolt lock on all windows, a bar across the door capable of stopping a battering ram...and a moat. Being outside in this neighborhood after dark will probably require an armed escort.

Institutional Investor: A active housing investor from 2006 who is now locked up in a mental institute.

Just available: The previous owner just died on the premises. That is the only way anyone would want to sell a home in this market unless they are trying to save a foreclosure. Hope you don’t believe in ghosts.

Large family room: The basement can hold a couch and a chair...which is more than can be said for the living room. Just try to keep the kids from eating the exposed insulation.

Lots of storage space: The basement is too small to be called a family room.

Low maintenance lot: No yard. The kids will have to play in the street. Or, maybe in the shopping mall parking lot.

Luxury Living: It has a Jacuzzi tub. It's leaning against the wall of the garage. But, at least it has one.

Market Correction: The day after you buy a house.

MUCH POTENTIAL: Steer clear unless you have a lot of money and actually believe your blind dates really did have nice personalities. See "Ready to Rehab," and "Fixer Upper."

Must see inside: Yeah...that's cause the outside is ugly.

MUST SEE TO BELIEVE: An absolutely accurate statement. It is hard to drive that kind of pain home through the eye without actually using a sharp instrument and a forceful thrust.

Market Correction: The term your broker/agent uses for a market crash while telling you that your house is worth 37% of what you paid for it.

Meticulously maintained in the original condition: The avocado-colored appliances are 50 years old. Minimum.

Modern: It doesn't have a dirt floor and it is insulated with something other than beaver pelts and flour sacks.

Motivated sellers: Subtract 15% from the asking price and see if they counter.

Natural setting: Forget about planting anything because the deer will eat everything in your yard but the sagebrush and knapweed.

Near transportation: an Amtrak train goes through the backyard roughly every 15 minutes, day and night.

Neighborhood Watch: Your next door neighbor has binoculars trained on your house. Your movements are tracked and reported to the police any time you have company.

Newly remodeled kitchen: The 50-year old cabinetry and faucets have been replaced with cheap modern equivalents.

Nice Condition: Apparently "nice" means different things to different people. See also: "Lipstick on a pig".

Nighttime Security: The street lights located on all corners of the home completely eliminate darkness 24 hours a day. Sleep is impossible.

No need to preview: Yeah, because if you did, you wouldn't show it!

Old charmer: Herbert from Family Guy lives next door.

ONE-OF-A-KIND: Ugly as sin. The neighbors hope the place burns down so their property value goes up.

Park-like setting: There is a tree located somewhere on this block.

Partial mountain view: You can see the tip of (insert name of local mountain) if you climb the roof and stand on a chair.

Pet friendly neighborhood: Various forms of organic matter are constantly deposited in your front lawn despite the fact that you don't own any pets.

Plenty of Parking: The stadium across the street has ACRES of parking spaces available.

Practicing Water Conservation: Yeah, the lawn is died. No one watered it. Ever. (Thank you Steve and Heather Ostrom!)

Prestigious: Expensive. Probably not worth it, either.

Prime Location: We have already had better offers from more qualified people than you...don't ask.

Quaint: Buy a wall paper steamer so you can get that crap off the wall without having to gut the entire place.

Ready to move in: The interior has been painted with one coat of cheap paint and the shag carpeting has been raked and shampooed.

Ready to remodel: This place is about to collapse; you will have to invest twice the asking price in remodel before you can move in. Seen the movie "The Money Pit"??

Recreation room with wet bar: Basement has been sheet-rocked, painted and has a faucet.

Reduced To Move: See also: "Walmart Rollback"

Rent With Option to Buy: We know you wont be able to qualify for crap...But, if you can make steady payments, it works for us.

Safe Neighborhood: Regardless of your attempts at privacy, your neighbors will continue to attempt to peer through the slits in your Venetian blinds. See also: "Neighborhood Watch"

Seasonal creek: There is a 4 foot wide, 6 inch deep muddy ditch that runs across the property...And it only fills up after a good rain or during spring thaw.

Secluded setting: The only thing further away from civilization is a polar ice cap. Grizzly Adams once lived here.

Show and Sell: In other words, the listing agent will be doing no marketing and the stubborn seller doesn't want it staged.

Shows Well: The seller actually cleans the place up before you bring your buyers over.

Sophisticated: Plain. White walls with zebra print rug and furnishings. A large piece of abstract art is in the dining room and a canvas the size of a Chevy hangs on the wall covered in what appears to be pantyhose, tin foil, and computer diskettes.

Spacious: We knocked out a wall and expanded the living room into the garage.

Sprawling ranch: Inefficient floor plan that appears to have been designed by a drunk monkey.

Storybook: This house is old and the roof is not flat. See also: "Little House On The Prairie"

Stunning house: The house is not ugly...the interior, on the other hand...

Sunny corner lot: There are no trees anywhere near this property located on the corner of the two busiest streets in town.

Sunken Tub: The tub isn't sunken...it fell through the floor. The remaining structure is only capable of holding water or a body. Not both.

Territorial view: Great view of your neighbor’s bedroom window and "private" hot tub with the glass roof. If you lean hard against the glass and look hard to the left, you can see a broken down Pontiac in the alley.

Three season sun room: Putting screen up around your front porch does not make it a "sun room".

TLC: Tear down, Level and Condemn!! (This after a Realtor told me her country property needed just a little TLC...Upon visiting, I promptly fell through the front porch up to my knees!)

Townhouse: A 3 story walk-up on the north side that is sandwiched between two others that look exactly the same. Not only can you hear your neighbors fight, but you hear when they play music, watch TV, use the bathroom, or blink.

Tudor: A quaint two bedroom where both bedrooms are now in the attic which is not insulated.

UNIQUE CITY HOME: Used to be a warehouse.

UPPER BRACKET: No, this doesn't include you. See also: "Executive Neighborhood" and "Prestigious"

Usable land: Vacant lot. Probably filled with broken glass, nails, large rocks, bicycle parts, and Jimmy Hoffa.

Victorian Sweetheart: Once you steam off the wallpaper, you will need to strip off 14 layers of lead-based paint.

Walking distance to (insert noun here): There is nowhere to park your car within 20 minutes of this house.

Well Below Market: We keep having to reduce the price on this shanty because nobody wants it.

Will Help Finance: Soooo....the owners know they're asking too much. And, taking that into consideration, they are more than willing to "help" you get into this house that you can not qualify on your own.

YOU'LL LOVE IT: No. No, you wont.

 

Feel free to add your own in the comments!!! Id love to see them!!

 

Follow Clint on Twitter and make sure you go to the RECR fanpage and become a fan!! If you have any questions about RECR, please call Clint at 800-977-7058.

We get a lot of questions about debt-to-income ratios these days.  Here are the underwriting guidelines for the various types of loans: 

Conventional (non-government) loans:

• If the loan is underwritten manually (by a person), the debt-to-income ratio (DTI) is 36%.  If the borrower has strong compensation factors, the DTI can be as high as 45%.  Compensating factors include such things as very high credit scores, large down payment, large amount of reserves (money in the bank), etc.
• If the loan is underwritten by the underwriting software that is available to some lenders, the DTI ratio is 45%, and it can go as high as 50% with strong compensating factors.
• IMPORTANT NOTE:Individual lenders are allowed to impose their own, more restrictive DTI guidelines on top of Fannie Mae's, so make sure you are using a lender who does not do that.
• SUPER IMPORTANT NOTE:Private mortgage insurance companies impose their own, more restrictive DTI guidelines on top of the lender's guidelines and Fannie Mae's guidelines.  At the moment, 41% is the maximum allowable DTI at most private mortgage insurance companies.  Their guidelines change constantly, so this needs to be checked every time a loan is originated.
• In the old days, there were two DTI ratios for conventional loans - one for the housing expense ratio and one for the total expense ratio.  Fannie Mae no longer uses two DTI ratios.

FHA loans:

• Unlike Fannie Mae, FHA uses two DTI ratios.  The front-end DTI ratio (housing expenses) is 31% and the back-end DTI ratio (total expenses) is 43%.  This only applies if the loan is manually underwritten.
• If the loan is underwritten by the software FHA provides to some lenders, then the ratios are not specified.  It depends on credit scores, down payment, reserves, etc.  We commonly get approvals from the software for ratios of 40-46% for the housing ratio and 50-55% for the total expense ratio.
• Lenders are allowed to add their own, more restrictive guidelines on top of FHA's, so it is wise to use a lender who does not.
• Mortgage insurance is not an issue with FHA ratios because FHA insures the loan.  There are no additional restrictions for mortgage insurance with FHA loans.
• If a borrower is using alternative credit (they have no credit scores and are using other trade lines to establish credit - rent, utilities, etc.), then they are restricted to the manual underwriting guidelines - 31% front-end and 43% back-end.

VA loans:

• VA only uses one, total expense ratio as well.  It is 41% if the loan is underwritten manually.
• If the underwriting software that VA supplies to some lenders is used, then the DTI ratio is not specified.  We typically see loans approved with DTI ratios in the 45% - 55% range.  It all depends on credit scores, reserves, etc.
• Lenders are allowed to add their own, more restrictive guidelines on top of VA's, so check with your lender before assuming VA's guidelines can be used.
• There is no mortgage insurance with VA loans, so there are no additional restrictions related to mortgage insurance.

If you've been tempted by the "great deals" you've heard that "somebody somewhere" got at an auction, please go in with both eyes open.  Here are a few auction basics which many people are not aware of.

 

 

1. Know the difference between Trustee Sale auctions (usually held at the steps of the courthouse), and private auctions. Trustee sales are CASH only. You don't get to preview the property, and it may come saddled with any number of liens, including mechanics liens, back taxes, IRS liens, all of which you will become responsible for. Private auction companies, like REDC and Hudson Marshall, will allow you to finance the property, and will also charge you a 5% buyer's premium on top of your winning bid amount. You can bring your REALTOR(R) and pre-register. You can also preview the property prior to auction, and all liens have been satisfied. Tax auctions happen more infrequently and information can be found on the county website.

2. Banks are notorious for setting the opening bid to equal the amount they are owed, plus legal fees, etc. This price is usually far above the current fair market value, so it isn't surprising when nobody bids. In this case, the property will revert to the bank, and you'll see it reappear later as an REO (real estate owned). At this point, it is priced more reasonably, and hopefully priced to sell. REOs can be a good buy, but lately we've seen most receive multiple offers, thus driving the price up.

3. Expect postponements at the Trustee Sale. The last few auctions I’ve attended had over 60 properties on the docket, but only a half a dozen were actually auctioned. The rest were postponed; reasons vary, everything from bankruptcy to mutual agreement, short sale, etc.

4. You can order a preliminary title report from your title company, and get the heads-up on outstanding liens and other property issues which will affect the value, and how much extra money you will have to kick in to end up with a property that’s free and clear. Plan to spend about $350-$400.  This is an essential step if you are going to bid at a Trustee Sale.

5. Before you buy, atttend a few auctions and observe. You will notice a few regulars at each auction. These are the professionals. Listen, watch and learn.

Do your homework upfront, as the basics change by state. Go to www.realtytrac.com for good basic definitions and explanations of the foreclosure process.

 

Barb Fischer

San Diego, CA

619.339.1396