Short-Sale vs. Foreclosure

If you are a homeowner who is thinking of getting foreclosed vs. trying a short sale, there is a wealth of information and Q&A’s available – click on the “Short Sales” button in the top border above. Get legal advice too.

Who should short-sale?

It’s uncertain, because there are questions without definitive answers until later:

Will your credit score take as big a hit as a foreclosure….?

Can get approved for a short sale? (maybe while current on payments?)

Can the lender be convinced to not pursue a deficiency judgement, and commit in writing?

Will future employers want to check your credit?

Will a short-sale be seen as more favorable with your future landlords?

It takes time and effort to procure a short sale.  If you don’t want to be bothered, then you are already approved for a foreclosure – enjoy the free-rent program for as long as it lasts, and know that you’ll have banged-up credit for the next seven years.  Recognize that the benefit is temporary, you’ll have to go back to paying rent again someday, and as a renter, you may be moving more often.  You may have to settle for an inferior house/neighborhood/lifestyle, but that might be a relief too?

Who should choose to short-sale?

  1. If you need a security clearance for employment, or just generally enjoy your high FICO score now, your credit might get lucky by short-selling.  If the lender marks it somewhat favorably, like “paid as negotiated”m or even better, “paid as agreed”, it would be better than a foreclosure.
  2. If you want to buy another house as soon as possible, then short-sell.  With an acceptable hardship, you might get approved for a new mortgage in 2-3 years if you can qualify full-doc, put 20% down, and have a decent FICO score .
  3. If you have refinanced, the lenders have recourse.  If you are concerned about a deficiency judgement, try to get the lender to waive it during the short-sale process.  You won’t know for sure until you see it with your own two eyes, but worth a try.
  4. If you bought the property as a rental (not your primary residence or vacation home), you could be liable for a deficiency judgement, even if it is purchase money.  A short-sale gives you a chance to plead your case for a waiver.
  5. If you are financially or morally desperate and just want to work the system for as much as you can get, run the gamut.  Apply for the Loan-mod, Short-sale, Bankruptcy, and Foreclosure package and it will buy you 1-2 years (or more) of free-rent.  Don’t be surprised if future landlords frown on your tenant application.
  6. If you want to manipulate who buys your house, and bargain for additional sweeteners, you can conspire with your agent to work the system – most are getting away with it for now.
  7. If you are a realtor, you could make a commission short-selling your own house.

Who should choose foreclosure?

  1. If you bought the home as ‘owner-occupied’ and still have the same one or two mortgages you used to purchase, then you don’t have to worry about any possible deficiency judgements, and are exempt from taxation on the debt relief (as long as you close by the end of 2012).  If none of the seven above apply to you, and prefer to slip out quietly in the night, foreclosure might be your best option.
  2. If there is something wrong with the property, getting foreclosed avoids seller-disclosures.  If you destroy or vandalize the property, you may be liable if the lenders pursue it.
  3. If you don’t want to divulge your financials (repeatedly), then foreclosure is for you.
  4. If you don’t want the whole neighborhood to know while you are living there, then foreclosure is for you (as long as you can grab the door ornaments right away).

For those who are over-encumbered and are wondering how long they’ll have to wait before “the market comes back”, the answer is 5+ years, especially if you are more than 110% loan-to-value currently.   If the “bottom” is 1-2 years away at best, it’ll be another few years before values are high enough to get you out clean.  Any appreciation will be at a slow pace, because of the pent-up sellers who will jump in at every increase.  But if you stick it out, you won’t have to worry about moving!

For those who are still unsure, go out and try to rent a replacement home.  You will see that, even with good credit, the rental market is very competitive.  You’ll at least have a feel for what to expect for the next 2-7 years.

For more information, click on “Short Sales” at the top of this blog.

Neptune Cliff

From this article dated December 28, 2010 in the

Platt said his family had no inkling that part of their backyard was gone until after last week’s storm passed and they went outside. He said the collapse made no sound and no one saw it happening. He said the Neptune Street home has been in his family for more than 30 years.

“Three or four generations have walked up and down those steps to enjoy the beaches,” Platt said. “We’ve raised babies and seen them grow up on the beach.”

John Turbeville, a MiraCosta College geologist who has made a study of shoreline erosion along the North County coastline, said the site of the recent bluff failure and areas just to the south are vulnerable to collapse if there’s much more rain in the next few days.

“It’s no surprise that you see things like this,” Turbeville said Tuesday as he eyed the collapsed bluff behind Neptune Street. “This is a common thing that happens. It’s not anything out of the ordinary.”

A surfer, Turbeville said he regularly walks the Encinitas shoreline and was taking his son surfing earlier this week when he noticed the collapsed bluff.

Typically, what happens is that rain will so saturate the bluff on a steep slope like the one behind the Neptune Street homes that the landscaping meant to keep it in place can no longer hold it —- so the soil slides down the hillside, Turbeville said.

“It’s real soft, and when you put water on it, it slumps,” Turbeville said. “The more rain we get, the more this is going to happen.”

McCourt’s Tennis-Court-Pool

The owners of the L.A. Dodgers have just settled their nasty divorce, which divulged the four expensive L.A. homes they bought during their tenure.  Here is one, from

Jamie McCourt likes to swim. That’s cool, right?

I mean, swimming is fantastic exercise, it’s relaxing, it’s clearly good for your skin, so what’s not to like?

I’m guessing that was the logic when Jamie plunked down an additional $14 million (that’s on top of the $21.25m purchase price) to turn the outdoor tennis court of the Holmby Hills mansion in the picture into an Olympic-sized indoor swimming pool with its own pool house, sauna, steam room, and massage room.

And while this would hardly be the only $30 million mansion in Holmby Hills, it might be the only one that’s only used for the pool.

That’s right. Post—separation, this 15,000 square-foot palace is being maintained by Jamie “exclusively for swimming,” according to Frank’s attorneys, while she lives in a separate beachfront Malibu mansion that used to belong to Courtney Cox and David Arquette (love must have been in the air!).

Of course, only having one olympic-sized swimming pool is like only having one pair of underwear, so Jamie’s been filing plans with the Malibu city office to expand the pool at that location and put in a snazzy wood deck and private cabanas.

Of course, none of this is cheap, which would explain why one of the centerpieces of the divorce proceedings is almost $750,000 a month in mortgage payments on their private homes.


Coastal Variety

Pacific Station has sold a few condos, and Whole Foods Market opens Wednesday, June 29th at 9am – the first 300 customers get a complimentary demi-baguette:

From Yelp:

FYI, just learned that the units are being sold, in phases of course.  Bluwater is giving tenants ninety days to move in the “Live Loft” area.  My assessment of Bluwater as a renter is different from being a buyer.  Being a previous home owner,  I would be upset to learn the wooden floor buckles quite easily when liquids touches it, that there is no sealant on the grout of the luxurious bathtub area (molds easily), or that the paint is just coming of the exterior trim.  Rumor has it the “Live Lofts” are going for $500K, which is approximately 1400 square feet.   I cannot say what the “Work Lofts” (2700-3000 sq. ft.) are being sold for, originally they were in the $700’s at the height of the real estate market.

687 South Coast Highway Hwy # 212, Encinitas, CA 92024

San Diego Case-Shiller Index, April

The Case-Shiller Index for April wasn’t as gloomy as predicted, and offered the usual expertise:

“In a welcome shift from recent months, this month is better than last – April’s numbers beat March”, says David M. Blitzer, Chairman of the Index Committee at S&P Indicies.  “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season.  It is much too early to tell if this is a turning point or simply due to some warmer weather.”

Is he suggesting that warmer weather might cause people to pay more for a house?  Normally we’ll see sales increase during the “spring/summer selling season”, but do prices go up too?

They said that the “seasonally-adjusted numbers” reflect that April’s improvement in the index was due to normal seasonal increases, but it’s hard to notice any calendar trends in San Diego’s Case-Shiller Index after the recent downturn.  

It dropped 37 months straight, and a whopping -42%, from April 2006 to April 2009, and has been bumping around since.  The index is blended over three months, so the monthly rate of change isn’t as obvious:


The monthly changes in the index are so small that these charts just give us longer-term pricing trends.

Is there a better time of year to buy or sell a home?

Theoretically, you would think that more of the elective sellers would try to sell during the spring/summer, warm weather or not – people believe that it’s the season to sell. 

With more of those better-quality homes selling, there should be an uptick in pricing around springtime, but it depends on the quality blend.  With today’s lower sales counts, there is more chance that a bulk of inferior properties could get dumped in any month, and potentially skew pricing downward even during the “season”.

Link to the S&P Case-Shiller Index data here.


San Diego’s Case-Shiller Index changes:

Feb. to March:  -0.8% (seasonally adjusted = -0.9%)

March to April:  +0.4% (seasonally adjusted = -0.09%)

1-year change:  -4.3%

2-year change: +7.0%  (April, 2009 was the trough for non-seasonally-adjusted index)

NSDCC Sales Comparison

The latest Case-Shiller Index will be released tomorrow, and more doom is expected.

Sales have been healthy though – comparing detached sales/avg. cost-per-sf from May 1-June 15:

Under $900,000

Towns or Areas 2009 2010 2011
Carmel Vly 22/$322 29/$340 31/$326
DM/SB/RSF 8/$373 4/$534 9/$502
Enc/Cardiff 35/$346 52/$359 36/$363
Carlsbad 108/$268 104/$281 103/$261
Totals 173/$296 189/$317 179/$305

Over $900,000

Towns or Areas 2009 2010 2011
Carmel Vly 18/$337 31/$352 32/$343
DM/SB/RSF 36/$860 48/$530 61/$528
Enc/Cardiff 9/$447 18/$452 24/$436
Carlsbad 9/$324 20/$294 19/$321
Totals 72/$611 117/$430 136/$439

There were 89% more sales of $900,000+ homes this year than in 2009, and much of the pop was in Del Mar, Solana Beach, and RSF.

But the way it’s going, monthly sales will be dropping somewhat – we averaged about 200 sales per month during the last half of 2009 & 2010, but there have only been 209 houses marked pending this month in NSDCC. It’s probably mean 150-175 sales per month the rest of the year.

Spanish Colonial Revival

From San Diego Magazine (more pics here):

With its monumental fireplace, balcony with French doors, and stenciled beams across a vaulted ceiling, Ingrid and Bob Coffin’s 1928 Spanish Colonial Revival living room feels palatial. But the heart of their warmly elegant house—the real party room—is an enclosed veranda added by a previous owner, a former president of Mexico, who traced his aristocratic family to 1545 and, in 1930, survived an assassin’s bullet to the head on inauguration day.


Pascual Ortiz Rubio, who was also a general and a diplomat, bought this Kensington home after he left office and lived here with his family during the early 1930s. His armed bodyguards, wearing sombreros and bandoliers, patrolled the neighborhood sidewalks and the steep canyon on this one-acre property.


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