The kitchen that ate the house - MSN Real Estate

The kitchen that ate the house - MSN Real Estate

Got a Monet or gold bar? Here’s a home loan

Pablo Picasso got a home loan.

Many wealthy home buyers are getting loans that are secured with high-value assets, such as fine art and investment accounts. While many of these buyers could purchase the home outright with cash, they’re choosing this loan in order to maintain liquidity.




Borrowers can get them in as little as one to 30 days after applying, compared with the two- to three-month waiting period that currently exists for mortgages with many lenders. They also don’t require a home appraisal, which has derailed many mortgage applications over the past few years.

In many ways, experts say, the process allows borrowers to have the best of both worlds. They retain the asset that they’re using as collateral for the loan—the artwork.

for instance, continues to hang in their home or the investment account remains untouched—and the loan they get can charge a low rate, often ranging from roughly 0.71% to 3.25%.
In most cases, borrowers turn to private banks and wealth-management divisions of large banks where they maintain significant assets.

Jim Minich, managing director of capital advisory services at Harris myCFO, a subsidiary of BMO Financial Group, cites an instance when an art collection mostly comprised of Picassos was used to purchase a roughly $12 million apartment in Manhattan.

Many institutions say demand is rising. J.P. Morgan Private Bank says the dollar amount of loans secured by clients’ assets for real-estate purposes increased 20% last year. At Wells Fargo Private Bank, about one-third of all the loans on its books are secured by clients’ liquid assets, such as investment accounts. Moreover, applications for these loans—used for a variety of purposes, including purchasing homes—are submitted daily. It also receives one to two requests per month for art loans, up from one to two a year in 2010. “There’s definitely been a surge of people using art as collateral for loans,” says Suzanne Gyorgy, global head at Citi Private Bank’s Art Advisory and Finance Group.

Many lenders will accept other tangible assets as collateral as well. Tom Clarke, U.S. head of capital advisory at J.P. Morgan Private Bank, says this can include gold bars and private jets that clients own outright

Lenders for their part are encouraging the trend. U.S. Bank’s Ascent Private Capital Management, whose clients have at least $50 million in net worth, says it’s building a program around art-backed loans that it plans to launch next year. (It currently considers art loans on a case-by-case basis.) And PNC Wealth Management says it has been talking to its clients more about loans secured by investment portfolios as an alternative to mortgages.

Lending thresholds vary, but if the loan is being secured by an investment portfolio, clients can borrow up to 95% if that account is comprised of cash, up to roughly 85% if it’s bonds and up to roughly 75% with diversified stocks. With art, most lenders will provide up to 50% of a work’s appraised value.

Still, these secured loans carry significant risk. Interest rates are mostly variable, potentially exposing the borrower to rate increases. Borrowers typically get one to three years to repay—though they can apply to renew the loan. Monthly payments are often interest only, and at the end of this period borrowers have to be prepared to pay the entire principal balance. If borrowers are suddenly unable to pay, they could be at risk of losing part or all of the asset, though most lenders say they’ll look for solutions to avoid this situation.

Other things to consider:
Some loans can be subject to margin calls: If a chunk of a borrower’s investment portfolio is wiped out by market losses, the lender could require the borrower to pump more money into the account to lower his loan-to-value ratio.

Art loans rely on appraisals: With an art loan, the work is typically reappraised annually and when the owner wants to renew the loan. If the art has lost value, the borrower may have to pay the difference between the amount he borrowed and the new value.

Can’t avoid underwriting: Most institutions will review borrowers’ credit scores and require income documentation to determine how much to lend and at what rate. They’ll also look over the assets they have with the lending institution.

Make your home offer stand out with a handwritten love letter

May Buying Advice: In some hot housing markets, a personal touch can help your purchasing plea rise above the others. Just as temperatures are starting to rise, so are multiple offers on prime properties in some recovering markets. To stand out from the pack, an increasing number of buyers are taking the old-fashioned approach and penning a love letter to sellers telling them what they adore about the house and why they are the best suitor to end up with it.
In this installment of Buying Advice, we'll look at what buyers stand to gain by writing these letters and what the letters should contain to be most persuasive. We'll also check in with the latest housing numbers and answer a reader's question about how to find first time homebuyer assistance.
Courting the owner
In this digital age, there's something nice about getting a personal letter written (or even typed out) on paper, even if it comes from someone you are doing business with. That's why an increasing number of sellers are writing letters to owners when competition for properties gets stiff — especially given that bids considered too high often won't meet lenders' appraisal rules.
Anna and Buzz Hays recently wrote a letter to shore up their bid on a midcentury home in a coveted Glendale, Calif., neighborhood. "I thought about it and said, 'I might not have all cash to pay for the house, but I do have writing ability and I can use that,'" says Anna Hays, a teen-fiction writer.
She described what she liked about the home, including how well-maintained it was, the beautiful rock waterfall by the pool, the friendly neighbors and the "nature and calm" in the wooded neighborhood that surrounded it. She also included a few lines highlighting her and her husband's résumés and assured the couple selling their home of 15 years that they would take steps to make its pool safe for their school-age twins.
The strategy worked. Hays and her husband beat out the other three offers and recently closed on the property. "They called me when the bid was accepted and said it was because of the letter," she says.
Is this tactic a good way to set your bid apart from the pack, or is it a waste of time? We asked agents what they thought about buyer letters and what they would include if they wrote one. Most said a sincere letter was worth a shot for a standard sale, not a bank-owned property.
"I have seen them work miracles with sellers, and I have seen sellers put them aside and move on with another offer," says Ofe Polack, an agent with Coldwell Banker in Manchester, N.H. "Like everything else in life, it takes two to tango."
However, agents caution that buyers should never go rogue and submit a letter without their agent's knowledge. "Buyers are never to have direct communication with sellers," says San Diego agent Kim Drusch of Century 21 Award. She says she often submits photos and background stories of the family she is working with, if she thinks the seller would be swayed by the information.
"A traditional seller typically is devoted to the home they raised their family in," Drusch says. "They, of course, are vested in who takes over 'their' house from this point forward."
Buyers should convey several things in a letter, including:

• Specific features or things that they like about the house and the community. "I've … had sellers read letters and the compliments made them so happy that they've chosen lower offers because of the letter. But not much lower," says Joseph Moore, an agent with Bridge Realty in Minneapolis.
• How long they've been looking.
• A little bit about themselves, including names and ages of any kids. "If the buyers knows that the seller raised a family in the house, I would appeal to those emotions," Polack says.
• Anything that speaks to their purchasing power or creditworthiness.
• A commitment to the house and a willingness to do "whatever it takes" to land it.
• Anything else buyer and seller have in common.

Keep it short and sweet and don't give so many compliments that the sellers think they've underpriced the home, agents say. And don't expect your prose to bridge a $30,000 gap between your offer and the next bidder's.
"If you're sincere," Hays says. "I don't see how you can go wrong,"

Keywords:real estate broker joycedoherty solanabeach

latest market trends in North San Diego County Coastal

Welcome to the latest market trends in our area!
As a real estate professional, I strive to keep in touch with my clients and provide them with information that I hope they will find useful. This newsletter is an opportunity to let you know about the state of the market and current trends. It may even touch on ways that you could enhance your home's value. I hope the market data and articles will help you with understanding real estate today and help you with your real estate decisions. If you have any questions, please do not hesitate to contact me.Joyce Doherty

North San Diego County Coastal area Real Estate Sales Data

Average Listing Price (last 12 months)

Average List Price in December

Single Family Homes	$2,233,950	Condos/Townhomes	$575,211	Multi-family Homes	$1,179,818

North San Diego County Coastal area Real Estate Sales Data

Days on Market (last 12 months)

Current Average Days on Market in December

Single Family Homes	126	Condos/Townhomes	113	Multi-family Homes	153

North San Diego County Coastal area Real Estate Sales Data

Price Reduction (last 12 months)

Recent Price Reductions in December

Single Family Homes	5.0%	Condos/Townhomes	4.6%	Multi-family Homes	1.8%

Joyce Doherty

Cell: 858.344.3175
Tel: 858.793.3600 ext. 109
joyce@pacificcoastal.net
www.pacificcoastalproperties.com

Existing-home sales at highest level in 3 years

Sales of existing homes continued to rise in November, hitting their highest level in three years.
At the current pace, 5.04 million existing homes would be sold in 2012. That’s up 14.5% over last November, the National Association of Realtors

Sales were up 5.9% percent from October. The national median home price was $180,600, up 10.1% from a year ago. November marked the ninth month of year-over-year price increases.

Momentum continues to build in the housing market from growing jobs and a bursting out of household formation," Lawence Yun, the NAR’s chief economist, said in a news release. "With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes.”

The number of homes for sale continued to fall, which is likely contributing to price increases. In November, 2.03 million existing homes were listed for sale, enough to last 4.8 months at the current sales rate and 22.5% fewer than last year. A six-month supply is considered a balanced market.

The last time fewer existing homes were for sale was December 2001, and the current supply is the lowest since September 2005, when there was a 4.6-month supply for sale.
First-time buyers made up a smaller proportion of all buyers than they did a year ago -- 30% versus 35%. The investor share remained the same, at 19%. That suggests move-up buyers are inching back into the game. All-cash sales accounted for 30% of sales, up slightly from 28% last November.
The percentage of sold homes that were distressed sales stood at 22%, down from last November’s 29%. Yun predicted the percentage of distressed properties, which usually sell at a discount, would fall into the teens next year.
"Existing-home sales have improved this year," Joseph Trevisani, the chief market strategist for Worldwide Markets, told Reuters. "Purchases are supported by the lowest mortgage rates on record. The housing market is considerably weaker than the statistics portray. Jobs, not interest rates, are the key to further improvement, but those lower rates from the Fed are putting the dollar on the defensive."
Joyce Doherty Real Estate Pacific Coastal Properties Solana beach brokers agents

Frost advisory issued for Wednesday night

John Gibbins

The surf was blow out Tuesday at Dog Beach, Del Mar. But it is building nicely today.

The cold air from Tuesday's Pacific storm settled to the ground across much of San Diego County overnight after the winds died out, widely dropping temperatures into the 20s and 30s for the first time this fall. San Diego didn't get quite that cold -- but the mercury fell to 41 in Balboa Park. The cold came as a surprise to many; the National Weather Service did not forecast such low temperatures across such a wide area. Even the beaches were cold. The big change also was caused by the quick dispersion of the clouds. There was nothing to hold warmer air near the surface.
Today's highs will reach the 60s at the coast and 50s inland. But the National Weather Service already has issued a frost advisory for Wednesday night, saying that this evening could turn out to be even colder.
Forecasters say skies will be mostly clear today, and clear again tomorrow, when San Diego State and Brigham Young square-off in the Poinsettia Bowl at Qualcomm Stadium. Kick-off: 5 p.m. Temps will be in the upper 50s.
Winter officially begins on Friday.
Sample of temperatures at 6 a.m. Wednesday:

Mixed news emerges on foreclosures

Completed foreclosures reached their highest level in nine months in November, while foreclosure starts were at their lowest level in almost six years.
Confused? The mixed picture on foreclosures reflects a number of factors, including the fact that lenders are engaging in more foreclosure alternatives, such as mortgage modifications and short sales. The statistics, compiled by RealtyTrac, also reflect the differing pace of foreclosures in judicial and nonjudicial foreclosure states

"The drop in overall foreclosure activity in November was caused largely by a 71-month low in foreclosure starts for the month, more evidence that we are past the worst of the foreclosure problem brought about by the housing bubble bursting six years ago," Daren Blomquist, vice president at RealtyTrac, said in a news release. "But foreclosures are continuing to hobble the U.S. housing market as lenders finally seize properties that started the process a year or two ago — and much longer in some cases. We're likely not completely out of the woods when it comes to foreclosure starts, either … ."
According to RealtyTrac, foreclosure starts in November were down 13% from the previous month and 28% from a year ago.

But bank repossessions, or completed foreclosures, were up 11% over October and up 5% from a year ago.
The foreclosure picture was mixed geographically, too. A total of 23 states plus the District of Columbia showed higher foreclosure activity than at the same time last year. But the national statistics were driven by big year-over-year declines in California, Georgia, Michigan, Texas and Arizona

Foreclosure starts were down from a year ago in 28 states, including Oregon (84%), Pennsylvania (67%), California (63%), Arizona (59%) and Georgia (51%).
But foreclosure starts rose in 18 states, some exponentially, with increases of 538% in New Jersey, 455% in Arkansas, 209% in New York 97% in Washington and 95% in Connecticut.
The largest numbers of foreclosures were in Florida and California, and the 10 cities with the highest rate of foreclosure activity were all in those two states.
The foreclosure rate in November was highest in Florida, at a rate of one foreclosure filing for every 304 housing units, compared with a national average of one in 728. The other states with the highest foreclosure rates were Nevada (one in 390), Illinois (one in 392), California (one in 430) and South Carolina (one in 455).
"This all leads to confusion over whether the market is getting better or worse," Blomquist wrote at RealtyTrac. "Generally I would argue it's getting better, but the unintended consequence of all the foreclosure prevention efforts of the last few years is a hidden inventory of properties in foreclosure limbo. The jump in bank repossessions in November is evidence that these properties are there and that some of them are being foreclosed. What's unknown is how many will end up as foreclosures in 2013 and even beyond."