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The Union

With the housing market in a slump, more people are enticing buyers with creative selling tactics - but local real estate agents said the right price works better than any gimmick.

In Alta Sierra this weekend, one developer will auction his home to the highest bidder after failed attempts to sell the house on the traditional real estate market.

"In the depreciating market that we're in, you have to be creative," said Gary Stokes, who runs an affiliate branch of Fidelity Housing Solutions from his home in Lake of the Pines. The Phoenix-based company buys homes in seven days and offers non-traditional selling options.

The 3,400-square-foot custom home on more than 2 acres is appraised for $875,000, Stokes said. But bidding will start Sunday at nearly $560,000.

Stokes has received a number of hits on his Web site, www.sellingsunday.com, he said, and expects more than 200 people to show up for the auction.

It's a bit of a gamble to sell this way, Stokes said, but was confident the bidding would reach the price he wants.

"It typically ends up closer to the appraised value," Stokes said.

In western Nevada County, 1,070 homes are for sale, compared to 400 in 2004, according to figures analyzed by Skip Lusk, executive president of the Nevada County Board of Realtors. Houses for sale from June to July have spent an average 122 days on the market, compared to 115 days the year before, Lusk added.

"We've tripled in inventory, and we have less buyers today," said Lynn Griggs, with ERA Cornerstone Realty Group. "People are having a hard time even getting homes shown."

The philosophy of "whatever works" has become more commonplace in the realty business, Griggs said, although she doesn't use the approach herself.

Cheryl Rellstab, of Keller Williams, worked with a homeowner who offered a new mustang to sell a home several months ago. When that didn't work, the seller lowered the price and switched to a Ford pickup - also without success, Rellstab said.


More conservative approach

"I'm not a firm believer in gimmicks," Griggs said.

Instead, sellers should consider setting a price at ten percent under market value.

"You're going to have more people look at a house in the first 30 days," Griggs said. As the third agent for one client, she recently sold a house that had been on the market for two years. The house sold for $150 less than the original asking price.

"Staging" a home is another effective tool.

An interior designer who visits the home can advice on ways to make the home more presentable to a buyer. Things like reducing clutter, painting and keeping things clean and neat all help sell a home, Griggs said.

"What sold two years ago is not selling today," Griggs said.

Rellstab agreed. Seller financing incentives also help clinch the deal, she added.

On Friday, Rellstab was finishing a deal for an $875,000 home using a seller buy-down on a loan called a hybrid fixed-option ARM. The arrangement gives the buyer a lower monthly payment for the first five years, Rellstab said.

The homes that sell in a slow market are the ones in the best shape with the best price.

"You have to be the pretty boy on the block. That's what I tell my clients," Rellstab said.

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To contact Staff Writer Laura Brown, e-mail lbrown@theunion.com or call 477-4231.

The SGV Tribune

Those proverbial chickens are coming home to roost in the

mortgage market, and the picture isn't a pretty one.

The Riverside/San Bernardino metropolitan area ranked fourth in the nation for foreclosures in June 2007, according to a report released Thursday by Realty-

Trac, with one of every 134 homes in the two counties in some stage of the foreclosure process.

"It's getting worse," said broker Pat McKenna of Bristol Home Loans in Ontario. "A lot of the ARM loans have been resetting, and a lot of people are finding they don't have enough equity to refinance. They can't sell, so some of them are just getting desperate and walking away."

In California, which ranked behind only Nevada for rate of foreclosure, the numbers were nearly 287 percent higher in June than a year ago, although they did fall 2.16 percent from May 2007.

Stockton, Merced and Modesto were the three hardest-hit markets in the nation. All three - plus Riverside/San Bernardino - had foreclosure rates in June that were more than five times the national average.

Two other California cities ranked in the top 10, with Vallejo/Fairfield, seventh, and Sacramento, eighth.

"Foreclosure activity nationally
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subsided somewhat in June after hitting a 30-month high in May," James J. Saccacio, chief executive officer of RealtyTrac, said in a release. "The drop in activity was fairly broad, with 33 states reporting month-over-month decreases.

"Still, the foreclosure rates in most states remained substantially above last year's levels."

McKenna says they're actually higher than they need to be, that if borrowers who find themselves in arrears would go in and talk to their lenders, they might get some help.

"Most lenders would rather renegotiate than foreclose," she said. "When people walk away from their houses, they typically trash them. Some of them look at a foreclosure like it's a car repossession, but there really is a lot they can do."

Some lenders will adjust loans, others might give a breather to give borrowers a chance to catch up.

"But they've got to go in, sit down and be honest about their situation," she said. "Some of these people got into loans they couldn't afford even though they knew it. They wanted the house. That's the dream. There might not be much that can be done for them."

The problem for some folks is that housing prices went up so fast until about 2005 that they figured they could buy a house and flip it for a profit before they got into trouble.

When the housing boom ended, though, people who had gotten interest-only loans or option ARMs found themselves unable to make their payments.

McKenna pointed out that loan documents always include numbers showing what will happen when loans readjust, but some borrowers either don't bother to read them or if they do, they ignore the possibility of getting into trouble.

Regional economist John Husing says it will be next year before the foreclosure market settles down and the housing market recovers.

m_rappaport@dailybulletin.com

(909)483-9395


The Sacramento Business Journal.

The outlook for homebuilders and homeowners looking to sell keeps getting worse.

New-home sales were dismal in the second quarter. The number of new and existing homes on the Sacramento market has eclipsed last summer's inventory and stands at close to 22,000. Foreclosures in Sacramento County are 10 times what they were last year. And mortgage rates have risen over the past few months.

"It's really a combination hitting all at once," said new-home analyst Greg Paquin, founder of The Gregory Group in Sacramento.

The company issued a report showing that the region's new-home sales in the second quarter fell by 42 percent compared with the same period last year, and 33 percent lower from the previous quarter.

"We are probably going to see this (situation) through this year and most of next year," he said.

Experts say it's a buyer's market, but despite plunging prices, buyers largely skipped the start of the traditional home-buying season. The region's homebuilders sold 1,788 new homes in the six-county area, a disappointing number to many who had seen slightly stronger sales figures over the previous six months as an encouraging sign. The latest quarter's performance was the worst since the end of 2004.

"The second quarter was terrible for us," said Kevin Carson, Sacramento division president for John Laing Homes. The company is the region's 16th-largest builder based on volume through May, according to Hanley Wood Market Intelligence. Carson said the company, which has projects in Roseville, Folsom and Natomas, has had much better sales recently. Its 16 sales over the past three weeks were more than its April and May sales combined, he said.

"There is still a lot of uncertainty," about where the market is headed, he said.

Investors, who created an artificial demand for homes in Sacramento, have fled the market. DataQuick Information Systems of La Jolla tracks investor properties by noting when tax bills aren't sent to the home in question but instead to a separate address. In 2000, about 14 percent of the tax bills for Sacramento County homes were being sent to other addresses. At the peak of the housing boom in summer 2004, that figure had climbed to 23.2 percent. The number has since fallen back to 13 percent for 2007, which is below the state average of 14.1 percent.

Despite builder promises of reduced inventories, one of the more surprising developments in 2007 has been a new-home inventory increase, which includes ready-to-build lots, over last year. At current sales rates, there's a 20-month supply.

"This is the biggest issue," Paquin said. "We looked into this and found that building permits are down on that side of things. But over the last two years, you've got 120 more projects out there. They're doing smaller phases, but opening up more projects during that time."

Paquin reported the number of new-home projects in the six-county region increased from 253 two years ago to 377 today.

"This is land they bought in 2005 and 2006," he said. "They can't sell it, they can't sit on it, so they're going to build on it."

The Gregory Group reported inventory of 4,899 new homes or lots, the largest figure since the company began tracking new homes.

Existing homes on the market in Sacramento, Placer, El Dorado and Yolo counties, including condos and townhomes, total 17,041 as of the end of June, according to Lyon Real Estate's information company, Trendgraphix Inc. That's above the 15,900 resale homes on the market at the same time last year.

"We knew it would go over last year .... That's too much food on the table, and the buyers are going for the caviar," said Lyon chief executive officer Michael Lyon. "It goes to show that any sellers who thought there would be a quick recovery need to get that out of their heads. Things are selling when they're priced below the last comparable sale."

A bright spot, he said, is that home affordability may be returning for many Sacramento residents.

The inventory of homes on the market has been boosted by foreclosures. Foreclosures.com, the Fair Oaks online real estate firm, reported that homes repossessed by banks in the four-county area increased from 477 for the first half of last year to 3,641 so far this year.

Prices are continuing to fall after an unprecedented run-up between 2000 and 2005. For new homes, the median price in the six-county region fell to $400,400, about a 12.9 percent decline from the same period last year. The median price for resale homes in Sacramento County is $339,000, about a 10 percent drop from last year.

New-home incentives, which aren't reflected in prices, have increased from about $12,800 at this time last year to about $18,000, Paquin said.

KB Home has had the best performance through May of all Sacramento builders, selling 346 homes. Territory president Barry Grant said he had no crystal ball to predict future results, but he attributed the company's success so far to its strategy of concentrating on starter homes and lowering prices rather than offering more incentives.

"Candidly, we've been adjusting the price until it's at a point we think will attract buyers," he said.

mshaw@bizjournals.com | 916-558-7861