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Lodi couple gets creative in sluggish housing market

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Posted: Friday, July 27, 2007 10:00 pm

Rick Latta "has tried everything" during the past six months to sell his West Locust Street home.

He's held open houses, reduced the price several times, listed it in local papers and on real estate Web sites.

But still, nothing.

Enter a giant lime green banner above his garage that reads: 'Buy This House! No down. No bank qualify. No credit application.'

Latta - who owns a commercial janitorial company - is hoping the sign and some creative financing will finally lead to a sale.

He's partnered with a Manhattan Beach investor to offer a "land trust" sale, one that doesn't turn over the deed to the home for five years, but allows a new buyer to move in and make payments with nothing down.

"It's just another way (to sell the home) - and a lot of people are doing it," Latta explained to a couple touring his 3-bedroom, 2-bathroom home Friday afternoon.

"It's another opportunity," added Valerie Smith, Latta's fiancée. "We thought: 'We're going to try it all.'"'

Under the trust agreement, Latta could not seize the equity that might build up over the five years, he said. Instead, the new buyer and the investor would split that equity.

The couple said they're also willing to do a conventional sale.

Latta is asking $367,000 for the home, down from the $435,000 he first listed. The blue-trimmed home has a pool, a 2-car garage and remodeled bathrooms and kitchen.

The two recently moved into a new home in Discovery Bay to be closer to Livermore, where Smith's two daughters attend high school.

Local real estate experts had mixed thoughts on the creative financing deals some sellers are offering in the slow market.

Larry Underhill, a Lodi real estate broker with 23 years experience in the business, said he had not heard of deals like Latta's.

But he said similar "contract of sale" deals - in which a seller makes a direct agreement with a buyer, without going through a lender - were extremely risky.

He estimated that less than one percent of all deals are arranged that way.

"I would warn people off it," he said. "I think it's too exotic for the average person to really grasp."

$410,000: May's average sales price.

$371,000: This month's average sales price so far.

$318,000: Last month's average sales price for homes in Lodi and Woodbridge.

514: Total number of homes and condominiums that remain for sale.

47: Number of homes or condominiums that have sold this month.

33: Number of homes or condominiums that sold last month.

3: The average number of months a home has stayed on the market this year.

Source: Paul Mertz, Lodi real estate agent

Reducing your sale price and sprucing up your home are the two keys to a quick sale, he said.

"The trick is you've either got to be the prettiest home on the block or you've got to have the best price … because there are so many homes out there," he added.

Paul Mertz, past president of the Lodi Association of Realtors, concurred with Underhill about pricing.

"If a house is too hard to sell, the price is usually too high," he said. "If you get the right price, it's going to sell."

In Latta's case, he's already lowered the price quite a bit.

He's ready to begin his new life in Discovery Bay, and doesn't want to be paying two mortgages at the same time, he said.

"I'm to the point where I need to get rid of it," he said.

At least one real estate expert said creative deals can and do work.

Jaime Alvayay, professor of real estate finance and investments at California State University, Sacramento, said there are positives to deals like Latta's.

He noted that on the East Coast, residential 'lease backs' are becoming more popular.

In those cases - which are common in the commercial world - companies buy homes from people unable to make their payments and lease them back to the residents, giving them time to stay in their homes and improve their finances.

Without seeing Latta's land trust contract, Alvayay said he couldn't comment specifically on it.

As the market continues to flounder, however, more people are likely to make such deals, experts said.

"I think (Latta's deal) is also one of those creative arrangements that works for people under these circumstances," he said. "It's certainly one way out of the problem."

Contact reporter Chris Nichols at chrisn@lodinews.com.

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  • posted at 6:25 am on Fri, Aug 10, 2007.


    Good idea.

  • posted at 6:49 pm on Sun, Aug 5, 2007.


    Here is an EASY WAY. There are hundreds of realtors who have already gone back to their regular jobs. One in fifty people in California has an RE license. Its easy to locate one from the classified ads. You don't want them affiliated with a broker. Pay them $500 flat rate to represent you. They will make MORE money this way than splitting the commission with a broker.

  • posted at 4:16 am on Fri, Aug 3, 2007.


    When we were looking for our home, years and years ago, I would shy away from "For sale By Owner" homes as I really didn't want to engage with the owner when looking at their home. It's hard to thoroughly check out a home when the owner is right there. It's quite uncomfortable. I have to admit that maybe we missed out on seeing some nice homes because of this. On that same note maybe some For sale By Owners are missing out as well.

  • posted at 7:09 pm on Thu, Aug 2, 2007.


    possible solution: GREAT ADVICE! And right on the nose. I have a question for you...I'm not selling/buying a home right now but always wondered...should a "For sale By Owner" show their house by appointment and have an "Open House" with someone other then themselves showing the house? I prefer to look at a house without the owner present. I am more comfortable walking through the home, making comments and discussing things with my husband without the owner present.

  • posted at 6:48 pm on Sun, Jul 29, 2007.


    You can handle the larger second to help them be qualified for your house. The rules change all the time. Hurry up before they start changing again and the interest goes up. Few buyers will get the personal touch only you can provide. The mortgage monsters ONLY want profits and caused this mess. Good luck.

  • posted at 6:47 pm on Sun, Jul 29, 2007.


    When school opens next week , will you have fliers (bilingual) available for the counselors, secretaries, faculty lunch room, and the Principals? I bet your market includes families with kids K-6. Teachers too. I am not a realtor. I deplore them. I know people and don't like to hurt them. If your price is right you should start getting offers soon. If you have a good loan person, you might find a way to pay down some of the first so it can allow easier quals for your potential buyer.

  • posted at 6:40 pm on Sun, Jul 29, 2007.


    Don't use the shotgun approach at sales, it has not worked for you and wasted your time and potential selling opportunities. Good Luck. I have sold houses several times in down markets and have seen it all. All times I have made a quick sale at or above my asking price. Make it easy for your market to find you. You need signs in Spanish and fliers in Spanish. Locate a Spanish speaker who can help you negotiate when it is time.

  • posted at 6:39 pm on Sun, Jul 29, 2007.


    Also I would not promote it (AITD) up front it might scare away potential buyers do to complexity. Have it ready in your back pocket to sweeten the deal when a potential buyer really shows interest. You will need someone who can babysit the house for you so a potential customer isn't hassled to see it. Make everything EASY and do-able! Don't talk down talk UP. They are climbing up the ladder and YOU want to help. Your house could be a good deal for the right family.

  • posted at 6:37 pm on Sun, Jul 29, 2007.


    People who have had them before are either bored with them or want special amenities which you may not have (cabanas, landscaping, built-in BBQ's etc). Now focus on this market. I would talk to your finance guy and set up a plan B for you to wrap a loan with a second. Try an All inclusive trust deed. AITD

  • posted at 6:36 pm on Sun, Jul 29, 2007.


    Most likely the prospective buyer will reside East of the RR tracks or South of Kettleman. Now learn your market. What is their view on life? What are their aspirations and goals. What type of furniture do they like? I am speculating that your pool will be BIG plus to this market. They probably never had a pool before and it is a BIG deal to them.

  • posted at 6:36 pm on Sun, Jul 29, 2007.


    Also a bus route can provide transportation saving them more money to pay your for your house (its location gives them the opportunity to afford it). Perhaps they have a pet or pets that need attention. Perhaps they have a child that needs special services. They can walk to school. This is your market.

  • posted at 6:35 pm on Sun, Jul 29, 2007.


    You also see that few families in 95240 make over $100,000/year an income that could support the purchase of your house. So look at people with steady incomes below 100K who NEEED to be near your strong points. Someone who does not want an extra car (so they can walk). Someone who can earn extra income in a service industry (look at the jobs at the Mall).

  • posted at 6:34 pm on Sun, Jul 29, 2007.


    Look at the demographics for zip 95240. Now look at 95242. Now you know who they(your market)are, what they can afford, and some of their interests. What is special about your specific location that would attract YOUR potential market. Four things that I can think of: 1) Lakewood Mall is walking distance away. 2) Bus route is nearby 3) Washington school although low academically has an outstanding special education facility. So its is not ALL bad. 4) A veterinarian is located across the street on Ham lane.

  • posted at 6:32 pm on Sun, Jul 29, 2007.


    Get your price determined and get ready for the hard job. You are not selling cereal, like in a store. You have to build up perceived value in your market. Okay assume you now have a price (I don't care what it is - as long as you have a rational and articulate reason for your price someone else might believe you. Okay now figure out who is your market.

  • posted at 6:31 pm on Sun, Jul 29, 2007.


    People are emotional and everything is important especially if they have kids. Washington school has very low test scores and is not perceived as high as Reese, Vinewood or Lakewood for some markets. Now make a projection on the VALUE of your house compared to the other houses. Here is the tough part. You are on your own and have already lost 6 months of opportunities. One of the previous closed sales could have purchased YOUR house.

  • posted at 6:31 pm on Sun, Jul 29, 2007.


    Notice that most new houses even starter houses are two stories. They are cheaper to build are on smaller lots, you can build more boxes per acre with them etc. So try to only look at comnparable single story comps. The two story houses look like higher square footage. Buyers are not fooled. Okay look at the high and low prices for the value comparable to your house. Okay list all of these houses and make a check list.

  • posted at 6:30 pm on Sun, Jul 29, 2007.


    You only need to find one willing, qualified and moitivated buyer. So look at all comps in your house VALUE range, not price range. You may see too many trees to see the forest. Your variables would be number of bed and baths and square footage. Single story houses are better than single story becuase of the way square footage is determined.

  • posted at 6:29 pm on Sun, Jul 29, 2007.


    You missed the mark but still have a chance. Run honest comps as though YOU are the buyer. Make your house irresistable to your market. SInce you house listed Bear Stearns ate a few billion on CDO's and the Fed is tightening up. These developments are killing parts of your potential market.

  • posted at 6:29 pm on Sun, Jul 29, 2007.


    You have already learned one lesson over the past 6 months. Think about this, if 6 months ago, you immediately dropped your asking to what it is today it probably would have been sold by now. I know that hurts but ego gets in the way in a bust market. The first out of the market are safe.

  • posted at 6:27 pm on Sun, Jul 29, 2007.


    As Lodi housing starts the plunge into a housing crash few factors can reverse the trend once it starts the run downhill. Lodi is following the typical pattern of bubble to bust. There is light at the end of the tunnel. One of the hallmarks of a bust housing market is the "stickiness" of the asking price. It can take a long time to sell a house unless, you take some steps to get out of the situation. Instead of thinking "day to day" or "month to month", you must think long term.

  • posted at 3:26 pm on Sun, Jul 29, 2007.


    BTW apartments are almost never affordable to anyone except to the builders and real estate property management firms (out of work realtors). Apartments are a very bad deal for everyone. I saw a similar attack like this among million dollar homes on 1/2- 1 acre lots. They couldn't stop the developer machine once it started. The area is now a ghetto, but the original buildings are beautiful. Sounds familiar? The houses of east Lodi are not intrinsically bad its the culture of the people in them that causes "blight".

  • posted at 3:24 pm on Sun, Jul 29, 2007.


    Strip malls, box stores and finally apartments is the usual order of the attack on the city. We don't have the economic base for strip malls, we can leach off Stockton residents money for the big box stores, but they will pull the "we need affordable housing" mantra probably with the RDA nonsense. Easy money from "other people" is king with them.

  • posted at 3:22 pm on Sun, Jul 29, 2007.


    Write this day on your calendar. Lodi "good ol boyz" and their puppets the city council WILL initiiate plans for apartments and other multiple dwelling and substandard housing. I have no inside information, but I have seen it too many times. When the housing market goes bad, the realtors builders and developers have only one way left for a quick buck.

  • posted at 1:02 pm on Sun, Jul 29, 2007.


    LodianII: Apartments can be the worst for a neighborhood.

  • posted at 1:00 pm on Sun, Jul 29, 2007.


    ToLodian: Good point. I remember when the area codes changed in Lodi and everything west of Ham Lane became 95242. It was an obvious indicator of what side of town you were on. I heard people say they wanted to have that 95242 in their address. Interesting... though I do feel the older homes, Avena, Fairmont, Sunset, Crescent etc, are still considered to be in a beautiful/desirable area.

  • posted at 10:31 am on Sun, Jul 29, 2007.


    Even Beverly Hills has its trashy areas. Until we start to get honest local government, we have to keep playing the game that helps keep realtors in business. Move and sell, buy move and sell. Many Lodians are Move and sell from other areas. Its only time before we get hit here. Apartments are next--I predict. That always starts the downward trajectory of a city. The next evil will be low priced public transport. In Europe public transportation is wonderful, but homies, bangers,boozers, are arrested and actually put in jails when they goof around.

  • posted at 10:29 am on Sun, Jul 29, 2007.


    You have a point, but you always have to worry about the "line". Every town has one. In Galt its highway 99 in Lodi it used to be the RR tacks then Hutchins now its at Ham lane. This is the well known buy "secret" demarcation line that divides the city between NO code enforcement, low police protection and rigorous enforcement of codes and crimes. You can have a wonderful neighborhood, but give it time. Thats why people keep having to move. Beauty turns to trash in only months.

  • posted at 8:26 am on Sun, Jul 29, 2007.


    I found five houses that are LESS than 4 years old, larger with lower asking. I also found for only $675k at more than double the square footage 3602 sqft on 4.8 acres. You could have two or three families buy it and it's large eough that you would never know it. This house has 3 car attached and several additional multi-car garages and carports that could be remodeled in the "East Lodi style" of no code enforcement to additional "patios" for visitors. Who will know what is going on with 4.8 acres? Go to metrolistmls.com

  • posted at 7:26 am on Sun, Jul 29, 2007.


    Whoa Nellie: A home can be a worth a lot more to the buyer if the home is in a great location. The same house in one area will not fetch the same price as the exact same home in a different area.

  • posted at 7:23 am on Sun, Jul 29, 2007.


    ROFL: I am not in the market to buy or sell as we enjoy our home and neighborhood. BUT I can tell you without a doubt that I would never buy any of the new homes you speak of over a well established Lodi neighborhood in an already well know location near established schools etc. etc. Also, most of these NOT SO NEW homes are built a lot better and more sound than these newer homes.

  • posted at 4:03 am on Sun, Jul 29, 2007.


    Who is the "Manhattan Beach Investor"? Last week Los Angeles just hit an 800% increase in foreclosure. It is not "in" to be called a "flipper" or "investor". Most people want nothing to do with real estate. This real estate "bubble" was one huge PONZI scheme. Just like a pyramid scheme The schemers bought and sold out quickly. The people that are left are the "true believers" and the suckers. The realtors are the cheerleaders of the bubble "just doing their jobs" - and making money until now. Lifestyles of the rich and famous.

  • posted at 3:20 am on Sun, Jul 29, 2007.


    continued: I would not be a renter - I will have the rights of an owner just like you. You will have to stand in line to sue, since the Stockton Record shows that there are 10-20 new foreclosures per day. I have at least 90 days before anything happens. I have no reason to stay if the housing prices drop. I can mail you the keys and walk. You will owe the mortgage, interest, taxes and insurance not me. I don't recommend this strategy. I do recommend doing what most of us do--commute.

  • posted at 3:19 am on Sun, Jul 29, 2007.


    The "average" house sold in May was $410K, and in June it was for $320,000. What if I buy the house at your price and terms and I can't pay you? What if I get laid off, sick, or my company tanks in a lousy economy? Do you realize how difficult it will be for you to kick me out of your house?

  • posted at 10:28 pm on Sat, Jul 28, 2007.


    Is your house East of Ham and adjacent to a parking lot at the rear with commercial activity along the back property line? Is it noisy when Lodi High gets out? How is the traffic on Ham, Locust or Lockeford? Were security guards hired to protect the strip mall? Why? Is the elementary school Washington? How is the crime? Is there a trailer park nearby? All of these environmental (LOCATION-LOCATION-LOCATION) factors affect value. I noticed that the latest LUSD chart shows you are within the borders of Washington school. My offer was too high, I withdraw it.

  • posted at 10:25 pm on Sat, Jul 28, 2007.


    The buyer is the ONLY one with money at the table. Someone paid $348k for 1634 sq feet = $212.97/sqft and you are asking $224.60. How did you improve the house by $12/sqft? Its two years older. If I were interested I would offer no more than $155,000. This is the high side of a reasonable price assuming no structural problems. Its value was computing using a standard economic model of house prices for Lodi. I think you better start renting it. Or you can always take my provisional offer, subject to an inspection by me.

  • posted at 10:16 pm on Sat, Jul 28, 2007.


    According to July 29 07 Zillow public tax records (could be an error?) $348,000 was paid in March 2005 at the peak of the Lodi market. You are paying taxes of $1184 and the house is 33 years old. That means you are asking $19,000 more than what you paid for it, not including the $20,880 (6%) you probably paid in Realtor commissions and unknown closing costs and point. Contary to popular belief it is ALWAYS the buyer who pays the Realtor 6% commission.

  • posted at 9:48 pm on Sat, Jul 28, 2007.


    How many sellers are really motivated to come down to earth? I don't want to lose 6.5%/year on the money I would be using for a downpayment on a depreciating asset. DEBT is not the same as wealth. You are the last owner at the START of a housing crash and you are stuck. October will be worse. Thats why you are in the paper. If you sell, the next person gets stuck. You prefer the money to the house. I am like you. I want to keep my money because it is more valuable than a house.

  • posted at 9:41 pm on Sat, Jul 28, 2007.


    EQUITY? We are in a housing crash! If you are doing a FSBO and saving $22,000 in realtor fees thats a start. If your house is at least 2,000 square feet that is $183.50/square foot. There are NEW houses off of 8 mile road that are selling for $122/square foot. This is a difference of $123,000. Thats $73,500 for a downpayment AND the ability to pay a HUGE PITI every month.

  • posted at 9:04 pm on Sat, Jul 28, 2007.


    If the homeowner wants to sell "short", the IRS will come a knocking on your door. This is because if a mortage holder loses money they will send you a form 1099 for INCOME. Also, a mortgage company can not short sell a house if there are junior lienholders such as deeds of trust (2nd, 3rds etc). If you calmly look at the history of each house over a long time (over 20 years) you will notice that their are bubbles and troughs that will balance out to 6% increase average per year.

  • posted at 9:01 pm on Sat, Jul 28, 2007.


    Most buyers have already bought, leaving prudent careful buyers who are saving money--every month. While owners are PAYING money every month. Cars, boats, vacations, and electronic toys are bought with HELOC money. A conservative analysis shows that home prices barely keeps up with inflation over the long haul. When you factor in upkeep costs and property taxes its a losing proposition to many.

  • posted at 8:58 pm on Sat, Jul 28, 2007.


    But we have a bigger problem. Its spelled HELOC. Many homeowners liked the feeling of being "wealthy" from watching the paper equity on their houses increase. So they got a loan on the house called a Homeowners Equity Line of Credit (HELOC). These loans are deadly because they affect not only sub-prime borrows and ALTA (liar loan) borrowers, but included prime borrowers with good credit and conventional loans. Now the problem. If an owner can't make house payments they have to sell the house for WHAT THE BUYER WANTS TO PAY.

  • posted at 8:57 pm on Sat, Jul 28, 2007.


    In 1998 a typical realtor sold four to five $130,000 houses per year. That is $3900 for each side. In 2005 with average sales prices of about $390,000 thats a profit of $12,700 per side, not counting incentive or referral fees from others. These are the SAME houses as in 1998. How can an old 1930's house built with old materials under an old code be worth more today? Some home buyers couldn't even make car or credit card payments. Salaries aren't increasing by 300%.

  • posted at 8:49 pm on Sat, Jul 28, 2007.


    Buy a house with NO downpayment, no job, no credit, no savings. A "helpful" RE appraiser could get you an LTV ratio so you get CASH at closing - up to 50%! The 1% teaser rates are expiring and the ARMS are exploding in interest. Many ARMS's have pre-payment penalties, so you can't refinance the loan. The average Lodi family income is only $55,000/year how can you make $3,000/month payments? county property taxes? and taxes will NEVER go down UNLESS the house value drops do to a lower sales price or assessed value.

  • posted at 8:41 pm on Sat, Jul 28, 2007.


    Greenspan lowered the prime rate to stem off a possible recession. The President gave a speech recommending that everyone buy a home. Here comes the problem. If a prospective renter who had NO savings, no credit and NO job wanted to rent he couldn't afford it (1st and last + security and cleaning deposit), he also may have had bad credit.

  • posted at 8:40 pm on Sat, Jul 28, 2007.


    As of July 29,2007 there are 623 houses for sale in Lodi and over 50 that have been recently taken back by the bank. They have not yet been listed. In addition there are easily over 100 FSBO's (For Sale By Owner) AND, uncountgesd which have dropped off the multiple listing service because the listing expired. I agree that 32 houses were closed in June, and the figures aren't in yet for July. Many of the "closed" houses have not reached settlement, they are still in escrow. The Lodi bubble started in 1999.

  • posted at 12:31 pm on Sat, Jul 28, 2007.


    Location...location...location! I still believe this is key even in this market. Isn't it always the key? I don't have the top house on my block, but the location is awesome! There are homes on my street that are much more grand than mine, but the location is extremely desirable. It's interesting...(even in this market)...we've had people ask if our home is for sale as they have clients interested in our area/block. Geez, aren't there enough homes on the market. I guess that's why I still believe that the location remains the most important criteria for buyers.



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