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7 Tips for Buying a Home During the Pandemic

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May 20, 2020

The ever-changing new normal

The coronavirus, and our reaction to it, has certainly changed our lives, from the way we do mundane tasks such a going to the store, to new procedures for seeing a doctor. Some of these practices and restrictions are already loosening up, but some changes may be permanent.

Regardless, there’s a new normal today.

The real estate market has been impacted, but it’s bouncing back. Perhaps buoyed by optimism, pent-up demand, and/or incredibly low interest rates, buyers are back in the market. At the current rate of sales in the Tri-County (Sacramento, El Dorado, and Placer) over 2400 buyers will have offers accepted by the end of May.

At the same time, we are still experiencing the low inventory numbers that have plagued the market for several years now.

There are just over 3400 homes for sale in the Tri-County area, compared to 4100 at the same time last year.

So, we’ve got eager buyers back in the market, but fewer homes to choose from.

If you are one, or are planning to be one of those successful buyers during this pandemic, I’m going to suggest that you try these 7 tips, so that you don’t waste time and you put yourself in the best position to win.

1) Keep your credit clean – Lender guidelines have been a little more lenient over the past couple of years, compared to how they were just after the mortgage crisis, but one thing they are very cautious of is bad credit.

Right now, creditors are offering deferments, ‘skip a payment’ programs, and forbearance agreements to help those who are struggling.

The problem is, it’s too easy a deal to get, and some may be taking advantage of it without really needing it.

As Jeff Sipes of Blue Water Credit said in our update from a couple of weeks ago, just because creditors are offering this doesn’t mean that there won’t be repercussions.

If you’ve lost your job, of course, you may have to take advantage of those deferment offers, but if you’ve lost your job, you probably won’t be buying a house anyway.

If you haven’t lost your job, and you plan on buying a home in the next year, do everything you possibly can to keep your credit clean. You don’t want to find out that lenders won’t trust you because of a missed payment, even if ‘they offered.’

2) Understand and heed precautions – Whether you believe the government and healthcare industry guidelines are necessary or not isn’t relevant. Sellers and agents must be cautious. We are not only concerned about you and I getting the virus, but are also concerned about liability should a buyer or seller contract it, and then blame their agent for not making them take those recommended and required precautions. Agents are now required to have buyers and sellers sign the new Coronavirus Property Entry Advisory and Declaration, as well as taking such precautions as social distancing, mask-wearing, and hand-washing. Please cooperate with these guidelines and precautions.

3) Get pre-approved – Seems like a no-brainer, but many people are asking to see homes and today, and every showing poses a potential risk. So, in addition to the noted precautions, agents must be selective and only show homes to pre-approved buyers. The days of wandering around random open houses and of seeing homes for fun are over for now.  

4) Get your own precaution kit – Get a cloth mask, some hand sanitizer, and gloves. Use them. Again, agents are instructed not to allow anyone into a home without a mask.

5) Do your research –  This involves everything from viewing the property online to doing community research. What’s important to you? Schools? Transportation? Quiet, interior street? Proximity to freeways? Shopping? Parks? All of this information can be found online. Learn what you can upfront so you don’t waste your time, and increase the risk to your health, by going to see properties that won’t work for you.   

6) Get real about your expectations – Folks this ain’t a buyer’s market.
I’ve spoken to several buyers and many agents who’ve worked with buyers who think this is the opportunity to get a bargain. While there are always deals to be had in any market, prices aren’t falling overall. Metrolist reports that 43% of currently pending sales, and 47% of sales closed this months had multiple offers. All of that can change, but it hasn’t yet.

In fact, instead of falling, prices have risen for the past 3 months, up 2% in April.

I’m not saying you have to pay more than the listed price. I’m saying that if you want the house, offer what it’s worth, based on comparable sales, and the and home’s condition.

Sellers aren’t panicking, and with rising prices, low-ballers are likely to be ignored. I have a client who absolutely loved a particular home. She wanted to offer $21,000 below asking price, not because she didn’t feel it was priced right, but because of her belief that with the pandemic, she could get a bargain. Her offer was rejected, and it sold for $6,000 over the listed price, after receiving 6 offers.

You may indeed find a bargain, but a new listing, priced right, usually won’t be one.

7) Don’t rush, but be ready. – I always give this advice, and it’s as relevant today as it was before the pandemic. Sellers aren’t panicking, and neither should you, but if you find the right house, and you’re ready to buy, don’t wait.

I had a client ask about a property he’d seen online. It was priced at $475k, and he said he wanted to ‘keep an eye on it’ and wait for it to drop. He was disappointed when it went pending a few days later. If it’s the right house, go for it. 

So, what do you think? Does this all make sense? Have anything to add, argue or question, drop me a line at 916 718 9577, or tune in to our weekly market update May 21 at 3pm via zoom at
https://financeofamerica.zoom.us/j/6173215868

Each week, Paula Harvey of Finance of America, along with occasional special guests provide updates and insights on the real estate and mortgage markets. We keep it short, informative and try to have a little fun, too.

I’ll post a link to the recording of it when finished.

In the meantime, happy house hunting, and hit me up if you need help or more information.

Steve Heard is a Realtor with EXP Realty, and owner of www.myfolsom.com. Contact Steve at 916 718 9577 – email [email protected]

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Why Are Certified Pre-Owned Cars More Expensive?

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The used car vs. certified pre-owned (CPO) argument can typically be summed up with the phrase “you get what you pay for.” Both are technically used vehicles, but CPO cars have a few advantages that may be worth their price tag.

Why CPOs Cost More Than Regular Used Cars

A CPO vehicle is commonly called the cream of the crop of used cars, and its price tag often reflects this. CPO vehicles tend to be more expensive than standard used ones.

But, why?

One of the biggest reasons why CPO cars are more expensive than their used counterparts is that CPOs are inspected by a manufacturer-certified mechanic. This means that every CPO vehicle must meet certain standards before it’s labeled as such. A true CPO is sold at a franchised dealership. Mom-and-pop dealers don’t have these vehicle options (and “dealer-certified” is not the same thing as a manufacturer-certified car).

Another reason for the higher price tag is that many CPO vehicles have just come off-lease. When a lessee returns a lease, the manufacturer’s likely to inspect to see if it qualifies for their CPO program. Since most auto lease terms are around two to three years, many off-lease cars make the cut when they’re returned clean and meet the low-mileage requirements. CPO cars are also refurbished, unlike regular used vehicles.

Each auto manufacturer has its own set of standards for their CPO cars, but the guidelines are usually in this ballpark:

  • Vehicles typically must have less than 80,000 miles
  • Some luxury brands require less than 50,000 miles
  • Typically must be less than ten years old, sometimes newer
  • Only one previous owner

Regular used cars don’t go through these rigorous manufacturer inspections before they’re sold. A used vehicle may be inspected in-house at the dealership before it’s sold, but likely not through the manufacturer like a CPO.

CPOs Are Covered

All CPO vehicles come with some sort of warranty, which adds to the overall cost, but offers peace of mind. Being on the newer side, many CPO cars may still be covered under their original manufacturer’s warranty and often include an extended warranty once that expires.

Some perks manufacturers may include in their CPO warranties include:

  • Why Are Certified Pre-Owned Vehicles More Expensive?12-months of 24-hour roadside assistance
  • A 12-month warranty after the manufacturer’s warranty expires
  • A vehicle history report
  • Powertrain coverage
  • Car rental coverage
  • Trip interruption benefits

Of course, manufacturers vary in what their warranties include when you purchase a CPO vehicle. Be sure to read through the exclusions of the warranty so you know what the terms are, how long you’re covered, and if there are any limitations.

Can Bad Credit Borrowers Finance a CPO?

Generally, bad credit borrowers are told to finance a used vehicle over a brand new one because used cars come with a lower sticker price, usually. However, while CPO vehicles tend to be a little more expensive than regular used vehicles, a CPO’s selling price is still likely less than a new car due to initial depreciation. Depreciation is loss of value over time due to mileage, age, and normal wear and tear.

Brand new vehicles lose a lot of value in the first two or three years of ownership, possibly up to 20% in that time, and it’s usually the steepest drop in value over the life of the vehicle. However, after those first couple of years, depreciation tends to slow down. If you opt for a CPO car, it’s usually much less expensive than its brand new equivalent, and very likely has already seen its steepest drop in value.

A CPO car is likely a more attainable option for bad credit borrowers than a brand new one. And if a borrower with credit challenges works with a special finance dealership that’s signed up with subprime lenders, CPO vehicles can be an option if they meet lender requirements.

Ready to Stop Looking and Start Shopping?

Sometimes the toughest part of car shopping is figuring out which dealership you can work with. There are so many dealers out there, and it can be tough for bad credit borrowers to tell which ones are signed up with subprime lenders that can assist with credit challenges.

At Auto Credit Express, we’ve crafted a nationwide network of special finance dealerships that are able and willing to help bad credit borrowers get the vehicle they need. Skip the search for a dealer with bad credit resources and let us do the legwork for you.

Starting is simple: complete our free auto loan request form and we’ll look for a dealership in your local area with no obligation.

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My husband signed for a car for a friend — against my wishes. Now we get notices for unpaid tolls and parking tickets. What if there’s an accident?

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My husband signed a car lease for a friend. He told me he was co-signing because his friend had bad credit even though I objected to that and asked why his friend can’t just buy a used car. Then at the last second, my husband told me that his friend’s credit “was so bad he had to take out the whole loan” in my husband’s name only.

Aside from the fact this story doesn’t add up, he is now getting second notices for unpaid tolls and parking tickets, and just sends them to his friend and trusts him to pay. He ensures the lease payments are made every month, and tells me that tolls will send collections notices before reporting to credit-collection agencies.

He also claims that his friend has insurance, but that doesn’t add up. The state we are in requires the owner to have insurance. He tells me that none of this is my business, and I have no right to be upset. Yet every time another “past due” envelope arrives I panic at the thought of the savings I worked so hard to put away might be gone in one accident, and that the home I wanted to buy with our excellent credit won’t be possible anymore.

Can you help me explain to him why this was a very bad idea, and why it’s not “none of my business,” as he says? What options do I have to get us out of this mess before we lose everything?

Panicking Wife

You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected]

Dear Panicking,

Yes, your husband is responsible for the vehicle insurance, especially if someone else is driving this car on a regular basis. If the documents say the borrower should be the primary driver, your husband’s arrangement with this friend is a “straw deal” and is likely also illegal.

But your problems go way beyond this car. Your husband’s willingness to take out a lease on behalf of a friend, and endure these collection notices, raises many red flags. What does your husband owe this person? Why would he go above and beyond any reasonable expectation of a friendship to risk his finances and credit rating in this way? The fact that he did this against your express wishes and good sense adds insult to injury. Something is wrong with the bigger picture.

As for your husband’s legal liability. According to Maggiano, DiGirolamo & Lizzi, a law firm based in Fort Lee, N.J., “As strange as it may sound, you can be held liable for a car accident that involves your vehicle — even if you weren’t present at the time. In most motor vehicle accidents, the negligent driver is the one held liable for any injuries or harm caused. However, in certain situations, the law can attribute fault to the owner of the car instead.”

The firm cites the legal principles of negligent entrustment and negligent maintenance. The first involves “entrusting your vehicle to someone who was unfit to drive.” Negligent maintenance “is the failure to properly maintain your vehicle, presenting a safety risk for anyone driving the car. This term ‘negligent maintenance’ is used because you have a duty to other drivers to keep your car in safe, working condition as to minimize the risk of an accident.”

Given that your husband owns the car and it is being driven by someone who is not paying its bills, and creating more costs through careless driving and bad parking, your husband is already fully aware that this is a bad situation. You are left without a “why” or action by your husband to address this. Take a closer look — with the help of an attorney — at your joint/separate finances, and explore ways to protect your savings. You also need to take action to restore your peace of mind.

Otherwise, you will be driving around in proverbial circles without knowing your legal and financial options. Whatever that potential action entails should be decided between you and your attorney in the first instance. I am willing to guess that this is not the first time your husband has made a decision in your marriage that has left you baffled. A lawyer should explain to you why it’s a bad idea to endure these kinds of unilateral decisions, and what you can do about them.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

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Loans Bad Credit Online – China’s Very Bad Bank: Inside the Huarong Debt Debacle | Fintech Zoom

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Loans Bad Credit Online – China’s Very Bad Bank: Inside the Huarong Debt Debacle

It’s been 11 weeks since Lai Xiaomin, the man once known as the God of Wealth, was executed on a cold Friday morning in the Chinese city of Tianjin.

But his shadow still hangs over one of the most dramatic corruption stories ever to come out of China – a tale that has now set nerves on edge around the financial world.

Photographer: Anthony Kwan/Bloomberg

At its center isChina Huarong Asset Management Co., the state financial company that Lai lorded over until getting ensnared in a sweeping crackdown on corruption by China’s leader, Xi Jinping.

From Hong Kong to London to New York, questions burn. Will the Chinese government stand behind $23.2 billion that Lai borrowed on overseas markets — or will international bond investors have to swallow losses? Are key state-owned enterprises like Huarong still too big to fail, as global finance has long assumed – or will these companies be allowed to stumble, just like anyone else?

The answers will have huge implications for China and markets across Asia. Should Huarong fail to pay back its debts in full, the development would cast doubt over a core tenet of Chinese investment: the assumed government backing for important state-owned enterprises, or SOEs.

“A default at a central state-owned company like Huarong is unprecedented,” said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group. Should one occur, he said, it would mark “a watershed moment” for Chinese and Asian credit markets.

Not since the Asian financial crisis of the late 1990s has the issue weighed so heavily. Huarong bonds — among the most widely held SOE debt worldwide — recently fell to a record low of about 52 cents on the dollar. That’s not the pennies on a dollar normally associated with deeply troubled companies elsewhere, but it’s practically unheard of for an SOE.

Time is short. All told, Huarong owes bondholders at home and abroad the equivalent of $42 billion. Some $17.1 billion of that falls due by the end of 2022, according to Bloomberg-compiled data.

Huarong Bonds Tank

It wasn’t supposed to be this way. Huarong was created in the aftermath of the ‘90s Asian collapse to avert another crisis, not cause one. The idea was to contain a swelling wave of bad loans threatening Chinese banks. Huarong was to serve as a “bad bank,” a safe repository for the billions in souring loans made to state companies.

Along with three other bad banks, Huarong swapped delinquent debts for stakes in hundreds of big SOEs and, in the process, helped turn around chronic money-losers like the giant China Petroleum & Chemical Corp.

After Lai took over in 2012, Huarong reached for more, pushing into investment banking, trusts, real estate and positioning itself as a key player in China’s $54 trillion financial industry.

Before long, global banks came knocking. In 2013, for instance, Shane Zhang, co-head of Asia-Pacific investment banking at Morgan Stanley, met with Lai. Zhang said his company was “very optimistic” about the future of Huarong, according to a statement posted on Huarong’s website at the time.

Before Huarong went public in Hong Kong in 2015, it sold a $2.4 billion stake to a group of investors including Warburg Pincus, Goldman Sachs Group Inc., and Malaysia’s sovereign wealth fund. BlackRock Inc. and Vanguard Group acquired lots of stock too, according to data compiled by Bloomberg. The stock has collapsed 67% since its listing.

Lai had no trouble financing his grand ambitions. A big reason: Everyone thought Beijing would always stand behind a key company like Huarong. It easily borrowed money in the offshore market at rates as low as 2.1%. It borrowed still more in the domestic interbank market. Along the way Lai transformed Huarong into a powerful shadow lender, extending credit to companies that banks turned away.

The truth was darker. Lai, a former senior official at the nation’s banking regulator, doled out loans with little oversight from his board or risk management committee.

One Huarong credit officer said Lai personally called the shots on most of the offshore corporate loans underwritten by her division.

Money also flowed to projects disguised as parts of China’s push to build railroads, ports and more around the world – the so-called Belt and Road Initiative, according to an executive at a state bank. Huarong didn’t immediately reply to questions on its lending practices.

Given Lai’s fate, both people spoke on the condition of anonymity.

Huarong snapped up more than half of the 510 billion yuan in distressed debts disposed of by Chinese banks in 2016. At its peak, Lai’s sprawling empire had almost 200 units at home and abroad. Heboasted in 2017 that Huarong, having reached the Hong Kong stock exchange, would soon go public in mainland China, too.

The IPO never happened. Lai was arrested in 2018 and subsequently confessed to a range of economic crimes in a state TV show. He spoke of trunk-loads of cash being spirited into a Beijing apartment he’d dubbed “the supermarket.” Authorities said they discovered 200 million yuan there. Expensive real estate, luxury watches, art, gold – the list of Lai’s treasure ran on.

This past January, Lai wasfound guilty by the Secondary Intermediate People’s Court in Tianjin of accepting of $277 million in bribes between 2008 and 2018. He was put to death three weeks later – a rare use of capital punishment for economic crimes. Some took the execution as a message from China’s leader, Xi Jinping: my crackdown on corruption will roll on.

At Huarong, the bottom has fallen out. Net income plummeted 95% from 2017 to 2019, to 1.4 billion yuan, and then sank 92% during the first half of 2020. Assets have shriveled by 165 billion yuan.

The company on April 1 announced that it would delay its 2020 results, saying its auditor needed more time. The influential Caixin magazine this week openly speculated about Huarong’s fate, including the possibility of bankruptcy.

According to people familiar with the matter, Huarong has proposed a sweepingrestructuring. The plan would involve offloading its money-losing, non-core businesses. Huarong is still trying to get a handle on what those businesses might be worth. The proposal, which the government would have to approve, helps explain why the company delayed its 2020 results, the people said.

Company executives have been meeting with peers at state banks to assuage their concerns over the past two weeks, a Huarong official said.

The Chinese finance ministry has raised anotherpossibility: transferring its stake in Huarong to a unit of the nation’s sovereign wealth fund that could then sort out the assorted debt problems. Regulators have held several meetings to discuss the company’s plight, according to people familiar with the matter.

In an emailed response to questions from Bloomberg, Huarong said it has “adequate liquidity” and plans to announce the expected date of its 2020 earnings release after consulting with auditors. China’s banking and insurance regulator didn’t immediately respond to a request seeking comment on Huarong’s situation.

Rising Stress

Onshore bond defaults by China’s state firms hit a record in 2020

Source: Fitch Ratings; 2021 data are for the first quarter

One thing is sure: Huarong is part of a much bigger problem in China. State-owned enterprises are shouldering the equivalent of $4.1 trillion in debt, and a growing number of them are struggling to keep current with creditors. In all, SOEs reneged on a record 79.5 billion yuan of local bonds in 2020, lifting their share of onshore payment failures to 57% from just 8.5% a year earlier, according to Fitch Ratings. The figure jumped to 72% in the first quarter of 2021.

The shockwaves from Huarong and these broader debt problems have only begun to reverberate through Chinese finance. Dismantling all or part of Lai’s old empire would show Beijing is willing to accept short-term pain to instill financial discipline among state-owned enterprises.

The irony is that Huarong was supposed to fix China’s big debt problem, not cause a new one.

“Allowing a state-owned financial institution that undertook the task of resolving troubles of China’s financial system to fail is the worst way to handle risks,” said Feng Jianlin, a Beijing-based chief analyst at research institute FOST. “The authorities must consider the massive risk spillover effects.”

— With assistance by Charlie Zhu, Jun Luo, Zheng Li, Dingmin Zhang, Evelyn Yu, Rebecca Choong Wilkins, and Tongjian Dong

Loans Bad Credit Online – China’s Very Bad Bank: Inside the Huarong Debt Debacle

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