The Malibu real estate market presents many opportunities for buying luxury homes and selling them for a profit,but finding ways to buy low and sell high is one of the biggest challenges of real estate investing. However,short sales give buyers the opportunity to buy at prices that are often below market value. Although this process has some risks for both buyers and sellers,the potential rewards are worth the groundwork required to find these low-priced properties.
What is a Short Sale?
When a homeowner gets behind on mortgage payments,the lender may agree to a short sale instead of foreclosure. “Short sale” means that the bank will accept a sum less than the amount due on the mortgage. If a homeowner still owes $200,000 on a loan,the bank may be willing to accept $175,000 in a short sale. Not all banks will agree to this type of sale,so homeowners must get permission before going through the process.
Benefits of Short Sales
Malibu short sales have one major benefit for buyers. This type of sale allows a buyer to purchase a home for less than the market value. If a homeowner bought a house for $600,000,owes $350,000 on the mortgage and convinces the bank to accept a short sale amount of $300,000,the buyer stands to make a considerable profit.
Risks of Short Sales
Short sales have risks for both buyers and sellers. A buyer can ask that the bank not issue a negative report to the major credit bureaus,but the lender is under no obligation to agree. Some lenders will also sue homeowners for the deficiency,which is the difference between the amount owed and the amount of the short sale. If a homeowner owes $100,000 on the loan and sells the home for $50,000,the lender could pursue the homeowner for the $50,000 difference.
Buyers also need to be aware of the risks associated with this type of sale. If the seller borrowed too much money,the home may not even be worth the short sale price. Additionally,not every seller qualifies to do a short sale. Buyers must be careful to work with reputable Malibu real estate agents to ensure that they are not wasting their time pursuing a deal that does not qualify as a short sale. Lenders also have the opportunity to change the terms of the sale before the deal closes. Market changes and new lending laws can cause buyers to lose money on this type of deal.
Timeframe
Buyers should set aside at least two months for the process of a short sale. The process starts when a notice of default is filed against the seller. The seller must work with the lender and submit all required paperwork before the lender will even consider a short sale. Once all the paperwork has been submitted,it may take up to two months to receive a response from the lender. If the seller has two mortgages with different lenders,it may take even longer to complete the process.
Russell Grether of Coldwell banker Previews International is a real estate agent based out of Malibu,CA. He specializes in Malibu real estate,Malibu homes for sale,Malibu properties,Malibu land for sale,Malibu rentals and surrounding area real estate from Montecito to the Pacific Palisades.
Why Look at Malibu Beachfront Homes for Sale
Unlike many neighborhoods in more suburban areas,Malibu offers an excellent variety of living situations for various lifestyles –from the quaint neighborhood of Malibu West to the homes way up the canyons with expansive land and awesome views to the luxurious beachfront estates on the sand,each area can appeal to different types.
When considering Malibu beachfront for sale here are a few things to consider.
1. Consider your proximity to neighbors and major roads.
Fact –The only major street in Malibu is the Pacific Coast Highway. This highway serves as the main thoroughfare by which thousands of cars travel everyday. During summer months it is no secret that traffic can get jammed at times and sometimes parking on the PCH can be an issue.
Many often forget that they live on such a busy street as soon as they close their garage door and look out at the waves and hear just the sound of the ocean and begin watching the dolphins play outside their back porch again.
To that end,one of the best parts of having a Malibu beachfront home is that you have immediate access to the main highway and can easily drive to anywhere you need to go. Many people commute to Santa Monica or further because being able to come back home and look at the sunset overlooking the ocean is worth it!
2. Do you prefer more land or less land?
People who live on the beach usually love it and for good reason. Not only do you have a pristine environment that is constantly changing and showing its moods but you also have immediate access to an incredible source of beauty,entertainment and fun!
One consideration,however,is that if you are a family with young children or prefer a yard that you can tend to,perhaps the ocean is not the best place for you.
3. Maintenance anyone?
Fact –The ocean is salty.
Fact #2 –If you have a beachfront home you will need to do more maintenance.
Living on the ocean definitely has more pros than cons but the main con in my opinion is that you will need to spend more money on maintenance and be very diligent to make sure that you take measures to combat the corrosion and wear that living on the beach causes.
4. Hello neighbor?
Fact –There is not more oceanfront land being made in Malibu.
Unfortunately,there is only so much coastline in Malibu and as a result the properties and home that exist on Malibu beachfront are limited. Most properties are very near their neighbors so as a result sometimes privacy can be limited.
5. I thought you said sand?
When considering a Malibu beachfront home for sale take into consideration as to why you want to live on the beach. Is it the just the views,the walks on the beach,the sand,etc? In Malibu,property values usually coincide with the quality of the beach that the home is built on.
In Malibu there are many different types of beaches that exist. To name a few:
- Dry sandy –commands the highest price and for good reason. These beaches usually have sandy beaches throughout the year.
- Wet Sandy –Can be sandy but usually at low tide
- Rocky –Many homes in the Big rock area can be built over large boulders –access to the water is still possible but launching kayaks or other small crafts can be difficult/impossible.
- Seasonally sandy –Sand moves. A lot. One day you will wake up and the sand will be three feet lower and the next day it can be four feet higher. Some beaches are seasonally sandy with the sand moving based on the predominant swell direction (Winter swells = swells from the W and NW. Summer swells = South swells)
- Rocky with access to sand –Some homes are built over the rocks but a small walk
- Beach key –There are several private beaches in Malibu. Little Dume,La Costa Beach club,Sea Level Drive are a few. Sometimes to the homeowner,it is not important to be directly on the beach that is the most important but rather it is having the access to the exclusive beach that can be more coveted.
6. It smells funny!
In Malibu,one aspect of the Point of Sale Ordinance 321 is that in order to transfer ownership of a house,one needs to provide evidence that the existing septic system is functioning properly with an operating permit.
In some homes,particularly the older ones,the systems are antiquated and do not pass the stress tests to indicate that the home has a functioning septic system. If the system does not pass costs to put in a new one can be between $80,000 to several hundred thousand!
Beach houses usually require retaining walls and even more engineering to protect the system from the relentless force of the sea.
If you are interested in buying a beach house be absolutely sure that you get a septic inspection done - Even if the home has an operating permit! Other agents will disagree with me on this. I have personal experience with saving clients hundreds of thousands on insisting they get systems with operating permits tested that have failed!
Call me for questions on this.
For more information from the City –click here:http://bit.ly/ImCIPd
Right now inventories are high and prices are very good so if you have ever considered buying a beach house now could be a great time! Just in time for summer!
If you have any questions regarding Malibu Beach front homes,please do not hesitate to contact me. I would be happy to answer any questions you may have! russellgrether@coldwellbanker.com or 310.589.2471
