Local Real Estate Expert Gives Update, Warns Against Short Sale Fraud

Murrieta City Council got an update recently about the state of real estate in the City, which included a warning to homeowners about short sale fraud.

The update was given by Gene Wunderlich, government affairs director for Murrieta-based Southwest Riverside County Association of Realtors, who said last year, loan modification fraud peaked; this year it's short sale fraud.

"For everyone out there doing it honestly, there are 57 scam artists trying to make a buck," Wunderlich said.

A short sale happens when homeowners owe more on their home than it is worth, but are trying to sell it to get out from underneath it. About 80 percent of homeowners in Murrieta are upside down in their homes, according to Wunderlich.

He said the most obvious red flags about short sale frauds are when a company asks for money up front.

"That is illegal; you can not do that," he said. "That was made illegal in California last year."

He said to beware of unlicensed negotiators. The only people who can legally represent a homeowner in a short sale are attorneys, licensed realtors and  homeowners as themselves.

As far as the state of real estate in Murrieta, Wunderlich said Murrieta and most of Southwest Riverside saw record sales in 2010, due in part to a first-time home buyers' $1,000 tax credit.

He believes Murrieta home prices have reached their bottom because the median home price has remained around $210,317 since June of 2009, down from its peak at $511,963 in January 2006.

"That is very encouraging, hopefully that indicates some stability in the market.

"Right now, demographics are 55 percent first-time home buyers. Homes are essentially half-price. Folks who thought they were frozen out of home buying forever are able to buy.

"Investors are also picking up a lot of properties. Right now they probably account for 20 to 25 percent of market--the ones that are there are very active. And then 15 percent are relocations and move-ups."

Wunderlich said that in a traditional market, investors and first-time home buyers usually make up much less of a percentage.

"For every home that is sold, it adds about $60,000 to local economy."

He added that property tax delinquencies, excluding those already in the foreclosure process, are at their lowest level since the end of 2008. Mortgages with only one payment past due are at the lowest level since the end of 2007.

He stopped short of making any predictions about the future of the market, however, saying that information from banks and national experts changes daily, sometimes hourly.

"What I can't tell you is where we are going."