Transaction One
Our first time buyer will be named Jane. Single, good income and good savings. We sat down with her and determined she could afford up to $700,000 with 20% down. We then factored in the tax effects of the mortgage interest deduction and property taxes. The real additional expense compared to renting was under $1,000. We found a condominium in Campbell, new construction listed at $699,000. After using the lost art of negotiation, the final sales price was $620,000. The seller credited $18,000 to Jane.
We used these funds to buy her interest rate down to 5.375%.
The seller paid for the first year of homeowners dues. Wait, not done, additional perks added were a new flat screen TV and all new blinds. I hope you get the picture. A good, good time to be shopping in the entry-level market.
Now the banking was almost nightmarish. The in-house broker said Jane was approved. We removed our finance contingency, placing our deposit at risk if we did not perform. The loan actually reached the point of docs being drawn and Wells hanged their mind. Thank goodness for a college friend who is an executive at Wells Fargo. A few difficult moments, situations that I have not seen since 1980. I hate to say it, but it is fun for me. I enjoy being in the trenches and playing chess with just about everyone.

Transaction Two
To set the scene: we have a listing at 3 million dollars. Buyer Joe brings us an offer and, lo and behold, we get an offer from another buyer. Two offers in this environment. Do not hold your breath any longer. Needless to say, we got our price.
Joe had no contingencies. We did check on how he was paying for it. One million dollars down, $2 million loan from his "relationship" bank. He was liquidating stock and had sold his home in Half Moon Bay for $1.35 million. In one swoop, his stock takes a dive and the bank "changes its mind" and will only lend $1.4 million. So we give him an extension and his deposit is released to our seller in hopes of his stock doing a little recovery. This does not happen, yet Joe and his wife love the home and decide to go forward with the purchase.
The Storm intensifies. Joe's buyer in Half Moon Bay decides he has paid too much and is willing to walk away from a 3% deposit.
This would kill everything.
Fast forward to the end result. The price of Joe's home in HMB was reduced by $100,000, keeping his buyer. Our clients accepted a sales price reduction of $50,000 and will carry a small loan at 7%. This allows Joe to postpone selling a portion of his stock.

Our clients receive $2.4 million in cash from Joe and a nice return on the balance. Win, win. I have not had to come up with ideas like this since 1980. Difficult, yet a fun challenge.
At the beginning of this year, I made a decision to reduce my workload. Although it has been fun, it has been a bit boring at times. So, on November 22nd I will have my PET scan 1 year posttreatment.
Assuming it is clear (Happy Thanksgiving), playtime is over. It may sound funny, but I am excited about the difficult market. Many of the old challenges and their long-lost solutions are resurfacing.
I know everyone is feeling deep concern for where all of this upheaval is going.
I am right on top of the list. I never thought I would be checking on the "up and down" club 2 or 3 times a day. But in all situations there is always an "up" side. Finding the "up" side is the challenge for all of us.
We will have a personal Christmas update out in a month.
My best to all of you,
RBL

ith such a drastic change in our economy over just the last few months, purchasing a home may seem daunting to some, but there is a silver lining in it all.
Having grown up in the Bay Area, I have watched housing prices rise at a substantial rate throughout my entire life. For many of my "thirty-something" friends, home ownership was out of reach unless they sed some "creative financing" by receiving assistance with down ayments from their parents, using both incomes in their household and putting every penny they have into their home. Although those options help, they also bring about new expenses. For example, with both parents working outside the home to make ends meet, there are additional financial expenses such as day care, gas, etc. These additional xpenses were just too daunting for them to even think about purchasing a home.
With the economic downturn, there is a "break in the clouds" in terms of housing prices, and perhaps some relief for those who wish to become homeowners. I've seen my friends in this area struggle with the decision to stay in the Bay Area or move out of town to "someplace more affordable". With inventory rising, and prices decreasing, there is now the opportunity for them to get in the game and stay in the area. Buyers are taking more liberties with list prices, realizing they have more power in the marketplace then they've ever had before, and are getting the home they want at the price that is more affordable. Going back to Brendan's example of first-time homebuyer Jane, she had actually been in the market for a home for over a year and a half. She was willing to wait for the right time, and jumped at the chance when the market went south. She is now happily living in her new condo, which she hopes will be a sound investment for the future.
Cheers,
Jaime