Archive for the ‘Saving money’ Category

What Every Short Sale Buyer Should Know

Wednesday, July 27th, 2011

As many people are aware, short sales are not going away any time soon, and they often present the opportunity to purchase desirable properties at prices below comparables – not such great news for the neighbors, but a blessing for buyers.

If you are a buyer considering purchasing a short sale, or if you know someone who may soon do so, there are a few things to be aware of before you make an offer.

1. Time frames. You probably already know that short sales can take a while to be approved by the lender(s). How long depends on several factors, like how many liens there are (approval time is usually quicker if there is only one), whether you are the firstnbuyer to submit an offer (if there had been a previous buyer and some progress had been made, you may not have as long a wait), the skills of the listing agent or her negotiators, and the alignment of the stars. All in all, the process has gotten quicker than it used to be, so a ballpark in San Diego County is likely 2-4 months (my last 3 short sales closed in about 2-3 months).

2. Acceptance by the seller does not the contract seal. By this I mean that just because you and the seller agreed to the contract terms, the lender can change those terms. It can ask for a higher sales price (and often does when the BPO (Broker Price Opinion – like an appraisal), and change terms (see #3). Be aware that things could change, and that is why it is so important to work with an agent in writing an offer.

3. Write as clean an offer as possible. The best chance at getting an offer accepted is to write a clean offer. Make the escrow period as quick as possible, do not ask for the seller to pay your closing costs unless this is absolutely necessary (most lenders will not). Also, I advise my clients not to ask for a home warranty, as the lenders won’t usually pay for that. Instead, I buy one for my buyers. Oftentimes lenders won’t pay for termite work but will pay for an inspection, but I do ask for the seller to pay any section 1 (typically the seller’s responsibility) items regardless. The lender can choose to say no, but I have had lenders pay for this so I include it. It depends on the lender, the sales price and other factors. Speak with your agent to make sure your offer is as clean as possible.

Short sales seem to be turning into an art. The best advice is to work with an agent who is experienced with these sales, and: don’t be afraid of short sales! It continues to surprise me how many agents refuse to work with them. Unless you need to close escrow quickly it can be a great way to get a good deal on a home; and the time frames, while frustrating, are usually well worth the wait. Happy hunting!

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Do We Need to Change the Real Estate Commission Structure?

Saturday, May 21st, 2011

Many people think so. There have been many debates, especially lately, about the nature of real estate commissions and whether the structure should be changed. I think we need to take a serious look at not only commission structure, but real estate services in general, to figure out a win-win situation for buyers, sellers and agents.

The argument: Many sellers think that real estate agents are paid too much. Although the days of the 6% commission are not over, many sellers opt to work with brokerages that charge a lot less. Sellers don’t understand why brokerages charge so much to place their home on the MLS, market it and help with disclosures and paperwork. They feel they can self-market on the internet, create their own flyers, and rely on the escrow company to help them once an offer is presented.

The problem: Many sellers do not understand that the agent does a lot more than place a home on the MLS, hold open houses and deliver disclosure packets. There are a few things to keep in mind when selling your home. One is that the expertise of an area agent makes a big difference in whether you will get any buyers to come view your home. Your home needs to be priced right, according to comparable sold properties and the current market, and the first TWO WEEKS is critical in this regard.

Next, all the paperwork that comes with selling a home must be in order, especially the seller disclosures. I have caught things several times that, if I had not pointed them out to my sellers, could have turned into legal nightmares down the road. It is important that you have an agent (or attorney) look over these to make sure you have filled them out correctly.

Last, and most importantly, the legal ramifications. Like many agents, I could actually write a book about things other agents have done that could have caused major legal problems down the road for the seller. It is most important to have an experienced agent and her broker, or an attorney, look over any offers presented before acceptance. There could be language in the offer or even left out that could create problems for you later. This is why agents and brokerages pay for errors and omissions insurance. If there IS a problem down the road it offers peace of mind to know that they will stand behind you in most situations. Think of it as paying for protection.

Solutions:

Flat fee commissions. This is not new – the discount brokerage model has been around for some time. Companies will charge flat fees for listings. The rest of the work – flyers, open houses, dealing with offers, negotiating and opening escrow – can be left to the seller. Or, if preferred, the seller can opt to pay for other services. However, the discount model has received a lot of badmouthing in the industry. This is because there is little agent involvement, and agents work hard. I say you get what you pay for. You can receive “Nordstrom” service, and have an experienced agent take care of everything for you so that you don’t have to, but that costs money (just like you would pay an attorney if you were sued or charged with a crime – I would NOT recommend representing yourself in such a situation). You can also get “Walmart” service, where you do the work yourself. I’m not going to compose a diatribe on how hard we agents work – often for nothing at all – so suffice it to say that when we do a good job we deserve our pay. The choice is up to the homeowner and whether he wants to deal with the sale of his home himself, or have help.

Although I understand the desire to save money, I do not believe the traditional flat fee model is completely beneficial to sellers the way it currently stands. There are too many potential problems that many sellers do not foresee.

Real estate and legal services combined: this is the model I have been studying for some time now. A real estate agent who is an attorney has a unique ability to offer services to clients that are like flat-fees services, but with a twist: the client can get legal advice and know that all the paperwork is handled correctly. This offers peace of mind that you cannot get with traditional flat-fee brokerages. The seller would have the benefit of brokerage marketing and handling of the negotiations and paperwork, for one set fee, and can also opt to pay for other legal services at a standard hourly rate. I think it is the future of real estate. There are only a few companies doing this nationwide, and I am looking into it as well.

The hard part is educating the public that there are other ways to approach the sale of a property. But I think this will catch on. It will not work with short sales, as the lenders agree to pay regular commissions, but this does not affect the seller (unless the lender feels the price is not enough, in which case they cut the commissions anyway. This still does not affect the sellers, just the agent’s bottom line). But I think when this model catches on the lenders will eventually agree to the flat commissions.

I would love to hear from you – the sellers and buyers and agents and others out there. Do you think this is a good idea? It can save sellers a lot of money and offer a new option to many. Sellers would still get the benefit of working with an agent/broker, without having to basically sell their homes themselves. Traditional brokerages will not like this model, of course, but it is really something to consider.

 

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How To Get Through the Holidays Without Breaking the Piggy Bank

Friday, December 10th, 2010

The holidays are a wonderful time of year, but they can also be stressful when it comes to gift-giving, especially when the budget is tight. There are a few different types of gift-givers, but no matter which one is more like you there are solutions to keep you stress-free and finish the year with money in the piggy bank.

The Over-Gifter: This person loves the holidays and loves to give gifts. Her list usually includes everyone she can think of, and this can cause her to get into trouble with spending. To combat this problem, it is imperative to set a budget and prioritze, then stick to it. A great option is creative gifting. Focus on ideas that can be packaged beautifully but will leave a big impression–bake cookies or make homemade candies, ornaments or frames, then wrap them up with beautiful bows or in colorful containers. People love creative gifts and they allow you to include everyone in your gifting without breaking the piggy bank.

The Procrastinator: This person doesn’t like the hustle and bustle, the traffic, the come-hither ads that lure people into stores, thus he tends to be a procrastinator. The problem with procrastination at this time of year is that you may end up spending more than you would have had you shopped early. An easy solution is to make a list and set a budget, then either shop online or purchase gift cards. It’s painless and simple.

The Self Gifter: Self gifters get caught up in all the great sales and end up purchasing gifts for themselves. The obvious problem is that your budget is blown and come January your are in debt. The key here, like above, is to set a budget and stick to it. It’s ok to give yourself a personal spending allowance when you are out shopping, but you have to be vigilant in not going over the limit.

No matter how many gifts you have on your list it is not difficult to get through the holidays and end up with money in the bank. It just requires making lists, setting a budget and sticking to it. There are so many great gift ideas out there that don’t involve spending a lot of money, so get creative, shop wisely and remember to have fun.

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Water Wise in Carlsbad

Wednesday, August 11th, 2010

If you live in Carlsbad and are looking for a way to be more water conscious, you are in luck. As a resident you are eligible to participate in the city’s home water audit program, which just got a little easier.

The city has just completed two videos that can be seen either on the Carlsbad Municipal Water District website (http://www.carlsbadca.gov/water) and also on the city’s Time Warner Cable channel 24/126.

The program originally involved a city representative visiting a home to evaluate water usage and make suggestions, but due to the drought and the economy the increase in popularity of the program has made it too difficult to schedule so many appointments. The videos offer a great alternative and can be viewed any time on the website in the comfort of your home or office.

Residents who prefer a live visit are still able to obtain one by making an appointment, although you may have to wait 2 to over 4 weeks for your visit due to increased demand. Call 760-438-2722 to schedule an appointment.

Water conservation is more important now than ever before, as the drought has increased the price we pay to import our water from the Colorado River. These videos are a great way to get informed and bring your water bills down, so what are you waiting for? Just another perk offered by our fantastic city!

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Getting Your Home Ready for Sale Without Breaking the Piggy Bank

Sunday, July 25th, 2010

Many sellers often make one of two mistakes when getting ready to sell their home: either they spend way too much money fixing up their homes (money that will likely NOT be recouped), or they do not take the time to make some subtle yet important changes that could make the “love it” lightbulb shine brightly in buyers’ heads. The tough economy may make the second mistake more of a reality, but there are some easy and relatively inexpensive ways to spruce up your home in a weekend and on a tight budget.

1. Paint: Painting is one of the biggest “wow” factors in my book, especially if rooms have not received a fresh coat in a while or if all your walls are white. Exterior painting is expensive so unless yours is in desperate need of new paint you can skip that (there are other ways to spruce up the exterior, which I will discuss shortly).

Paint is inexpensive and color is a BIG plus for most buyers. Try to stick to neutral colors, but it is alright to accent with color as long as you pull it all together. Keep in mind when using color that many people follow feng sui principles, so speaking with a color expert at your local paint store, consulting with your Realtor, or combing through home decor magazines or online is a good idea. You don’t have to paint the entire home, but rooms that are most lived in will make the biggest showing difference–like the kitchen, family room and living rooms. The master bedroom is also a big selling point for buyers.

2. Plant: Some sellers hire landscapers to give the yard a boost, but doing it yourself is not only cheaper but rewarding. Local nurseries often sell flats of flowers for cheap. Flowers in the front make a BIG difference in curb appeal. If you can’t afford a lot of flowers, consider sprucing up the areas that make the biggest difference, for example, if you have posts leading to your front door you may want to purchase some inexpensive pots and fill them with flowers. If you have a lot of space by your door you may want to fill it in with potted arrangements as well. If your front yard is all grass you may want to dig a space and add some color there. There is a saying that most buyers decide in less than a minute when they pull up to your home whether they can see themselves living there, so use color and welcoming plants to spice up the curb appeal.

4. De-clutter! This is a no-brainer and although most people have heard it you wouldn’t believe how many homes I show that are filled with clutter. Not only does it look bad and make your rooms seem smaller, but it often makes it difficult for the potential buyers to picture living there, and to see where all their own “stuff” will go. Think of this as a great time to go through closets, cabinets, garages and attics, and make some nice donations to charity or sell items online. Remember that the less clutter that shows, the bigger the house looks.

5. Clean carpets. You can do this for cheap if you do it yourself. Many grocery stores rent machines for around $30, plus the cost of the cleaner, for a day. It is easy to do and you will be surprised what a difference it will make.

6. Open and bright. Clean all window treatments and open them up. If you have a showing you want your house to be as bright as possible.

7. Focus on the kitchen. You want your potential buyers to feel the kitchen is a great space to work in. Clear counter tops and leave VERY little on them. Make sure all your surfaces and the sink are clean. If it is built in or you are including your refrigerator in your sale remember to clean it out and make it look as decluttered as possible for showings.

8. Clean windows. Not only does this give the obvious impression that you take care of your home, but it also brings the outside light in better.

9. Exterior sprucing: Unless it really needs it, exterior painting is expensive and not necessary in most cases. A better idea is to hose off cobwebs, hose down your garage, and hose down your driveway–you may need to rent a high powered hose. Trim bushes and plants that are overgrown, mow the lawn and make sure it is in good shape (you may want to check all the sprinklers if you have brown patches). Clean your front door and sweep the front patio or porch. Replace any light fixtures that have burned out…you get the idea.

10. Clean everything! Finally, give your home a good scrub. Pay attention the to bathroom areas–toilets, showers/tubs and sinks that are dirty make buyers scrunch up their noses. No one wants to buy a filthy home.

Remember, you can do all of the above yourself and most of it can be completed over a weekend, especially if you get the family involved. Happy selling!

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Buyers: Buy Now and You Could Get up to $18,000 Tax Credit!!

Wednesday, March 31st, 2010

Thanks to an a combination of state and federal laws, you could be eligible for up to $18,000 in tax credits if you are a first time homebuyer, or up to $16,500 if you are a non-first time buyer and meet the requirements. But this is only available for a limited time, so if you are in the market to purchase real estate there has never been a better time. Here are the basic requirements for the tax credit programs:

First time home buyers–dual credits:

1. Purchase must be of principal place of residence

2. Escrow must close between May 1, 2010 and June 30, 2010

3. Up to $10,000 tax credit to first time homebuyers under new California law and up to $8,000 credit under federal law

Purchasers of New Homes (Never Been Occupied):

1. Property must be principal place of residence

2. Can be first time or non-first time buyer

3. Up to $10,000 under California law

New California Law:

1. Applies to purchases that close on or after May 1, 2010

2. Must be first time homebuyer or purchaser of new construction (never been occupied home)

3. Up to $10,000 tax credit

4. Must remain in home at least 2 years post sale or pay back money

To make sure you meet all the eligibility requirements, purchase price restrictions, other restrictions and time frames, please visit http://www.car.org/legal/legal-questions-answers/2010-qa/homebuyer-tax-credit-2010/ for a tax credit chart detailing both the Federal and state initiatives.

You can visit the following sites: IRS– http://www.irs.gov/newsroom/article/0,,id=204671,00.html.

California Franchise Tax Board: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml.

Happy hunting!

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California Homebuyer Tax Credit Extended

Thursday, March 25th, 2010

Today Governor Schwarzenegger officially signed an extension for the home buyer tax credit through December 31, 2010. The bill provides $200 million for tax credits, allocating $100 million for first time home buyers (defined as those who have not owned a home in the last 3 years) and $100 million for purchasers of new or previously unoccupied homes.

The requirements for the credit are:

1. The residence purchased must be the buyer’s primary residence;

2. The purchaser(s) must live in the home for at least two years after the sale, or will be required to forfeit the credit to the state;

3. Buyers must be at least 18 years old and unrelated to the seller of the property.

The credit will be assessed at 5 % of the purchase price or $10,000, whichever is less, and will be paid over a three year period. This is great news for home buyers and for the housing market, especially with the spring inventory just starting to arrive on the market. Happy hunting!

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Property Tax Savings for Sellers 55 and Over

Thursday, March 25th, 2010

Did you know that if you are over 55 you have an excellent opportunity to sell your home and downsize, while also saving money on property taxes?

There are several propositions in California that allow these sellers to save substantially on property taxes. Proposition 13 was first initiated to prevent drastic increases in property values during the life of ownership, or until ownership changes. Proposition 60 takes this one giant step further and prevents the tax basis from increasing on the purchase of a subsequent replacement home, where the new home is of equal or lesser value. This is allowed only one time.

Here are the requirements:

1. Seller must be at least 55 (if sellers are married at least one must be 55 or older at the time of sale)

2. Home must be the seller’s principal residence and the property purchased must be the new principal residence

3. The replacement home must be purchased no later than 2 years post-sale of the original home

4. Seller must file an application with the San Diego County Tax Assessor.

Keep in mind that this savings is only allowed ONE TIME during the life of the seller. This is a big savings if the sellers purchased the original home years ago and have a low tax basis.

Here is an example: if the homeowners purchased the current property for $75,000 twenty years ago, with a current assessed tax value at about $100,000, the annual tax will be approximately $1,100. Say the current market value of the home is $600,000. If the sellers sell the property and purchase a new home for $600,000 or less they will be able to transfer the taxable value of the original home to the new home–thus keeping their taxes around $1,100. Without the benefit of this rule the tax on the new home would be over $6500. (Thank you to Kevin Kueneke with Primary Residential Mortgage for the example!)

Proposition 90 aids those who want to reap the benefits under Proposition 60 but live outside San Diego County. There are several counties in the state of California that will allow the sellers to transfer the tax basis to a new home within another county. The counties that currently allow this are San Diego, Los Angeles, Orange, Alameda, San Mateo, Santa Clara and Ventura.

If you are in the market for a new home and qualify under Prop 60 for the tax savings, now is a great time to go shopping. Please do not hesitate to contact me if you need further information.


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Reversion to Simplicity

Saturday, February 27th, 2010

There has been a lot of talk in the media lately about refocusing on priorities and reassessing what is valuable in our lives. Into this equation falls one’s home and the manner in which we live. The real estate boom of the early 2000s was all about bigger, better, more, about keeping up with the Joneses. Homes were bigger, cars were bigger; everywhere you looked there was an overwhelming focus on getting the next BIG thing.

With the economy in dire straits, the last several years have been a wake up call; millions of Americans have to face the facts: all that BIG stuff doesn’t matter. It is the quality of life that matters.

Today’s buzz words have changed from McMansions, SUVs, bling and grande lattes to more realistic terms, terms like sensible houses, green appliances, family game night, sack lunches and yes, homemade coffee. This “reversion to simplicity” has caused many companies to change the way they market their products, including home builders.

The National Association of Homebuilders (NAHB) reported at the end of 2009 that the median square footage of new homes dropped 9% between the third quarter of 2006 and the third quarter of last year.

KB Home, a large builder here in California, reported to USA Today at the end of last year that building smaller models helped it achieve a 62% increase in year-over-year net orders in the third quarter.

Many new construction developments are displaying smaller floorplans, complete with energy efficient appliances, solar power and drought resistant landscapes. They are also building closer to urban areas, with many new communities including multi-zoned housing tracts which incorporate businesses, eateries, shopping and parks within walking distance to homes.

Other companies have taken advantage of consumer trends. One of the best examples is the synthetic lawn industry, which really has a dual advantage: you get a zero-maintenance, great looking lawn year round AND you are saving lots of change on your water bill. Good for the environment and maintenance free….this is the new mantra for consumers.

Duane Ruth, owner of SYNLawn, a Southern California company that installs synthetic lawns for residential, business and golf courses, says that “We’ve seen year to year 50% growth in our installations with over 7,500 residential installs in So Cal so far.” Ruth says that according to studies hundreds of millions of gallons of water are saved a year by the lawns they have replaced, and “that’s millions of square feet of grass that are not being cut 32 times a year and dumped into landfills where they produce harmful methane.” For more information on synthetic lawns and their benefits please visit http://www.synlawn.com.

This new movement is not only sensible but is good for the planet. Most importantly though, it is good for our souls. It is the beginning of creating a new focus on priorities that we can pass down to our children. No matter what you do for a living, no matter where you live, you can make a big difference by embracing the reversion to simplicity. If you have more ideas on how you have or plan to simplify your life and your home, please post a comment below.

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