Posts Tagged ‘San Diego real estate’

Why Homeowners Need an Estate Plan

Tuesday, April 10th, 2018

As a real estate broker and attorney, I always advise my clients to hold their properties in trust, and to execute a complete estate plan. This offers peace of mind in times of difficulty and as the population ages. The great thing is that documents like living trusts can be modified during your lifetime as needed, such as when the family grows, upon acquisition of other property, or when other life changes like illness or divorce occur.

An estate plan can provide several benefits:

1. Avoidance of probate proceedings
2. Protection of your family and loved ones – A properly drafted estate plan protects your minor children in the event that both parents die or can no longer care for them. It can also shield a spouse from creditors and protect adult beneficiaries in divorce situations.
3. Estate tax reduction – there are different tools to help with lowering estate taxes, so speak with your estate planning attorney
4. Protection from creditors. An estate plan can identify assets and help protect them from creditors after your death.

If you are thinking of creating an estate plan (you definitely should be thinking about it if you own real estate), it is time to get started. You will need to collect information to provide your attorney, so find a good estate planning lawyer.

Here are the documents you may want to incorporate into your estate plan:

1. Trust: Holding title to real estate in a trust enables you to appoint executors of your estate so that your wishes are adhered to properly when you die. It also avoids the costs of an estate sale and court time to determine who inherits the property. Just as importantly, if you have minor children you will be able to identify guardians to raise them should anything happen to you and your significant other, as well as appoint conservators to oversee financial needs of the minors. If your children are adults but poor with finances (or have partners who are not efficient planners), you can specify how and when they will receive their inheritance within your estate plan.

2. Will. This will specify your wishes regarding a host of issues like who will inherit personal items and the disposition of your assets. You can make changes to these documents due to the passing of relatives, age and health of family members. Make sure you specify your goals to your attorney.

3. Power of attorney. This allows you to name who will pay your bills, sign tax returns and sell any needed assets. Without a power of attorney the state will appoint someone to oversee such issues, so it is best to name those you choose to handle the task.

4. Health care directives and DNR. This will allow you to appoint the person who will make medical decisions for you if you are unable to do so yourself. I suggest including a DNR (do not resuscitate) if it is your desire not to be kept on life support when you are unable to breathe on your own. It is hard to think about such situations when you are healthy but it is necessary, and could save your loved ones from having to make painful decisions.

Depending on your net worth and the particulars of your assets, you can have estate planning documents drafted that range from the simple to heavily detailed. But no matter what you need, my advice to you as a lawyer and real estate broker, is to get started. Speak with an estate planning attorney to find out what you need to protect yourself and your family – make sure your legacy is left to your heirs or whatever organizations you choose.

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Will Increased Interest Rates Affect the Housing Market?

Wednesday, March 14th, 2018

The reality of rising mortgage rates is of concern to home buyers and sellers. Normally interest rate increases alone would not be much of a concern but combined with continued low inventory and high prices many wonder if the housing market will be able to sustain itself; there are 3 – 4 expected rate increases remaining this year.

I feel it is safe to say that rising interest rates will have an effect on housing affordability and inventory. Here is how I see it:

1. Higher rates mean many buyers will not be able to afford the house they could afford today (if inventory was not an issue). Many people, especially the would-be first time home buyers, may choose to continue renting or live with parents. If there is less demand for the homes that are on the market, prices will drop.

2. Sellers may continue to withhold homes from the market for the same reason – if there is no inventory for them to move either up or down, selling may not make sense. Especially when you take into consideration the higher rates, plus property tax increases for move up buyers. With less homes hitting the market we will continue to see inventory shortages, BUT combined with higher rates, which could lead to lower demand, prices should start to come down.

3. Luxury markets will face even tougher challenges as rates rise. Combined with the new tax laws, which raise tax on purchases for loans over $750,000, many potential luxury buyers may decide to hold off. Luxury sellers will likely see longer market times and lower prices.

It is important to keep in mind that every market is different. Here in San Diego we have year-round desirable inventory due to weather and location – but the coming changes will affect us and could alter the second/vacation home market purchases as well. It is important to consult a local area real estate agent to understand what is going on in your specific area.

If the inventory rut continues on this path it could lead to a big problem in the real estate market. I feel, and many economists and real estate market watchers agree, that it will stall purchases, keep sellers in homes they would have otherwise sold, and have a deep effect on buyers currently in the market and future buyers. As we head into the Spring and Summer it is a good time to think about selling and purchasing, prior to further rate increases.

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7 Tips for First Time “Buy and Hold” Real Estate Investors

Tuesday, February 20th, 2018

Real estate investment can be a great opportunity financially, especially if you know what to look for in an investment property. There are many different types of investments and just as many financial goals to go along with it.

Over the years I have represented many investor clients. The majority of them have long-term goals in mind – purchase a well-maintained property at a great price, rent it out and let the equity build over the years. These are what I call “buy and hold” clients. I have also represented “flippers,” an investment category that has a lot of caveats and will only be profitable if you know what you are doing or have a reliable contractor who can walk you through it.

I am going to focus here on long term residential property investments, or “buy and hold” properties. Here are 5 tips to help you get started:

1. Sort out all the financial information. The first and most important step to investing is to figure out the financials. You need to connect with a mortgage professional (unless you are paying cash, of course) to find out not only what you can afford, but what your monthly payments need to cap out at to keep you in an income flowing position. This number needs to include mortgage principal, interest, HOA payments if any, taxes and insurance, as well as a maintenance budget and a vacancy budget (especially important if you are purchasing a property for vacation rentals).

2. Location first, then property. Not following this tip is a big mistake for first time investors. Keep in mind that it is not just a bargain you are looking for – the AREA is a major consideration as well. You need to look at appreciation and rental information in the areas you are considering for your purchase. Also keep in mind that location of course will determine rental value – this is important if you have the desire/opportunity to get into vacation rentals. You may find a good deal inland somewhere, but the rents will not be as high as what you can get if you purchase closer to the coast or in a desirable location. Pencil out all the numbers so you can see the profitability.

3. Get accurate rental information on potential properties. Find out what rent you can expect for properties in areas you are considering. Engage your real estate agent and find a property manager if necessary.

4. Factor in additional costs. Find out how much the current maintenance costs run annually. You will need to take into consideration the age of the property – is it getting close to needing a new roof, appliances; how about the plumbing and electric systems? Many of my investors like newer condos and townhomes because they do not have to worry about these things for a long time. If you are purchasing in a complex that has and HOA you need to study the financial information for the HOA and see if there are any assessments planned. The big ones are usually roofing, plumbing, exterior painting and maintenance. HOAs will assess property owners to get these items completed. Find out, especially in older complexes, what has been done in the last 5 years and what the budget will sustain moving forward, especially if anything has been identified as needing attention…which leads to the next tip:

5. Create an emergency account. Based on your research, you should plan to have about 2 months of payments for everything set aside, in case a tenant vacates and you cannot find a replacement right away. In today’s rental market, especially here in San Diego County, this is not so much of a concern but it still is smart to have an account for emergencies.

5. Understand the life cycle of your preferred location(s). This is another important factor. You need to know the phases of the areas you selected – are they slowly gentrifying or already there? North Park in San Diego is a great example – it has been transforming over the last 5-10 years and gentrifying. There are a lot of hip restaurants and shops, and many properties have turned over and are attracting a younger crowd. This renewal and regrowth will bring higher rents. The same is true of downtown Oceanside, which has been going through the regrowth and renewal process for about 10 years now. Those who invested 10-15 years ago in that area, when it catered mostly to the military and was not the tourist destination it is today, really made great investments. Rents are property values have soared.

6. Know the tax ramifications. It is important to consult with your accountant or financial advisor prior to purchasing investment properties. New tax laws could affect deductions and write-offs, especially if you are getting a loan for a San Diego property that is over $750,000. Make sure you understand what tax consequences you may face so you can factor them into your bottom line.

7. Buy with your head, not your heart. Most of my clients purchase property for themselves to live in, so the decision can be (and usually is) emotional. With investment properties you need to use your HEAD, not your heart. It is a completely different way of looking at the purchase. It is all about the numbers and not about falling in love with the property – in fact some investments I have sold were awful looking…but a smart investor sees the potential and knows through research that it will be a smart investment with a little TLC. You need to see the property from your future tenants’ perspective so that you can grow your wealth.

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Happy Valentines Day and Thank You!

Wednesday, February 14th, 2018

Happy Valentine’s Day! There is no better day to say “Thank You” to my clients and friends, and to express the love and gratitude I feel for each one of you, and for your support.

Each of the candy hearts in the photo represents a home I have sold. Whether it was a purchase or sale, each has a story behind it that starts with people and building relationships.

I am blessed to have met such amazing people and to have been a part of such incredible stories and lives. Your trust and loyalty are beyond special to me.

So I thank you for filling my heart (pun intended)! I know as time goes on I will be able to fill my heart even more, and meet others who will touch my life.

I wish you a day full of love, today and every day.

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Home Seller Dilemma: Sell Now or Wait Until Spring?

Monday, January 29th, 2018

A lot of homeowners have been wondering whether to sell now or wait until Spring. While Spring and early summer are typically the best times to sell, when a large majority of buyers are searching for homes, this year there is no reason to wait if you are a seller…and here is why:

Low Inventory – although picking up in some places, housing inventory is still low. The last year has been challenging for those who are ready, willing and able to buy, since they are unable to find homes that meet their needs or desires. This puts sellers in a great position while it is still a seller’s market.

Mortgage rates will continue to rise – rates have risen once already and will likely do so twice more this year. Combined with low inventory this double whammy will effect homebuyers, effecting their purchasing power and pricing some out of certain markets. If inventory picks up and the rates rise it will start to shift to a buyer’s market, and prices could come down in the long run.

Here is an example I read on a lender’s blog: If rates increase by 1%, from 4% to 5%, a buyer will lose 10% in purchasing power. This means that if a buyer can afford to purchase a $600k home today, but rates increase by 1%, she will only afford $540k using the same monthly payment.

Borrowing is still cheap – from a historical perspective it is still inexpensive to borrow money.

Prices will likely continue to rise – most economists and those who watch the real estate market predict that despite rate increases, prices will continue to rise in 2018. In the last year prices in San Diego County increased 9.1% – this was higher than the yearly increase of 4.2% in 2016. Again, this could impact homebuyers in many areas of the county.

New tax laws will likely effect high-end borrowers – those who are obtaining loans for high end properties will be effected from a tax perspective, as the new laws cap the mortgage interest deduction and the ability to deduct state and local taxes. Therefore the higher end market will be impacted this year, but we will have to wait and see the extent.

Based on the above it is an ideal time to sell. There is a great demand out there – I get emails from agents every week asking about whether I have any upcoming listings in certain neighborhoods. Many homes are selling before they even hit the MLS, and many agents are choosing to put their listings on sites other than the MLS first, in order to try to represent both parties in the sale (so some buyers may not even be aware of listings in neighborhoods they like).

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Happy New Year 2018 and Real Estate Predictions

Thursday, December 28th, 2017

It is amazing that 2017 has come to an end, and it has certainly been an interesting year in real estate. Low inventory, rising prices and high buyer demand all made for some tough times for buyers and advantageous times for many sellers.

Moving forward into the new year I forsee the following:

Price stabilization: I stand by my comments over the last months that prices should start to calm down. We have already seen that in many areas here in San Diego county. HOWEVER, if the inventory levels remain low and demand high then we could see increases in some high-demand neighborhoods. But I do not think that will last for long.

Inventory increases: With the still high prices and coming market changes – likely interest rate increases, mortgage rate increases and new tax laws, hopefully we will see an increase in properties for sale. Many sellers will likely want to sell prior to tax changes and rising rates, and while demand is high, before such changes could effect net profit margins.

Mortgage rate increases: The last several years have proved positive for sellers with very historic low interest rates. I believe those rates will start to rise as we head into the new year, and that we could even see several increases in 2018. For those who have been pondering purchasing property now is a great time to start looking.

No matter what the new year brings it is still evident that the real estate market remains strong. As I have always believed, you cannot go wrong purchasing San Diego real estate. We have the most beautiful weather, you are never far from the beach, and we have an amazing outdoor, healthy lifestyle here in San Diego county.

Happy New Year to all of you, and I hope that you have a year blessed with good health, lots of laughter, success and much time spent with those you love.

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North San Diego Coastal Real Estate Sales: 10/16-10/17

Thursday, November 30th, 2017

Sales in North San Diego have jumped considerably between October 2016 and October 2017. The chief economist for the California Association of Realtors predicts that sales will be up 8% for the year. For 2018 the prediction is a 4.2% in appreciation and a slight increase in sales volume.

Here are the statistics for North County coastal zip codes from October 2016 to October 2017, for both single family homes (SFR) and condos:

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Protect Yourself: What You May Not Know About Escrow Companies

Wednesday, November 15th, 2017

Most people know that escrow is the party that handles the money, paperwork and closing details of a transaction in California (and other states – the remaining states use attorneys for closings). But many do not know that escrow and escrow officers can fall under two regulatory categories, and that this could have an effect on their duty to remain a neutral party to both sides of a property sale.

2 Types of Escrow Companies in California

Independent or licensed escrow companies are independent companies that are licensed by the California Department of Business Oversight (DBO), which are governed by strict regulations designed to protect consumers.

Some of the requirements of independent escrow companies are that they are subject to management and bond requirements, are trust fund insured, are subject to annual financial and procedural audits and Department of Justice investigations of all employees, as well as escrow license requirements.

Controlled, or non-independent, escrow companies are nonlicensed businesses owned by third parties, such as real estate brokerages, attorneys, banks or title companies. These controlled companies are regulated by different licensing and regulatory authorities, which can vary amongst jurisdictions and are not governed as strictly as independent escrow companies.

Escrow officers have a difficult role in that they need to represent both parties in a property sale transaction while remaining neutral. An independent escrow company is the best choice, in my opinion, for real estate parties and clients, as there is more protection offered and there is not the threat of compromised neutrality.

 

 

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How To Stop Annoying Real Estate Calls to Your Landline and Cell Phone

Monday, October 23rd, 2017

In the last few years it seems that some real estate agents or brokers have jumped on the phone calling spam bandwagons. They call your home phone, often using canned recordings, or text messages to your cell phone. These messages tend to be about how they can help you buy or sell property. There have recently been several class action lawsuits filed against brokerages for do-not-call/auto dialing violations.

The federal Telephone Consumer Protection Act (TCPA) prohibits a brokerage from using an auto-dialing system. Brokerages can easily violate the law even when the calls are ultimately transferred to a live agent.

The TCPA prohibits:

  • Prerecorded voice messages to landlines.
  • Prerecorded voice messages to mobile phones without consent.
  • Auto-dialed calls, and text messages to mobile phones without consent.

Have no fear – there is something you can do to prevent these. First of all, make sure your numbers are registered with the Do Not Call Registry. Click here to do that. Then, if you continue to get such calls or texts you can report them. The caller will be fined and the calls/texts should stop.

Damages can be substantial: $500 for each call placed negligently and $1500 for each call placed willfully. Although this seems like small change to a big brokerage, the total claims can rise quickly since damages are uncapped and per call, and importantly, multiplied by the number of calls for each class action plaintiff.

In order to report a violation you need to wait 31 days after you register your number. There are also some types of organizations that are allowed to call you without penalty, such as debt collectors , charities, political organizations and telephone surveyors. To see the list you can look on the website. To report a violation click here. We all need to be vigilant if we do not want to be bothered by unsolicited calls and texts.

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Why NOW is the Time to Sell Your Home

Tuesday, October 17th, 2017

Many people have been on the fence about selling this past year, due to the fact that inventory is low and they are concerned they may not find replacement housing right away – I personally have been assisting multiple sellers with such concerns. That of course keeps the inventory stagnant and prices high – a perpetual Catch-22. However, there are some conditions that make the market right now the BEST time for sellers to sell…so if you are considering selling, consider the following:

Inventory is still low and prices high. Normally at this time we should see a 6 month inventory supply, but there is only a 4.2 month supply on the market according to the National Association of Realtors (this number has even dropped since this time last year). Although we have seen homes dropping prices quite often in the last few months here in San Diego County, as well as longer market times, it is still a great time to get the best price for the sale of your home as long as you are realistic. Homes that are not priced far above comparable value and offer positive qualities can still sell at strong (higher than average) prices. But this may not be the case as we head toward the end of the year and into the next year, depending on several factors.

Buyer Demand is Higher. Compared to this time last year, buyer demand for homes is higher. Historically low interest rates and sustained job creation fuel the demand, but inventory levels prevent many from finding the right home. How long these buyers will remain in the market is hard to say, but many have decided to rent because they could not find homes, thus taking them off the market for at least a year in most cases.

Natural Disasters Will Help Fuel Buyer Demand. Due to the recent wave of hurricanes in the south many homeowners have been displaced and may soon join the ranks of buyers in other areas, making the demand even higher, OR they could become renters and take rental inventory off many markets – causing purchases to become the only option for many looking for places to live. There is a possibility this could push prices up in some areas.

Proposed Tax Changes Could Effect Demand. There are several proposed tax changes that could effect the buyer demand levels, including changes to real estate deductions. If this happens there is the possibility that sellers may elect to stay rather than move up (to save money), OR buyers may decide to rent to avoid higher tax bills. This remains to be seen but it is something to consider.

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If you are considering selling it is important to get an idea of what is going on in your specific market area. Talk to a real estate area professional and crunch the numbers. As always, the real estate market will fluctuate with the ebb and flow of many factors, but if you want to get a high price for your home now is a great time to do your research and prepare to sell.

 

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