How to determine your home equity?

Cash Home How to determine your home equity?

Home Equity

Are you wondering how much equity you have in your home?  Do you know how much you will net in case you sold you home?  Well, the answer depends on the Fair Market Value of your home in the current market.

There are websites that you can use to get estimates based on historical sales in your zip code or city.  These sites include Trulia, Zillow and RedFin.    But you need to be very careful to include all characteristics that makes your home unique in terms of amenities, functional utility and even school districts.  For instance, Los Gatos has 2 school districts and homes in Saratoga-Los Gatos district fetch much higher values than homes is Los Gatos-Union district.   And to make matters more difficult, these homes can be on the same zip code.

Therefore it’s simper to retain a local real estate agent to develop a Competitive Market Analysis specifically for your property.  Once you know how much you home is worth, then you can compute your equity by deducting the amount of loans you have on the property.

You can also Contact Us to get a Free Home Value report that you can use to calculate your home equity.

 

 

 

What for sale by owners need to disclose about lead-based paint

FBSO1 300x207 What for sale by owners need to disclose about lead based paint

For Sale By Owner (Source; theprovince.com)

Are you interested in selling your own home?  Are you aware of the massive amount of disclosures required by State of California?

Well, here’s some background information about the lead-based paint disclosure that you would have to provider every potential buyer who writer an offer on your home.

If your home was built prior to 1978, the odds are that lead-based paint was used in the home.   In that case, even Environmental Protection Agency (EPA) mandates that any repair and painting should be done with certified and trained technicians who will need to follow strict guidelines for protective work practice to avoid any exposure to lead. This rule applies to remodeling, repair and painting activity affecting more than 6 square feet in a room or 20 square feet of lead-based paint for exterior of your home.

The Disclosure document associated with Lead-Based paint states that lead-based paint may place young children at risk of developing lead poisoning and may produce permanent neurological damage, including learning disabilities, reduced intelligent quotient, behavioral problems and  impaired learning.  The lead-based paint  disclosure also warns of risk for pregnant women as well.

So, if you have done any such repairs in your home you will need to disclose that to your potential buyers.

The California Association of Realtor’s lead-based paint disclosures has specific language that will allow sellers to identify any specific location of the property where lead-based paint might have been used.  This disclosure form also offer the buyer 10 days to check for the presence of lead-based paint prior to close of the purchase transaction.

Ironically, disclosures are the main source of challenges to a real estate sale transaction and home owners are held liable up to 5 years after the sale where the buyer has the right to file for damages if they discover any hazardous material that the seller might have known about but failed to disclose.

So, if you are selling your home by yourself, then at least make certain you have all the disclosures that is required by EPA and State of California so you can sleep like a baby after your home’s sale.

Contact Us if you have any questions about these disclosures.

 

 

 

 

 

Why investors prefer for sale by owner homes?

FBSO1 300x207 Why investors prefer for sale by owner homes?

For Sale By Owner (Source; theprovince.com)

Are you a real estate investor ready to purchase homes in the current market?   Would you like to get an under-priced home?

Well, you might be in luck since according to 28% of the For Sale by Owner homes are under price according to National Association of Realtors.   Those are decent odds considering the challenges facing the owners who are trying to sell their own house.  The main challenges facing these owners are:

1) Marketing:  It’s hard to compete with the marketing exposure homes get when they are listed on MLS.  In fact, when we were selling REOs, it was one of the critical requirements of any home to be listed on MLS for at least 2 weeks to generate significant traffic and interest in the property.    So, as an investor you might have a better chance of getting your offers accepted since For Sale by Owner homes will typically have less exposure and consequently less competition.

2) Valuation:  As a real estate investor, you might have advantage of dealing with home owners who have not priced their home properly.  Pricing a home is not a trivial task when it comes to For Sale By Owner transactions.  Part of the reason is that finding identical sold comps  will be difficult without access to MLS.  And when you finds comps that are similar in size, age, floor plan, functional utility requires industry specific  knowledge.

Finally, most home owners either under value their home or over-price it where it does not generate interest and stays on the market too long.   In both of these cases you have the upper hand to negotiate a better deal and purchase the home without facing much competition.

3) Disclosures:   Developing a comprehensive disclosures package is not simple task since most home owners are unable to determine what is considered “material”information that must be disclosed to home buyers.   And with every fiscal year, these disclosure requirement change.   For instance, effective January 1, 2014, there are new disclosure requirements for Water and Energy usage depending on the size of the building.   Also added recently is a Gas and Hazardous Liquid Transmission Pipeline requirement that most agent miss to disclose let alone for sale by owners.

4) Legal Terms:  Another challenge for the owners who are trying to sell their own home is finding and completing the right legal and binding contracts for their state.  Contract language used in Real Estate transactions is very specific to each state and requires expert knowledge of Real Estate law and Civil code governing that state. In fact, these owners would be well advised to retain a California attorney to help you with the purchase contract.

Finally, challenges of buying a for sale by owner home, you might be negotiating directly with the seller who is not an expert negotiator.   And that is reason alone to target for sale by owner homes.

 

 

 

 

 

 

Did FED create yet another real estate bubble?

Real Estate Bubble Did FED create yet another real estate bubble?

Image Source (orlandoareahomes.org)

Are you frustrated that your dream home is out of your reach?  Are homes in your area un-affordable?   Well, you are not alone.  Is the real estate bubble back?

Analysis of mortgage data by Zillow (Z)of income, mortgage and home value data in the fourth quarter of 2013,  shows that more than one-third of homes for sales in US are too expensive for the local residents!   This analysis goes counter to claims by Real Estate industry associations that homes are indeed more affordable now than before the crash.

And if you recall, sustained low interest rates and flow of easy money was instrumental in creating a bubble that led to the crash in the 1st place.  And that’s what worries Stan Humphries, Zilow’s cheif economics who says “We’re not in a bubble yet, but we’re beginning to see the early signs of one in some areas.”

Buyers are routinely being forced to consider pockets outside of metro markets to be able to afford homes.  This was yet another indication of the market’s frothy behavior in California where areas outside Sacramento, Fresno and Bakersfield were developing as rapidly as buyers could grab them ahead of the crash.

According to this Zillow analysis, more than 50% of homes currently for sale in Miami (62.4%), Los Angeles (57.2%), San Diego (55.3%), San Francisco (55.2%), Denver (52.8%), San Jose (50.9%) and Portland, Ore. (50.3%) are unaffordable by historical standards. Nationally, Zillow analyst found that one-third of homes are currently unaffordable.

Compounding the problem is the rising mortgage interest rates rise which is making the affordability picture much worse than it could be where most 2nd time buyers will not be able to afford to buy another home even if they sold their home at a hefty profit.

Home buyers in Los Angeles, San Francisco and San Jose are expected to pay a much larger share of their monthly income today toward a mortgage than during the pre-bubble years.  And that does not bode well for an economy which depends on consumer spending for growth.

According to Zillow mortgage rates on a 30 year fixed-rate mortgage will reach 5% by the first quarter of 2015 which can not be good news for anyone looking to buy a home.

In a recent article on San Jose Mercury News, Pete Carey the real estate beat writer interviewed Economist Ken Rosen of the Rosen Consulting Group in Berkeley who expects the price increases to slow when interest rates rise and when more homes come on the market in response to higher prices.

How can you modify your plans to deal with these conditions? Some Americans are opting to rent instead of owning which certainly is an option.  But I didn’t think that was part of the American Dream.

Let us know what you think.

What to expect from agent selling your house

 What to expect from agent selling your house

Choosing a Real Estate Agent

Are you selling your home?  What do you have in mind as selection criteria to choose your agent?  Below are some of the most critical services that you should expect your listing agent:

1) Make recommendations to maximize marketability of your home.

2) Deliver Competitive Market Analysis report to help you determine your pricing strategy.

3) Assist in negotiations with buyer’s agent.

4) Assist you in developing comprehensive disclosure documents to avoid any confusion for buyers about the condition of your home.

4) Present and review ALL offers regardless of price and contingency.

5) Continue to provide you feedback and communicate any material information about market changes such as interest rates and regulation changes that might impact your sale.

6) Provide written estimates of your closing and a net sheet showing how much you will receive when you home is sold at the list price.  This net sheet should include all the closing costs including city and county tax and commission costs.

7) Make recommendation on buyer’s financial strength and their ability to close escrow based on the financial information provided by buyer’s agent.

8) Offer home purchase assistance to you to move after your sale.

9) Keep in constant communication with Title and Escrow officers responsible for your home sale to assure timely close and recording. on time close of your home sale.
service details.

Finally, keep in mind that there are a lot of moving parts to selling your house.  From escrow, title, buyer agent, inspectors, appraiser, loan officer there are a lot of people that could cause delay or damage the success of your sale.

Contact Us if you have any questions about your home sale.

 

 

Why some folks disagree about housing recovery to continue

Property Investments Why some folks disagree about housing recovery to continue

Property Investments

During a recent discussion with a Los Gatos seller, she mentioned that a neighborhood home had sold for $1.4 million, suggesting that her fixer upper could fetch more!  Well, we had to throw cold water on that kind of expectations.

The fact of the matter is that according to the Trulia Price Monitor, the home prices have started to dip in some silicon valley market.   Please keep in mind that we are not talking about homes becoming affordable again, but we are talking about a slow down.  And even as slow downs go we still have ways to go before homes stay on the market too long.

However, we are seeing price drops for Los Gatos homes which would is a rare site.  Another group of people who are not that optimistic about the housing recover were appraisers who participated in a survey which clearly showed they are not confidant about the recovery.

United States Appraisals, sent out an anonymous survey to its member and associates. Roughly 600 appraisers responded to this survey and when asked, “What is your current level of confidence in the housing market?”; less than 50% answered they feel the recovery is mildly strong.  This is down from the last time the same survey at the end of Q1 where nearly 55% of the respondents felt very strong about the housing recovery.

 According to Aaron Fowler, president of United States Appraisals, “Appraisers tend to focus on the local markets in which they work and are not typically concerned with national numbers or reporting.  She continued that “By polling our nationwide panel of local appraisers, we believe that in the aggregate we receive a solid interpretation of the national marketplace.”

Fowler echoes our observation and sentiment that the broadly speaking everyone is still optimistic, but rising interest rates have contributed to the slow down.    And we are seeing the evidence of such slow downs in our local market as well where a recent listing in Monte Sereno only generated 6 offers compared to last year where the home could have easily generated twice as many offers.

What is your sentiment about the market?  Are you still looking to buy?  Are you nervous about the rising rates?   We would love to hear from you.

Why real estate investments should be part of your retirement plan

Property Investments Why real estate investments should be part of your retirement plan

Property Investments

Do you have enough set aside for retirement? Do you know how long you have to work before you could retire comfortably?

You can do a quick calculation on the amount of funds you will need to retire using the MSN Money site’s Retirement Calculator.

But once you have figured out how much you will need to retire, then it might be time to consider cash flow real estate as part of your retirement plan to help secure and protect your social security income.

But why do we recommend real estate as a secure investment for your retirement days? Here are top 4 reasons:  

  1. Control:  You have complete control of your real estate investment when you own property.  You can keep it as a vacation home or rent it during certain months of the year to generate income during your retirement.
  2. Appreciation:  Property values have recovered in more than 48 States even after the worst recession in recent memory.  For instance, California homes appreciated more than 14% in 2013.  Can you say the same thing about your other investments?  
  3. Mortgage Interest  - IRS Tax code is full of nuggets planted to benefit real estate and property ownership.  You can write off your mortgage interest deduction for you primary residence.  You can also depreciate improvement expenses on your rental properties.
  4.  No Capital Gains:  You will not owe no capital gains tax if you sell your primary residence even if you have gains up to $500,000!  This level of deduction is available to home owners who are filing jointly and have been living in their home for 2 years during the past 5 years.
  5. Transfer-ability:  You can easily transfer your real estate assets to your children or estate without incurring too much hit on taxes.

 

As you can see there are great advantage of real estate holdings when it comes to augmenting your retirement income.  So, Contact Us when you are ready to start your investment career in Real Estate.

 

Unlisted Los Gatos Home for Sale

fixer upper1 Unlisted Los Gatos Home for Sale

Los Gatos Fixer Upper

Are you looking for a fixer upper for flip or long term rental?  Are you a builder?  Are Are you a cash buyer?

Well, we are working on several Los Gatos Fixer Uppers that will be listed starting May 2014 adn we are interested in identifying a select few cash buyers who can purchase home in the ranges of $1-1.5M.

We can email you the list a Competitive Market Analysis showing the recent sales of homes in the past 90 days with median sale price of $1.47m.

Here are some basic information about one the listings that is located in the 95032 zip code:

1) Age:   This home was build about 60 years ago and requires some updates before occupancy.

2) Los Size:   Lot size is above 10,000 sqft.  These are typical sizes for los gatos homes.

3) Living Space:  The home has 2 bedroom and 1 bath floor plan.  This should not detract you from making an offers since the you will be able to build a 3800-4100 sqft home on this lot.

4) Price:   Median sale price of homes in Los Gatos for the past 90 days were  $1,475,000, but we anticipate lower list price since the home needs some repairs before occupancy.

5) Opportunity:  The opportunity here is to purchase this home and build a 3800 sqft home on the lot.  New home sales of similar size have sold for $2.3-2.8 Million

6) Terms:  The owners plan to only counter Cash or pre-approved buyers with 20% down payment.   Keep in mind that we can not recommend your offer to the sellers if your pre-approval can not be validated.   Major lenders such as Wells Fargo, Bank of America can issue you a pre-approvals which only require an appraisal to match your offer price.    This means that your loan is can be funded as quickly as your lender can get an appraisal completed.

 7) Designers & Architects:  We have worked with local designers and architects whose plans are in vogue with Planning Commission of Town of Los Gatos because of their long history of developing neat projects in town.  We would recommend retaining the services of these professionals to avoid any un-necessary delays.

8) County Pocket:  Some of these Fixer Uppers are located in un-incorporated area of Los Gatos which means the plans have to be submitted for approval to the County as opposed to the Town of Los Gatos.   This is a huge advantage if you have every tried to develop a project in Los Gatos.

So, Contact Us if you are ready to buy in Los Gatos Fixer Upper.

 

 

 

Top 3 reasons to invest in real estate

Property Investments Top 3 reasons to invest in real estate

Property Investments

Are you planning a real estate purchase?  Are you thinking about some rental properties to generate cash flow?

Well, you are not alone. After the recent revealing book by Michael Lewis on the rigged stock market; it might be a good time to evaluate investing in real estate.

So, why invest in real estate?  What are the top 3 reasons to invest in real estate:

  1. Control:  You don’t have to rely on a stock market gyrations to make money with Real Estate and you are in complete control of your investment.  If you pay your mortgage on time, you can use it to generate income or resell it.
  2. Appreciation - Even after the worst recession in recent memory, property values have recovered in more than 48 States.  That is more than some our stock market investors could wish for with their stock market portfolio could say.
  3. Tax Advantages  - Written into the IRS tax code are tax advantages of owning real estate long term.  From deductions to improvements on your rental properties to mortgage interest deductions, there are good reasons to consider real estate investment for cash flow and retirement.

Types of Investment Property to Purchase: 

There are many different types of property that you can choose as your investment. The things that you should be clear about when you’re investing in property are:

  • Income Property – Buying for cash flow make a lot of sense in the current market and your dollar will go a long way in places like Stockton or Modesto these day as opposed to San Jose.
  • Capital Appreciation – Homes in Santa Clara county have appreciated more than 10% this year, but the affordability index is at it’s all time low and some investors have walked off the market due to these high prices.
  • Flips - Buying properties for the sole purpose of fixing them for sale is one of the most profitable practices.  However, you will be subject to capital gains tax.   These kind of projects have become more fashionable with the popularity of HGTV’s flip shows like Property Brothers….. etc.

Contact Us when you are ready to start your investment career in Real Estate.

 

 

Top 3 recommendations to help you sell your own home

According to Property Index of Trulia, home prices have started to flatten or decline in Silicon Valley and other markets after seeing double digit increases in 2013.    So, if you are selling your own home and want to get the highest price, then these 3 recommendations will help you:

1) Competition:   Are you competing with brand new homes?  Is your home in a move-in condition?   If the answer is no, then you might want to consider quick remodeling projects to increase your odds of competing with these home.  Small Kitchen and Bathroom remodels can add  a lot of visual appeal and value to your home while creating a much stronger 1st impression.

2) Age:  How old is your home?  If you are in an area where developers are building tons of new homes while offering purchase incentives; then you might want to consider seller financing as an option.  Seller financing will increase your pool of potential buyers to your home to include those who can not afford the down payment.

3) Condition:  What kind of 1st impression is your home creating?  Are bathrooms remodeled?  Are kitchen appliances from 70s?  This might give you another pause about kitchen and bathroom remodels to compete better on the market. One option might be to use the equity of your home to finance these remodels. But before you venture into a major remodeling projects, you should find you home’s worth.   This should give you a good approximation of where you should be priced compared to similar homes. You can use sites like Zillow and Tulia to get an approximation for your home’s worth.   But be prepared if these sites provide values that could differ as much as 200,000 which is not helpful when attempting to price your own home.

So it might be a wise move to partner with a Realtor to develop a Competitive Market Analysis to determine the most strategic pricing for your home that adjusts for Condition, Age and Recent Sales.

Contact us if you have questions about these recommendations.]