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Windstorm Cuts Through San Gabriel Valley

A fierce windstorm cut through the San Gabriel Valley late evening last Wednesday and into the morning on Thursday (November 30 and December 1). The wind blew over trees, electric poles, and debris that caused damage to cars, homes, sidewalks, and caused power outages throughout the area. Our office had power restored early Saturday morning but many of the busier streets still had broken signals. As of Saturday, newspapers were estimating that power would be restored by the end of the Sunday.

The hardest hit areas were the cities of Arcadia, Pasadena, San Marino, South Pasadena, Temple City, Sierra Madre. Here are some pictures I took of the area as well as an interactive incident map (Link).

Should the City Allow Arcadia Residents to Change Street Numbers?

A few years ago, changing your address was easy for Arcadia residents – a few pieces of paperwork, a fee of about $500, and it was done. You could even change which street your house belonged on if your house was on a corner, if your home met the right conditions. Now, residents aren’t allowed to change street numbers because it creates too much burden and confusion for city officials who maintain many of their records, many that date back a few decades, using street addresses.

So why do residents care about numbers and street names? In today’s Arcadia real estate market, many of today’s buyers are foreign or immigrate buyers who either are coming directly from or originate from China, Taiwan, and Hong Kong. In these cultures, numbers play a significant role, specifically the number 4 which in most Chinese dialects, sounds like death, and 8, which sounds like prosperity. In fact, many buildings in these areas don’t have a 4th floor for this reason.

The reason residents care is that having an unfavorable number may affect resale value. With the importance of numbers being so deeply rooted in these cultures, the street number becomes part of the decision making process for these buyers, who are often the most qualified and quite often pay for homes with cash. And anytime you lose any buyer, for any reason, you lose an opportunity to attract the best possible price for your home.

But it doesn’t just affect the owners of these homes ending in the number 4. If a home down the street from you recently sold for less because of the number, an appraiser, who’s not trained to account for this fluctuation in value, may incorrectly assume that property is equal to your home, and may appraise your home for lower.

And the problem doesn’t just occur for buyers purchasing from these backgrounds. Certain numbers in American culture also have a stigma, like the number 666. Homes with this number are hard to sell for the exact same reason.

Currently, the city is evaluating a proposed solution and looking into the true cost of actually doing the street address change and if they decide to pass it, may allow homeowners to take on this expense for the city to perform the change. According to some estimates, the cost of changing the number could be as much as $2500, which in a community where most homes range from $700,000 to $2,000,000, may be a small price to pay for a chance to sell to the pickiest buyer with the highest offer.

Local 4th of July Celebrations in the San Gabriel Valley!

Celebrate America’s Independence Day with your family, friends and neighbors on July 4th, 2011! Several cities in the San Gabriel Valley Area hold July 4th events to commemorate the signing of the Declaration of Independence.

Come out to your local event to participate in fun family activities and marvel at the spectacular fireworks shows.

San Marino

The City of San Marino will hold its Annual Fourth of July Celebration on Monday, July 4 at Lacy Park (1485 Virginia Road). This event will feature game booths and bingo, a community parade, stage entertainment and a fireworks display at approximately 9 pm.

Entrance to the activities in the park require a wristband purchase -
San Marino residents – $5; all others $15.  Children under 2 are free.

If you only want to catch the fireworks, do what other local residents do, and set up along Huntington Drive or on the median for free.

For more information about the event, please call (626) 943-2627.

Pasadena

Pasadena’s famous Rose Bowl hosts the city’s annual Fireworks extravaganza, “Family Fun on the 4th,” the 85th year for this community tradition. There will be food, activities and a Fun Zone for children, admission to the Fun Zone will be free. The show inside the Rose Bowl stadium will begin at 7:00.

Parking Lot opens at 8:00 a.m. admission is $20 per car
The festival starts at 2pm, with stadium gates opening at 6 and live entertainment including bands, motorcycle stunts begins at 7, until the main event.

Fireworks show begins at 9:05pm

General Admission Tickets $13 each, children 7 and younger are free; active military with ID FREE entry.
Preferred Admission tickets are available for $25 each.

Tickets on sale at the Rose Bowl Ticket Booth (Gate B)
Weds. June 29th – Sun. July 3rd
10 am – 5 pm
Mon. July 4th – 10 am – 9 pm

For additional Information please call (626) 577-3101

Alhambra

Almansor Park is host to the city of Alhambra’s annual 4th of July event. Admission is free, and there is plenty of room to have a picnic and several local vendors selling patriotic goods and treats.

Parking will be at a premium. Pay lots will be available at the West San Gabriel Valley YMCA and the Emmaus Lutheran Church, and limited handicap parking will be available in Almansor Park’s lower parking lot.

Most importantly, the fireworks display starts at 9:00 p.m.
Location: 800 S. Almansor St., Alhambra CA

West Covina

This 4th of July celebration is to benefit The Muscular Dystrophy Association. There will be carnival rides, games, and food from 3:00 p.m. – 11:00 p.m. There will also be live entertainment by Sangria from 6:00 p.m. – 9:00 p.m. Fireworks show to follow.
Location: 1625 W. Durness St., West Covina 91790
Entrance fee $1.00 beginning at 2:00 p.m.
For additional information please contact Community Services Dept. (626) 939-8430.

Pomona Fairplex

This fireworks show starts at 9:20, and is preceded by a wild Monster Truck and motocross stunt show.

Location: 1101 W. Mckinley Ave., Pomona 91768

General Seating $15.00
Trackside Bleachers $17.50
Reserved Box Seats $19.50

Children 2 and younger FREE
Buffet at the Top of the Park $45

For additional information call (909) 623-3111 or visit their website.

Closing Your Sale the Easy Way

Even though every transaction has unique challenges, there are ways you and your agent can make the process as smooth and stress-free as possible to get you to an easy closing.

Eliminating Surprise Costs and Issues
Throughout the escrow process, sellers will provide both reports and disclosures to a buyer that are either required by law or used to ensure a safer transaction. The 3 reports that a seller will typically provide are:

1. Natural Hazard Disclosure – Consists of a series of maps showing if the property is in a special hazard zone such as an earthquake zone, a flood zone, or a high fire severity zone.
2. Preliminary Title Report – Shows any issues affecting the title of the property. This will show shared spaces (like a shared driveway), utility access, and most importantly the report will show current loans, mechanic’s liens, or judgments against the property.
3. Termite Report – A detailed report showing evidence of termite infestation. This will also show required repairs to damaged areas if there are any.

Many agents will order these reports once an offer is received or accepted but I always advise clients to complete the disclosures and to order these reports right when the property is listed, before there’s even an offer. This means that before you even begin negotiations on an offer you are aware of any issues with the title of the property and have calculated the cost of the termite work. It’s not uncommon to discover a lien that was not cleared correctly or an unexpected issue on the title of the property. Most of the time, these issues are easy to address but they require time to do so, making it essential to know as soon as possible to avoid delaying the sale. Another benefit is that you can provide these reports to the buyer the day they accept and possibly shorten some of the contingency periods. Plus, all the reports are free, even if you don’t close.

Knowing the Areas of Possible Delay
The two most common sources of delay in a real estate transaction are the loan approval process and obtaining the HOA documents for a condominium complex, townhouse complex, or a planned community. One of the most important duties for an agent is to keep the transaction progressing, especially in these two areas of delay.

Overestimate the Time Needed to Move and Clean the Property
A common issue that occurs before closing is that physically moving takes longer than expected and the owner needs additional time to move and clear the house. When that happens, it becomes messy because now the buyer is paying the mortgage and may request to be reimbursed, he may have already given notice to his landlord, or he may have to reschedule the moving vans, or even furniture and appliance delivery.

My best suggestion is to hire professional movers and to overestimate the time required to move, especially if you’ve lived in the home for a long time. My clients who sell always tell me how much stuff they didn’t know they had. Also, homeowners have a duty to leave the property clean and free from debris, so also make some time to take care of that as well. The last thing you want to do is to have to go back to haul away debris during your move to your new home. The smoothest moves have always happened slowly, with the owners starting from the offer acceptance date with throwing away or donating unneeded items until the contingency removal date when the real packing begins.

Lastly, before you leave your former home, forward your mail, stop all utilities, say goodbye to your neighbors, and if you had a good experience with your Realtor, don’t forget to recommend him to anyone you know, he’ll appreciate it.

Happy Moving!

Previous: Offers and Negotiation: How do we make the most out of every offer?
Table of Contents: Mark’s Selling Guide

The 5 Most Important Factors in Negotiating an Offer

So you have an offer on your home, great! What’s important in the offer and how can you make the most of it?

The Negotiation Starts Before the Offer is Written
The truth is that even though two offers that may look exactly the same on paper, they can have very different amounts of negotiating room and very different chances of even closing. It’s important to understand the buyers who are making offers on your property more deeply than just financials and a loan approval. A couple good starting points are:

1. Why are they moving? Are they upgrading/downgrading? Why? Is it because they have a new baby on the way or because their youngest just got married and they’re downgrading from a larger home? Are they moving because of a job transfer?
2. Why did they choose your specific home? Is it the area? Are they moving for the schools or a single school in particular? Do they have relatives nearby? Maybe even on this street?
3. What do they do for work? Are they self-employed or do they work for someone? Where is their place of business?
4. Do they have a timeline? Maybe because of a job transfer or because of a new baby on the way
5. Have they made a lot of offers? On which particular properties? Why did they not get those properties? Your agent should know why that property sold, a rough idea of how much activity was on that property, and how their offer compared to the offer that was eventually accepted.

These questions can serve as a starting point for why they like your home, their motivation to purchase, and an idea of their financial ability to close the transaction. Once they do write an offer, there are a few important factors to consider when you consider an offer.

Price is Only One Factor
Most of today’s contracts are very sophisticated and usually include detailed terms that may have a substantial effect on the smoothness and ability to close the transaction. A good Realtor will address these 5 important factors when negotiating on your behalf:

1. Price, Down Payment, and Deposit – Price is always important, but the price won’t matter if the transaction doesn’t close. In today’s market, loans are much harder to qualify for, which means the amount of down payment is a huge factor in whether a buyer can even obtain a loan. Experienced agents will know down payment and income requirements for current mortgage loans and will be able to spot any red flags before you start negotiating, especially in multiple offer situations. The deposit amount also shows how committed a buyer is. If a buyer intends to complete the transaction and the deposit goes towards the down payment, why not request the largest deposit possible?
2. Contingencies – Buyer’s will have a period of time, 17 days by the standard C.A.R. contract, to inspect the property for any defects, request any repairs to be done, obtain an appraisal and to get their loan approved. During this period, the buyer can cancel the contract for the reasons above without risking his deposit. Usually, the shorter these time periods are, the better it is for the seller since once these periods are up, they can feel safe planning their next move. Sometimes buyers will make offers contingent on the sale of their home, which typically isn’t favorable for sellers.
3. Condition of the Property – The standard contract we use in my market states that all sales are AS-IS. However, in the majority of all transactions, a buyer will do an inspection and request repairs to be done on the property. Sometimes these can be minor repairs but there are many cases where these repairs will cost thousands. This is another instance where a little bit of foresight can save you money. If your real estate professional knows about the items in your home that aren’t in good, working condition, he can address those issues up front during the counter offer stages when the buyer is more willing to make concessions to save you repair costs later on. In some cases, you may even be able to have the buyer do an inspection and accept the complete condition of the house before you open escrow.
4. Closing Costs – Both buyer and seller pay closing costs to complete a real estate transaction. The common practice in my market is that the seller will pay their portion of escrow fees, owner’s title insurance policy, transfer taxes, a natural hazard report, mandatory termite work, and a 1 year home warranty for the buyer. In some cases, buyers will request the seller also credit some money for closing costs or in multiple offer situations, may even offer to pay for some of the costs that sellers typically pay, such as termite or home warranty.
5. Closing and Possession – The date you close escrow is when all the funds are distributed to sellers, buyers, the title company, and service people and may differ from the possession date, which is when you actually hand the property over to the buyer. Make sure these fit your timeline, taking into consideration the time you need to find your next home or rental, and the time you need to physically move.

So you’ve negotiated a great offer and now you want to open escrow. How does this whole escrow process work?

Next: Tips to Ensure a Smooth and Successful Closing
Previous: Maximize Your Price: It starts before you even get an offer
Table of Contents: Mark’s Selling Guide

Maximizing the Selling Price of Your Home

If there’s one key to getting the highest price for your home, it’s exposure. As with selling anything, the more customers who are willing to pay for a product, the higher the price the product will demand. In addition to the number of buyers who go through the home, the features, benefits, and condition all have an effect on what a buyer is willing to pay. Buyers who see your home as being different, unique, or special are willing to pay more for it to outbid other buyers. So the two biggest questions that your real estate agent should be able to answer are:

How do I get as highest number of people through my home to get the best offer possible?
Every qualified buyer who walks through your home is a chance to sell. This means that the more qualified buyers that visit your home, the better your chances of selling and the higher price you’re likely to get. This is where your agent comes in.

A skilled professional will have a strong real estate marketing plan to get buyers excited about your property and motivated enough to make in person visits. The number of in person showings is the key number in determining the quantity and quality of offers a property will receive. Agents need to know the numbers for specific markets in order to know when to adjust. For example, in the Arcadia real estate market, that number is 5-8 showings per week for a good chance of selling quickly. Any less and the chances of getting an offer declines, but more may mean you might even get multiple offers.  My marketing plan is specifically design to encourage as many buyers to enter and tour the property as possible.

How do I make more of the buyers who visit fall in love with my house?
So you’ve gotten the right number of showings, how do you turn more of those showings into offers? I’ve had clients who listed their home with another agent and started with over 15 showings per week and finished with less than 1 per week after being on the market for over 6 months, all while receiving zero offers. A few months later, after listing with me and preparing the property for sale, the owner received a full price offer in two short weeks.

What made the difference? Pre-listing preparation. Preparing a home for sale is one of the most overlooked and important considerations before selling your home. Preparing to sell your home is much like preparing to sell a car. Before you sell a car, you wash it, vacuum the inside, remove the clutter, and show that it’s been kept in good condition, and it’s the same with a home.

Most of the homes I list, even newer ones, need some amount of preparation to be in showing condition. The exact amount varies from home to home, but you only have one chance to make that first favorable impression on a buyer’s mind, so make sure it’s completely ready before buyers see it. Otherwise, you may risk losing that buyer who would have been willing to pay the highest price. Your agent should not only provide a list of things to do before you put your home on the market but should also be able to refer you quality professionals to get the job done, if it’s required.

Now that you’ve gotten tons of visitors and an offer or maybe even multiple offers, how can you make the most of the situation?

Next: Offers and Negotiation: How do we make the most out of every offer?
Previous: Listing Your Home: How do I get started? What are the costs involved?
Table of Contents: Mark’s Selling Guide

Selling in Today’s Market: Numbers, Numbers, Numbers

In today’s market, it’s essential to know not only your numbers but the numbers of the neighborhood homes that have just sold. Make sure you hire a local agent who’s been in these homes and understands why the comparable properties sold for the prices they sold for. If you or your agent don’t have this information, you’ll be at a disadvantage because the buyers will.

Pricing Strategy Makes a Difference
Pricing your home correctly in today’s market is more essential than ever. If you price off a dream number, you may end up spending a lot of time on the market, hurting your chances of selling now, hurting your chances of selling later, and you’ll base your move off something that may not really work financially or logistically. No one wants to spend 6 months on the market only to realize at the end that the realistic market price means no down payment for the next home.

A real estate professional who will tell you the truth about your price, chances of selling, and possible hurdles of selling under current market conditions is doing his job. I see situations all the time where an agent will list a home too high for fear of disappointing the owner and after months and months, the home fails to sell and the owners give up on their dream. Hire a true professional who will be honest from the start so you can make the appropriate adjustments right from the beginning.

Knowing the Reasons Behind the Numbers
As you may know, appraisers, real estate professionals, and especially buyers often use price per square foot to determine the value of a home. This number is one of the most important numbers that will show up on internet sites, flyer print outs, and on the multiple listing service. BUT it’s not everything.

This is where the local expert comes in. Hiring a local expert who is fully involved in the business every single day means that he has probably seen most of the homes on the market. He would know that the Smith house down the street only sold for $310 per square foot because the living room was only 8 feet wide, and that yours might be worth $350 per square foot because you have a brighter, more open floor plan. Buyers will come in and try to mention properties that aren’t comparable to try to negotiate your price down, but the professional will be able to handle those situations because they simply know the market.

Your Bottom Line: What are the Costs to Sell
Typical closing costs for sellers include real estate commissions, escrow fees, title fees, termite work, transfer taxes, and a 1 year home warranty for the buyers. A good way to estimate it is to budget 7% of your projected selling price towards closings costs. Lastly, deduct the loans and estimated capital gains taxes to get your proceeds from the sale that you can save or put towards your new home.

How can you make sure to maximize your sales price and increase your bottom line?

Next: Maximize Your Price: It starts before you even get an offer
Previous: Deciding to Sell: What should I consider? What are my options?
Table of Contents: Mark’s Selling Guide

Deciding to Sell: What should I consider? What are my options?

I would like to move because…
Most of the time a decision to sell or move is a result of a significant life event or a changing need like having a new baby, getting married, needing a yard, downsizing after the kids leave home, or just downsizing to reduce expenses. In these situations, it’s not only important to review financial implications of selling but to also consider the intrinsic value of selling and moving on to the next phase of your life.

Many of my personal clients who waited years to move tell me afterwards that they wish they had moved sooner, especially if the move is to be closer to family, to enjoy their retirement, or even just to downsize to help pay for traveling adventures.

When to Sell and When to Lease:
If you’ve decided that now is the time to move, should you lease your home to a renter or should you sell it? The easiest ways to maximize your real estate investment is proper planning.

Why you should sell:
One of the biggest factors to consider for owners who have seen their values go up is tax-free gains. If you’ve lived in your home 2 out of the past 5 years, you can claim $250,000.00 as an individual or $500,000.00 as a couple in gains absolutely tax-free. Of course, always consult with your CPA as every situation is different. If you move out of your home and lease the home out for more than 3 years you lose the homeowner’s tax exemption gains mentioned above. If you have some gains or you’ve reached the limit, it may be a good idea to sell and re-invest the money into another property where you can hopefully do that again in a few years.

Other factors to consider include the ability to afford multiple mortgages or homes, a backup plan for setbacks such as loss of income, your desire to become a landlord, and needing the money to purchase the next home.

When it makes sense to convert your home into a rental:
If you can afford to purchase the next home without selling and you’re planning on keeping your current home as a rental, interest rates are so good these days that you might be able to refinance to a great rate, rent out the home, have someone pay your mortgage for you, and if you’re lucky or have owned the home for awhile, you may even have a little cash coming in each month.

If you’re still confused about what you’d like to do, feel free to contact me or your local Realtor and one of us will be happy to walk you through your options. Otherwise, if everything you’ve thought about still points to selling, the next step is to find out if makes sense to sell in today’s market.

Next: Listing Your Home: How do I get started? What are the costs involved?
Table of Contents: Mark’s Selling Guide

Mark’s Guide to Selling Your Home

Welcome to my Selling Guide! I wrote this guide in hopes of assisting homeowner’s looking to sell answers some of the common questions about the selling process, how to maximize their bottom line, and to make you aware of potential issues to look out for during the sale. Hopefully, you’ll find it useful and if there’s any additional information I can provide, please feel to contact me.

In this guide, I’ll share both a basic overview of how the process goes for selling your home and also share a couple of strategies to get the most out of your home when you decide to sell. I have divided this guide into 5 different sections:

Getting Started: – Deciding to Sell: What should I consider? What are my options?

California State Tax Credits for First Time Buyers and New Homes

Many home buyers were rushing in the last days of June to close escrow and qualify for the federal tax credit of $8,000 for first-time home buyers and $6,500 for repeat home buyers. If you were one of many buyers who were under contract on a home purchase by April, 30 2010, and waiting to close escrow, you still have hope. The U.S. Senate has passed a 3 month extension to allow buyers additional time to close, moving the deadline to close escrow to September 30, 2010. However, if you’ve missed these deadlines, you’re not out of luck, you may qualify for a California State Tax credit.

California State Tax Credits

In addition to the federal tax credit, the California Franchise Tax Board (FTB) is offering tax credits of its own to first-time home buyers and new home buyers in 2010. California has set aside a fund of $100 million for first-time buyers, and another $100 million for new home buyers. Those who qualify in both categories will receive their tax credit from the new home buyer fund, which is expected to last longer.

Even though the CA tax credits are still available, time is running out. As of June 29, 2010, the first-time buyers fund is estimated to have reached almost $106 million. The new home buyers fund is estimated to have reached $50 million. As a first-time home buyer, you still have additional time if you are purchasing a new home. These figures are only estimates, as the California Franchise Tax Board assumes that there have been multiple duplicates sent in, and continue to accept up to 28,000 applications (currently at 20,760) until further notice.

The amount of tax credit you can receive is equal to 5% of the purchase price or $10,000, whichever amount is less. It must be applied over 3 successive tax years, with a maximum of $3,333 per year. They are nonrefundable and cannot  be carried over.

To qualify for these tax credits, a buyer must have completed a purchase of a qualified principal residence on or after May 1, 2010, and before January 1, 2011. As long as escrow closes on or after May 1, 2010, you qualify, even if you entered into a contract before that date. For the purposes of both tax credits, a “qualified principal residence” is defined as:

1. A single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been “purchased.”
2. Be eligible for the California property tax homeowner’s exemption.
3. Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.
4. NEW HOME ONLY: Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit.

You are NOT eligible for these tax credits if any of the following apply:

• The taxpayer was allowed a 2009 New Home Credit.
• The taxpayer is under 18 years old. (A taxpayer who is married as of the date of purchase will be considered to be 18 if the spouse/registered domestic partner (RDP) of the taxpayer is 18 or older on the date of purchase.)
• The taxpayer or the taxpayer’s spouse/RDP is related to the seller.
• The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.

New home buyers are also allowed to make a reservation on a New Home Tax Credit if they have entered into a contract on or after May 1, 2010, and on or before December 31, 2010.

The following steps must be taken to apply for the tax credits. Applications are accepted by fax only.

Within two weeks (14 calendar days) after the close of escrow:

• The seller must complete Parts II, III, and also Part IV (if the home has never been occupied) of Form 3549-A, Application for New Home / First-Time Buyer Credit, and provide a copy to the buyer or escrow person.
• The buyer will complete Parts I, V & VI of Form 3549-A.
• Fax the completed Form 3549-A and the final settlement statement (generally the buyer’s HUD-1 statement) to FTB at 916.855.5577.

California FTB recommends that the escrow company, on behalf of the buyer, fax the completed application and settlement statement to FTB and provide a copy to the buyer. The buyer retains ultimate responsibility to ensure the completed application and settlement statement are submitted timely to the FTB.

After applying, to claim the tax credit, you must have received a Certificate of Allocation from FTB.

An important thing to note: Special rules apply to married/registered domestic partner taxpayers filing separately, in which case each spouse/registered domestic partner is entitled to one-half of the tax credit, even if their ownership percentages are not equal. For 2 or more taxpayers who are not married/RDP, the tax credit amount will have already been allocated to each taxpayer occupying the residence on their respective tax credit allocation letter.

Please see http://www.ftb.ca.gov/individuals/new_home_credit.shtml for more details.

Good luck to all the first-time and new home buyers out there! And remember to always contact your CPA about any tax questions as we’re not tax professionals.

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