THE SECOND STORY | May 17th, 2018

Mouth shut & eyes wide open…

San Francisco from Alameda Point

I often wonder why some agents can’t just keep their mouths shut. This market is so hot, that some agents will often brag about the selling price, the moment a property is in escrow.

That’s a very bad habit to get into. The actual price is determined by a buyer. Even though, in this hot market, most, if not all offers have no contingencies (like financing, the appraisal, inspections, etc), what happens if the unexpected happens (like a buyer finds out s(he)’s being transferred by the company, or s(he) is laid off, or the loan isn’t approved, or one of the buyers dies?)

From the Sellers’ point of view…that Buyers’ disaster is also a disaster for the Seller, who has to put the property back on the market (BOM). And if the listing agent has gone around and told other agents what the property sold for ….you can bet that price on the accepted-offer-contract, most likely will be lower …how much? I’m not sure. I’m not the buyer!

Agents are so blatant these days, that in the last few weeks I;ve attended a broker’s open house, and the hosting agent wanted me to tell him what my listing sold for. I looked at him like he was crazy and said something like ‘you’ll find out when it closes.’ Then he proceeded to tell me that he heard it sold for ‘north of $740,000.’ I said ‘you’ll just need to wait until it closes.’

And if all goes well tomorrow, it should close. And then you can check back here, or see it all over the real estate portion of the internet.

Moral of the story? It pays to keep my mouth shut and my eyes wide open. And if you are thinking about hiring an agent…why not toss some of the disasters you can think of his/her way, when you are interviewing that potential agent, and see what his/her answers are. And I’m hoping I’ll be on that list of agents you’ll be interviewing.

Alameda Real Estate this Week

Tues Broker Tour 11

New 18

Pending 14 

Sold 11  2 sold for less than the list price

Total active on the market 43 including 2 Active Contingent & 1 Price Change

Have a wonderful weekend…and contact me if you have questions about the market.

best, marilyn

Maybe you’d be entertained (or not) by my ‘for fun’ blog...Boomer-chick-musings.

THE SECOND STORY | May 15th, 2018

A Home for Tomorrow

As people near or enter retirement, one of the decisions that typically comes up is whether to sell their “big” home and buy a smaller one. If you know anyone who has been faced with that situation, selling one home and buying a smaller one may not save enough money to make it worthwhile.79996505-250.jpg

There are sales expenses on the property being sold and acquisition costs on the replacement home. Generally speaking, homeowners may not mind a home with less square footage, but they usually don’t want to give up amenities or locations that they’ve become accustomed.

After a little number crunching, the move may not make enough difference in savings and they end up staying in their current home even if it doesn’t fit their needs anymore.

What if while this couple were still in their peak earning years, they acquired a home in an area where they would consider retiring and rent it during the interim. They could put it on a 15-year mortgage and possibly, even accelerate the principal payments to have it paid off by their anticipated move.

In the meantime, they could continue living in the “big” home until it is time to make the transition. Sell the “big” home that may be paid for by then and avoid up to $500,000 of capital gain. Take part of the proceeds and remodel the rental/transitional home and invest the proceeds for retirement income.

Ideally, the former rental would be mortgage free by this point, so the retirees would not have a house payment. Even if at this point, they changed their mind about retiring to this particular home, they still have a property that acted as a hedge against rising prices and have sufficient equity to purchase something else without using the proceeds from the “big” home.

It is difficult to know what the situation will be years from now when a person retires. It is clearly advantageous to have a plan that allows for options and choices. To find out more about purchasing your retirement home today, give me a call at (510) 908-9021.

THE SECOND STORY | May 10th, 2018

Who ya gonna call? Ghostbusters?

Let’s say you’re renting out a house or a bunch of houses. That’s what my dad did years ago,when he retired at 49. Yep, that’s right. Age 49. Long before tech showed up.

If I recall, I think the company he worked for had a professional (like a job therapist) come in to teach the management how to work more effectively. Well, that sure backfired (for the company).

After figuring out that his portion of the shares he owned could be cashed in, enabling  the other shareholders to buy him out, he realized he didn’t need to commute to LA from Newport Beach, anymore.

The broker/agent he started working with, would look for houses close by but in a different neighborhood/city. In his case, the commute was minimal getting to Costa Mesa from Newport Beach. No freeways, hardly any accidents. My folks would buy them, and my dad would fix them up a bit and rent them out. And he was his own property manager. Sure, he would hire contractors, but most property managers do!

This was long-term fixing (rather than short term flipping) and well before it became TV- fashionable, and definitely decades before the financial fiasco.

These days, very few of us can afford to buy locally, more than one property to rent out.  But if you don’t want to manage a property, here are some questions that you need to ask when interviewing for a property manager.

-Who is on your staff? You want all of the names….
-Who works on the weekends?
-What happens if the tenant calls about an issue and there is nobody picking up the phone? What happens if the call goes into voice mail?
-What happens if an ‘event’ takes place during ‘after hours’? (like an earthquake, a fire, a pipe blowing up).
-How do you communicate with the tenant and/or me? via cell, texting, em?
-What’s your normal response time?
-How do you bill?
-What is the monthly price you charge?
-What if there are no calls from the tenant that month?
-Do you take money up front from me…(to cover emergencies or to have on deposit?)
-How much do you charge for multiple units in one building? How about single family homes?

And on and on….then compare the answers. Be sure to write each answer down while they’re present. That way you’ve got a record of what they said.

Because a friend (and client) asked me about property management, I sent those questions to her. She became a became a landlord, unintentionally. She’s now retired..and she doesn’t want a new job as a ‘property manager.’ She wants a life!

Most everything is a balancing act. What you mostly want is peace of mind and restful nights. But you need to stay on top of things…otherwise, items can go south quickly.

Alameda Real Estate this Week

Broker Tour 18

New this week 16

Total Pending 63

Sold this week 12

I’m working on various concepts to get this info out to you. These days the info is so quickly available all over the world. My thought, for now, is to come up with some ‘for real’ stories once I think of them and remember them. Any ideas?

best, marilyn

You may be interested in my ‘for fun’ blog – Boomer-Chick-Musings check it out!

THE SECOND STORY | May 8th, 2018

Assumptions May be an Alternative

For the last 25 years, most buyers have gotten a new mortgage or paid cash when purchasing a home. For a practical reason, owner-occupant buyers have another alternative: assuming a lower interest rate existing FHA or VA mortgage.29377293-250.jpg

In the late 80’s, both FHA and VA began requiring buyers to qualify to assume their mortgages. Prior to that, good credit or even a job wasn’t required. The real reason there haven’t been significant numbers of assumptions in the past 25 years is that interest rates have been steadily going down. If a person had to qualify, they might as well do it on a new loan and get a lower interest rate.

Even though mortgage money is currently attractive and available, it is at a four-year high. When interest rates on new mortgages are higher than the rates of assumable FHA and VA mortgages originated in the recent past, it may be more advantageous to assume the existing mortgages. Conventional loans have due on sale clauses that prevent them from being assumed at the existing rate.

FHA loans that originated with lower than current interest rates have great advantages for buyers and sellers.

  1. Interest rate won’t change for qualified buyer
  2. Lower interest rate means lower payments
  3. Lower closing costs than originating a new mortgage
  4. Easier to qualify for an assumption than a new loan
  5. Lower interest rate loans amortize faster than higher ones
  6. Equity grows faster because loan is further along the amortization schedule
  7. Assumable mortgage could make the home more marketable

This financing alternative can save money for the buyer in closing costs and monthly payments. While the equity may be more than the down payment on a new mortgage, second mortgages are available to make up the difference. Call us at (510) 908-9021 to find out if this may be an option for you.

THE SECOND STORY | May 3rd, 2018

2 examples of a hot market

Goslings at Crown Beach.

1252 Sherman…

…was a hot mess. It sold for $1,195,000 in Dec 2017 on a list price of 987K. In April it was listed again…and it still is/was a hot mess.  This time it was listed for $1,249,000 and sold for $1,275,000.

I was told by the agent that he found a multi-million dollar home in Tiburon. Bought it.

725 Baywood Rd

…cleaned up okay. But not many upgrades. It was listed for 879K in 7/2017. It sold for 980K a few weeks later. It was listed again in April for 980K. Now it’s pending. I was told by the agent that he found another house in Harbor Bay.

In a different environment, these Sellers would have lost a good bit of $$$. In this environment…uh, no.

Easy come….easy go….for some!

Alameda Real Estate this Week

Tues tour 8

New 15

Pending 16

Sold 8

Total active listings on the market 38

Total pending listings on the market 58

I love that’s it’s light at 8pm! I was out clipping the first blooms from my roses, on Tuesday evening. Enjoy your weekend. Call if you have questions the market.

Enjoy! marilyn

Follow me on my ‘for fun’ blog, Boomer-Chick-Musings.com

THE SECOND STORY | May 1st, 2018

Overlooked Recordkeeping

Homeowners are familiar that they can deduct the interest and property taxes from their income tax returns. They also understand that there is a substantial capital gains exclusion for qualified sales of up to $250,000 if single and $500,000 for married filing jointly. However, ongoing recordkeeping tends to be overlooked. 38285944-250.jpg

New homeowners should get in the habit of keeping all receipts and paperwork for any improvements or repairs to the home. Existing homeowners need to be reminded as well, in case they have become lax in doing so.

These expenditures won’t necessarily benefit in the annual tax filing but may become valuable when it is time to sell the home because it raises the basis or cost of the home.

For instance, let’s say a single person buys a $350,000 home that appreciates at 6% a year. Twelve years from now, the home will be worth $700,000. $250,000 of the gain will be exempt with no taxes due but the other $100,000 will be taxed at long-term capital gains rate. At 15%, that would be $15,000 in taxes due.

Assume during the time the home was owned that a variety of improvements totaling $100,000 had been made. The adjusted basis in the home would be $450,000 and the gain would only be $250,000. No capital gains tax would be due.

Some repairs may not qualify as improvements but if the homeowner has receipts for all the money spent on the home, the tax preparer can decide at the time of sale. Small dollar items can really add up to substantial amounts over many years of homeownership.

You can download a Homeowner’s Tax Worksheet that can help you with this recordkeeping. The important thing is to establish a habit of putting receipts for home expenditures in an envelope, so you’ll have it when you are ready to sell.

THE SECOND STORY | April 26th, 2018

Off-market listings….and keys.

Salome Idea Mixed Set of 30 Large Skeleton Keys in Antique Silver - Set of 30 Keys (Silver Color)

How many house keys do you need?

How many locks do you have? These days the locksmiths find themselves losing biz to Nest and other companies with remotely (phone) controlled locking devices.

I recently had a listing with 17 keys, all different for different locks. And they were NOT labeled. Oh well, we got a locksmith in and turned the 17 keys into a single key for all of  the doors.

In our ancient house, over the years, we’ve found several antique keys. And one day I found myself locked inside my bathroom. Even though I was hollering to son Evan through the heater vent, he was fast asleep.

Because this old house has had various fixes/modifications to it, you needed to pull the door towards you to step into the bathroom. Not normal. One of our tenants heard me hollering through the ductwork, so I had her call our landline (no cell phones back then)..to wake Sleeping Beauty up. Somehow he got me outta there. But these days I have that key hanging on the inside of the bathroom door, so should I get stuck again, I’ll have a way out.

Off-market listings. 

This is the elephant in the room.

When I’m working with (a) Seller(s) on pricing a property, there is only 1 party who has a say in what the purchase price should be. That’s the Buyer(s), regardless of what that property is listed for.

Sure, as agents we can do our homework and explain the conditions in which the market has previously acted, but none of us mere mortals can predict what will happen in the next 10 minutes, much less further out into the future.

For years now, it’s been a sellers’ market. Who knows if and when it will slow down, and when it will be a buyer’s market again, aka the financial fiasco in 2008, when the lending industry collapsed.

The best I can do is talk to the potential sellers about how to get their property viewed online, or in person, or how to get the neighbors chatting (whether those neighbors like the property itself or not), and then they’ll tell their friends, who will tell their friends and we’ve got a Facebook-Next Door thing going on.

But one of these days….sooner or later, despite the broker’s disclosures that they give to the sellers, there’s gonna be one (or more) pissed off sellers. Once their property has closed, somebody (at a party, at the beach, in line at the grocery store), will tell them that they would have easily paid $$$$ more than what they sold it for.

Oh, and btw, I feel the same way about Dual Agency (when the listing agent also is acting as the selling agent), repping both parties at the same time. Sure it seems good to everybody…and the jackpot goes to that agent….but ka-boom! It’s legal but I don’t consider it ethical.

You can have a Buyer’s agent and a Listing agent from the same company…but it’s not as dangerous as one person repping both parties. Be sure you know what/how that relationship is between the listing and the buyer agents.

And be sure you trust your listing agent. I’ve heard stories over the years….oh well.

IMHO.

Alameda Real Estate this Week

Tues tour 14 

I saw 4 places in short order…1 on BFI and the other 3 were multi-units on the main island. Two of those were terrific!

New 17

A/C 1 active contingent (have something to sell before they can buy)

BOM 1 back on market

Pending 10

Sold 16

Withdrawn temporarily 2

Total active listings on the market 29

Have a great weekend! Contact me if you have ???!

best, marilyn

THE SECOND STORY | April 24th, 2018

Costs More – Takes Longer

The one experience that homeowners can agree upon after completing a remodeling project is that it costs more and takes longer than expected. It doesn’t really matter that you researched, planned, and received multiple bids, it will, invariably, cost more and take longer than you originally anticipated.96303159-250.jpg

Replacing floorcovering or painting is a project that a homeowner can easily get bids and contract with the workmen directly. A new level of complexity occurs when the project involves more specialized contractors, like plumbers, electricians, carpenters, counters, and others.

Now, a homeowner is faced with dealing with one general contractor who will run roughshod over the sub-contractors or make the decision to do it themselves. Typically, you’ll pay more for a general contractor, but the trade-off is that they have the contacts and experience to make things go smoothly.

Subs are notorious for wanting to finish their “part” of the project and move onto to the next job. Sometimes, they’re not interested in the “big picture” enough to consider doing things in a way that are best for the overall outcome.

When you start tearing out some things, you find out that there may be unexpected expenses involved. Another common occurrence is that during the project, you get a new thought about changing something else “since it is already torn up anyway.” This will add time and money to the job.

There can be the situation that the homeowner doesn’t even know the right questions to ask or what to consider when trying to coordinate the different workers. The most detailed timetable can be thrown off track if one set of workers don’t show up or finish on time. At best, it delays the project for a few days. At worst, it can delay it for a few weeks because the individual workers may have committed to other jobs that don’t allow them to reschedule.

Once the work is done in a professional manner, you’re probably going to live with it for years. If it is something you’ve wanted to do and it will allow you to enjoy your home more, it is worth doing. Just be patient and enter this adventure with the understanding that it will cost more and take longer than you expect.

THE SECOND STORY | April 19th, 2018

All hail broke loose in Alameda…

Hail the size of dimes,  fell to the               ground, in A-town!

It was hailing so hard:

1) I woke up.

2) I thought the electrical workers were heaving/whipping their wires around. Turns out they weren’t even here yet.

3) I thought my windows would break.

_________________________________

I’ve never heard of FOMO…but now I have. Here’s an article from The Realtor online magazine. “Fear of Missing Out”

FOMO Drives Young Buyers Toward Ownership

Fear of missing out—or FOMO, as millennials have coined it—has become a powerful motivator for young buyers to pursue homeownership, according to a new Bank of America survey. In particular, social media platforms such as Facebook and Instagram, where users often post about their lives as homeowners, are big influencers on prospective buyers, the survey of 2,000 U.S. adults finds. “I think it’s motivating them to think about homeownership,” says D. Steve Boland, BofA’s head of consumer lending. “Their interest level is high, and it’s driven by what they see.”

According to the survey, a third of millennials say that when viewing social media posts about homes their peers have purchased, they think: “If they can buy, why can’t I?” And a quarter of all consumers say they fear missing out on an opportunity for themselves to purchase when viewing others’ home photos on social media. Twenty-three percent of consumers—16 percent of whom are first-time buyers—say they are jealous of the homes bought by their friends and acquaintances.

Social media postings about homeownership can stir up emotions in consumers and motivate them to want to own themselves, Ethan Kross, a professor of social psychology at the University of Michigan, told USA Today. “If other people are doing better than we are, that can get us to feel bad,” Kross says. “It reminds us of what things could be like.”

Source: “Instagram, Facebook Photos Spur Millennials to Become Homeowners,” USA Today (April 11, 2018)

_______________________________

Passers-by

I was hauling some groceries out of the car and an older guy was out taking a walk. I recognized him, and he kind of recognized me. We re-introduced ourselves. Frank has lived nearby in the same house for over 50 years.

He started off by saying…”There is nowhere else I’d rather be than Alameda!” He said he was stationed at the Alameda NAS, back in WW II, and he’s been here ever since.

He has a great attitude. Despite the traffic, the density of the new housing, the height of the new housing, how long it’s taken the base to get developed, and the fact we may be stuck here in 94501 if anything happens to our ability to get access into and out of this island, Alameda meets all of his needs.

I get it. And even if I didn’t get it….there are still a bunch of folks who want to live here. The only reason I showed up here is because my husband’s first real job was at at the brand new Mariner Square building, working with yacht designer, Gary Mull.

It’s changed quite a bit since then.

We love calling Alameda our home. What a great conversation. That’s one of the reasons we like it here. Nice folks abound in Alameda.

________________________________

Alameda Real Estate this Week

My Seller who owns the single level townhome on BFI received 3 offers yesterday. It is now pending. Should close in 25 days.

New 13

Pending 20

Sold 12

Total active on the market 28

Total pending on the market 52

If you are just thinking about buying or selling, give me a call. We can talk about what’s going on here in A-town.

Have a lovely weekend! marilyn

THE SECOND STORY | April 17th, 2018

Case Study – Housing Decision During Retirement

A couple is planning to tour the United States in a travel trailer during their first few years of retirement. They are going to sell their current home now and purchase another home when they finish their travels. 30349530-250.jpg

An interesting exercise is to determine the optimum time of selling the home: now or when they’re ready to buy their replacement home.

If they intend on traveling for more than three years, then, it may be a good decision to sell prior to the sojourn to avoid paying taxes on the gain in their home. IRS allows for a temporary rental of a principal residence while still keeping the $250,000/$500,000 capital gains exclusion intact. A homeowner must own and use a home for two out of the previous five years which means that it could be rented for up to three years, but it would need to be sold and closed before that three-year window expires.

If the travel will be less than three years, there is an option of selling now or later. Using the example below, the homeowner sold the home, paid their expenses and invested the proceeds in a three-year certificate of deposit until the replacement home was purchased.

case study retirement-1.jpg
As an alternative, if the homeowner rented the home, not only would they have income, the home would continue to appreciate and the unpaid balance would go down resulting in larger net proceeds. Based on a 5% appreciation and continued amortization of the mortgage, the net proceeds could easily be $40,000 more.

case study retirement-2.jpg
Obviously, there are a lot of considerations that affect the decision to sell now or later but in an appreciating real estate environment, being without a home for several years could affect the financial position of the owner in the replacement property. It is certainly reasonable to look at various alternatives before making a decision. Call me at (510) 908-9021 to help you look at the different possibilities and talk to your tax professional.