THE SECOND STORY | April 11th, 2019

“Thank you for helping me to realize that online house hunting is..

….is about as useless as online dating:-)”

This just cracked me up, today. And it was sent by a marvelous woman, who is house hunting in Alameda.

Stacks of pink, in my backyard.

The photos do say a few things…like the difference between a professional photographer vs. an agent with a cellphone. Or if the agent doesn’t look to see if his photos are upside down/ or sideways (which recently happened).

The photos do give you an idea of how the property looks with staged furniture..and that will help bring folks in the house/condo/townhome.

Like an iceberg, there’s a lot more under the surface than you may realize.

What’s the neighborhood like? Is there a Neighborhood Watch? Where do folks shop? Where do they get good take-out? Where are the parks? Is there a skate park? How are the schools?

Get an agent who knows the ‘hood.’ You’re wasting your time if you don’t.

Alameda Real Estate this Week

Tues tour 11

New listings this week 10

Pending this week 12 including 1 pending sale: want back up PSB

Sold this week 5

Total active 28 including 1 AC (active contingent)  and 1 PCH (price change)

Total Pending 28 

OK. That’s a wrap!

Enjoy your weekend!

If you have questions about this market…maybe we can figure it out together.

best, marilyn

THE SECOND STORY | April 9th, 2019

Qualified Charitable Contribution

If you’re at an age where you need to be taking Required Minimum Distributions (age 70.5) from your IRA, a qualified charitable contribution and some planning may allow you to lower your overall tax liability.

Let’s say that a couple’s 2019 itemized deductions include $8,000 in property taxes, $4,400 in interest and $20,000 in charitable contributions. That would total $32,400 which exceeds the 2019 $25,300 standard deduction for married couples, 65 years of age or older, filing jointly.

Their required minimum distribution from their IRA is $40,000 which will be taxed at ordinary income. If this couple is in the 24% tax bracket, the tax liability would be $9,600.

Alternatively, if they made the $20,000 in charitable contributions from their IRA as a Qualified Charitable Contribution, it would not be taxable in the withdrawal. The balance of the RMD of $20,000 would be taxable at 24% which would have a tax liability of $4,800.

Their $32,400 worth of itemized deductions would be reduced by the $20,000 because it was paid from the IRA which makes their itemized deductions $12,400. The $25,300 standard deduction would benefit them more by an amount of $12,900 increased deductions. At 24%, this would reduce their liability by $3,096.

In the first instance, they would owe $9,600 in taxes due to the $40,000 RMD from their IRA. In the second example, because of the increased amount by taking the standard deduction, the net tax liability would be $1,704 ($9,600 – $4,800 – $3,096 = $1,704).

This example shows how shifting contributions to a Qualified Charitable Contribution will get the same amount to the charity but lower the Required Minimum Distribution that must be recognized as ordinary income. The shifting also gives the taxpayers the advantage of a higher amount of the standard deduction than the itemized deduction.

As always, before taking action, you should get advice from your tax professional on how this strategy may impact you. There is information available on www.IRS.com for IRS Required Minimum Distribution FAQs and Qualified Charitable Distributions.

THE SECOND STORY | April 4th, 2019

“Hope is no longer a viable marketing alternative.”

I have the title of today’s post..taped to my computer screen and it’s been there for decades.

-You can hope who the buyer will be (depends on the market).

-You can hope the property will sell at or above the list price (depends on the market).

-You can hope the seller is/are nice people (in our case, the sellers were definitely not very nice).

-You can hope the price will come down…(depends on the market).

-You can hope it will sell in a timely manner (depends on the market).

And the market can change, literally overnight (like with natural disasters: earthquake, flooding, fires, loan interest rates).

So if you own a condo, townhouse, single family home, mansion, units…..

I would say that the location is primary (not the property). And as I’ve said before and I’ll continue to say, “You’re buying a location…that happens to come with a condo or a townhouse or house or mansion or rental units or whatever.”

Alameda Real Estate this Week

Tues tour 11

New 11

Active 30 (incl 2 Active Contingent)

Total Pending 48

Sold 13

I’ll be at 2837 San Jose this Sunday 2-4 having an open house. Come on by…rain or blue sky!

best, marilyn

 

THE SECOND STORY | April 3rd, 2019

Auto Pay Your Mortgage Payment

In the time that it takes to write one check, you can set it up with your bank and never have to do it again. You won’t have to write checks, envelopes or buy stamps anymore. You’ll save time, money and benefit in other ways too.

  1. Never be late … avoid late fees and protect your credit
  2. Schedule additional principal contributions monthly to save interest, build equity and shorten the mortgage term.
    An extra $200 a month applied to the principal on a $200,000 mortgage at 4.5% for 30 years will result in shortening the loan by 8.5 years. If the loan was paid to term, it would save $52,977 in interest. Use the Equity Accelerator to see how much you can save.
  3. It’s convenient … by doing it online with your bank, you’ll have a centralized history of the payments.
  4. Protect your credit … your payment history is the single biggest component of your credit score and accounts for over 1/3 of your credit score.

Establishing the practice of auto bill pay could run the risk of overdrawing an account and incurring overdraft charges. Monitor your bank account to be sure that you have enough cash to cover your automatic payments.

Schedule the Auto Pay to allow for processing and the time it takes to reach the lender so that you don’t incur late fees.

And even though, you set up the Auto Pay, it is still your responsibility to monitor your bank account to see that they are executing it properly. If you are making additional principal contributions, you must see that the extra amount was indeed applied to principal reduction and not somewhere else like in the escrow account.

Some banks offer email or text reminders to let you know when checks are about to be written or if your balance is low.

THE SECOND STORY | March 28th, 2019

Shredding Party and Alameda Meals on Wheels

It was a beautiful day for the Shredding Party – absolutely gorgeous! People were able to dump and run, and others were hanging around making small talk: about their lives, vacations, trips, A-town, and other issues that involve most of us. The front steps were host to many of us…as others went inside and found fruit, donuts, and juice.

All of the donations amounted to $955 for Alameda Meals on Wheels.

Electrical box, southeast corner of Central   and Walnut, close to Alameda High School.

 

Rosemary, the lovely woman who has run the office for over 15 years, has lived in Alameda a lot longer than I have, knows who’s who (inside AMOW and all over the town). She told me that AMOW has no funding from the county or state, and runs a deficit of $17,000 per month were it not for the donations.

She also let me know that 2 volunteers, in separate instances, each found a person down (on the floor) while delivering the meals, and unable to get up. In each case, they may have died had AMOW not showed up. They immediately called for an ambulance.

Another attendee, a woman (who I didn’t know), saw my FaceBook post about the Shredding Party that morning, came over with her stuff, and proceeded to repost it to her friends once she shredded!

All good, all amazing. And both Rosemary and I shared stories about Alameda, including her friend who spent some time with her, and saying it was the most calming part of her trip was the 24 days in “Mayberry by the Bay.” Her friend’s words, not ours.

Onward…

Alameda Real Estate this Week

Tues tour 5

New 9

Total active, including 1 PCH  32

Total pending  51

Total sold this week 14

Do you have questions about the market? So do I! I do not profess to know it all…but I’m happy to share what I know, if you want to converse about it!

best, marilyn

THE SECOND STORY | March 26th, 2019

To-Do List for Better Homeowners

Checklists work because they contain the important things that need to be done. They provide a reminder about things we know and realize but may have slipped our minds as well as inform us about things we didn’t consider. Periodic attention to these areas can protect the investment in your home.

  1. Change HVAC filters regularly. Consider purchasing a supply of the correct sizes needed online and they’ll even remind you when it’s time to order them again.
  2. Change batteries in smoke and carbon monoxide detectors annually.
  3. Create and regularly update a Home Inventory to keep track of personal belongings in case of burglary or casualty loss.
  4. Keep track of capital improvements, with a Homeowners Tax Guide, made to your home throughout the year that increases your basis and lowers gain.
  5. Order free credit reports from all three bureaus once a year at www.AnnualCreditReport.com.
  6. Challenge your property tax assessment when you receive that year’s assessment when you feel that the value is too high. We can supply the comparable sales and you can handle the rest.
  7. Establish a family emergency plan identifying the best escape routes and where family members should meet after leaving the home.
  8. If you have a mortgage, verify the unpaid balance and if additional principal payments were applied properly. Use a Equity Accelerator to estimate how long it will take to retire your mortgage.
  9. Keep trees pruned and shrubs trimmed away from house to enhance visual appeal, increase security and prevent damage.
  10. Have heating and cooling professionally serviced annually.
  11. Check toilets periodically to see if they’re leaking water and repair if necessary.
  12. Clean gutters twice a year to control rainwater away from your home to protect roof, siding and foundation.
  13. To identify indications of foundation issues, periodically, check around perimeter of home for cracks in walls or concrete. Do doors and windows open properly?
  14. Peeling or chipping paint can lead to wood and interior damage. Small areas can be touched-up but multiple areas may indicate that the whole exterior needs painting.
  15. If there is a chimney and fires are burned in the fireplace, it will need to be inspected and possibly cleaned.
  16. If the home has a sprinkler system, manually turn the sprinklers on, one station at a time to determine if they are working and aimed properly. Evaluate if the timers are set properly. Look for pooling water that could indicate a leak underground.
  17. Have your home inspected for termites.

Instead of remembering when you need to do these different things, use your calendar to create a system. As an example, make a new appointment with “change the HVAC filters” in the subject line. Select the recurring event button and decide the pattern. For instance, set this one for monthly, every two months with no end date. You can schedule a time or just an all-day event will show at the top of your calendar that day.

By scheduling as many of these items as you can, you won’t forget that they need to be done. If you don’t delete them from the calendar, you’ll continue to be “nagged” until you finally do them.

If you have questions or need a recommendation of a service provider, give us a call at (510) 908-9021. We deal with issues like this regularly and have experience with workers who are reputable and reasonable.

THE SECOND STORY | March 21st, 2019

The A word…Alameda Shredding Party!

 

When I was in 4th grade our family moved three times: from Costa Mesa to Claremont (San Diego) to La Jolla (San Diego) and to Daly City (in the SF fog belt). Except for Costa Mesa, each of these homes were rentals.

My dad was in upper management for a concrete supplies company, and he was transferred to those locations.

When I was in 5th and 6th grade, my folks found a great lot, up on a hill, in San Rafael (where the sun mostly shines), and they decided to build a home there.

But when I was about to start junior high, my folks moved us back down to Newport Beach, because they felt we needed to be grounded (not as a punishment) but to call a place ‘home’ for several years. And it was a lovely home.

But, back to LaJolla. That’s where the 4 of us kids lived in one room…two bunk beds, and a crib in the middle. The two older kids got the top beds, kid  #3 got a bottom bunk, and the youngest slept in the crib.

At the same time, my dad’s mom came to live with us. So Grandma got her own room. And she loved sitting out on the deck in the evenings, while the cooler ocean air whipped around the hills.

Just last week something brought this to my mind: asbestos. After thinking for a while, I realized that back in the day (in LaJolla), while I was in bed and still awake, I was picking off the small bits of the pop-corn ceiling within arm’s reach. I mean, what else was there to do?

Popcorn ceilings are not necessarily a bad thing. I think they were supposed to provide some insulation between the roof and the finished ceiling inside the house, before anybody knew anything negative about it.

These days the environmental booklet that is required to be given out to buyers, is a treasure-trove of would-be-disasters. Every once in a while I scan through it.

I know that going through all of the state, county, and city disclosures is a pain in the butt…but I suggest you do just that. Because, no matter what, you will have to sign off on receiving that booklet of joy, whether you read it not.

https://www.epa.gov/asbestos/protect-your-family-exposures-asbestos#whattodo

Alameda Real Estate this Week

(One of my good friends emailed me after I posted last week’s blog, to let me know that the links weren’t working. Thank you, Alan. Once I knew that, I was able to fix whatever was wrong. Sorry!)

Tues Tour 9

Total Active listings this week 43, including on BOM (back on market)

Total pending listings this week 47

Total sold this week 10

That’s a wrap for now!

You’re invited to my 12th Annual Shredding Party 

this Saturday 9-12! Rain or Shine!

 

You have my contact info, if you don’t have my address, call me, and bring your stuff to shred, have some donuts, juice, and fruit!

Hang around for a while, or dump and run!

Best, marilyn

 

 

THE SECOND STORY | March 19th, 2019

Reasons Rental Homes Rank Highest

Single family homes offer the investor an opportunity to borrow large loan-to-value loans at fixed interest rates for long terms. Lenders will loan 75-80% of the purchase price at 5.5% to 6.5% interest rate for thirty years. Compare that with other popular investment alternatives like precious metals, commodities, stocks, and mutual funds and it will be hard to find financing available at all.

There may be some short term, one-year, loans at a floating rate tied to prime plus with no guarantee that it will be renewed. Some of those loans require you to have a 50% margin of equity and if the value goes down, you’ll have to put up additional cash or be forced to sell.

The advantage of having long-term mortgages is that an investor could find the optimal time to sell the property instead of needing to sell it because the term is due, and no other financing is available. Supply and demand cause the real estate market to be higher and lower and a long-term mortgage provides options to sell when the price is optimal.

Single family homes enjoy distinct tax advantages. If the rental or investment property is held for more than 12 months, the gain is taxed at lower, long-term capital gains rates rather than ordinary income rates.

Another advantage of rental homes is that the improvements can be depreciated over a 27.5-year life. This is a non-cash deduction that reduces income and shelters income. The accumulated depreciation taken over the life of the property is recaptured when the property is sold.

Since rental homes provide income that other investments may not, tax would have to be recognized on the annual income. IRS allows normal operating expenses like interest, property taxes, insurance, repairs, and management to be deducted including the annual depreciation.

Rental and investment property are eligible for tax-deferred exchanges to avoid paying tax at the time of disposition. Real estate also enjoys stepped-up basis which means that when an heir inherits a property, instead of having a potential gain from the value the decedent had purchased it for less depreciation taken, the heir’s basis becomes the fair market value at time of death. All potential gain may be permanently avoided.

Appreciation is a much-anticipated benefit of real estate because value tends to go up over time.

Another big benefit is the control that an investor has with rentals that is not available with other investments like stocks, bonds, or commercial real estate. It takes a relatively small amount of cash to control the entire investment in a home that wouldn’t be available in other investments without partners or publicly traded companies.

Single family homes are an investment that homeowners understand because they are essentially the same as the home they live in. They’re used for rental purposes but the maintenance is the same, the service providers are the same, and the neighborhood are the same. Most homeowners understand rentals far better than alternative investments.

Contact me at (510) 908-9021 if you’d like to know more about rental property.

THE SECOND STORY | March 14th, 2019

History tells us…now what do we do with it?


Saturday, March 23! 9am – noon! Bring your stuff to shred, watch it get ground up into bits, have a couple Lee’s Donuts (just ordered them), some juice, some fruit, jaw around for a while, and off you go!

If you read this and haven’t gotten an invite,

let me know…

and you’re invited! Bring friends! It’s free to all!

And any and all donations will go to Alameda Meals on Wheels…and will be matched by me!

 

My masterful webmeister fixed what was wrong last week when I couldn’t post anything!

Thank you,  Stuart! See you and family at the Shred Party!

I’ve been to a couple of meetings this past 2 weeks with the Bay East Association of Realtors, with our Alameda Local Government Relations Committee, and with our local (Realtor) Alameda Inforum, where we often have a guest speaker.

The first meeting was with local elected officials from all over the East Bay. This was my second year attending this event. It was as fascinating as the first time…when the Mayors, Vice Mayors, Council members, and City Managers were able to look at the California Real Estate stats for 2018. And get a clue about what we are all facing..pricing, housing inventory, spending hours in the car or  public transit.

Yep..there’s a real housing shortage. Yep, the freeways are packed with cars going somewhere (usually to jobs) very slowly. Yep, we have school issues. Yep, we have budget deficits.

But this event is one way to let them know we can be partners to help remedy these items.

Many of the Realtors at this meeting, knew that the market made a shift, downward, in June, 2018. I had a listing that felt that severely.  It was listed for 780K, had a price drop to 769K, and while the open houses were busy…there were no offers. Finally, an offer came in for 720K, and my Seller countered it for 749K (I think) and the Buyers came up to 729K.

And that’s when I knew (and the stats now showed us) that June was a turning point: more days on market, more price reductions, less bidding up, and Buyers found some relief. And just this past Tuesday, at our Alameda Inforum Marketing Meeting, the stats showed us the same thing.

Here’s the deal…IMHO the price reductions start at the top of the market (those listed for the most $$$), and while those prices are coming down, those on the lower end of the market are still climbing.

We (Realtors) only work off history, and we don’t have a genie to guide us into the future. But looking behind us, we need to face the facts.

BTW, we had 1 offer on the listing I have at Bali Lane…and now it’s pending as of yesterday.

Alameda Real Estate this Week!

Alameda Tues Tour 11

Total active listings 46 including 1 BOM

Total pending listings 42

Total sold this week 12

Questions? I may not have the answers, but I may be able to find somebody who does!

best, marilyn

 

THE SECOND STORY | March 12th, 2019

Will Points Make a Difference

Lenders typically quote mortgages at a market rate but can offer a lower interest rate loan if the borrower is willing to pay points up-front which is considered pre-paid interest. These points are generally tax deductible for the year paid when the borrower pays them in connection with buying, building or improving their principal residence.

A point is one-percent of the mortgage amount. A lender will quote a lower-rate mortgage with a certain number of points. There is not a standard amount; it is an individual company policy.

A simple comparison of the two alternatives based on the borrower’s ability to pay the points and whether the borrower will stay in the home long enough to recapture the costs will help to determine which loan will provide the cheapest cost of housing.

In the example below, two choices are compared; a 4.25% loan with no points vs. a 4.00% loan with one point. If the buyer stays in the home at least 69 months, they will recover the $3,150 cost for the point on the lower interest rate.

If the purchaser stays ten years, he’ll save two thousand three hundred dollars over the cost of the point. A less obvious advantage will be realized because the unpaid balance on the lower interest rate loan will results in an additional $2,076 savings.

Points a Difference.png

Use this Will Points Make a Difference app to discover whether paying points will make a difference in your situation. This is an example of a permanent buy-down but temporary buy-downs are also available. A trusted mortgage advisor can help you determine alternatives.

For more information about the deductibility of points, see IRS Publication 936 and if you’re refinancing a home, there is a section specifically on that. For advice on your specific situation, contact your tax professional.