THE SECOND STORY | December 1st, 2020

Home Inspections

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A home inspector is another key professional involved in a real estate transaction. Many times, the sales contract will have a provision that allows the purchaser to have inspections made to discover issues that are not readily apparent or have not been disclosed by the seller.

It is important to have a qualified individual perform the inspection. Regardless of whether a license is required, buyers should ask about the inspector’s experience, training, years in business and if they are familiar with the area and type of property involved.

Membership in professional associations can indicate an inspector’s commitment to education and training. References from both customers and agents are helpful and may be more meaningful. You are encouraged to call the references, especially, if you are concerned about any specific areas.

Errors and Omission insurance is intended to cover mistakes made during an inspection. It would be good to find out if the inspector has this type of insurance and how mistakes are handled or if omissions are made.

Find out exactly what is included in the inspection and what will trigger the inspector to recommend that you get an opinion by a specialist. They should be able to provide you with a sample report so you can see the detail with which the items will be explained. Ask if items that need attention will also be documented with pictures.

Some inspectors will allow you to accompany them during the inspection. They will be able to point out their concerns and answer any questions you may have about different things. An inspection can take two to three hours depending on the size of the property.

Generally, there is a time allotted in the sales contract for the inspections to be made and not completing them in a timely fashion could waive your right to use the contingency. Your real estate professional will be able to guide you through this process.

THE SECOND STORY | November 24th, 2020

First Things First

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If you are making a particular meal for the first time, it is essential to have a recipe so that it turns out the way it should. Knowing the ingredients and preparation can guide you through the process.

Buying a home is really no different than making a new recipe. There are certain things that need to be done, many of which should occur in a particular order to save time, money, effort and disappointment.

Your first inclination may be to start searching the Internet for homes and schedule some showings or possibly visit open houses. Even though this is very gratifying, it shouldn’t be done until you have gone through the preliminaries.

Buying a home for the first-time implies you haven’t been through the process before and even though, you may have a rough idea of what needs to be done, selecting the right agent in the beginning will give you the benefit of years of personal and professional experience that can help you avoid some of the common mistakes made when buying a home.

This agent can direct you to find the other team members that are required like the lender, title company, inspectors and others. Each member of the team has an important role to play that if not done correctly, could cause delays and possibly, jeopardize the transaction.

An important step is getting pre-approved so that you’ll know exactly what price mortgage and home you’ll qualify for. This may even allow you to lock-in a mortgage rate before you contract for a home. The pre-approval could also prove very helpful in negotiating with the seller by removing some of the doubt in their mind regarding an unknown buyer. Another advantage to pre-approval is that if you are competing with multiple offers, you have the advantage of being more of a known commodity.

You’ll need to assemble some documents for the lender including pay stubs from the past two months, W-2’s from last year, proof of additional income, tax returns for the past two years, bank statements for the last three months, list of all open credit accounts and balances, copy of driver’s license and history of residence for past two years.

Buying a home is one of the most important decisions in your life and it should be done with care and research. When all the things are done in the right order, finding the “right” home is just like following a recipe. For more information, download this Buyers Guide that includes great information to help you through the process.

THE SECOND STORY | November 19th, 2020

Just because….you’ll get into the holiday spirit!

A Good Cause!

Troop 78, based here in Alameda is selling poinsettias! I’ve ordered two of the blended pink/red plants.  Just click on the link above and order for yourself, for friends! The flier says it all.

Alameda Real Estate this Week

DEFINITIONS:
AC (active contingent on selling another property)
PCH (price change)
PSB (pending sale, want backups)
DOM (days on market)

(You may see some duplicates and I can’t seem to get rid of them!)

New listings this week 14

Active listings this week 40  including 1 AC, 1 BOM, 2 PCH

DOM  high 1292  low 7  avg 81  med 32

Pending listings this week 12  including 2 PSB  

DOM  high 41  low 3,  avg 15  med 11

Sold listings this week 24  

DOM  high 69,  low 0,  avg 18,  med 12

The winner for the highest sold price this week was the house @ 1714 San Jose  Ave. which sold for $1,926,000 on a list of $1,495,000! The listing didn’t say how many offers the agents received, but they told me that there were 23 disclosure packages requested by agents. It was gorgeous.

I showed my prospects that San Jose property (our second time out looking) and with that volume of disclosures out….I told them what they wanted to offer would not even make sense. Somehow I guess my frankness about the prices turned them off…and I haven’t heard from them since. Oh well.

I won’t be writing this blog since next Thursday is Thanksgiving…and I usually put the blog to sleep through December. I may make some posts (or not) on my for-fun blog Boomer-chick-musings.com.

I’ll recap what’s been happening in Alameda real estate on January 8th, 2021. If you have questions, comments, ideas about what I should write about, send me an email.

Think about ordering a (some) poinsettia(s) from Troop 78!

I hope your holidays are peaceful, fun, filled with zoom gatherings (or not).

All is well, even though it doesn’t seem that way.

Best,  marilyn

Check out my ‘for fun’ blog  Boomer-chick-musings.com 

THE SECOND STORY | November 17th, 2020

More Time at Home

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We are all spending more time at home and will probably need to continue to do so for a while longer. Depending on the makeup of your family, your home is now a home office, a gym, a virtual classroom and considerably more meals have been prepared in your kitchens in the past six months than normal.

Some businesses have undergone a metamorphosis that has shown them that maybe they do not need the big commercial spaces for their employees. They realize that they can be just as productive with their work force offsite which will cut expenses.

If this scenario sounds familiar, it may be worth exploring what moving would look like for your situation. To analyze the options, you will need to know what your home is worth and what the net proceeds will be after selling it.

You will need to know what homes are available with the amenities you are looking for together with the prices and mortgage money. Depending on the interest rate on your current mortgage, there may not be much difference in payment for a larger mortgage at today’s incredibly low rates.

Another option that some homeowners are considering is to not reinvest all the proceeds from the sale of their existing home into the new home. They are reserving some of the cash as a contingency fund for the unexpected. This strategy is providing peace of mind in uncertain times.

It is said that an investor is faced with three decisions every day: buy, sell, or hold. The equity in a home represents, for most people, their largest investment asset. While it is an asset, it is also an amenity.

Prudential thinking would insist on protecting your investments, but it would also suggest that you would evaluate alternatives to avoid missing opportunities. Having the facts available will make the options clearer and possibly, the decisions will become obvious.

We are available to help you assemble the information you need to consider what is best for you.

THE SECOND STORY | November 12th, 2020

This is what we walked into…

….when I was showing condos to my client. We walked in and found this mess in the sink. Thank goodness it didn’t stink.

Clearly, the kitchen sink had backed up. And I was the one who took the photo and sent it to the listing agent. He was not a local agent. I felt sorry for him. But I’m quite sure it grossed my buyer out!

He also wasn’t able to tell us where the parking space was or where the storage ‘unit’ was. And for the most part, his Disclosure Package was very incomplete.

This is another example of why I don’t sell real estate outside of Alameda. I don’t know the out-of-area rules/disclosures/rent control issues.

But I do know local vendors! This week I’ve had several calls from friends, clients, neighbors about vendors. I even keep track of the vendors: whether the client is pleased with them or not. I often check to see if they’re still in biz or have retired or just disappeared prior to giving their names to my clients.

Alameda Real Estate this Week

DEFINITIONS:
AC (active contingent on selling another property)
PCH (price change)
PSB (pending sale, want backups)
DOM (days on market)

New listings this week  8

Active listings this week 47 including 1 AC 1 PCH

DOM  1286   Low 8   Avg   82  Med 37

Pending listings this week 9

DOM  19  Low 0  Avg 9  Med 10

Sold listing this week 22

DOM  35   Low 0  Avg 13  Med 10

 

Check out my ‘for fun’ blog: Boomer-Chick-Musings.com

Be safe, be well, enjoy each day as it comes.  marilyn

THE SECOND STORY | November 10th, 2020

Moving “Down” in an “Up” Market

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Selling a home and buying a lower priced home that meets your current needs can be to your advantage in an “Up” market like the current one with low inventory. The advantage is that you can maximize the price for the home you’re selling and not have to reinvest it all in your replacement.

Just to illustrate the point, let’s say there is a 10% premium in the sales price of a home currently. If you’re selling a home for $750,000, it would be $75,000. If you replaced the home with a $500,000 home, the premium would be $50,000 which means you’re $25,000 ahead.

Let’s further assume that your home is debt free so that when you sell it, you have a large cash equity. Instead of paying cash for the replacement home, get an 80% loan at today’s low interest rates and reinvest the proceeds to supplement your retirement.

You may be able to get as low as a 2.5% mortgage and earn significantly more on the proceeds in other investments.

Home prices are up significantly over last year and they’re selling on average in three weeks. Inventory is down and there is less competition for your home than normal which can lead to a higher price. Closed sales increased 9% from August to September according to a Zillow report.

Moving down in an “up” market may be to your advantage. It could lower your cost of housing by saving on property taxes, insurance, utilities and maintenance while being able to take cash out of your home to reinvest in your retirement.

You’ll be using “other people’s money” to free up your equity that you can reinvest at a rate higher than you’ll be paying on your mortgage. The difference would be profit.

To explore this opportunity, give me a call and we’ll look at your numbers.

THE SECOND STORY | November 5th, 2020

When in doubt…..

…find a flower and take a deep breath.  Do it soon, before it blows away!

This is one of the last of the roses blooming in my front yard. I’ll cut most of the buds and blooms off tomorrow, before the rain hits! Hallelujah! RAIN!

Alameda Real Estate this Week

DEFINITIONS:
AC (active contingent on selling another property)
PCH (price change)
PSB (pending sale, want backups)
DOM (days on market)

New listings this week 8

Active listings this week 50  incl 1 AC, 1 BOM, 4 PCH

DOM  HIgh 1278  Low 4   Avg 70  Med 28

Pending listings this week 8 incl 2 PSB

DOM  High 24  Low 0  Avg 8  Med 8

Sold listings this week 16

DOM High 31  Low  0  Avg 11  Med 10

You can see that the inventory is low…probably due to the holidays…but the interest rates hit a new low today!

Be safe, be well, wear a mask, keep socially distancing, and we’ll be all OK!

Call if you have ???  Remember, I have reliable vendors on my list if you need to have something fixed/repaired/analyzed.  I called one of my best handy guys this am (knowing that it might be raining tomorrow), and he was able to do a temporary fix/repair on one of my south-facing windows in the entryway. Next week I’m having my window person come in and put in new hinges – weather permitting! This old beast of a house demands quite a bit from my vendors. And thank goodness, lots of them work on older properties!

Be well!  marliyn

Check out my ‘for fun’ blog….Boomer-chick-musings!

THE SECOND STORY | November 3rd, 2020

Cutting Your Housing Costs in Half

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Cutting the price will generally bring buyers of anything out of the woodwork that were not serious before. Some renters could easily lower their monthly cost of housing by half or more by purchasing a home with all the financial benefits that come with it.

The most obvious thing in today’s market is that the mortgage payment could be less than the rent the tenants are paying. With mortgage rates hovering around 3%, this is a major factor of the savings.

The two other major contributing factors are appreciation and amortization of the mortgage, neither of which benefit tenants continuing to pay rent. According to the FHFA House Price Index, home prices rose 5.4% from July 2019 to July 2020. There were 400,000 less homes on the market during the summer of 2020 than the previous summer which is influencing appreciation.

With each payment a homeowner makes on their mortgage, a portion is used to reduce the principal amount owed. This is like a savings account for the owner because it lowers their unpaid balance and increases their equity.

The equity becomes an asset that can be accessed by doing a cash-out refinance or a home equity line of credit once the equity has reached 80% loan-to-value.

A $300,000 home purchased with an FHA loan at 3% for 30 years would have a payment of approximately $2,013 including principal and interest, taxes, insurance, and mortgage insurance premium. If the tenant were paying $2,400 in rent, this would be a savings of almost $400 a month.

The monthly principal reduction would average $500 a month for the first year which would lower the net cost of housing. The other major item to consider would be the appreciation. Assuming, in this example, the home was appreciating at 3% annually, the monthly appreciation in the first year would be $750 which would further lower the cost of housing.

Rent $2,400
Total House Payment $2,013
Less Monthly Principal Reduction $513
Less Monthly Appreciation $750
Plus Estimated Monthly Maintenance $200
Net Cost of Housing $950

In this example, it would cost over $1,400 per month more to rent than to own.

A different approach to this would be that the equity in this home in seven years would be $121,579 based on appreciation and principal reduction. If the same person continues to rent, there would be no equity build-up.

If you’re curious as to how much you could cut your housing cost, go to the Rent vs. Own or contact your real estate professional.

THE SECOND STORY | October 29th, 2020

Fall back….and please VOTE (if you haven’t already)!

…this Saturday evening. Gain an hour of extra sleep!

I’m waiting for this weird time-changing thing to stop.

….These wooden leaves hang in my window near my front door.  Kind of makes it feel like fall, autumn, or whatever. 

I had the opportunity to call some of my colleagues yesterday, to be sure that they’ve voted… and specifically for Prop 19 (sponsored by the CA Assoc of Realtors).

This type of calling really rags on me, saying this and saying that…but because I’m involved with the local leadership of BayEast Associaton of Realtors, I made the leap into the vast unknown.

Much to my surprise, I was calling local agents, many of whom I’ve not seen for years. I had this pre-printed list and as I went through it I realized this was kinda made for me.

Yep, I get AI (artificial intelligence)…but this list was a wonderful way to either catch up with other agents and/or leave a message. They definitely were not COLD calls.

The chats were lovely, sometimes tear-jerking, and the conversations were a rich history of what the people are doing now…certainly during COVID. All of it was done electronically. And all of the folks I had spoken with had already voted and that included FOR Prop 19.

 

 

 

 

 

 

 

 

 

ALAMEDA REAL ESTATE THIS WEEK

DEFINITIONS:
AC (active contingent on selling another property)
PCH (price change)
PSB (pending sale, want backups)
DOM (days on market)

New listings this week  12

Active listings this week 51 including 1AC and 2 PCH

DOM   High  1271  Low  6  Avg  7  Med 3

Pending listings this week 16 including 2 PCH

DOM   High 42  Low 0  Avg  11  Med  9

Sold listings this week 15

DOM High 28  Low 0  Avg 12  Med 12

That’s a wrap!  check out my other ‘for fun’ blog Boomer-chick-musings.com

Be well, be safe, wear a mask, blah blah blah.

Best, marilyn   (Let me know if you have questions about the market…or if you have answers to my questions – like who’s gonna win our election, by how much, and where are you gonna move if your candidate doesn’t win?)

I wonder if there’s a black market for lots on the moon?

THE SECOND STORY | October 27th, 2020

Some Mortgage Interest May Not be Deductible

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Banks are concerned about making loans that will be repaid not about making loans that are tax deductible for homeowners. It is good business for the bank but how is the homeowner supposed to know?

Most homeowners and potential homeowners are aware there are tax benefits associated with ownership. For instance, mortgage interest and property taxes have been deductible expenses from federal income tax since it was enacted in 1913.

The current law provides that homeowners can deduct the interest on Acquisition Debt which is the amount of debt incurred to buy, build or improve a first or second home up to $750,000. The amount of acquisition debt decreases as payments are made and it cannot be increased unless the additional funds borrowed are used for capital improvements.

It is not uncommon for a homeowner to refinance their home for any number of reasons. It could be to get a lower interest rate that would lower the payments or remove mortgage insurance. However, when additional funds are borrowed for reasons beyond “buy, build or improve”, the excess is considered personal debt and the interest is not deductible according to IRS.

Maybe this is not important if the owner is taking the standard deduction because it is higher than the total of the property taxes, qualified mortgage interest and charitable deductions made by the taxpayer. Currently, it is estimated that 90% of homeowners are electing to use the increased standard deduction implemented with the 2017 Tax Cuts and Jobs Act.

A confusing issue that occurs at the end of the year is when the lender reports to the borrower the amount of interest that was paid. While that amount is most probably accurate, the bank doesn’t know if it is qualified mortgage interest for the borrower.

It is the responsibility of the taxpayer to keep track of outstanding acquisition debt and whether part of the balance is considered personal debt.

Another area where it could become important is if the property was lost due to foreclosure, deed in lieu of foreclosure or a short sale. The provisions of the Mortgage Forgiveness Act have been extended through 12/31/20 which exempts the forgiven debt from being considered income and therefore taxable. However, it only applies to acquisition debt. Any part of a mortgage refinance that is considered personal debt could be taxable in that situation.

As an example, let’s say that homeowners originally borrowed $300,000 to purchase a home that they owned for 15 years. During that time, the home appreciated significantly, and they refinanced it twice. Once, they made some improvements and took out cash to pay off personal loans and the second time, it was only a cash out.

Original acquisition debt $300,000
Remaining acquisition debt including improvements 225,000
Unpaid balance on current mortgage $550,000
Personal debt 325,000

In the example above, the personal debt of $325,000 would be considered income on foreclosure and recognizable as income on that year’s income tax return.

If you have never refinanced your home or have refinanced it but never taken any money out of it except to make capital improvements, your unpaid balance in most likely acquisition debt. However, it you have refinanced your home and pulled money out of it for purposes other than capital improvements, those funds may be considered personal debt.

This article is for information purposes. If you are unclear about the current acquisition debt on your home or need advice for your individual situation, contact your tax professional. Additional information can be found in IRS Publication 936, Home Mortgage Interest Deduction.