Open House - Alamitos Heights - Expansive Mid-Century

Open house today on fantastic remodeled mid-century style home. Dec. 16, 2012 noon-4 pm.

Take a break from Christmas shopping and stop by to see an amazing home! 5 bedrooms, 4.5 baths, pool.



795 Los Altos Ave., in the Long Beach neighborhood of Alamitos Heights.

See more open house information.

Julia Huntsman, Broker
01188996

The Fiscal Cliff - or Tax Breaks That Could Be Gone

At the end of 2012, depending on what happens between the political parties, there could be many expiring tax provisions that originated in the George W. Bush Administration, when 2012 was the sunset year for so many breaks.

Federal income tax rates are scheduled to increase in 2013, with tax brackets currently spread from 10%-35% changing to 15%-39.6%. Long term capital gains will increase from 15% to 20%, and other long term capital gains tax rates which apply to qualifying dividends will be taxed as ordinary income.

The 2% reduction in the payroll tax  for Social Security will expire, something which concerns many businesses.

Estate taxes will return to 2001 and the $1,000,000 exclusion for taxes, and the top tax rate increases from 35% to 55%.  (In 2001, there weren't nearly as many $1,000,000 properties to inherit as there are now.)

Earned income tax credits, child tax crfedit and the Hope tax credit will revert to lower limits.

Student loan interest will no longer be deductable after the first 60 months of repayment.

Have you been affected by the Alternative Minimum Tax? the exemption amounts will be lowered, affecting many more individuals (a tax that was only supposed to affect the highest income earners has been affecting more and more of the middle class).

Will tax rates for income earners under $200,000 or $250,000 (households) annually change, or will the tax rates for the vast majority of Americans be impacted as well?

And, once again, there are issues about the "debt ceiling", and what measures may have to be enacted in order to allow the government to meet its obligations.

The Mortgage Debt Relief Act is also set to expire; this act is what allows short sale sellers and individuals who took out a mortgage in a certain time period and were foreclosed on under certain conditions to not be taxed on the forgiven or cancelled debt. Should this Act not be extended, the tax burden of many distressed sellers will be increased.

And, last but not least, there is the issue of whether the mortgage interest deduction will continue and in what form--In California 89% of those who took the mortgage interest deduction earned less than $200,000. Losing the deduction would cost the average California taxpayer over $3,900.

Are you concerned? I hope you are and that you contact your Congressional representative to express your opinion.

www.juliahuntsman.com
www.longbeachrealestate.blogspot.com
www.facebook.com/longbeachhomesandcondos

December Events Around Long Beach Area

Local events and happendings in the Long Beach/Lakewood area, and some are tonight!


Las Posadas Procession and Fiesta at Rancho Los Alamitos on December 16.

See events at Rancho Los Cerritos for Christmas Festival and Tour -
Old Time Christmas Festival, 1-4 p.m., Sunday, December 9; 
Saturday & Sunday, December 15-16: Christmas Candlelight Tours, 5:30-7:30 p.m.

Long Beach Airport will open up a brand new concourse and terminal soon! See gallery photos and article.  See article about original mosaics recently found in the original terminal which were part of the WPA's projects.

Parade of 1,000 Lights, 5:30 to 7:30 p.m. , Saturday, Dec 8, boat parade between Shoreline Marina and Rainbow Harbor.

The Christmas Tree Lane Parade will take place from 5 to 7 p.m. Saturday, Dec. 8, on Daisy Avenue between Burnett Street and Pacific Coast Highway, Long Beach.

Naples Boat Parade, Sat. Dec. 15th, 6 p.m.,  off Naples Plaza and Marine Stadium.

See photos for the Victorian Christmas at the Banning House in Wilmington.

Huntington Harbour Board Parade, Dec. 8, 5:15 p.m., off Pacific Coast Highway, Huntington Beach.

New Real Estate Laws for 2013

California new real estate laws are coming up effective January 1, 2013, and here are a few:

For transactions in homeowner associations, documents are ordered in escrow to go to the buyer, for which there are typically fees charged for the preparation of these documents.  A homeowner association cannot collect a cancellation fee for sales disclosure documents (1) when a written cancellation by the party ordering documents is received by the HOA before work is performed; and (2) when a written cancellation by the party ordering documents and HOA was compensated for any work performed--the HOA must refund all fees collected if a request is cancelled in writing and work had not yet been performed on the order.

Hazard Disclosures: Sellers must now disclose the location of gas and hazardous liquid pipelines, from information in a database.  This information would most likely be coming through hazard disclosure companies hired by the seller in escrow to make these and other disclosures.

Property owners will continue to have anti-deficiency protection on refinanced loans on their property, except for a refinance where cash is taken out. 

Month-to-month tenants of properties in foreclosure must be given 90-day notice to vacate after foreclosure--in six languages (after March, 2013, and there are 4 exceptions to this).  Lease tenants may remain until end of lease term under all terms of the agreement.

Helping Distressed Homeowners Keep Their Homes -- No dual tracking, meaning no sale of property if an alternate foreclosure prevention method has been approved in writing by all parties (investors, lienholders and mortgage insurers).  See my previous post .

Vacant REO properties must be maintained (an existing law which has not been extended indefinitely).

Foreclosure notices must have a summary of information accompanying them, in six languages.

Property taxes -- the death of a co-tenant will not trigger a reassessment of the property, providing certain conditions are met.

Buyers of foreclosed properties have opportunity to correct substandard conditions of at least 60 days before an enforcement agency can take further action.

If you would like the specific legal descriptions of any of these laws, please contact me with your e-mail and name information, I will be happy to forward you additional information!

What is For Sale Under $300,000 in Long Beach?

MLS R1205418 - Click to see listing

Periodically (maybe once a year) I've been tracking this price range about affordable properties in Long Beach. 
One thing to know since my last post on this subject in May, 2012:  The market has changed, and for more than one reason.  Not only are prices going up in some areas, but at the same time there is far less inventory than even just a few months ago. 

Currently, in the MLS, the total number of active listings for $300,000 or less for single family homes, condominiums, lofts, own-your-owns, and coops comes to the grand total of 167 as of this date.  Compare that to 618 properties in May of 2011.

 

The breakdown is as follows:

• Single family homes (some of which homeowner association listings in PUDs) comprise 62;
• There are 80 condominiums listed;
• There are 7 coops (similar to condos but have different property tax arrangements)
• No lofts in this price range;
• There are 18 own-your-owns listed (also similar to condos but different property tax mode)

The number of listings is down due to various market forces, not the least of which is fewer distressed properties on the market. In general, market inventory has decreased by 60-75% since this time last year.  Also, the market prices are actually increasing compared to October of 2011, sometimes by as much as 20% on a month/year to month/year comparison in some zip codes of Long Beach.  See a south Los Angeles County/north Orange County regional report for overall market trends for areas including Lakewood, Cerritos, Huntington Beach, Newport Beach and inland cities including Fullerton.  While the picture may vary individually within each city or zip code, the trends are reported here.

There are even more complex trends within the picture presented here, such as the future of the mortgage debt relief  forgiveness being uncertain which is probably impacting some short sale sellers from putting their property on the market, whether or not there is "shadow inventory" which will be added to the market in 2013 (that's another topic of discussion).

For a property search of these areas go this property search tab, where all types of properties, including 2,3, and 4 units, may be searched throughout Long Beach, Los Angeles County and Orange County and all cities in Southern California. (Currently, all active, backup and pending status listings are shown in this search.)

Are you thinking of selling? Please contact me.

What is a HAFA short sale?

Short sales have not gone away by any means.  Although the number of actual short sales for residential properties has decreased greatly just since the beginning of 2012 in the south Los Angeles County/north Orange County region, the number of homeowners estimated to be in an "underwater" value position is about 25%-30% of the market. A search in today's MLS in the City of Long Beach, out of 492 active residential listings, about 71 are listed under short sale conditions, or about 14% of the active market.  Interestingly, the number of short sales in October 2012 compared to October 2011 has actually increased by 28% overall in the same general region, with short sales being about 6% of the combined market in all the local cities of this local region.

There are, however, reasons for a decline in short sales, one of which is there is still a great number of owners who go into foreclosure without ever attempting to list their home first; next, some do list their home but are unsuccessful in selling before the bank takes it over.  Nationally, more than 7 out of 10 homeowners go into foreclosure without visible intervention.

Currently, there are over 100 lenders participating in the HAFA (the government-subsidized Home Affordable Foreclosure Alternative), including Citimortgage, Bank of America, Wells Fargo, and many servicers.

For a homeowner to participate in this program, there must be certain requirements met--your home must be listed with a local real estate agent, and the necessary documents must be submitted before December 31, 2013, and close by the following September of 2014.  First, it must be a loan other than one by Fannie Mae or Freddie Mac, or insured by FHA, or the VA.  It must be a first trust deed originated before Jan. 1, 2009, and the loan amount for a house or a condo (1 unit) must be under $729,750. The borrower must comply with the specific timelines in this program. The borrower may have more than one property approved for sale under this program, but cannot have purchased a property in the last 12 months..  Last but not least, the borrower must be in a hardship situation.

Now, HAFA will not apply to all borrowers because about 60% of California's mortgages were issued under Fannie Mae, which is excluded from HAFA.  (But Fannie Mae and Freddie Mac also have hardship program, please contact me for information.)  The bank or servicer may not attempt to collect any additional sums (i.e., cash or note) from the borrower after the property is approved for a HAFA sale, and the bank may not complete a foreclosure sale if the borrower complies with the HAFA sale terms.

There's about 9 steps to complete (including close of escrow) to go through a successful HAFA short sale.  What are the pluses? You may have some financial incentives to move under this program, and you may also be able to obtain a release of your second lien. 

Are you being scammed?  See this video here for the 5 basic trouble signs you want to watch out for.

The same banks have their own "cooperative" short sale programs which are similar to the HAFA program; currently Bank of America in particular is doing an outreach to certain borrowers.
For more specific information see Making Home Affordable and a HUD telephone number to call for housing counseling. 

This is a sale which requires the assistance of a real estate professional.  Please contact me for more specific information which can be e-mailed to you about this program.  Please remember you may have other options (do you think you still have equity in your property? that actually happens), and there are other short sale programs being offered right now, some of which offer a great deal of cash incentive to the borrower, so please call me about the HAFA or any other short sale program. Don't let your house go into foreclosure if you can possibly help it.

Julia Huntsman, 562-896-2609

Borrowers are always advised to seek advice from their tax and/or legal professionals.

Eliminating Your Second Lien -- Do Some Checking First

Under a new program by offered by Bank of America for home mortgage second liens, about 150,000 of its borrowers are being contacted to apply for full forgiveness.  Based on the total dollar amount forgiven so far for the number of borrowers, the average is about $69,000. 

If you're currently in a short sale, this could potentially cause a delay, or worse, if you're already on track for closing on the first and time is running as you approach your closing date.  The release time required for completion of the second loan is running about 90 days, so accepting that release will result in a delay of your short sale, or even worse, a loss of that transaction if the investor/servicer on the first will no extend time to close.

Make sure you're really going to get freedom from a difficult mortgage burden.  Say you're not in a short sale, and you receive the offer from Bank of America or one of the other major banks, make sure you get a proper estimate of your home's value from a professional.   If your first loan balance is about $465,000, and your second balance is still around $45,000-$50,000 because you got an 80/10/10 loan (you had 10% down payment, and got a 10% second mortgage) getting your second loan released won't do you any good right now because it will not put you into an equity position--I forgot to mention, you just found out that at best your house is currently worth $450,000 from your neighborhood REALTOR who has checked all the sales within the last 4-6 months in your neighborhood.  If releasing that lien puts you into an equity position, and you're not under a short sale timeline that cannot be extended, then the second lien forgiveness program could be for you.  But make sure you read the entire letter, because if your first is currently in default and on a foreclosure track, getting the second forgiven will not prevent the first's foreclosure. That will still require separate action to stop the foreclosure (there can be different banks and/or different investors on each loan).  Bank of America also makes is very clear that they are choosing who gets invited to this event, you as the borrower cannot pursue it without being invited. (It's not personal, it's just that there are many conditions affecting second mortgage liens.) The fact is, Bank of America took over Countrywide's loans, and Countrywide did a lot of "piggyback" loans, which are probably some of the seconds that are part of this offer. 

It's also wise to review beforehand any possible impact to your credit score (debt cancellation may actually impact your score), reporting to the IRS, and any bankruptcy issues you may have.

If you need an estimate of value on your Long Beach, Cerritos, Lakewood, Seal Beach home, or somewhere near these cities, please contact me.  If you would like more information about a short sale and you're in Long Beach, Cerritos, Lakewood, or in Los Angeles County or Orange County, please contact me.

Julia Huntsman.REALTOR®, CDPE, e-PRO®, SFR, Broker

and don't forget to "like" us at www.facebook.com/longbeachhomesandcondos

Complacency Could Kill Real Estate Opportunity

What does the California Homeowner Bill of Rights Mean for You?

Gov. Jerry Brown signed this Bill of Rights on July 11, 2012 and it will take effect on January 1, 2013.  This law will help homeowners avoid foreclosure by prohibiting lenders from engaging in "dual tracking", by requiring a single point of contact for the borrower, and by giving the borrower the right to sue the lender for violations of this law.  It applies to first trust deeds on owner-occupied properties that are 1-4 units. 

The single point of contact doesn't necessarily mean the borrower will deal with only one person throughout the process, but it means "one person at a time." 

What California borrowers wanted was protection from the foreclosure process when trying to obtain a loan modification--the foreclosure department in the bank was not talking to the loan modification department and the borrower who thought they were well on their way to keeping their home, suddenly lost it in foreclosure. 

There is much more information and guidelines in this law, so for more information, please contact me with your contact information and I can e-mail or fax the entire summary about this law to you.

Don't be one of the homeowners who loses a home without searching out your other options.  Foreclosure may affect you in many ways, including candidacy for future jobs, obtaining some insurance premiums, and much more, because credit histories are often reviewed by a wide variety of sources in your life, which will make determinations about you based on what they see there.  Do all you can to avoid the pitfall of foreclosure--find free information here.

What's the 2013 Prediction for California Home Prices?

Assumptions:

The PITI is based on the prevailing median price in the

2nd Quarter 2012. The PITI is calculated based on an

 underlying effective FRM interest rate of 3.92%,

 a 20% downpayment,

and corresponding loan amount.

The monthly rent is derived from

RealFacts Q2 2012 estimates for a

3bd 2ba average asking rent.

The California Association of Realtors annual conference was held earlier this month in Anaheim.  The 2013 Forecast extensively covered all phases of the residential market, with a total of 136 PowerPoint slides as part of CAR economist Leslie Appleton-Young's annual presentation. 

At the closing section, Market Opportunities for 2013, four points were made:  1) Home prices are rising, but still very attractive; 2) Look for return on interest for investment opportunities; 3) interest rates are at historic lows; and finally, 4) first-time buyers: rent v. buy?  Do The Math!.

The current story for many buyers and sellers has twists and turns all along the road, but it's still a time to not be passed up!

For California, the median price of a single family home is projected to rise in 2013 from $317,000 at the end of 2012 up to $335,000 in 2013.  At this point, buyers are more optimistic than sellers about future home prices:  49% of sellers think prices will go down in one year, and 9% of sellers think they will go up.  But while 49% of buyers think prices will stay flat, 25% of buyers think prices will go up.  And those buyers are probably going to be right--last year the projected price increase for 2012 was for a 1.7% increase, but the current projected actual increase by the end of 2012 is 10.9% increase.

Median home price for So Cal Counties

The median home price in Los Angeles County went up over 10% from August 2011 to August 2012, with REO sales making up only 12% and short sales making up 24% of the total sales in August 2012.

The Mortgage Debt Relief Act Is Hanging in the Balance For Long Beach Area Owners

In 2007, the Mortgage Debt Relief Act was passed in an attempt to help the millions of homeowners who, due to the housing crisis and economic crash, suddenly found themselves in danger of losing their home to foreclosure.

The act has helped many California distressed homeowners find solutions to avoid foreclosure and opened up options to them that were previously unavailable.  This Act removed the tax responsibility on forgiven mortgage debt and allowed short sale sellers and owners of foreclosed homes to recover more quickly from selling their principal residence as a distressed property.  

 

Although there is less coverage in the media about homeowners who owe more than their home is worth, those owners make up about 22% of the nation's homeowners.

The Mortgage Debt Relief Act, however, was only intended to be a temporary solution and is now set to expire at the end of 2012.  This law has already been extended twice.  There is a bill in Congress that would extend it again, but it is unclear if it will pass. For distressed homeowners, this means that time is limited to take advantage of this program.

Time is running out. But there is still a chance to change your financial direction and avoid foreclosure.  Call today to find out the current process for listing and selling your property as a short sale--the banks have streamlined their process greatly compared to the past, and limited inventory has made buyers more willing to wait for the short sale process.

Just one more thing: please don't think that if this law is not extended, that a short sale is not possible because that is not true.  What it means is that the tax forgiveness period will be over, which will impact both short sales and foreclosed properties.  Please remember that with a short sale, with the vast majority of properties, there is less of a loss for the bank to accept than when it is not sold and goes straight into foreclosure. Either way, the homeowner will be responsible for this difference between the bank's loss and the mortgage amount, if the MDRA is not extended.

 

Contact me, Julia Huntsman, CDPE, at 562-896-2609 and see more short sale information at www.juliahuntsman.com - Help for Homeowners.

Los Angeles and Orange Counties Home Price Snapshot

Orange County's median single family home price was Orange County $567,710 in August 2012, up from $551,160 in July 2012, and up from $508,910 in August 2011.

Median price of a single family home in Los Angeles County was $344,770 in August 2012, up from $334,190 in July 2012, and up from $312,900 in August 2011.

Home Improvement Tips--Cost vs. Value Report

There's a lot of information available about getting a new look for your home, or getting it prepared for marketing, or just getting it fixed.  But how do you know the best areas to invest your time and effort?  Every year Remodeling Magazine publishes its online report -- it's a great resource to consult with to find out what your best choices might be, both from a popularity standpoint and a financial one.  If you're thinking about or considering selling, why spend tons of money or time on a big improvement that may be your best personal choice (if you're going to live there indefinitely), but not one that the majority of buyers may deem significant, or vice-versa? Find out what the trends may be in your region. The improvement picks are not necessarily the same each year.  The annual "Cost vs Value" report for 2012 is not out yet, but should be soon, but here is the link to the Los Angeles area version from 2011.

Also, If you go to www.juliahuntsman.com and scroll down to "Houselogic", you can click and go to their main website for more home improvement tips and maintenance.  This is a really useful resource as you can save items to make your own collection.  Houselogic is another great resource from the National Association of Realtors.

Frankly, when it comes to home colors, I go to a store like Dunn-Edwards and get their paint color chips--they also have very nice brochures putting together a coordinated palette of colors for interiors and exteriors--as well as colors that could be used for various architectural styles and periods. Historical colors can be important, especially if you're located in a historic district where there may be local rules or guidance on period color selection.

If you use Facebook, "like" my page at www.facebook.com/longbeachhomesandcondos while you're there and you can follow my blog posts where I put out information for both buyers and sellers, or just look at my blog at www.longbeachrealestate.blogspot.com from time to time!

Best Time Ever to Save on a Mortgage Payment in Southern California

30-year mortgage rates since Sept. 2007

Dear Buyers:

Did you know rates are about 3.49% right now? Best time ever to save on a new mortgage payment in the Long Beach, California area!

Rates have trended downward since 2008, and that means you will pay less on your monthly mortgage payment for the same selling price. 

See what your monthly median payment will be at different interest rates and different selling prices.

The lower chart was made up when interest rates were a little higher, but get out your calculator to easily compute a selling price at a lower rate as follows:

Comparisons at higher rates/higher prices

For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI (principal, interest, insurance and taxes) will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.  So, for a $400,000 home at today's 3.49 percent mortgage rate, the monthly PITI would be about $1885, and a savings of over $100 at a 4 percent rate.

Pulsenomics, in its latest quarterly survey shows housing prices for the future.
Price appreciation/depreciation expected over the next five years:
2012: -.4%
2013: +1.3%
2014: +2.6%
2015: +3.2%
2016: +3.5%

The average pre-bubble (1987-1999) annual appreciation was 3.6%.
(Thanks to KCM Blog for Pulsenomics data.)

New and Easier Guidelines for FHA Approval of Homeowner Associations

The fallout rate for FHA approved homeowner associations has been huge over the last 2 years. FHA-approved condominiums are often one of the best entry level paths for first time buyers into homeownership.  But the Federal Housing Administration (FHA) just eased some of its restrictive guidelines, bringing their rules into the sphere of the current economic market, and bringing more opportunity to sellers and buyers.

One example of change is the acceptance of FHA loans in complexes which included commercial units--often located on the first floor, such as the Lafayette in downtown Long Beach or one of the newer loft projects in San Pedro.  The revised rules changed from allowing 25% to now allowing 35% of the project to be retail or commercial, and possibly more.

Another difficult requirement concerning the personal legal liability for condo board officers for being responsible for certain knowledge that could be well beyond their actual ability to know, with a penalty up to 30 years in prison, has now been changed to "less scary language."

And, significant in these economic times, the requirements concerning delinquent dues and length of time delinquent has been expanded to 15% of owners may be up to 60 days late (not the previous 30 days) to meet FHA approval for the project. 

While these may not seem like significant changes to some, by checking the list of FHA approved projects in Long Beach, compared to the far greater number that were FHA approved for many years, it's not difficult to see the impact on buyers, sellers, and the lending market.  See the complete article by Kenneth Harney.

Market Update, And More Home Price Directions Are Moving UP

California prices by county

The median price paid for a Southern California home rose to $309,000 in August--that's an overall median for Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties--that's an increase of 10% compared to August 2011, and the highest median price since August 2008's median of $330,000.

Short sales and foreclosures (the distressed property market) are trending downward by 1%-2% from  July and previous months.  That does not mean they are going away, because the distressed property market is predicted to be here for a long time into the future.  The good news is that higher prices mean a lift out of the short sale category for some prospective sellers, or a higher net from a sale to put towards a new purchase. Short sales in the 6-county area were about 17% of sales, but locally, there are specific areas where they are still 50% or more of the market.

Drops in foreclosure inventory,  increases in sales of higher priced properties are part of the increase in home price.  The increase in numbers of properties in escrow is impacted by the lowest interest rates since the 1940s, which are likely to stay that way for some time into the future, this August was the highest August sales in the last 6 years.  The volume of sales however, is still 15% below the average calculated since 1988.

Investors, or "absentee buyers" bought 27% of the homes last month, and buyers paying with cash were 31%, paying a median amount of $235,000, an increased amount from last year.

Credit conditions for buyers, and therefore for sellers, are strict.  Buyers who currently occupy their homes and want to purchase a new one not only must meet all those loan requirements, but satisfy the lender's requirement for at least 30% equity or more in their property. If your property is currently a rental, the property's equity may not be an issue assuming you have satisfied other lender conditions.

Find more local trends for houses and townhouse/condos in Los Angeles and Orange Counties including housing affordability, months of inventory, median sales price (now up at 5.9% at $450,000 for the region covered by this report), and local inventory amounts. Just go to my site for this local regional report that covers cities including Lakewood, Long Beach, Cerritos, Seal Beach, Huntington Beach, Newport Beach down to Aliso Viejo and Rancho Margarita, out to Yorba Linda and Placentia, and many more cities in between.  A more specific report is available by zip code (here is 90713 in Lakewood) or by city--this one is for Long Beach.

For a copy of your local report, please contact me and I will be happy to send it to you.

Some selected prices:  the highest median sales price in the local region:  Corona del Mar at $1,700,000; Cerritos, $499,900; Long Beach, $320,000; Signal Hill, $410,000; Cypress, $422,500.

Click on the link to see Dataquick's Southern California report for August. Do you want to find out your home's current value?

Please go to What is My Home Worth for more information.

When Am I Able to Buy Again?



Seasoning Requirements
 

The distressed property market began some time ago, and some people are beginning to wonder when they will be able to buy again.

Credit scores are important as well, depending on how severe the situation was and how long it will take to recover.

This is meant as a general guide only. 

For instance, if your short sale closed escrow in September of 2009, you could be eligible for an FHA loan, depending on your other loan criteria of course.  IF you have certain extentuating circumstances and were current on your mortgage at throughout the short sale, you may not have any waiting period for a new FHA loan.

To obtain a conventional FNMA loan, your waiting time is as early as 2 years after a short sale closed if you have 20% down payment.  And, for a FNMA loan, IF you can show certain extenuating circumstances, your wait might be only 3 years after a foreclosure.

Bankruptcy is one of the most damaging events to your credit, but if you work diligently to restore your credit as soon as possible, your wait could be much shorter in order to buy.  Paying bills on time and getting new credit established, perhaps by obtaining a secured credit card, are essential to improving your status as a good loan risk, according to John Walsh of Total Risk.

Please contact your lender (or I can refer you to one) for circumstances about your particular situation, because it may vary somewhat from the information here. Please contact me--I want to help you, even if you're not able to buy now.

The Interest Rates are Down but Has the Cost Gone Up?

A lot of buyers know that rates are down, way down, and therefore feel they don't need to be in a hurry to buy. But there's more to the story than that.

The Housing Affordability Index from the National Association of REALTORS® shows the drop in interest rates over a period of time since 2009.  The interest rates for were 4.37% in January, 2012, and down to 3.81% in June, 2012.  In January and February of 2012, the monthly payment as a percentage of income was 12.% and 12.0%, the lowest for the entire period of the chart, but increased to 13.9% in June. That means a buyer is spending a larger percentage of his/her income on mortgage payments. 

Yes, rates are low, but with low housing inventory all across the nation, and more buyers than there are sellers, there is an upward pressure on prices.

And why is that? Because the median home price went from $154,600 in January to $190,100 in June, a 23% increase. These home prices are on a national level.

So what is going on locally? Many areas are still trending downward, but upward trends are happening all around:  The average home price in Signal Hill has gone up .8% annually, and 23% comparing August 2012 to August 2011.   The average home price in Belmont Heights/Belmont Shore/Naples (90803) has gone up 10% over the last 12 months.  The median sales price in Cypress is up 8%; Long Beach median sales price is up 1.4%; Cerritos is up 11.3%; Bellflower is up 8.5%. If you would like a monthly price report on one of these areas, they are readily available to send to you.

One of the most popular posts on this blog was The Cost of Waiting to Buy which continues to tell a part of the story.

Is now the time you're ready to take action? 

Top 10 Mistakes Buyers Make

 

California Association of Realtors has made a very nice graphic about their list of buyers' top 10 mistakes in a transaction.  Since they have the experience of hearing from many agents all over the state, they would be in a position to hear the most common complaints.

Personally, I haven't had equal experience with every single one of these items when working with a buyer, but when I think about, I can come close.
Item 1:  In every market, there seems to be a certain buyer who makes a below market offer (possibly known as "lowball") and wonders why the seller didn't respond with a counteroffer, or at least hear from the listing agent. Buyers, if you are this type of offeree, please know the seller is not ever required to respond (although it's nice of them to do so) if they don't like your offer.  Even if you are totally right about the price, and sometimes you are, it doesn't matter. Because the seller has a different perception, and does not agree with yours, even if you are right. Which leads to an important point: a good contract agreement reflects a meeting of the minds. Buyers, sometimes you have to either move on, or wait and see.  

And then there's the frustration of Item 2, where the seller accepts another buyer's offer. That other

Seller Top 10 Legal Mistakes, Part IV

Not providing the buyer with legally required disclosures.

There is an important form used by REALTORS in California transaction named the Transfer Disclosure Statement (TDS) for residential sellers to make certain written disclosures about their property. This form is required by the California Civil Code, since 1987.

Sellers often forget how important it was to them as a buyer to find out what their seller could tell them about their new home. Buyers still want to know, so what is a checkbox and a few blank lines to fill in to a seller on the TDS is a world of important information to the buyer(s).

The TDS is meant for the seller to tell the buyer what is within their ordinary knowledge about their property, i.e., repairs, how recently painted, permitted and non-permitted modifications or additions, how old the roof is, new flooring, is there a sump pump under the subflooring--in other words, things that the mentally present person is not likely to have forgotten about.  There is even an additional multi-page Property Questionnaire covering numerous topics to prompt the seller's memory, a document which is not legally required but is often requested by the buyer's agent. Buyers sometimes think that sellers purposely didn't tell them certain things, like that rot that was found after the brick facing was removed from the front of the house. But things can happen that the seller may have no knowledge of, especially if they lived there for many years without spending money on maintenance. But then there's the case of the freshly painted bathroom that may have been covering over the water stains from a roof leak, which the buyer found out about on physical inspection, but where there was no disclosure about it on the TDS.  Sellers, it only upsets buyers when you're not totally forthcoming--it may be painful to negotiate during escrow and walk away with less money, but it could be saving you from an angry buyer (that did not discover a problem during escrow) and a lawsuit later on.

It's important to give this TDS document to the buyer, in the time period stated in the contract, since the buyer has the right to cancel the contract otherwise. If the seller thinks he/she doesn't have to provide this form and refuses to do so, the seller will be liable for any resulting damages (that means . . . attorneys, and more money spent).  If they seller accidentally includes wrong information, and then realizes it later, they may amend the TDS and give it to the buyer. There are certain sellers exempt from this form, such as in probate cases, and trust, plus a few other types.

And there are other required disclosures, including those about natural hazards, lead paint, special districts, and others, such as death on the property.  If someone died on the property more than 3 years prior to the buyer's offer to purchase, or if they died from AIDs, the seller is not required to disclose that fact, unless the buyer asks. If someone did die before that time, then the seller must disclose it--because if you the seller thinks the buyer won't be talking to the neighbors later on, you should think again.  Buyers should know what they are concerned about before and during their buyer investigation period, so that they are not unpleasantly surprised after they move in.

This is a more complex and lengthy subject than in this post, if you have questions please feel free to contact me.
An observation:  It's so very difficult to absorb all that is conveyed in the tiny print in these transactions, so my advice is:  turn off your TV, do not check your phone, your iPad, your computer, just sit and focus in as quiet a place as possible when completing your documents.  It is not a time for multi-tasking.

Does the 3.8% Healthcare Tax Affect You?

The Healthcare Measure was recently passed, which imposes a 3.8% tax which will affect some people.

Important things to know about this tax are that, first of all, there may be some analyses which may not be correct.  For instance, this Measure does not mean that you will be paying a 3.8% tax on the sale of your home after 2012.

As stated in columnist Kenneth Harney's article of July 15th:  "Yes, there is a new 3.8% surtax that takes effect Jan. 1 on certain investment income of upper-income individuals — including some of their real estate transactions. But it's not a transfer tax and not likely to affect the vast majority of homeowners who sell their primary residences next year." 

The surtax does not change the current capital gains exclusions of $250,000 (single tax filers) or $500,000 (joint tax filers, i.e., couples) for the sale of your principal residence.  But, basically, any gains above those amounts on the sale of your residence and if your income is above the $200,000 (single filer) or $250,000 (joint filer) annual income thresholds, you may then be exposed to the 3.8% surtax.

Therefore, it will be important to gather documentation on your property concerning improvements and expenses--including your closing costs--which increase your tax basis in order to lower your capital gains.

The National Asssociation of REALTORS at their website shows the following sample:

Say you and your spouse have adjustable gross income (AGI) of $325,000 and you sell your home at a $525,000 profit. Assuming you qualify, $500,000 of that gain is wiped off the slate for tax purposes. The $25,000 additional gain qualifies as net investment income under the healthcare law, giving you a revised AGI of $350,000. Since the law imposes the 3.8% surtax on the lesser of either the amount your revised AGI exceeds the $250,000 threshold for joint filers ($100,000 in this case) or the amount of your taxable gain ($25,000), you end up owing a surtax of $950 ($25,000 times 0.038).

Capital Gain: Sale of a Principal Residence

AGI Before Taxable Gain  $325,000

Gain on Sale of Residence  $525,000

Taxable Gain

(Added to AGI) $25,000 ($525,000 – $500,000)

New AGI $350,000

($325,000 + $25,000 taxable gain)

Excess of AGI over $250,000 $100,000

($350,000 – $250,000)

Lesser Amount

(Taxable) $25,000 (Taxable gain)

Tax Due $950

($25,000 x 0.038)

See Kenneth Harney's article and Health Reform scenarios at Realtor.Org.

Please consult your tax advisor for information that directly pertains to your situation.

Top Ten Legal Mistakes Home Sellers Make-Part III

Verifying the buyer's finances.

The standard contract form used by California REALTORS says that the buyer must provide verification of their financing and/or funds to close within 7 days after the contract is entered into.

But why wait until then? The seller shouldn't have to find out a week later to find out the buyer may not have the upfront pre-approval, or that there may be some other doubts. The buyer's motivation should be such that he or she is ready to provide all that information with their offer to the seller, and in fact, the seller may have required their agent to request this in the MLS listing.  It only makes sense to find out as much as possible in the beginning, at least that one contingency can be out of the way. All too often, it turns out the buyer can't get a loan when it's time to fund. There are underwriting issues, or appraisal issues, that may come up that were unforeseen by the buyer, but sometimes not enough of the right questions were asked in the beginning. 

So why overlook the easy things up front, such as having your agent contact the buyer's lender for a direct conversation, and getting copies of statements (via the buyer) showing source of funds if it is not submitted with the offer? And, does the buyer currently own other property that he's not selling that could impact financing; or, is their source of closing funds in a liquid account? Seven days after a contract is entered into is not the time to learn about some uncertain source of buyer funds or fuzzy loan approval, the seller should want to know as much as possible beforehand.

These are just some of the reasons for verifying the buyer's finances up front. For more questions, please contact me or visit www.juliahuntsman.com.

What California Homesellers Sometimes Overlook: 10 Things, Part II

Because homesellers may feel eager to sell, they sometimes overlook what could turn out to be very important clues about an offer.
 
About the buyer deposit:

What if the buyer submits an offer for your California home at $250,000, which also happens to be your list price? You think you've got a good offer for your equity sale listing, right?  And you see the letter from their lender saying they're pre-approved and that they have funds to close. So what could be wrong?  It's this:  the amount on the deposit line in the offer is for $500.00. and their down payment shows 20% down and they are paying their own closing costs, so they are presenting themselves as strong buyers. So why aren't they putting down a good $5,000-$7,500 for their deposit so they show you they really want your house? First-time buyers with an FHA buyer assistance program might not be able to do more than $500.00 deposit and be highly motivated, but a investor or other buyer with more assets would be ideally putting down 2%-3% deposit because they have the monetary ability to show their motivation.

Important to remember:  The buyer's deposit is fully refundable to the buyer within the buyer's contingency terms of the standard California of Association of Realtors form contract, but if the buyer defaults later on and walks away, the seller will have little or no buyer deposit as liquidated damages to which he/she may otherwise be entitled.  If you, the seller, question the amount of deposit, remember, you can include a reasonable amount in your counteroffer to the buyer if you believe the buyer has the capability and you want the commitment.

For more help and real estate information, please go to http://www.juliahuntsman.com/Home-worth.html

What California Homesellers Sometimes Overlook: 10 Things, Part I

Regardless of when and where the homeseller could be selling in California, or whether there's a shortage of inventory or not, the transactional issues and facts are still tied to the contract between buyer and seller.

Here's a handy list for the Top Ten Legal Mistakes, with some added commentary by me.

What are the other contractual terms?
Sellers quite naturally want to sell at the highest possible market price, and have very good reasons for doing so. But selling price is not the only term in the contract-- for example, what if the buyer has a contingency to sell their own property, or what does it mean if the buyer is willing to remove their appraisal contingency but not their funding contingency? What if you agree to the liquidated damages clause? In a short sale, do you understand all the terms of the short sale addendum? And what do you need to consider with an all-cash buyer vs. a financed buyer?

What may happen with multiple offer situations?
In multiple offer situations, many buyers could be submitting offers but the seller is not obligated to any one buyer. The seller may respond to all buyers or choose one (but without discrimination). But what if additional offers are submitted in a regular sale after a signed contract exists with buyer no. 1? And what if you're a short sale seller, and a higher offer comes in after the first offer was submitted to the bank? (Hint: the short sale addendum states property may continue to be marketed after contract with the 1st buyer, and other offers may be presented to the bank.) Or, what if the buyer is submitting multiple offers on multiple properties, should they tell you that, or not, in their offer?  (Hint: Yes, they should disclose.) 

These are issues the seller should take time to review carefully and ask questions, preferably before a contract is signed--it saves on remorse later.

Every Day There is Another Story That Housing is Recovering, and Then It's Not: Read More

What is the real story on short sale numbers and borrower delinquencies? The story seems to vary on a daily basis.

But according to the Mortgage Bankers Association, which keeps track of these statistics, the delinquency/foreclosure rate was still 11.33% as of the end of the 1st quarter of 2012.  That's the lowest since 2008, but is still a lot of homeowners on a national basis.

The Potection of the Mortgage Debt Relief Act Coming to End

With some recent news about positive signs in the real estate market, some owners may be taking the pressure off themselves.  However, the national statistics seem to indicate that about 30% of properties nationwide are in negative equity.

The federal Mortgage Debt Relief Act was passed at the end 2007 to allow homeowners debt relief on their principal residences if foreclosed on or sold in a short sale. California later passed a bill also helping homeowners in this situation.  Currently, it is set to expire at the end of 2012, meaning that if the deadline is not extended by Congress, owners after that date will be responsible for debt after a foreclosure or a short sale. Previous to this Act, the amount forgiven in a short sale, or walked away from in a foreclosure, was treated as "phantom income" to the owner, and taxed.  California's Debt Forgiveness Relief Act also expires as of January 1, 2013.

So, after December 31, 2012, if a property is approved by the bank in a short sale and sold for

Sellers, Buyers Are Competing With Multiple Offers

Did you know that Long Beach and surrounding areas have less than two months of inventory?
This chart covers up to 2011, and the trend of multiple offers in the lower price ranges is even stronger in 2012.
Think you can't sell?  Think again, and call me.