Law Enforcement Cracking Down on Online Home Rental Scams

Don't get fooled by a fraudulent "rental"

The rental housing landscape has been the target of fraudsters.

For instance, a legitimate "for sale" listing which shows up not only on the local REALTOR multiple listing service (MLS), and then (according to licenses) automatically fanned out to such sites as Realtor.com, Trulia, Zillow, etc., and also possibly manually entered by the listing agent into other sites such as Craig's List, is hijacked.

Actual listing agent information is deleted by person(s) attempting to misrepresent the listing, but the rest of the listing information, including photos, is resubmitted as a rental property with a new rental price, often one which does not support local neighborhood values, but gets the fraudster plenty of emails or phone calls.  The purpose of this is to get an unsuspecting renter to wire money to the "agent", before agreeing to see the property.  Of course, after they obtain money, there is no showing of the property--the fraudster may live on the other side of the country, or in another country.  This has personally happened to me, and to other area agents as well.  To get the false information and listing deleted online takes time and phone calls, including phone calls from renters who went to my listing to verify its existence, and then called me from the "for sale" sign.  Of course, it's not for rent, it's for sale.  Moral of the story:  Do not send money or personal information to see a rental.

Another local scenario in the 562 area code is where another rental company with a different area code goes to vacant properties and puts up their own rental sign so that they will get phone calls off someone else's property for which they have no contract to lease or to sell.  Yes, they've been reported so they quit for a while, but after a while, the signs pop up again. 

This is a nationwide problem.  If you are a landlord, you should also take notice of this issue.
Always try to first verify the actual agent or owner of a listing, because this is happening just often enough to cause headaches for all concerned.

Below is an online article for the Freddie Mac Blog published today about this very issue, worthwhile reading for everyone on how to recognize and protect yourself from these schemes. 
Law Enforcement Cracking Down on Online Home Rental Scams: Law enforcement started the year by cracking down on fraudsters using phony online real estate ads to fleece would-be renters.

December Average Sold Prices in Cerritos, Long Beach, Lakewood and Seal Beach

In Los Angeles County, the median priced home in November 2015 was $457,870 and $489,310 in December, 2015 for all of California.

In the chart below are average prices for Cerritos, Long Beach, Lakewood , and Seal Beach single family homes for the past 2 years through December 2015.  The four cities have increased between 12% and 20% in that time.  Current average price - Long Beach $611,735; Cerritos - $699,438; Lakewood $529,903; Seal Beach $1,070,400.

 

Average condominium prices are more similar for all four cities, ranging from $383,000 (Cerritos) to $312,000 (Seal Beach).

November 2015 Sales Prices in California

California home sales volume and median prices for November, 2015:

Top Concerns for the 2016 Market

Although the Consumer Financial Protection Bureau states "no problem", many REALTORs are experiencing delayed closing with the new TRID (TILA/RESPA Integrated Disclosure) rules implemented October 3rd.  For about half of those responding to a survey, closings took up to 40 days to close.  While this may not be of concern to all-cash buyers, buyers obtaining financing and sellers in contract with those buyers may have to be prepared for taking extra time to close, at least while the industry is in the earlier phase of these new mortgage/escrow rules.

Some years ago FHA revised their rules on eligible condo HOAs--Since an entire association was required to become "FHA-approved", and for only two years at a time, the number of approved condos has declined severely.  This reduces the number of eligible buyers for a condominium severely and is a factor everywhere for FHA condo buyers.  Association members are advised to take up this issue with their boards -HUD provides a resource for current status - and apply for renewal.  Some lenders are willing to provide this service without cost, especially if there is an  active buyer for that complex.  Contact me for more information.  VA approvals for condos are also required for VA buyers, and these are another important source of condo buyers.   However, for buyers obtaining FNMA loans there are no restrictions on percent of owner-occupied units, a major qualifier on FHA loans. 

Tight inventories are still a factor nationwide, as buyers can attest to after they have experienced multiple offer situations.  Buyers who are fully approved and prepared to make realistic offers have more success, although the price range under $500,000 in many Southern California cities is competitive.  Below is a trend chart for "months of inventory" for Long Beach.  Neighboring cities are similar.  A 6-month supply (how long the inventory would last at the current rate of sale) is considered the norm, but has not been the norm for several years. The chart shows 1.5 months.


Tight credit standards continue to affect sales.  There was a time when a 700 FICO score meant smooth sailing, but the average FICO score on all closed loans in the third quarter was 723, the lowest level in at least four years, according to Ellie Mae. Two years ago, the average score for denied applications was 729.  In other words, keep up your credit score but minimizing debt and no delinquencies.

Low appraisals continue to be problematic.  This is a large subject by itself, but the short summary is: Find a good REALTOR to work with, whether you're a buyer or a seller, and avoid over-inflated pricing.

More Trends:

Cash sales continue to decrease; buyers are interested in walkable areas (check the WalkScore for your neighborhood), "green" homes, or older homes with upgraded environmental efficiency, are on the buyer lists in many areas, new home sales are up in some areas (however, older Southern California cities are less impacted by this demographic), rents may increase by as much as 8% in some areas, so buying at today's lower interest rates will still be cheaper than renting.

For a free property search, go to www.juliahuntsman.com Property search page.

Please contact me for a more specific home analysis for your property.  As a licensed REALTOR for over 20 years, I can help whether you have a home or investment property sell.

HAPPY NEW YEAR!

Some New California Laws for 2016

New CA laws for 2016

One of the more interesting new laws for 2016 allows transfer of deed without going through probate court.  As a transfer-on-death deed, it allows a homeowner, effective January 1, 2016, to transfer to a named beneficiary a one-to-four unit residential property without going through a probate action.  The property cannot already be part of another will or trust, but must be separate and apart.  So if you have not included a property in your trust, or you don't have a will or trust yet, but you want a property that is yours to go to someone automatically upon your date of death, you may do so by this Transfer on Death Deed, sign and notarized and recorded within 60 days.  It is revocable in case you change your mind.  This a form deed accompanied by 24 FAQs explaining it. The law lasts through January, 2021.  Assembly Bill 139.

There are a number of laws involving no penalties for water use and lawn appearance during a drought.

Extended indefinitely is the victim's rights law to terminate tenancy, where he or she or a household member was a victim of an act of domestic violence, sexual assault, stalking, elder abuse or human trafficking and that the tenant intends to terminate the tenancy.  The time to give notice has been reduced from 30 days to 14 days.  Assembly Bill 418.

Senate Bill 655 pertains to new mold/habitability standards pertaining to landlord/tenant law. A change from current law, this new law  now provides that a lessor (landlord) is not obligated to repair a dilapidation relating to mold, as specified, until he or she has notice of it, or if the tenant is in substantial violation of the duty to keep the property clean and sanitary, and thereby substantially contributes to the existence of the mold. This law authorizes a landlord to enter a dwelling to repair a dilapidation relating to mold.  There are current definitions about substandard housing, and "this law specifies that visible mold growth, as determined by a health officer or a code enforcement officer, is a type of inadequate sanitation and therefore a substandard condition. However the presence of mold that is minor and found on surfaces that can accumulate moisture as part of their proper and intended use would not constitute a substandard condition."

For a complete list of 2016 laws which also address consumer protection, HOA regulations and drought conditions and FHA disclosures, disclosure required by AirBnB rentals, to name a few, please contact me.  I will be happy to forward them to you.
Lic #01188996

VA Loans Are Still a Very Good Option for Military Service Members

Benefits for Nation's Heroes

VA loans offer no down payment, competitive interest rates, easier credit standards, and easier loan qualification guidelines. Other loans may be harder to get due to an applicant's frequent moves, but this is not a problem with VA loans.   Interest rates may be .05 to 1% lower than a conventional loan.

These loans are offered to current or former service members who have served for a certain period of time and can obtain a Certificate of Eligibility.

Service members may also obtain USDA loans (not common in metropolitan areas), FHA loans and other conventional loans.  But often the advantages to a VA loan, for those who qualify, are so good they can't pass it up.

VA loans are used both on new purchases and refinances. There is no private mortgage insurance (PMI) found on other loans with low/zero down payment, which saves money from the beginning.

The Department of Veterans Affairs guaranteed 630,000 loans in 2013, an all time high.  To find a qualified VA lender, please contact me, or go to a company such as Veterans United Home Loans.  Not all lenders are well-versed in VA loans, so it pays to get a personal referral to someone in your area.  Please feel free to contact me.

Affordability in the California Housing Market

With the improvement in the California housing market since the "bottom of the market" in 2009, affordability has changed.

California's housing affordability index is at 29 percent, meaning 29 percent of California's homebuyers can afford the median-priced home of $487,420, which is a statewide figure.  The required income is just over $98,000.  To compare, 38 percent of the California population makes an annual income of $78,000 or more.  While not all single buyers may fit this profile, couples able to use both incomes to qualify are more likely to suceed, especially in the lower-priced condo market in certain cities.

In spite of this affordability declining over time, it appears to have stabilized in the 30% range.  Has it affected sales volume? Apparently not, because sales volume has increased 5.7% since the same time last year.

Downtown Long Beach

Will gradually increasing interest rates affect California's housing market?  Hopefully not, if the economy and labor markets continue to stabilize or grow.

What is the Long Beach median single family home price doing?  Here are the latest citywide figures:




 Long Beach condo price for the citywide median price of under $350,000
is posted below:

Cost vs. Value - What Improvement Projects Pay Off?

Sometimes the lower cost improvement may pay off best, especially if the seller is considering fixing up to sell.  See this article for more information on how less is more.

Avoiding Buyer's Remorse--Is That Possible?

Sometimes no matter how much research is done in advance, buyers may still suffer the pangs of remorse after a purchase, and buying a home is no different.  There are seemingly endless disclosures made in a California real estate transaction for buying a residence, but with so much going on after escrow is opened, a buyer should have "eyes open" as much as possible during the home search period.  Searching for homes on the internet, which is performed by almost all buyers in the initial stages, is one part of the home search. 

But in order to avoid the awful feeling that something is wrong after you've closed escrow, try to focus on what are the most important things to you from the very beginning.  For many people, having the right neighborhood, schools, as well as the features of the home itself, are key to their happiness.

Feelings of happiness/regret vary by age, region, demographics and income level.  According to a 2014 study of 2000 adults by Redfin (a large brokerage), if you lived in the West, were over 65,  male, and had an income over $100,000, you were more likely to have less buyer remorse.  For example, 85% of people over 65 said they would buy their home again.  Women with children under the age of 18 (27%) were more likely to express regret. 

How to avoid feeling regret?  Know your local market, i.e., shopping, schools, neighbors and neighborhood, commuting time, as well as loan types and interest rates, buyer competition (or months of inventory) and local list-to-sell percentages.  These are all basic factors about buying a home.  Determine your top priorities - and I do like to remind people that priorities can change as they become familiar with their actual buyer environment.  Knowing the neighborhood may mean knocking on doors to see the people to ask their opinions--a Realtor can go with you for introductions, but your Realtor cannot tell you information that you need to discover personally, if this is important to you. Taking time to order and review property reports, and review transaction documents are essential to homeowner happiness.


There will probably not be a perfect home, but the list of dissatisfactory items will be much shorter the more conscious the buyer is, and the more thought put into, about the home choice.  Not only does this extra work reduce later buyer remorse, but it reduces anxiety.  Prior education, in my opinion, reduces unrealistic expectations and produces more long-term satisfaction.  Going over the buyer/seller contract may seem very dry in the beginning before the home search, but there may be much later reward in owner satisfaction! Taking the time to discuss your opinions of homes you've viewed with the Realtor helps your agent help you.  Realtors know what size bathrooms and closets you can probably expect with a certain age of house, in a given area--most Cerritos homes are more contemporary in style than the majority of Long Beach neighborhoods which date from earlier eras.  This kind of discussion can help you judge if you should change a priority or not. 

Buying a home is a significant purchase, it should be accompanied by a corresponding understanding.

A Few Facts About the California 2016 Housing Market

Every fall a comprehensive report comes out by the California Association of Realtors assessing the current year's activity and projections for the next year.  The second slide shows prior years selling prices and percent change from prior year, interest rates, and affordability indices.

Interestingly, when asked "Which of the following is your dream home?", 32 percent of those surveyed want a Craftsman bungalow, getting the highest number of votes.  Perhaps that's not surprising when you, the audience member, look at the settings for numerous TV shows and home advertisements, i.e., "Blue Bloods" for one. Craftsman homes have lots of wood, warmth and old-fashioned craftsmanship plus a feeling of years of established family ownership in practically all cities in the U.S.

Certainly in Long Beach there are several neighborhoods in which to find one.  But, what does it take to own one?  From 2010, the CA median house price has risen from $305,000 to the current $476,000, and up to a projected $491,000 for 2016.  The good news for buyers is that the rate of increase is slowing to a projected 3.2% increase for next year.  But the other news for buyers is that, as early as December, we may receive the long awaited news about an interest rate increase--already anticipated in the financial markets.  So the rates under 4% for so long are likely to be up to 4.5% next year.  Sales volume is still expected to go higher, hopefully a release from the long-depressed inventory.

Using statewide medians, that 2015 median priced home at $476,000 is probably going to be about $15,000 higher, and the interest rates will be about .5% higher.  Looking at principal and interest only, a mortgage payment could go from $1796.11 (20% down, SP $476,000, 3.99%) to $1990.26 per month for a 2016 $491,000 house at 4.5% interest with same assumptions.

For buyers who do not know any other market except the current very low interest one, this may seem like very foreign territory.  But it's still not such a bad time to buy.

Too see the entire CAR 2016 report in pdf format, click here or see below in ScribD

2016 California Economic Market Forecast

How Much Can You Rely on Automated Home Value Widgets?

Have you looked for a new car lately?  If you're like me, you checked out everything you could find on the internet before you ever went to a dealership for a test drive. 

The websites have interior and exterior 360 degree photos, closeups, zoom capability, video, and even the actual car price, which we equate with value. That's something we love, knowing the price, not the one we have to haggle over. You get everything on the internet except the new car smell--minus one more thing, the actual driving experience.

It's the same with house listings, there's so much available information on numerous sites, and the photos often make them look so attractive that you might think you want that one .  But unlike a car, a house price reflects many more "moving parts", condition, location, upgrades, additions, deferred maintenance, permits or lack thereof, remodel, the immediate surroundings, earthquake zones, flood zones, and much more.  And like buying a car, you really have to be there to see for yourself. The asking price could be very different from value when all is said and done with negotiations and the appraisal.

So what does this mean for AVMs (automated valuation models) such as Zillow and its "Zestimates", and other valuation widgets found on many home search sites?  It means that they are tools, rather general tools, but like driving the car and seeing the house, you have to be there. AVMs can't judge the condition of the house, or know how many prior water damage claims were submitted on it, or check the unpermitted rooms, or see if there are title defects which will prevent mortgage financing.  Zillow values are calculated on public records (strictly data oriented) and user submitted data points (selective pool of information).  By the time a given property is negotiated through buyer/seller agreements, the value may be off by as much as 30% from a Zillow estimate.   Zillow's CEO recently sold his house:

     To see a Zestimate at work, consider the fact that in July of this year Zillow Group CEO Spencer Rascoff listed his four-bedroom home in Seattle, Washington, for $1.295 million. At the time, the Zillow Zestimate valued the home at about $1.39 million. That’s over 7% higher than the list price, but within the Zillow median margin of error.
     Gordon Stephenson, the listing agent for Rascoff, told industry publication Inman that Zillow probably overestimated the value of Rascoff’s home because “its algorithm might not have accounted for the home’s unique floor plan.”  Christian Science Monitor, November 14, 2015.

When an appraiser performs his/her job during escrow, an AVM is not a part of the process. When a Realtor helps a seller or buyer established listing or offer price, knowledge of appraisal parameters may be used along with knowledge of recent sales and individualized comparisons to other properties. 
Algorithms and weights assigned to data can be educational up to a point, depending on what properties get caught in the AVM's net, but when a buyer sees multiple houses combined with knowledge of area sales, the reasons for the final result become known. 
So automated robotic prices are fun to look at and may help educate on overall price range for a given area, but they are not a substitute for a complete home price determination.

See the complete Christian Science Monitor article.

Signal Hill's Skyline Estates Dream Home with World-Class Views!

Home on Sea Ridge

This desirable highly sought after home is located in the Signal Hill development of Skyline Estates. Situated on a unique promontory in the highly coveted “Sea Ridge” with sweeping and explosive views from Palos Verdes to the Pacific Ocean to Newport Beach. The views from this home are unparalleled. The three-level floor plan features a formal dining room, formal living room, spectacular ‘Chef’s’ kitchen with GE Monogram appliances, double ovens, center island and breakfast bar that opens up into the family room with expansive windows offering impressive views of downtown Long Beach. 

View towards San Pedro

Three bedrooms are located on the first floor with one being a second master en-suite. The spacious master retreat features lounge, massive walk-in closet. master bath with dual vanities and spectacular tub featuring city views. Wonderful backyard with fireplace and BBQ is perfect for entertaining year round. 

Excellent location close to the community walking trails, and pool. Just minutes to Belmont Shore, Downtown Long Beach and freeway access.
Association dues include community pool and paved road.
Information per MLS# PW15230654

View of downtown Long Beach

See the video and/or find out more about this home, please contact me at 562-896-2609. CA Lic. 01188996

Listing Broker:  Boardwalk Properties

Congress Still May Tax Mortgages to Pay for Highways

The real estate industry and those purchasing or selling residential properties are often the focus/target of politicians looking for a vehicle for passing a law. They don't always get passed, fortunately, so the general public is usually not aware. However, the following bill is still in the works, and is a good example of another attempt to get, in this case homeowners, to pay more money for something which should be funded by the entire public, assuming it is truly needed:

 Back in July the U.S. Senate passed a long-term Transportation funding bill that includes a tax on mortgages to pay for the construction of highways. To make it more palatable to Republican lawmakers, this tax has been disguised as a “fee.” This tax isn’t small potatoes either.

On a median priced home in California ($489,560), homeowners could pay over $8,000 for this tax.

While the Senate has passed its version of the long-term Transportation bill, the House has merely passed a short-term version to keep the federal Transportation Department open. The House plans to pass its own version sometime this fall, but there’s no guarantee that this new tax won’t be included in that version. The California Association of REALTORS® is actively opposing this approach to paying for the highway bill and is encouraging the public to get involved.

People are urged to visit www.nomortgagetax.org and go to the “Take Action” tab to send a personal message to Congress to oppose the tax. The public can also get updates on Facebook at www.facebook.com/no.mortgage.tax or follow the campaign on Twitter™ at @NoMortgTax.

Under current law, a portion of every conforming loan, (those backed by Fannie Mae and Freddie Mac) includes a fee used to offset losses from bad loans and to pay for the administrative costs of running these companies. These are called guarantee fees (or g-fees). In 2011 Congress added on an additional.1% increase on the interest rate of every Fannie and Freddie mortgage to fund a six month extension of unemployment benefits. That “add on” was due to expire in 2021 and loans originated after that date would not be subject to the additional fee.

The U.S. Senate’s highway bill extends the “add-on” fee until 2025 for all new mortgages in order to pay for transportation infrastructure. As an example using real numbers, buyers purchasing a median priced home of $489,560 using a typical conforming loan with a 20% down payment will pay an additional $8,100. This figure is sure to rise with an increase in sales prices.

You can contact your representative (go to the website above) to register your opinion on this.

Points to Ponder When Considering A California Condo or Homeowner Association

Versailles HOA Condominiums

Single Family in Bixby Village HOA

Condominiums and other types of units in common interest developments (CID) are very appealing because they may offer homeownership in an area where houses cost much more, security, amenities, neighbor accountability, and less personal responsibility for certain maintenance issues that might otherwise be required in a non-CID single family home.

The most common form of ownership in Southern California is ownership in a condominium project where the owner has title to an individual unit and an undivided interest in the common area. Other forms are stock co-op, own-your-owns, and planned unit developments (PUDs).

The common areas are the areas outside the unit such as walkways and lobbies.  They also include, if present, exclusive use areas such as parking spaces, balconies, and private patios, which many people think they bought when they bought their condo, but in almost all circumstances what they acquired was the right to exclusively use them.

A standard part of the purchase contract includes the receipt and review of association documents which the seller is required to provide.  So often, though, these documents, which include the CCRs, the Rules and Regulations, and By-Laws, are not so thoroughly looked at during the buyer's contingency period, because there seems to be so much else to do, like go to your job everyday.  So the more you know beforehand, the better off you'll be.  Some of the more common concerns that pop up are pets, parking, smoking, and the hours on the association swimming pool or tennis court.  HOAs may regulate the number and type of pets within the guidelines of the pet law; smoking is becoming more of an issue even within private units because smoke drifts out windows; and be prepared to carefully check out the assigned parking area because you'll be signing a disclosure form from the seller so that your oversize truck does not become an issue when you move in.  Why is it so important to know your documents? Because they are voted in by the association members, and they form a contract between the owners and the Board of Directors whose duty it is to enforce them.

If you are buying into a small association, you want to verify that they have an active association as required by law--nothing could be worse than paying dues and not knowing where the money is going.  How old are their CCRs?  Yes, it's still not unusual to find 30-unit associations operating on original documents from the 1970s.  Just be aware that many California laws have changed since then and that older documents will not reflect those laws.  Associations are required to make a growing number of annual disclosures to their members, i.e., starting 1/1/2016, they must disclose in their annual budget if the project is FHA/VA qualified (FYI:  a growing number of formerly FHA-approved associations are not meeting current FHA requirements).

An important law effective January 1, 2015 requires the seller to pay upfront for all HOA documents (per Civil Code Sec. 4525) provided to the buyer.  This can amount to several hundred dollars depending on property management companies who typically manage the transmission for the seller; so the seller may instead forward complete copies directly with written verification (form provided by your Realtor) if he/she already possesses them.  You the seller will have to order what you do not have, but your costs should be greatly reduced.  The contract specifically details these and other HOA documents, and what the buyer or seller will pay for, because non-required documents may be paid for by the buyer.  A new owner could expect to find topics addressing solar panels, satellite dishes, roofing materials, sign and/or flag displays, right of board entry (or not), tenant use of common area, storage, parking, noise, use of swimming pools, architectural control, smoking, and much more including the owner's duty to pay dues and other assessments, what the board may impose a lien on and how, and how the board is elected.

 If you would like a more detailed written discussion about the rights and responsibility of homeownership in various types of common interest developments, please contact me with your information and I will forward you the information.

REDUCED. Extensively Remodeled 1923 Cape Cod Style Home in Belmont Heights ...

Now priced at $999,789. October 28 2015.
Remodeled, but with its original character. This is the home for you, just 12 lots from 2nd Street in Belmont Shore, shops and fun. This 1923 Cape Cod is in prime Belmont Heights on a northwest corner lot which offers morning, afternoon and evening light/sun. This home has all the character and charm that anyone could ever want, and can easily be used as a 4 bedroom 2.5 bath home.

The 3rd floor works beautifully as a large master with 3/4 bath, or guest suite, with expansive ocean/water views. As you enter the living room you will see the original hard wood floors with dark wood inlays, a Batchelder tile fireplace, and custom crown molding and plantation shutters covering the double paned windows. The large formal dining room has original inlays as well as original corner builtins. The kitchen also has a cozy fireplace,  granite counters and tons of storage. The 2nd floor offers 3 bedrooms, including an office with builtins, plus a large bath. The large master on the 2nd floor has dual closets and a features a sitting area. This home offers central heat updated electrical, copper plumbing, central heat. Also featured is a subterranean 15x140 garage so no land is wasted on driveway and garage.
Asking $1,099,999.  Click on link for more photos and floor plan.
http://www.planomatic.com/mls41382

For more information on availability of this property, please contact me soon! 562-896-260, Lic. #01188996

Note:  This listing is off market.

Are You Taking All Your Tax Deductions?

It's never too early to review what the tax advantages are for you as a homeowner or a future homeowner.

Homeownership comes with many benefits, including some sizeable tax deductions.

For more specific information, ask your accountant or tax professional about whether these deductions apply to you. Also, more information is available in the many publication published on the IRS and California FTB web sites.

Deductions

• Mortgage interest – You may be able to deduct all interest paid on your mortgage.
• Mortgage insurance – Mortgage insurance on government-backed mortgages may be deductible in the same way as mortgage interest.
• Local property tax – You may deduct property taxes paid to the county tax collector.
• Points & prepaid interest – Points and charges paid to obtain a mortgage for a home purchase or improvements may be deductible.
• Home office deduction – The portion of your home used exclusively and regularly as an office space is deductible from your taxable income.
• Green energy tax credit – Installation of renewable energy systems may be eligible for deductions up to 30%.
• Moving expenses – If you moved more than 50 miles for a job opportunity, you may be eligible for moving deductions.
• Renovation/demolition salvage – If you donated construction materials or demolition waste to a qualified charity, you may deduct the value of the donated materials.
• Improvements added to basis – Qualifying improvements added to your cost basis may reduce your capital gains tax owed if you later sell your home.
• Withholding credit for investors – If you purchased or sold an income property and 3.33% was withheld, check out the Franchise Tax Board’s withholding criteria to ensure you receive credits.

Looking to buy or sell your home? Call me today or go to my website at www.juliahuntsman.com.

Some Types of Taxes When Selling Real Estate, and a 1031 Exchange May Save Money

There are certain differences between owner-occupied property and investor property (non-owner occupied) when it comes to selling--and buying, but here we are concerned more with selling.

Some owners who have rented out their residences and moved on to another location are surprised to find out when it comes time to sell that they may have lost their capital gains exclusion ($250,000, or $500,000 for married owners). On top of that, they may be paying the State of California 3-1/3% withholding tax upfront at the close of escrow.  Additionally, if you took depreciation on an income property you now own as an investor, you will have additional reckoning at tax time.  Please see IRS Publication 523 for specific information.

Depreciation is a method for matching the costs of acquiring property over the properties’ estimated
economic life.  The IRS requires that most properties be depreciated via the ‘straight-line’ depreciation method.  Using the straight-line method, residential income properties are depreciated over 27.5 years.  Commercial properties are depreciated over 39 years.

Depreciation Calculations
Land is not depreciable.  In order to properly calculate depreciation, the value of land must be excluded. For example, a $1MM duplex with land worth $300,000 has $700,000 worth of depreciable real estate.  Using the straight-line depreciation method, the annual depreciation amount is approximately $25,500 ($700,000/27.5)  NOTE: The IRS will typically not challenge the assessment of the land value if it is reasonable. A tax advisor, attorney or real estate agent should be able to provide guidance for what is reasonable based on the location and type of land.

Depreciation Benefits
Depreciation is an ‘intangible expense’ that will reduce the reportable taxable income from the property, and means less tax to the IRS.
Here’s how it works:
The yearly rental income from the example duplex is $36,000. At the end of the year, this will have to
be reported to the IRS. However, the IRS does not tax the entire $36,000. The taxable income from the property is calculated as follows:

• Rental Income
• (Expenses)
• (Depreciation)
• Taxable Rental Income

If the expenses of operating and managing the duplex are $5,000 for the year, the taxable rental
income is calculated as follows:

• Rental Income $36,000
• (Expenses) ($5,000)
• (Depreciation) ($25,500)
• Taxable Rental Income $5,500

NOTE: Please always seek the guidance of a tax advisor. Capital gains may or may not apply depending on how long you lived in the property, and depreciation items may be calculated on different schedules. To completely avoid last minute upsets and lose your deal, it's important to obtain your information before you sell--I once represented a buyer on a very nice fourplex where the seller finally obtained tax guidance after we opened escrow, only to be shocked by how much recapture tax had to be paid to the IRS since the property had been owned long enough to be fully depreciated.  The seller cancelled escrow, much to the buyer's disappointment.

Depreciation Tax
Upon the sale of an investment property, the IRS requires the payment of a depreciation re
tax, which means you have to "pay back" the money you were entitled to take previously. The tax rate is currently set at 25%. In the example above, if the duplex was owned for 10 years, the entire depreciation taken on the property would amount to $255,000 ($25,500 x 10).  The IRS requires a recapture tax on that entire amount. Hence, the sale of the duplex will result in a $63,750 depreciation recapture tax (255,000 x 25%). This is in addition to state and federal capital gains taxes. The depreciation recapture tax as well as any associated capital gains taxes can be deferred in full via a 1031 Exchange.

Conclusion
Of all the benefits of owning real estate, depreciation may be one of the most important. The tax advantage depreciation offers is powerful. The IRS will always assume that depreciation is taken and
will hold an investor liable for the deprecation recapture tax – even if the investor failed to take advantage of the depreciation. Bottom line: make sure you are taking advantage of this powerful tool.
Thanks to Asset Exchange Company for this sample.

Prices in Long Beach, Lakewood, Cerritos, Signal Hill

Home prices continue to rise in Los Angeles and Orange Counties, 6% to June of this year from June of last year according to the Los Angeles Times.  In the four cities below, the average days on market for a single family home in August ranges from 41 days (Lakewood) to 67 days (Signal Hill). Long Beach had total closings of 193 (not surprising since it's the largest city of the four), Signal Hill had 6 closed sales, Cerritos had 26 sales, and Lakewood had 72 sales.

Even though the National Association of Realtors® reported that sales in July were the highest since 2007, Long Beach and Cerritos sales volume decreased somewhat in August.

Housing inventory is still low, although a recent daily trend for the local market shows a higher number of new listings in the MLS than closed sales. For August, however, each of the four cities below shows a decrease in inventory supply from the prior month: 1.6 months (Lakewood) being the lowest, and 3.7 months (Signal Hill) being the highest. Long Beach had 2.2 months supply in August. The traditional norm for a normal market supply has been 6 months.  This is a long term trend: Prices go up while inventory remains low.

Condo prices, which are typically lower than single family home prices, also increased from the prior month: average prices in Lakewood -- $485,000; Signal Hill -- $379,000; Long Beach -- $362,000; Cerritos -- $392,000; all prices represent increases from prior month range from 2% (Signal Hill) to 60% (Lakewood).

Don't Overprice Your Home's Asking Price

When a willing buyer and a willing seller complete a home sale, they have just announced to the world what the value of that property is.  That home may now be used as a marker for other similar home sales, based on other factors:

Location - proximity to community attributes such as parks, schools, and job market usually has more desirability to the buyer.
Size - Larger homes and larger lots may sell for more, and comparing a home to one that is much larger or much smaller could lead to the wrong pricing.  A buyer's lender may have very specific criteria on size when it comes time for the appraisal.
Bedrooms and bathrooms - The most common request from buyers today is for a three-bedroom, two-bath home; families today want and expect more privacy than in prior eras. And, the difference between a two-bedroom vs. a three-bedroom home may be critical for the buyer.
Features - Luxury sells, and homes with newer flooring, newer counters and cabinets are perceived as more luxurious and appealing. Some features such as spas and pools may not be worth extra to the buyer, these are often market-led factors. Newer landscaping may be a comparison item depending on the area.
Condition - A newer home that is well-maintained retains more of its original value, as do updated older homes. Homes with deferred maintenance sell for less.
Appeal - A home that looks inviting on both the exterior and the interior may be able to compensate somewhat for a less desirable location, or some other condition the seller has no control over.

If your house looks like this . . .

Too often sellers based an asking price on their own perceived value, or because they are comparing their property to a recent sale that is not completely comparable to theirs. Understanding how the buyer views the property, using the proper sale comparables most likely to be used by an appraiser, and seeing how their property stacks up against the immediate competition in the local market are important tools for seller objectivity.

It cannot be compared to this.

The public online valuation systems may be very accessible and offer quick valuations, but the homeowner should keep in mind that these systems do not use software that can "see" the home the way the buyer or your REALTOR does.  They use the public tax records, and may include properties inappropriate for yours.  As an example, 9 recently sold SFRs or condo properties in the Long Beach 90803 zip code between February 25th and August 4th, 2015 varied as much as 68% between the actual sales price and the online value estimate by a popular website company.  (Many real estate data sources within the industry do use AVMs, but some are "closer" to value than others.)  In this particular instance with the 9 properties, 6 of the properties were overestimated in value, and 3 were underestimated.  Two of the underestimated were within 1.8% of the actual selling price, which is a realistic market difference, while the third underestimated value was 17% less, which is far outside of the average  list-to-sell price.  The condo that was overestimated in value by 68% at $572,000 actually sold at $339,000.  Other estimates ranged between 7% to 41% over selling price. 

Speaking of estimates, the value of an experienced real estate professional cannot be underestimated. A good market opinion and strategy can earn you more money at the close, and save unnecessary time on the market.  Please contact me, a professional with 20 years' of experience! 

Are Your Ceiling Fans Turning in the Right Direction?

Are you wondering what difference it makes to have your ceiling fans be in one direction or the other?  Make sure your ceiling fans are spinning in the right direction to move air around the room.

Most fans are reversible: One direction pushes air down, creating a nice summer breeze; the other direction sucks air up, helping you distribute heat in winter. There’s normally a switch on the motor to change the fan’s direction.

Is your fan turning in the right direction for summer?

• Stand beneath the running fan, and if you feel a cooling breeze, it’s turning correctly.

• If not, change directions, usually by flicking a switch on the fan’s base.

Typically, it’s counterclockwise or left for summer and clockwise for winter, but the best method is to follow the steps above.

This applies to fans in general, depending on which way you want the air to flow., i.e., into a garage or out of a garage.

More information is at EnergyStar.gov: 

In the summer, use the ceiling fan in the counterclockwise direction. While standing directly under the ceiling fan you should feel a cool breeze. The airflow produced creates a wind-chill effect, making you "feel" cooler. In the winter, reverse the motor and operate the ceiling fan at low speed in the clockwise direction. This produces a gentle updraft, which forces warm air near the ceiling down into the occupied space. Remember to adjust your thermostat when using your ceiling fan — additional energy and dollar savings could be realized with this simple step!

Long Beach Area Hot Sheet Data Shows Trends Towards More Listings

Every day the MLS shows how many new listings, new escrows, or new sales in a given period of time.  Even though the market is still in a low inventory mode, there has been a trend lately of more new listings coming on the market vs. how many sold in a given period of time, i.e., 24 hours up to 7 days.  So for Long Beach, Lakewood, Signal Hill areas, there seems to be a "catch up" going on.  And even though you can read every day of the week in the Los Angeles Times about the latest multi-million dollar celebrity residence sale, recent sales in this area don't share that profile.  Between July 10th and July 13th, 27 houses or condos sold in these 3 areas, ranging from $235,000 (house)  to $1,070,000 (condo). These are represented by vastly different neighborhoods, and seeming show the far ends of the distribution curve for houses and condos. 

MLS Area Sold Stats for 7/10-7/13-2015

As showing at the right, the average price for these properties in this time period is $505,963.
While condos and houses are not normally used to compare with each other, this data is for trend purposes,.


New listings on the market for the same time and areas are 46, ranging from $175,000, to $3,450,000.   Three properties went into escrow right away, and 43 remain as active listings, with the average listing price being $628,072.  Whether this shows an upward trend in sales price remains to be seen, as the $3,450,000 property has been previously listed multiple times and not yet sold.

MLS Area New Listing/Active Stats for 7/10-7/13-2015

For buyers, this is a positive trend; for sellers, it's really nothing to get the least big panicked over, because over stats for June for Long Beach, for example, clearly show that there is less than 3 months of inventory for houses and condos.  This low level, which has been going on for very long periods of time, does not reflect a normal level of inventory, which traditionally means about 6 months, or perhaps double our current inventory.  Sellers often think that multiple bids due to housing shortage is favorable for them, which can be quite true, but not if you don't already have a home to move into after you sell.

If you are thinking of buying or selling, whether you have a house, condo or multiple units, give me a call for an evaluation of your selling position.
Lic# 01188996

What Do Homesellers Really Want? Four Important Things

 Judge Judy, that icon of courtroom wisdom, says "Beauty fades, dumb is forever."

"The top four tasks that sellers want from their agent has remained consistent regardless of the housing market— sellers place the highest priority on: helping the seller market the home to potential buyers, help selling the home within a specific timeframe, help pricing the home competitively, and help finding a buyer for the home.  As many sellers use an agent that was recommended to them personally, it is not surprising that the reputation of the agent is the most important factor in choosing an agent to work with (36 percent). This is followed by the importance of the agent’s honesty and trustworthiness at 19 percent and the knowledge of the neighborhood at 15 percent."  Just a few more facts out of this 128 page report:  The typical age of the homeseller was 54, vs. 46 years in the 2009 report.  Married couples were 74% of the sellers, while single females accounted for 14% of sellers.

This report stems from an annual survey, the most recent being the  July 2014 127-question survey which was sent out by the National Association of REALTORS® with a response from 6,572 home buyers who had purchased a home during the prior year within one of the four U.S. regions.  There are many elements to this report - including agent efforts, problems buyers can have with financing, characteristics of homes sold and homes purchased, all of which is valuable profile information.


Ironically, buyers in this survey rated the top two valuable features of a real estate website as being 1) the photos of a property, and 2) detailed information about properties for sale.  Maps, tours and neighborhood information came next in importance, with videos of the property second to least most important.  I say ironically, because--and here is the unspoken elephant in the room not usually overtly addressed in these nice surveys--one of the most difficult aspects of selling for many sellers to grasp is the appearance and cosmetic condition of their home, yet most sellers always want their home marketed as much as possible.  A key factor in marketing a home is how it looks to the buyer, that means the buyer who is looking at those photographs.  The cereal box needs to get off the counter, the bed sheets need to hang evenly, because those photos are memorializing your home FOREVER on the internet.  And once the buyer gets inside the house, if only they could see past the catfood, and ignore how it smells on a 90 degree day, it would all be so much easier.  This is where the faded beauty and forever dumb enter the listing.  You would not buy a car like that off the showroom floor, not for full price.  And that's where your listing is, on the showroom floor.  But I digress.  Buyers are not always perfect either, but they do have a physical inspector and a 17-day contingency period, and a 21-day loan approval contingency period.

So to have it all come up roses, it pays to pay attention--on appearance, on disclosures, on price--so that the homeseller can get what he/she really wants -- a SOLD home. If you, however, are a seller who is marching to the right drumbeat on marketing your home, my sincere congratulations!

To find out competitive listings in your area, just go to www.juliahuntsman.com.
Lic# 01188996

You Don't Have to Have a New Home to Have a SmartHome

The best part of home innovation is that it has little to do with the infrastructure in your house. So, even older homes can take advantage of the home innovation products on the market today. From wireless dimmers, to a home battery, chatting with your appliances to a speaker light bulb, new products do not require remodels of your home, but things that can be used now!

Here’s a look at the products featured and discussed by members of the Coldwell Banker Home Innovation Panel from April 2015:

1. Caséta Wireless Dimmers by Lutron. Control your lights, shades and temperature from anywhere, whether you’re home or away. Caséta Wireless dimmers and switches install in minutes, work with numerous bulb types – including dimmable LEDs and CFLs, and bring the convenience of a connected home to your fingertips. “Smart lighting may be special now, but it’s going to be part of a smart home going forward,” says Matt Swatsky,of Lutron Electronics product management director.

2. Tesla. We’re all enamored with Tesla Motors. Who doesn’t want a car that drives like a dream, runs on electricity and gets new features every time the system is updated? Now, the company is offering the TeslaPowerwall. It’s a home battery that charges using electricity generated from solar panels, or when utility rates are low, and powers your home in the evening. It also fortifies your home against power outages by providing a backup electricity supply. Automated,compact and simple to install, Powerwall offers independence from the utility grid and the security of an emergency backup.

3. LG HomeChat. Start chatting with your home appliances on your mobile messenger. Heading to the store but not sure if you need milk or not, text your refrigerator and it will tell you. What is your refrigerator doing right now? Is your washer not working properly? Isn’t it a hassle to have to find your audio and play music every time you come home? HomeChat will take care of everything. “HomeChat is a digital personal assistant that you can text and tell the refrigerator to make more ice or download new wash cycles on your LG washing machine,” says John Taylor, vice president

of public affairs and communications for LG.

4. Sengled PULSE speaker bulb. Each intelligent bulb has a JBL multi-channel stereo wireless speaker hidden within. You can simply screw the bulb into your existing lamp socket and pair with your Sengled PulseMaster bulb; download and install the app on your smart devices. Instantly stream music and regulate the lighting. They also have lights that offer wireless security cameras, so cool! Because you don’t need to buy or adapt infrastructure, said Robin Foreman, vice president of marketing and business development, “You can make an impact on day one with just one bulb.

5. Nest. “We transform unloved home products,” said Ben Bixby of NEST. The company offers a thermostat that can program itself. Most people leave the house at one temperature and forget to change it. So, the Nest Learning Thermostat learns your schedule, programs itself and can be controlled from your phone. Teach it well and the Nest Thermostat can lower your heating

and cooling bills up to 20 percent.

Long Beach 4th of July

Looking for July 4th activities in Long Beach?  Here are all-day

events in Long Beach: on the Queen Mary, a bike parade, barbecue at the Aquarium, and a party at the Belmont Pier. 

All-American 4th of July
Queen Mary / 12-11pm
(562) 499-1771 / www.queenmary.com

Kids’ July 4th Bike Parade
Granada Avenue / 9:15am
http://justinrudd.com/bikeparade.html

Big Bang on the Bay - July 3
Boathouse / 5:30-10pm
(562) 493-1100 / www.boathouseonthebay.com

Late Night & BBQ
Aquarium of the Pacific / 5-10pm
(562) 590-3100 / www.aquariumofpacific.org

Party on the Pier - July 4-5
Belmont Veterans Memorial Pier / 12-10pm
(562) 477-6820 / www.alfredosbeachclub.com

• And for more summer events including movies and music, check out this page from the Port of Long Beach.

Please remember that fireworks are not allowed in the City of Long Beach, except as permitted for events. 

May 2015: Average Price of a Single Family Home in Long Beach CA: $590,000

The average price of a single family home in Long Beach at the end of May was $590,000, an increase from $427,000 in January of 2013. The overall market in California is characterized by fewer first-time homebuyers, lower homeowner turnover, static turnover in rentals. Employment levels are not expected to rise to pre-recession levels until 2019, even though California has regained all the jobs lost due to the 2008 recession. High level of speculation by investor buyers drove prices upward beyond the borrowing capacity of occupant buyers. California homeowners underwater in their home values is around the 9-10% level, and is another chunk of the population which is holding back movement in the market due to inability to move on.
Relocating baby boomers are anticipated to be a forward movement in selling and then buying -- however, that will vary greatly by geographic location in the state. According to an estate sale professional who works in the Long Beach area and is kept very busy with approximately three estate sales per week, it would seem many people in this area are not moving until the very end.
 Buy-and-hold owners may finally begin to let loose of their accumulated rental inventory (this has been a major impact in areas such as Riverside County), which hopefully will occur prior to a major rise in interest rates. (Interest rates bipped up twice yesterday.) This investor-held group is considered to be a massive shadow inventory which may not be released for another two-plus years, and at what price? For now, there is a gradual 3% annual increase in the number of new jobs, and a price-flattening trend compared to 2013 and 2014, all of which is helpful to bringing an upward trend in sales volume and inventory over time.

Who May Run and Check Your Credit in California?

Homebuyers seeking a purchase or refinance mortgage, or people wanting to buy appliances on payment plans or using their credit cards, are among those who will have their credit reports checked.  The federal Fair Credit Reporting Act requirements state who can look at or order your credit report.

Such people may include landlords, credit card issuers, car loan lenders, student loan lenders and insurance companies and government agencies.   However, at least ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington) have passed laws prohibiting employers from pulling credit reports at all or restricting how and when employers may use them to make hiring or other job decisions.  According to the Fair Credit Reporting Act, access is restricted to businesses or government agencies that meet the permissible purpose requirements.

Concerning landlords:  If a landlord has a property managed or listed by a Realtor with a written contract in place giving the broker permission, the broker may be allowed to run the credit of a prospective tenant.  Or, the Realtor can also assist the property owner by helping the landlord find a source for running credit (about $25), with action performed and the report reviewed by the landlord.   The Realtor may be doing all other agreed functions for renting, but the credit report responsibility lies with the landlord if not otherwise expressly allowed for in the contract.  It would be a good idea for landlords and tenants alike to find out what should be of concern to a landlord.  Landlords can check rental history, accounts, debts, foreclosures and general credit worthiness.  For individuals who experienced getting a notice of default and foreclosure, even though they had other good credit, they found it was not easy moving to a good rental property, and some found that getting a co-signer was necessary.

To find out what can be included in your credit report and other resource material, Privacy Rights Clearinghouse and Nolo contain additional information.  For California information on accessing a free annual credit report, see the California Office of the Attorney General.

Rental Scams: Don't Fall For Them

One of the downsides of all the home listings on the internet is the abuse of them by hijackers.  They

go to sites such as Zillow and Trulia, choose a property and turn a legitimate listing into a so-called rental ad, with the listing agent not finding out until he/she receives a bunch of phone calls about a "rental".  In a very expensive and limited rental market, a renter is doubly frustrated when finding out that the seemingly good deal is too good to be true.  So not only is it a waste of time for those searching for a rental property, it's also an extreme annoyance to the listing agent whose listing is illegally used as a dupe and all the misdirected phone calls, as well as the time it takes to correct the situation on the listing site. 

The smarter people knew before they called me that $1200 per month rent for a 2800 sq. ft two-story house in a nice neighborhood of $500,000-$600,000 selling prices was suspicious, but they called me anyway after they drove by the property.  Some actually called the name given on the fake rental ad, which of course used my listing photos and information as if it were their own, and were told to send money before they would be given any more information.  This is the tipoff--a legitimate landlord or management company does not request money, i.e., security deposit or rent, up front for information. 

And another scenario may be that the rental does not exist at all.  Yet another is a rental sign in front of an actual advertised property that is for rent, or it may be a bank-owned property for sale.  In this situation the false advertiser is attempting to get business by re-directing prospective renters to actual rentals--one company has been complained about in California, yet they popped up again with their red and white rental signs on wooden stakes posted on properties that are not their rentals. 

For more information, contact the Federal Trade Commission.  Avoid sending money to people you don't know.

Have You Heard of PACE for Energy/Water Savings?

Keeping Cool

The Property Assessed Clean Energy Program, or PACE, makes it possible for an owner to finance certain improvements and pay for them via an assessment on the owner's property.
There are a wide range of conservation improvements allowed and which vary by program, but most PACE programs include  improvements such as solar panels, energy star rated core plumbing systems, duct replacement, electric vehicle plug-in stations, pool circulating pumps, water heaters, and furnace.  They work in conjunction with a local public agency, and are available for both residential and commercial properties.

To be eligible, the homeowner must be current on property taxes, with no judgment liens or federal or state tax liens, not in bankruptcy, can't be delinquent on any mortgages or late on property taxes (some exceptions), and there are limits based on the mortgage percentage value of the property.


Property tax liens associated with the homes underlying the security, which are meant to fund energy-savings measures, are senior to all other liens - including mortgages on the properties financed by Fannie Mae and Freddie Mac (which currently finance close to 90% of US mortgages).  Read more at Reuters.  Since they don't like not being in first lien position, the Federal Housing Finance Agency (FHFA) ordered Fannie and Freddie to avoid financing mortgages on homes with PACE liens already on them,  Generally, all loans following FHFA guidelines must obtain consent before being allowed to enter into a PACE program, or the lender may declare the loan in default if owner does not pay off the lien. These conditions also affect refinancing as well, especially if the loan was obtained after July, 2010.

Homeowners who may find that PACE works well for them are:

• Those who have sufficient equity or whose improvements are not that costly and therefore, would not have difficulty paying off the lien if they need to sell or refinance their home
•  Those who intend to remain in their homes for the duration of the assessment and do not plan to refinance 
•  Those whose PACE program will offer to subordinate the PACE lien in circumstances beneficial to the homeowner.

HERO

Certain PACE programs, such as the HERO PACE program are now offering to subordinate their liens in certain instances, generally for a fee.  If the PACE lien is subordinated the buyer may be able to enter into a PACE agreement and obtain consent from a conventional lender.  Homeowners in areas with HERO PACE programs should inquire with the entity. Not all cities have approved this program; according to their site, HERO programs are locally available in the cities of Carson, Bellflower, City of Industry, Hawthorne, Lomita, Garden Grove, Huntington Beach, Fountain Valley, Stanton, Westminster, Cypress, to name several.  Long Beach, Los Angeles, or Lakewood are not included at this time. 

California FIRST

This program  appears to cover Long Beach and other areas, but an address must be entered in order to find out. Their criteria and financing terms are available on the site.

FHA

Energy Efficient Mortgages have been around since the 1990s, and may work for the owner with an FHA loan. Contact an FHA lender for more information. 

Secondary Financing

Another alternative is a home equity line of credit, for people with enough home equity, which may provide some tax advantages, including lower interest rates than the PACE programs. This type of loan would automatically be paid off in sale of a home.

Similar to solar panels, any PACE lien must be disclosed to a prospective buyer and will most likely be found in the preliminary title report given to a buyer. The seller may be in the position of having to pay off the lien in order to sell, depending on the circumstances involved.

And, a property owner should always first consult with a tax advisor regarding their own circumstances before accepting any of these loans. Interest paid on PACE liens may not be tax deductible but there may be a capital gains benefit based on the improvements.