Real Estate by Sebastian

Tax Ramifications of Short Sales

2011-08-03T12:11:00.000-07:00

Many people consider selling their house as a short sale as opposed to a foreclosure to protect their credit history, but they are unaware of the tax implications of a short sale. Under The Mortgage Debt Relief Act of 2007 taxpayers do not need to pay the short sale tax if they are selling their primary residence as a short sale. However, this is not the case if the taxpayer is not selling his/her primary residence. In this situation, the amount that the lender is forgiving the taxpayer on his/her mortgage is considered income and therefore taxable. One way that the short sale tax can be avoided if the taxpayer is not the primary residence is the taxpayer can ask the lender to reclassify the forgiven amount and report it as a gift in which case the short sale tax will not need to be paid.

It is important to consider the tax ramifications when deciding on a short sale or foreclosure. Although a short sale has the advantage of protecting taxpayers' credit history, they should plan for the tax that accompanies the short sale.

Hopefully this helps.

Leona Zhu Assistant to Sebastian Wong

'Trickle' of foreclosures continues

2011-07-13T11:23:00.000-07:00

By Pete Carey

Banks foreclosed on fewer homeowners in the South Bay in June while the number of people served notices they were falling behind on their payments rose slightly, according to a report Tuesday by ForeclosureRadar.

The Discovery Bay company said that homes taken over by banks dropped almost 25 percent from May in Santa Clara County and 19 percent in San Mateo County.
Notices of default -- the first step in the foreclosure process -- were up 4 percent in Santa Clara County and nearly 7 percent in San Mateo County.

With more than 9,000 area properties headed toward foreclosure, and more than 3,000 owned by banks, no one is predicting an end to foreclosures. It's just taking a long time for banks to complete them -- 337 days in Santa Clara County, and 275 days in San Mateo County, "There's just really no incentive for banks and politicians to push these through to a foreclosure sale," said Mark Skilling, chief executive officer of the company. "The trend continues of a trickling out of foreclosures," he said.
Foreclosures force banks to write down the affected properties to market value, putting a dent in their balance sheets.

Banks continue to draw fire for the complexity and slow pace of loan modifications, which help homeowners stay in their homes under plans that reduce their payments.
"Homeowners are being left in limbo by their loan servicers," said Martin Eichner, director of federally authorized counseling programs for Project Sentinel in Sunnyvale, a nonprofit that helps homeowners obtain loan modifications.
"They either sit on the applications for a long period of time, or they put people in trial modifications and leave them in trial modifications forever."

Eichner said his agency's cases are remaining open for 10 months or more. Delaying action means the banks "have somebody staying in the house, making some kind of payments and keeping the house up."
The California Reinvestment Coalition released a poll of housing counselors throughout California Tuesday.

"Of 568,630 borrowers requesting loan modifications in California, 46 percent were denied immediately," the Coalition reported. "A mere 23 percent of those who applied received a permanent modification. The other third of the applicants were either stuck in aged trial modifications or had their modifications canceled."
Homeowners often give up out of frustration with the long, drawn-out process, said Kevin Stein, coalition associate director.

"There is this dragging of your feet dynamic" he said. "A homeowner who might have been entitled to modification winds up leaving their home, and likely leaving it vacant, which is bad for the neighborhood."

Cancellations of foreclosure sales also dropped in both counties. These can be indications of either a successful loan modification or short sale of the property for less than is owed on it.

The state is also seeing a slowing trend in foreclosures. Default filings fell for the third straight month, and foreclosure sales were down from May.

Assessor: Glimmer of rebound in Santa Clara County real estate

2011-06-24T14:32:00.000-07:00

From the mercury news.
By Tracy Seipel

After three years of enduring plummeting property values, tens of thousands of Santa Clara County homeowners will see their property tax bills begin to creep up again this fall, the first signal that some of the county's most distressed real estate markets are clawing back from the bottom.

Still, the glimmer of a rebound is masked by the number of residential and commercial properties assessed below their purchase price, which increased by 5 percent to 124,148. That means 27 percent of all single-family homes and almost half of all condominiums in the county are now "underwater."

Still, county Assessor Larry Stone is partially restoring the assessed value of 45,773 properties that had dropped in recent years and fully restoring the values of 8,000 more.

"What we're seeing for the first time is some fairly significant increases as well as declines," Stone said Thursday, after his office released the preliminary figures for the coming tax year and promised property owners they would receive news about their assessments in the mail within a week.

At the same time, the assessor said, 75,271 properties that had previously declined in assessed value have shown no change or are declining even further. "So it's a strange kind of thing," he added.

More than one-quarter of Santa Clara County's property values dropped, for a total loss in assessed values of almost $27 billion -- $3 billion more than last year's historic plunge.

One other trend stood out in the preliminary tax rolls: significant declines in assessed value in some of Silicon Valley's most expensive communities, which had previously weathered the economic storm.

For example, last year in Los Altos Hills, 342 properties were assessed below their purchase price, dropping the value of those properties in the tony Peninsula town by $320 million. This year, the assessor is reducing the value of 471 properties, with the total plummeting by an eye-popping $1.4 billion. Some homes in Saratoga, Palo Alto and Monte Sereno also saw drops in assessed value, though not as dramatic as Los Altos Hills.

Stone's office estimated that 20 percent of Los Altos Hills' 2,899 properties are now underwater, something he said reflected the hot real estate market during the dot-com boom through 2007, when many overpaid for their homes.

Thursday's numbers didn't surprise San Jose officials, who had anticipated the drop and did not need to alter the city's budget.

Budget Director Jennifer Maguire said the reductions represent one-quarter of 1 percent of the city's expected property tax revenues, and will not have a significant effect on the 2011-12 budget.

The assessor lowered the value of 70,904 properties in San Jose by $13.4 billion.
While Stone is feeling more confident about the future, "we still have not overall seen a recovery year,'' he said, pointing to the 124,000 properties that are underwater.

He attributed that to the record number of foreclosures and distressed sales and defaults by property owners, mostly in South County, East San Jose and certain parts of Milpitas.

Yet, 7 percent of the county's properties that had been reduced in value in recent years have now climbed above their purchase price, the assessor said.
The fact that assessed values are being restored while others are reduced can confuse property owners, Stone said.

Most property owners assume that Prop. 13 limits increases in the assessed value of a property to no more than 2 percent annually. But that's not entirely true, he said.
When the market value of a property falls below the assessed value, the assessor is required to reduce the property tax. However, when the real estate market recovers, the assessment goes back up to the Prop. 13 cap.

But homeowners who want to contest their properties' assessed values can request a review from the assessor or file an appeal with the county. They can also go to www.sccassessor.org/prop8 to request a review online.

While Stone's office is reducing the value of 1,954 commercial and industrial properties, he sees signs of a recovery in the commercial real estate market that have occurred since Jan. 1 but won't be reflected until next year. But if they continue, the trend should buoy the rest of the county.

As an example, he cited the seven buildings that make up the 1.8 million square feet in office space in Moffett Towers in Sunnyvale. Over the past six months, about 1.1 million square feet has been leased to such giants as Hewlett-Packard, Rambus, Microsoft and a subsidiary of Comcast.

"What that means is that the stock market and investors have increasing confidence in the future of Silicon Valley, and that bodes well for property values," said Stone, adding that it means companies are expanding and hiring people. "And that will have a trickle down impact upon residential property values."

10 Questions to Ask the Condo Board

2011-06-21T22:59:00.000-07:00

I have sold several town homes in the last couple of months. I think it's a good idea to get to know the HOA pretty quickly as they can be quite an hassle.

Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive — and organized — its members are. You’ll also be alerted to potential problems with the property.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve? Plus, find out how that money is being invested.

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs.To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn’t the assessment cover? Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal?

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building? This will tell you if residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS®, owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.

8. Is the condo building in litigation? This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

SW

Attention, Lawmakers: Taxpayers Oppose Ditching Mortgage Interest Deduction

2011-05-25T14:18:00.001-07:00

By: Natasha Altamirano

Tax Day is behind us, but if some Washington policymakers get their way, so too might be many popular tax breaks, such as the mortgage interest deduction, which saves the itemizing American household about $3,000 per year. Several budget plans and proposals to reduce the federal budget deficit include eliminating or dramatically curbing the MID.

Tax Day is behind us, but if some Washington policymakers get their way, so too might be many popular tax breaks, such as the mortgage interest deduction, which saves the itemizing American household about $3,000 per year. Several budget plans and proposals to reduce the federal budget deficit include eliminating or dramatically curbing the MID.

But a new USA Today/Gallup poll shows that a clear majority of taxpayers oppose eliminating tax deductions like the MID:

61% of respondents, asked if they would support eliminating certain deductions to help lower the overall federal income tax rate, said they oppose jettisoning the MID.
60%, asked if they would support excising certain deductions to help reduce the federal budget deficit, said they oppose cutting the MID.
And why shouldn’t they? Roughly 38.5 million of the nation’s 75 million home owners claim the MID on their tax returns.

Even taxpayers who don’t itemize their income tax returns understand the important role MID and home ownership play: About half of the poll respondents who don’t claim the deduction would oppose its demise. That makes sense, given the fact that:

Renters might see higher rental rates if their landlord’s cost to own real estate goes up.
Non-itemizing home owners could see property values fall an estimated 15% without the MID.
Despite this widespread taxpayer support for the MID, proposal after proposal—from President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, charged with reducing the federal budget deficit; to House Budget Chairman Paul Ryan’s fiscal year 2012 plan; to a new deficit-reduction commission announced recently and chaired by Vice President Joe Biden—seems to be gunning for this popular tax break.

Policymakers take heed: U.S. taxpayers—home owners and renters alike—want to keep the mortgage interest deduction.

Shedding a second mortgage? It's possible!

2011-05-09T11:44:00.000-07:00

Bankrupt homeowners shed second mortgages

By Pete Carey

Stung by the crash of the housing market, some struggling homeowners are using a little known but increasingly popular provision of the bankruptcy code to eliminate second mortgages and avoid foreclosure.

Statistics are hard to come by, but bankruptcy lawyers say the provision has been used effectively on hundreds, if not thousands, of cases in the Bay Area during the past two years.

"It's a big thing in our valley," said James "Ike" Shulman, a San Jose bankruptcy lawyer. "But it's not widely known."

Shulman, co-founder of the National Association of Consumer Bankruptcy Attorneys, said he has helped a number of clients who have filed for personal bankruptcy use the law to hold on to their houses -- including three last week.
Cathy Moran, a Mountain View bankruptcy lawyer, said one of her clients had a $132,000 second mortgage voided by the court.

"This is a really big-ticket issue that allows people to keep a home and conform the mortgage to something closer to real value," Moran said.
Bankruptcy laws prevent homeowners from eliminating the debt of a first mortgage if they plan to stay in their home. But second mortgages are treated differently. They can be declared unsecured debt when there is no equity to cover them, as is the case for millions of houses that are now worth far less than a few years ago.
When that happens in a personal bankruptcy proceeding, the second mortgage is put on hold and no payments are required while the homeowner completes a repayment plan for other debts -- which typically takes three to five years. At that point, the second mortgage is eliminated.

Many of these second mortgages were granted during the housing bubble, when home prices were going in one direction only -- up, up and up.
"A lot of these are loans that shouldn't have been made at all," said Henry Sommer, editor of Collier on Bankruptcy, a publication on bankruptcy law.

One of Shulman's clients, Veronica -- who asked that her full name not be used -- was struggling to keep the San Jose house she bought in 2005 for $612,000.
Her home's value has dropped to about $367,000 -- less than her first mortgage of $489,000 -- which allowed her to petition the bankruptcy court to set aside her $122,000 second mortgage. The court granted her motion.
She successfully completed her payment plan for other debts two months ago, and her second mortgage is now eliminated.

"It's wonderful," she said. "After almost six years, I am finally able to see the light at the end of the tunnel and I'm so, so grateful."
Mortgage bankers don't like the practice.
It's "a troublesome phenomenon. It's one of those things that's just now developing and bubbling up," said Dustin Hobbs, spokesman for the California Mortgage Bankers Association. But there is little the mortgage industry can do, aside from seeking to change the law. That could be difficult given the current partisan lineup in Washington.

And there are no complaints from investors in first mortgages, like the pension and retirement funds represented by the Association of Mortgage Investors. "We think with the right controls, something like this to allow a responsible, distressed homeowner to reorganize their assets, liabilities and cash flows is a very pro-business proposition," said Chris Katopis, the association's executive director. "We disagree with what the mortgage bankers associations are saying on this."
The law has been like this for years, bankruptcy lawyers say. It's just never been used as much because in the past there was usually enough equity in a home to cover the second mortgage.

"We're having great results" using the rule, said Brette Evans, a San Jose bankruptcy lawyer. In one recent case, a small-business owner was able to hang on to her home by setting aside a $240,000 second mortgage, she said.
That put the borrower in "a safe zone" where she could work out a modification of her first mortgage, Evans said.

Are banks delaying short sales?

2011-04-12T15:14:00.000-07:00

The California Association of Realtors today charged that lenders aren't doing enough to encourage "short sales" -- or transactions for less than the value of the mortgage on a property.

"Many underwater homeowners who have been hit by the recent economic crisis can no longer afford to stay in their home and just need to sell their home as expeditiously as possible are unable to largely because of the complex and cumbersome short sale process," association President Beth L. Peerce said today in a news release.

According to a survey by the group of 2,150 Realtors, 94 percent were involved in a short sale transaction last year. Less than 3 in 5 of short sales transactions were successful, and lenders in more than half of the cases took 60 days or more to approve or reject the deals.

Bank reactions: According to a Merc report, at least one big lender, Bank of America, reports that it has increased its staff and technology to make the short-sale process more efficient.

Bloomberg News is reporting today that BofA is separating its mortgage portfolio to create a "good bank, bad bank structure." Loans going into the "bad bank" are "delinquent or are expected to go delinquent over the next three years," Laughlin said. "As borrowers default, we'll evaluate them for a loan modification."

What exactly does Title Insurance do for me?

2011-03-19T21:44:00.000-07:00

Many of my first time buyers are foreign to the subject of title insurance. So what exactly does it do?

Title insurance protects the holder from any losses sustained from defects in the title. It’s required by most mortgage lenders. Here are five other things you should know about title insurance.

1. It protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. It’s a one-time cost usually based on the price of the property.

3. It’s usually paid for by the sellers, although this can vary depending on your state and local customs.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

Hope this helps!

SW

Does Moving Up Make Sense?

2011-03-01T14:15:00.003-08:00

People who are lucky enough not to have lost a lot of money in recent times more than likely have a good amount of equity in their homes.

These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.

1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.

2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.

4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.

5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.

6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Agency relationships

2011-02-23T07:54:00.000-08:00

It's hard to figure out what legal relationship we have with each other as clients and as an agent. It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. Ask what type of agency relationship your agent has with you:

Seller's representative (also known as a listing agent or seller's agent)
A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.

Buyer's representative (also known as a buyer’s agent)
A buyer’s agent is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split with the seller’s agent.

Subagent
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.

Disclosed dual agent
Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.

Designated agent (also called appointed agent)
This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.

Nonagency relationship (called, among other things, a transaction broker or facilitator)
Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

Questions comments?

More bad news?

2011-02-17T13:27:00.000-08:00

Sure. Here you go.

"The market is still dominated by distress sales and bargain hunting, DataQuick President John Walsh said.
Median prices dipped 9.9 percent from December to $338,000 for all types homes, including condos and townhouses, the fourth straight month of decline and the largest dip on record. That's up from a low of $290,000 in March 2009, and down from a high of $665,000 in June and July of 2007.
Foreclosure resales are at their highest level since last February. Investors and first-time buyers were snapping up lower cost homes over the holidays, with many transactions closing in January, helping push the median price lower, DataQuick reported. For single family resale homes only, prices increased 4.2 percent,, countering the drop in other types of dwellings"

What is the silver lining behind this? That there are still buyers out there purchasing. I think the ultimate gray area is here in bay area real estate. Prices aren't going to rise dramatically or droop dramatically. Simply house that should have never sold in 2003 are being bought in 2010 for actual market value. It's an interesting time...

Future of the Housing Market

2011-02-08T11:27:00.000-08:00

Home prices increased from April to May of this year by 1.3 percent, according to the Standard & Poor's/Case-Shiller 20-city home price index. The credit for this largely goes to the government's home buyer tax credit, which expired at the end of April.

The general thought out there seems to be that the housing market has been bolstered by the tax credit--which was the point--and now will come tumbling down again. Maybe not, says University of Chicago economist Casey Mulligan. Even the home price index report points out that May is historically a strong month for home sales.

The Home Buyer Tax Credit was part of the American Recovery and Reinvestment Act of 2009, which passed in February of 2009. The tax credit was originally an incentive for first time home buyers, but later was extended to include qualifying home owners purchasing a new home. Reporting on the New York Times Economix blog, Mulligan suggests the math is faulty when it comes to crediting this tax credit for the latest rise in the housing market.

Mulligan cites Internal Revenue Service reports that show that the average home buyer's tax credit was around $6,000, not much when compared to the price of a home. Also, only $19 billion in tax credits have been claimed so far, which Mulligan considers to be a drop in the housing bucket when compared to the $14 trillion worth of owner-occupied houses in the United States.

Mulligan contends that the impact of the credit isn't big enough to bolster the housing market. Not as many people took advantage of it as could have and it needs to be evaluated in the context of the larger market. Yet, real estate agents, mortgage lenders and economists are fearing the worst now that the home buyer credit will expire.

It is reported that nationally home prices have risen 5.1 percent from the bottom of the housing bust in April 2009. However, overall house prices are 29 percent lower than the height of the housing bubble in July 2006. While the percentages are vastly different across the county--Las Vegas home prices are still dropping--the housing market seems to be one sector of the economy where steady progress has been made.

Recovery can be agonizingly slow and panic can be easier to feel than patience. But as Mulligan points out, housing is a long term investment. Pinning the hopes of the housing market on the one-time, nominal return of a tax credit may not be realistic. Maybe time will show it to be the tiny jolt the recovering housing market needed, not the sugar high of a falling market.

New boxing blog

2011-01-03T01:28:00.000-08:00

In my spare time I love boxing. Check out my boxing blog if you have a chance!

http://fightknights.blogspot.com

SW

Interest rates rising again.

2011-01-03T00:53:00.000-08:00

This was inevitable. Looks like we are going to creep into the 5% range. It was the perfect time for a small window. Now we'll see how it goes with a double dip looming.

http://money.cnn.com/2010/12/30/real_estate/mortgage_rate_spurt/index.htm

"Keith Gumbinger of HSH Associates, a provider of mortgage information said that the market reached a new plateau.

"I don't think we're going back to a 50-year low anytime soon without an economic collapse," he said. "Rates will probably never revisit those levels."

The increase will push mortgage payments higher for homebuyers. When rates rise from 4.25% to 5% it takes away about 9% of buying power, according to McBride.

"That's nothing to sneeze at," he said. "But it's still small relative to the steep drop in home prices over the past few years.""

Here's an interesting question. At what point will our housing value, if ever, will reach peak 2003-2005 pricing? I think it isn't absurd to say 10 years may be a possibility. I don't think that the real estate market has EVER seen this type of sustained downtime in history. We are truly looking at a four year period of tumbles and no end in sight?

At least it's a new year =).

Great Article from the Merc!

2010-06-22T14:10:00.000-07:00

Great Article from Sue McAllister

Silicon Valley house hunting? 5 things to know

By Sue McAllister

It's been a tumultuous three years since the housing bubble popped, leaving both buyers and sellers uncertain about the best strategy. Interest rates are low, but likely to head up, and while housing prices are also low, they're already inching up in some areas.

For help navigating this uncertain market, here is our list of the Five Top Things to Know Right Now about the South Bay housing market.

1. Expect stiff competition for some homes.

Even though home sales are decidedly fewer now than during the boom of a few years ago, some homes still get multiple offers when they hit the market. And nearly 50 percent of houses sold in Santa Clara County in May, and 41 percent in San Mateo County, sold for more than their asking prices. The homes most likely to draw competing bids, real estate agents say, are those priced the lowest and in the best condition in any particular neighborhood. So a $350,000 condo on San Jose's Communications Hill might get multiple offers, and so might a turnkey house in Los Altos priced at $1.1 million. Where buyers are likely to find deals: Among fixer-uppers, especially in the upper price ranges of any particular neighborhood, "short sales," in which sellers must get their lender's approval to sell for less than they owe on their mortgage; and on homes priced north of $2 million.

2. Getting a loan may be more complicated and time-consuming than you expect.

If
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you haven't bought property or refinanced in the past three years, you may be surprised by how much documentation lenders now require. Pay stubs, bank statements and tax returns are all required, of course, but lenders are also getting verification that the tax records you submit to them match what you filed with the IRS. They are calling employers to verify where the borrower works and checking credit just before escrow closes, to make sure circumstances have not changed since they approved the loan. Some in the mortgage business caution borrowers not to use their credit cards in the eleventh hour, in case a sizable purchase erodes their credit score enough to put the loan in jeopardy. Real estate agents recommend buyers get preapproved before making any offers on homes, increasing the odds the process will go smoothly.

3. Buyers, be prepared to try, try again.

If you're trying to buy one of the least-expensive homes in a particular neighborhood, be prepared to try a few times before yours is finally the winning offer. If you're trying to buy a condo or townhouse using a loan insured by the Federal Housing Administration, you can't get the loan unless the FHA has already given that condo complex its stamp of approval, reviewing the complex to make sure not too many owners are behind on their association dues, etc. If the complex you've chosen isn't on the list (see www.hud.gov), then you'll need to start looking again.

4. The appraisal process can throw a monkey wrench into a sale.

In another turnabout from the excess of the housing boom, lenders appear to be urging restraint among appraisers. Real estate agents and mortgage brokers say appraisals these days often come in lower than the buyer's offering price. When that happens and buyers can't get a big enough loan, they either have to add extra cash to close the transaction, renegotiate with the seller on price, try to get a new loan from a new lender with a new appraisal or lose the deal.

5. Completing a "short sale" can be a hassle.

Occasionally real estate agents report that short sales are closing faster than they were, say, six months ago. But it still typically takes a few months for sellers to get approval from their lenders to accept an offer that's less than what is owed on their mortgage. Sellers who have a second mortgage and need a second approval should expect delays. If there are liens against the property, such as for unpaid property taxes, you guessed it — delay. But for buyers, the hassle-ridden process usually means they'll get the property at a discount compared with what a "regular" sale might have fetched.

New Listing in Cupertino

2010-06-04T01:02:00.001-07:00

Busy Busy!

Another listing! Once again another one within the FUHSD area. This one is Monta Vista instead of Lynbrook.

It is a modest townhome 2br/1.5ba. Goes to the best schools!

MLS # 81027598

Check it out!

New Listing - Some exterior tips

2010-06-02T17:38:00.000-07:00

New listing is coming up tomorrow in Cupertino! There are two more to come this month and I am excited. The market is picking back up.

The address for the new listing is 10325 Mary Ave in Cupertino. It goes to the best schools and is a 2/1.5.

This one should go quick!

There was a question at a recent listing presentation I did about cheap ways to spruce up your home's exterior. So here are some ideas that I have under 20 bucks:

1. Trim bushes so they don’t block windows or architectural details.

2. Mow your lawn, and turn on the sprinklers for 30 minutes before the showing to make the lawn sparkle.

3. Put a pot of bright flowers (or a small evergreen in winter) on your porch.

4. Install new doorknobs on your front door.

5. Repair any cracks in the driveway.

6. Edge the grass around walkways and trees.

7. Keep your garden tools and hoses out of sight.

8. Clear toys from the lawn.

9. Buy a new mailbox.

10. Upgrade your outside lighting.

11. Buy a new doormat for the outside of your front door.

12. Clean your windows, inside and outside.

13. Polish or replace your house numbers.

14. Place a seasonal wreath on your door.

CAR Counter Offer

2010-05-10T15:36:00.000-07:00

It's nice to have Google Analytics! I get too see how people are reaching my blog and my website.

Of course the top searches that land them on my site are usually 1% commission, Sebastian Wong, Asante Real Estate, etc.

However, one that keeps showing up is the CAR counter offer form. Interesting. I put a blog post on it last year and people just keep going back to it. I think that a lot of the people searching it must want the document as a reference. So... here you go!

CAR Counter offer

BTW. This form is pretty straight forward. I encourage you to use a Realtor to write an actual offer however. There are definitely some issues within the true offer that needs overview by a professional.

If you have questions Comment below!

Campbell Union High School District Boundary Map

2010-04-26T11:20:00.000-07:00

I just an open house in Los Gatos that was in the Campbell Union High School District (the one bordering FUHSD).

There were a lot of people asking about the boundary and high schools. I thought I should share my link to the boundary map for that area! It definitely helps when looking for a home to know what school districts they are in.

CAMPBELL UNION HIGH SCHOOL DISTRICT BOUNDARY MAP

For the Fremont Union High School District, I have an easier link for you.

Just plug in your address here and it will show you what school you go to!

http://www.schvision.com/schoolfinder2/FUHSD/default.asp

Happy house hunting!

Home Inspections / What should it cover?

2010-04-22T13:18:00.000-07:00

With all my pendings right now, my property inspector has been keeping busy. I am lucky enough to be working with a property inspector that I trust and does great work for me. He not only gives me reports quickly, he also walks through the property with my buyers to make sure that they see every problem. Sometimes this helps instead of just looking at pictures.

Home inspections will vary depending on the type of property you are purchasing. A large historic home, for example, will require a more specialized inspection than a small condominium. Also now because of all the new REO and short sales, it is even more important to look through the homes. The as-is sale is becoming more standard than ever.

However, the following are the basic elements that a home inspector will check. You can also use this list to help you evaluate properties you might purchase.

Structure: A home’s skeleton impacts how the property stands up to weather, gravity, and the earth. Structural components, including the foundation and the framing, should be inspected.

Exterior: The inspector should look at sidewalks, driveways, steps, windows, and doors. A home’s siding, trim, and surface drainage also are part of an exterior inspection.
Doors and windows
Siding (brick, stone, stucco, vinyl, wood, etc.)
Driveways/sidewalks
Attached porches, decks, and balconies

Roofing: A well-maintained roof protects you from rain, snow, and other forces of nature. Take note of the roof’s age, conditions of flashing, roof draining systems (pooling water), buckled shingles, loose gutters and downspouts, skylight, and chimneys.

Plumbing: Thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate problems.

Electrical: Safe electrical wiring is essential. Look for the condition of service entrance wires, service panels, breakers and fuses, and disconnects. Also take note of the number of outlets in each room.

Heating: The home’s heating system, vent system, flues, and chimneys should be inspected. Look for age of water heater, whether the size is adequate for the house, speed of recovery, and energy rating.

Air Conditioning: Your inspector should describe your home cooling system, its energy source, and inspect the central and through-wall cooling equipment. Consider the age and energy rating of the system.

Interiors: An inspection of the inside of the home can reveal plumbing leaks, insect damage, rot, construction defects, and other issues. An inspector should take a close look at:
Walls, ceilings and floors
Steps, stairways, and railings
Countertops and cabinets
Garage doors and garage door systems

Ventilation/insulation: To prevent energy loss, check for adequate insulation and ventilation in the attic and in unfinished areas such as crawlspaces. Also look for proper, secured insulation in walls. Insulation should be appropriate for the climate. Excess moisture in the home can lead to mold and water damage.

Fireplaces: They’re charming, but they could be dangerous if not properly installed. Inspectors should examine the system, including the vent and flue, and describe solid fuel burning appliances.

I hope this helps. To skimp on a home inspection is a very very bad idea. I can put my professional opinion on that.

A quick lender checklist for buyers

2010-04-16T05:31:00.000-07:00

A lot of my first time buyers and buyers who haven't been in the housing market for a while were a bit anxious about the process to get themselves approved for a loan. I compiled a quick lender checklist for you so that it might makes things easier

Lender Checklist:
-W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.

-Copies of at least one pay stub for each person signing the loan.

-Account numbers of all your credit cards and the amounts for any outstanding balances.

-Copies of two to four months of bank or credit union statements for both checking and savings accounts.

-Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.

-Addresses where you’ve lived for the last five to seven years, with names of landlords if appropriate.

-Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.

-Copies of your most recent 401(k) or other retirement account statement.

-Documentation to verify additional income, such as child support or a pension.

-Copies of personal tax forms for the last two to three years.

New Pending! Back from HK!

2010-04-15T13:08:00.000-07:00

I got back from Hong Kong and my welcome back present was my new listing went pending! I didn't even have time to blog about the new listing I got in Saratoga and it went pending already!

20367 Seagull Way in Saratoga!

Here is the website if you are interested. The great thing is that it is in Saratoga and has amazing schools (Blue Hills, Miller, and Lynbrook) Go Vikes!

It was also nice that it wasn't a foreclosure or short sale (the majority of my recent transactions) so it was a breath of fresh air for me.

http://www.20367seagullway.com

I do the website for all my listings and it really helps with the marketing and the disclosures.

Short Sales and Tax Problems

2010-04-04T04:12:00.000-07:00

Tax season is upon us! Unlike most people who get W-2's I get 1099's. This means instead of being excited for a tax refund. I am the one paying out. *sigh* The life of a self employed Realtor makes the checks look bigger when you get them, but they also seem humongous when you send them out.

However, tax seasons also got me thinking about short sales. AGAIN. What many people who are looking to short sale their home in California do not know is the money that they save by short selling their home may be taxable! LET ME REPEAT THIS. YOU MAY BE TAXED FOR THE MONEY YOU ARE SAVING ON A SHORT SALE. Unfortunately most realtors who are looking to get short sale listings probably won't exactly be advertising this fact.

The big problem is this. California's tax code is allowing this taxation. Most federal tax laws don't have this in place. The state considers canceled debt as taxable income. What happened was the federal government outlined in 2007 that tax on loan modifications or short sales will be given a pass. California, decided that this was a pretty good idea and went along with it. However, California only approved that law for 2007 and 2008. 2009 short sales have not been included. What does that mean? If you short sold your home in 2009. You may be taxed the difference.

Oh, by the way, in Santa Clara County, there was over 2000 short sales last year. Let's just assume that the homeowners save 100k in debt expense (which is WAY conservative) and they tax them at the tax rate of 9.55% (what they can tax it up to). That's a lot of money in tax revenue, and that's just Santa Clara County!. For a broke state, it might look golden.

Be afraid. I would. Until they fix this.

Check out the graphic. Thanks to SJ Mercury for that!

Final Walk-through! Some Thoughts

2010-03-30T00:55:00.000-07:00

I have a few deals closing in the coming weeks and I just finished a final walk-through yesterday. A final walk through is not something that is completely mandatory, but here at Asante Real Estate we not only encourage it, I make sure of it. (They are also stipulated in a standard CAR contract)

It’s guaranteed to be hectic right before closing, but you should always make time for a final walk-through. Your goal is to make sure that your home is in the same condition you expected it would be. Ideally, the sellers already have moved out. This is your last chance to check that appliances are in working condition and that agreed-upon repairs have been made. Here’s a detailed list of what not to overlook for on your final walk-through.

Make sure that:
-Repairs you’ve requested have been made. (Obtain copies of paid bills and warranties.)
-There are no major changes to the property since you last viewed it.
-All items that were included in the sale price(draperies, lighting fixtures, etc. are still there)
-Screens and storm windows are in place or stored.
-All appliances are operating, such as the dishwasher, washer and dryer, oven, etc.
-Intercom, doorbell, and alarm are operational.
-Hot water heater is working.
-No plants or shrubs have been removed from the yard.
-Heating and air conditioning system is working
-Garage door opener and other remotes are available.
-Instruction books and warranties on appliances and fixtures are available.
-All personal items of the sellers and all debris have been removed.
-Check the basement, attic, and every room, closet, and crawlspace

Final walkthroughs are good for everyone because it gives a peace of mind as well as a good final check to make sure everything is where it needs to be. Happy closings!

Cost VS. Value

2010-03-27T04:10:00.000-07:00

I have been talking to a few people about remodeling their homes before putting them on the market this summer. It's going to be an interesting summer, with some very good prospects. Every year Realtor Magazine publishes an article showing the cost vs value of remodeling projects. It is something that I would highly recommend taking a look at.

http://www.remodeling.hw.net/2009/costvsvalue/national.aspx

Among those I found interesting was the change from last year is that a roofing replacement is now giving back a better cost to value ratio.

Until next time, happy remodeling!

Inactivity sigh

2010-03-18T14:34:00.000-07:00

I have been pretty much inactive for the last couple of months. There has been too much work to do for me to come up with new article ideas. However, I still have been thinking about all the news that is coming onto the market.

There is an article I want to share with you today. It was in the Rolling Stones magazine and it's about the bailout. It makes me sad and frustrated to read things
like this.

It is thought provoking.

I have held the stance that these the big guys are the ones who put us in this mess and aren't really helping out in fixing the problem.

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle

Great Article and New Co-Listing

2009-09-05T17:27:00.000-07:00

I read this great article in the Merc today and I wanted to share it. Thanks to San Jose Mercury News and Sue McCallister

--

"
O'Toole spoke with Mercury News reporter Sue McAllister about foreclosures in California and why buying such properties can be tricky. The conversation has been edited for length and clarity.

Q What's the latest trend in California foreclosures?

A The big picture is that we know we have an unprecedented portion of the population underwater in their homes. We have a ridiculously high number of folks who aren't making their payments, as reflected in the Mortgage Bankers Association delinquency data. We have a record number of homes in the foreclosure process, and we have relatively few foreclosures being finalized. So we know we have a
foreclosure problem, but it's not necessarily resulting in the impact we would expect.
The big question remains, will we see a big wave of these things pushed through, or will it trickle out over time? The third possibility is we do something to fix the fundamental problem, which is negative equity.

Q Can that be done?

A I don't believe we have the political will to fix the negative equity problem. As a society, we're OK with giving billions of dollars to bail out GM, but we're not OK with giving thousands of dollars to bail out our neighbors. So I don't think we're going to directly fix the negative equity problem by reducing people's debt.
Q Which do you think will happen, a big surge of foreclosures, or a trickle?
A We've got all these folks in foreclosure, and in years past we would have just pushed them through the process. But we also don't have the political will to put that many people "on the street," to use the language of those against foreclosure. So given those two things, which are immutable, the answer is they will trickle out for years to come. Even if we see a wave, it will probably be short-lived because government will intervene again.

Q Months ago, you thought one reason for the backlog of homes that should have been foreclosed on already was that banks might not have enough capacity to handle all those foreclosures. You don't think that's the problem anymore?

A It's been a year since banks handled 29,000 foreclosures last July, and they only did 17,000 this July. Capacity should grow, it shouldn't contract. So I don't buy the capacity argument anymore.
Q Describe the various types of government intervention that you say are keeping foreclosures artificially low.
A We start off in September 2008 with Fannie and Freddie going into conservatorship; after that happened, the government slowed foreclosures. Also in September, SB1137 went into effect in California, and that created a temporary delay in notice of default filings (the first step in the foreclosure process).
Then, (former Treasury Secretary Henry) Paulson announced the TARP program, which had two elements that affected foreclosures. Then in February, Barney Frank (congressman from Massachusetts) asked the major lenders to forestall foreclosures until the Making Home Affordable loan modification program was put in place. Later that month, we have the California Foreclosure Prevention Act, which established a 90-day moratorium on foreclosure. That went into effect June 15, but it was a total red herring because it exempted all the banks that have loan modification programs, and all the major banks have them.
As for the Making Home Affordable program itself, it has a three-month trial period on the loan modifications. Borrowers stay in foreclosure during the trial period. As those trials end, which should begin to happen in the next 60 or 90 days, we should either see foreclosure cancellations go way up, or lots of foreclosure sales because they're not working.

Q What's a major misperception about buying a foreclosure property?

A That you can go to a consumer Web site that has a list of foreclosure properties and save 50 percent on your next house. I've bought about 150 foreclosures, and I've saved 50 percent only a few times. It's possible, but not probable.
Q Your company is aimed at professional investors and Realtors, not home buyers. Why?
A Real estate transactions are complicated, and foreclosure transactions are more complicated. If you don't have the time to put into it, hire a professional who does. To go knock on somebody's door and buy the house directly, or go down to the courthouse steps as a home buyer — I don't think the rewards are worth the risks. We offer professional tools with really deep search and analysis capabilities, and we track the auction activity so we can show not only what went into foreclosure but also its current status and outcome.

Q Give me an example of the risks for novices.

A One is buying a second mortgage at auction, or the fact you don't get to inspect the house when you buy at auction.

Q Someone might unknowingly buy a second mortgage at auction?

A What's really being sold is the loan, not the home. If you go down and the auctioneer says "This property is being sold subject to existing liens or encumbrances," if there are other loans that are senior to the one being sold, you still owe the balance on it. But if you are a newbie, you don't know what a lien or encumbrance is. It may result in a total loss for the buyer.

""

Also, I am co-listing a property with Audrey Shilling, also from Asante Real Estate!

A absolutely gorgeous home in Saratoga. It is a 5br/4.5ba 5749sq foot house in Saratoga. 3,299,000.

15126 QUITO RD, Saratoga 9507

http://www.quitoroad.com

Cheers!

New Listings New Website

2009-09-03T16:00:00.000-07:00

I have been working like an ant. Two new listing are up with one forthcoming.

One is a land parcel in Saratoga 6 acres of gorgeous land

BOHLMAN RD MLS # 80942325
$289,000

the other is a 4br/2.5 ba in Portola Valley.
Listed at $2,599,900
It has it's own website (like all my listings)
http://www.beargulchdrive.com

Thanks for looking!

I also update my own website. It's been hectic, but something that I am proud that I can do myself. I don't think there are too many agent outs there that just pluck away at the keyboard and do their own HTML like I do.

http://sebastian.110mb.com

Thanks for checking it out!

Quito Road listing is on it's way! 3.2 Million! Woot!

websites I think you would like

2009-08-31T20:00:00.001-07:00

I am always impressed with how smart and resourceful a lot of my clients are. They seem to look for so much information online, many times before meeting me!

I wanted to have a blog post for those of you that do your own research. Of course there are the basic ones, such as zillow, redfin, and mlslistings. But there are some other websites that are pretty useful!

Trulia's market trends. This is as close as you are going to get to our own professional statistics (offered to only realtors) folks. I like this for checking up statistics.

Here is an example http://www.trulia.com/real_estate/San_Jose-California/market-trends/

I also like Crime Reports They give you a recent history of things that go down in your neighborhood or a future neighborhood!

Sex offenders are also a big concern. This website is for tracking them in your neighborhood, also another great tool especially for parents. http://www.familywatchdog.us/

Lastly City data. Is great for anyone moving to a new city and wanting to find out cool information like median income of households etc!

http://www.city-data.com/city/Santa-Clara-California.html

SW

Scores of Local schools

2009-07-07T17:11:00.000-07:00

I realized that I needed to update my school scores! Here they are! I put my favorite schools on the list. All of the FUHSD and a few others in the area. Please let me know if you want any other schools!

New appraisals law.

2009-07-01T13:07:00.000-07:00

According to a recent new Law by the Federal Reserve Board, the appraisal market has been hit with lower fees and new appraisal rulings.

1.Appraisal Fees that the Banks are charged have been reduced from $400.00 to $200.00. Which means that the Quality Appraisers are leaving the market since they will not reduce their income by 50%.
2. If an appraisal comes in low by an appraiser the bank can only have 2 appraisals and they have to take the lower one.

The result is that thee banks do not have enough appraisers to process the current loans so we are being advised to lengthen our contingency times to 25 days since no closing are happening prior to 45 days and if you have a low appraisal from an inexperienced appraiser you must go and apply with a new bank to get a new appraisal.
Which since there are only 4 banks to choose from is really tying our hands.

I was around in the 1990's when the banks lost 100K's of dollars due to a refusal to take 5K less and sat until the market dropped 100K more. I asked the Banks don't your stock holders see these losses and they replied "no" we right all of this off in the red and they just declare it. They never see that the process of foreclosures is the cause of it.

Well, here we go again in 2009. Banks take 2-3 months to get back to our buyers who have the 1st offer. By then the buyer sees prices dropping or a better buy and walks from the short sale or foreclosure and here we go again.

I had such high hopes that the short sales were going to be the cure of the foreclosure problems of the 1990's but the banks are self destructing again. This is not out of ignorance but out of fear. They get so scared about the market that they over compensate to the point where they choke the life out of the real estate flow and stop the process almost to a halt.

Hopefully, someone in the banking industry will use the expertise of a experienced Realtor and get this market flowing again before they cause another major price drop.

Median Prices up from last month

2009-06-18T12:25:00.000-07:00

With more expensive homes selling better than they have in months, the median price of houses sold in the Bay Area rose last month compared to April

In the nine-county region, the median price of previously owned single-family houses that sold in May rose to $337,000 from $307,400 in April, according to MDA DataQuick, which gathers the data from public records. May's median price, however, was a drop of 37 percent compared to May 2008.

n recent months, sales of previously foreclosed homes in the Bay Area's less expensive communities have formed a large portion of sales, which has helped tug the median price down.

But in May, sales of more costly homes bounced back a bit, nudging the median price up. According to DataQuick, sales of homes in the $800,000-and-up price range rose to 13 percent of sales of previously owned houses, up from 10 percent in April and the highest level since October. Sales of houses for less than $400,000 fell to 58 percent in May, down from 62 percent in April and the lowest level since November.
In San Mateo County, the median price of previously owned houses was $601,000 last month, up from $550,000 in April, but down 23 percent from a year ago. Alameda County's median price was $330,000, up from $303,800 in April, but down 35 percent from May 2008. In Contra Costa County, the median price of $227,000 was up from $220,500 in April, but down 40 percent from May 2008.

Sales volume of all types of homes was higher in May this year than last in all Bay Area counties except Marin and San Francisco.

Change in Rules for Home-Buyer tax Credit!

2009-06-11T13:25:00.000-07:00

In a policy change that could benefit thousands of people, the federal government announced Friday that its tax credit for first-time homebuyers can now be used to help pay closing costs on mortgages insured by the Federal Housing Administration.

The economic stimulus bill passed in February allows first-time homebuyers a tax credit equal to 10 percent of the home's purchase price or $8,000, whichever is less, when they file their federal income taxes. But under the plan announced Friday, buyers using FHA-insured loans will be allowed to treat the tax credit as additional down payment funds, or use it to pay for the closing costs that are typically incurred when a mortgage is funded.

"Families will now be able to apply their anticipated tax credit toward their home purchase right away," said Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, which oversees FHA.

Donovan announced the new use for the home-buying tax credit at a meeting of the National Association of Home Builders' board of directors, in Washington, D.C.

He also said the government is putting "safeguards in place" to ensure that lenders who are offering the tax-credit advances are not charging "excessive" fees for the service. In a letter to FHA-approved lenders, the agency said fees of more than 2.5 percent of the tax credit are excessive.

FHA loans are insured by the Federal Housing Administration and made through its approved lenders. The loans, whose upper limit is $729,750 in Santa Clara County, typically have lower interest rates than traditional mortgages.

Only qualified buyers using FHA loans can use the tax credit toward down payment or closing costs. Other buyers can take the tax credit when they file their income tax returns.

A few weeks ago, the housing industry was abuzz with news that FHA might allow borrowers to use the tax credit to replace the 3.5 percent minimum down payment required for FHA-insured loans. But the government quickly backpedaled on that idea, which would have resulted in more no-money-down, foreclosure-prone mortgages.

Friday, Donovan specified that FHA borrowers will still need to make down payments of at least 3.5 percent of a home's purchase price. But the tax credit can be used as an additional down payment amount, which may help borrowers secure a lower interest rate on their loans. It may also be used to pay for closing costs — such as the fees charged for title searches or mortgage applications — which sometimes total thousands of dollars.

Local real estate agents said the change to the tax credit program will help the local housing market somewhat.

"Overall, it is a good thing," said Karl Lee, a Milpitas broker who is president-elect of the Santa Clara County Association of Realtors.

But the change won't affect the current market for bank-owned properties, he said. Recently in Santa Clara County, banked-owned, post-foreclosure properties have been garnering multiple purchase offers. And the banks prefer to accept offers on their "REO" (real-estate-owned) properties from non-FHA borrowers when possible, he said, because FHA loans usually take longer to close than traditional loans.

"It may not help with the REO piece of the market," he said of the new use for the tax credit, "but for the rest of the market it will be a positive impact."

The tax credit applies to home purchases that close before Dec. 1.

What the heck is an Escrow?

2009-06-09T03:20:00.000-07:00

Many of my posts that answer questions are derived from clients asking me questions. Just today I had a first time buyer ask me what Escrow is. I realized that people not in the profession might not fully understand the nature of escrow.

Help from lending tree gave me this!

If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something similar by opening an escrow account.

How it works

When you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.

When it's used

When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.

Its purpose

The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.

How you benefit

Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.

Escrow payments

Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.

When escrow may be waived

In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.

Prices are flattening.... bottom coming?

2009-05-25T17:10:00.000-07:00

By Sue McAllister

After falling steeply for most of last year, median home prices in Silicon Valley have been flat for the past four months, according to a home sales report released Thursday. While that is a positive sign for homeowners, experts say a housing market recovery is distant, not around the corner.

The median price of single-family, previously owned homes that changed hands in Santa Clara County last month was $435,000, up 2 percent from March, but down 38 percent from April 2008, according to a report released Thursday by real estate information firm MDA DataQuick.

Since January, the median house price in the county has hovered in a narrow range between $420,000 and $435,000, while sales volume has increased from last year for several months. Economist Matthew Anderson of Foresight Analytics called that "a typical pattern in the early stages of a recovery."

A total of 1,171 previously owned single-family houses changed hands in the county last month, 27 percent more than in April 2008, the DataQuick report said. That marks the fifth consecutive month that sales volume has been up more than 20 percent on a year-over-year basis.

Condo sales in the county rose too, but only by 1.3 percent, to 318 units.
Across the nine-county Bay Area, sales volume of houses increased 28 percent in April from a year earlier, while condo sales rose 1.4 percent.

"Still, the sales volume is rather anemic, so we think it is too early to really call this a recovery," said Anderson, whose real estate research firm is based in Oakland. "The economy itself — that is, jobs — will need to recover in order to fuel a sustained recovery in the housing market."

The price trend for Santa Clara County condos and townhouses was similar to that for houses. The median price of condos sold last month was $255,000, up from $230,000 in March, but down 45 percent from a year earlier.

DataQuick reported that one reason median prices are flattening is that post-foreclosure properties — which are usually cheaper — make up a smaller proportion of home sales.

In April, 41 percent of previously owned homes sold in Santa Clara County had been foreclosed upon sometime in the previous 12 months. That was down from a high of 45 percent in January. For the Bay Area as a whole, foreclosures accounted for 47 percent of resales, down from a peak of 52 percent in February.

Rick Turley, president of Coldwell Banker for Northern California, said the number of foreclosure resales could go back up again later this year.

"We know there is a backlog of foreclosure properties that have not been released," he said. And though the introduction of those properties would nudge the median price downward, a recent spate of luxury-home sales will keep it stable, he said.
The median price represents the midpoint, meaning half the homes sold in a given period cost less than the median figure, and half cost more.
Meanwhile, sales of cheaper Silicon Valley homes are brisk, said Kurt Aichele of Thurro Realty in San Jose.

For homes priced at about $550,000 and below, he said, "it's a very competitive market. If you think, 'I can throw a bunch of lowball offers out there,' that day is gone; this market has bottomed out." Unless, of course, a lot more foreclosures flood the market or the economy sends a lot more people to the unemployment rolls, he added.

Multiple offers for under-$500,000 listings are common, and many of those properties sell for more than their asking prices.

The combination of lower prices, average mortgage rates of 5 percent or less for smaller loans, and a new $8,000 federal tax credit for first-time buyers is motivating people, Aichele said.

"If you're buying a $1.5 million property, an $8,000 tax credit doesn't get you all excited," he said. "But if you're buying a $300,000 property, $8,000 coming back to 'em is a big deal."

San Jose resident Pono Aiona and his wife have been looking for a Berryessa house priced at $400,000 or less since last month.

"We're four offers in," Aiona said, having made two unsuccessful bids for bank-owned homes that had multiple offers and two offers for short-sale properties, one of which was accepted about three weeks ago.

"Short sales" occur when an owner sells property for less than is owed on the mortgage; the sale must be approved by the lender, which is often a long and bumpy process.

If Aiona and his family do finally get the keys to the home they've signed a contract to buy for $350,000, Aiona says his monthly loan payments will be only $200 more than the rent he's paying now — "perfect," he said.

"I'm only willing to spend so much. I own my own business, and I need to make sure with the relatively soft economy, things don't go upside-down with it," said Aiona, a chiropractor in Fremont.

"We're just being really careful. I don't want to be in the position that many people find themselves in" — that is, unable to pay the mortgage if the family's income drops.

Mortgage rates dip to 4.82 percent, remain above record lows

2009-05-22T14:30:00.000-07:00

By Alan Zibel
WASHINGTON — Rates on 30-year mortgages inched downward this week, remaining below 5 percent for the tenth-consecutive week and just above record lows.
Mortgage finance giant Freddie Mac said today that average rates on 30-year fixed-rate mortgages dipped slighly to 4.82 percent this week, down from an average of 4.86 percent last week.
The all-time low of 4.78 percent was recorded on the weeks of April 2 and April 30. Freddie Mac's survey dates back to 1971.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its index of application volume climbed 2.3 percent last week from a week earlier. Applications to refinance existing loans made up nearly 75 percent of all applications.
To revive the economy, mired in the worst slump in decades, the Federal Reserve has cut its key interest rate to a record low near zero and is expected to hold it there well into next year. The Fed also has turned to unconventional tools to lower interest long-term rates and spur spending, which would help bolster economic activity.
The Fed at its meeting in March launched a bold $1.2 trillion economic-revival effort. It agreed to starting buying up to $300 billion worth of government debt over the next six months and to boost purchases of mortgage securities and debt from Fannie Mae and Freddie Mac.
At the April meeting, some Fed policymakers said additional purchases "might well
be warranted at some point to spur a more rapid pace of recovery," according to documents released Wednesday.
Qualifying for a loan, however, is still tough. Lenders have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage fell to 4.5 percent this week from 4.52 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages dropped to 4.79 percent from 4.82 percent last week. Rates on one-year, adjustable-rate mortgages rose to 4.82 percent up from 4.71 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages and averaged 0.6 point for five year and one-year adjustable rate loans.

Summerizing projects and Ecoonomic Indicators!

2009-05-21T12:27:00.000-07:00

"Summerize" Your Home with These Spring Projects

It's hard to believe, but the official start of summer is just a few weeks away! Here are some spring cleaning projects you should definitely consider tackling before the hottest days of summer descend upon us.

Air Conditioning
It's important to have your air conditioner in perfect working order before summer starts. Taking care of any issues after the summer heat hits can potentially result in an increase in price, as well as an increase in the time it takes for a technician to visit your home. You should also replace any filters now. Simply remove the old one and take it to your local home improvement center. Sales representatives should have no problem finding its replacement.

Clean out your garage
Organizing a garage can be an excruciating experience during the hot summer months, so if that's something you need to do, don't put it off any longer. Once you clean out your garage, either donate any unwanted items or sell them.

Paint
Late spring is the perfect time to paint the interior of your home since the weather best lends itself to keeping your windows open, allowing the fresh air in and the paint fumes out. If you decide to paint the inside of your home, think about lightening the existing color as opposed to darkening it. Lighter colors are not only inviting, they create the illusion of a bigger, more open space.

Buy fans
Installing ceiling fans and using portable fans are great methods for cutting the heat inside your home. They are also far less expensive to use than an air conditioner. Using fans of any kind also enables you to keep windows open at night, allowing fresh air to circulate throughout the house.

Install dimmer switches
Dimmer switches not only add ambience, they also cut down on energy and the unwanted heat given off by brighter bulbs. Another tip is to use low-wattage light bulbs whenever possible.

Good luck and happy "summerizing!"

The Week's Economic Indicator Calendar

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of May 18 - May 22

POST-CONTRACT PITFALLS

2009-05-12T00:53:00.000-07:00

Selling a home is like climbing Mount Everest – getting a signed contract is a great accomplishment, but that's only half the journey. The typical home sale today involves more than 20 steps after the initial contract is accepted to complete the transaction.

Much of what needs to be done before the closing is the responsibility of appraisers, loan processors, attorneys, and inspectors — the REALTOR®'s role is to coordinate those responsibilities, helping to ensure that others do their jobs promptly and correctly and that the closing isn't jeopardized.

Many steps between contract ratification and closing involve the cooperation of both buyer and seller, and attentive REALTORS® on both sides of the transaction will troubleshoot and keep everyone on track.

Home Selling from A to C (Acceptance to Closing)

Home Sellers	Home Buyers
1. Select an escrow agent. One of the parties selects an escrow agent. The escrow agent will collect the necessary documentation from each side and will conduct the closing.	1. Deposit earnest money funds. Earnest money funds are deposited according to instructions, which include who will hold the deposit, whether interest is to be accrued, and conditions of release. These funds are applied to the down payment at closing.
2. Assemble condo or home owners association (HOA) documents. Sellers who live in condos or in a neighborhood subject to an HOA must provide financial statements and recent reports to the buyer for review.	2. Make the final loan application. If interest rates are falling and more home owners are refinancing, additional time may be needed to obtain a mortgage commitment. If the property is being financed with a VA, FHA, or other government-backed loan, it will be necessary to obtain copies of correctly filed building permits for all remodeling or additions done since the original construction. Decisions about locking in interest rates can be made at any time after a contract is ratified.
3. Order a preliminary title report. A title search examines all public records to determine any defects in the chain of title; in other words, to confirm that the seller actually owns the property and has the right to transfer ownership.	3. Order the home appraisal. Lenders require an appraisal before committing to a loan. Appraisers compare the features and condition of a home to similar properties to arrive at a dollar figure for its value.
4. Request a satisfaction letter from present lender. Total amount due on any existing mortgages must be provided in advance of settlement.	4. Arrange the property survey. A survey determines the boundaries of the property, its location, and the size and shape of any buildings on the lot. The survey also identifies any existing easements or encroachments.
5. Coordinate home appraisal and inspections. Arrangements for access to the property must be made for the lender's appraisal and any inspections as specified in the contract.	5. Order inspections. Inspections may include those for home condition, radon, lead, earthquake, and termite infestations. Inspections should be ordered as soon as the contract is ratified so there is time to remedy any problems or renegotiate terms. REALTORS® have established relationships with inspectors and contractors to help ensure that their transactions get priority in busy times.
6. Arrange final utility readings and payments. When bills are prepaid, payments will be prorated at settlement between buyer and seller.	6. Verify employment and financial information. Lenders will require buyers to verify employment and financials before committing to the loan to ensure that there have not been significant changes since the process began.
7. Obtain home warranty policy (if applicable). If a seller has offered a home warranty policy, he or she must obtain this policy before closing.	7. Purchase homeowners' and hazard insurance. Homeowners' and hazard insurance is required by lenders; in some areas, flood insurance is also required.
8. Complete repairs. If the sellers have agreed to make repairs as a result of a home inspection, these must be completed. If repairs require a building permit, sellers must apply for one as soon as possible, because this could delay closing.	8. Obtain title insurance. Title insurance can help ensure that title defects will not make a property unsaleable in the future because of: Forged documents Undisclosed heirs to the property Mistaken legal interpretations of wills or trusts Misfiled documents — deeds, liens, mortgage satisfaction documents Confusion caused by similarities in names Incorrect marital status Mental incompetence
9. Have an attorney prepare the deed. The deed is the document by which the owner transfers title to the property.	9. Secure a loan commitment. Lender notifies escrow agent of commitment and confirms settlement date.
10. Arrange for payment of transfer taxes. Most states require a tax on transfer of property. This expense is most often the responsibility of the seller. Cities and local municipalities may also charge transfer taxes.	10. Transfer utility accounts. Utilities should be transferred into the buyers' names as of the date of settlement.
	11. Complete the final walkthrough. Buyers walk through the property with their REALTOR® shortly before closing to ensure that the property is being delivered in the condition agreed to in the contract.

Time Estimates for Delays

When things go wrong, closing can easily fall behind. Here's how much time to expect on particular delays:

One-Week Delays

Buyer submits incorrect information to lender.
Source of downpayment changes.
Escrow fails to notify parties about missing documents.
Principals leave town without signing all necessary papers.
Unknown defects are discovered in the property.
Last-minute liens discovered.
Cloud on title.
Move-out date changes.

Two-Week Delays

Lender decides at the last minute it doesn't approve of the borrower or the property.
Lender raises interest rates.
Lender requires last minute reappraisal or repairs.
Appraisal too low.

Mortgage applications falling?

2009-04-15T14:48:00.000-07:00

Update!

Mortgage applications volume fell 11 percent last week to 1,113.2 from 1,250.6 the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, the index decreased 10.9 percent compared with the previous week. It increased 45.6 percent compared with the same week a year ago.

The refinance share of activity decreased 1/10th of a percent while the purchase index declined 11.3 percent.

This was the first drop in mortgage applications in five weeks. While there was no adjustment in the calculations for the Easter and Passover holidays, it may have contributed to the decline in volume, the mortgage bankers suggested.

Mortgage rates continued to fall:

* 30-year fixed-rate mortgages decreased to 4.70 percent from 4.73 percent
* 15-year fixed-rate mortgages decreased to 4.46 percent from 4.49 percent
* 1-year ARMs decreased to 6.21 percent from 6.23 percent

These rates are great!

Also I mentioned last week that I was going to put a list for buyers to checklist. That is my previous post

Home sales and Roundabout problems

2009-04-05T13:22:00.000-07:00

Another Sunday. Another day on the road. Another traffic incident and home sales.

I wanted to start off with a little traffic dispute I had on the road today. California doesn't have many roundabouts like the East Coast does. i don't think many drivers here actually know the rules I was going around a roundabout when another car was about to enter. I was already in the roundabout (about 3/4) clearly making my turn. A incoming car, not yet in the round about, decides that it is not her prerogative to yield to me. I keep going, she hits the brakes, raises her arms in disgust and curses at me. I say audibly, "It's my right of way."

As I finish my turn and drive by, the neighbors who happened to be outside couldn't help themselves and proceeded to give me a dirty look as if I had done something wrong. So, me being a nerd and frustrated I looked up the rules. Plain and simply, anyone already in the roundabout has the right of way. Period. So if angry woman in silver car, or annoyed neighbors happen to come across the blog. Thank you for the dirty looks.

Anyways. Back to business. I have some buyers right now looking to buy a home in the northern portion of the South bay. Palo Alto, Foster City etc. After talking to thme about their options, we were looking at REO-Bank Owned Properties, Short Sales, Private Sales and New builders. I realized something. I should create a pros and cons list for all the seperate properties you can look at. I am now creating one and should be up soon on my next post.

Regards,
your roundabout master

New Home Tax Credit in California

2009-03-24T10:20:00.000-07:00

Looking to buy a new home? Good news. California is offering a new state tax credit for first time buyers buying newly built homes. The state tax credit is for $10,000 or 5 percent of the purchase price of a newly built home, whichever is less. The home must be the principal residence of the buyer for at least two years following the purchase, and the sale must close between March 1, 2009 and March 1, 2010.

Put this on top of the $8000 first time buyer Obama Tax Credit (see other post) you are accumulating $18,000 of tax credit.

And of course. With Asante's business model of 2/3 cash back. Of the 3% broker commission that most new home buyers pay out, if you ask one of us to be your agent, you will get ANOTHER 2% BACK.

I just want to do the math for fun. 500k home newly built, with a bunch of incentives from hurting builders. $18,000 in tax credits, and $10,000 cash back from me. Um.. Your looking at a newly built house for immediately ~30k under the market value?

So anyways here are some questions.

How does the tax credit work?
• A tax credit of up to $10,000 credit (5 percent of home price or $10,000, whichever is less) for the purchase of a newly constructed, previously unoccupied home.

• Available March 1, 2009, until March 1, 2010, or when funding authority runs out – whichever comes first ($100 million was allocated to program).

• Allocated by the state’s Franchise Tax Board (FTB) on a first-come, first-served basis (details still to be worked out).

• Paid out to home purchasers over three tax years in equal amounts (i.e. $3,333 for 2009, $3,333 for 2010, etc.).

• Purchasers must reside in the home for at least two years.

• There are no income limitations that have to be met by purchasers.

• There is no first-time homebuyer requirement.

• There is no repayment requirement (unless the purchaser sells, rents out, etc., before two years expire).

What constitutes a purchase, for purposes of qualifying for a credit?
The FTB has determined that, for purposes of securing a homebuyer tax credit, a qualified purchase means close of escrow.

How does a customer obtain a tax credit?
The FTB has indicated that it will provide tax credit to buyers for escrow closings after March 1, 2009, until March 1, 2010, or until the statutorily authorized funding for the credit runs out, whichever occurs first. A buyer will receive a notice from the FTB following the close of escrow confirming the apportionment of a tax credit for that buyer’s purchase.

How will customers know if there are credits still available?
The FTB has promised to keep and publish – as often as daily – a running total of how much funding remains from the original $100 million set aside for the program.

Will I receive the credit if I buy an existing home?
No. The credit is only for the purchase of a newly built home that has never been occupied.

How much money is available under the program?
The law limits the total amount of credits that can be claimed to $100 million. Credits will be allowed on a first-come, first-served basis. When the $100 million runs out, the state tax credit program is over.

Where can I go for more information about the tax credit and find out if I qualify?
Consult the FTB website at www.ftb.ca.gov. The FTB is the agency responsible for administering the tax credit and will have information, including all necessary forms available on their site.

Can the credit be used in conjunction with the recently enacted federal tax credit?
Yes. The state homebuyer tax credit ($10,000) and the federal credit ($8,000) can be used together, but there are conditions that must be satisfied:

• The state homebuyer tax credit applies only to new, previously unoccupied homes.

• The federal tax credit is limited to first-time homebuyers.

• The federal tax credit is also limited to individuals with annual incomes of $75,000 or dual filers of $150,000. Lower-valued credits are available to individuals with incomes up to $95,000 and $170,000, respectively. Consult www.federalhousingtaxcredit.com for more information on this and other aspects of the federal tax credit.

• Both the state and the federal homebuyer tax credit require the purchaser to maintain occupancy of the home for a period of time following the purchase – two years for the state and three years for the federal credit. Both tax credits must be repaid if the purchaser fails to meet these occupancy requirements.

• To qualify for both: A homebuyer who qualifies for both credits (up to $18,000) must buy a new home; can't have owned one in the last three years; must have an individual annual income of $75,000 or less; and must live in the home for at least three years. Also important to remember regarding the use of both credits is that the state homebuyer tax credit is paid out over three years (i.e. $3,333 per year, based on a $10,000 credit), whereas the federal credit is a one-time tax benefit.

What procedures need to be followed to process the tax credit with FTB?
FTB has put in place a specific procedure for reserving the homebuyer tax credit for qualified buyers, that includes the following:

• The preparation by FTB of a form that allows.

• Sellers to certify that eligible homes have never been occupied.

• Buyers to declare their intention to occupy the eligible home as their principal residence for at least two consecutive years immediately following the purchase.

• The publication of said certification form on the internet, which may be downloaded and completed by the seller before close of escrow.

• The requirement that the completed form be faxed to the FTB within seven calendar days of the close of escrow. FTB requests this because the computer managing the program creates a file for each tax credit the escrow agent separately fax forms for each home.

• The plan of the FTB, following receipt of the certification form, to send a letter to the buyer confirming (or not) the buyer’s initial eligibility for the homebuyer tax credit.

Check this out the Federal Tax Board for their info

http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

Feb numbers/ Foreclosure sales up

2009-03-23T14:26:00.000-07:00

Foreclosure sales are up! Like I have been noticing, the median pricing is way way down. Yet the sales #'s are going up. This is definitely a good thing for the market. All of the lower priced properties are beginning getting snatched up because of their increasingly realistic sellers/owners.

If you are a first time homebuyer or someone trying to get into a home for cheap, the wave might be beginning now. Here are also some numbers outlining February.

SW

What is Supplemental Tax Assessment?

2009-03-16T00:21:00.001-07:00

I ran into this question today and I thought it would be a good question to post on my blog.

State law requires the Assessor's Office to reappraise property immediately upon change of ownership or completion of new construction. The Assessor's Office must issue a supplemental assessment which reflects the difference between the prior assessed value and the new assessment. This value is then prorated based on the number of months remaining in the fiscal year, ending June 30th.

For example, if property is purchased on September 15th with a market value of $150,000, and it has a prior assessed value of $50,000, this will result in a supplemental assessment for the difference ($100,000) prorated for the remaining months in the fiscal year (9 months from October through the following June):

$150,000 New Purchase Price/Market Value
-$50,000 Prior Assessed/Taxable Value
$100,000 Supplemental Assessment
x 9 1/2 Remaining months in Fiscal/Tax Year
$75,000 Supplemental Assessment
x 1% Tax Rate
$750 Supplemental Tax Bill
This supplemental tax bill is in addition to the regular tax bill which is based on the assessed value as of March 1st of each year. If a second sale or transfer of the property occurs during the same fiscal year, but before the mailing of the first Supplemental Tax Bill, the taxes will be prorated between May 31st, a second Supplemental Assessment will be required for the next fiscal year.

Hope this was easy to understand! Uncle Sam is a tough one to understand.

Good news?!?

2009-03-14T00:39:00.001-07:00

Wow. Am I dreaming? I hope not.

CBS 5 in SF is giving some good news.

http://cbs5.com/video/?id=47401@kpix.dayport.com

Pinch..

SW

The Negotiation Stage

2009-03-13T22:47:00.000-07:00

I am in a negotiation right now with a few homes. Sometimes it feels as though it gets personal. When your purchasing a home you are well aware that there is a lot of money at stake. No house is perfect. Understanding and remembering these two statements will help diffuse the negotiation stage.

Emotions are high for both buyers and sellers. - The seller may have loving memories and years of sweat equity in the house. Maybe they are being relocated and don't want to go. Understanding their motivations for selling will help you appreciate their situation and predicament during these emotional times.

There is a lot of money at stake for all the parties involved (and that includes the real estate agents) - Just remember that market value (the value of a home) is the price that a willing buyer and a willing seller can agree to. If you can not agree on a price, ask yourself: Is there something you missed? Are there comparables that support the price that they want? Are there motivations that might factor into the price they are demanding? In the end, does it matter? What is the house worth to you today and what do you think you can reasonably sell it for based on the amount of time you plan to spend in it? Think about the answers to those questions before you make your move.

The home buying process is an emotional, complex and time-consuming process, but it is worth it. Nothing compares to owning your own home in a neighborhood that you chose.

Tax Benefits of Home ownership

2009-03-10T12:06:00.000-07:00

Lots of buyers (especially first time home buyers) are interested in the tax deductions they receive. While I still think the best incentive for home ownership is the actual appreciation in value, this sure doesn't hurt!

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Here’s how it works.

Assume:

$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
______

$12,577 = Total deduction

Then, multiply your total deduction by your tax rate.

For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Side Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.

-SW

Obama's Tax Credit for First Time Buyers

2009-03-06T10:51:00.000-08:00

Obama has announced a tax credit for first time home buyers. So I thought I would give those of you who are looking a review of what exactly this means for you, who qualifies and information about it

First Time Home Buyer Tax Credit
· The tax credit is for first-time home buyers only.
· The tax credit does not have to be repaid.
· The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
· The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
· Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

1. Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here's another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

10. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

11. I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

17. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer's tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

18. I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.

19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?

Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

20. If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

I hope I answered most of your questions. Let me know if there is any thing else you need!

No Special Treatment for First Offer

2009-02-27T17:02:00.000-08:00

I am in a multiple offer situation right now with some of my clients. While there may not be many of these situations in the market right, these problems will eventually arise if you are active in the market. This Q&A was put in a magazine I was reading and I think it will help a lot of people who have questions.

The question is from a realtor. He was wondering whether the selling agent was in breach of the code of ethics, a code that is suppose to clean up the grey areas of our business.

Q. I was in the middle of negotiating an offer on behalf of buyers I was representing. We had submitted a counteroffer in writing to the listing agent and we were waiting for a response. Suddenly, the listing agent contacted me and told me that there were multiple offers on the table. She said her seller instructed her to tell us that we needed to make our "best and final offer" by a certain time that day. This doesn’t seem fair to me. I feel the sellers should have completed negotiations with my buyers before considering another offer. Is the listing agent in violation of the Code of Ethics?

A. No. Considering several offers at the same time or asking one or more potential buyers to make their "best and final" offer by a specific deadline doesn’t violate the Code. The listing agent and the seller had the right to ask that your buyer submit a "best and final offer." While individual sellers may use that practice infrequently, it seems more common in situations requiring a quick sale, such as relocations and properties sold by lenders. Because these properties are often attractively priced, they can generate multiple offers. Standards of Practice 1-6 and 1-7 of the Code address offers and counteroffers. Standard of Practice 1-6 provides "REALTORS® shall submit offers and counteroffers objectively and as quickly as possible." Standard of Practice 1-7 states, "When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counteroffers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing . . ."

No provision of the Code requires that parties negotiate the first offer received to a conclusion before they consider or act on other offers. What happened in your situation is that the seller rejected your counteroffer and requested that your buyer resubmit a new offer that included your buyer’s "best" terms. In those circumstances, it’s up to the buyers to decide whether they will make another counteroffer.

If your buyers don’t submit a new counteroffer, the seller will have lost the opportunity to consider their previous counteroffer. That’s something the listing agent should have explained to the sellers before they rejected the counteroffer and called for "best and final" offers. Your expert negotiating advice about their choices can help your buyer clients achieve their objectives.

credits to Bruce Aydt

Numbers for January / My Return!

2009-02-23T16:36:00.000-08:00

My lack of participation in this blog is horrible. I have some statistics for you all. Thank you for your reading!

On a personal note, my business has been really picking up! If you are my client reading this blog, I thank you for keeping me busy.

In the peak times of the real estate market there was over 22,000 real estate agents licensed and active (questionable) in Santa Clara County. That number has been dropping, most recently to about 14,000. The year of 2009 may bring that number way down, perhaps dropping us into the 4 digits. I hope to be one of the few remaining agents that can still consider this my profession, and with your continued patronage, I can fulfill that goal. Thank you.

The first chart I have is a bit scary.

What's interesting is that you can see the mortgage delinquencies on the western side of our South bay are still alright. It's the trouble areas east of 87 that are scary. Chances are if you are in those areas you are seeing a large majority of the sales in your area being either short sales or REO listings. This is definitely pushing down the price of your home.

The second graphic I have for you are the January numbers for the individual cities.

Please let me know if you want more in depth looks into a certain city. (As I probably need more material to write about anyways!)

What you want to notice in these numbers are Days on Market, and the Closed Sales/Inventory ratio. When the ratios are this bad... the market is probably not doing too well. (case and point).

I hope all is well!

Regards,
Sebastian Wong
Asante Real estate

Rent or Buy?! That is a good question.

2008-08-14T15:42:00.000-07:00

Renting or Buying:
Advantages and Disadvantages

If you are considering buying a house, one of the first decisions you need to make is whether buying a house instead of renting one is the right direction for you. Since owning a home is the "American Dream", many people simply assume that it's always to their advantage to buy a home, and for most, it is. Take a moment to review the following table to see how your situation fits in.

sigh more problems with Freddie mac

2008-08-07T01:08:00.001-07:00

Freddie Mac's rising losses bode ill for US housing crisis

by Veronica Smith Wed Aug 6, 10:36 PM ET

WASHINGTON, (AFP) - Troubled mortgage finance giant Freddie Mac reported a shocking loss in the second quarter that bodes ill for the US taxpayer after the government's huge rescue package.
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Freddie Mac and twin Fannie Mae, government-chartered, shareholder-owned mortgage firms that underpin roughly half the US housing market, were thrown a federal lifeline a week ago amid the worst housing crisis in decades.

"It has been more than a year since the housing market went on a tumultuous skid. Yet, the hangover from bad lending practices and tighter credit has housing's two primary sponsors, Fannie Mae and Freddie Mac, still unable to step in and fully provide support," said Jeffrey Ham, an analyst at Briefing.com

As their plunging shares raised questions of solvency, the government offered Freddie Mac and Fannie Mae aid that could cost 25 billion dollars in the next two fiscal years, according to the Congressional Budget Office.

"Without the lifeline many fear the two government-sponsored enterprises lacked the capital to absorb losses associated with further deterioration in the housing market," Ham said.

Economists say the housing collapse has not yet hit bottom.

Treasury spokeswoman Brookly McLaughlin reiterated that the Treasury has no plans to use the temporary authorities of the rescue package, which allow the Treasury to buy equity in the two firms to boost their capital.

"We have a responsibility to the taxpayer and to the overall financial system to thoroughly analyze and understand these authorities, should circumstances ever warrant their use," she said, in explaining the Treasury had hired Wall Street investment bank Morgan Stanley for advice.

Freddie Mac reported it had a second-quarter net loss of 821 million dollars, with the loss per share at 1.63 dollars, more than triple most analysts' forecasts of 53 cents per share.

The financial results were severely impacted by a 2.5 billion dollar charge for credit losses from rising delinquencies, foreclosures and falling home prices, it said.

Investors punished the twin firms: Freddie Mac plunged 19.15 percent to 6.50 dollars and Fannie Mae shed 15 percent at 11.56.

Fannie Mae is due to publish its financial results Friday.

Freddie Mac's second-quarter results were worse than the prior quarter, when the firm posted a net loss of 151 million dollars and a 1.2-billion-dollar charge for credit losses.

The company reaffirmed its July commitment to raise 5.5 billion dollars of new capital and suggested it would seek more if needed.

"While we expect continued housing and economic weakness will affect our overall performance this year, we continue to maintain a surplus over all regulatory capital requirements," chairman and chief executive Richard Syron said in a statement.

Freddie Mac also said it wanted to slash its 25-cent dividend in the third quarter by at least 80 percent, subject to approval by the board of directors.

The Federal Home Loan Mortgage Corp., known as Freddie Mac, insisted its "liquidity position remains strong."

Moody's credit agency said it continues to review for possible downgrade Freddie Mac's stock and financial strength ratings.

"As expected, asset quality continues to deteriorate," said Brian Harris, Moody's senior vice president.

Article by my broker.

2008-07-28T00:27:00.000-07:00

False Hope For Foreclosure Crisis

July 24, 2008
The United States is in the midst of a foreclosure crisis and California is at the epicenter of that meltdown.

Congress is working on a Foreclosure Prevention Act that will allegedly help distressed homeowners avoid foreclosure through “voluntary” lender actions.

In reality, most mortgage lenders fail or refuse to help homeowners faced with foreclosure and politicians posture with empty political promises and legislation that gives false hope to consumers and homeowners.

Asante Real Estate Group works with many short sale clients, bank-owned homes and lenders. For example, Asante Real Estate Group has been trying to convince American Home Mortgage Servicing Corporation to accept fair market offers on two owner-occupied homes selling for $449,000 in San Jose, California and $3.9M in Los Gatos, California. American Home Mortgage Servicing Corporation has refused both of these bona-fide offers and these homes are now hurtling toward an unnecessary foreclosure.

Elected officials, like Senator Dianne Feinstein, claim that they want to help homeowners facing foreclosure. However, both of these homeowners went to Senator Feinstein’s San Francisco office and requested her help only to be dismissed by her staff and referred to HUD counselors. Senator Feinstein’s staff refused to help convince American Home Mortgage Servicing Corporation to reconsider the short sale offers for the above-described homes. In the end, these constituents were told to leave and they were physically shown the door by Senator Feinstein’s security guard.

I am constantly dismayed that mortgage lenders, such as American Home Mortgage Servicing Corporation, consistently fail to work in good faith with distressed homeowners and fail to respond in a timely manner to time-sensitive offers. These lenders procrastinate and stonewall homeowners for months and end up forcing thousands of homes into foreclosure when those homes could have been saved through refinancing or short sales at fair market values.

It is even more disturbing that an elected representative, such as Senator Feinstein, also refuses to help the distressed homeowners. Senator Feinstein is quick to claim credit for “helping” distressed homeowners – but when her constituents actually need her help, she kicks them out of her office.

In the near future, a majority of these lenders, such as American Home Mortgage Servicing Corporation, are going to petition our Congress for a record bailout of hundreds of billions of dollars, and Senator Feinstein and legislators like her are going to reward these lenders for failing or refusing to solve their own problems by working in good faith with distressed homeowners.

Ironically, Senator Feinstein has been quoted saying, “We need to clean up the industry to protect home buyers."

Well, talk is cheap.

Carey Sutton, CEO
Asante Real Estate Group, Inc.

Curb appeal, Curb appeal

2008-07-22T16:01:00.000-07:00

"These days, 70 percent of home buyers get their first look at a house from a picture on the Internet," says Al Mansell, president of the National Association of Realtors. "If this picture is unappealing, most people won't look any farther." But even homeowners who aren't selling should still care about keeping their biggest asset in top condition. Got a free weekend?

The home selling market is a tough nut to crack these days and first impressions are everything. Creating curb appeal is the key to getting your home noticed as the buyers drive around the neighborhoods to find their perfect place to live. Curb appeal is the look and feel you get from the outward appearance of your home and the property. It's a first impression to what's to come inside, and with a good curb appeal presence, you set the stage for an inviting place to call home.

Some aspects to consider when working your curb appeal:

- neat and classy landscaping with some splashes of color and a neatly mowed lawn
- freshly painted home and/or fencing, including clean or freshly power washed siding
- clear and large house number and neat mailbox that matches the outside look of your home
- inviting entryway with a nice door matching the decor of your home
- proper outdoor lighting for evening visitors

Back from Hong Kong

2008-07-16T19:36:00.000-07:00

Back from Hong Kong! gosh so jet lagged. The real estate market is so different over there. People aren't required to have licenses and anybody can do it. Plus the commissions structure is also different, they are all negotiable but it seems as though the traditional rate is 2%. I CAN STILL BEAT THAT! =) Regardless I have been reading up on loans as I am in a few short sales situations right now. Personally I have not been too happy. Listen to this.

Fannie, Freddie spent $200M to buy influence

by. Lisa Lerer

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.
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But the political tentacles of the mortgage giants extend far beyond their checkbooks.

The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home.

They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.

Fannie and Freddie’s aggressive political maneuvering has helped stave off increased regulation and preserve special benefits such as exemption from state and local income taxes and the ability to borrow at low rates.

When their stock prices took a dive last week, their government allies extended another helping hand with a plan for the Treasury Department, the Federal Reserve and, possibly, Congress to shore up the companies.

The housing crisis is sure to linger into the next administration, when the mortgage companies will inevitably be well-represented — no matter who’s in the White House.

Fannie and Freddie’s political contacts exist deep in the two presidential campaigns.

Is that not ridiculous?

Credit History

2008-06-22T10:08:00.000-07:00

Thinking about buying a house? Then think about your credit history...the folks who lend money do!

How well you have handled your credit obligations in the past is of utmost importance to lenders today. The good news is that this information, for the most part, is available to you.

Your credit history is maintained by three different private companies called credit reporting agencies: Equifax, TransUnion and Experian. You can order your report by phone and charge it to your major credit card if you like. It usually takes about a week to arrive. Or you can order your report online and view it within seconds.

It's a good idea to get a copy of all three reports, because if an error exists on even one of the reports, it may negatively affect your chances of getting the loan you want. Your credit report lists all the consumer credit that has been extended to you over the past seven years. It will show what your highest balance has been and what your current balance was on the date last reported by the creditor. It will also show how many payments you made on time and how many late payments were late. Late payments are grouped into categories showing how late you were. For example, if your credit card payment was over 30 days late one time, it might not be considered too serious. But if payments were over 60 days late four times, over 120 days late two times and over 180 days late one time, you have had a serious problem. That problem is going to impact your ability to borrow money.

It just makes sense to find out about your credit and correct any errors now. Regardless of how many credit problems you have had in the past, there are two good points to remember.

First, negative credit information can be reported in your credit file for only seven years. After that, it drops out and cannot even be considered. The one exception is bankruptcy, which can be reported for 10 years. But after that you start with essentially a clean slate.

Second, lenders are much more concerned about how you have handled your credit recently than with what happened several years ago. Even if you have had a bankruptcy, if you have kept your nose clean and paid your bills on time since then, it is possible you could qualify for a loan after as little as two or three years.

One of the best developments in the world of lending has been risk-based pricing. That's a five dollar term for the ability of lenders to offer higher priced loans to borrowers based on their demonstrated ability to repay. In other words, even if you have slightly fractured credit, you can still likely get a loan. It just may cost you a little more.

From
Understand Your Credit
By John Adams
Homestore.com

First Time Buyer's Tips

2008-06-20T11:42:00.000-07:00

From Lending Tree. I like this article.

"If you're like many first-time homebuyers, chances are you've been spending your weekends driving around visiting open houses and new model homes. This is a great way to get a feel for what you want. The problem is that what you want isn't always what you should get.

Before you start touring homes for sale, it's important to start off with a budget so you know how much you can afford to spend. Knowing what mortgage payment you can handle will also help you narrow the field so you don't waste precious time touring homes that are out of your reach.
Where to begin

The key factor in figuring how much home you can afford is your debt-to-income ratio. This is the figure lenders use to determine how much mortgage debt you can handle, and thus the maximum loan amount you will be offered. The ratio is based on how much personal debt you are carrying in relation to how much you earn, and it's expressed as a percentage.
The ideal ratio

Mortgage lenders generally use a ratio of 36 percent as the guideline for how high your debt-to-income ratio should be. A ratio above 36 percent is seen as risky, and the lender will likely either deny the loan or charge a higher interest rate. Another good guideline is that no more than 28 percent of your gross monthly income goes to housing expenses.
Doing the math

First, figure out how much total debt you (and your spouse, if applicable) can carry with a 36 percent ratio. To do this, multiply your monthly gross income (your total income before taxes and other expenses such as health care) by .36. For example, if your gross income is $6,500:

$6,500 (Gross monthly income)
x .36 (Debt-to-income ratio)
= $2,340 (Total allowable monthly debt payments)

Next, add up all your family's fixed monthly debt expenses, such as car payments, your minimum credit card payments, student loans and any other regular debt payments. (Include monthly child support, but not bills such as groceries or utilities.)

Minimum monthly credit card payments*: ____________
+ Monthly car loan payments: ____________
+ Other monthly debt payments: ____________
= Total monthly debt payments: ____________

*Your minimum credit card payment is not your total balance every month. It is your required minimum payment -- usually between two and three percent of the outstanding balance.

To continue with the above example, let's assume your total monthly debt payments come to $750. You would then subtract $750 from your total allowable monthly debt payments to calculate your maximum monthly mortgage payment:

$2,340 (Total allowable monthly debt payments)
- $750 (Total monthly debt payments other than mortgage)
= $1,590 (Maximum mortgage payment)

In this example, the most you could afford for a home would be $1,590 per month. And keep in mind that this number includes private mortgage insurance, homeowner's insurance and property taxes. To determine the price of home you can afford based on this amount, use a home affordability calculator.
Exceptions to the 36 percent rule

In regions with higher home prices, it may be hard to stay within the 36 percent guideline. There are lenders that allow a debt-to-income ratio as high as 45 percent. In addition, some mortgage programs, such as Federal Housing Authority mortgages and Veterans Administration mortgages, allow a ratio higher than 36 percent. But keep in mind that a higher ratio may increase your interest rate, so you may be better off in the long run with a less expensive home. It's also important to try to pay down as much debt as possible before you begin looking for a mortgage, as that can help lower your debt-to-income ratio."

Lease Agreements!

2008-06-20T00:04:00.000-07:00

Argh, I've been so busy lately, it's been hard to keep my blog updated. I am going to try as hard as I can however to continue to post in the future.

I am dealing with a lease agreement right now with a restaurant in Milpitas. It is in a great location and has a ton of potential. I wanted to point out to all of you that have a business and are leasing a space to take a look at your contract. Most contracts are written by the lenders themselves. Unlike residential properties, the forms are not standard like CAR or PRDS. Instead many of the leases are changed based on the needs of the building or the circumstances of the property.

The lease I am going to end up writing for this property will probably have boilerplate legal definitions inside of it, but will have some extra protection. Hopefully I can put together something that is fair to both the tenant and give full protection to my building owner.

Of course I have fiduciary responsibility to the person I originally signed the contract with.

Fair Market Value

2008-05-12T17:36:00.000-07:00

Fair Market Value. It seems like such an easy understandable concept, yet many sellers and buyers seemed to be blinded by their own personal feelings about Fair Market Value. As simply put as possible, FMV is what a buyer, acting upon his/her own best interest will purchase a product (in our case a home or a piece of property) from a seller, who is also acting upon his/her own best interest, on a given day.

In the realm of United States tax law, the definition of "fair market value" is found in the United States Supreme Court decision in the Cartwright case:

The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.United States v. Cartwright, 411 U. S. 546, 93 S. Ct. 1713, 1716-17, 36 L. Ed. 2d 528, 73-1 U.S. Tax Cas. (CCH) ¶ 12,926 (1973) (quoting from U.S. Treasury regulations relating to Federal estate taxes, at 26 C.F.R. sec. 20.2031-1(b)).

Continuously I hear over and over again how different factors should change a market price of a house. From buyers I usually hear things like.
"They are making so much money on this house! They bought it for so cheap!"
or
"Look at how many houses they own. They must be rich. We should be able to get this house for cheaper."

From sellers I usually hear things like.
"Do you know how much money I put into this house?"
"I bought this for more than that last year!"
"I have prepayment penalties on my SBA loan! I am going to put that in the purchase price."

Unfortunately for these people. That has nothing to do with market value of a home. What a willing and able buyer is going to pay a willing and able seller has nothing to do with love of the home. It has nothing to do with whether the seller made a good or bad investment on the property. Market value, unfortunately, is market value. Appraisers don't care whether you put those cabinets into your home with your own bare hands. Appraisers don't care whether your dog is buried in the backyard. Appraisers dont' care about whether you have 3 million to pay off on your home or 3 dollars. Appraisers simply find the FMV of your home.

So when your real estate agent shows you a CMA (comparative market analysis) and explains to you what a price of a home is, try to keep your emotions out of it. Try to take a step back and realize that regardless of all things that we all feel and think, the market doesn't listen to us. I told you FMV is simple. =)

Property condition

2008-05-01T15:58:00.000-07:00

I am currently involved in an interesting negotiation for a property in Sunnyvale. Strangely, I don't see this problem come up more often, but it seems easily remedied and I am going to explain a few ways to do it. What the situation is that there is a good number of section 1 work needed to be done on the property that my buyers are purchasing. Not only that, there is also some masonry work that needs to be done on a chimney. It is all totaling to somewhere over 10k.

The sellers don't want to fix this problem. They rather credit the buyer and let them deal with it. Seems like an easy thing to fix. Write the buyer a check for 10k and we should all be happy right? Unfortunately you have to put it in contract. There is where we run into a few problems

Often loan companies (especially nowadays) really don't like it when the house that they are lending out money on doesn't pass inspections. If you are in this situation, you should definitely talk to your lender and see what they think. In my case, because the loan value was high enough, we are under the Fannie Mae regulations . This is not always the case. Talk to your agent or you lender! Good luck out there. Don't let the termites bite

The saddest REO story.

2008-04-21T21:32:00.000-07:00

I am working with a few investors that have been looking at REO properties. Often when I arrive at the properties they are usually in poor conditions because the tenants before the bank took over the properties weren't exactly too nice to the house. I've seen houses with no sheet rock, insulation hanging out the walls, broken windows, kicked in doors, overturned refrigerators, abandoned vehicles, etc.

The other day I saw something that absolutely broke my heart. I walked into a house and entered one of the bedrooms. I quickly noticed it was a child's room. The painted walls had a youthful pattern to it. On the wall, close to where the kid's bed was a hand scribbled note.

"Thank you for all the good times house. I love you. My mommy says we can't keep you because you are too expensive, I am sure the next family will be very happy, treat them well. I will miss you. Love, Amy."

WOW. How am I suppose to deal with that??? It was as close to a tear jerker as I could come to in the business. How could I even show this house to my clients and not feel guilty?

With that little note it re-highlighted to me the scary turn of events that our housing market has turned too. People always are complaining about the rich getting richer and the poor getting poorer. The ex-tenants of this house will be falling on hard times for probably the rest of their lives. Their credit, which our country seems to run on, will be utterly destroyed, they will be renting (a sunk cost) for a long time to come because they won't be able to get another loan. They will be paying higher interest for their credit cards, insurance, etc. The poor getting poorer.

Also they will probably be renting from someone who bought one of these houses that has money saved up and will rent it out. The new owner will simply take the rent money and pay the new lower mortgage payment that the other family get. The rich will get richer, and the poor will get poorer. It's a sad cycle, but something that we will all have to get used too in the coming years.

I am one of those fortunate to be thinking about investing in one of these properties, but I do believe that we also have a responsibility to remember those of us that are less fortunate.

Amy, I hope everything goes well to your family. I am sorry for your loss.

New REIL statistics

2008-04-11T17:24:00.000-07:00

New stats.

Short sale information

2008-04-05T23:26:00.000-07:00

What is a Short Sale?
A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Lenders do not have to accept your price, even if the seller does.

Short sales are a little different to deal with. If there are two loans, you could have a problem. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. If a seller owes $160,000 on the first and $40,000 on the second, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its cooperation.

This I think is the most important aspect of short sales.

Reserve the Right to Conduct Inspections
Generally, the lender will not pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits of any kind and pest / termite inspections. A buyer will be asked to purchase the property "as is," which means no repairs.

It is extremely important that a buyer obtain a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, chimney or fireplace inspections. Do not waive your right to obtain these inspections and make your offer contingent on approving them.

Note! Buying a "short sale" home can be a pain.

Getting approval from the lender to buy a home for less than the owner still owes on his mortgage can take weeks or months. In the midst of the process, the lender on the owner's first or second mortgage may decide to foreclose after all, scuttling your purchase. Patience - and hopefully an experienced real estate agent - is required.

Buying new homes

2008-03-27T15:18:00.000-07:00

Hi again all you real estate fanatics. I am currently working with one buyer who is a first time buyer and interested in some of the bay area's numerous NEW building developments. These properties are great! While the HOA fees might scare some people away, they are great because they are new properties meaning: no termite, no water damage, no disclosures to deal with etc!

Now here is the big big kicker! Many of these new places give broker co-op. Meaning that they give the agent who helps you find the new place a finders fee. Usually, this wouldn't matter to the buyer. BUT.. I work for 1%! Most of the places give 3%-6%! Now for the buyer I'm working with, he is going to buy a condo for about 450K. The 3% commission that they give me will be split into 2/3 and 1/3 and he will be saving 12 grand!

If you are in the market for a new home.. it's a no brainer to give me a call because I can save you money just by walking in the door with you. It doesn't make any sense to walk in there alone and let them make the full commission off of you!

-Sebastian

new stats available

2008-03-24T14:35:00.000-07:00

new stats came out on REIL! Check out some of the numbers. Let me know if you have any questions. Go Cupertino! Los Altos also had a good month. Fed cuts did their job?

Dirty tactics.

2008-03-12T16:03:00.001-07:00

I realized that when I first came into the world of Real Estate there were going to be some shady, under the table aspects of the industry.

Yet, when I sat down with my parents and the dinner table and they told me about their experience I could feel nothing but anger, disgust and bewilderment at the actions of certain people.

They went to an open house in Palo Alto with my Uncle (who is looking for a home) to tour. The listing agent (who's name I will leave unmentioned because I don't feel like falling to her slandering level) and her two "assistants" start gathering information from my parents and my uncle.

My parents and my uncle, being candid, explained that they were in the market for a home in Palo Alto and that they were already working with and agent (me) and that we have tried a few times to purchase a property. They also added because we were not close on price (a few hundred thousand off) we didn't get the house. She then got a funny face and asked my father to speak privately.

Drawing my dad into another room so that her "assistants" and the other clients couldn't hear them she once again asks the name of his agent. My dad once again responds Sebastian Wong. She then remarks how she has never heard of me (which is surprising since we spoke on the phone about one of her listings a week prior) and how "this Sebastian Wong must not be a big player in this market. He sounds unexperienced. If you were with an agent like me I would have gotten you the house. Most of the time, it's the agent NOT the price."

WHAT!??!?! She then proceeds to tell my family a story about a house with multiple offers. Not only did her client get the house, while other offers were over a million, because of her "good name" she got her buyers into contract for under a million. All because of her.

So let me get this straight. You can magically make sellers, because of your amazing famous name, turn away hundreds of thousands of dollars? How do you do that? I want to know. Maybe I can get a job as one of your lackeys and learn these wonderful tactics.

Of course she was also so incredibly intelligent, she started bad mouthing an agent in front of his clients. Unfortunately not only were they MY clients, they were my PARENTS AND RELATIVES. SMART.... Perhaps she should get her facts straight before breaking every section of Section 16 of the Code of Ethics?

So it brings me to the present day. What do I do? Call her and read her the code of ethics? Send her an email, write her a letter, complain to her broker? Or should I just take the high road and say nothing? I'm sure little "small time player" Sebastian Wong isn't the first to have his clients poached (or attempted to poach) from him. Let me know. I am still fuming a bit and I decided I am going to make a good, rational decision.

My dinner was great by the way. Thanks mom!

1198 Fairview Ave

2008-02-23T10:54:00.001-08:00

Open house!

1198 Fairview Ave / San Jose / 95125

Do you want to check out a new house in the Willow Glen area? This is your chance. It is listed at 1.575m and it is gorgeously laid out with 4br/3ba

Sebastian Wong | Asante Real Estate Group | 408-390-3372

1198 FAIRVIEW AV, San Jose, CA

Brand new beautiful Mediterranean style home located on one of WG's most prestigous tree lined streets! Gourmet kitchen, hardwood flrs, vaulted ceilin

4 Bdrm Single Family House

offered at $1,575,000

Year Built	2008
Sq Footage	2,715
Bedrooms	4
Bathrooms	3 full, 0 partial
Floors	Unspecified
Parking	2 Car garage
Lot Size	5,900 sqft
HOA/Maint	$0 per month

DESCRIPTION

This beautiful Mediterranean style home located on one of Willow Glen's most prestigious tree lined streets is just a short distance to all the amenities of downtown. Featuring 4 spacious bedrooms and 3 full bathrooms, generously laid out over 2700+ sf of living space. The phenomenal gourmet kitchen is truly a chef's dream with granite slab counters, a center island, top of the line stainless steel appliances, double ovens, walnut cabinets, hardwood floors, a natural mosaic backsplash and beautiful skylight. With the finest attention to details, this home features custom touches throughout such as walnut wood floors, custom base boards, designer paint, vaulted ceilings, exposed beams, bamboo wall coverings, skylights, expansive windows and so much more. This home is perfect for entertaining as is resides on a fully landscaped, secluded corner lot with an outdoor patio room, complete with fire pit. This home is a must see!!

see additional photos below

PROPERTY FEATURES

Central A/C	Fireplace	High/Vaulted ceiling
Hardwood floor	Tile floor	Family room
Living room	Dining room	Breakfast nook

COMMUNITY FEATURES

Garage parking

OTHER SPECIAL FEATURES

New

ADDITIONAL PHOTOS

Seller contact info:

Sebastian Wong

Asante Real Estate Group

408-390-3372

For sale by agent/broker

Equal Opportunity Housing

Posted: Feb 21, 2008, 12:52pm PST

An exciting weekend for me!

2008-02-21T14:40:00.001-08:00

I am excited about the upcoming weekend. I have two open houses and are stoked about their potentials.

1198 Fairview Avenue / San Jose, CA on Saturday
Listed at $1,575,000

Sunday I have 411 Irving Ave / San Jose
Listed for 525,000

DROP BY AND SEE ME! I would love to meet some of my readers. Have a great weekend.

Starter Homes.

2008-02-16T11:14:00.000-08:00

I am sitting at on a great example of a starter home this weekend.

2330 Samaritan Place. It is a 2br/1ba and is offered at 370,000.

Open house! Sat/Sun 1-4:30

-Sebastian

open house today!

2008-02-10T09:24:00.000-08:00

I am hosting an open house today in San Jose. It will be a great chance to meet me, learn about our business model and to check out a gem of house.

1464 Suzay Ct, San Jose, CA 95122!

You can check it out on www.Suzaycourt.com and enjoy the virtual tour.

This part of the marketing plan that all of Asante Real Estate's listings get.

We provide the full range of services to sell your home, including the following:

• Perform Comparative Market Analysis & Pricing
• Coordinate All Inspections and Reports
• Professional Staging and Preparation Consultation
• Handle All Paperwork & disclosures
• List your Home on Multiple Listing Service (MLS)
• Conduct Open Houses
• Online Virtual Tours & Photos of your Home
• Include your Home on Realtor Tours
• Mailed Color Just Listed Postcards to your Neighbors

You are welcome to stop by and check it out and meet me! And of course check out the house!

January Numbers/Happy Chinese New Year!

2008-02-07T16:09:00.000-08:00

Happy Chinese New Year! Much of my family is coming into town and this week is going to be hectic. REIL also had it's market statistics out and January 2008 is available! I will tell you the truth, it doesn't look good. Of the Santa Clara County there were 337 closed sales vs 4563 houses listed.

Cupertino is also not doing great with 8 closed sales and 52 total inventory. However on the buyers side this is good news. The inventory should continue to rise into the summer and if you are trying to move into the area for the better schools this is a great time to buy! The feds are dropping the rate, the inventory is up, this is the definition of a buyers market!

Commercial

2008-01-31T18:32:00.000-08:00

I dabble in commercial real estate. I have done a few leases signed and have a few commercial properties (a warehouse and a restaurant) ready to be leased out. It's strange however the differences between commercial real estate and residential real estate. While, everyone on the residential side can go on the MLS regardless of whether your are an agent or the public there is no such thing on the commercial side. There is Loopnet.. but it's not nearly as comprehensive as the MLS.

Commercial real estate is still a drive around, find signs, get tips from old buddies, pat each other on the back type industry. I am really the only agent in in my company that even ventures into the commercial landscape and it seems as though it will stay that way. It's fine by me, I find it refreshing to do both.

Recently I have been dealing with some commercial properties and the difference in working hours, reachability of agents, and mostly courtesy of agents to be the biggest difference. If you are looking for a commercial property you should find someone who is pretty well connected and knows what they are getting into. Unlike residential where there are a lot of newbies, commercial is a whole other ball game.

The Fed's been cutting!

2008-01-29T17:00:00.000-08:00

As most of you have heard by now that the Fed has surprisingly has dropped the Federal Funds rate by .75% to 3.5% which means the prime rate will fall by .75% to 6.5%!

Over the coming weeks and months, interest rates will fall on home equity lines of credit and many variable-rate credit cards. This action by the Fed is the response to drop of 465 pts in the Dow Jones market after trading began this morning.

The next Fed meeting is scheduled to take place on th 29th and many suspect another rate drop! I am guessing another 1/4 percent. THIS IS GOOD NEWS. Buyers will be more inclined to buy and sellers are going to get more interest in their homes.

I also put a live chat on my site.. so you can ask me questions in real time!

Fremont Union High School District Comparison

2008-01-29T11:26:00.001-08:00

You know, it's funny. Since I first attended Lynbrook High, there was always a rivalry in between Lynbrook and Monta Vista. Whether it be a football game, a water polo game (man I loved to beat Monta Vista), Speech and Debate, or marching band, it was Lynbrook VS Monta Vista.

Slowly after I graduated and look back, I can be proud of both schools. They have continued to excel in academics, (not so much in the athletic department) but have maintained great housing prices in the area. Some joke, realtors look at the API scores of those high schools with more interest than some of the parents.

Well, this is no joke. Since I do work primarily in this area, the API scores are important to me. As is the ethnic makeup of the schools, the college acceptance, the graduation rate etc. The link following is a side my side comparison of the 5 schools in the Fremont Union High School District. Hope you find this useful.

An interesting note: When I graduated Lynbrook there was just (wow, I'm saying just) 50% Asian. If you notice.. it's up to 74% Asian now.

Fremont Union High School District comparison.

Controversy is BREWING....

2008-01-25T14:02:00.000-08:00

OK, I admit it. I work for Asante Real Estate. I sell houses for 1% instead of the standard 3%. I also rebate up to 2/3 Cash back if you find your own home. Well, I just read this article on it... and I did not realize how much we are hated!

California Real Estate Market

Just read the comments... What's wrong with what we are doing? We have saved our clients over 4.2 million dollars last year. It seems as though the only people not enjoying our business model are OTHER agents and brokers. (I wonder why....)

BTW... there is some foul language.. yes it gets THAT bad

Counter offer

2008-01-14T16:31:00.000-08:00

I wrote a counter offer to ANOTHER counter offer today. The counter that came back was a CAR counter. It's interesting because so far I have been doing all of my things on PRDS forms. Unfortunately in Palo Alto the agents are really split half and half with CAR forms and PRDS forms. For people looking for a house this really isn't that big of a deal. I personally think that PRDS gives more protection for the buyer because I think the verbage is better.

So to explain all the acronyms for forms it is pretty simple. CAR is a California Association of Realtors and is a list of forms that are standard use for all contracts. All the inspection reports, offers, counter offers etc. are all from template us as agents just need to plug in different information and change certain things. The PRDS is just a different template with different verbage.

SILVAR (Silicon Valley Realtors, which I am a part of, allows their agents to choose in between CAR and PRDS. Thankfully I learned how to use both. For all you buyers and sellers out there, this may be a question you want to ask your agent. What association are you with? Every agent should be a part of NAR (National Association of Realtors), but there are also other programs such as SCORE, SILVAR, etc.

While the forms aren't such a big deal for all, if you are buying in Cupertino, most houses here are done with PRDS. If you agent is a CAR user, they might have no experience using the PRDS forms and might overlook something. Just something to look out for!

Dad's Birthday

2008-01-11T18:01:00.000-08:00

Happy Birthday to me father today. I am proud of my dad, he is still going very very strong. He's now a purple belt in Brazilian Ju-Jitsu and still the 3x reigning U.S. Open Senior Featherweight champion. Isn't it scary that my dad can beat me up?
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Fremont Union High School District

2008-01-10T14:41:00.000-08:00

Sometimes a lot of my clients are interested to see where the actual district lines are. I am posting a jpeg here of the Fremont union High School District Lines. Let me know if you have any questions!

Alliance Title goes under!

2008-01-09T15:39:00.000-08:00

Wow. Alliance Title is closing their doors.

Now with the Countrywide stock plummeting and KB homes posting record losses are many analysts are saying that we nearing the bottom of the market.

For all of us Cupertino residents, real estate agents, and future residents however the picture is still strangely clear. Cupertino is STILL hot.

The numbers for the market just came out from REIL and the Cupertino numbers are staggering. Below I put a table together from the market statistics of a few cities just to give you a feel

Single Family Residential
Dec-07
City/Area	Current Inventory	Closed Sales	Average DOM	Average Sales Price
Cupertino	31	22	47	1,227,874
San Jose	2710	237	60	770,715
Saratoga	69	21	65	1,620,476
Summary	2835	301	57	877,079

LOOK AT THE CUPERTINO NUMBERS! While San Jose has over 10 months of inventory, Cupertino has a month and a half! Even Saratoga's numbers (which are great btw) still don't even put a candle to the fire that is Cupertino. Also December is a traditionally slow time for the market.

Once again, Cupertino proves itself to be an anomaly in this changed market. I sure am happy that I have the privilege to work in the Cupertino area.