Tracy’s LA Real Estate

If you are 55 or older, you can qualify for a once-in-a-lifetime chance to take your current property tax base and transfer it to your next home purchase. The purpose is to help make it possible for a senior citizen to move down from his/her large home to a more manageable one without incurring a raise in the property tax.
These two California Propositions, 60 and 90, comprise the Senior Citizen’s Replacement Dwelling Benefit. For all the details, go to the Los Angeles County Tax Assessor’s website, http://assessor.lacounty.gov/extranet/guides/prop6090.aspx.
The latest information about which counties participate in the reciprocal Proposition 90 is now current as of February 15, 2010. The counties are: Alameda, Orange, San Mateo, Ventura, Los Angeles, San Diego, Santa Clara, and El Dorado. These can change, so always check before you make the move.
High points of the rules are:
• This has to be your principal residence.
• The replacement property has to be of equal or lower price. There are some exceptions, all described on the website.
• The property must be purchased within 2 years (before or after) of selling your property, but you have 3 years to file the claim.
• You can’t give the house to your son or daughter and get the tax benefit.
• Only one person can take the tax benefit. If there are multiple owners, only one gets the benefit. If you divorce after selling the house, only one of you gets the benefit.
This can be a huge savings to the people who qualify. Combine this with the long-term owner $6500 tax credit if you buy the replacement property by April 30, and you could double-dip your tax savings!

A client of mine just sent me an official-looking letter from Title Concepts Plus advising them of the need to file a homestead exemption to protect their recently purchased home from creditors.

What is a declaration of homestead? According to the San Diego County Public Law Library,
A homestead declaration is a written statement, made under penalty of perjury that claims a particular “dwelling” (for example, a house, condominium, boat, mobilehome, etc.) as the owner’s principal place of residence. This guide uses the word “home” to signify a person’s principal residence.
When a homestead declaration is (1) signed by a homeowner, (2) notarized, and (3) “recorded,” it helps to protect the home against loss to creditors.
A properly prepared and recorded homestead declaration immunizes the home (and the land on which it is situated) from many (but not all) legal enforcement measures. For example, if a homeowner files a petition in bankruptcy, it may be possible, because of a homestead declaration, to retain the home, or at least a portion of the equity in the property, instead of losing it to creditors.
What Title Concepts Plus says they will do for the $47.95 fee they want is to send you the blank forms you need, plus they will send you a completed application for a Declaration of Homestead. You can get these forms yourself for free from the Los Angeles County Clerk’s office or from their website: http://www.lavote.net/GENERAL/Form_Downloads.cfm
Title Concepts Plus isn’t doing anything necessarily illegal, it’s just misleading. If you want to pay a company $47.95 for a few sheets of paper that you can get yourself for free, there is nothing wrong with that. But imagine, about 7,000 residential properties sold in Los Angeles County in December, 2009. If you sent out the offer to that many people every month and had a 1% return, that would be about $3000, not including postage and paper costs. Not a bad little sideline. Check out this link to find the truth about homestead exemptions in California:
http://www.dca.ca.gov/publications/legal_guides/h-1.shtml
One fact noted in the above article is that a company cannot charge you more than $25 to file the Declaration for you, and that includes recording fees. But if you look at the paperwork sent by this company, they don’t offer to file or to record the document, just to send it to you. I wonder if you sent the check in to them whether you would even receive the documents back.
This website is very helpful about many legal issues and they charge less for more help:
http://www.1stoplegalforms.com/FormLs/FL_0101.asp?Page_ID=1&source=google&kw=homestead
Should you file a Declaration of Homestead? You automatically have a homestead exemption without filing anything, but a recorded Declaration of Homestead does give you some additional protection if you are likely to have an involuntary judgment recorded against you, like for nonpayment of medical bills or if you file for bankruptcy. But if you are in that kind of financial trouble, you will probably consult an attorney anyway who can advise you accurately about your particular situation. A Homestead Declaration does not absolve you of the responsibility to pay “voluntary liens” such as your mortgage and taxes, or even mechanics liens. It doesn’t save you from being obligated to pay your credit card bills, either.
There are a number of official appearing letters homeowners have received in the last few years from companies who claim they will do your Decline in Property Valuation applications or send you a copy of your Grant Deed for fees ranging from $25 to $189. This is a waste of your money! Please feel free to call or email me whenever you receive offers like these and I will be happy to check them out for you.

It seems like I’m always saying that here at last is the straight story on the real estate market, but it’s always true! Last year, 2009, there were 121 sales in Eagle Rock, zip code 90041. Here’s the interesting part: 60% of the sales were “distress sales,” that is, either short sales or bank-owned properties. Now, in 2010, we had 9 sales in the first month and 55% of those were short sales or REOs (bank-owned). While the foreclosures were scattered out fairly evenly over the last year, I noticed that the short sales that actually closed escrow tended to happen later in the year, and in January, 5 of the 6 distress sales were short sales. This is in line with the government’s efforts to help people avoid foreclosure, modify their loans and then approve a short sale if the loan modification didn’t work out.
What you can’t tell from the Multiple Listing Service is that a lot of the “normal” sales were under duress as well. I know personally of several divorce sales and a few properties that had to be sold quickly before the owners were unable to make any more payments due to job losses or failed businesses.

In other words, very few people who didn’t have to sell did sell. But look at the graph and table for the year from 12/08 through 12/09: it’s obvious that we did reach a bottom in the first quarter.  I think the dip in November was not another bottom, just an example of my point about distress sales. Notice on the table how few properties were selling at the end of the year–because of holidays, because of perception of the market. If you take the dip in November out, the market was steadily higher than earlier in the year. And note that the year over year prices were up, which is much more meaningful than the dramatic 1-month changes around November.

What’s going to happen this year? My crystal ball is still on backorder, but so far this year I have talked to a lot of people who want to sell and many who want to buy. From the energy I’m feeling, I’d say the first quarter of the year should be very active. In most years past, the first quarter is sluggish with sellers talking a lot about going on the market in the spring, but not getting around to going on the market until May or June. Buyers want to take advantage of the federal tax credit programs with their April 30 deadlines, and more and more sellers are saying they are ready to sell even if they can’t make what they might have in 2007. This promises good things to come.

Making Home Affordable – Web Tools for Troubled Homeowners
It seems like every other person I meet is applying for a loan modification on their mortgage. The general feeling seems to be, “Why not? It might work.” Well, check out http://www.makinghomeaffordable.gov/pr_01192010.html. In this article, the government says there are 3-4 million homeowners who may be eligible for the Home Affordable Modification Program. That’s millions. And all of 110,000 (that’s thousands) have been approved, and of that, 66,000 have been signed. That’s for permanent modifications. They also say that 850,000 modifications in excess of $500 (that’s hundreds) has been approved. If you live in LA County and you are offered a temporary $500 modification, what will that do for you? Not a whole lot, is my guess.

Because the document submission process can be a challenge for many borrowers, the Administration has created
new resources on www.MakingHomeAffordable.gov to simplify and streamline this step.
New resources include:
• Links to all of the required documents and an income verification checklist to help borrowers request a
modification in four easy steps;
• Comprehensive information about how the trial phase works, what borrower responsibilities are to convert
to a permanent modification, and a new instructional video which provides step by step instruction for
borrowers;
• A toolkit for partner organizations to directly assist their constituents;
• New web banners and tools for outreach partners to drive more borrowers to the site and Homeowner’s
HOPETM Hotline (888-995-HOPE).
• Homeowners do not have to pay for loan modification services

If you are considering doing a short sale, where you sell your house for less than you owe on it, you pretty much have to attempt a loan modification first. You can go on the website above in the privacy of your own living room and see where it takes you. Once that’s done and you still feel a short sale is in your future, there are a number of online resources that you should read through (I can help you find them), plus you should consult your tax preparer, accountant, and attorney. After all that, call me back and we’ll talk about selling your home.

This is probably the most common question I am asked as we launch into an exciting new year in real estate. Everyone is happy to be done with 2009 and to look forward with hope to a much better year. The most common answer I hear from various experts is that, in general, don’t expect much different from last year. I think it’s better than that in our special corner of the LA area.

Here is my personal experience so far since the beginning of this year, a bit over 3 weeks.

I’ve taken two listings, one of which hasn’t come on the market yet. Sellers are seeing that the prices aren’t necessarily as dismal as this time last year, so it might be a good time to sell and figure out a good next step. I’ve been on about 9 listing appointments and several of them may decide to move forward in the next month or two. I also opened escrow with some people who have been looking hard for many months.

Of the two listings in Eagle Rock that I have on the market now, we are having a good turnout at our open houses. That means over 30-40 people at the $699,000 listing at 5320 Rock View Terrace at each the last 3 open houses. Yesterday was the first open house for 4902 Wiota, listed for $429,000, and we had over 60 people! 

5320 Rock View Terrace, Eagle Rock

So the first-time buyer crowd is out in force for the under $500,000 price range, with good interest for higher price ranges as well. And we don’t have just looky-loos walking through (though you are always welcome at my open houses), we have serious talk of offers at both properties.

The First-Time Buyer Tax Credit deadline of April 30, 2010, is having a positive effect both on buyers and on sellers. I think there is a real urgency to take advantage of that opportunity, so buyers are about to have a better choice of interesting properties to consider. The inventory is extremely low right now as properties are being snapped up. 

4902 Wiota Street, Eagle Rock

For you homeowners who have been in your primary residence 5 of the last 8 years, you have a very brief opportunity for a tax credit as well.  Check out my previous blogpost at http://www.tracyslarealestate.com/federal-tax-credit-for-home-buyers-expanded-and-approved-for-eagle-rock-home-buyers. You can also go to www.federalhousingtaxcredit.com for the complete information.

But whether or not you qualify for tax credits, this year is starting off with an active real estate market fueled by relatively low interest rates and prices higher than last year, but lower than the peak. Opportunity is everywhere!

Can you believe this kitchen is in a townhome that’s listed for $1,600,000? One of 12 limited edition residences at 633 South Lake Avenue.

 These last two photos are from 309 Grand, South Pasadena. This very special Spanish estate is on a half acre and is listed for $1,995,000.

Posted via email from tracyslarealestate’s posterous

Really. It’s amazing what a well-chosen new paint color scheme can do for the exterior of your home. It’s the least expensive major upgrade you can invest in and actually expect to make money on when you sell your home.

Look at these:

1135 Rock View Ave, Eagle Rock

This sold in 2009 as the pale beige seventies house it was. The new owners painted it a tasteful dusty gray-green and really transformed it.

1312 N. Avenue 57, Highland Park

I sold this in 2005 as a major fixer for $475,000. That buyer did little to it and resold it for $575,000. The current buyer has done much more including the really great fence, but you couldn’t see much change until he painted it these nice colors.

1319 Las Flores, Eagle Rock

This is a really good example in terms of showing what effect the paint has on value. When this house was white, it was towards the beginning of the major slide in prices. I sold it in 2007 for around $489,000. It just sold again at the end of 2009 for $470,000. Considering that the average price in Eagle Rock went down about 32%, this property held its value incredibly well. I credit the paint job for a major influence.

Every now and then in this hilly, older part of Los Angeles, we see a property that has settling to the point of obvious house/land movement. Several homes were red- or yellow-tagged after the 100-Year Rains of 2004/2005. A couple of them are still for sale as foreclosures with their asking prices continuing to drop as the houses edge closer to the abyss over the Arroyo. About 30 years ago and a couple of miles away, there were a few houses that did slip down a hill and were eventually torn down. A few here and there didn’t survive the 1987 or the 1994 earthquakes.
These are dramatic, expensive issues when the problem is obvious. But what if it’s not so obvious? What if it’s a little slippage, but nothing major? How do you decide what to disclose? What to do?
First rule: if the question “Should I disclose this?” occurs to you regarding a property you plan to sell, the answer is “Yes.”
Now we see before us a sea of gray. Ok, so you say the floor isn’t level. What does that mean? Almost any house experiences a little settling over the years. How much is normal? How much is acceptable?
“If I disclose that the floor isn’t level, will that scare buyers away?” It can. It’s a red flag. So what are you going to do about it? And, would you rather have this deter timid buyers before or after you accept an offer and take it off the market?
Some people at this point firmly decide that they don’t want to know anything they would have to disclose and would rather do nothing. This is certainly a fair choice. I have known attorneys who decided this about their own homes. Everyone has a different tolerance for each consequence. Most foreclosures and probates are sold with no pre-sale inspections as well. With a fixer, this path can lead to the property falling out of escrow a time or two or more, and it can lead to a much lower eventual sales price.
Second rule: You can have 5 different professionals give you an honest assessment of what they think should be done and you will get 5 different opinions costing 5 different amounts.
I once had 7 different floor guys give me 7 different estimates that went all the way from $1000 to refinish my hardwood floors to $15,000 to replace them. I had 5 different estimates to install copper plumbing that ranged from $1500 to $9,000 and they each specified exactly the same work!
So do you get the work done? Can you afford to? Do you want to? Here is how I would structure my decision-making process if I had this problem in my house and I was thinking of selling it:
1. Assume I’m going to live here for the rest of my life: what would I do about it? Would I feel safe and comfortable if I did nothing? How would I feel if I did the cheapest fix—or the most expensive one?
2. Assume I’m going to sell in the next couple of years:
a. What will it do to my property’s value if I do nothing and hope for the best?
b. What if I were buying this property? What would I expect the seller to disclose to me?
c. What if I bought this property and found out that there was a big problem afterwards, how would I feel? Would I call my attorney?
d. Who can I talk to about what to do next?
One comment I have heard countless times during inspections over the years is that drainage and water management can have a huge effect on foundations and on hillsides. One of the least expensive repairs can simply include installing gutters and diverting water away from the house. So don’t immediately expect you have a very expensive repair in front of you. Get the facts.

Here are some options that seem reasonable to me:
1. Have a physical inspection done and see what a generalist thinks of what they see. And go a step further, tell them what you know so they know what to look for.
2. Depending on what you hear, you might want to consult various professionals including:
a. A geological inspector
b. A foundation inspector
c. A drainage expert
d. A landscape designer
3. After you have inspections, see where they point you and get some estimates.
a. If the general consensus is to repair, you can choose to fix it or leave it alone. Depending on the size of the expense and your pocketbook, you can make the best decision for your particular situation.
b. Remember, you have to disclose the issue whether you fix it or not.
c. If you decide not to fix it, make your information known to the buyer and price the house accordingly.
d. If you fix it, disclose to the buyer what you did.
If you haven’t been involved in a real estate transaction for many years, the laws and paperwork regarding the seller’s obligations to disclose have changed a lot. Every year we have a new form to complete, new questions to answer. Did you know that you are supposed to provide every report that you have on the property since you bought it? If you’ve owned a place for 20 years, that can be a lot of paperwork.
Oh, that’s overwhelming! Upsetting! Unfair! I’m selling “as-is! “ Fine, it’s already in the contract that all transactions are sold in their current condition subject to the buyer’s inspection rights. And “as-is” does not mean you can choose not to make disclosures. And no, a buyer can’t expect perfection in a 50-year old house. But again, put yourself in the buyer’s shoes. What’s fair now? Which leads us to:
Rule Number 3: Price cures all problems.
So maybe the eventual price is not what you want, but every house will sell at some price. Will you make back all the cost of your repairs? Maybe, maybe not. But here’s the final rule for today:
Rule Number 4: The houses that sell for the most money are the ones that offer the best condition, location, amenities and style for the price in the current marketplace.
It doesn’t matter what you paid, it doesn’t matter what you want to net, what matters is the perceived value in the eyes of the buyer. Which would be worth more in your eyes: a house that has a serious slant in the floor, maybe some signs of water intrusion or cracks around the foundation–or a house that doesn’t?

Homeowners, get the straight story on your property tax situation directly from the source: the Los Angeles County Assessor’s office. Here is the link to the Property Tax Portal: http://lacountypropertytax.com/portal/default.aspx . From this website, you can click onto all kinds of helpful information including:
• Property Tax Relief for Owners of Fire Damaged Properties.
• Information on Decline-in-Value Reassessments
• Has My Property Been Reviewed for a Decline-in-Value?
• Property Tax Postponement Program Suspension Statement
Your property automatically qualified for a 2009 decline-in-value review under either one of the following conditions:
The property is a single-family home or condominium purchased between July 01, 2003 (2000 in some areas based on economic conditions) and June 30, 2008.
The property is subject to annual review of a temporary decline-in-value reassessment granted for the prior assessment year (2008).
Owners of properties other than single-family or condominium (residential-income and commercial/industrial for example) may file a Decline-in-Value Reassessment Application on or before December 31, 2009.
If you need help (for free) finding sales to support your lower value, I’m happy to help. But there are a couple of dates you must be aware of:
1. You only have until December 31, 2009, to file for the 2008/2009 tax year. If you miss that deadline, you can file for a reassessment as of January 1, 2010. You cannot file for that date until after April 1, 2010, and the value will be based on sales between about January 1 and no later than March 31, 2010.
2. The value we are filing for now is based on the approximate value as of January 1, 2009. The Assessor’s office is looking at sales no later than March 31, 2009.
Timesaving Tip:  You can also file the Decline-in-Value application and not fill in the sales information. The Assessor’s office will still consider your application. Also, if you have been reassessed and you disagree with their number, you have missed the deadline to file. But you can file for the next tax year.
Thoroughly confused? Well, this is the government. The property tax system is intricate. The good news is that even if you miss the deadline, there is always next year. Hopefully, that will be the last of the price declines, but stay tuned.

Check out this blogpost by Sean O’Toole, CEO of Foreclosure Radar.

http://www.foreclosuretruth.com/blog/sean/time-for-troop-surge-on-the-front-lines-of-the-housing-crisis/ 

If you look at his website and his past blogposts, you see a thoughtful, intelligent person who has studied and understood more of this real estate market than most. I know that I have done what he suggests, talked to people who are in trouble with their mortgages, and I’ve tried to help them find solutions. Unfortunately, if they are in real trouble with no equity, I can’t help them effectively because they have to negotiate with their lender–and that, as Sean eloquently points out, is where the trouble lies.

More thoughts on my chosen profession:

As I reflect on my year in real estate, 2009 has certainly been a challenge. But last year at this time, it was even more frightening. Would I ever sell another house? My notes from December, 2008, show that was a real concern to me. To relate back to what Sean wrote, I did feel like the best thing I could do was to be as helpful as I could. I wrote about the government programs in my blog, I took flyers around the neighborhood, I met with people to discuss their options even though they couldn’t sell. But I felt powerless in most cases to effect positive help.

In hindsight, it looks like the real estate market in our area bottomed out in the first quarter of this year, so I was truly facing a very dark time ahead. But as I looked around at other people going through that dark time, I could see that I had a huge advantage—I am my own boss and no one can lay me off but myself.

Imagine how vulnerable employees feel, not knowing if they will have a job next week. Even public employees are feeling the pinch with unpaid furlough days, frozen wages, pay cuts. It may not be easy to go out and sell another house, but at least I have that possibility in my day.

I have a full-time assistant and I have a family and a household to support. This has been both a burden and an inspiration to me through these difficult times. As my income was drastically reduced, I had to make a number of budget adjustments, but I always felt it was very important to make sure I kept my employee. Imagine how tough it is on a person who relies on an individual person for their livelihood. I have seen many Realtors decide that they can’t afford their staff anymore. Is that a really wise economy? There is the saying, “If you don’t have an assistant, you are an assistant.” If you spend your time doing administrative jobs, when are you going to go out there and do your real job, which it to make deals? The temptation is really strong to spend a lot of time on administration since it feels like work. But it’s not our work. Not if we are really doing what we need to do.

When the market is so difficult, it’s really easy to decide any effort you make is useless and you might as well not try. But with an assistant to keep busy and a family to support, I went ahead and got out there and looked for deals. The key to success is to be there the moment the decision to buy or sell real estate happens. If you are back at the office filing your paperwork, how will you be there with the buyer or seller?

What if we were out in our neighborhoods helping people get to the truth about what they really could and couldn’t do with their homes and providing them with achievable options?