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Real Estate @ A Glance – September 2018 Edition

September 24, 2018

Local Market Update - San Diego County - Real Estate
Real estate is about location, location, location . . .  If you have questions about the market in your specific area, please contact me via email or call 619-888-2117.

 

Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders. Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges.

While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research-based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.

 

 

 

 

 

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How energy-efficient windows work

September 20, 2018

 

Kevin Clark/The Washington Post/Getty Images

Getting energy-efficient windows for your home is widely lauded as a way to cut down on drafts and save money on heating bills … only how much do these replacement windows cost—and really save you, anyway?

To help you crunch the numbers and do some concrete cost-benefit analysis, here’s everything you need to know about adding energy-efficient windows to your home.

Several elements contribute to the overall energy efficiency of windows:

Frames: If you have old windows, they are likely to have aluminum frames. The problem with that is aluminum allows hot and cold air to easily pass through from one side to the other. “A vinyl or fiberglass frame [which you’ll find in updated windows] is much more energy efficient,” says Michal Bohm, owner of BM Windows, a replacement window company in San Diego. Both of these materials are poor conductors of heat, and thus better insulation.

Number of panes: Most older windows have a single pane of glass that lets the heat of your home slip out during the winter months. (And do a similarly so-so job of keeping your air conditioning contained during the summer.) Energy-efficient windows will have two, or even three, panes to cocoon your home.

Fancy glass: In between these panes of glass, manufacturers of energy-efficient windows insert an inert gas like argon or krypton. Because these are denser than air, they reduce the amount of air that is transferred into and out of your house.

These insulated glass units (IGUs) also feature what’s known as low-emissivity (“low-e”) glass. Think of it as sunscreen for your house.

“Low-e glass features a microscopically thin layer of metallic oxides that both control infrared light and reflect the sun’s ultraviolet rays,” says Larry Patterson, franchise owner of Glass Doctor, a Neighborly Company in Dallas. “This has the combined effect of reducing solar heat gain in the summer and lowering home heat loss in the winter.”

Window installation: How your windows are installed can also make a huge difference in their performance. “You can buy the most expensive windows on the market, with the best energy- efficiency ratings, but if they aren’t installed properly, you won’t see the energy savings,” Bohm says.

Hint: When you’re ready to upgrade, think about hiring a replacement window company that has a professional installation team, rather than a company that outsources the installation to subcontractors or general laborers.

How much will energy-efficient windows save you?

The U.S. Department of Energy estimates that you’ll save between $126 to $465 a year by replacing single-pane windows in your home. Already have double-pane windows? You can still reap savings by switching them out with energy-efficient ones, but far less. Plan on $27 to $111 per year.

Where you live also matters.

“The average savings overall are about $250 in warmer states and $150 in colder states,” says David Bakke, a personal finance expert at Money Crashers.

Since the average replacement cost runs around $150 per window, depending upon how many you have to replace, you may see savings after even one year or two.

Do energy-efficient windows have other benefits?

Energy-efficient windows are also excellent at reducing noise pollution. “Most homeowners report that 60%-75% of exterior noise is muted when they installed IGUs in their home,” says Patterson.

Low-e coatings on windows also help reduce sun damage to your furniture, carpets, and even personal items like photos by up to 75%.

Plus, consider the value you could add to your home. Notes Bohm, “a conservative estimate would be to expect to recoup about 70% of the purchase price of your replacement windows when it comes time to sell your home.”

Combine that with your monthly energy savings, Bohm adds, and “your windows should more than pay for themselves.”

What are the best energy-efficient windows to buy?

Fortunately, “Manufacturers have made significant technology advancements over the years, and new labeling requirements allow you to more easily compare window performance,” says Mark Montgomery, vice president of marketing for Ply Gem Windows.

Any windows you choose should have an Energy Star rating. This means the windows will meet or exceed energy code requirements.

Next, pay attention to what’s called the National Fenestration Rating Council (NFRC) label. This lets you geek out on comparing such nitty-gritty properties as U-factor (the rate of the window’s non-solar heat loss or gain) and solar heat gain coefficient (SHGC—the fraction of solar radiation that passes through the windows). If your eyes just glazed over at that list, don’t panic. Energy.gov’s comprehensive Efficient Windows Collaborative can help you select the right windows based on your geography and climate.

Keep in mind, too, that many cities, states, and utility companies offer incentives or rebates for homeowners who decide to upgrade to energy-efficient windows. Ask a window company what’s available in your area, or search for current deals on Energystar.gov.

Article from: realtor.com

 

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

What is Mills Act?

September 13, 2018

 

Information provided by SOHO.

A historical designation can provide a property tax reduction. San Diego is a relatively young town, but many residents are beginning to take notice of one of our most valuable resources, our historic sites and houses. The Mills Act, named for San Diegan James Mills, a former State Senator, provides an important monetary incentive designed to encourage the preservation, maintenance, and restoration of designated historic properties. If you have questions on the calculation of the assessed value, please call the Assessor’s Office at (858) 505-6262.

What is the Mills Act?
The Mills Act provides that property that is subject to a historical property contract be valued using the rental income that could be expected from that property rather than using comparable sales to establish the assessed value. This generally results in a much lower assessment if the property has been recently purchased.

How does my property qualify for the Mills Act?
It must meet qualifying criteria such as significant architecture, association with a historically significant event or person, or location in a historic district, such as Marston Hills. Once designated as a historical site, the owner can then enter into a voluntary contract with that city.

How long is the contract an is it canceled if I sell the property?
The term of the contract is ten years, however, it is automatically extended unless the property owner cancels the contract. The new owner would receive the full benefit of the contract because the contract goes with the property.

Is the property owner required to open the property to the public?
No, the law was revised in 1985 when new legislation relaxed the rules to encourage the preservation of historic properties. Prior to that time, any property under contract had to be open to the public for tours. After the 1985 revision, many additional properties have been placed under contract.

Do all historical properties in San Diego County qualify for the Mills Act?
No, only the City of San Diego, the City of Chula Vista, the City of Coronado, the City of Escondido, the City of La Mesa, and the City of National City have enacted ordinances to grant the Mills Act exclusion. The County of San Diego has also passed an ordinance for historical properties in the unincorporated areas of the county.

How many properties are benefiting under the Mills Act in San Diego County?
Currently, there are approximately 370 properties under contract with the various cities that receive this property tax benefit.

What is the Assessor’s role in the process?
Although the individual cities actually place the property under a historical contract, the Assessor’s Office must determine the actual assessed value based on a formula under State law, using the income that could be generated from the property.

What kind of savings can I expect on my property tax bill?
Typically, property owners can expect a 20% to 70% savings on their property taxes. Under State law, the lesser of 1) the current market value, 2) the Proposition 13 value, or 3) the restricted value based on the rents will be used to calculate your property taxes. It is possible that the Proposition 13 value may actually be lower than the restricted value, and the property would receive no benefit.

Since I have owned my property for many years and already have a very low assessment, is it worthwhile to apply for the Mills Act?
Some owners who would receive no benefit still apply for the Mills Act. It can be a selling point to a potential buyer because the property would not be reappraised at its full market value upon sale if the property were already under a historical contract.

Once my property is listed on a historic register, are there any binding restrictions that will affect my property?
Yes, once that property is designated on a Federal, State, or local register, it is subject to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, and the U.S. Secretary of the Interior’s Standards for Rehabilitation, and the Historic Building Code. In effect, the owner must protect, maintain, and rehabilitate the property into perpetuity.

Mills Act Benefits
-10-year contract, which is renewable
-Once a property is designated as a Historical Property, it must be permanently maintained as a historical site

  • Who should I contact if I want to place my property under the Mills Act?
    Each city has its own ordinance and criteria to determine if a particular property qualifies.

Do you have questions about the Mills Act? Are you thinking of buying a historic home or home that could receive historic designation? Just send me an email or call 619-888-2117 – I can help.

 

Mortgage Musts

September 6, 2018

 

Consider me your #1 resource for all things Real Estate! Are you thinking of buying your first home? Do you know someone who is ready to graduate from renting to homeownership? Just send me an email or call 619-888-2117 – I can help.

How to Price a Home in a Seller’s Market: Go Low, or Shoot for the Stars?

August 30, 2018

 

 

Article from: Realtor.com

 

How to price a home in a seller’s market may be a question that’s top of mind if you’re listing your home. Much of the United States right now is a seller’s market—which spells potential for major profits. Lucky you!

However: Some sellers may see this as an opportunity to set the bar high—maybe too high—when it comes to their list price. Others may decide on a lower asking price, in hopes of generating a bidding war.

So which pricing strategy works best in a seller’s market? Every approach has its pros and cons, so here’s how to determine the best one for you.

First, assess the landscape

Before you go about setting your list price, you’ll want to survey your area to see whether you’re truly in a seller’s market, says Seth Lejeune, a real estate agent with Berkshire Hathaway in Collegeville, PA.

For a quick assessment, you can check out where your city ranks on realtor.com’s Market Hotness Index, which uses the latest housing data to show which cities are heating up for home sellers.

For a deeper look at your market, however, you’ll have to analyze a few key variables:

  • Average days on market (DOM). This measurement shows the median age of real estate listings in your area. If houses are selling in your neighborhood in less than 10 days, its a strong sellers market, Lejeune says. You can find what the average DOM is in your city using realtor.com’s Local Market Trends tool.
  • Asking vs. final home price. In seller’s markets, bidding wars can often erupt among buyers, which means that sellers may enjoy a final sales price equal to their asking price, or more. So, if a home is listed at $450,000 and sells for $450,000 or higher, that’s a seller’s market. In a strong seller’s market, the final sales price is typically at least 10% higher than the asking price. You can compare the listing prices vs. the closing prices in various cities across the country at realtor.com/local.
  • Home prices over time. Rising home prices over time are a sure sign of a seller’s market. You can determine whether home prices are rising or falling in your city by looking at your ZIP code’s “market price curve” on BuilderOnline.com.

Pricing strategy No. 1: Listing at market value

To assess your home’s “fair market value”—i.e., what your house is actually worth in today’s market (not just what it’s worth in your head)—you can enter your address in realtor.com/sell to get a ballpark figure for your home’s value.

To hone that number further, check what comparable homes recently sold for in your area. Good agents can help you synthesize this info into an asking price that you can justify and stand by, which is important once the negotiations on a home get rolling.

“If you’re working with a real estate agent who understands the market, you have to trust their comps,” says Lou Nimkoff, president at the Orlando Regional Realtor Association.

Even in a seller’s market, Lejeune generally recommends that sellers list their house at market value. “You have to forget the noise, especially if you’re looking to sell in a reasonable period of time,” he says. “For most sellers, it’s always the best strategy, regardless of the status of the market.”

The bottom line: By listing at market value, you’ll be in a good position to get a full-price offer relatively quickly.

Not in a rush to sell? Keep reading.

Pricing strategy No. 2: Listing high

If you’re not on a tight timetable to sell, you could price your home above market value—typically 5% to 10% more—to see if you can nab a great offer. But that approach has its flaws.

For starters, “The last thing you want to do is price your home too high and then have it just sit on the market,” says Nimkoff. When that happens, your house can become stigmatized in the eyes of home buyers, which can make it even more difficult to sell, Nimkoff says.

You might also have trouble closing the sale if your lender’s appraisal of your home’s price doesn’t come in at that same high number.

“Even if you find a buyer that’s willing to pay you $400,000 for a $300,000 house, a lender may not loan that much money,” Nimkoff says. “So, unless you have an all-cash buyer, it would be next to impossible to close the sale.”

That being said, some people have success selling over asking price by targeting investors with the ability to make cash offers, says Dan Burz, an agent at Douglas Elliman in New York and New Jersey.

The bottom line: By listing above market value, your home might sell at a premium—but there’s a greater risk that it doesn’t sell, especially if you’re unwilling to reduce the price.

Pricing strategy No. 3: List low

One way to get your property more exposure, Nimkoff says, is to set the list price below market value—generally 5% to 10% under—in an effort to attract more buyers and potentially spark a bidding war. “If you price low, you can probably get multiple offers within one to two days,” says Nimkoff.

A bidding war is a good problem to have if you’re a seller, but “the more offers you receive, the more options you have, which can make choosing the best offer challenging,” Nimkoff says.

For some sellers, the most appealing offer is the one with the fewest contingencies; for others, the best offer is the highest bid. It depends on your priorities.

The bottom line: This strategy can backfire if you receive only one offer for asking price or less. That’s less likely to happen in a seller’s market, but it’s always a possibility. There’s also less wiggle room for you to negotiate if you receive a lowball offer.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

Ready, Set, Go!

August 23, 2018

Photo of brochure cover

 

 

Given the deep concerns we all have with regard to wildfires, I think it’s wise to get this document into circulation through all available means. Those of us in San Diego and throughout California need to pay attention to the advice of our fire safety professionals on the front lines.  

 

 

No one knows when or where the next major wildfire will occur in our region. But it is a question of when — not if — it will happen.

That’s why San Diego Fire-Rescue has partnered with the International Association of Fire Chiefs to create the Ready, Set, Go! Wildland Fire Action Guide.

We hope you will read the guide, and follow its advice.

PDF icon Ready, Set, Go! English version

PDF icon Ready, Set, Go! Spanish version

  • Ready — Take personal responsibility and prepare long before the threat of a wildland fire, so your home is ready in case of a fire. Create defensible space by clearing brush away from your home. Use fire-resistant landscaping and harden your home with fire-safe construction measures. Assemble emergency supplies and belongings in a safe place. Plan escape routes and make sure all those residing within the home know the plan of action.
  • Set — Pack your emergency items. Stay aware of the latest news and information on the fire from local media, your local fire department and public safety.
  • Go –– Follow your personal wildland fire action plan. Doing so will not only support your safety, but will allow firefighters to best maneuver resources to combat the fire.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

What You Need to Know Before Accepting or Rejecting An Offer

August 16, 2018

The day will come — and it will be a wonderful, joyous, do-a-happy-dance day — when you receive an offer, or multiple offers, for your home.And on that day, you’re going to face a question you may not have previously considered: How do you know if an offer is the best one for you?

Your listing agent will be a big help here. They will understand and help you suss out the merits and faults of an offer because — believe it or not — it’s not always about price.

One buyer’s beautifully high offer might not look so good anymore, for example, if you discover that it’s contingent upon you moving out a month earlier than planned. Or, conversely, you may prefer speed over price, particularly if you’re moving to a new city.

Your listing agent will have a sense of what you want financially and personally — and can help you determine whether the offer at hand satisfies those goals.

Before the first offer rolls in, here’s what you need to know about the offer evaluation process, including the main factors that should go into making a decision — accept or reject? — with your agent.

5 Important Things — Other Than Price — to Consider When Evaluating an Offer

Want to fetch top dollar for your home and walk away with as much money in your pocket as possible? Of course you do. You’ve gone through the time-consuming process of setting your asking price, staging your home, promoting your listing, and preparing for open houses — and should be rewarded for your efforts.

Your first instinct may be to just pick the highest bid on the table. But the offer price isn’t the only thing worth considering.

When vetting offers, evaluate these five areas in addition to price:

1. The earnest money deposit. One important consideration when weighing an offer is the size of the earnest money deposit. The EMD is the sum of cash the buyer is offering to fork over when the sales agreement is signed to show the person is serious (i.e., “earnest”) about buying your home. This money, which is typically held by a title company, will go toward the buyer’s down payment at closing.

A standard EMD is 1% to 3% of the cost of the home (so, that would be $2,000 to $6,000 on a $200,000 house). If a buyer tries to back out of an offer for no good reason, the seller typically keeps the EMD. Therefore, the higher the earnest money, the stronger the offer.

2. The contingencies. Most offers have contingencies — provisions that must be met for the transaction to go through, or the buyer is entitled to walk away from the deal with their earnest money. Contracts with fewer contingencies are more likely to reach closing, and in a timely fashion.

Here are of the most common contingencies:

Home inspection contingency. This gives the buyer the right to have the home professionally inspected and request repairs by a certain date — typically within five to seven days of the purchase agreement being signed. Depending on where you live, you may be required to make home repairs for structural defects, building code violations, or safety issues. Most repair requests are negotiable, though, so you have the option to haggle over which fixes you’re willing to make.

Appraisal contingency. For a mortgage lender to approve a home buyer’s loan, the home must pass appraisal — a process during which the property’s value is assessed by a neutral third party. The appraisal verifies that the home is worth at least enough money to cover the price of the mortgage. (In the event the buyer can’t make their mortgage payments, the lender can foreclose on the home and sell the property to recoup all — or at least some — of its costs.) Generally, the home buyer is responsible for paying for the appraisal, which typically takes place within 14 days of the sales contract being signed.

Financing contingency. Also called a loan contingency or mortgage contingency, a financing contingency protects the buyer in the event their lender doesn’t approve their mortgage. Although the timeframe for financing contingencies can vary, mortgage lenders report that buyers generally have about 21 days to obtain mortgage approval.

Sale of current home contingency. Depending on the buyer’s financial situation, their offer may be contingent on the sale of their home. Usually, buyers have a window of 30 to 90 days to sell their house before the sales agreement is voided. This contingency puts you, the seller, at a disadvantage because you can’t control whether the buyer sells their house in time.

Title contingency. Before approving a mortgage, a lender will require the borrower to “clear title” — a process in which the buyer’s title company reviews any potential easements or agreements that are on public record. This ensures the buyer is becoming the rightful owner of the property and the lender is protected from ownership claims over liens, fraudulent claims from previous owners, clerical problems in courthouse documents, or forged signatures.

These contingencies are standard for most real estate sales contracts. There’s one exception: the sale of current home contingency, which tends to be used more often in strong buyer’s markets, when buyers have greater leverage over sellers.

That being said, contingencies are always negotiable. (The caveat: Mortgage lenders require borrowers to have appraisal financing contingencies, or they won’t approve the loan.) It’s up to you to decide what you’re comfortable agreeing to, and your agent can help you make that decision.

3. The down payment. Depending on the type of mortgage, the buyer must make a down payment on the house — and the size of that down payment can affect the strength of the offer. In most cases, a buyer’s down payment amount is related to the home loan they’re taking out. Your chief concern as a seller, of course, is for the transaction to close — and for that to happen, the buyer’s mortgage has be approved.

Generally, a larger down payment signals the buyer’s financial wherewithal to complete the sale. The average down payment, according to the NATIONAL ASSOCIATION OF REALTORS®, is 10%. Some mortgage products, such as FHA and VA loans, allow for even lower down payments.

If, by chance, the appraisal comes in higher than your contract’s sale price, the buyer with a higher down payment would more likely be able to cover the difference with the large amount of cash they have available.

4. The all-cash offer. The more cash the buyer plunks down, the more likely the lender is to approve their loan. That’s why an all-cash offer is ideal for both parties. The buyer doesn’t have to fulfill an appraisal contingency — whereby their lender has the home appraised to make sure the property value is large enough to cover the mortgage — or a financing contingency, which requires buyers to obtain mortgage approval within a certain number of days. As always, having a sales contract with fewer contingencies means there are fewer ways for the deal to fall through.

5. The closing date. Settlement, or “closing,” is the day when both parties sign the final paperwork and make the sale official. Typically, the whole process — from accepting an offer to closing — takes between 30 and 60 days; however, the average closing time is 42 days, according to a report from mortgage software company Ellie Mae.

Three days before closing, the buyer receives a closing disclosure from the lender, which he compares with the loan estimate he received when he applied for the loan. If there are material differences between the buyer’s loan estimate and closing disclosure, the closing can’t happen until those amounts are reviewed and approved. But this is rare.

Some transactions can take more time, depending on the buyer’s financing. For example, the average closing time for a Federal Housing Administration (FHA) loan is 43 days, according to Ellie Mae.

Whether you want a slow or quick settlement will depend on your circumstances. If you’ve already purchased your next home, for instance, you probably want to close as soon as possible. On the other hand, you may want a longer closing period — say, 60 days — if you need the proceeds from the sale to purchase your new home.

When Should You Make a Counteroffer?

Depending on the circumstances, you may be in the position to make a counteroffer. But every transaction is different, based on the particular market conditions and your home. In some circumstances, you can be gutsy with your counteroffer. In others, it might serve your goals better to give in to the buyer’s demands. Your agent can provide helpful insight about when and why a counteroffer will be the right thing for you.

For instance: If you’re in a seller’s market — meaning that homes are selling quickly and for more than the asking prices — and you received multiple offers, your agent may recommend you counteroffer with an amount higher than you would have in a buyer’s market.

If you choose to write a counteroffer, your agent will negotiate on your behalf to make sure you get the best deal for you.

A caveat: In many states sellers can’t legally make a counteroffer to more than one buyer at the same time, since they’re obligated to sign a purchase agreement if a buyer accepts the new offer.

When Does an Offer Become a Contract?

In a nutshell, a deal is under contract when the buyer’s offer (or seller’s counteroffer) is agreed upon and signed by both parties. At that point, the clock starts ticking for the home buyer’s contingencies — and for the sweet moment when the cash — and home — is yours.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

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