Monday, November 30, 2009

Downtown San Jose Bank Owned Fourplex

Just updated that a very nice fourplex that was part of a large multi-property bankruptcy proceeding, now a bank owned property, fell out of escrow because of financing issues. The deal is right off of East Santa Clara in the heart of the new downtown renovations. Offered at $549,000 for 2,600 square feet and a very attractive turn of the century building. This will move fast yet again. Call me for offer strategies.

Saturday, November 14, 2009

Feng Shui Issues in Selling Homes

Buyer's agent called me today, thrilled about my new listing. Her clients have been waiting for a townhome in that complex to come available. She even said they will write an offer this weekend once they see the inside. Then the agent asked me: Which direction does the front door face? I said North - in fact, I use my iPhone compass application on every home I sell. Sadly for me her clients will not buy a home that faces either North or South - that's 50% of the market! Now, not every buyer has these same directional allegiances - many home buyers love homes that face South - they tend to be sunnier - or North for the same reason if the living spaces are oriented to the back of the house. I tend to not like high rise condos with West facing views - you roast in those units in the summer afternoon. East facing is difficult if you want to sleep in on lazy Sunday mornings - or you invest in black-out blinds. Find me a house that rotates please! By the way, my desk faces South East - what does that mean?

Thursday, November 12, 2009

Real Estate on it's Head in Silicon Valley

For a bank owned home in Silicon Valley - buyers should offer 10% over asking and better be "all cash" in order to beat the competition.
For a "normal" sale - buyers can offer 5-10% below asking and get favorable responses.
For a short sale - buyers can offer less than 10% below asking and get sellers quite thrilled to take that offer to their short selling lender.

Now don't quote me on this - this is NOT completely factual - actually very anecdotal - yet, ask most buyers, sellers and agents in this marketplace and that is typical of what is going on.

Wednesday, November 11, 2009

Home Buyer Tax Credits


Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

• They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
• They do not use the home as your principal residence.
• They sell their home before the end of the year.
• They are a nonresident alien.
• They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

Tony Guaraldi
Mortgage Consultant


Direct: (408) 342-8644
Mobile: (408) 504-3295
eFax: (408) 516-5922
Address: 10275 N. De Anza Blvd. Cupertino, CA 95014

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Sunday, November 8, 2009

United Commercial Bank seized by FDIC and sold to East West Bank

One of the largest banks in the US focusing on Asian American lending was seized this weekend by the FDIC. This is the 120th bank to fail this year. East West Bank, with a similar Asian American focus was chosen by the FDIC to acquire UCB's assets, loans, liabilities and branches. This is a boon for East West Bank - especially because the loan loss liabilities are covered by the FDIC. Locally, UCB had a $22,000,000 loan in default on The Globe development in Fremont. Construction lending was the core of UCB's business. Typically a high profit lending segment, although of course the high risk is evident in this economy. See the San Jose Business Journal article on this for more details.

Duplex Short Sale San Jose - Oakridge Mall

The acceptance of short sale properties is becoming the norm. There is a very nice duplex by Westfield Oakridge Mall which was put on the market 4 days ago. There are now 4 offers in hand and the listing agent is submitting the best one to the bank's short sale department tomorrow. This deal was priced aggressively low at $495,000 for a 2,100 square feet quality condition duplex - perfect for an owner-occupant. And that is what it takes to spur interest and get a home sold. The emphasis is to beat the foreclosure deadline and to alleviate the negative cash flow burden that the seller is facing. This underwater property may very well be stabilized by a new owner in the next 45 days. If you know of anyone who has a property that has negative equity, is facing payments that are way too high to handle or has foreclosure looming, talk to us about our short sale successes.

Silicon Valley Turkey Trot 2009

I love this race! Great way to pre-offset the gluttony of Thanksgiving - run a fun, flat, enjoyable 6 miles through downtown San Jose, Naglee Park and the Rose Garden. The 10K run finishes well running from The Alameda @ Race Street to the Shark Tank. This race continues to get more popular every year. If 6 miles is not in your training program, there is a 3 mile version through downtown that is great too. And this year Peirre Silber is sponsoring the costume contest - do I see visions of Bay to Breakers in San Jose as this race continues to morph?

Thursday, November 5, 2009

Wells Fargo Short Sale Department Wins My Respect!

I thought I was sunk with a short sale listing that I took just 6 days before the trustee sale date on the courthouse steps in San Jose. I had to get this done so that the owner could process a short sale instead of a foreclosure. I listed the property and got an offer in within the day. Signatures, tax returns, pre-approval letter, financial worksheet, hardship letter, listing agreement, purchase agreement, verification of funds, etc - all this took about 24 hours. I faxed the 35+ pages to Wells Fargo's short sale department last night at 6:30pm. Today at 5:45am I am sitting in my living room trying to see who I can contact to get some movement on this file - normal receipt processing time is 72 hours - not time that I have to spare with a weekend looming and a Monday trustee sale date. Luckily I found an email through a business networking site of a manager in the Wells Fargo short sale division - I shoot him an email at 7am, by 10:13am I get a reply with 3 cc'd Wells Fargo employees who are all searching for my file, 10:18am another cc email to THE guy who can stop a trustee sale and by 10:38am a personal call from that wonderful gentleman telling me the foreclosure has been postponed and assigning me a short sale negotiator! This group of people from all different parts of the country made damn sure that this property was not going to slip into foreclosure oblivion. Great job Wells Fargo!

Why Wells Fargo bought Wachovia and not Washington Mutual

Great insight into why Wells Fargo bought Wachovia. I just read this article as I was searching for ways to get my client's Wells Fargo short sale approved. The banking industry of course is very influential to real estate and knowing why banks do certain moves is power. Eric Meyerson's blog Free Rise is outstanding. He is a banking industry insider and San Francisco area resident. Check him out.

Wednesday, November 4, 2009

Proposition 60 Information 55 and over - Santa Clara County

As per site:

Proposition 60 allows homeowners 55 years of age and older to transfer the base year value of their principal residence to a newly purchased residence in the same county, providing that certain requirements are met.

The requirements, in part, for this exclusion include the following:

The replacement residence must be purchased or newly constructed within two years (before or after) of the sale of the original residence. The purchase or new construction of the replacement dwelling must include the purchase of that portion of land on which the replacement dwelling will be situated.
The principle claimant or the claimant's spouse who resides with the claimant must be at least 55 years of age at the time the original residence was sold. The claimant must be an owner of record of both the original and replacement residences.
The sale of the original residence must qualify for reassessment under the provisions of California Revenue and Taxation Code Section 110.1.
The principle claimant must have been either:
1. Receiving, or eligible for, a Homeowner's Exemption, or
2. Receiving a Disabled Veteran's Exemption on the original and replacement residences.
The replacement residence must be equal to or lesser in value than the original residence. "Equal to or lesser in value" has been defined as: 100 percent of the market value of the original property as of its date of sale if the replacement dwelling is purchased before the original property is sold; 105 percent of the market value of the original property as of its date of sale if the replacement dwelling is purchased within one year after the original property is sold; or 110 percent of the market value of the original property as of its date of sale if the replacement dwelling is purchased between one and two years after the original property is sold.
Special rules apply to multi-unit dwellings and mobile homes.
Relief pursuant to Section 69.5 (Proposition 60 and 90) of the Revenue and Taxation Code can be granted only once, except for certain circumstances regarding severely and permanently disabled persons as defined in Revenue and Taxation Code Section 74.3.
Claims must be filed within three years of the date the replacement residence is purchased or newly constructed. You must complete the claim form and provide evidence and/or declare under penalty of perjury that you are at least 55 years of age. Application forms may be obtained by contacting the Real Property Division of the Santa Clara County Assessor's Office at the number below.

For More Information Please Contact:
Assessor Real Property - General Questions, Property valuations and Propositions 3, 8, 60, 90
70 West Hedding St., East Wing
5th Floor
San Jose, CA 95110
Phone: 408-299-5300
Fax: 408-298-9439

Tuesday, November 3, 2009

Short Sale Townhouse Willow Glen $515,000 San Jose

Best schools - Booksin Elementary, Willow Glen Middle and Willow Glen High. 2 bedrooms, 2.5 baths, two story townhouse in quiet complex off Malone and Bird. 1290 square feet. 1 car attached garage plus one car space in complex. Motivated sellers. Great condition. Come look at a great bargain in perfect Willow Glen area of San Jose.
See virtual tour.

Follow up to REOTrans soon to be Equator on Short Sales

According to CEO Chris Saitta, as of October 9th, REOTrans had 4,388 short sales in their system. For sure this number will skyrocket. As more and more banks who want to purge the glut of short sales through stream lined technology, will look at companies like REOTrans for help. The industry as a whole will benefit from transactions that are taking months, coming closer in line with traditional sales in the 30 day range. Buyers will also step up easier into that market when the grinding barriers to entry are lifted. Yes - that a bit heavy - but that's what it feels like sometimes!

Monday, November 2, 2009

Home Buyer Strategies 101

Most home buyers jump on the new listings that come on the market. There is a mad rush to the first open house and then a decision whether to offer on that home - typically with fear that others will do the same. For sure, those homes are worth looking at, but a better strategy tends to be looking at homes that have been on the market for a while, have had a price reduction (and if so how long ago), are vacant (typically more motivation there) or are truly overpriced. This last point needs some clarification. An overpriced home does not typically reflect a motivated seller - but there are sellers out there that will not reduce their price yet will cut a market rate deal when an offer is presented. I talk to a lot of listing agents before showing homes to a buyer to evaluate what is possible in each of these situations. Info wins!
By the way, setting up a listing alert specifically for "changes" in the listing is very beneficial - this will highlight price reductions as well as changes in the comments which may reveal a more motivated seller.