ICYMI

Damn! I almost lost this account AGAIN!!!. As a permanent reminder to myself that I created a gmail account specifically for this blog , it is: mhickerson.forinvestors@gmail.com. Don't write me there, I never use that account. If you wish to contact me: mhickerson@cbzhomes.com that is all.

I'm Back

Geese, these guys make it hard to get back in to your blog! I changed computers, a good thing, and I'm runnning all over the place with new websites, but I did not take this link with me when I shifted to the new machine. But OK. Enough with the excuses. Watch this site for useful stuff! No more blue screen of death!

Maintaining your home: What is it going to cost?

A recent letter from a client regarding the estate property pictured above prompted this article. It's important to budget for upkeep and regular maintenance even though the bank does not take this figure into account when figuring your debt load for a mortgage.


One key figure is hard to project with exact accuracy, and is often overlooked: If you buy a home, how much will you shell out every year for maintenance and repairs? A careful look at these potential costs might discourage you from buying a more expensive property, or might make renting look more appealing than it would seem otherwise.

Obviously, there’s no way to forecast these costs for sure. But mortgage-data firm HSH Associates suggests homeowners assume they will come to about 1% of the property’s value — every year. My own experience is that in upper level priced homes, that's a bit high, although .75% would seem about right.

That’s $3,000 on a $300,000 home. To be on the safe side, you should probably use that as a minimum. So let’s say $4,000, and assume you’d also need a healthy cash reserve for any big expense that’s not covered by homeowner’s insurance, like a new furnace or roof. A $4,000 annual maintenance and repair budget is $333 per month. If you bought a $300,000 home with 20% down and a 30-year fixed-rate loan at 3.75%, your $240,000 mortgage would cost $1,112 a month, according to the Mortgage Loan Calculator. A $333 monthly maintenance and repair budget would equal nearly 27% of your principal and interest payment. That hurts! But , that's the cold number. You can defer these maintenance projects, and many often do. But it's not going to be any cheaper in 3 or 4 years.


uj7 Back to the estate in question. .75% of the 1.999m value is about $15,000 yearly. or $1250 per month in various things. Tree trimming, pool maintenance, brush clearing, trim paint, marble floor maintenance, it adds up. The point is, there’s a lot of money involved. It’s too much to be shrugged off as an incidental when you’re deciding which home to buy.

I have lots of experience with large gated estates. Call me anytime for information about Oak Creek Estates, Hidden Hills West, The Ridge, Hidden Hills, or Bell Canyon

Things to Think About Before Going FSBO

Sell your home without a broker? Good idea or bad idea? It depends on whom you ask. For realtors, it makes little sense for a seller to go it alone, without the help of a broker and his or her existing customer base. For sellers who wish to save the realtors’ standard commission fee of six percent and are willing to put in the work involved in marketing their homes, it makes perfect sense. However, few sellers in this position realize what they are letting themselves in for.

Sales statistics can be misleading. Many of these properties were not placed on the open market – 42 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances. Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance was a record low six percent – the rest were unrepresented sellers in private transactions. The market share of open-market FSBOs is nearly half of what it was five years ago – 10 percent were sold on the open market in 2004.

There is also the pricing issue. John Vitteri, a Realtor who teaches Real Estate says "Most buyers expect a house that is for-sale-by-owner to be cheaper than a house being sold by realtors"
But here's the main issue: “According to the NAR, those sales that are negotiated through a real estate broker sell for 16 percent more than if the owner sells themselves. So, even when you consider you’re saving the six percent broker’s fee you’re still losing 10 percent,” he said.

Sites like forsalebyowner.com and www.owners.com offer step-by-step guides for selling your house on your own. For example, www.owners.com provides information on the following topics:

• Deciding to sell “FSBO”

• Pricing Your Home

• Preparing your home for sale

• Marketing your home to buyers

• Holding an open house

• Closing the sale
Remember , I do this for a living. I know about the legal aspects you haven't even considered. For example, you must agree between you and your buyer on the following :



Advisability of Title Insurance An escrow transaction for the purchase or simultaneous exchange of real property where a policy of title insurance will not be issued to the buyer. The buyer must receive the statutory notice. The law does not specify who is responsible for providing this notice. Typically handled by escrow agent. Cal. Civ. Code § 1057.6



There's 23 pages more, here is the link the CAR's website disclosure guide.

So, just like with the law, where you may represent yourself in court, you may represent yourself in a sale, but there are myriad legalities and liabilities to this procedure that professional Realtors understand and can explain to you.

Thinking about selling? Give me a call for an honest appraisal of your home and todays market in your area.

Bank Owned Homes- a couple of good ones

I see bank owned houses every day. Scores of them in a month. I don't show them to you unless the have some redeeming quality. So, check these out:

In this case, this home caught my eye because I think of this neighborhood as Northridge. This is due to the fact that the Northridge border is at Devonshire, and this home is north of that. It's in that area south of the 118 but west of Balboa, but this island of land is Granada Hills. So call it "Northridge adjacent". The other thing that caught my eye was that this is a single family home for under $500k in Granada Hills. It's priced at $399,900! As with all bank owned homes, this one has problems. There's issues inside and out; the yard the paint, the roof, and the pool are all in a state of disrepair. I like to estimate high because it turns out closer to reality for a first pass. I figure 15k to make the pool right. It needs the whole filter pump and heater thing. Plus a minimum of an acid wash but probably replaster and spruce up the deck surround and coping, maybe with some brick ribbons. Another 5-6k for paint, 10k for the roof, 8 k for infrastructure (electrical, HVAC, Hot water heater) 20 k for bathrooms and floors, 6 k for the kitchen appliances, another 6k for materials like granite. what's that come to? $71,000. Add 20% for contingencies. Because your crew always finds some issue you hadn't budgeted on. So, that's a budget of 85,000 +/-. With the cost of the property ( say no competition, because this place is SO bad)of 350,000. Add Landscaping. 6 k. That brings your all-in to $441,000. Will it flip at this price? Sure, but factor in holding costs and commissions and you are getting your profit margin dangerously thin. So it goes. If you're an end user, this makes sense. Borrow hard money to get it all done, then refi. THAT works!

This one caught my eye because I know the neighborhood; it's way out in the tulies of Moorpark, off the 118 west of the 23.It's the last outpost of civilization. After this neighborhood is the serious farmland of Ventura County that stretches all the way to West Ventura and inland off the 126 to Santa Paula, Fillmore, and Piru. But they are new-ish homes that run 4-5 BR and 3-4 Baths and are over 3,000 square feet.

What do you get in exchange for living 40 minutes past Calabasas? A Huge house at a great price! This one is 5 bedrooms, 4 baths, with almost 3200 square feet. And like the home in Northridge -adjacent, this one needs some huge work undertakings. It DOES NEED MOLD MITIGATION which scares the bejeesus out of many people, but it's simple to do for the pros. 20k. And a new Roof 15k. New Floors and Paint. 15k. Landscape/tree trimming. 10k. The price here is what really caught my eye. $553,400, which works out to $173.37 a foot!!! You can't build it for cheaper than that. If you're a flipper, there's not enough upside there for the trouble; comps run high 500s low 600s. For an owner, you could come out ahead. So, feeling brave?



I have lots of experience negotiating with banks, let me put that to work for YOU.

(805) 907-5211

Deducting Mortgage Interest: not so fast!

Here's a Tax question for you: Husband and wife purchase a home. They get the money from Hubby's mom, who is loaded, and execute a note secured by the house. It's payable interest only for 30 years. Is the interest paid on the note secured by the home deductible? Of course, right? Not so fast. Recently a tax court ruled AGAINST homebuyers in this situation. Know why? Well, IRS publication #936 specifically stated the criteria for interest on a home mortgage to be deductible. Quoting:

Secured Debt


You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:

Makes your ownership in a qualified home security for payment of the debt,

Provides, in case of default, that your home could satisfy the debt, and

Is recorded or is otherwise perfected under any state or local law that applies.

It's that third one that is important. VERY IMPORTANT. In the case above, mom had not bothered to have the note RECORDED in the county where the home was located. So the interest deduction could not be taken.

Always make sure your mortgage note is recorded, especially if you got the money from family instead of a traditional source.

Working with me and my team of professionals will get your home sold quickly at the highest price. And when you buy you'll be secure in the knowledge we have set you up for maximum success when dealing with Taxes.

SELLING YOUR HOME FAST

I have a great track record when I list a home. Generally speaking, the home sells within 36 hours. Why? Well, I have a really good handle on the market. It's my job to know this stuff, and I do. The only time I list a home that it doesn't sell is when the seller does not listen to my advice. First, be aware everyone thinks their home is the best one on the street. It's even worse with Realtors. I can't explain this, but just be aware your home's extra 1000 sq. ft. lot size is not going to swing things one way or another. If you want to sell your home fast at the highest possible price, listen to me. I'm here to help. Just remember I do this for a living, and you don't. So here's the factors I use to arrive at the sell quick price:

1. The Comps. If we all got the price we wanted for our homes, without considering the rest of the market, what a wonderful world it would be. But here in the real world, ‘Comps’ is just industry shorthand for sales data on similar homes near yours which were recently listed and/or sold (“comparable” listings and sales). Moreover, this info is directly used to justify your purchase price to your lender. This is hard info, not sentiment. It wipes away all the "look at my beautiful roses" talk from the equation. I can provide you with your home’s comps; also, check them out by searching your address and general area for homes similar to yours. This can be done on Google. While you should view the actual sales prices (vs. list prices) of comps that have recently closed escrow as very informative and influential for your pricing decision, the list prices of homes that are lagging on the market can also help educate you about what price points buyers in your area see as too high.

2. DOM [Days on Market]. The MLS will provide with the comps and the listings you find here online should also contain information about how long the various listings in your market have been on the market. You can use this information - or your agent do the math for you - to get a gauge on what the average DOM, or Days on Market, is in your neighborhood. This empowers you to look at the comps with more nuance and to use them more strategically to influence your own pricing decision; you will ideally want to price your home in line with properties that went pending and/or sold in a time frame at or shorter than the average time homes in your area stay on the market. On a micro level, always , always price your home less than anything in the neighborhood; you don't want to be the pioneer trying to get the record price. These are generalities, and there ARE exceptions. The homes that have lingered on much longer than that may be overpriced and may even require a list price reduction to sell; and that’s a club you don’t want to join.

3. List price vs. sale price. Here, LP stands for ‘list price’ and ‘SP’ stands for ‘sale price or ‘sold price.’ This comparison - sometimes expressed in a ratio, other times in terms of how many percentage points the sale price was over or under the asking price - gets at the difference, if any, between what sellers are asking for homes in your area vs. what buyers in your area are willing and able to pay. When homes are selling for more than the asking price as a pattern or average, this usually suggests that your market is more of a seller’s market or that multiple offers are commonplace. And the opposite is often true - when homes typically sell for less than the list price, it indicates that buyers may have superior negotiating power.

Do the math and to understand its implications for your own pricing decisions, as they are not always completely obvious. For example, an agent might be able to point out patterns you don’t automatically see, like the increasingly common one in which well-staged, vacant homes that are listed at a slight discount are the ones that typically sell for significantly over asking.

4. Competition Level. How many homes are competing with yours for the hearts, minds and wallets of qualified buyers? How has the number of competing homes on the market trended over time, recently? Many areas have reported an ongoing decline in competition - less supply is good for sellers, but you need to know what’s going on in your area; don’t try to apply national headlines to your local, personal real estate decisions. This is frequently common in this day of Zillow and Trulia. Not everything there is germane to your specific location.
As you work to understand competition levels and their impact on your pricing, here’s what not to do:
•Don’t just look up and down the street, or in your subdivision - also look at similar homes in nearby neighborhoods or even nearby towns that a buyer who likes what your home might also target.

•And don’t just look at quantity - look at the quality, or nature of the competing listings. Is the competition mostly comprised of ‘regular’ equity sales, short sales or foreclosures/REOs? If you’re a regular sale in a sea of foreclosures, your price competition might be steep, but there may be other advantages of your listing that can offset that, to a degree.
So, what should you do? Get your agent to help you understand the competition level and the trends in number of listings on the market in recent months. Then, crash some of the competing listings’ Open Houses to scope out their condition and collect the rest of the intel listed here, before factoring it into your pricing decisions.


5. Timing. If your neighborhood’s award-winning school district or abundant colleges drive much of the buyer demand, you might be able to ask or get more for your home in June than in October, once the school year is in full swing. If you live where it snows, listing it while it’s easy for buyers to get around might pay off, literally. There are a number of area-specific timing considerations that you may need to calculate into setting your just-right list price. Chances are good that you know what they are where you live, but your agent may have some novel insight on the matter, as well. Universally, most homes sell between March and July.

6. Motivation Levels. How motivated are you? Are you just testing out the market to see if you can hit a target number, or do you need to have escrow closed by a particular date to make your life and job plans run smoothly? What is your primary motivation? Price, timing, closure, making sure your home passes into caring hands or just getting rid of a home or a mortgage that no longer serves you?
And how motivated are buyers in your area? From insights like: •Average number of days on market •Average list price vs. sale price •Trends in comparable sales - their number and sales prices •Trends in interest rates •Trends in competition levels •And insights like where you are in the seasonal changes that impact buyers in your area

You can work with your listing agent to gauge whether buyers are so motivated that they will not be deterred by a premium list price, or whether you’ll need to use a discount or value-based price to churn up motivation in a market of fence-sitting buyers.


7. Agent and Market Feedback. So, you came up with a list price that you thought was ‘just-right,’ but you’ve had little or no Open House traffic or private showings. Or you got lots of showings, but no offers - or nothing but lowballs, anyway. It’s not too late to get to the ‘just-right’ list price for your home; in fact, time is of the essence if you want to take advantage of the swelling levels of buyer interest and activity that has sprung this Spring. In many scenarios where a home lags on the market, the list price was set or maintained against the express advice of the listing agent, who urged the seller to list it lower. Or maybe you and your agent agreed on pricing early on, but they’ve been asking you for a price reduction for months now. If you trust your listing agent, and they have a strong background for getting homes in your area sold on today’s market, then it behooves you to at least take their pricing advice seriously, whether or not you follow it to the letter.

If you need more data before you make the understandably scary move of cutting your list price, ask your agent to ask for feedback from the brokers and agents who have shown the property or attended Open Houses - or even to run the property past their own colleagues at their office or marketing meetings. Once you have this input - listen to it and factor it in, along with the other factors. Sometimes it's some simple fix instead of taking a hit of $5,000 or more. Call me with any questions or for an honest opinion of the value of your home. (805) 907-5211