- What are the key drivers of California Housing market?
- Interest rates still at near record low levels
- Low inventory levels
- Steady job and income growth
- Equity wealth effect of repeat buyers
- Limited supply of housing
- Lifestyle appeal of California
- What is the current market psychology and how has it changed recently?
The real estate market in our community is certainly changing and returning to a more "normal" market. For the last 5 years, buyers and sellers knew it was a boom market and most Seller's got their way. Inventory was very low and listing time periods were very short. Multiple offers were the norm.
In 2006, the tables started to turn. Prices are still higher than 2005 due to limited supply. We are seeing inventory starting to build within certain price segments as interest rates continue to rise. Buyers are expecting prices to drop because of higher inventories while Sellers still want what their neighbor's received and more. The net result is longer time of market for those wanting to sell their home.
- Why does experience of an agent really matter?
For Sellers, experienced agents who have navigated and succeeded in various market conditions will help you anticipate opportunities and assess risk. Expertise in staging your home prior to listing it, promoting the property properly and pricing are absolutely critical in achieve the highest offer. Furthermore, having an expert negotiator and a hands-on service provider leading the transaction through escrow will increase your probability of a successful close, with the least amount of aggravation for the highest possible net profit.
For Buyers, experienced agents will help you prepare for the process up front so that when you do find your dream house, you are able to move decisively, quickly and achieve a successful outcome. They will help you prioritize your objectives and be the voice of reason when necessary. A good agent should have enough local expertise to help you form a clear picture of what life will be when you settle into the neighborhood and where the neighborhood may be headed in the future. Many times experience agents know when properties are coming on the market in advance of the competition giving you a leg up on other buyers. Finally, expert negotiators and a hands-on service provider will lead you through inspections and further negotiations with the Seller, anticipate problems before they arise, see that you get through escrow and closing with the least amount of aggravation and expense.
- I have two agents I like and who seem to be successful, how do I decide which one to use?
We suggest you consider a combination of quantitative and qualitative information. For example, how many homes has the agent bought and/or sold in your price range? What is their expertise in your target neighborhood? How much of their business is repeat and/or referral? Do you like them? Trust them? Will you look forward to their calls and have fun dealing with them? Will they have time for you? Are they interested in executing a transaction or building a relationship?
- Does the agent and the company make a difference?
It is critical that the agent you select has a track record of success. Then, you need to make sure that you trust the person and are comfortable with them. Finally, working with first class company will enhance the nature and value of your transaction. We started our careers with Coldwell Banker and continue to stay because they have unmatched resources, a global network of real estate professionals, comprehensive internet marketing, exceptional advertising plus local market expertise and market share. Their size gives them the ability to serve any number of buyers and seller's at the same time without compromising service.
- Why is pricing such a critical component of the overall marketing strategy?
Overpricing rarely works to a Seller's benefit:
- May signal to buyers that you are not really interested in selling
- Pricing your property higher than comparable listings may actually help sell another property more quickly than your own
- Overpricing may attract the wrong buyers
- Agents will miss showing your property to potentially qualified buyers because your home is out of their client's price range
- Fewer potentially qualified buyers will respond to your marketing because they are priced out of the market and thus you are your wasting your money
- How can I buy another house without first selling my existing home?
One option is to obtain a bridge loan in which cash is obtained from the equity of your existing home. Money is then drawn from a home equity line of credit (HELOC) and used as the down payment for your new purchase. Depending on your financial qualifications this program can be done without liquidation of investment and/or retirement accounts, which can be a huge advantage and convenience. In addition, there are usually no prepayment penalties.
- I am over 55 years old and I am considering downsizing, is there a way roll over my tax basis?
Propositions 60 and 90 provide a one-time property tax benefit by preventing tax reassessment for a senior citizen (age 55 years or older) when he/she sells their existing residence and then purchases a replacement residence within 2 years provide that the cost of the new property is the same or less than the original property. These propositions either apply to the principal owner(s) of the original residence or a spouse who resides with the seller who must also be 55 years of age at the time of sale.
- Why is the 1031 tax deferred exchange important to a real estate property investor?
The IRS 1031 tax code allows an investor in real estate to exchange from one investment property to another and defer taxes on the gain. Translated this means an IRS 1031 exchange is a rollover of equity of like properties, rather than an avoidance of tax. The investor continues to build wealth through real estate investment and maintains the hard earned equity. Any tax liability through inheritance, will be limited to the gain from the date of the inheritor's acquisition, not during the years of ownership.
- I am considering buying a duplex or 4-plex but it is occupied by tenants paying below market rents. What are my options?
The City of Los Angeles Housing Department has very specific rules for rent increases and grounds for eviction. Currently rents can be raised 4% per year for Section 8 housing according to the Rent Stabilization Board. In general a landlord cannot terminate any tenancy without cause. In our experience, the only cause that seems to work is when the landlord needs to use the unit for himself or a family member or for a resident manager when there is no other unit available for the manager. Once a "Declaration of Intent to Evict for Landlord Occupancy" is filed, relocation assistance is required. From July 1, 2006 to June 30, 2007, the relocation rate per unit is $3,450 or $8,550 depending on whether the tenant is qualified. For example, a qualified tenant could be defined as a person 62 years of age or older, disabled or handicapped, or tenant is residing with one or more minor children. Please call (866)557-RENT or check www.hacla.org for more information and forms.