Dave Knight Real Estate Group Podcast

Explaining what an ADU is and how a recent bill opens up housing options. Have you ever seen or heard the term ADU? It stands for accessory dwelling unit, and to help you better understand what they are, I'm coming to you from an ADU that's in the process of being built right now. If you search for ADUs on Google, you'll see that California has many options to let you build a second unit on your property. That can be helpful if you're looking to have family come stay with you, or it can serve as a source of income if you rent out the extra unit. SB-9, a bill that was recently passed in California, eliminated single-family zoning restrictions, opening up the way for duplexes and many other options. This change will ultimately allow for more housing options here in the area. If you're interested in building an ADU on your property or have any questions about them, don't hesitate to call or email me. I'd love to hear from you.

How can buyers write competitive offers without sacrificing their protections? If buyers remove all of their contingencies at the offer stage, what protections do they have throughout the rest of the process? This is an excellent question that is very relevant to the current market. Eliminating contingencies upfront can be risky, so today I'll share a few strategies to help make your offer safer while remaining aggressive: 1. Eliminate financial risk. Many lenders are getting their buyers fully underwritten before they even look at properties. That way, when you do find the right home, you can write an offer without a loan contingency. Getting fully underwritten early on in the process also helps speed up the closing and lets you compete with cash offers. “There are always ways to write an aggressive but safe offer.” 2. Investigate the property. Before you write the offer on the home and remove your contingencies, review the home's title report, disclosures, and other important documents. When we list a house, we give all the disclosures to the buyer upfront so that they have a good perspective on the home's potential defects. Some buyers will have a contractor, handyman, or physical inspector go through the property with them while they're writing the offer. 3. Look at the big-ticket items. What is the condition of the important areas like the roof, foundation, plumbing, electrical, and so on? Be sure to look into these key areas because they can contain unpleasant surprises. Inspecting these items helps to eliminate risk. You can also do a five-day physical contingency and cram the inspections into that time frame; if you discover major problems and want to walk away from the deal, you can. In the end, there are always ways to write an aggressive, attractive offer that still has protections in place for you. If you have any questions about contingencies or writing competitive offers on homes, don't hesitate to call or email us. We'd love to help you.

Here are three tips to resolve your property dispute before selling. I'm not sure what it is, but recently, I've talked with a ton of clients that are having boundary disputes with their neighbors. These can be emotionally charged issues, and they're essential to solve before you sell your home. That's why today I want to share a few tips to help you resolve your boundary issues: 1. Explore their story. Just the other day, I met with a client's neighbor and did nothing but sit there and listen to what he had to say. After hearing his side, I realized it didn't make much sense that he was so upset over such a small issue. However, when I asked him how long this had been going on, he told me it had been an issue for over a decade. Suddenly, the dispute made a lot more sense. It was a tiny problem, but this neighbor had a ton of time invested in it. Plus, he used a lot of keywords, such as fair and unfair. I realized that this dispute was no longer about the land for this neighbor; it was about getting his fair share. 2. Understand and validate them. Try to put yourself in their shoes. If you were in this person's position, how would you feel? If you can begin to see things from their side, you can begin to validate their feelings. Often, this is the first step toward reaching an agreement. It's still possible to buy a great home in this market. 3. Look for win-win situations. Property disputes often get heated because both parties feel like it's a zero-sum game. However, this is rarely the case. I'm not an attorney, but from a sales perspective, you should disclose your boundary dispute to your buyers. I would also encourage your buyers to speak with the neighbor and discuss the issue with them. Often, without the personal history, things can work out. Hopefully, you found today's topic helpful. If you have questions about today's topic or need a mediator in your property dispute, please call or email me. I am always willing to help.

Four ways buyers can make their offers stand out to sellers. In a market where many homes receive 20 or 30 offers, how can you make sure you win? In March, I was selling a house every other day, and as a result, I reviewed countless offers. I've noticed a few things that winning offers have in common, so I want to share my advice about them: 1. Follow the offer guidelines. Most properties will list specific guidelines in their instructions. Make sure you pay attention to these—the seller provided them for a reason. When I review offers, I have someone on my team highlight every mistake in red. If your offer has lots of red, there's a good chance my seller won't be interested. “If your offer isn't dependent on an appraisal, you can gain a big advantage.” 2. Make your highest offer upfront. In this market, you can't expect a counteroffer. Make your best deal immediately so that the seller knows you're serious. 3. Remove your loan and appraisal contingencies. Homes are appreciating so fast that they often don't appraise. This creates a lot of headaches, but if your offer has no appraisal contingency, you suddenly have a big advantage over the competition. Even if you need financing, many lenders can fully underwrite you before you make an offer. This way, you can remove your contingencies and compete with cash offers. 4. Consider removing your physical contingency. Recently, one of my sellers accepted an offer $50,000 below the highest competitor because it was a done deal. They didn't want a ton of inspections slowing down the process or putting things in jeopardy. Talk to your agent to see if this option makes sense for you. The key takeaway is that you need to find out what the seller is looking for and give it to them. If you need help looking for a home, please call or email me. I am always willing to talk!

What are 1031 exchanges, and how can they benefit you as a seller? Recently, a seller of ours received an offer that used 1031 exchange money. They didn't know what that meant, so I wanted to explain the concept today. A 1031 exchange is a tax-deferred exchange. When someone sells an investment property, they usually have to pay a capital gains tax on the sale. However, with a 1031 exchange, they can transfer that money into a similar property. They only have 45 days to identify three possible properties they'll do the 1031 exchange with; then they must buy one of those three after they sell their current property. As a seller, keep in mind that these 1031 buyers are very motivated. They have a timeline to find a property, and if they don't, they'll have to pay potentially hundreds of thousands in taxes. Because of that, these buyers don't have much negotiating power. Depending on how close they are to the deadline, these offers could almost be a done deal. Feel free to call or email us if you have any questions about 1031 exchanges or real estate in general. We'd love to hear from you.

Here's what the data says about the future of our housing market. As an agent, one of the most common questions I receive is, “What's happening in the real estate market?” Today I want to answer that question by taking a look at our current trends. If you check out the video at 0:23, you can see a chart from Keller Williams that shows average home prices going back to 1990. This chart has plenty of information, but I want you to pay special attention to the yellow trendline tracking average appreciation. **The data shows that, on average, homes appreciate by about 4% every year. ** If you follow the line, you can see that appreciation was consistently 4% in the 1990s, but it started increasing around 2004. We all know what happened next; the Great Recession hit, and houses began depreciating for a few years. The fascinating part is that we can see exactly how long it took our market to recover from this crash. Throughout the 2010s, home prices appreciated faster and faster until we caught up to the average of 4%. “It looks like we are in for another strong year of appreciation.” Now, we're well over the average. Last year, the average home appreciated by 17%! Because of our crazy appreciation the last few years, many people think our market is overinflated, but if we look at this trendline, we can see that we're just returning to normal from a period of stagnation. So what are the chief economists at Keller Williams projecting for the future? They're saying we could be in a state of high appreciation for one to five years. In other words, they're bullish on the real estate market, but anything could happen. What could put a stop to our crazy appreciation? Global conflicts, such as the war in Ukraine, could destabilize our market. Interest rates are also rising, so homes will become less affordable. However, if no outside force changes our market, it looks like we are in for another strong year of appreciation. If you have questions about today's topic or how you can navigate our real estate market, please call or email me. I am always willing to help. Make it a great day!

How did we manage to get over 100 offers on a single property? On just one listing in Whittier, California, I helped a client generate 121 different offers. Even in our red-hot market, that's a crazy amount of interest in just one home. So how did I manage it? Today I'll share my tips for getting more offers for your listings, but we also need to differentiate between the factors we can—and cannot—control. The real estate market is one of the things that we can't control. The reality of the market in Whittier is that the supply of homes is extremely low, while the demand is really high. There are hundreds, if not thousands, of people waiting to buy homes in the area. During the property's open house, the line of interested buyers went out the door and all the way down the sidewalk; it looked like people were waiting to get into Disneyland. “We received so many offers because of high demand, low supply, and the home's move-in-ready condition.” Now, there are also factors we could control. The previous owner had passed away, so the successor trustee came in to make decisions on behalf of the home. We worked with the trustee to get the home ready for sale. First, we held an estate sale to get everything out of the home. Then we gave all the walls a fresh coat of paint and deep cleaned the place to make it look and smell fresh. Finally, we staged the home. The combination of high demand, low supply, and the move-in-ready condition of the home ended up drawing over 100 offers. Though getting many offers does increase the amount a seller can get for their home, it also comes with issues. If the price is bid up too high, the home might not appraise for the amount on the accepted offer, and if all the highest bidders are using loans, you'll then have to work through the challenges of bridging the gap between the appraised value and the contract price. If you have any further questions about generating more offers on your listings or anything else to do with real estate, don't hesitate to reach out to me by phone or email. I'd love to speak with you.

Here's how we use emotion to make people act in today's market. How can you get the most money for your home? Sellers ask me this quite a bit, but sometimes I'm even asked this by buyers who are looking to move into a new home. To illustrate a point, I want to tell you a story about a cup of mine. I walked into the kitchen last week and saw a crack down the side of the cup. I wanted to try and salvage it, but when I told my wife, she looked at me like I was crazy. Throw it away, she said, and when I thought about it more, I had to admit we had plenty of other, less dangerous cups. “Logic makes people think, and emotion makes them act.” But I wanted to salvage the cup because it came from a client of mine, Rose, who would always serve me water in it when I talked with her. It also reminded me of the cups my grandma used to use. To me, it was a big deal; to my wife, it wasn't. Real estate can have similar emotions: emotional sellers, emotional buyers, and even emotional agents. For me, the cup was worth a lot. For my wife, it was worthless. It's important to remember that logic makes people think, but emotion makes people act. To sell a home for the most money, or buy a home for the least, we're trying to tap into those emotional buttons.  When we're buying a home, we're trying to think of what the seller wants out of the deal and how we can cause them to act on our offer. While selling a home, one way we do this is by setting the price as a strategy, not the destination. We want to price the home so a buyer sees more value in the home and becomes attached to it. So if you understand that emotion makes people act, you can position yourself to try and get people to act more on your offers or your listing. If you have any more questions about this, give us a call. We love helping people think through their strategy more.

Here's what's most crucial to getting your offer accepted in this market. How do you get an offer accepted in this competitive real estate market? With low supply and very high demand, buyers are currently finding it more difficult to win the home they want. The simplest answer, and what often gets an offer accepted over others, is having the highest price. Most sellers want to get the highest price for the sale of their homes.  Besides that, the key things that get offers accepted are the terms. To illustrate this, have you ever gone to a restaurant and ordered fish, but they brought you a hamburger? If that happened, you would say they weren't listening to what you wanted, this isn't what you ordered, and you'd like the salmon. Putting an offer together is similar because you need to find out what the seller truly wants and needs.  “Besides price, the key things that get offers accepted are the terms.” What terms do they want, how quick of an escrow period do they want, do they need a rent-back? Are they looking for a tight contingency period, or are they looking for an offer that has no appraisal contingency? It doesn't matter what you think they want— what they truly want is what matters. When you're neck and neck in price with another offer, if yours has exactly what the seller wants, it's likely to get accepted.  We love writing offers for buyers and winning them the homes they love. So if you're considering buying or have any questions, call or visit our website. We would be happy to help you.

Here's some advice about when to start packing when you sell your home. When a home seller accepts an offer on their home, they typically get excited and start packing their boxes in anticipation of their move. However, it's very important to not pack them too early and refrain from destaging the home until all contingencies have been removed. If you're packing up all your boxes and basically tearing apart the presentation that the buyer saw and their agent sees, they're going to realize that they're in a stronger position of power because you have been mentally moving forward with your move.  “Without proper guidance, your transaction could be in jeopardy.” Keep the property as is until all contingencies are removed. Once the buyer has done that, then you can actually start packing up your boxes, destaging, and having work done on the property. Without proper guidance, this could put a hiccup in your transaction. When you hire a Realtor, you're hiring a professional negotiator. When a buyer's Realtor sees that you are mentally moving forward, it gives them a better opportunity to ask for more in repairs or further price reductions and probably get them. If you have any questions for me about selling your home or real estate in general, don't hesitate to reach out via phone or email. I look forward to hearing from you soon.

Here’s when accepting a contingent offer might actually benefit you. Why on earth would a seller—especially in a low-inventory seller’s market like this —accept a contingent offer from a buyer? In most cases, it’s not a good idea to do so. There’s just too much risk involved, especially when there are so many other options. Most sellers just opt for the offer with the fewest challenges. In certain cases, though, it might be better for you to accept a contingent offer.  “This high level of motivation can lead to a simple, clean transaction with a buyer who just needs to find a place to live.” For example, let’s say the buyer is in escrow on their current home, meaning the contract is signed for someone to buy it and all contingencies are removed. Now they either have to find a new place to move into or wind up homeless. Furthermore, if they don’t find a new home, they risk losing the buyer for their current home. What’s nice about these buyers is that they already have their home sold and are getting pushed out of it. They’re desperate to find a new place. If they’re interested in your home, that’s a good sign that they’re highly motivated to buy it. How else does this benefit you as a seller? Once you accept an offer, in most cases the buyer will request inspections and repairs. However, if you know the buyer is highly motivated and doesn’t have enough time to find another home, you’ll likely be able to concede nothing in terms of repairs during the negotiations. This high level of motivation can lead to a simple, clean transaction with a buyer who just needs to find a place to live. You might even be able to sell your home as is.  Of course, you’ll have to make certain that all contingencies are removed from their home sale, but if that’s the case, the bottom line is that it can be very advantageous for you to accept a contingent offer.  As always, if you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’m happy to help.

Here are the details of negotiations when rent-back is a factor. Today’s question comes from the selling side: “Can we get a rent-back after the close of escrow?” The answer to that question is yes, you can always ask for a rent-back. First, let’s discuss what a rent-back is. Once the closing is completed, you can ask for the change of possession to be three days later, 15 days later, three months later, etc. What’s nice about that for sellers is, first of all, it’s easier in this market because demand is high and supply is low. Sellers have a lot more control over what they can negotiate and picking the best buyers. If you have two identical buyers, and one is willing to give you a free rent-back for a month, that can be nice; once you close escrow, the deal’s done, the stress of it is over, and you can start to focus on boxing up all your stuff and moving out within that month. Then the money gets wired to your account. It really helps solidify the closing and then you can begin the process of moving. “You can always ask for a rent-back.” We’re often asked whether we can guarantee a rent-back for our clients.  It always comes back to what you want. For example, let’s say that there are ten offers on a place, the highest offer is $50,000 more than the next best offer, and the lower offer is willing to give a three-month rent-back. The highest offer says they want you out at the close of escrow. That’s where you have to decide if fifty thousand dollars less is worth the buyer giving you a rent-back. You could also talk to that second buyer and offer to come up in price and we’ll work with you. It really is all about negotiation. When you work with us, we’ll lay out the different options and present them to you. As a seller, you have the final say. Do you have that rent-back, and do the numbers make sense? A lot of times sellers will say that it’s not worth it since they can be out quickly and want to see if they can get half the amount. It always depends on what the buyers are willing to do in this market. Hopefully, this helps answer your question about rent-backs. Feel free to contact us if you have any additional questions. We are never too busy to help you.

Sellers: Here’s what to look for in an offer besides price. As a home seller, price is obviously a crucial factor in any offer you accept. However, there are three other things you should look for in an offer to truly know its strength: 1. Time periods. How long does the buyer need to handle the physical inspection, appraisal, and loan contingencies? Specifically, you want the physical contingency to be as tight as possible. This is the time where the buyer is ‘dating’ the property—they’re investigating it, seeing what problems it has, and making a commitment to become ‘engaged’ to it. Once they’re ‘engaged’ to the property, they’ll remove this contingency and move forward with the ‘marriage’ (i.e., closing). Once they do this, it’s just a matter of getting the financing together, which brings me to my second point… “You want the physical contingency to be as tight as possible.” 2. Financing. This is especially important if your property will likely go over its appraised value, because your buyer will need extra cash. You need to make certain they have the money to do what they want to do and have the ability to get a loan for the additional amount that’s needed for the property to close. Their approval needs to be valid, and there can’t be any issues.    3. Closing costs. This can include termite work, the allocation of costs for escrow and title, etc. Sometimes the closing costs can mean the difference between two offers that look similar, but one is slightly better by up to $5,000 due to the way its closing costs are structured.  If you’d like to know more about choosing the best offer for your home or have any real estate questions at all, don’t hesitate to reach out to me. I look forward to hearing from you. Make it a great day!

Here’s a quick tip to help sellers avoid a low appraisal. How can you avoid a low appraisal when selling your home? This is a common question in today’s market because home prices continue to rise, and we’ve seen properties selling for more than their appraised values. In fact, just this year, we had one property sell for $250,000 more than the appraised value and a townhouse sell for $50,000 over the appraised value. “Find a buyer who is willing to waive the appraisal contingency.” Low appraisals often occur when there’s a high demand for properties. When an offer comes in, you need to look at the financing of all the offers. Look for the buyers who have extra cash they could use to cover the difference between the contract price and the appraised value. Be careful, though, because lenders won’t allow buyers to make up the difference if the buyer doesn’t have the extra cash. If the buyer can do it, however, then they could be swayed to remove the appraisal contingency. That would eliminate a potential exit strategy for them and a reason to cancel the contract if the property doesn’t appraise. If you have any questions or would like further tips for buying and selling in our market, don’t hesitate to reach out to me. I’d love to help.

Here’s why refinancing in today’s market is such a great idea. If you’re considering a refinance of your home, you’re not alone. I’ve already refinanced twice in the past year.  Why? One reason is that the conforming limit has increased from $756,000 to $822,000. If your home is between that value, refinancing to a conforming rate may be in your best interest.  Maybe your home’s value is at $900,000, but you want to buy down your debt in order to drop your rate drastically. I was actually able to save $800 per month on my last refinance with this method. “Refinancing to a conforming rate may be in your best interest.” It’s a great time to look at refinancing,  but if you have any questions for me about the process or your specific situation, I’d be happy to answer them or connect you to an expert lender who can.  If you have any other questions, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

Make sure to file for your homeowners exemption if you haven’t yet. Today I have a quick tip for reducing your property taxes this year. A lot of new homeowners are unaware of the homeowners exemption, which will save you approximately $70 per year on your property taxes. If you have bought a home and it is your primary residence, you can apply. All you need to do is fill out this form, send it in, and start saving. If you have any questions for me about the homeowners exemption or real estate in general, don’t hesitate to reach out via phone or email. I look forward to hearing from you.  

You can brace and bolt your house almost for free—here’s how. Last year, a neighbor told us about the Earthquake Brace + Bolt program (EBB) that would allow us to brace and bolt our house for minimal cost. To take advantage, here’s what you need to do: 1. Apply by the program’s deadline, March 19. 2. If you’re accepted, you can have different contractors come out to your home to give you bids. 3. Submit your bids to the program. 4. As long as everything is approved, you get to work with the contractor of your choice. Overall, it was a pleasant process that was over in just one day. Now our home is braced and bolted against earthquakes for just a couple hundred dollars. “Make sure you apply as soon as possible.” Make sure you apply as soon as possible and tell anyone you know who could benefit from the  Earthquake Brace + Bolt program how to do it themselves. If you have any questions, don’t hesitate to reach out to us. We’d love to be a resource for you.  

Here’s why it behooves buyers to call sooner than later in today’s market. Oftentimes we hear from people who say they’re looking to buy in four months, so they’ll just plan to meet with us then; while that’s totally fine (we can meet with people whenever), we’ve found that the more prepared you are for the future purchase, the better.  To work with us and have us help you buy, it doesn’t cost you anything. All of our services to help you prepare for the purchase are free. On several occasions, we had clients who assumed they were ready to buy but discovered they had a credit issue, or some additional documentation was needed for their pre-approval that took a while to gather.  Even if you don’t plan on buying for some months, it’s good to meet with us now so we can get you connected with a lender; doing so will help you figure out approximately what your purchase price is—you may be surprised at what you’re able to afford, or you may be left saying, “Wow, I won’t be able to afford what I thought I would.”  “Meet with us now so we can get you connected with a lender.” For the latter case, you’ll have ample time to come up with creative solutions. For example, you could acquire a loan with a family as a co-signer so you can maximize your purchase price.  Call us and set up a time to meet with us and we’ll help you look through everything. We’ll tailor our solutions to your unique situation and prepare you fully so that when it comes time to act, there will be no surprises.  As the old adage goes, “Those who fail to prepare, prepare to fail.” Reach out at any time, we love hearing from you and helping however we can.  

Some cash homebuyers make their money by preying on desperate sellers. Here’s how they do it and how you can avoid it. In our last video, we talked about hassle-free cash buyers and the role they play in our market. We’re continuing that discussion today by focusing on a common scenario that we’ve been seeing with these investors. What happens is that an investor will send out a bunch of letters using tax records and extend a hassle-free cash offer to a homeowner. When a homeowner reaches out to one of these investors, it’s usually out of desperation.  Although their initial offer may appear pretty close to market value, after the inspection they’ll come back and say there is $100,000 worth of work or more and reduce their offer by that amount. Here’s the problem: At that time, the buyer is in control. They’ve wasted your time, your home has been off the market, and you’re even more desperate to sell the home. Whether the report is accurate or not, you have to disclose it to anyone you work with in the future. Not only are you in a pinch financially, but you have an additional burden of responsibility. In many cases, sellers decide the hassle isn’t worth it and just decide to sell for that low price.  “Once you accept their initial offer, the buyer is now in control.” I’ve seen this situation happen often, so it just enhances the fact that you need to work with someone you trust as a homebuyer. They’ll ensure that you don’t get stuck in a situation like this. If you currently find yourself stuck in a situation like this, reach out to me today and I’ll see what I can do to help. If you have any other real estate questions for me, I’m happy to answer them. Just reach out via phone or email and I’ll get back to you soon. I’m never too busy to be a resource for you.

If you get a hassle-free cash offer to buy your home in the mail, here’s what you need to know about that offer. If you’ve received a letter from someone asking to buy your house hassle-free with just cash, what do you do?  First of all, ask yourself: What are your goals? Oftentimes, a home seller’s primary goal is to sell for as much money as possible. Another common goal is to sell hassle-free. When wholesalers write you a letter inquiring about your intentions to sell, it might look like it’s addressed specifically to you, but in reality, they’ve written similar letters to thousands of other homeowners. If you call back, they’ll know you’re motivated to sell, and their aim is to get the contract as low as possible because they want to take advantage of the fact that you want a hassle-free sale.  Once they get that binding contract, they’ll try to sell it. I’ve seen contracts sell for as much as $100,000, and there’s no risk for them in this situation. Many times, they won’t even abide by the contract and won’t turn in their earnest money deposit until they find someone else to invest their money into the deal. They have no skin in the game. They make money by selling to another wholesaler for less than market value.  “There are easier ways to have a hassle-free transaction while netting the most money possible.” The challenge of this type of transaction is that you as the homeowner don’t make as much money for yourself.  There are easier ways to have a hassle-free transaction while netting the most money possible. Realtors have a fiduciary responsibility to make sure our clients make the best decisions for themselves so that they have a smooth transaction and/or sell for the highest price.  If you’re thinking of selling and are interested in how I can help you do this, don’t hesitate to call me. I’d love to speak with you.

Even if you’re not looking for a home in our market, we can connect you with someone who can help out. Here’s how. Today’s question comes from Linda, who wants to know, “Dave, can you help with out-of-area properties?” Wendy asked us a similar question recently, too. The answer is yes, we can help. Keller Williams Realty International allows us to have access all over the world. No matter if you’re looking to buy or sell a home in Boise, Idaho, or Frankfurt, Germany, we can pinpoint the area you’re looking in and find the top agents in those markets. Whether it’s a residential or commercial property, we can use this strategy to help you out. “We can quickly screen agents for you that check all the boxes.” People want three things in a Realtor: Someone they can trust, someone that cares about them, and someone that can get the job done. We can quickly screen the agents in a certain area that will check all three boxes.  This service doesn’t cost you anything. We’re simply glad to connect you to someone who can care for you if you’re in need. If you have any questions for me, don’t hesitate to reach out via phone or email today. I look forward to hearing from you.

Today we’re explaining Delaware statutory trusts and how you could benefit from them. We recently had a client come to us asking how they could help their parents with their rental property because they need the income that’s coming from that property, but they’re tired of the hassles. We had a great solution for them, and we’re sharing it with you today. I’ll use the exact numbers from this example. The house is worth just under $1 million; they bought it for around $300,000. If they were to sell it today and they put that money in the bank, they would have a substantial amount in capital gains. However, they would lose the continued income that’s working for them. One of the challenges, though, is that they’re tired of the headaches—it’s not earning them that much money. It’s getting about 2.7% on return per year, which isn’t a great return.  A great option for people in similar situations is a Delaware statutory trust. A Delaware statutory trust (DST) is a legally recognized trust seeking to defer capital gains taxes, and the truster is entitled to the beneficial interest in the trust property.  “If you want a referral for a company that does DSTs we’re glad to connect you to someone.” The companies that do this basically pull together people who have the same needs, and they all do a 1031 exchange. So in this example, let’s say they sell the home for $960,000, they will net approximately $900,000 after fees, no debt. All of that goes into a Delaware statutory trust—they don’t pay any capital gains, because that’s deferred through the 1031 exchange. Then they shift $900,000 over into the DST, the group pools everyone’s money together, and they buy something like a 50-unit apartment building, and they go into that together. Whoever’s managing the money will give a return, perhaps 4% to 7%, and that’s monthly income for the people who previously owned the investment property. So they’ve lost all the hassles; the tenants aren’t calling anymore with issues.  Often that money can be almost tax-free because of depreciation. This is an excellent option to consider. If you want a referral for a company that does DSTs we’re glad to connect you to someone. If you, your parents, or grandparents are tired of dealing with a rental property this is a fantastic option to examine.  Feel free to give us a call or send us an email, we’ll look at your situation and answer any questions you may have. We would love to help you!

How do you hold title on your property? If you don’t know, you need to find out. Let me start my explanation with a story: I once had a dear client come to me; her husband had recently passed away, and she was ready to sell her house so she could move on and be with her children. We had gotten all the paperwork done and I had the title company review the file to make certain there weren’t going to be any problems or challenges. But sure enough, there was a challenge: According to the title company, the recorder would not record the property because of the way she held title with her husband was not the proper way to do so. Because of that, half of the property was likely going to need to go to probate. “Are you aware of how you or your loved ones hold title on a property?” Now, there was another option, but she needed to hire an attorney to come in and help resolve the problem. She threw around $5,000 down the drain just to hire the attorney, and it wasn’t even a sure thing that the attorney’s help would solve her issue. Since the property might have needed to go to probate, that would constitute a long process (about nine months) before she could sell it. And once she could sell it, she’d net less money because of the probate fees. So are you aware of how you or your loved ones hold title on a property? Double-check to make certain that they’re holding title in the proper way. If you’d like to know about how to do that, reach out to me. We can have the title company look over everything and offer their advice about what should be done differently, especially if the property isn’t in a trust—commonly when people refinance, they forget to put the property back in the trust. And if you have any other questions about real estate, you’re always invited to contact us. We’d love to hear from you.

It’s a great time to refinance, and today we’ll explain why. Interest rates are still incredibly low, and this has led many people to refinance their homes. If you haven’t already thought about doing so, yourself, now may be the time to consider it. Refinancing could help you save a significant amount of money on your monthly payments over time. But low rates won’t last forever, so we highly encourage you to connect with a lender soon to find out whether this move could be right for you or one of your loved ones. If you need a recommendation, we’d be happy to provide one. Also, if you do decide to refinance, make sure to put the property back into your trust when you’re finished. As always, if you have any other questions or would like more information, feel free to reach out. We look forward to hearing from you soon.

The ability to get a spot approval for an FHA loan will help condo buyers and sellers alike. Few people know about FHA spot approvals, but it’s a resource that can open up many new options for potential condo buyers. If you own a condo or are looking to buy one, this type of approval likely affects you. The FHA loan was created for people who have bad credit or little money for a down payment. With this loan, people can purchase a house or condo for as little as 3.5% down.  “As of October, we can do spot approvals for the FHA loan.” In the past, certain condo complexes were already FHA-approved, and people with FHA loans could only choose from these condos. Many condos were not FHA-approved, however, and this greatly limited the options for potential buyers. The good news is that, as of October, we can do spot approvals for the FHA loan. If you’re interested in a certain complex, you can receive a spot approval and then be able to get a loan for your home. This opens up many more options to choose from when looking for the perfect condo. This change is beneficial for sellers as well, as it frees up buyers who used to be locked into FHA-approved complexes. It increases demand and can help unsold condos find new owners.  The biggest downside is that the FHA loan does have mortgage insurance tied into it. If you have any questions about mortgage insurance or would like more information about the FHA loan, feel free to reach out to us. We look forward to hearing from you soon.   

Probate sales are often touted as a good deal, but is it risky to buy this kind of property? Before we get into this, let’s first define what probate is.  In short, probate is the process by which the court determines how to appropriately distribute your assets after death. But, when buying this type of property, it’s important to understand the difference between the two types of probate sale: full-authority probate sales and limited-authority probate sales.  In a full-authority probate sale, the administrator has complete power to sell the property—and, unless court confirmation is required, this type of transaction is generally very straightforward. However, while full-authority probate sales are very similar to standard real estate transactions, a probate purchase agreement does carry some distinct terms and conditions. Per these conditions, the details of your offer will be relayed to the decedent’s beneficiaries via a notice of proposed action. Then, so long as none of the beneficiaries objects, the sale will proceed as normal.  “Probate properties can be a great opportunity for today’s homebuyers, so long as you understand the process that comes along with such a transaction.” In a limited-authority probate sale, the property’s administrator is required to follow a series of court-mandated steps. The court will also provide guidance on marketing, pricing, negotiation, and other aspects of the process.  The bottom line is that probate properties can be a great opportunity for today’s homebuyers, so long as you understand the process that comes along with such a transaction. And since so many people assume a probate sale is overly complicated, buyers who take advantage of this niche will likely face less competition.  If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

If you need to make a contingent offer to buy your next home, now’s the time to do so. Can you purchase a new home contingent on selling your current one?  If you would’ve asked me a year and a half ago, the answer would’ve been “probably not”. Back then, we had very little inventory and high demand, which meant sellers were getting well-financed offers with quick closings. They also had their pick between which offer to accept.  It’s hard to get a contingent offer accepted in that type of market, but the market has cooled off since then. Supply has slightly increased, while demand has slightly decreased. This means you have a great opportunity to make a contingent offer on homes that have sat on the market for longer periods. If the seller of one of these homes has no other offers, yours becomes quite appealing.  I recently went through this situation with a couple of clients of mine named Ryan and Monica. They were looking to move from a townhouse into a single-family home, and we were able to get an offer for a single-family home accepted that was contingent on their townhouse selling first. If they can’t sell their current home for whatever reason, we can cancel the transaction and get their earnest money deposit back.  “Making this type of transaction work depends on what the market is doing, and now is a great time for buyers in this situation.” Thus, there are four transactions lined up, starting with the sale of the original property. We were able to work out a deal where they will sell their townhouse and then live as tenants in that townhouse for 14 days after closing. During that time, they’ll close on the next home while the current owners move out. They’ll be able to transition from one property to the next without having put their belongings into storage for an extended period.  The bottom line is, making this type of transaction work depends on what the market is doing, and now is a great time for buyers in this situation.  If you have any more questions about this topic or our market in general, don’t hesitate to reach out to me. I’d love to help you.  

Many buyers aren’t sure if getting a home warranty is worth it, so today we’ll get to the bottom of this question. Buyers often ask whether they should get a home warranty when purchasing a new property. Actually, yes—getting a home warranty is generally a good idea, especially given that sellers typically pay for a one-year policy at closing. And since a comprehensive policy tends to cost about $550 (or more if the home comes with a pool or some similar amenity), this is a great deal.  So unless the buyer is specifically opposed to doing so, our team almost always includes this request in their sales contract.  But why is a home warranty important? Well, let’s say your refrigerator breaks down after a few months of living in your new home. Would you rather pay to fix, and possibly replace, it yourself, or would you rather the expense be covered by a home warranty policy? The answer is a given.  Buying a home is expensive enough as it is—a home warranty helps ensure that living in the home isn’t quite as pricey.  “If you’re buying a new home, you should absolutely ask the seller to pay for a home warranty.” Home warranty companies require policyholders to work with the contractors they provide. You don’t have the option of working with a contractor of your choice. Of course, when you work with our team, we will only refer you to the very best professionals. If you ever have a bad experience, please let us know. We would be happy to advocate for you and your needs and to make sure that you get the level of service you deserve.  The bottom line is that if you’re buying a new home, you should absolutely ask the seller to pay for a home warranty.  If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon. 

We work with our fair share of elderly homeowners who are thinking about downsizing or moving closer to family, at which point we introduce them to Props 60 and 90.  With this tax initiative, homeowners who are 55 years old or above are able to transfer their current property tax base over to a new home of equal or lesser value under the condition that they stay within the confines of their county and that the home is their primary residence. These are the stipulations spelled out by Prop 60.  Through an application process, Prop 90 affords you the opportunity to do an inter-county tax base transfer between cooperating counties. One scenario might be that you’re moving from LA County to Riverside County or vice versa.      For example, say you bought a home for $100,000 several years ago and your home is now valued at $800,000. You’re now looking to downsize and you’d like to make an intra-county home purchase. Thanks to Props 60 and 90, that same tax base you’ve had on your once-$100,000 property could be applied to your new home.    “All in all, this is a wonderful option for aging homeowners who would like to downsize or move closer to their loved ones while keeping their tax base.” This carries a lot of benefit for older homeowners because you won’t have to pay more in property taxes based on a new assessment.  An important point to consider is that the participating counties in Prop 90 are subject to change over time, so we always encourage homeowners to research the counties that allow or disallow this kind of move.  All in all, this is a wonderful option for aging homeowners who would like to downsize or move closer to their loved ones while keeping their tax base. A lot of people we speak with are good candidates for this resource and aren’t aware of it, so it’s important to have information like this at your disposal before making such a major life decision.   For more information about Props 60 and Prop 90, check out Assessor.LACounty.gov.  If you have any further questions for us, we’d be happy to provide you more information on this particular topic. We’d be happy to assist you with your real estate needs!  

If you’re thinking about refinancing your mortgage, you’re in luck. Today I’m answering some common questions about the topic. Today I’m back to answer a few common questions that homeowners have about refinancing. First, Dan recently asked me, “If I refinance my home, is it going to increase my property taxes?” The simple answer is no. When you refinance your home, it does not reassess your home or increase your property taxes. If it did, it wouldn’t be advantageous to do a refinance because the jump in property taxes would offset the savings from the refinance. The second question comes from a lot of people who believe their home is in a trust, only to find out that it’s not. Why is their home no longer in a trust? What we’ve found is that sometimes when you refinance, the property isn’t always put back in a trust.  If you or your parents have refinanced in the past after placing a property in a trust, double check to make sure that the title is held properly. One simple oversight could be a big headache down the road if it’s not caught. “Sometimes when you refinance, the property isn’t always put back in a trust.” If you have any questions about refinancing, trusts, or anything else related to real estate, don’t hesitate to reach out and give us a call or send us an email.. We look forward to hearing from you soon.

About once a day, someone will reach out to me and ask for a referral. When people ask for a referral, there are three implied questions within that request: Can I trust this person? Does this person care? Can they help me? People want to know that the person they’re thinking of working with is trustworthy, compassionate, and competent. Many people will attempt to find referrals online through platforms like Yelp!, but working directly through a person is generally much more effective. When you get a referral directly from someone you already know, you’re getting a much more solid recommendation than you could ever find through an online review. “People want to know that the person they’re thinking of working with is trustworthy, compassionate, and competent.” When people ask me to recommend a plumber, electrician, lender, or some other vendor, they can be confident in my referral because I’ve worked with the person or company I’m recommending myself—often multiple times. They know that I care, and can, therefore, feel safe in assuming that the professional I’m referring them to will too.  If you have any other questions, would like more information, or would like me to refer you to someone from my network of local vendors, I would be happy to help. Please give me a call or send me an email. I look forward to hearing from you soon.

What exactly is included in the sale of a home? Oftentimes, whenever buyers see that a home’s MLS description says it comes with a washer, dryer, refrigerator, ect., they assume that those items are included with the home when they buy it. That’s not true—that just means the seller is offering them as part of the sale. If you want these items to be included in your purchase, you must specify that in your offer. If you don’t, they won’t be included—no matter what it says in the home’s MLS description. On the flip side, sellers commonly forget to exclude items like curtains and chandeliers from their sale. If you forget to exclude these items, that means when the buyer writes their offer, they don’t have to specify that they want them included—they’ll be considered real property. “We provide our sellers with a checklist of items so they can specify what they want included and excluded in their sale before we accept an offer.” This is why, on our team, we provide our sellers with a checklist of items so they can specify what they want included and excluded in their sale before we accept an offer. If you have any more questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d be happy to help you.

It’s hard to believe that 2018 is almost over. As the holidays are fast approaching, we want to take a moment to wish you and your family a warm and safe holiday season. It’s the season of giving, and we’d like to give you some insight into fun events going on in the area. Check out the list below to see our recommendations for ways to spend the season: Enchanted: Forest of Light at Descanso Gardens - Now-January 6, 2019, 5:30 to 10:00 pm Holiday Ice Rink Pershing Square - Now until January 21st, 2019 LA Zoo Lights and Reindeer Romp - Now- January 6, 2019, between 6:00 pm and 10:00 pm. “We want to take time out to wish you and your family a warm and safe holiday season.” 26th Annual Festival of Lights- Now through January 5th Queen Mary Christmas - November 23, 2018, through January 6, 2019 Grand Park’s Winter Glow - December 1st to December 26th Rose Parade Float Decorating & Viewing - December 28th - 30thRose Parade - Tuesday, January 1st Sierra Madre Candlelight Walk - December 23, 2018, 6:00 pm - 8:00 pm Teddy Bear Tea in the Lobby Lounge at The Langham in Huntington, December 1, 2, 8, 9, 15-23, 10:00 a.m. and 1:30 p.m. 2018 Holiday Party at Candlelight Pavilion, Claremont - Now through December 24th, 6:00-9:00pm LA Arboretum Lantern Festival - Now through January 6th, 2019 - 5:30-10:00pm For more events, check out this link! If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon. Happy Holidays!

Here at the Dave Knight Real Estate Team, we love helping people buy and sell homes. I also love saving money, and today’s topic will be tips about how you can save money yourself if you’ve been thinking about retrofitting your home to prepare it for an earthquake. The credit for this tip goe to my neighbor Jim, who told me about the **EBB Program, which stands for ‘Earthquake Brace + Bolt.’** With this program, you can receive up to a $3,000 credit to help with the cost of bracing and bolting your home during the retrofitting process if you’re in an area where earthquakes are a serious threat. “This program can help take out a large chunk of the cost of retrofitting for you.” In order to take advantage, click here to visit the Earthquake Brace + Bolt website and apply for the program. Your home will need to meet certain criteria, such as being in the proper zip code, not being located on a hillside, and the home must be your primary residence. Once you apply, it’s essentially a lottery system that will give certain people that $3,000 credit. Now, the cost of retrofitting your home this way will be somewhere between $3,000 and $7,000, according to the website, so this credit will take out a large chunk of that expense for you. If your home isn’t braced or bolted in preparation for an earthquake, it’s a good idea to start thinking about that now. It could potentially save you money down the road, should an earthquake strike (knock on wood). For any further questions about this program or about buying or selling a home, you’re always encouraged to reach out to us. We’d love to speak with you.

Today I want to talk to you about a really powerful lesson that I learned from Matt Townsend. You may have heard of Matt Townsend, but in case you haven’t, he is the author of “Starved Stuff: Feeding the 7 Basic Needs of Healthy Relationships,” as well as the person who helps train Keller Williams agents. He has even worked with fellow author Steven Covey, who penned “The 7 Habits of Highly Effective People.” As a Realtor, I sell houses while also acting as a psychologist, therapist, or counselor. We have to be trained and equipped with how to work with people, and the model I’m about to share with you helps with this. No matter who you are, you interact with people; we all have some type of relationship, whether it be a spouse, partner, child, or co-worker. This model, although powerful, is also very simple. When somebody gives off a vital sign with heightened emotions of anger, sadness, or embarrassment, you can detect it. After you detect these emotions, there are two things you can do: run from it or attack it and smother it. Matt says that the first thing you should do is mention that they seem embarrassed, or angry, and then let them speak. You acknowledge it and then unpack and explore it—seek to understand what’s going on. Let them tell you their story and during that time don’t object or get argumentative. Also, don’t deny it. Instead, find out why that emotion exists and then paraphrase it back to them. All things lead to what Townsend calls “Starved Stuff,” which are the issues that are the real issues. He says that it usually comes down to an issue of safety, trust, respect, validation, encouragement, or dedication. This is where we want to focus because this is where the issue is. “In real estate, one of the most important lessons that I’ve learned is that people want to be understood.” As you’re talking through this, if the emotions do get heightened again, you start back over. Once you get past the “Starved Stuff,” you can move on to lifting the conversation. This is where you apologize, accept, affirm, acknowledge, act, or adapt and retell the story. You will then get to change the problem and the relationship gets pulled back together and people begin to feel understood again. In real estate, one of the most important lessons that I’ve learned is that people want to be understood. Whether a person is upset or argumentative, they want someone to dig down and genuinely listen. I think what I love about this model is that it gives you a good template for all of your relationships, whether they’re personal or professional. You will be able to feel those heightened emotions, get the vital signs that someone is angry, embarrassed, hurt, etc., and then explore them so that the person is able to open up and you can understand why they feel this way. Then, you can lift the conversation and lift them up. If you want to learn more about this and the “Starved Stuff,” you should definitely read Townsend’s book “Starved Stuff: Feeding the 7 Basic Needs of Healthy Relationships.” If you have any questions for me, please feel free to reach out to me. I look forward to speaking with you soon.

Sellers often ask whether or not they have to do an inspection before they sell their home. This is a great question, to which the general answer is no. As a seller, you don’t have to discover future or current problems; it is the responsibility of the buyer to hire an inspector and discover existing problems. The seller is responsible for disclosing problems they’re aware of, like a persistent issue with the plumbing or something similar. “Generally speaking, sellers aren’t required to do inspections on their own homes when they sell, though some cities have those requirements.” However, some cities like Pasadena have what is called an occupancy inspection, which requires sellers to do an inspection of their home when selling. The purpose of the program is to maintain the quality of housing in Pasadena. Mind you, not all parts of Pasadena have this requirement—Chapman Woods, for example, which is under county jurisdiction, doesn’t have this requirement. Where required, a city inspector will come out to your home to check for certain things, like permits (if any) being pulled properly, peeling paint, or other structural/legal issues. So generally speaking, sellers aren’t required to do inspections on their own homes when they sell, though some cities have those requirements. If you are curious about your area’s requirements or are thinking about selling your home, reach out to us. We can help you figure out what, if anything, you have to do regarding inspections before you list your home on the market. We hope to hear from you soon!

Today I want to pass on some information for those of you whose properties were damaged by the recent wildfires. If your property wasn’t damaged, you may have friends or family that could benefit from this information. The county assessor recently sent an email to most of us Realtors with information about what you can do if your property was damaged. In the email, it says that any taxpayer whose property has been severely damaged or destroyed by the recent wildfires may be eligible for disaster relief on their annual property tax bills. In some cases, this includes refunds on taxes already paid. “You may qualify for a refund for taxes already paid as well as lower annual tax bills until the property is repaired or rebuilt.” The link is **here **for those who may be eligible and need to file a claim for misfortune and calamity relief. This must be done within one year and you must have sustained a minimum of $10,000 in property damage. You may qualify for a refund for taxes already paid as well as lower annual tax bills until the property is repaired or rebuilt. I know that there is somebody out there who you know who has been affected by the wildfires, so please feel free to pass this information on to them. Hopefully it will help them recover some of their losses. If you have any questions, please feel free to reach out to me. I would be happy to help in any way that I can.

Today I’m here to answer two questions that often come up when people are talking about condos and townhouses. The first question is, “What’s the difference between a condo and a townhouse?” This is the best way to look at it. A townhouse is just going to share walls with somebody else. It may be two stories or three stories, but there will be nobody living above you or below you. “Condos in this area are generally fine with pets.” A condo, on the other hand, will have shared walls and a shared floor and/or ceiling. Some condos are part of an association where they don’t share a wall or ceiling, but the fact that they are one-story buildings sets them apart. The second question is, “Are there pet restrictions in a condo?” We hear this question a lot from people who are looking to move into a condo from a house. For the most part, we find that condos in this area are generally fine with pets. However, there are certain condos with pet restrictions. There might be a 35 lb weight limit for a dog, for example. It’s best to let your Realtor know about that before you start looking so that they can make sure your furry friend can tag along. If you have any additional questions about condos, townhomes, or anything else relating to the real estate market, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

I’m here today to answer the question, “Can I sell my home as-is?” Long answer short: You can. However, there is a common misunderstanding you should know about. Here’s a hypothetical situation you could run into: Let’s say there’s a Brian from Illinois who calls me and says, “Hey Dave, I’m the successor trustee of a property. My parents have passed away in Southern California and their property has a lot of wear and tear on it. I’m out of state and don’t want to deal with it, so I want to sell it as-is.” “You have to disclose what you know.” Brian is well within his rights to do this, but there is a common misunderstanding we need to clear up. Most people think that they don’t have to disclose material facts that affect the value or desirability, but that’s not true. Even if you’re a successor trustee or a bank, you’re going to have to fill out disclosures about anything that is wrong with the property that you know about. It is your responsibility to disclose any material facts that could affect the desirability of any property. You may have a lot of knowledge or you may not have any. It’s still required that you disclose what you know and you’ll have to pass those along to the buyer. The best thing to do is over-disclose because you don’t want any lawsuits coming back to you. If you have any questions about this topic or anything else relating to real estate, don’t hesitate to give me a call or send me an email. I would love to hear from you.

If you’re a homebuyer in our area and you don’t want the general public to know where you live, there are ways you can buy a property anonymously. Most people who want to buy a home simply write an offer for it in their name. After that, the title company records that offer in their name. The problem with this, though, is that anyone who has access to your tax records has access to your address. “The two most common ways to hold title is as a family trust or an LLC.” If you want to buy a property anonymously, you can still write an offer for it in your name. All you have to do is fill out a vesting document with that offer once it’s in escrow. The two most common ways to hold title is as a family trust or an LLC. The unique thing about having an LLC is you can call it whatever you want and nobody will know that your name is attached to it. Once the transaction is complete and all the information is officially recorded, nobody will know you own the home. If you’re a celebrity and you’re still worried that your escrow information could leak out, you can attach a non-disclosure agreement to your offer. This agreement requires everyone involved in the transaction to not expose who you are and where you live. If you have any more questions about how to buy a home anonymously or you have any other real estate needs, feel free to reach out to me anytime. I’d love to help you.

Today, we want to invite you to a fun event.  Mark your calendars for Saturday, April 21 for our Paper-Shredding and E-Waste Event. If you have boxes of files to shred or old electronics to get rid of, bring them by. We will pay for the shredder and the E-waste company.  All you have to do is stop by La Salle High School (3880 E Sierra Madre Blvd). We’ll be in the upper parking lot from 9 a.m. to noon.  Hundreds of past clients come out for this event, and it’s always a lot of fun. If you could benefit from it, bring all your junk and drop it off. We’ll take care of it. We’ll also have some food available.  “Drop off your junk and we’ll take care of the rest.” Just so you have an idea, here are a few examples of things you can bring:  ComputersAudio equipment Household appliancesOld TVsPrinters  And, just to be on the safe side, here are a few things NOT to bring:  Household chemicalsBatteries Old paint cans Syringes  If you have any junk (that’s allowable), make sure you bring it on by on April 21. We look forward to seeing you there.  Please don’t hesitate to reach out to us with any questions in the meantime! 

According to the latest reports, there are currently 400,000 homeowners in LA County who aren’t taking advantage of the savings on their annual property tax bills, leaving as much as $30 million unclaimed. If you own your primary place of residence as of January 1 of this year, the homeowners exemption will reduce the taxable assessed value of your home by $7,000, thereby lowering your tax bill by $70 each year. Unlike other programs, this is something you only need to do one time to receive the savings every year. Here’s what you need to do to take advantage of this exemption. “I’m taking advantage of this tip, and I hope you do too.” First, click here and log in to see if you’re already receiving the exemption. If you aren’t, it will tell you so. If you aren’t already receiving this exemption, follow that same link and download the one-page PDF form that’s provided. Then, all you have to do is fill out that form and send it in by February 15 to ensure you receive the full rewards of 2018. It will take you 30 minutes at most to fill out this form, and the benefits are substantial. As they say, a penny saved is a penny earned. If you have any questions about this exemption or you’re looking to buy or sell a home in our market, don’t hesitate to give me a call or shoot me an email. I’d love to help you.

Happy 2018! You’ve all asked me some great questions this last year, and today, I’m utilizing this time to pose a question that has had a huge impact on my life. I hope it has the same effect on yours. This is a very personal story.  About three or four years ago, I was diagnosed with an autoimmune disease called ITP. I’ve been fine for the last three years; I’ve not dealt with it since then. But for a couple years of my life, I’ve dealt with being on prednisone and going through chemotherapy. It was a really hard time and I’ll never forget it. Maybe you’ve been through chemotherapy yourself or have had a friend or family member who has. It’s a very challenging time. Once a week for eight weeks, I would go in and get dripped, be hooked up, and they would have everything going through my body. One of the first times I went, I was parked in the lot, and I realized that I was going to go in and have this drug dripped into my body. I knew there would be potential side effects. I began to realize that life is very precious and that I may not be around tomorrow. When I was faced with that reality, it really made me contemplate what I was doing in my life and what I would do differently if I knew that I wasn’t going to be around for very long. One of my business coaches actually planted this question and it really stuck with me: “Dave, what would you do differently in your life if you knew you couldn’t fail?”In that moment, I realized a lot of the things that I wanted to do in my business weren’t being done because I was afraid. I wanted to throw this question out to you to carry throughout 2018. What would you do differently in your life if you knew you couldn’t fail? Maybe it’s something personal. Maybe you would adopt, but you’re afraid of something. Maybe it has to do with your dating life, your marriage, your business, or something else. “What would you do differently in your life if you knew you couldn’t fail?”This year, as you move forward in 2018, I hope that you ask yourself that question and live by what you would do if you couldn’t fail.If you have any questions for me, feel free to reach out. I’d be happy to help you. Until then, make it a great 2018!

What is a “reverse mortgage?” Today I have Don McCue, owner of Reverse Mortgages Plus, here with me to discuss what they are and how they can help you. So what exactly makes it “reverse?”A reverse mortgage in its simplest form is a mortgage. To qualify, we do the exact same process as a conventional mortgage. I collect documentation, submit it through processing, and then we’ll do an appraisal. After that, we’ll give approval based on financials and the appraisal value. The reverse part comes in because, with a conventional mortgage, you pay the mortgage today and the balance goes down. With the reverse mortgage, you have a contract with the lender that says they’ll wait for their payment tomorrow, which means they’ll add that payment to the balance today. It’s kind of like you’re paying out money for a long time to send your kids to college, and hopefully, they’ll start paying you back. With the contract that the lender has, it’s guaranteed that they’ll get their money, which is fair. This allows you to stay in your home and not have a payment today, thus improving your cash flow. Who qualifies for a reverse mortgage? And if I qualify for a reverse mortgage, how much equity do I have in my house?There’s no cookie-cutter answer to that; we have to collect documentation and go through the qualifying process. In order to qualify, you must be 62 years old, and you must have some equity in your home. A roughly 50% equity position is where we start because the older you are, the more money you get. Then we incorporate other financials into the conversation. What are the pros and cons of a reverse mortgage? The reason a lot of people consider them is that our real estate is, many times, our largest asset which goes untapped. When you have money in a bank, IRA, or pension plan, you use it. When it’s in the home, the traditional American Dream has been to pay the home off. The reality is that when you own real estate, you have an asset that you can leverage, meaning that you can enjoy living in the home and retain the title, as well as enjoy some of the equity. You can get a conventional refinance that requires a monthly payment, which you’re trying to eliminate, or you can sell the home, which means that you don’t get to live in the home you love. The reverse mortgage came into being for exactly that conversation: live in your home, use some of the equity, and don’t have a monthly payment that impacts your long-term care and retirement planning. You can pay it off later. Who wouldn’t want it? Well, if you live a long, healthy life and that balance goes up over time, you could end up having a home with minimal or no equity. For some people, the dream of leaving a legacy to their children comes into the conversation, so then we look at that and try to couple it with other financial products they have to make it a win-win. A lot of the time, it ends up that the reverse mortgage is a great option. Any final thoughts on reverse mortgages? There are a lot of negative myths out there that we’ve heard, and I can dispel all of them. The FHA and Congress have gotten together and made this a very secure, government-insured product. “The FHA and Congress have gotten together and made reverse mortgages a very secure, government-insured product.” I have 21 years under my belt as a financial planner and I bring that to the table. I work with your fiduciary, trustee, Realtor, and financial advisor to come together and see if this is the right option for you. Hopefully this has helped answer some of your questions about reverse mortgages. In the meantime, if you have any questions about this or other topics, give us a call. Until then, make it a great day.

Should you sell your home during the holidays? I’ve been asked this question about four or five times in the last couple of weeks. This is a seller question but if you are serious about putting your home on the market, you need to consider things from the buyer’s perspective. Buyers who are looking for a home during the holidays tend to be more serious.They have more time off work to look at homes, and they tend to be very emotional around Christmas and Thanksgiving. Going into escrow during this time can be very emotional for buyers. It’s a great time for them to get into a new home and celebrate the holidays with their family. If you are looking to sell, that can be emotional as well. Your life will be interrupted when your home is on the market. We want to get as many showings for your property as possible. If you plan on having friends and family over for the holidays and you don’t want to be interrupted, then by all means, wait until the new year to put your home on the market. If you don’t mind being bombarded by buyer traffic, then the holidays are a great time to sell your home. Most of the people we talk to wait until January or February to get in the market, so there is less inventory and less competition for sellers during the holidays. As we mentioned, buyers tend to be more serious during the holiday market as well. “If you don’t mind buyer traffic, then the holidays are a great time to sell your home.” That said, if you do sell your home during the holidays, you don’t want to take the first offer. Let your listing mature. Wait eight or 10 days so that any buyers who were out of town for the holidays have a chance to see it. Once your home has been properly exposed to the market, then you can accept an offer. If you have any questions, just give me a call or send me an email. I would be happy to help you!

How do you deal with a 1031 exchange? Today I’ll be answering this question for you so that you won’t be confused when you hear this term in your real estate dealings. First, what even is a 1031 exchange? I’ll use an example to help me explain. My friend Brian purchased a small condo in Azusa (sp?) for a couple hundred thousand dollars. He sold it recently for over $400,000. He shifted that money in Azusa to purchase three properties in the Midwest. Normally, he’d have to pay capital gains on it, but he did a tax-deferred 1031 exchange to acquire those other three properties. You’re probably asking how that works. When you’re selling that original investment property—whether it’s land, an apartment, or a house you have rented out—have a term in your contract that states that the buyer is to accommodate the 1031 exchange at no cost to the buyer. When you sell that property, the time periods are tied to the 1031 exchange. You have 45 days to identify three other properties you’re interested in buying, and you have 180 days to close on at least one of those properties. The tightness of the time period can make the process pretty intense, so what do you do about that?  When you’re selling the original investment property and are worried about time periods, a great thing to do is make a longer escrow period. For example, you could make the close of escrow 60 days or sooner by mutual agreement. The downside to this would be that when the buyer doesn’t agree to that period, you may not close in time. When you’re in escrow, you can hire a 1031 exchange company that will help oversee the exchange. We can connect you to such a company, but it’s actually a very simple process—it’s just time intensive. “It’s actually a very simple process—just time intensive.” The trick is to know what you’re ideally looking to buy after you close escrow on that other property. If you’ve got specific questions about 1031 exchanges, feel free to reach out to me. I’ll do what I can to advise you on navigating the process.

What do our current market conditions mean for buyers and sellers in Los Angeles? Is now still a good time to buy? Here’s the biggest thing you need to remember—historically, we’ve seen seven-year cycles in the real estate market over the last 100 years from top to bottom. Right now, we’re in year 10 of our current cycle, so we’ve lasted three more years on borrowed time. Based on that, we would expect to see a shift in the market with an increase in inventory and a decrease in demand and overall pricing. What we’re actually seeing right now, however, is the exact opposite. We’ve been to two masterminds in the past two weeks with some of the top real estate minds in the country, and we’ve learned that one of the biggest changes taking place in our market is the reduced amount of new construction. This has put a huge pinch on the amount of available inventory, especially for first-time homebuyers. Because inventory is incredibly low, we’re seeing many multiple offer situations with buyers fighting over homes and driving prices up. “Because inventory is incredibly low, we’re seeing many multiple offer situations.” One of the things Gary Keller himself said that resonated with us was that most of the ongoing new construction is happening in the higher-end part of the market, which is exacerbating the issue for first-time homebuyers and first-tier move-up buyers. The top experts we’ve listened to are predicting a couple more years of this. So, is it still a good time to buy? Gary’s response to that question was that, based on relative affordability, if you plan on staying in your house for the next seven to 10 years, now is still a great time to buy. Keep in mind, though, markets vary based on a number of different factors, so there are other considerations you should make before deciding to make a purchase. If you have any more questions about our current LA market or you’re thinking about buying or selling a home soon, don’t hesitate to reach out to us. We’d be happy to help you.

We recently received a great question from Lynn that we wanted to answer today. She wanted to know, “Is there a good rule of thumb for how much to fix up a house before putting it on the market?** Also, what improvements give homeowners the best return on their investment?”** Every house is different, so there are a few different questions that we will typically ask to help us narrow down the answer. They include: 1. Is it a buyer’s or seller’s market? If we’re in a seller’s market, a lot of times you can get away without having to do too much in terms of repairs because there is so little for buyers to choose from. In a buyer’s market, however, sellers are entering a beauty contest and with the increased competition they will need to make sure that their home looks its absolute best. 2. What does the competition look like? Before we list a home on the market, we need to know what the market actually looks like so we can position your home the right way. We look at the competition throughout the city and in the same neighborhood.  3. What will the next owner want? If we spend $10, we want to make sure we get at least $15 back, so we really need to consider which repairs and improvements the next owner will want and pay a premium for. “Curb appeal is essential.” When it comes to home improvements that bring the highest return, there are a few specific ones we usually focus on. The first is curb appeal. It’s how you entice buyers to come inside and take a look, so your home has to be inviting. We’ve also seen a lot of home sellers have success with remodel work in their kitchens and master bathrooms as well. If you’re thinking about selling your home in the future and are curious about the specific repairs you can make to bring up your home’s value, don’t hesitate to reach out and give us a call or send us an email. We look forward to hearing from you.

We received a great question recently from one of our clients.  The question is, “What is the Mills Act and what does it do?” The Mills Act is a government program that incentivizes those who own historic homes to keep up the preservation of those homes. They incentivize these homeowners through a discounted rate on their property taxes. For example, we have a client in Upland who saves 60% on his property taxes annually through this program. “A client in Upland saves 60% on his property taxes annually.” How can you find out if a home qualifies? First, you need to know if the city you are living in is Mills Act-approved. If it is, you’ll then need to check with your local building and zoning committees to see if your home has the historical monument classification and is within the historic preservation ordinance zone. What if you find out your home isn’t Mills Act-approved even though you think it should be? You’ll need to go to your local planning committee or historical preservation society and petition them as to why this is an important program to bring value to the city and preserve historic homes. When these homes have lower taxes, they have more value and add more value to the neighborhood overall. If you have any other questions for us or need any help buying or selling a home, give us a call or send us an email. We look forward to hearing from you soon.

If you’re a homeowner, putting your property in a trust is a wise decision. Typically, there are two reasons people put their home in a trust. The first is for the tax benefits. To that end, it might be a good idea to talk to your accountant about how putting your property in a trust would specifically help you in this standpoint. The second reason is to avoid probate. When someone passes away, if their property is held in their name only and not in a trust or a will, it goes into probate. The challenge with probate is it costs a lot of money and takes up a lot of time. “Letting a home go into probate can cost you a lot of time and money.” If a property is put into a trust, when the trustee passes away, the successor trustee takes over and can then sell the property so all the beneficiaries get their money. It’s almost as clean and simple as a standard sale. In fact, there can be fewer disclosures the seller has to make to the buyer in this type of situation. I have the perfect story to share to demonstrate how trusts can save you a lot of headaches. A friend of mine who I’d grown up with back in Illinois called me one day telling me that because his parents were getting very old, he wanted to look into eventually selling their property in Pasadena. After doing some investigation, I found out that his parents’ property was actually in their names. That means if they would’ve passed away before he called me, the house would’ve gone to probate. Thankfully, we were able to call a trust attorney and have them create a trust for the home. When the parents did pass away, the family was able to sell the property easily and collect the proceeds. It’s important to note that sometimes when people refinance their house, it can get pulled out of a trust. If you’ve done a refinance, double-check to see that your property was put back into the trust. If you’re not certain that your property has been put into a trust or you have done a refinance, you’re more than welcome to reach out to us so we can see how the title of your property is currently held. If you know your property isn’t held in a trust, we can also refer you to a great trust attorney in the area who can help you. If you have any other questions about this topic or you’re looking to buy or sell a home, feel free to give us a call or shoot us an email. We look forward to hearing from you.

Today I’d like to share two questions that can help you determine whether now is the right time to sell your home. It might sound counterintuitive, but something I love about my job as a Realtor is helping people figure out when it’s best to not sell. The first question to ask relates to your closing costs and capital gains. Do you know what they will be? To illustrate this, let me give you an example. Recently I met with a woman who had a home on the smaller side and was looking for something larger to better accommodate her children. The challenge that arose in this case was that since buying her home in 1994 at $250,000, the property’s value rose to $900,000. Though this isn’t really what you would call a problem in and of itself, we did determine that she would have about $90,000 worth of capital gains tax. “Something I love about my job as a Realtor is helping people figure out when it’s best to not sell.” This means she wouldn’t be able to take all of that money into her next property because of closing costs and capital gains, which will total to approximately $150,000. In other words, that’s $150,000 worth of equity she would lose if she made the move from her current home to a larger one. The next question to consider is whether you can build more square footage. To start, let’s estimate an approximate $250 per square foot on an addition. Keep in mind, though, that we can also estimate a value of $500 per square foot. In this case the money you are putting in is actually being doubled. But you’ve got to be careful that you aren’t overbuilding for the neighborhood.Determining if this is the case is something I’d be happy to help with. If you have any other questions or want more information, feel free to give me a call or send me an email. I look forward to hearing from you.