Great Time for Investors, Sellers Now Hold the Upper Hand (For the Time Being)

Likely in response to the state’s dwindling inventory, home prices are climbing once again.  In California’s 10 largest cities, the median list price increased by a whopping 20 percent on average from January 2012 to January 2013

Inventory is Low:

Prices are Higher:

California Median List Price Change Year Over Year

There is a rise of cash-in-hand buyers.state-of-the-california-real-estate-market

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Banks Offer Money to Home Owners to Short Sale!

HOME OWNERS:  Did you know that the banks can offer MONEY TO YOU if you short sale a home?   In December 2011, foreclosed properties sold for an average of 22% less than conventional sales, while the discount for short sales was only 14%, according to the National Association of Realtors. 

The deals are aimed at incentivizing homeowners who owe more on their home than it is worth and who are seriously delinquent on their payments to sell their homes in a short sale.

For the banks, foreclosure has become an increasingly difficult and expensive option, and as the cases drag, expenses grow.  Homeowners not only stop paying their mortgages but they stop paying property taxes and conducting normal maintenance as well.  By the time banks take possession, they’re out tens of thousands of dollars.

Interested?  Late on payments and thinking of short selling your home?  Call me for details, 408-771-8472.

–CNN Money

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Dave Cortese Talks About Changes in the Silver Creek / Evergreen Community

Dave Cortese with The County of Santa Clara spoke at the weekly Evergreen/East Valley Marketing Meeting at MegaBytes Pizza today. 

Did you know that Dave voted to keep Prop 13 in Santa Clara County when the tax accessor wanted the County to vote against it?  Under Prop 13 tax reform, property tax values were rolled back and frozen at the 1976 assessed value level and prohibited reassessment of a new base year value except for a change in ownership. (http://www.californiataxdata.com/pdf/Prop13.pdf

If Prop 13 was denied in Santa Clara County, the many now seniors or their family members could not transfer their Prop 13 status to a home they want to purchase in Santa Clara County–this would have potentially decreased interest and/or the sale of property in this County.  Way to go Dave for fighting to keep it!

A few other items covered:  The County is in communication with Ponderosa Builders in hopes that they will continue to build more homes in the community.  Also, there is a potential building development on the Reid Hillview lot (across from Beshoff Motor Cars).  In addition, there is talk of turning Capitol Expressway into a Boulevard to make it more pedestrian friendly.

More to follow!  April 16th is the ribbon cutting ceremony for the new Tully/101 road improvements–reducing back-up of traffic on that exit! 

Special thanks to Dave Cortese, and special thanks to those that organize, promote, and come to the Evergreen East Valley Marketing Meeting!

 

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Who wants to be my date?

New Leaf Grocery Pre-Opening Receiption:

New Leaf has invited me and a guest to join them for a private Pre-Opening Reception at their new location on Silver Creek Valley Rd, cross street Beaumont Canyon Dr.  Come with me to celebrate their first location in Santa Clara County.  Take a walk through the store, have some wine, and other refreshments from each department.  Like many of you, I’m very glad a supermarket moved in right around the corner!  It starts at 4pm today…I know it’s last minute, but did I mention that there will be wine?  Call, text, or e-mail me (Lisa@SilverCreekValleyProperties.com or 408-771-8472.)

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2012 Housing Market Forecast

Very modest increase in both sales and price expected next year…

View a video of California Association of REALTORS® Vice President and Chief Economist, Leslie Appleton-Young.

While the worst is over, the market continues to struggle with not much relief in sight.  The economy started to gain a bit of traction in the beginning of 2011, but things happened one after another – Japan’s earthquake and tsunami, oil price spikes, uprisings in the Middle East, stock market volatility, the U.S. debt and the debt crisis in the euro zone.  As a result, the housing market that appeared to be recovering is now stalled.

The forecast for California home sales next year is for a slight 1 percent increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.

C.A.R. (California Association of Realtors) expects the median price to hit $291,000 by the end of 2011 and to increase 1.7 percent to $296,000 in 2012.  C.A.R. expects 491,000 unit sales by year-end and 496,000 unit sales in 2012, just a 1 percent increase from this year.  California’s median price was $287,440 in September, down 8.3 percent from September 2010, but way above from when it bottomed in February 2009 at $245,230.

Lenders aren’t lending and consumer and entrepreneurial confidence continue to be low.  As long as the jobs problem continues, she doesn’t expect consumer spending to improve by much.

“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants,” said Appleton-Young.  “An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.”

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What Happens with Early Termination of the Lease?

Most leases in California are written for initial fixed terms, usually 12 months. Renewal periods are also usually written for a fixed number of months.  During these fixed terms, the tenant has agreed to remain in the property and pay rent through a certain date, and the landlord is obligated and required to allow the tenant to remain for that period of time.  The only exception is a month-to-month lease which can be terminated with a 30 day notice by either party–a 60 day notice from landlord to tenant if the tenant has been in the property for over a year.

So what happens if it’s November and your lease doesn’t end until the following June 30th, but life circumstances are forcing an early departure from your rental home?

Perhaps you’ve lost your old job and already found a new one, but the new job requires relocation to another city?  Sometimes tenants divorce and neither can afford the rent alone, so both have to move.  Sometimes tenants are under no financial duress but elect to buy a new home and terminate early, and simply include the early termination costs in the overall financial decision to buy the new home.

There are a number of life circumstances that can cause a tenant to contact us and ask, “What happens if I can’t finish my lease term?”.

This is called Early Termination and is covered by paragraph 30 of the California Association of Realtors Residential Lease Agreement.  “In addition to any obligations established by Paragraph 29 (Tenant’s Obligation Upon Vacating Premises), in the event of termination by Tenant prior to completion of the original term of the Agreement, Tenant shall also be responsible for lost Rent, rental commissions, advertising expenses, and painting costs necessary to ready Premises for re-rental.  Landlord may withhold any such amounts from Tenant’s security deposit.”

When a Tenant “skips” and simply moves out and stops paying rent, it results in legal action, damage to the tenant’s credit report, and ultimately the account being placed for collection. In other words, the worst financial and credit consequences possible are realized, and the price is paid for years to come—which can affect the tenant’s ability to be qualified for another rental.

In a nut shell, when you want to move early and wish to do so in a way that follows the lease agreement and avoids negative consequences, all of the costs of your decision to terminate early must be absorbed and paid by you, not the property owner.  This is a simple concept for most to understand.  The owner of your rental has no obligation or desire to subsidize your moving costs by absorbing lost rent and other turnover expenses created by your early departure, so all of the financial consequences of your decision to leave early belong to you.  The following steps must happen if you are a Silver Creek Valley Properties tenant:

1) You must provide written notice of your intent to terminate early, including a move-out date.

2) Your written termination notice must include payment of the reletting fee listed in paragraph 28 of your lease agreement. The reletting fee is typically 4% of your remaining lease term (but no less than $395) via a check made out the Property Management Company, and there can be an additional $200+ in real estate commissions if the new tenant comes from another agent who found the advertisement on the MLS (Multiple Listing Service).  For example, if your lease term is one year at $3,500/mo, and you decide to do an early move out by the 6th month, you have 6 months left on your term.  $3,500 x 6 = $21,000.  $21,000 x 4% = $840 due to the Property Management Company.

3) You must continue paying rent each month, until a replacement tenant is found and starts paying rent for you.

4) You must continue your utility services after vacating, until a new tenant moves in.

5) You must arrange for lawn service (if applicable) after you vacate, until a new tenant moves in.

6) You are responsible for any cleaning fees associated with the lease, including a re-key fee.  Since you are voluntarily doing an Early Move Out, it is your responsibility to pay for an early re-key of the home, as the owner is obligated to re-key the property after each tenant per the property management agreement the Company has with the owner.

8) Your security deposit will be returned after a new tenant moves in and takes over your lease term.

7) All other terms and conditions of your lease agreement must continue to be met.

Once this is accomplished, you leave with a good rental history, receive your deposit refund (subject to any deductions according to the contract), and have completed your lease agreement on good terms.  You haven’t technically “broken” the lease, but instead satisfied the requirements of Early Termination. It should be noted, however, that you are still legally obligated until the end of your remaining lease term in the event your replacement tenant defaults.  

Frequently Asked Questions:

Q: Can I wait until you find a tenant to provide notice?
A: No.  We won’t initiate any efforts to locate a replacement tenant until/unless we have written notice to vacate with a move-out date.  Understand that we don’t even have the legal right to promise the property to a new tenant if we haven’t received written notice from you, so your status is either one of 100% staying, or 100% leaving.  There is no “maybe” or in between allowed and we can’t market a property without a defined availability date for move-in.

Q: I don’t want to pay the reletting fee. Do I really have to, or can I pay it later?
A: You already agreed to pay it when you signed your lease. You are simply keeping an agreement you already made.  It must be paid up front, as agreed in the lease.

Q: If I know someone who wants to rent the house, can I refer them to you?
A: Yes, of course.  They must submit an application and qualify the same as any tenant.  You may not “market” the house though, once we begin marketing efforts.  You can tell your friends and co-workers about it and try to help find a tenant, but you can’t, for example, put your own sign in the yard.

Q: Why should I have to keep paying rent after I move out?
A:  That’s the agreement you made when signing the lease.  Failure to pay rent will represent a default of the lease.  Continuing to pay rent allows us to keep sending the owner their monthly proceeds and it keeps you in compliance with your lease agreement and in good standing, which is the goal of paragraph 30 of your lease agreement.

Q: How long will it take to find a new tenant?
A: We normally locate a new tenant within 30 days, sometimes sooner but it could also take longer depending on the time of year, market conditions, how well the house shows, and other variables.

Q: What if I only have 2 months remaining on my lease? Can I avoid the Early Termination fees?
A: Yes.  If you have less than 3 months remaining on your lease, you’re probably better off finishing your lease or paying out your remaining rent in full rather than terminating early.  When a tenant pays the final month of a lease term and also notifies us in writing they will be departing by a date sooner than the last day of the lease, we will market the property as available on the earlier date.  You will still have to maintain utilities and yard care per your lease agreement through the final day of the lease, but if a new tenant is located and moves in prior to the end of your lease term, you’ll receive a rent rebate and will have successfully completed your lease term without having to pay a reletting fee.

If you have more than 3 months remaining on your lease term, you’re probably better off paying the reletting fee though and letting us find a replacement tenant.

Special thanks to Steve Crossland, a TX NARPM Member. 
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The 5 Types of ID Theft and What to do if YOU are a Victim

There are 5 types of Identity Theft:  Financial, Medical, Employment, Drivers Licenses, Character Theft.

While the FTC has the Identity Theft Forms Online, they do not offer any assistance in clearing up your information.  You will need to get your credit cleared yourself (or with the help of an attorney).  Here are some tips:

 Protect yourself by doing the following:

  1. Do not carry your social security card around with you
  2. If you are on a wireless server, make sure you are on a secured network with the proper firewalls
  3. Make sure that when you are dealing with money online, that the web address shows the HTTPS encryption
  4. Check your bank accounts every month as well as your bank statements
  5. Check your credit report by going to www.annualcreditreport.com.  It is free, you just don’t get a FICO score.  You can check your credit on a daily basis without it counting as an inquiry.
  6. Shred all documents
  7. If you have a credit card with a chip (allowing you to swipe the card over readers), beware that scammers can snag that information wirelessly if they are within 3 feet of you.  Get a special metal wallet for these types of cards or simply request a card without the chip.
  8. Get a lock on your mailbox

If you are a victim:

  1. Fill out the FTC Identity Theft Form and have the Affidavit notarized
  2. Have the police fill out a police report.  Do not settle for them stating that one will not be provided!  Go down to the station if need be.
  3. Send in the FTC form and police report information to the 3 Credit Bureaus and ask the Bureaus put a “Freeze” on opening any new accounts

By law, the credit accounts and any collections that were a result of Identity Theft must be removed from  your credit report within 14 days, however many companies fail to abide by the law.  If any creditors fail to remove your Identity Theft, I would strongly suggest that you get legal advice, as you may recover the fees you needed to hire an attorney in the first place. 

Special thanks to Julie Macchi for sharing this information at the Evergreen Valley Marketing Meeting held at Mega Bytes Pizza today.  For those of you who have more credit related questions, feel free to contact her directly at 650-867-5936.

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Win $200 in Canyon Creek Pet Hospital’s Costume Contest!

Stop by 5617 Silver Creek Valley Road anytime between 3-6pm from now and Halloween with your pet in full costume to get their picture taken.  They will then send the photo to you, and you can send the photo to Graphics@VetWebDesigners.com to have your pet’s photo on the Canyon Creek Pet Hospital’s Website.  Winners will be anounced on Halloween, 10-31-11!

Check out the contestants here:  http://www.akalanimalhospital.com/halloween_pets.htm

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Reduced SCVCC Membership Dues!

Hey everyone…I spoke with Janice, the Membership Director of The Silver Creek Valley Country Club; she is offering a trial program through the end of this year!  Reduced monthly dues to try out a Premier or Racquet membership.  If you know of anyone who is new to the area or is thinking of previewing a membership, now’s the time to check it out.  You can reach Janice at 408-239-5888–tell her that Silver Creek Valley Properties sent ya!  :)

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6 Mistakes Landlords Make…(Great tips for investors)

Investing in real estate right now can be surprisingly profitable, but if you’re going to purchase investment property to rent it out, watch out for these common pitfalls.

Mistake 1: Confusing a cheap deal for a good deal.

It is true that you can buy some homes for ridiculously low prices — but that doesn’t mean you can rent them out.  Homes in deserted subdivisions aren’t any more appealing to renters than they are to buyers.  The same is true for less attractive properties or those in less desirable school districts.

Mistake 2: Overlooking key costs.

Knowing the potential rent isn’t enough. Before you buy a property, you should also factor in closing costs of 3% to 6%, the costs to fix up the place and maintain it, and your holding costs.  Then add the profit you expect to make — and more closing costs, if you intend to turn around and sell it.  Only then can you figure out what you can afford to pay.

Mistake 3: Forgetting that time is money.

In real estate, “time is your biggest enemy,” says David Hicks, co-president of HomeVestors of America, a franchiser whose motto is “We Buy Ugly Houses.”  You lose money when your property is empty, whether you are painting it or are between tenants. You also lose if you buy in the fall and can’t replace the roof until spring. You may be better off accepting a lower rent than waiting for a higher-paying tenant.

Mistake 4: Assuming you will sit back and watch the rent roll in.

Just like homeowners who can’t pay the mortgage, tenants lose their jobs and stop paying the rent.  Evicting them can take several weeks, and some steal appliances or other property.  You will need to screen prospective tenants carefully, or pay someone to do it for you.

Mistake 5: Underestimating repair costs.

As with all homes, you will be making lots of repairs.  You may find wood rot or mold when you remove that cracked bathtub.  Carpet in rental homes typically must be replaced every five years, and you may have to repaint after every tenant. Tony A. Drost, president of the National Association of Residential Property Managers (NARPM), suggests setting aside six months of expenses so that you will have money if a major repair is needed.

Mistake 6: Assuming that owning a rental is the same as owning a home.

You might put up with flaws that a renter wouldn’t tolerate.  In addition, many states and communities have strict and complex laws for landlords, even if you own only one property.  A property manager can handle most of the headaches, but you should expect to pay one up to a month of rent for finding and screening tenants — and up to 10% of the monthly rent for management fees.

“By Karen Blumenthal of The Wall Street Journal”

 

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