Timing Your Home Sale

As many of you have probably learned, the timing of a situation can be everything! When it comes to selling your home, it is wise to take go over the following questions and develop a timeline that works for your family’s unique needs:

  • How long is it going to take you to get your home ready to be put on the market?
  • How long is your home going to be for sale?
  • How long of an escrow should you negotiate?
  • How long will it take you to find your new property (whether buyer or selling)?
  • How long does it take to actually move?

Questions on how to best time the sale of your home?
Contact us!  info@weberaccetta.com
Lauren: 310-387-4693 and Michelle: 310-293-1883

 

Con’s of Contingent Offers

Looking at a real estate purchase agreement can be overwhelming…Even the name of the contract is an unnecessary mouthful (Residential Purchase Agreement and Joint Escrow Instructions). Each page is full of confusing terms & dense explanations. One area of a contract that a majority of people have trouble comprehending is the “contingency clauses.”

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According to Investopedia: “A contingency defines a condition or action that must be met in order for a real estate contract to become binding. These becomes part of a binding sales contract when both parties (i.e., the seller and the buyer) agree to the terms and sign the contract.”

Basically, a contingency is generally put into a contract as a way for the buyer to back out of a sale if something goes wrong  without losing their full deposit.

There are two main kinds of contingency clauses within a Residential Purchase Agreement there are :

  1. Appraisal Contingency: This requires hiring a third party to determine the current fair-market value of the home. If the appraised value is lower than the sale price, the buyer is given the option to cancel the deal. Buyers still have the option to move forward with the sale , but should remember that a lender will only provide money based on the APPRAISED COST, not the agreed upon sale price. You could also chose to waive this contingency entirely when writing an offer, but this could drastically raise the amount you pay out of pocket.
  2. Home Inspection Contingency: This allows the buyer to have the home professionally inspected and then, based on the inspection results, to request repairs to be made by the seller. If the seller refuses to make the requested fixes, the buyer is given the option to back out of the sale. A good home inspection looks for major issues (such as foundation problems or mold), but also examines the functionality of the home’s major systems (such as water heaters). Again, a buyer could choice to waive this contingency clause but we generally do not suggest it.

 

It is important not to confuse these contingency clauses with a contingent offer!

 

A contingent offer is an offer that is reliant on the sale of your buyer’s home. Generally speaking, contracts contingent upon the buyer’s sale of his home do not even enter escrow and or being inspections, appraisals, etc until the buyer actually sells his/her home. We suggest caution when it comes to accepting a contingent offer for a few reasons:

  1. Once you accept a contingent offer, the MLS will require your to change the status of your listing.. meaning that it will be listed as “pending” or “contingent”rather than “active”. While this does not completely remove your home from search sites, it will limit it’s visibility or marketability. Buyers and agents are less willing to take the time to see or make offers when a home is not 100% available, which makes it more difficult to line up a back-up buyer.
  2.   It is stressful  enough worrying about selling your own home.. but accepting a contingent offer means that you are now dependent on the sale of second home. You also have no say in how this home is marketed or how proactive the owner’s/owner’s agents are being. This scenario could increase your stress level, drag out the sale of your home and culminate in a frustrating outcome.

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However, there are exceptions to the general rule.. and each situation must be evaluated individually. For example, if the buyer’s home is in the last stages of escrow then accepting their contingent offer is a much lower risk. It might be worth considering if it is your only offer OR if their offer is significantly better than any other offer you have.

In general though we suggest to avoid contingent offers by asking the buyer to remove the sale contingency and replacing it with a longer escrow. This gives the buyer more time to sell their home, but compensates you for your time by allowing you to keep their deposit. If the buyer is unwilling to do so, you could always suggest that the buyer resubmits an offer once his or her home is sold.

 

STOP in the name of Low Mortgage Rates

Seriously, stop what you are doing.

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BECAUSE, low mortgage rates = amazing opportunities for buyers, sellers, or homeowners looking to refinance!

While rates on mortgages change daily, they are currently holding steady at near record lows. In fact, according to the Bankrate.com rates have not been this low since December 2012!  The graphic below demonstrates the drop in rates from just last week.

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Both 15-year and 30-year mortgage rates are down more than 0.5% since the start of the year.

What does this mean for buyers?

This drop in rates means that those looking to buy have experienced a purchase power increase of 7%…meaning that buyers who could afford an $800,000 home in December can now afford an $852,000 home!  For many on the house-hunt, this increase in purchase power could put their dream home just in reach!

What does this mean for sellers?

Lower mortgage rates translate to a surplus of buyers looking to take advantage of their higher purchasing power; which means you, as a seller, have the ability to get top dollar for your home! More active buyers are out looking increases the desirability of your home.. making it a hot commodity.

What does this mean for refinancers?

Refinancing gives a homeowner access to a new mortgage loan which replaces the existing one. The details of the new loan’s mortgage rate, loan length in years, and amount borrowed can customized by the homeowner. Thus, refinancing during a period of lower mortgage rates could benefit borrowers by lowering their monthly housing payments and/or shortening the term of their mortgage.

For a personalized rate, check out this helpful site: http://themortgagereports.com/ratequote/

Remember: Mortgage rates change quickly and there is no guarantee that these rates will last. Whether you are a seller or a buyer, it is time to take advantage of the current market!

Rent-Back Agreements and How They Work

One qualm that often holds homeowners back from selling their current property and moving into their dream home is that they will sell their home before securing a new one. Considering Southern California’s hot real estate market and how quickly homes are being sold, we recognize that this is a valid concern.  Buying a home is a huge decision.. and not one that anyone wants to make under the pressure of becoming homeless!

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However, several options exist to help ensure a smooth transition period  for both buyers and sellers. One alternative that we have found to be mutually beneficial for both parties is the rent-back agreement – this essentially allows the sellers extended time in the home by making them the new owner’s tenants after escrow closes. While this agreement comes with a time limit designated by the buyer, it gives the seller extra time to get things squared away with their new home. It also eliminates the need to deal with storing their belongings or finding an interim place to live! For the seller, this is a more secure option then simply extending escrow as it removes the risk that the escrow will not close and it also gives him/her access to the money from the sale.

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The rent-back agreement is advantageous to the buyer for two main reasons:

  1. If there are several competitive offers on the home, it may make the buyer’s offer stand out and help ensure it’s acceptance.
  2. The rent charged to the seller may help to recover closing costs – or at least lower the overall cost of the move.

Note: While it is technically up to the buyer to determine how much the cost of rent should be, it is typically the equivalent of the buyers’ principal, interest, taxes and insurance on a prorated basis. Thus, the seller will essentially be paying the buyer’s mortgage for the amount of time they will be occupying the home.

It is important to note that rent-back agreements are legally binding agreements made in writing so it is essential to maintain clear communication concerning your needs (whether you are the buyer or the seller!). Be sure to agree on the exact date that the seller is expected to move out, as well as the amount of rent the seller will pay.

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Overall, the rent-back agreement offers the seller some breathing room and peace of mind when it comes to finding a replacement home, but also proves beneficial for the seller. As long as the kinks are worked out and both parties are willing to participate, this option is an ideal solution for those who are looking to relocate into their dream home!

 

 

 

 

Congratulations to KC!

By: Lauren Weber and Michelle Accetta

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What a pleasure and honor to have met KC and to have represented her in selling her home. From the moment we met KC we could tell she was a successful business woman. Working with her we witnessed first hand how she became this way. She always had a positive attitude, and business minded mentality. It was easy to see how this mindset brought her such success.

Upon closing, we took KC out to dinner to spend some time celebrating the closing escrow. Little did we know WE were the ones actually in for a treat. KC openly shared about her travels and her appreciation for immersing herself in different cultures with us. We got to learn the story of how she acquired her success and her advise for us as younger entrepreneurs. We left inspired!

What moved us most about KC is the freedom she has to create her life. She worked hard straight out of college to grow her business and wealth. She shared with us how owning income property has played a large role in her success and the story of how she starting acquiring property. Her persistence and grit paid off, and she now spends periods of time each year traveling the world and enjoying different cultures (something both of us are passionate about doing). KC is a real example of what hard work and making smart moves can get you and truly is an inspiration to us. We take her words of worldly wisdom wholeheartedly. 

Working with KC she also reminded us of the importance of appreciation. Throughout the process, she always showed her gratitude and thanked us for our hard work. This made us grateful to her and to have the opportunity to work with her as our client, to go above and beyond and make sure she was taken care of. The small words “thank you” can go a far way and we will always take that with us with every person we encounter. She shared that is was her travels that made her so appreciative for everything that we have here in America, day in and day out. We are so grateful and thankful to have met KC and are forever thankful for her kindness and wisdom.

What can Props 58 and 193 do for you?

By: Cathy Strini

As real estate agents, it is our fiduciary duty to act in the best interest for our clients. This requires us to constantly expand our areas of expertise.. from termite infestations to mortgage applications, we deal with it all! We also realize the value in sharing our acquired knowledge and educating our clients (and blog-readers). Knowledge is power..and often can lead to saving you or your loved ones thousands of dollars! Today we will be introducing Propositions 58 and 193 and their significance in the current real estate market.

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In California, real property* is reassessed at market value if it is sold or transferred. A home is generally taxed at 1% of it’s assessed value, meaning that in today’s market your property taxes may increase dramatically following a reassessment.

For example:  Imagine you bought your home in 1996 for $110,000. The original property tax would be $1,100 a year. Assume that you now want to sell or transfer the home and it is worth $1 million in the current market. The new owner would pay property tax on $1 million, or $10,000 the first year.

If you are selling your home to stranger, this increase in property tax probably means nothing to you. However, if you are looking to transfer your home to your child or grand-child this significant increase in annual property taxes may be off-putting.

Introducing Propositions 58 & 193 (codified by Section 63.1 of the Revenue and Taxation Code):

These constitutional initiatives provide property tax relief for real property transfers from parents to children (58) and from grandparents to grandchildren (193). Essentially, Props 58 and 193  exclude these home transfers from reassessment which makes it easier (and more affordable) to keep property in the family.

This exception, however, is contingent upon certain conditions, namely that the proper application is filled out within 3 years of the transfer date. We want to highlight a few of the other requirements/stipulations of the propositions.

  1. Transfers of primary residences have no value limit. So, even if your home is worth $4,000,000 in the current market, your child may still pay taxes as if it is still worth the $450,000 you originally paid for it. It is important to know, your primary residence does have to have a Homeowners exemption recorded on title prior to the transfer to reap this benefit.  Note: The amount that is taxed can be increased by a maximum of 2% each year. Thus, the property tax may have increased since you first purchased the home.
  2. If you are transferring property that is not your primary residence, the first $1 million is exempt from reassessment. This means that while multiple non-residence properties may be transferred, the cumulative exclusion amount may not exceed $1 million. Note: The million dollar exclusion applies separately for each transferor. Thus,  there is a $2 million limit to property owned by an eligible married couple.
  3. Eligible children are defined as:
    1. Any child born of the parents
    2. Any stepchild while the relationship of stepparent and stepchild exists
    3. Any son-in-law or daughter-in-law of the parent(s). Spouses of eligible children are also eligible until divorce or, if terminated by death, until the remarriage of the surviving spouse, stepparent, or parent-in-law.
    4. Any adopted child who was adopted before the age of 18.
  4. An eligible grandchild for purposes of Proposition 193 is any child of parent(s) who qualify as child(ren) of the grandparents as of the date of transfer.
  5. Transfers by sale, gift or inheritance qualify for the exclusion. The person doing the transfer, who can only be the parent or the child, must own the home.
  6. Important note for Prop 193: The parent of the grandchild must be deceased as of the date of the transfer.

A little research could save your children or grandchildren a significant amount of money! However, we have worked with enough families to know that sometimes the worth of a family home is not just weighed in it’s market value, but in the memories and love it also holds. Make it easier to keep property in the family by taking advantage of Props 58 and 193.

Remember, the exclusion does not happen automatically. You must complete a “Claim for Reassessment Exclusion for Transfer between Parent to Child” (Prop 58) or a “Claim for Reassessment Exclusion for Transfer from Grandparent to Grandchild” (Prop 193) form within 3 years of the transfer. Copies of each form are attached below. For more detailed information, check out the sites below. Feel free to fact-check and let us know what additional facts you would have liked us to include.

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm

http://www.sfaa.org/mar2008/0803ogrady.html

*Real property is defined as any property that is attached directly to land, as well as the land itself.

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When to sell.. and when to buy?

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When is the best time to sell your home? Most homeowners stress over what season to list their home. There are all sorts of myths about when is the best time to sell, but every situation is truly unique. Luckily, here in the South Bay – each of the four seasons offers different perks of listing your home!

WINTER:

Historically, the winter months are considered to be the slowest season for the real estate market, but it is necessary to take the temperate weather of Southern California into consideration. Seasonal variations may play a more prominent role in other parts of the country, but we fortunately skirt a good portion of extreme winter weather. Warm, sunny winter days means that your home may have just as much curb appeal as it does during the spring months!

As Sam Heskel, president of Nadlan Valuation, an appraisal firm in Brooklyn, highlights, “Sellers typically find that off-season buyers may be more focused and ready to buy a home.” This means that while some home buyers take a break over the holidays, they return after New Year’s with renewed motivation and focus to purchase a home.

*Remember, the quality of the buyers is often times more important than the quantity! Buyers who are serious about finding a home (no matter the season) are more desirable than those who are casually looking.*

SPRING:

The spring season always comes out on top as the best time to sell. With the warm weather, more daylight and spring fever in full swing, buyers are more likely to shop during this time of year. With more competition comes bigger sale prices. Thus, home prices are highest during the prime season, when more homes are on the market.

SUMMER:

A lot of sellers hold off putting their home on the market during the summer, preferring to wait until the first of the year or the spring season. This results in reduced inventory during the summer months, meaning more buyers checking out your home, whether online or in person. “For Sale” signs and postings are much more visible and easier to install in the summer than they are in the winter. Also, in some tourist areas, traffic is heavier, ensuring additional exposure.

Lastly, listing your home in the summer positions you well to sell in the fall. Even if you do not secure a buyer over the summer, you have the opportunity to assess the buyers’ reactions and make necessary adjustments to make your home more appealing.

FALL:

According to a survey by ERA, 40% of respondents cite that with the end of the vacation season comes a renewed attention to real estate. The survey also highlighted emotional motivations that are strengthened during the fall – namely the desire to be “home for the holidays”.  ERA President and CEO Charlie Young states, “As vacations wind down after Labor Day and people become more focused, the desire to be in a new home for the holidays is a historically strong driver of fall home sales”.  As the season progresses, financial motivations also come into play. 10% of respondents cited the desire to purchase a home before the end of the year in order to gain tax benefits.

The point of this all being: There are clear perks to selling in each season! Make sure that you home is in the right condition to sell and go for it!

Now on the flip side of things, when is the best time to buy?

Do not obsess with trying to time the market and figure out when is the “best time to buy.” Real estate is cyclical and constantly changing. The ideal time to buy is when you find your dream home (or the house that has the potential to become it) and you can afford it. Trying to predict the housing market and wait for the so-called right time, may mean you miss out.

You have to remember that while buying a home is one of the most important decisions of your life, the rest of your life does not get put hold. We have had buyers who have been planning a wedding while house-hunting, as well as a couple who gave birth during escrow! It can be a stressful process, but one that is well worth the effort!

However, there are three things that we suggest having arranged before you purchase your home: be pre-approved, have enough for a down payment and make sure you are comfortable with the monthly mortgage payment.

Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford.

As always, we are here to help so don’t hesitate to contact us with any questions or to set up a consultation to discuss if right now is the right time for you to buy or sell your home. info@weberaccetta.com

New Listing! 1108 S. Prospect Ave, Redondo Beach

Hi Everyone!

I’m so excited to announce What’s Up Redondo’s newest listing! Michelle and I have been working hard in preparation of listing this awesome house and we are excited to be hosting brokers open house today, Thursday 10/1/15 from 12pm-2pm and this weekend both Saturday 10/3 and Sunday 10/4 from 2pm-5pm. Come by and say hello to us!

  
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Located in the relaxing and established neighborhood of South Redondo Beach, is a wonderfully impeccable two-story, 4 bedroom, 3 bath, traditional home. Lush landscaping and Spanish-style roof, invite you into the open concept floor plan perfect for comfortable family living. This house immediately invites you in to take a seat and enjoy the warmth of the fireplace and the expansive 12 foot tall vaulted ceilings. The remodeled kitchen is the heart of the home, the large granite counter top connects the kitchen to the expansive living room. One bedroom is located on the lower level and remaining rooms on the second, including the large master suite with vaulted ceilings and private balcony. The 6,207 sq. ft. flat square lot, features secluded backyard and garden with covered patio, great for year round BBQ’s and outdoor entertaining. Easy-access to excellent schools, just a 2-minute drive to the Riviera and beach or a few minutes to lots of great shopping! We invite you to view this entertainers home today!

Click HERE for the full listing post for more details!

Seller’s Transaction Timeline

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Hi Friends!

This year I have been working with a lot of sellers so I thought I’d fill you in on what a typical timeline looks like from the seller’s end of a transaction.

1. Select a Realtor

2. Initial Consultation
-Review market analysis and comparable homes
-Establish listing price
-Sign listing agreement

3. Home Preparation
-Declutter
-Clean up
-Stage

4. Work with Realtor
-List and market the home
-Schedule showing and open houses
-Review offers
-Negotiate terms

5. Fully Executed Sales Contract
-Open escrow
-Buyer to deposit earnest money 

6. Prepare, Review, and Sign Documents
-Disclosures to be filled out and signed
-Escrow instructions to be filled out and delivered back to escrow

7. Grant Buyer’s Access to Home for Inspections
-Review and negotiate request for Repairs (if applicable)
-Request buyers to remove inspection contingencies 

8. Request Buyer’s to Remove All Other Contingencies
-Appraisal contingency
-Loan contingency

9. Sign Final Documents

10. Grant Buyer’s Access to Home for Final Walk Through
(if applicable)

11. Lender to Fund the Loan

12. Title Transfer to New Owners

13. Close Escrow!
-Buyers receive keys

14. Receive Final Check and Closing Package from Escrow

Your agent’s job is to help keep you on track every step of the way so you wont have to memorize this process. They should be aware of the deadlines for the buyer to remove their contingencies and for when your paperwork is due. They will also help you coordinate appointments with the buyers as well as handle any new negotiations that may arise during the escrow period. Hopefully this timeline has given you a snap shot of what to expect when selling your home and the general order of the process. As always, if you have any questions or if you are thinking of buyer or selling your home, don’t hesitate to contact me! cell: 310.387.4693 or email: laurenw@hmsold.com

Two closings in one week!

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Congratulations to my brother, Mark, for his first home sale! His condo/townhouse sold for asking price of $589,000 and closed in less than 30 days. From this transaction I learned the power of communication BEFORE entering into escrow. The biggest challenge we came across was making sure everyone was aware of the Mello Roos and HOA dues. Irvine and Tustin are known for these additional fees in the newer developments and even though it was disclosed in the listing details, I was surprised at how many agents overlooked it. So my tip to my sellers and listing agents is disclose, disclose, disclose! Pre-screen your agents and prep the clients before they submit their offers. Have open communication and make sure that everyone is aware of any additional fees/taxes/supplements, because you can never assume that they already do know.
After a total of three offers, the house went to a great and well deserving buyer. It was nice to work with his awesome agent and kick ass lender. Their clear and open communication was the key to our smooth transaction and am so appreciative of their professionalism. Congratulations again to Mark, Linda, and my dad for all their hard work!

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Congratulations to Sammi and Alex who sold their home in Gardena. Wow was this a hot commodity! After listing the house I received at least 10 phone calls and over a dozen showings in the first two days on the market. By the third day we had our first open house and had over 30 different parties come to visit! We received multiple offers and sold the house for over asking at $450,000 and it was appraised at value! I have learned a lot from working with my clients, more than they probably know. I feel truly honored to have met such hard working, kind-hearted, positive, and smart people. By observing they way they carried themselves in this transaction I was constantly reminded of the importance of having a good attitude towards all things in life (including business). Their positive mindset is what made this transaction such a pleasure to be a part of and an honor to be their agent!