How to Negotiate with Sellers

Buying a home is one of the most important purchases most people will make. In order to make the right decision the first time, potential buyers need to be prepared. Consider the following before starting negotiations:

  • Be prepared Research the housing market in the target area. Once you have information about the general area, focus on the particular property and seller. Look for answers to questions such as:
    1. Why is the homeowner selling? (If they’re moving because they find the area undesirable, you might want to consider this issue.)
    2. How long has the home been on the market? (If it has been on the market for a long time, perhaps there are negative facts about the property that you need to know.)
    3. How much did the seller pay for the home compared to the current asking price? (If the seller paid more, find out why. Was it a general real estate trend, or did property values in that particular neighborhood go down?)
    4. What is the seller’s time frame for selling and moving? Does it fit within your needs?
    5. Are there any defects in the home or problems with the surrounding neighborhood? (For example, is the roof so old that it will likely leak during the next storm? Is there a new construction project in the area that will lead to major traffic congestion?)

As the potential buyer, you want the advantage. While you want answers to all your questions to the seller, reveal very little about your circumstances.

Do not give the seller personal information such as your income, the maximum you are able to pay for a down payment or the home, or when you want to move.

Make sure that your agent knows not to reveal any such information to the seller or his/her agent.

Also, do not let the seller see how much you want the property. If you appear desperate or overly enthusiastic, the seller then has the stronger bargaining position. When meeting with the seller or listing agent, keep your emotions in check.

  • Establish a Timeline Find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating. Even if you, the buyer, are the one with the deadline for purchasing a home, don’t let yourself be rushed into making concessions or a purchase you may regret later.

3 Tax Benefits of Owning Los Angeles Real Estate

Taxes

While there are many advantages to owning Los Angeles real estate, the tax benefits are some of the most important to consider. For decades, the Federal Government and the state of California have incentivized homeownership through tax benefits that are not available to renters. These benefits not only help to reduce the home ownership costs, but also the costs of buying and selling a home. Below are a few tips to help you get a better understanding of real estate and the many tax benefits that come with owning a home.

It’s important to note, however, that in order for a homeowner to take full advantage of most benefits, they must itemize their taxes.

1) Mortgage Interest Deduction

The mortgage interest deduction (MID) is easily one of the best tax benefits available to homeowners. After searching, finding, and purchasing one of the many Los Angeles homes for sale, a new homeowner is able to deduct all the interest paid on their mortgage payments. For the first few years of the loan, interest tends to be the largest component of the mortgage payment. Because of this, the MID is a very beneficial tax advantage to homeowners.

2) Property Tax Deduction

For income tax purposes, it’s possible to fully deduct the real estate property taxes paid on a first home. By taking advantage of these property tax deductions, a homeowner can effectively reduce their total tax burden. To learn more, check out Schedule A (Form 1040), line 6.

3) Capital Gains Exclusion
When considering Los Angeles homes for sale, it’s important for a buyer to develop a long-term plan that includes the capital gains exclusion. So long as a homeowner has lived in their home for two of the last five years, they can take advantage of the exclusion. Individuals can exclude up to $250,000, whereas couples can exclude up to $500,000. It’s possible to claim the exclusion once every 2 years.

Ultimately, there are a ton of tax advantages and benefits available to homeowners — the tricky part is finding them. For those who wish to learn more about these tax advantages and others, seek out a certified public accountant (CPA) or tax attorney to assess all the available options.

If you’re looking to buy, sell, or lease property in Los Angeles? If so, please contact me at (310)402-8181 or jkryukova@gmail.com.

To sign up for free, daily property emails, please go to my website and sign up: http://juliekproperties.com/free-listings-market-information/

Source: Yahoo! News

New addendum could help appraisers give credit for green features

The three-page Appraisal Institute form should guarantee at the minimum that an
appraiser will take notice of a home’s energy improvements and seek to come up
with a value adjustment for local market conditions.

Here’s some good news for homeowners who’ve installed energy-saving features
but haven’t been sure appraisers will credit them with higher valuations: Thanks
to a new industry-issued appraisal addendum, the odds have improved that such
upgrades get the fairer market value they’re due.

The Appraisal Institute, the country’s largest and most influential association in
its field, published the long-awaited addendum late last month. It’s designed to
be attached to any standard appraisal report covering a property with
significant green features. Owners, sellers, buyers, refinancers and realty
agents don’t have to wait for an appraiser to use it. They can download it at no
cost and ask that it be made part of the appraisal submitted to the lender.

 

The new addendum won’t guarantee you that the appraiser will raise your
property value by the tens of thousands of dollars you spent on your solar panel
array, high-efficiency windows or geothermal system. But it should guarantee at
the minimum that he or she will take notice of the energy improvements and seek
to come up with a value adjustment for your local market conditions.

The three-page form is a response to growing concerns that although the Obama
administration and many state governments and utilities are pushing homeowners
to invest in energy-conserving components, standard appraisal forms — including
those used by financing giants Fannie Mae and Freddie Mac — are not set up to give adequate

recognition to those often costly improvements.

The inevitable result: Owners are frustrated at what they consider lowball
valuations. Refinancers can’t get the loan amounts they seek because the
appraisal report doesn’t factor in the monthly utility savings they’re getting
from their solar panels. Appraisers, for their part, say local real estate
listing documents often don’t spell out in detail all the energy-efficiency
improvements or they get the facts wrong.

For example, appraisers complain that some realty listings claim that the
house is an “Energy Star Home” when in fact there’s nothing more than a few
Energy Star appliances installed in the kitchen. The Energy Star Home
designation is a much higher standard: It requires qualifying under a
comprehensive set of criteria for the lighting, windows, water heating and
high-efficiency appliances, among others.

The institute’s addendum runs the gamut of improvements and ratings, and goes
well beyond energy efficiency. Though it has basic sections covering insulation,
windows, lighting, heating, air conditioning and solar, it also covers
sustainability features such as the presence of water-saving or reclamation
systems, landscaping that lowers either water or energy use, and even the
presence — or lack — of public transportation nearby that might help lower fuel
usage.

Of special significance to owners who have had their houses audited or rated
for green features and energy efficiency, the addendum asks for detailed
information on the rating or auditing entity, the dates of the rating, average
utility costs in the area and estimated monthly savings based on the rating
itself.

Any certifications such as LEED (Leadership in Energy and Environmental
Design) must be attached to the report along with information on any changes
made by the owners to the property since the certification. If the house has
solar installations, the addendum asks for such details as the age of the
panels, the energy production in kilowatt hours for each array, and other
information relating to the energy savings attributable to the solar
features.

Appraisers using the new addendum should now be better equipped to identify
accurate, recent “comparable” sales in the area — a key part of coming up with a
valuation, according to Joseph C. Magdziarz, 2011 president of the institute. In
other words, if you have a highly efficient, audited house with extensive
energy-saving features as demonstrated by the addendum, an appraiser should look
for prices of houses that sold recently with and without energy-efficiency
features for indications of your home’s true market value.

Appraisers who have training in green valuations can also use one or more
techniques that essentially capitalize the documented monthly savings on utility
bills into a specific value adjustment appropriate for the local market. Sandra
K. Adomatis, an appraiser in Punta Gorda, Fla., who teaches green appraisal
courses and is a nationally recognized expert, said the higher the utility
charges in a jurisdiction, generally the higher the value gain from solar panels
and other energy-saving installations. For instance, in a relatively
high-utility-cost state such as California, said Adomatis, the value increment
from the same improvements might be double that in a relatively low-cost state
such as Florida.

The addendum is available at the Appraisal
Institute site, at http://www.appraisalinstitute.org

 

Source: Latimes.com 10/9/11

By Kenneth R. Harney

Financing Game Changer to Affect All Buyers and Sellers!

If you’re a buyer or seller on the fence about making a move, October 1st could be a game changing date.

Starting October 1, 2011 “Conforming” (think Fannie and Freddie) and FHA loan limits are set to be lowered nationwide as the federal government looks to lessen its footprint in the business.  This means the current loan limit of $729,750 in Los Angeles that we’ve gotten used to in the past several years will be reduced to $625,000 this fall. So why does that matter to you? Since most buyers rely on the low rates, smaller down payment requirements and the easier underwriting guidelines offered by these government backed loans, the market is going to lose a tremendous amount of its purchasing power. When purchasing power decreases it puts downward pressure on sale prices. For sellers in certain price ranges this means less qualified buyers this fall. For buyers this will put many properties out of reach. For example:  With the conforming loan limit at the current $729k the average buyer with 20% down payment can buy a $910,000 house.  When the conforming loan limit decreases back to $625k, the average buyer with 20% down payment can only buy a $780,000 house using conforming financing. Today an FHA buyer with the minimum 3.5% down payment has the power to buy a $755,000 property. After October that max purchase price drops to $646,000. If you’re planning on buying or selling you may want to accelerate your timeline.   Of course there is and will continue to be financing far above these loan limits. However, these “non-conforming” or JUMBO loans may have higher interest rates, are more difficult to qualify for, require a larger down payment, and require more post closing cash reserves by the borrower.

It’s also important for you to know that this is not being backed by the government so in turn the Jumbo loan product varies significantly from one bank to the next and one lender to another. It is not “one size fits all” when it comes to jumbo loans. That’s why it is so important to have a mortgage consultant who is skilled in jumbo financing, not only understanding the different programs and guidelines but having access to all of those choices. Please don’t hesitate to call for any additional information on these upcoming changes or any property sales questions you may have.