Supplemental property taxes can confuse a buyer

Have you recently purchased a home and been thrown off by getting bills about “supplemental property taxes?” Our friend Jay Vorhees at JVM Lending breaks it down for you:

Supplemental property taxes often create significant confusion for new homebuyers. When someone purchases a property in California, the County Assessor is required to immediately re-asses the property for property tax purposes. This re-assessment usually correlates to the purchase price and can take up to six months to complete.

JVM Supplemental property taxes

When a home is purchased, property taxes are usually based on the property tax bill of the current owner or seller. But usually, their property tax bill correlates to the price the seller paid for the property – often much less than the buyer is paying. Then, buyers mistakenly believe the property tax payment estimate when they purchase is an accurate reflection of their actual property tax. Usually, that’s false.

Anywhere from three months and beyond, buyers should expect a “supplemental tax bill” from the County Assessor. Even if a buyer has an escrow or impound account, they have to pay for the supplemental taxes, which can be sizable. As soon as a supplemental bill is received, a buyer should contact their loan servicer.

Also, when new buyers refinance into a new loan less than a year after a purchase, supplemental tax bills can cause confusion. Even if a borrower is refinancing into a lower rate, the housing payment can appear to increase. This is because lenders are basing the new housing payment on the new property tax liability, while borrowers are still basing their housing payment on the seller’s property tax liability, which is too low.

Pantone “Color of the Year”

Everything’s coming up Better Homes and Gardens right now. Even Pantone’s Color of the Year is “Greenery,” which is very similar to what we use here at BHG.

Lee_Eisemann Pantone Color of the Year 2017 GREENERY
Picture Credit: Pantone.com

Check out the story on the Color of the Year, which Pantone describes as “a fresh and zesty yellow-green shade that evokes the first days of spring when nature’s greens revive, restore and renew.” As an outdoor enthusiast and BHG realtor, I love this. But, I probably won’t be painting my walls this color – I think it makes a great accent color!

My favorite part of Pantone’s description, though, is this at the end: “A life-affirming shade, Greenery is also emblematic of the pursuit of personal passions and vitality.”

As we near the end of 2016 and move into 2017, it’s a good time to reflect and consider what we’ve accomplished and what there is to look forward to. I have a few resolutions: up by 6, work out Monday through Friday and in bed before 11 (no more falling asleep on the couch)! And of course, the time to lose some weight needs to become a reality versus just thinking about it. I am also going to start a remodel and add an in-law unit to my current house; I’m thinking about setting myself up for retirement. What is on your New Year’s resolution list?

How bathroom remodels are trending

Of all the things to remodel in a house, bathrooms and kitchens are probably the two most popular rooms.

bathroom-remodel-2

Houzz.com wrote a cool article about how homeowners are “craving stylish, beautiful spaces, with luxurious finishes and big showers.”Their study surveyed more than 2,100 Houzz users in the U.S. who own homes and are currently renovating their bathrooms, are recently done with a renovation, or are planning on one in the near future.

Check out some of the graphs that reveal the current trends for bathroom remodels:

How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend
How People Upgrade Their Main Bathrooms, and How Much They Spend

The climbing stock market’s effect on housing

Did you know interest rates climbed about 1/4 of a percent in the aftermath of Donald Trump’s election? This was the biggest single-day rate increase in three years.

trump-rates

Despite being told over and over again that a Trump victory would result in lower rates, the opposite has happened. In a recent Forbes column (Dec. 6 issue) Gary Shilling said he thinks the markets have massively overreacted to Trump’s election. He points out that the root causes of weak economic growth (that have kept rates low) will remain. He also says that Trump’s proposed tax cuts and stimulus programs will be watered down by Congress; the expectations of an economic boom are overblown. If he is correct, this means rates may fall again.

images-2

This now begs the point: nobody can predict anything in this market. So, if you have been thinking about buying or selling, is it time to get off the fence? Rates are still historically low, but for every 1/2 percent increase in rate on a $500,000 loan, the payment increases about $140 to $150 (and even less after “tax benefits”). Should buyers and borrowers wait to see if rates fall before moving forward with transactions? Absolutely not. Borrowers can easily take advantage of no-cost refi’s if rates fall.

500_f_112661321_cpogf2tpziyed8z81tkb9wpun9mfazw3

If you do decide to buy or sell, give me a call, I would love to help you navigate the process!

December/January housing market is stronger than you think

December and January are usually busy months with holidays, vacations and school breaks. But, contrary to popular belief, that does not mean the housing market slows down. On the contrary, actually!

for-sale-1

Based on 2015 numbers, listing your home in December and January actually give you a benefit. You can garner multiple offers and close above list price. In Spring, you get the price increase but also more houses listed, which lead to many more choices for buyers, making multiple offers rarer (or, you’ll get fewer offers at least, like 3 vs. 8 in Dec./Jan.).

If you’d like to take advantage of this market in December and January, reach out to me. I’d love to help you navigate the holiday season weather you are selling or buying a home or just consult with you on the best overall strategy for you!

Happy Veterans Day 11/11

Tomorrow is Veterans Day – a day to honor and celebrate the men and women who protect our country. I have a son who is currently serving and know many who are veterans of the military. I’d like to first and foremost thank them for their years of bravery, courage and selflessness in defending the United States of America.

One of my main focuses in real estate is helping veterans get into the crazy California housing market.  I believe those who have served our country deserve to own a home in that very same country.  The VA loan is the best loan going and I strive to educate other agents about the benefits to help them when there is more than one offer.  The VA loan allows our veterans to purchase with zero down, but the government backs 25% of the loan, thus it is like putting down 25%.

If you are a veteran or know anyone who is that may be looking for a new home, please contact me. For those of you who aren’t, but would like to make a difference for our veterans tomorrow, please visit serve.gov and search “veterans” to find volunteer opportunities.

East Bay housing market is shifting

housing-marketLately, we’ve started to see a “shift” in the Walnut Creek-area housing market. Price appreciation growth has slowed and we are now seeing more price reductions. Home price appreciation has generally declined to single-digit annual appreciation with estimates in the next year of 3-5 percent.

In the 24/680 corridor, homes are sitting on the market longer than they did in the Spring (20-26 days, as compared to 15-20 days). I am receiving 1-3 offers  with a final sales price of 4 percent over the asking price on most of my listings.

The Federal Reserve Bank will not increase interest rates this month. Currently, the best mortgage interest rate for a 30-year fixed rate is approximately 3.5 percent. In the big picture, global growth concerns remain the driving force behind the long-term trend toward lower rates.

Kitty Cole, who coaches many Bay Area agents, has noticed two distinct Bay Area markets. Many of them are side by side. Check out her insights:

Some of the market (still a seller’s market) is hot, with low DOM’s, high Sales Price to List Price ratios, low inventory, no contingencies, multiple offers and buyers aplenty. This market is going on in Oakland, Berkeley and surrounding cities.

It looks similar to the last 4 1/2 years. The only thing that is quite different is the number of offers that was 10-25 a few months ago, and is now 2-6 (and occasionally higher). This market requires savvy pricing and negotiating to get your seller the highest price. san-francisco

The other part of the market (a buyer’s market) has slowed with these factors in place: price reductions (up to 10 percent, and sometimes two before it brings an offer), contingent offers (contingent upon the sale of another property), high DOM’s, few offers (sometimes only one!), expired listings, cranky sellers and demanding buyers (because they can be!).

In the city, one client whose specialty is high-rise condos, literally slowed overnight and now the DOM’s for her listings are more than 30 days. Another San Francisco agent has had three listings expire in the past three months. One agent in the East Bay (Pleasant Hill) is stymied by her listings that sold within seven days and are now sitting for weeks. Many newer agents are not prepared to have the “I need a price adjustment to sell your property” conversation.  In three months, it will be different … how, I don’t know, wished I had that elusive crystal ball.

Will the Presidential race affect our mortgage rates?

I thought this might be interesting to share. Traditionally, there is very little on the market as we enter the holiday season. The last couple years, sellers listing in December and the beginning of January tended to have multiple offers because there isn’t much inventory (meaning, people don’t like to have Open Houses or showings during the holiday season as they are usually entertaining family or friends).

With the Presidential election around the corner, many agents are getting the feel the market has softened. It will be interesting to see how this year’s election will affect our market. Here are some insights from my friend Jay Vorhees at JVM Lending:

trump-clinton

Trump = Lower Rates; Clinton = Same or Higher Rates

We have blogged several times about how rates are not held artificially low prior to major elections. It is a myth that they are. Presidents, in fact, like to see proof that the economy is getting stronger, and these signs usually push rates higher. Presidents hope for positive signs like GDP growth, job growth, lower unemployment, etc. These signs usually push investors into stocks and out of bonds, causing rates to go up.

(Quick reminder: When investors demand more stocks, rates go up; when investors demand more bonds, rates go down.)

With respect to Donald Trump and Hillary Clinton, it is all about “stability.” Stock market investors like “stability” as much as they like growth. Worries about instability or shakeups send investors away from stocks and into the safety of bonds (pushing rates down).

Investors believe that Clinton will follow President Obama’s course, and this is perceived as “stability.” So, signs that Clinton might win will probably keep investors in stocks, which will ultimately keep rates largely the same.

Investors are not sure what Trump might do, so signs that Trump might win will probably push investors to the safety of bonds, pushing rates lower.

This is very similar to the uncertainty the Brexit vote created and its influence in pushing rates lower.

Mortgage Terminology 101

mortgage-1 Buying a home, even for those with experience, is already a tricky process to navigate. Add choosing a mortgage on top of that and things can get really stressful. Luckily, Keith Loria of BHG posted a great list of basic mortgage terminology to help guide buyers through this process. Check out our lightly edited version:

“Mortgage Lenders” – lenders make the loan and provide the money you’ll use to buy your home. You’ll need a lot of financial background information when you meet with a lender so he or she can set mortgage interest rates and other loan terms accordingly.

“Mortgage Brokers” –  brokers work with multiple lenders to find you the best loan. This can be confusing, but their jobs are essentially to get you the best rate and terms on your loan.

“Mortgage Bankers” – most lenders are bankers, which means they don’t actually lend their own money, but borrow funds at short-term rates from warehouse lender. Some larger mortgage bankers will originate their own loans and sell directly to Fannie Mae, Freddie Mac or investors.

“Portfolio Mortgage Lenders” – they originate and fund their own loans, offering more flexibility in loan products because they don’t have to adhere to secondary market buyer guidelines. Once these loans are serviced and paid for on time for at least one year, they’re “seasoned,” and can be sold more easily on the secondary market.

“Hard Money Lenders” – this may be your last resort if you’re having trouble getting a mortgage and working with a portfolio mortgage lender. They are private individuals with money to lend, though interest rates are usually higher.mortgage-2

“Wholesale Lenders” – they cater to mortgage brokers for loan origination but offer loans to brokers at a lower cost than their retail branches offer them to the general public. For you, the loan costs about the same if it were obtained directly from a retail branch of the wholesale lender.

“Correspondent Mortgage Lenders” – these lenders have agreements in place with one or more wholesale lenders to act as their retail representative. They lend directly to buyers and use wholesaler guidelines to approve and close loans with their own money. They will also buy back any loans they close that deviate from those guidelines.

“Direct Mortgage Lenders” – direct mortgage lenders are simply banks or lenders that work directly with a homeowner, with no need for a middleman or broker.

10 tips for adding value to your home before you sell

kitchenWhen you sell your home, it’s all about adding value before it goes on the market. There are some small tweaks you can make around the house to make sure you get top dollar for your house. Here is a whittled-down version of the top 10 tips from Houzz.com on how you can increase that value:

1. Add square footage: Move furniture around to fit the room better and make it feel larger. Perception is powerful, even if that true square footage won’t budge. You want prospective buyers to see a lot of space, and therefore, a lot of potential.

2. Traditional sells too: You don’t have to buy a bunch of new stuff to show off your home. Every buyer has his or her own style, so staying honest to the home’s roots can pay off.

3. Master bedroom closet upgrade: Add custom closets to the master bedroom. A large, walk-in closet will add value to any home and excites buyers. Finding an affordable way to do it isn’t terribly difficult with a little research.

4. Kitchen is king: If you do spend money on your home before it hits the market, put it towards your kitchen. Even updated light fixtures will add value to a space used for eating, drinking, gathering and storage by even the worst cooks.

5. Storage, storage, storage: There is no such thing as too much storage. It’s important to provide ample storage space, so utilize it as much as possible when selling!

6. Fresh paint is magical: Painting is the most cost-effective way to freshen up a space. Freshly painted rooms feel updated, clean and crisp and won’t break the bank. Try to avoid colors that are too bold and might scare off buyers. Traditional, neutral choices can do wonders!

7. Try to be energy-efficient: Buying a home involves closing costs, moving fees, energy bills and more on top of just the sale price. If you offer buyers energy-efficient options (CFL or LED lightbulbs, solar panels, etc.), they may find that long-term cost savings attractive. front-yard

8. Bathroom updates help: Behind the kitchen, bathrooms are going to be the most important part of your home to get updates in when selling. A little bit can go a long way in most bathrooms; replace outdated features or change light fixtures to start.

9. Hire a professional organizer: Don’t try to do everything yourself. This process is stressful enough! A professional organizer can help you de-clutter your home and help open up manageable space. That organization will impress buyers.

10. Add curb appeal: You only get one chance to make a first impression, right? Make sure your front yard is tidy and well-groomed. Don’t let peeling paint or cracks in the walls scare off buyers before they even make it in the door.