Real Estate Information Archive

As stated over the last several weeks, we are very concerned about interest rates going higher for the following reasons:

• In just 2 months, interest rates have increased by .500% in rate across the board.
• The Federal Reserve has stopped buying mortgage back securities which has kept rates down in the past.
• The Federal Reserve now plans on selling mortgage backed secrurities which will force interest rates higher.
• There is talk on the street that the Federal Reserve may increase the federal fund rate by .25 in after hours trading one of these days not to upset the stock market but would devistate the bond market and push rates higher.
• We continue to see more economic reports being released weekly that are indicating the economy is recovering which pushes interest rate higher.

As result of the above, the window of opportunity for locking in a low interest rate on your mortgage or refinance may be numbered.  Please contact me for more information.

Rob McCarthy
Owner and Senior Mortgage Planner - 101 Loan
www.101loan.com
Email Me
408-377-4123 Office
650-465-8957 Cell
560 S Winchester Blvd, Suite 500
San Jose, CA  95128
A Dept.of Real Estate - License # 01165697

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Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
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For a limited time - Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits.  

To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

The Federal Credit
Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010.  

The New California Credit
Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied.  The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)).  Other terms and restrictions apply to both tax credits.

Got Questions?
Interpreting the rules for the two programs can be confusing (does one program limit credit when you close on a full moon or if the purchase contract has an odd number of page?) – call us to help you craft the best strategy to buy your next home at the best possible price (with the most tax credits possible!)

The Dawn Thomas Team
Intero Real Estate Services
496 First Street, Suite 200
Los Altos CA 94022
(877) 901-2121
CA DRE License: 01860743

____________________________________________________________________
The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

When a taxpayer sells an investment property and implements a 1031 tax deferred exchange, there are a few time period requirements the taxpayer must follow. 

1031 taxpayers have 45 days from the sale of the relinquished (old) property to identify new property to purchase. The deadline for completing the exchange is the earlier of

• 180 days from the sale of the old property or
  
• the due date of the taxpayer's tax return for the year in which the old property was disposed. 
  

If a taxpayer sold property after October 18, 2009 and utilized a 1031 exchange, the taxpayer's exchange period will expire on April 15, 2010 (assuming the taxpayer is a calendar year paying taxpayer).  In order to ensure the taxpayer has a full 180 days to purchase new property, the taxpayer must file for an extension.   For example, if the relinquished (old) property closed on December 2, 2009, unless the taxpayer files for an extension, the taxpayer will only have until April 15th to acquire their replacement (new) property.

However, if the taxpayer files for an extension of their tax return the taxpayer will have the entire 180 days (May 31, 2010) to complete the exchange.

 
Tax Forms You May Need

 It is important to note that, taxpayers must report their exchange on the tax return for the year in which the exchange begins.

•  Form 8824 is used to report the 1031 exchange. This form requests the date of the exchange transaction, the date properties were "identified" and financial information obtained from the closing/settlement statement.

• Form 4797   is used when depreciable rental or business property is sold.

• Form 1041 is used when non-depreciable investment property is sold.

• Form 4868 is used to file for an extension.

Ron Ricard, CES®
Assistant Vice President, Sales Manager
Investment Property Exchange Services, Inc.
(408) 483-1031
Email me

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Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Adding new solar panels to a home in a remodel is still quite expensive. If you are looking into adding solar panels to your home or even a backyard greenhouse, then consider going to commercial installers and asking them to let you have the solar panels they have replaced in commercial buildings. Panels that become chipped or scratched in commercial buildings are swapped out for new panels. Yet, even damaged solar panels can deliver most of their original output and still be perfectly safe for a home project or renovation.

Be prepared to ask politely and it is good form to offer to pay something. Getting rid of old solar panels will save commercial installers the recycling and disposal fees, but it is still good business to acknowledge their helpfulness.

You can purchase a multimeter that measures amps and watts and attach it to the used solar panels while they are in the sun to determine if they are still producing energy.

© The Dawn Thomas Team

The Dawn Thomas Team
Intero Real Estate Services
496 First Street, Suite 200
Los Altos CA 94022
(877) 901-2121
CA DRE License: 01860743

____________________________________________________________________
The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

I am proud to announce that Exclusive Physician Loans, the Nation's leading physician referral and relocation company, selected The Dawn Thomas Team of Intero Real Estate Services as its exclusive network team of Realtors for the Silicon Valley. Since our partnership's inception, We have specialized in helping residents at Stanford Medical Center,  Santa Clara Valley Medical Center, O'Connor Hospital, and Kaiser purchase homes throughout the Silicon Valley. In addition, this special financing program will extend the special Zero Down Loan* to Dentists and Lawyers (up to $1,000,000) and Physicians (up to $1,500,000) across the country.  Many other Doctor Loan programs are not offered across the country or in the State of California.

About Exclusive Physician Loans: Exclusive Physician Loans specializes in providing mortgage solutions and award winning real estate agents for physicians. They have access to the only remaining 0-5%* Down Physician Loan available in all 50 states, which can mean the difference between renting and buying. Exclusive Physician Loans and their team have helped thousands of physicians in the last 9 years buy homes using special financing for doctors.

For more information, visit EPL's website or e-mail The Dawn Thomas Team directly.

Thank you for your interest!
Dawn Thomas

*5% down payment may be required if zip code where property is located is in a "declining market" per current lending guidelines.

(Part 1 of 3)

Balance in one's portfolio, as in life, is often easier said than accomplished.  Questions arise that include:

1)    Is real estate safe?  If so, when, what, where, how and why should I buy?
2)    Is the stock market safe?  Again…when, what and why should I buy and for how long?
3)    How do I keep balanced in my stock and real estate portfolio?

These, and many others, are questions we ask ourselves as investors on a daily basis.  Many of us may have had too much of one thing at one point in time, whether it was tech stocks in the late 90’s or real estate in  2006 through 2008 or now in 2010 with commercial property.

Many analysts have very complicated spreadsheets and graphs predicting what may happen or not happen in the future and based on these, investors must make hard decisions on what to do, how to proceed and what purchases they should make.  There is no real crystal ball that is 100% accurate.  If there was, I would not be writing this article, if you know what I mean!

One thing I have learned through my years of lending experience and course work on economics, lending and finance is something titled “The Four Cycles of Real Estate” which, based on my experience, repeats every 10 years or so and is applicable to investing in the stock market as well.

For real estate, every 10 or so years, each geographic area throughout the United States experiences a full circle, moving from a recessionary market (that we have experienced over the last 2 years) to a recovery market to a growth market to an oversupply market.  It appears that each cycle lasts between 2 to 2.5 years but can vary from area to area.  Based on my experience, an investor of real estate would should buy in the recessionary period when prices are low and sell in a growth market when prices are high.  This application could be used with the stock market as well.  Buy the stock (after researching it) when the stock is low and no one wants it and sell when everyone is buying it or when the stock is high.

With this model, you might not see the peak or the high point of real estate or stock prices but you certainly won’t see the low point either as so many investors experienced in 2001 and 2008 if they held on to the investment and had to sell.  In summary, it seems that one of the major keys to creating balance while providing a good return on investment is when you buy and when you sell and in the case of real estate buying in the recessionary period, holding in the recovery period, selling in the growth period, staying in cash in the oversupply period and then buying again in the recessionary period.

In relationship to what, where and why to buy, on Thursday 2/25/10 I will provide part 2  and explain the “what and why” part and on Thursday 3/4/10 I will explain the “where” part.

If you have any questions on the above or would like to determine your purchasing power and financing options for a home purchase or investment property in the future, please contact me.

All the Best,

Rob McCarthy
Owner and Senior Mortgage Planner - 101 Loan
www.101loan.com
Email Me
408-377-4123 Office
408-558-1422 (Renee Steff) Sr. Loan Coordinator
408-608-1921 Fax
CA Dept.of Real Estate - License # 01165697

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

A colleague asked me to write a post on the different ways to hold title to real estate.

The nature of your assets and how you hold title to those assets (called character of the property) is a critical factor in the estate planning process. Before you take title (or change title) to an asset, you should understand the tax and other consequences of any proposed change. Your estate planning lawyer will be able to advise you.

Keep in mind that transferring title to a trust generally does not necessarily change the character of the asset unless the trust (or related document) changes the character. For example, if you and your spouse own property as joint tenants (which is considered separate property), merely transferring it to the trust does not alone change the character to community property (see below for more information). Moreover, just putting a person’s name on a deed can trigger gift or transfer (sale) consequences, so make sure you seek good legal advice.

Community property and separate property - In general, separate property is assets 1) owned by a spouse or domestic partner before marriage or registration of domestic partnership; 2) acquired by gift or inheritance; or 3) acquired while separated. All other property acquired during marriage or domestic partnership (such as earned income) is community property. (Note: For domestic partnerships, federal laws do not treat community property the same way that CA law does.)
     Separate property can be converted to community property (and vice versa) by a written agreement. However, because taking such a step can have tax and other consequences, make sure that you understand such consequences before taking this step.

Joint tenancy with right of survivorship - Co-owners of real estate can hold title as joint tenants with right of survivorship. This means that, if one co-tenant dies, the property passes to the surviving joint tenant, no matter what the will says. The drawback to joint tenancy is that, if you’re married, joint tenancy only allows for a step-up in basis for the deceased joint owner’s half interest. A step-up in basis means that the basis of your house is stepped up to the fair market value at the time that an owner dies. In joint tenancy, only the deceased person’s half interest gets a step up in basis to the fair market value at time of death. So, if the surviving joint tenant were to sell the house, there would be a profit, perhaps resulting in having to pay capital gains taxes. Compare this to community property where both halves get stepped up in basis to the fair market value at the time one spouse dies, which will result in reducing profit and therefore capital gains tax. (See my previous post on 2010 on “What’s Going on With Estate Taxes?” for a brief explanation on the modified step up in basis in 2010.)

Tenants-in-common - This refers to an arrangement in which two or more people own real estate without a “right of survivorship.” Upon the death of one tenant in common, his or her ownership interest passes to the beneficiary named in a will or trust. If a co-tenant dies without a will, the heirs will be determined by the probate court according to the probate code. This applies to co-tenants who are married or in a domestic partnership as well as to those who are single. Note that, generally, a will goes through probate court and a living trust does not.
Community property with right of survivorship - If you are married or in a registered domestic partnership, you and your spouse or partner could hold title to property as community property with right of survivorship. Like joint tenancy, the property passes to the surviving owner regardless of what the will says.
Examples (not meant to be exhaustive):

First marriage: If you are in your first marriage and hold everything as community property, you should generally hold your property as community property and then do a will or a living trust (a living trust avoids probate but a will does not). Holding your property as joint tenants avoids probate but can have negative capital gains consequences. Community property with right of survivorship avoids probate but the IRS has not specifically ruled on the step up in basis with regard to this type of character. Moreover, community property with right of survivorship or joint tenancy with right of survivorship postpones probate but it does not avoid probate. For example, when the 1st owner dies, the transfer can occur without probate. But when the surviving owner owns it then as a single person, the asset will be probated if the interest has not been put into a living trust. Also, keep in mind that avoiding probate does not mean that you avoid conservatorship, make it hassle-free for your heirs, have adequate tax planning, or protect your children from creditors.

Married with Separate Property: If you’re married and you have separate property, you can have a joint trust with your spouse and still hold the separate property as a separate property in that joint trust. Or you can have two trusts, one community property trust and another a separate property trust.

Blended Marriage: If you’re in a second marriage and you have 2 different sets of children, you should carefully consider what is community property and what is separate property and how you want you provide for your current spouse as well as for your children. You do not want to disinherit your children or your spouse and you also do not want to create conflict between your current spouse and your children. You could leave your community property to your current spouse and your separate property to your children. Or you could leave all your property to your surviving spouse to use during his/her lifetime and then have it go to your children. This kind of situation can create conflict between the surviving spouse and your children though, so perhaps you should consider life insurance to give to the kids upon your passing so that they do not have to wait for the inheritance.

Single: If you’re single, you will hold it as a single person. Unless you transfer your property into a trust, your heirs will have to probate the assets.

Single with co-owner: If you’re single and someone else has contributed to the down payment, you and the co-owner can own the asset as tenants in common or joint tenancy. If you own it as tenants in common and one tenant dies, that interest will have to probated unless that interest is in a living trust. If you own it as joint tenants, your share will automatically pass on to the surviving joint tenant. This may not have been what you wanted though because you may have wanted to transfer your share to someone other than your joint tenant. Plus, again, you only postpone probate, not avoid it.

Gifts - I have to explain gifts and gift taxes here. Remember that any amount that you give to anyone is a gift and there are gift tax consequences over $13,000 this year (lifetime exemption of $1,000,000), unless there is an exemption. A commonly used exemption is gifts to a US citizen* spouse, which is unlimited (“unlimited marital deduction”). If you put your U.S. citizen spouse on your deed when that spouse has not contributed financially to the asset, it is exempt from gift taxes because of the unlimited marital deduction. So, when you want to put someone on the deed as a joint tenant because you want to avoid probate, and this person is not your US citizen spouse and has not contributed financially or the amount commensurate to the value of the share that he/she owns, you have a gift issue.
                    *If you are a non-US citizen, you do not have the unlimited
                      marital deduction and your estate tax exemption is different
                      from US citizens. If you are a non-US citizen, you should
                      seek qualified help.

This all may seem very technical, but this actually just touches the surface of the issues involving title to your house and this cannot substitute good holistic, legal analysis of your entire estate. Your house is most likely your most valuable asset and you should make sure that you 1) own it in the right way; 2) that you have a plan for who will inherit your hard-earned property; 3) that you minimize taxes and costs as much as possible; and 4) that you have a plan for someone to manage your assets if you become disabled or incapacitated.
 
LAW OFFICES OF E.J. HONG
2225 E. Bayshore Road, Suite 200
Palo Alto, CA 94303
Tel:  (650) 320-7680
Fax: (650) 320-7675
Website

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Great Teacher Loan Program

We recently helped a teacher purchase their home with the CalSTRS loan program.  Initially the buyers wanted an FHA loan but did not like the fees and mortgage insurance associated with the loan.  The CalSTRS loan which allowed them to forgo mortgage insurance, pay fewer points and significantly lower their cost of financing.  Below are some benefits in the CalSTRS loan program.  

If you know of a public school teacher or public school employee, please pass on this information.  Below are some of the details on the program:

•    Max purchase price of $670,103
•    No Mortgage Insurance required (unlike FHA loans)
•    3% down payment (1% can be from the borrower with the remainder from a family gift)
•    Credit scores as low as 620 on conforming;  680 on high balance conforming
•    Deferred mortgage payments on 2nd loan for 1st five years
•    Only 2 month's reserves required by lender
•    Must be a member of CalSTRS.

Have your favorite teacher call us for more information!

Rob McCarthy
Owner and Senior Mortgage Planner - 101 Loan
www.101loan.com
Email Me
408-377-4123 Office
650-465-8957 Cell
560 S Winchester Blvd, Suite 500
San Jose, CA  95128
A Dept.of Real Estate - License # 01165697

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Getting a group of interested parties together to purchase real estate can provide great advantages.  You can purchase real estate of higher value that what may be available to you individually.  It can also be a great way to get started with real estate investing.  However, there are some steps you should follow to avoid having problems down the line.

First, ensure your mortgage contains a non-recourse clause.  This provision keeps the personal property of each group member from being at risk in the event of a default.  The lenders recourse is limited to foreclosure and acquisition of the property.  This means your personal property, other real property, and income are out of the lender’s reach.

Second, ensure you have a clear agreement between the parties on how you will split mortgage payments, property taxes, insurance and maintenance on the property.  Include dates to comply with things like maintenance, and the possibility that unexpected repairs may need to be made.

Third, agree on how and when you will sell the property, including the possibility of a loss and how the loss will be apportioned.  Although real estate investment is historically sound as a long term investment, short term real estate investors have faced problems in our current economy.

Fourth, consider setting up an entity such as a limited liability company for holding the real property.  This will provide further liability protection and provide a clear way to spell out the parties responsibilities in the investment.

Lastly, make sure you do your due diligence in deciding who your investment partners will be.  Many friendships and families have been in turmoil because of the financial issues surrounding a real estate investment.  Understand your intentions, your exit strategy and your responsibilities before you make a decision.

For more information on real estate law, contact:

Elena Rivkin Franz,  Attorney at Law
Pratt & Associates 
1901 S. Bascom Avenue, #350
Campbell, CA  95008
(408) 369-0800 ext. 202

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Here are the real estate market statistics for the Willow Glen area of San Jose, CA for January 2010:

Trends over the Last Year in Willow Glen - San Jose, CA

Data source:  MLSListings

Want more information about the market in your specific neighborhood?  Give us a call or email us!

Have a GREAT week!

Laura Powers, Realtor
The Dawn Thomas Team
Intero Real Estate Services
496 First Street, Suite 200
Los Altos CA 94022
(877) 901-2121
CA DRE License: 01860743

____________________________________________________________________
The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home