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The House Sold: How to Keep the Money!

You sell your property for a lot of money.  But as the saying goes, it’s not what you MAKE but what you KEEP that counts!

Wouldn’t you like to know upfront how to net the most out of your sale? 
 
Get an Estimated Seller of Proceeds aka a NET Sheet.  What are the costs of selling?  I will work with the Escrow officer to get you this important information for multiple price points. 

It’s important to put together a list with all money you’ve spent on capital improvements during the entire time you’ve owned the home, even if it’s been for thirty years. Yes, it’s a lot of work but it’s super important in establishing your basis for capital gains.

Then what?  Talk to your CPA.

Based on your estimated net proceeds, perhaps there might be a situation where you could offset some or even all of your capital gains?  Expecting a loss from a business or other investment that will flow through to your personal return?  Appropriate timing of a sale could allow you to write off some of your gains, making a big difference in what you keep.

Timing is everything in life! 

Photo by Skitterphoto on Pexels

Selling Real Estate with the “Click of a Button”

Real Estate NFTs, cryptocurrency, blockchains. No, this isn’t some futuristic, far-off concept. It’s real and it’s happening today. But, when it comes to real estate, are there true advantages or is this all just a novelty? And what exactly is a Real Estate NFT?

NFTs are unique digital tokens purchased with cryptocurrency and are most commonly used to buy/sell digital assets like digital art and music. NFTs grant sole ownership of a digital asset and that ownership can then be publicly tracked and easily sold.

When it comes to Real Estate NFTs, these are used to buy/sell physical assets, such as real property. For example, a developer in Portugal recently sold two luxury homes for a type of cryptocurrency and made the ownership of the homes available via NFT, which would allow the new owners to resell the properties digitally.

The selling point of NFTs is the ability to buy/sell quickly with the “click of a button”. But when you peel away that shiny new promise, it’s a bit more complicated on the back end. There are many important questions that emerge, like “how is title officially transferred?” or “what is the recording process and how will property taxes be calculated?”. What happens to all those important steps during the escrow process such as ensuring clear title, identifying any liens or defaults, conducting inspections, etc.

I think it’s safe to say that the ease and speed of this new digital world is attractive, but it will take some time for the other key steps in the buying/selling process to catch up.

Click here for a great article on Real Estate NFTs

Photo by Worldspectrum from Pexels

National Association of Realtors® Chief Economist’s Predictions for 2022

National Association of Realtors® Chief Economist’s Predictions for 2022

While none of us have a crystal ball to predict the future of the real estate market, it’s interesting to hear what the National Association of Realtors® chief economist, Lawrence Yun has to say about next year.  During a recent conference, Yun expressed tempered optimism for 2022.  To quote Yun directly, “All markets are seeing strong conditions and home sales are the best they have been in 15 years.  The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.”  He went on the express that while the 2022 housing market may not exceed this year’s, he expects house sales to outperform pre-pandemic levels.

My personal experience this past year has been anything but slow.  Mostly all listings have received multiple offers above asking price.  Buyers are coming prepared and properties have been moving quickly.  Through my 30+ years in this business, I’ve seen many ups and downs and it’ll be interesting to see what 2022 has in store.

Click here for an article with more details on Lawrence Yun’s predictions for 2022.

Photo by Michael Tuszynski from Pexels

Price Per Square Foot – Keep it in CONTEXT

In real estate, there are numerous factors to ponder when determining the fair market value of a home.   One measurement that everyone seems to use is price per square foot, but it’s important to consider this data point in context.

The calculation is basic – list price divided by the square footage.  But, prices per square foot can vary significantly based on several factors – lot size, overall condition, age of the home, location, upgrades, and many other characteristics of a particular property.

How do you use price per square foot to help make an informed decision?  It should be viewed as a barometer of whether the home is priced appropriately for the area.  If it’s on the high side, that’s a tip that there may be something special or unique about the home that would warrant a higher price.  If it’s extremely low, perhaps the home’s condition or location is not as desirable as others in the area.

Here are two examples – both high water marks for their neighborhoods:

BURBANK: I recently sold a property in Burbank for $1100/SF.  That’s the highest price per square foot sold in 91501 this year!  If you were to look at the home, you may scratch your head and ask – how/why?  There were major factors that added to the desirability of the property and propelled the price per square foot to the level of other, more updated houses in the area:

  1. The lot size was considerable – 9000+ SF lot in an area where the average lot size is smaller – offering upside potential.
  2. It was located in a sought-after neighborhood, positioned in the middle of the block and surrounded by remodeled homes.

SAN MARINO: My recent San Marino listing closed at $1194/SF – a record high in this particular neighborhood of San Marino.

  1. The home needed updating, but the lot was large and offered privacy, as well as opportunity for expansion.
  2. Boasts an excellent school district – one of the highest rated in LA County.

Most times it’s not just about the home itself, but the lot, location, and nearby schools and amenities play a major factor in determining value.

The Real Estate Flop of the Year – Zillow

Zillow has exited their e-buying platform. Why? Because they relied on their own Zestimate – and guess what, it set them up to lose money.

Their famous Zestimate is not accurate, and never was. This tool was an effort to give a value estimate for every home in the US – and literally every home buyer, attorney, or just nosey neighbor used the estimate to establish a value. But, of course, they only liked it if it was more than they thought. When the homeowner found the Zestimate to be lower than what they expected, they decided “something must be wrong”.  These Zestimates only told half the story and corrupted the data.

Zillow wanted to play the role of buying low and flipping houses quickly, but their own algorithms didn’t accurately predict the right level to buy, and they ended up overpaying.

The result?  Well, now you have it officially from Zillow – it was a flop.

Savvy real estate agents already knew this, but explaining that a home’s value is not a simple number created by a robot had its challenges.  I watched the Zestimate of my own home go up and down like a bouncing ball every week. Really? I don’t think so. It’s not just square footage of a home. Value is complex!

An experienced agent knows how to price a property to sell and how to maximize the value. An app simply cannot.   While Zillow is still around and offers some interesting services, agents keep a close eye on the market, house by house. Each is unique and must be evaluated accordingly.

Do you know that Millennials have been an important asset to the multi-family market? Do you know that this is shifting?

One of the main factors contributing to the success of multi-family’s success in recent years has been the Millennials: in particular their desire to live close to where they work and socialize. Additionally their tendency to wait in regards to marriage and starting a family as well as a social consciousness has often involved sharing houses to be more socially responsible, which also allows them to pay higher rents.

But time moves on and millennials are growing up.  Many are also just “aging out” of the rental market. For many, those delayed life milestones are upon them. There are others are waiting in the wings, but will they be enough to sustain the current level of multifamily supply and demand?

Pundits think that at least for 2020, multifamily properties will continue to be a strong performer. When  considering a longer term demographic trend, however, the millennial generation is starting to age out of the key renter pool, as they get into their mid to late 30’s.

 

The “average” millennial is also getting married, having kids and buying a house, but later in life. There is going to be an economic impact to that. We still have record employment but wages have not kept pace. Another huge factor is the student debt burden. The amount of student debt has also more than doubled since the early 2000’s, so the millennials have a hard time saving and qualifying for their first home, even when they have good jobs.

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Adding to all of this is the fact that the prices have gone up significantly. In Los Angeles it’s now over $600,000. And that’s just the median. The question is whether or not millennials have the ability to qualify for a loan and make the down payment needed to purchase the types of housing that they want at the prices that the market is bearing.  Add to this the fact that the construction costs of multi-family and single family, including the costs of remodeling or adding on to homes, have risen significantly.

If they cannot afford to buy a home, they may continue to rent. But the problem there is whether they can afford the larger spaces that they will need. The larger units available tend to be more luxurious and much more costly. Some will decide to move out of the area, if not out of the State. It remains to be seen.

541 Foothill

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Nestled against the picturesque foothills of the San Gabriel Mountains, Sierra Madre is beloved for the quaint atmosphere and charming town center. Close to wonderful hiking trails, the city offers access to the best of the natural wonders of the region.

Retro Split Level in an idyllic setting on a quiet cul-de-sac. The practical design offers staggered living on three levels, suitable for many different lifestyles. The
low-pitched roof and deep-set eaves give the home an asymmetrical façade.

3 Bedrooms  |  2 Bathrooms  |  1,641 sqft  |  7,868 sqft lot

Homes Reimagined Modern Living, and Remain Relevant Today

On a Friday afternoon in the spring, a small group wandered below a canopy of towering eucalyptus trees in an idyllic and sun dappled Southern California yard. The Pacific Ocean below sparkled a dazzling shade of blue, birds chirped and sang overhead, and cheerful bright orange poppies blanketed a nearby hillside embankment.

The crowd was here to take a self-guided tour of the Eames House, an architectural marvel of glass and steel, built by Charles Eames and his wife, Ray, in the late-1940s. The couple moved into the property on Christmas Eve 1949, and continued to live and work there for more than a quarter century until their deaths. In 2004, the couple’s step-daughter, who then owned the house, gave it as a gift to the non-profit Eames Foundation, which she founded in part to protect it. In 2006, it was declared a National Historic Landmark.

The house, situated on a Pacific Palisades bluff, north of Santa Monica and south of Malibu, is “unselfconscious,” “created in its own little world, screened all around by trees, foliage and hills,” which serve as a “shock absorber,” according to the description of the property in the December 1945 issue of Arts & Architecture magazine. It was here that the Eames House was introduced as part of the magazine’s famed Case Study Houses program, for which publisher John Entenza commissioned major architects of the day to design and build affordable and efficient model homes meant to address the mid-century housing boom and serve as a template for how returning GIs and their families wanted to live after World War II.

Between 1945 and 1966, 36 homes were designed and 25 were built—most of them in Los Angeles. The Eames House—Case Study House #8—is one of two that has nonprofit status, and is eagerly toured by architecture buffs from around the world. The other is Pierre Koening’s iconic Stahl House—Case Study House #22—which overlooks the city’s expanse from a point of remove in the Hollywood Hills.

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