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 Real Estate e-Newsletter
Coldwell Banker Previews International
Coldwell Banker
166 N. Canon Drive
Beverly Hills, CA 90210
by Cynthia S. Radom Award-winning Certified Seniors Specialist REALTOR
                                                          Since 1994
              NEWS & ISSUES for BABY BOOMERS to GOLDEN-AGERS
         October-December 2014     Cynthia@RealtorRadom.com     (310) 288-0479  CalBRE #01184864

                                     ** Writer and Publisher since October 1999 **

Winning in Multiples
How to Win in Multi-Offers

Ever since October 2012, when the L.A. housing market turned upward from the depths of the recession, there has been high demand in Buyer activity and low inventory in homes for sale.  Interest rates remain historically low, cash is still the almighty King and homeowners are staying put.  As a result, multiple offers are now the norm for any listing that is priced to sell.   

 

Competing with another Buyer  who pays cash and who can close quickly is causing havoc among would-be Buyers.  Especially when a speculator wants the land only and can waive the inspection contingency.  However, winners don't always have the highest price, but may offer less hassle during the sale.

 

How to Win!
Here are some helpful tips to follow when buying property:
- Be ready: pre-underwrite a mortgage by completing a loan application and submitting all required documentation to a lender (see the article below titled  Today's Buyer Must-Have)
- Be aware: while you're sleeping on it, someone else is sleeping in it!  If you picture yourself living in the house, make an offer then sleep on it during the negotiation period
- Be flexible: you may be paying over the asking price, so start looking at lower priced listings to keep within your budget
- Be prepared: take a contractor with you for a pre-inspection, or better yet, do a full inspection before you make an offer
- Be quick: shorten the contingency periods; general inspections can be completed in two days when you have inspectors lined up
- Be wise: keep in mind the Seller holds the ball with multiple offers.  Learn what the Seller wants and offer the terms that suits them


Investigate getting a "bridge" loan to buy a replacement property before selling, or a loan on your non-retirement investments.  Also, consider showing proof of funds with an investment account for an all-cash offer, and state that "Buyer has the right to get a loan, but it is not contingent on this offer".  Working with an experienced REALTOR has its perks.  

Becoming a Landlord
Income property investors have done their homework, by understanding and accepting the risks of being a landlord.  Renting your personal property can lead to a disastrous situation.

Homeowners who are in need of extra income should answer these questions before seeking a tenant: 
- how will your life be affected if your tenant does not pay rent? 
- how much does it cost and what is the process to evict a tenant? 
- are you going to accept pets
- can you charge a larger deposit for a service animal? 
- who is going to be on-call 24-hrs. a day for emergencies? 
- what happens if an unexpected disaster (earthquake) renders the rental property uninhabitable? 
- how much rent is left after paying expenses: i.e. income tax, insurance, gardener, pool and other equipment maintenance? 
- if the market changes, can you afford a reduced rent? 
- how much are you going to spend to rent a replacement home? 
- are you financially prepared to pay for tenant-damaged property that their deposit does not cover? 
- how much is the allowed annual rental increase? 
- what do you have to spend to get your property rent-ready?
- have you studied about tenant eviction?  (worth repeating)
- do you know how to handle tenant disputes?

 

The laws governing landlords in CA are many and complex. 

For example, limits on a security deposit (for potential damages): two months rent for unfurnished and three months rent for furnished, or if a pet is includedThe deposit does not always cover damages that tenants leave behind, and no additional deposit is allowed.
 
Renting a residential property can be a great investment.  However, it is not without its challenges.  Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale that is inevitable. 
Role of a Title Co.
When completing the sale of real property, the title company acts as a neutral third party to both principals. They handle the:
- transfer of documents and money
- closing or final transfer
- recording of the documents

Usually the listing agent orders a Preliminary Title Report (PTR) even before a Buyer is found to reveal any possible problems or defects, and to expedite closing.  The title company performs a search to assure the property is owned by the party who claims to be the owner and that no other party can assert a claim of ownership.  Also, all property records are searched to find any possible financial claims (liens, or deeds of trust - mortgage) against the property.

Potential issues, that may arise during a title search, which need to be corrected to clear title are:
- Liens: a legal hold or claim on the property (may be unbeknown to the owner) as security for a debt or charge: unpaid taxes, equity or abstracts of judgments, child or spousal support claims.  When a property is sold in bankruptcy, or from a decedent's estate, added legal requirements need to be completed
- Clerical Mistakes: known as Scrivener's Errors, are document errors made by the preparer
- Fraud & Forgery: irregular, forged or fraudulent documents

Once the title is clear and escrow closes, the title company issues a policy that protects the insured from any claims against the property, pursuant to the policy coverage.  This is an Owner's Policy which assures that the property is being sold by a party that has the authority to sell and that no issues are attached to the title.

For more than twenty years my clients have been using Equity Title Company, which is partly owned by Coldwell Banker.  But, any vendor that I recommend has to offer the same high standards and services as I do.  Get the best title services from Equity.
Dual Agency is Legal and Ethical
A standard purchase offer form titled, Disclosure Regarding Real Estate Agency Relationships must be signed by all principals when transacting a property transfer.  At the top of the form it states: When you enter into a discussion with a real estate agent regarding a real estate transaction, you should, from the outset, understand what type of agency relationship or representation you wish to have with the agent in the transaction.  
In CA it is legal and ethical for an agent to represent both sides of a transaction, acting on behalf of both Buyer and Seller in the same sale.  This 'dual agency' relationship is what you truly need to understand.
Dual Agency
- The agent, representing both Buyer and Seller, takes on twice the responsibility
- As the listing agent, the ultimate fiduciary responsibility lies with the Seller
- A dual agent may never disclose any confidential information to the Buyer unless Seller first approves, in writing
- The Seller, who pays the commission, is the ultimate decision-maker, not the agent. The agent does not decide which offer to accept
- In multiple offers, when the listing agent is acting in a dual capacity, it is mandatory that their office manager oversees the negotiations to ensure every offer is treated equally
There is no need to fear or disallow an agent working in a dual capacity role.  As a Seller, you trusted the listing agent enough to represent you.  As a Buyer, just know that the listing agent will not give you any financial advantage.
Boomers Take Note
Golden-agers have been known to leave sizable inheritances and gifts to their Baby Boomer offspring.  According to Santa Monica estate planning attorney, Brett Bjornson, Boomers don't always understand what this means if the bequeathed is married, so Bjornson explains:

In CA, if someone is married and receives a gift or inheritance it is considered "separate" property and not "community" property.  Keeping full ownership, and not giving half to a spouse, requires keeping the asset separate, literally.

If cash, stock, bonds, real estate, etc. are bequeathed, it must not be commingled (held jointly with a spouse in any way).  Also, to keep the asset as separate property, it must not carry any debt or mortgage that is paid with joint earnings or a relative portion will be owned by the spouse.  This may happen with an income property when a joint account is used to pay for negative cash flow (expenses that rents do not cover).

Beware: separate property does not get the tax-saving advantages of a stepped-up basis when a spouse dies.  Contact Brett at (310) 459-5353 or visit his site:
          Tidbits of News
- Robinson-May development, the 1.8 acre mixed-use project in BH, now owned by the Wanda Group from China (also owns AMC theatres), has not finalized the $1.2B building plans with the City
- NEW!  Pricing and floor plans are now available for the BH 35-unit condo project at
460 N. Palm at Civic Center Dr.  Opening Spring 2015, two- to four-bedroom units are now pre-selling.  Contact me if you are interested
Century Hill devastation occurred in July when a garage caved in, 40 condo owners are displaced and repairs have not started...thankfully, no one was hurt
- Pay all-cash for a property with a low interest rate line of credit using your non-retirement investment funds as collateral 
- Playa Vista, now selling are several new, affordable Senior housing communities: one-story attached homes, two- and three-story detached homes, plus Fountainview the independent
residence for those 62+

- Brand New Rental in Bel Air! Empire at Bellagio (at Sepulveda) is open now with 23-apartments one-, two- and three-bedrooms in a full LED building
Today's Buyer Must-Have
Winning in a multiple offer situation, when competing against an all-cash Buyer, is difficult.  According to First Capital Mortgage Co., a typical pre-approval letter is not enough to ensure a Buyer is fully qualified for a loan.  However, you may increase your winning odds in any situation by getting an Advance Review.  Underwriters perform a detailed review of the income, asset and credit package provided by the would-be borrower.  Here are the differences in a loan approval:
Pre-Approval
A loan officer:
- interviews the client
- runs a credit report
- may or may not run automated underwriting
- issues a pre-approval letter without underwriter review
Advance Review
- interviews client and obtains asset and income verification
- analyzes credit report
- runs automated underwriting
- analyzes loan package
- provides specific feedback
- works with client to discuss and address underwriter feedback prior to entering into a purchase agreement
- provides Advance Review letter
Benefits
Going through the underwriting process in advance:
- helps the transaction close in a much faster, smoother and less stressful manner.
- can shorten the financing contingency as the file has already been seen by an underwriter
- helps reduce borrower-related loan delays, which may pop-up during escrow
- reduces unforeseen loan issues that may jeopardize the transaction
When you are competing against other Buyers with all-cash or those needing a loan, you will be a WINNER if you have submitted an Advance Review letter with your offer.  Contact Simon Atik at First Capital, (310) 880-8414.

        Decorating Ideas
Remodeling, re-freshening or just want new ideas?  Look and learn:
click here: HOUZZ.COM


  The Model Home Look
Create a model home ambiance before listing your home.  Just remove all collectibles and clear counter and table tops in every room.  This is called "staging". 
A Daughter's Story
Written by Debbie Paperno-Harrison
My parents decided to sell their  home of 40 years in Westwood, CA, and move to Colorado where my husband and I live.  Mom and Dad (both around 90-years-old) had been thinking about selling their home for awhile, and had researched the REALTORS in their area.  They attended Cynthia Radom's Moving Made Easy seminar and decided that she was not only extremely knowledgeable about the home market, but she also specialized in helping Senior homeowners through the entire sale process.  In addition, Cynthia helped with services such as packing and moving companies.  My brother and I met with Cynthia, and we all agreed that she was the perfect choice, especially in our absence.  

During the short two-week period that the house was for sale, Cynthia was very protective of my elderly parents, and was very sensitive to the stress that open houses and fielding the various offers could have on them.  She kept everything as simple and uncomplicated as possible.  She also made sure that my brother and I were involved in every step of the process, and kept us informed daily via emails, texts and phone calls.  Very important. 

My parents arrived in Lakewood, CO, and, thanks to Cynthia and all of her hard work and excellent attention to details, the house sale and subsequent move went very smoothly.  Cynthia continues to check in with us from time to time.  It's obvious she really cares about her clients and their families, and wants to make sure that the entire process of selling and moving is a good experience for all involved.  It's never easy to make a move like this, but because of Cynthia's expertise and kindness towards our family, it went better than we could have ever expected.

        Longevity Award
Ralph was six-years-old when he moved into his family-built Beverly Hills home in 1930.  He grew up in the house, then with his wife of 56 years, raised two children in the same residence.  Today, Ralph is 90 and gets the longevity award: 84 years living in the same home.

Side note:  A Mexican woman reportedly just turned 127 making her the oldest person in the world.
If you prefer the "Real Estate Newsletter" mailed to you, please e-mail: Cynthia@RealtorRadom.com
Respecting your privacy and confidentiality, names and e-mails will only be used for providing pertinent material by Cynthia S. Radom and will not be shared with any other organization.

2013 Coldwell Banker Real Estate LLC.  Coldwell Banker is a registered trademark licensed to Coldwell Banker Real Estate LLC.  An Equal Opportunity Company.  Equal Housing Opportunity.  Owned By a Subsidiary of NRT LLC.  This is not intended as a solicitation if your property is already listed.