Through agreements on the San Diego MLS, agents can offer limited access to all listings in the MLS. For a self-directed service we offer our VIP version of MarketWatch. Another option is to contact one of our team members at 858-457-5368 for a more detailed and customized search that is much more precise.
To search for San Diego Real Estate go to www.garykentteam.com/gkent.htm
Create a VIP user account with your email address and create a password. You will be sent a link by email for confirmation. After that you can search independently and even create and store specific searches.
What if I’m not finding what I want?
Contact one of our Gary Kent Team members, check them out at www.garykentteam.com/team.htm They will be happy to discuss your needs and help you find what you are looking for.
The Gary Kent Team is a specialized group of Real Estate Professional. In addition to Gary Kent, there is a team of real estate “buyers” agents. Their primary focus is working with folks that want to buy homes. From the initial consultation meeting to handing you the keys to your new home their job is to “make it happen!”
The following FAQ’s come directly from Gary’s weekly e-newsletter. This weekly report is written by Gary and focuses on Home Buying, Home Selling, Investing and Financing news along with special offers. To subscribe, simply email us at email@example.com and ask to be put on the newsletter. Remember to list garykent.com as a “friend” on your spam filter.
California's Proposition 13 limits your property taxes to 1% of the assessed value + voter approved local bonds, all totaling just under 1.2%.
This makes your monthly property taxes easy to calculate: approximately 1/10 of 1% per month. For example, a home purchased for $600,000 has approximate taxes of $600/month.
Note #1: The assessment can go up 2% per year. It can also go up if you improve the home and the county reassesses it. It can go down if home values fall, as they did in the early 90's.
Note #2: This 1.2% does not include Mello-Roos fees, which are not technically a tax. Mello-Roos is found on some homes built since the 1980's.
Mortgage insurance is generally required for home loans with a "loan-to-value" ratio of over 80%. The insurance protects the lender (NOT you) should you lose your home to foreclosure.
Now, to avoid paying high mortgage insurance premiums, "80-20" loans are becoming very common. A lender makes a 80% loan-to-value loan with no mortgage insurance. Then, the same or another lender makes a 20% loan with a higher rate, due to the risk. But the higher rate on the small 20% loan still allows a total "blended" rate much lower than getting a 100% loan with mortgage insurance.
If you have further questions or are interested in an 80-20 loan, call me office at (858)457-KENT and we'll put you in touch with our preferred mortgage lender.
"I don't agree with this whole value range pricing idea. It just doesn't make any sense. No one's ever going to pay any more than the bottom. I'd never sell my San Diego home with it."
I'm with you. And while we're at it, I don't agree with this whole electricity thing either. It doesn't make sense that you flip a switch and a light turns on. I'm not buying it, thank you. And don't even get me started on hummingbirds--they shouldn't be able to fly and...
My point: You need not understand something for it to work. And this quirky little "only-in-California" concept DOES work. Studies have shown it does and I've used it successfully for 10 years.
The wider price range opens up a wider range of buyers througout San Diego County. Or you could say the low number gets more people in the door and the high number gives you a number to negotiate from.
BTW, some clients worry it's misleading to have a low-end price they'd never accept. And I respect that. So it's important to understand what "Value Range" is and is NOT saying.
It says, "Seller will ENTERTAIN offers between $X and $Y."
It does NOT say, "Seller will ACCEPT offers between $X and $Y." If it said "accept", then everyone would indeed just offer the bottom price.
Hope that clears things up...
For more information on selling your Pacific Beach Home:
When I bought my home in East San Diego two years ago, I had marginal credit and had to pay a higher rate. Now my credit score is way up and I'm thinking of refinancing for a lower rate. Do you agree with the '2% rule' that says you should refi when rates are 2% under your current rate?"
Perhaps 20 years ago. But with today's low/no-cost loans, refinancing can make sense with less than a 1% difference. It depends on the closing costs, whether you have a prepayment penalty, and how long you plan to keep the home.
"Hi Gary. I'm going to be buying a home in Clairemont or Pacific Beach. My wife's uncle is retired, but he has a license and she wants to use him. But I want to use a good full-time agent like you or someone on your team. Help me convince her!"
Common misconception: "A license is a license. All agents do the same thing. What's the difference?"
QUESTION: Which profession studies the LEAST for their
2. hair stylist
3. real estate agent.
If you guessed #3 you're right. Scary!
I don't know about you, but I'd rather have a whole bad hair WEEK than lose $10,000 on a home purchase, not get the home I want, or end up in court because my agent screwed something up.
What about you?
And let me share just one real-life example...
Recently a very nice agent brought an offer on a home I had listed in San Diego. During escrow, he realized he'd forgotten to ask for the washer and dryer. When my seller refused to include them, he kept saying we were trying to "sucker punch" him. To him, us complying with the contract that he himself wrote was a "sucker punch". Curious.
And things like this happen all the time. Is that the service you want?
My advice is to use a skilled, full-time, successful "professional" real estate agent. (No amateurs!)
Home Pricing Advice
"Hi Gary. We'll be selling our condo in La Jolla next month. We know the comps say it's around 700K, but we'd like to shoot for 725-750K. We're willing to hold out even if it takes several months to sell. How long should we expect it to be on the market?"
I hear this all the time and find it, well, puzzling. How does "not being in a rush" actually increase the value of your home?
Sure, you'd likely sell for less under time pressure. But the opposite isn't the case. You don't get a higher price just by waiting (unless you're in an highly appreciating market and the market rises to your price over time). In fact, studies show the longer a home is on the market, on average the LOWER the final price.
Because it no longer has the "new home on the market" buzz. And with time agents and homebuyers start to wonder what's wrong with the home and figure the seller is getting more motivated and willing to deal.
The moral is to price you La Jolla Home right from the
beginning and to generate the most interest when it's the
new home on the market.
Mortgage Payments Question
We're beginners in the San Diego home buying game. Can you give us some tips on deciding how much to spend on our monthly mortgage payment?"
I want you to come up with 2 monthly payment figures.
They should include loan payment, taxes, insurance, and possible HOA fees, Mello-Roos fees, or mortgage insurance. Be sure to factor in that loan interest and San Diego County property taxes are tax deductible.
Here are the 2 figures to come up with:
1. __________ = Monthly payment you can comfortably
2. __________ = Monthly payment you'd live with if you find a pricier home you're absolutely crazy about.
Why #2? The best homes sell fast. If your dream home costs a few extra bucks, I want you to know now if you're going to let it go, or go for it.
Then go talk with a great lender (call me at 858-457-KENT to get in touch with the GREAT lender we use) to make sure you qualify and if you like the type of loan program.
Zero Down Home Loan Information http://www.sandiegorealestateinsider.com/buyforzerodown.htm
How can I sell amy Mission Beach Home to avoid taxes:
"Hi Gary. After I sell my home in Mission Beach, how long do I have to buy another one to avoid paying taxes?"
You're either thinking of the old I.R.S. Code Sec.121 rules for a principal residence, or the Sec.1031 rules for investment property.
Old Section 121 rules gave you 18 months to reinvest. Current 1031 rules give you 45 days to identify a property and, running at the same time, 180 days to close. Neither of these rules apply.
Current Section 121 rules do NOT require you to purchase another home at all. Individual owners who've lived in and owned their home for at least 2 of the past 5 years can exclude $250,000 of gain. Couples can exclude $500,000.
NOTE: There are exceptions to the 2-year rule. If you
want to know more about that, call me. And of course you
should consult your tax expert.
Free DVD offer: http://www.sandiegorealestateinsider.com/sellthenbuy.htm
San Diego Real Estate Mello Roos Question
"We've been looking at homes in North San Diego County and sometimes we see an extra fee called Mello Roos for a few hundred bucks a month. I wouldn't want to buy a property with an extra fee. What is that?"
In California's "taxpayer revolt" of 1978, voters passed Proposition 13 that:
1) limited property taxes to 1% of assessed value, + voter approved local bonds
2) limited the annual assessment increase to 2%
Prop 13 didn't provide enough property tax revenue for infrastructure in new areas. So State Senator Henry Mello and Assemblyman Michael Roos introduced the Community Facilities Act of 1982, creating bonds and fees to pay for new schools, roads, fire stations, etc. "Mello-Roos" shows up on your tax bill in addition to the 1.2%.
Most newer areas in San Diego like Carmel Valley, Eastlake, Aviara, and Sabre Springs have Mello-Roos. It typically ranges from $50 to $300 monthly and usually expires in 30-65 years.
Be careful to read your disclosure forms to be sure you know if there's a Mello-Roos fee.
Should avoid buying a property with Mello-Roos? In
theory, if you have two identical developments and one has
Mello-Roos and one doesn't, the one with Mello-Roos should
sell for a lower price reflective of the Mello-Roos fee. And
I believe I see this in practice.
What is better home to buy in San Diego? Condo vs. House
"Perhaps you can help settle an argument. I want to buy a nice condo in a safe area like Clairemont or La Mesa, but my husband wants a house, even if it's a little dump in a slummy area. He says he'd never buy a condo because they just keep jacking up the fees and the fees are a waste of money. Do you advise buying houses over condos?"
This "they" that your husband says "keep jacking up the fees" are actually fellow homeowners on the Homeowner's Association Board. They don't profit if fees go up. They pay them just like you, so they're motivated to keep them as low as possible.
And of course, depending on the development, HOA fees benefit you by paying for your common areas, hot water, trash pick-up, exterior maintenance including roofs, cable TV, etc.
I don't have blanket advice for clients of choosing a
house over a condo, or vice-versa. The choice of a house or
a condo is a personal one.
San Diego Condo information http://www.sandiegorealestateinsider.com/affordablecondos.htm
Avoiding a Pre-Payment Penalty
"I'm going to refinance soon and I want to be sure I don't have a prepayment penalty. I told my loan person, but how can I be sure?"
My best friend is a smart, successful stockbroker. His mother refinanced her home awhile back and he told the lender she planned to sell soon and didn't want a prepayment penalty. The lender assured him there'd be no penalty.
Then she went to sell a year later. $5,000 penalty!
My friend called the lender quite upset, but they refused to make amends, saying his mom had signed the papers with the penalty.
My point: Yes, tell your lender you don't want a prepayment penalty. But to protect yourself, be sure you read the "Note" or "Trust Deed Note" carefully, especially the clause nicely called "Prepayment Privilege", where any such penalty is spelled out.
By the way, could there ever be a time when you WOULD be okay with a prepayment penalty? Yes.
It might be to get other attractive terms. For example,
very-low start rate adjustable loans have prepayment
penalties. That makes up for the lender's loss if you were
to get a below-market start rate, then pay it off after a
Selling For Sale By Owner
"I know it's a good idea to use a broker to sell a home in Hillcrest, but I need to get every penny out of it and I'm thinking of trying to sell on my own. Can you give me any tips?"
I understand where you're coming from. Most of my clients need every penny then can get from their sale.
Just realize that even if you're successful selling For-Sale-By-Owner ("FSBO"), it does NOT mean you'll net more money. You MIGHT, but you might not. Consider these 6 facts:
A 2004 NAR national study showed sellers without a broker on average sell for at least a 5% lower price.
Many FSBOs pay 3% to a broker who brings them a buyer.
Many FSBOs say “If I find a buyer, the escrow company can handle everything.” In truth, escrow handles only a small part of the sale.
Many FSBOs pay unneeded costs or junk fees, pay too much for repairs, and pay extra loan payments or other losses from closing delays and cancellations.
Real estate transaction have so many moving parts that many licensed agents mess things up! There's negotiating ...long, complex contracts full of fine print ...inspections ...dozens of disclosures ...repairs ...loans ...appraisals ...termites ...insurance ...building codes ...permits ...title ...escrow ...and much more.
Most FSBOs unknowingly violate a wide range of laws and leave themselves wide open to a lawsuit from the buyer.
(You just have to combine #1 & #2 and the hoped-for
savings already start to disappear.)
DISCLAIMER: Obviously, I'm not completely objective as I make my living selling real estate. But you'll probably agree that everything I said above is true.
Selling San Diego Real Estate http://www.sandiegorealestateinsider.com/selectingabroker.htm
What about Interest Only Loans?
"I read in the San Diego Union that interest only loans can be risky. I mean you're not paying your loan down, so in 5 years you'll still owe the same amount of money. Do you think they're a good idea?"
It depends. These loans can be good or bad depending on your situation.
They can be wonderful if your dream home is otherwise just out of reach and you see your income increasing and you plan to make principal payments as your income goes up.
Or they're great if you have some fluctuation in your income. It's nice to have the safety valve of lower payments if things get tight.
Think twice about buying with the most liberal
interest-only low-start-rate loan if you have no plan, no
expected income increase on the horizon, and little savings.
Is using a Part-time San Diego Real EstateAgent a good Idea?
"My husband and I will be buying a house in Scripps Ranch or University City area He wants his fishing buddy who does real estate on the side to represent us. I know that's a bad idea, but can YOU tell him?"
USING A PART-TIME AGENT IS DANGEROUS! (Excuse the yelling, but I wanted to be sure your husband heard me.)
Any agent can put you in his car and show you homes. But few really know how to do the job right and protect their clients' interests. Consider the following...
I received an offer on a client's home I'm selling. The buyer's agent, a part-timer, FORGOT to ask for a termite clearance and FORGOT to make the offer contingent on his client's house closing escrow. If his client's sale falls through, he'll likely lose his deposit.
And this isn't the half of what I see all the time.
Of course, some part-timers know what they're doing. But
why risk it? Trust the biggest financial move of your life
to a full-time professional...don't use someone, part time
or not, just because you know them.
Sell San Diego Home http://www.sandiegorealestateinsider.com/agent.htm
Cap Rate vs. Gross Rent Multiplier
"What's the difference between a cap rate and the gross rent multiplier?"
Cap rate is the opposite of a price/earnings ratio, used with stocks. Here are some random cap rates and GRMs in San Diego:
4\15 Pacific Beach
5\13 North Park
5.3\12 El Cajon
As you can see, as cap rates go up, gross rent multiplier goes down.
When you buy, you want a high cap and low GRM.
When you sell, you want a low cap and high GRM.
Hope that makes sense!
San Diego Real Estate Investment Advice Free DVD of a Gary Kent Seminar http://www.sandiegorealestateinsider.com/free1031.htm
"We're starting to shop lenders and loans before we buy a condo in University City. One gal we talked to told us about a loan that has negative amortization. What exactly is that, and is it something we should avoid?"
Some adjustable loans allow payments that don't cover all the interest due, thus letting you defer some or all of the interest (which is why they're also called "deferred interest" loans.) The interest is added to your loan balance, making the balance grow instead of shrink. Lenders limit how much interest you can defer before you have to start making payments covering interest and principal.
Is a negative amortization loan something to avoid?
Not necessarily. Many people love the flexibility these loans offer because they allow them to have a lower payment, while giving them the option to make a higher payment covering all the interest and even paying down the principal.
I think a big reason negative amortization loans have a
bad rep is simply the name! How can anything that's
"negative" be positive?!
Real Estate Fees:
You Realtors are overpaid and make way too much money! When I sell this summer there's no way I'll pay all that. I'd like to have your job. Why should a Realtor make 6% profit when all you guys do is run some ads, stick up a sign, and wait for someone to buy the house?"
I understand how you feel. And the truth is, I agree that many agents don't deserve what they charge. But let me just clarify a few things:
1. If your home doesn't sell, your agent doesn't make a
nickel. But they'll have spent hundreds or thousands on
marketing, servicing, overhead, & more. And that adds up to
a lot more than you may guess.
2. Agents don't make a 6% profit. From a 6% fee, the
buyer's and seller's agent each GROSSES 3%. From that, they
split with their broker and pay expenses. The typical agent
takes home 1% to 2%. (My personal profit margin is <
3. Homes sold with agents sell for 5% more on average. So
the true net cost to you as a seller is only 1% to use an
4. There's WAY more to selling a home than a sign and an
ad, such as: how to prepare the home for sale, correct
pricing, marketing, selling, negotiating, contracts,
disclosures, managing the transaction, and protection from
5. A 2001 survey said only 35% of "by owner" sellers
would do it again.
San Diego Home(s) FSBO Report http://www.garykenteverywhere.com/silver_fsbo.asp
How Can I find out about my Credit Report?
"Gary, Thank you for your newsletter, I enjoy it a lot. I
have some info that your readers may find helpful. To
further clarify your 2nd answer to the q: 'Hi Gary. How do I
find out my credit score?' Please check out the website
below. This just went into effect for California on Dec 1
2004. It's a website created by all three reporting agencies
to comply with the "FACT" act (see below). Bottom line:
every year you can now get a comprehensive credit report for
free from all three agencies through this website. Again
thanks for your newsletter." The website is:
***ANSWER: Thank you, Eric, for that valuable information and I hope my readers will take advantage of it.
Proposition 60 and 90
"Hello and thanks for your newsletter :o) I'm trying to keep track of real estate, with an eye to moving from a house to a condo. What's all this about being able to keep your Prop 13 taxes if you've passed your 55th birthday? Are there any catches? Keep up the informative (and entertaining) work!"
I'm asked this question a lot. Proposition 60 allows homesellers 55 or older a one-time opportunity to transfer their existing low property tax bill to their next home when they sell their home and buy another.
Some key rules:
1. The replacement home must be bought or newly constructed within 2 years before or after of the sale of the original home.
2. Claims must be filed within 3 years of buying or building the replacement home.
3. The new home must cost 100% or less than the old home. Or you may go up 5% if you buy within 1 year after selling the old one, or 10% if you buy between 1 and 2 years.
4. The replacement home must be in San Diego County or,
per Prop 90, one of the following California counties:
Alameda, Los Angeles, Orange, Santa Clara, San Mateo,
Ventura. (This list is always subject to change.)
NOTE: This does NOT include Riverside County! Several clients have erroneously been told by friends or real estate agents that they can move their low property tax base to Riverside...
For more questions about Props 60 or 90 or for the exemption form, call me at (858)457-KENT or call the San Diego Tax Assessor at (619)531-5507 or go to: www.sdcounty.ca.gov/arcc/docs/6090formemp.pdf
Grading Apartment Investments A,B,C, & D
I'm looking into buying apartments and I've heard brokers talk about A, B, C, & D areas. I think I understand, but can you explain?"
A, B, C, & D are subjective grades used to describe both location and property quality.
For location, here's how I'd describe it. It's a bit tongue in cheek, but it should help:
A- You'd be happy to live there
B- You'd feel safe there day or night
C- You'd feel safe during the day, but not at night
D- Don't get out of the car
"Hey Gary. Question. What if when you're buying a house the appraisal comes in low? Does the seller have to sell for that price?"
Great question. It's important to remember that a residential appraisal is really the appraiser's opinion and may or may not be "correct."
If the appraisal comes in low, one of several things may happen:
1. The appraiser may be shown comparable sales data or other information causing him or her to raise the appraisal to the sales price or higher.
2. The buyer may agree to put additional money down to cover the gap between the appraisal and the sales price.
3. The seller may be convinced to lower the sales price to the appraised value. (The seller is not required to do this.)
4. Buyer and seller agree to adjust the price to a figure
between the appraisal and the sales price. The buyer would
still likely have to bring in additional funds to cover the
difference. This is a compromise between #2 and #3.
"What's this I see around San Diego about 1% and 2.5% real estate fees to sell a home. I know they're discount brokers and don't do very much, but how can they charge so little and stay in business?"
Many of them don't. There's a real revolving door of these reduced service brokers starting up and later shutting their doors.
As to how some charge so little, I was curious too. So awhile back I had a lady on my staff call one, tell them she was planning to sell her home (she actually was), and ask how they could charge so little and still pay an outside broker who brought a buyer.
Their response was they DON'T cooperate with or market to other agents! They did add, "...if one does bring a buyer, you just add their fee to the sales price."
If only it was that simple.
The truth is these firms dangle a low fee as bait for sellers to call and hire them. Then they shut out other real estate agents and all their clients, keeping the property a secret from 90% of the market! (Is that really "marketing"?)
But if a broker accidentally discovers the property and brings a client, the seller pays a much higher fee than they were promised.
And due to reduced exposure and typically much weaker negotiating skills, on average the property sells for less, erasing all the promised savings.
Not such a good deal.
NOTE: While I'm no fan of reduced service brokers, some
are truthful about the services they do and don't offer. I
respect their honesty, as opposed to those who falsely claim
to provide the same services as a good full-service broker.
1031 Tax Deferred Exchange
"Hi Gary. I have 24 apartments in City Heights. They've been a headache lately and I'd like to get out of them into something else. Is it true that you have to buy up to do a 1031 exchange?"
Almost. While you do have to buy up to do a full deferral, just buying up isn't necessarily going to work. The rule is you have to reinvest all your proceeds (or more) AND have the same size loan (or more) to have a FULL tax deferral.
Two comments on this.
First, due to closing costs, you can actually buy down a little bit. For example, if you sell for $1M but net $930K (before paying off your loan), you can buy for $930K for a full tax deferral provided you move all your cash and have the same size loan.
Second, you can buy down and pay a partial tax. It's not all or nothing. So if you sell for $1,000,000 and net $930,000 and buy for $800,000, you'll pay taxes on the difference (called "boot").
Remember, I'm a real estate broker, not a tax
professional. So though I know this topic well, there's
always something I may miss when I comment on taxes. CONSULT
YOUR TAX PROFESSIONAL.
What are some Credit Score Myths?
4 Common Credit Score Myths Revealed
---Myth #1: You have one credit score---
You have three, one from each of the three major credit bureaus. And they can vary 50 points or more.
---Myth #2: Your income or wealth impacts your score---
They don't. Your credit score is about your CREDIT, not your wealth or income.
---Myth #3: Checking your own credit hurts your score---
NOT if you check it through one of the 3 bureaus or a legitimate score seller like MyFico.com.
---Myth #4: Shopping for a loan lowers your score---
Yes AND No. Having your credit run shows as an "inquiry" to your credit, and too many do indeed lower your score. But the same kind of inquiries made in a 2-week period count as one inquiry. Exception: credit card inquiries.
"Hi Gary, We're starting to look for a house in either San Diego or Chula Vista. We saw one that just came up for sale down our street and we're waiting for the open house so we can see it. If we like it, can you help us buy it?"
Yes, we can definitely help you purchase that (or any) home. And the first help I'll give you is this advice:
Don't wait for the open house!
Contrary to popular belief, the average home is held open ONE time. That means the home you're interested in may be held open this weekend, several weeks down the line, or NEVER.
If you see a home you like, don't wait for an open house,
because you might be waiting a long time.
Agents Brokers & Realtors
"Hi Gary. We really enjoy reading your newsletter. We're going to be selling my aunt's home in Clairemont soon and will be looking for an agent. I've seen several different titles. What's the difference between a Realtor, an agent, and a broker?"
A real estate agent in California can have either a salesperson's or a broker's license. Salesperson is the basic license.
A broker has a higher level license that allows one to "hang out a shingle" and run a real estate company. Brokers can also work under another broker.
A REALTOR is an agent (broker or salesperson) who is a
member of the National Association of Realtors. Most but NOT
all agents in San Diego are Realtors. Your odds of getting a
good agent are much higher when you work with a Realtor.
Open House Tips
"When I was a kid in the 60's, my dad was in the navy and we moved a lot. When we sold a home, my mom baked bread when people were coming to look. The whole house smelled great and my folks said it helped with the sale. Now I'll be selling soon, but I don't like to bake. Any shortcut ideas?"
Every culture has "memory smells" from good times past. For Americans, it includes baking bread, cookies, pies, or cinnamon buns, roasting turkey, brewing coffee, or logs burning in the fireplace.
If you're kitchen-challenged, 2 shortcuts:
1) Scented candles specially made with great scents like pumpkin pie or cinnamon spice
2) Put some vanilla and cinnamon in a piece of foil and "bake" it in the oven.
1031 Exchanges – Reverse Exchanges
"Hello Gary... We're interested in selling our investment properties in North Park and Downtown San Diego. We like the 1031 exchange concept. However, we are scared off by the 45 day identification process."
Here's the 2nd part of the answer to this question from last week:
Two other ideas:
First, you could list your properties contingent on buying a property. In that way, if you don't find a property, you don't sell. Yes, you will lose a few buyers, but 80-90% of buyers will still be interested.
Second is a "reverse exchange," where you buy the new property first. Two caveats: 1) It costs you about $5,000 in extra fees. 2) You need to have the down payment money available WITHOUT first selling your properties.
For more info, email me or call me at (858)457-KENT
FREE DVD http://www.sandiegorealestateinsider.com/free1031.htm
What about IRS Code 121?
"Hi Gary, Your newsletter is interesting and informative. We enjoy reading it and learning from it. I have a question that I would like to ask you. I know that by law if you live 2 of the five years in a house when you sell it you would get $500,000 tax break. Please explain if after 2 years that you lived there and then 2 years that it was vacant because the price was going up, could you then rent it for 2 or 3 years after that and then sell it with the same tax exemption? An agent told me, yes. Please explain. Thank you."
Under IRS Code 121, you must own and live in a home for at least 2 of the past 5 years. Then a single owner can exclude up to $250,000 in gain and a couple can exclude up to $500,000.
If I understand you correctly, you've lived in a home 2 years, then left it vacant 2 years. You're asking if you can rent it another 2-3 years and still use the principal residence tax exclusion.
Currently, this is your situation (for simplicity, I've used calendar years):
2002 - Principal Residence
2003 - Principal Residence
2004 - Vacant
2005 - Vacant
2006 - ? ? ? ?
So RIGHT NOW you still qualify for the 121 exclusion.
Now here is your proposed situation:
2003 - Principal Residence
2004 - Vacant
2005 - Vacant
2006 - Rented
2007 - Rented
Under your PROPOSED scenario, you would have only lived in it for 1 of the past 5 years and you would NOT qualify.
By the way, I'm assuming the home wasn't legally your principal residence while vacant. I believe that's possible, and even common for military personnel stationed away from home.
NOTE: As I'm not a tax or legal specialist, please
confirm all this with your tax advisor!
"My friend is looking at a house that's listed in Clairemont for $550,000, but was appraised for $575,000. He thinks it must be underpriced, but I've heard that appraisals aren't always accurate. Do you agree?"
Yup. The appraisers I know are hard-working, smart professionals and usually the figures they come up with are right on or close.
But I've just seen WAY so many appraisals that were WAY off the mark that I don't blindly trust any appraisal. I could tell you dozens of stories of clients who came to me saying their home or rental was worth $X due to an appraisal they'd had. Then I "ran the comps" and it was clear the actual market value was very different from the appraisal.
In short, MAYBE your friend has found a bargain. But his
agent should advise him and show him comparable sales
information so he can draw his own conclusions...
Great deals on San Diego Real Estate: http://www.sandiegorealestateinsider.com/marketwatch.htm
How to choose a real estate agent
"I've been interviewing agents to sell my mother's home in Del Mar. After talking with five, I've come to the conclusion I really have no idea how to tell who I should hire. Help!"
I'm going to tell you something you already know, but perhaps in all the confusion have forgotten.
The best predictor of future performance is...
Think of it this way:
If you needed brain surgery, do you pick the surgeon...
A) that your uncle recommended
B) who had the lowest fee
C) with the best track record of the most successful brain surgeries
If you were being sued for $10,000,000, do you pick the
A) with a known law firm
B) who made the best presentation
C) with the best track record of winning the most lawsuits
So now that you're selling a property, do you hire the
A) who says she "does a lot of business" and was "one of the top agents in her office"
B) with the best personality
C) with the best track record of selling the most homes
If you answered C to all of the above, congratulations! Yes, the "A"s and "B"s sounded OK. But when you really think about it, did they tell you anything about the agent's past performance?
Great, but how can you see the agent's past performance?
One easy way is to ask them to print out a list from the
MLS (multiple listing service) of all the homes they've
listed that sold in the past 5 years. Then hire whoever has
the longer list!
Selecting a San Diego Real Estate Broker
What about the 1031 Exchange 45 day Identification process?
"Hello Gary... We're interested in selling our investment properties, we have a duplex in Bankers Hill and 3 condos in Mission Valley. We like the 1031 exchange concept. However, we are scared off by the 45 day identification process."
I understand the hesitation due to the 45-day period you have from closing your sale to "identify" the property(s) you want to buy. While everyone has this same time period, it goes quickly if you don't plan ahead.
Here are steps to help you in effect s-t-r-e-t-c-h that 45 days so you have plenty of time and can go at a more comfortable pace:
1. Before you list your property, get a clear picture of what you want to buy. Investigate different options and decide which one(s) you want to pursue. Do you want a house, condo, apartments, T.I.C., etc.? Do you want to buy local or out of state? You should also get prequalified or pre-approved with a reputable lender.
2. Get familiar with that market and the available inventory of properties to buy. Do some "window-shopping" so you're already "in the market" before you even list your property for sale.
3. Now list your property for sale. And the minute you accept an offer, start looking for the specific property(s) to buy. You may have already found a few while window-shopping that are still available now.
4. Make an offer contingent on the closing of your property. While sellers don't love contingencies, they're much more open to a contingency on closing an escrow than if your property isn't in escrow or even on the market.
As you can see, if you do it right, you can stretch that 45-days into 60, 90, even 120 days or more.
For a FREE DVD on 1031 Tax Deferred Exchanges go to: http://www.sandiegorealestateinsider.com/free1031.htm
How Much Money Should I put down as my Deposit?
"How much should my deposit be when I buy a home? I've heard you should make it as small as possible so you don't lose much if you back out."
Small deposits do pose less risk to you as a buyer. But your deposit money is only at risk if you back out, and you're not going to do that, are you? If you cancel your purchase within your rights in the contract, you should get every dime back.
The downside of a small deposit is that it shows the seller a lack of seriousness and may make them wonder if you even have enough money to buy their home.
My opinion is that a deposit should be 1% to 3% of the price. A bigger deposit -- say 5-10% -- can impress a property seller and make him or her more likely to take your offer.
Check out: http://www.sandiegorealestateinsider.com/sevensimpleways.htm
Should I put in New Carpet?
"Hi Gary. I'm going to be selling my home in Pacific Beach that you sold me way back 20 years ago. Would you believe I never changed that green carpet?! But it's all worn out now. So do you suggest I recarpet or just offer a credit instead? I've heard people want to put in their own colors anyway."
New carpet makes sense if yours is damaged, very worn, or just downright ugly! If you've got 20-yr-old green carpet, I'd say yours qualifies!
A basic psychological fact is that people buy things on emotion and justify with fact. (Yes, even engineers and computer programmers do this.)
A carpet credit doesn't stir the emotions of a buyer like the clean look, new smell, and cushiony feel a cushion of just-installed light-colored neutral carpet. Most people don't have the vision to see past what's already there.
Do you HAVE TO recarpet? No. I know it can be a hassle, particularly if you live in the home. But it is more profitable.
Sell Your Home For More Money with these tips: http://www.sandiegorealestateinsider.com/profitablefixups.htm
How to Choose a Lender?
"We're going to be buying a home soon, either in University City or maybe La Jolla. Do you recommend using a bank or a mortgage broker? I've heard direct lenders and banks have very limited options, but mortgage brokers can shop your loan to many sources and have a wider variety of loans. What do you suggest?"
Mortgage brokers have lots of options as they can shop a loan to many sources. But many direct lenders have a good variety, offering dozens of programs.
And our preferred lender, Countrywide Home Loans (a direct lender), actually has hundreds of programs. At some point, you just have enough options. And I think a hundred is plenty.
My clients, my agents, and I are thrilled with the great
team we use over at Countrywide. Give us a call at
(858)457-KENT and we’ll put you in touch with them...
What about cracked slabs?
"I saw a home I loved in West Clairemont, but there was a crack in the slab. Should I avoid buying a home with a cracked slab?"
Some cracks are very serious and cost thousands, tens of thousands, or even hundreds of thousands to fix correctly.
Other cracks are more "cosmetic", don't reflect structural problems, and just need to be filled with epoxy. I usually see that done for under $2,000, plus flooring repair or replacement.
My advice is to have any cracks inspected by an expert,
usually for about $500. If it's just cosmetic, don't let it
stop you. If it's structural, think twice. But you might go
forward if you feel comfortable with the report and the
estimate, and the repair cost is reflected in the price or a
$$ credit. http://www.sandiegorealestateinsider.com/andre.htm
Should I use a discount broker to sell my Tierra Santa Home?
"What do you think of those discount brokers, the ones who say they'll sell your home for 1 or 2%? My friend used one and said it was a disaster. Once she called her agent and he didn't even know who she was. And the service was terrible. But I really like the idea of a 1% commission instead of 6%. Which way would you go?"
Disclosure: I'm a full-service real estate broker, so I'm biased.
Here's what I've heard from other agents and the public about the types of firms you mentioned:
1. Their ads don't disclose they won't put your home in the MLS at their low rate. But once you call, many "upsell" you into a much higher fee for MLS and other basic services. (Bait & switch?) If you decline the upsell, you basically pay to keep your home a secret from the other 15,000 San Diego County agents and their buyers. Is that what you want?
2. Most normal agents I've talked to despise and avoid them whenever possible. They feel they cheapen the profession, mislead the public by saying they provide the same service as normal brokers, and dump all of what should be their work on the broker who brings the buyer to one of their listings.
And now here's my biased opinion and advice:
1. When you accept an offer, you're going to sign a 10- to 15-page small-print CONTRACT that you're never going to read. (In 21 years I've never had a client read it word-for-word). That makes you very vulnerable. You need a skilled, experienced agent that you completely trust reviewing that contract and advising you!
2. If a good full-service Realtor can't get you an extra
2% or 3% for your home, get one who can. They're definitely
How do I find out my credit score?
"I want to buy a home next year. I know my credit has problems from a few years ago, but I've paid all my bills on time or early since 2003. How do I find out what my credit score is now?"
Residents of California (and 12 other western states) can get a FREE credit report from the three nationwide credit reporting companies: Equifax, Experian, & TransUnion.
Just go to www.annualcreditreport.com, call 877-322-8228, or mail a standardized form to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
By the way, if you do have credit "challenges", I know a
great lender who probably can still get you a home loan.
Call me if you want to talk with them.
What about Termite Reports
"Hi Gary, it's XXXXX. As you know, I'll be calling you to list my house this summer. I want to get your advice. I think the whole termite requirement is a racket. Every home has termites. But I'm a realist and I know I'll need to clear the house to sell it. But I want the lowest bid, so I plan to get several pest inspections and go with the lowest. How much of the work can I do myself?"
You raise a number of great points. Let me address them:
1. Regarding the termite "requirement", it's not a legal requirement, but getting a clearance on current problems (called "Section 1") is the standard expected by homebuyers.
2. It is a "fixed game", kind of. Most pest control inspectors work on commission, so there IS the incentive to find problems. But... As it's a VISUAL inspection, if you have any doubts, call the inspector and have him show the area to you. If you can't see it, neither can he, and he shouldn't put anything on the report he can't see.
3. I'm not sure if every home has termites or not, but there are no termites found in about 1/3 of the homes I sell.
4. You want to be careful about getting multiple inspections. Here's why... If the first report recommends repairs A+B, the second says A+B+C, and the third has C+D, you'll likely have to do A+B+C+D. That's because you must disclose all recent inspections, and most buyers will insist on all recommended work being done.
5. You can do any pest control work for a clearance
except use termicides. However, give yourself ample time to
have the pest control company re-inspect. If you did
anything incorrect or missed an area, you'll need to do it
right before they'll sign off.
Condo vs. Townhome
"My husband and I can't afford a detached house yet, so we're going to buy a condo. Is there a difference between a condo and a townhome?"
"Condominium" is a form of ownership in which you own an interest in an entire property (the condo complex), with the exclusive right to use the designated "airspace" that the condominium unit occupies.
"Townhouse" is an architectural style with 2 or more levels. Many condos are "townhouse-style".
There's also a Planned Unit Development or PUD. In PUDs,
you own the structure and the land beneath it (often a small
parcel a little bigger than the "footprint" of your home),
plus a shared interest in the common area.
How about some tips about fixing up a property to sell?
"My wife and I are selling our home in Pacific Beach shortly and moving to Vegas due to her job transfer. What work should we do to our home to ready it for sale? And will we really get more money or will someone pay almost the same amount for a fixer upper?
Great questions. Let me answer them in reverse order.
If you do the right repairs and improvements, it will definitely be profitable. Because homebuying is more emotional than logical, even many people looking for a fixer-upper will pay more for a nicer-looking home.
As to what work, I can only give you basic ideas without
seeing your home. Work that has the highest payoff, in
1. Getting rid of any unpleasant odors
2. Cleaning, including carpets if needed
3. Getting rid of clutter & excess furniture
4. Sprucing up the curb appeal, with flowers etc.
5. Paint as needed
6. Sprucing up the rest of the yard
7. Fixing obviously broken items, like broken windows
This is obviously a general and incomplete list. If
you're interested in using my services, call me and I'll be
happy to come out and give you specifics for your home or
property. I've bought, fixed up, and sold many homes before
(in addition to advising thousands of clients), so I have
experience and good ideas...
Should I use my Credit Union?
"I'm going to be buying a home soon and I'm a member of the XXXXXXXX (name deleted) Credit Union. Should I go there to get my home loan or to my bank?"
Credit unions are funny. Because they're non-profit, you get some curious results...
Occasionally, credit unions have slightly more favorable rates than other lenders. And at other times their rates are above market.
A downside to credit unions, in my experience, is that they offer much fewer loan options, are less flexible, and tend to be much slower than banks.
I use the biggest mortgage lender in the county. If you'd
like to talk with them, call me at (858)457-KENT and I'll
put you in touch with my favorite loan representative.
What about Loan Contingencies?
"How does it work if I'm buying a home but cancel because I find a problem with the home or my bank won't give me the loan. Is that breaking the contract? And do I lose my deposit?"
Most contracts have contingencies letting you cancel and get your deposit back under certain conditions.
The 3 categories of standard contingencies are:
2. inspection & investigation
So if the seller discloses a problem, if your inspections are unsatisfactory to you, or if you don't get your loan, you typically get your deposit back...PROVIDED you keep within the agreed deadlines.
Be sure your agent knows contracts and follows up on
deadlines. Contracts and deadlines are common weaknesses for
real estate agents, so be careful whom you work with.
Landord Assistance Sites
"I've been investing in real estate for a couple of years. My wife and I own 3 rental condos that we manage ourselves. Can you recommend any good websites to learn more about what I need to know as a landlord?"
Here's a couple:
For San Diego Rental information try http://www.sandiegorealestateinsider.com/rental.htm
Hope that helps...
For more advice on San Diego Real Estate Investing http://www.sandiegorealestateinsider.com/parent_investor.htm
What about Probate Sales?
"Hello Gary. My wife and I see your name everywhere. Question- We're looking for a home in Pacific Beach for our daughter. Do you recommend buying a home at a probate sale?"
First, some info...
A probate sale occurs when someone passes away without a living trust naming a willing, ready, and able party to handle the estate's affairs. So the probate court supervises the sale of the real estate.
When that happens, an "executor" (a person named in the decedent's will or selected by the court to represent the estate) often obtains full "IAEA powers" and handles the sale much like any normal sale.
Without full IAEA powers, the sale is subject to court approval and overbid 30-60 days AFTER the estate and a prospective buyer have signed a tentative purchase contract. The sale may be confirmed by the judge in court without event, or there could be an fast-paced exciting auction and bidding in the courtroom.
If there is an auction, the first overbid must be 5% + $500 more than the original "accepted" offer. Further increments are set at the judge's discretion.
Many probate properties sell slightly under market due to the 30+ day wait, the 10% non-refundable deposit, and the fact that no contingencies (financing, inspections, etc.) are usually allowed.
Others sell at or even above market value due to the "auction effect"-- many people just get excited at an auction and overpay.
So, FINALLY, my answer to your question:
I recommend being open to buying a probate property if
you see one, but not investing your time to find one unless
you're very flexible on property characteristics and
location, plus ready to invest months looking and going to
probate court hearings.
San Diego Foreclosures and Distressed Real Estate information site http://www.sandiegorealestateinsider.com/andre.htm
Should I use a lockbox to sell my home?
"I'm talking to agents about selling my home in Clairemont and one said I don't need a lockbox for agents to see my home. Won't it be harder to sell my home without one?"
You're right. And any agent who (except for special cases) tells a homeseller not to use a lockbox is doing them an awful disservice.
Some agents "sell" the seller on how they'll make the process private, convenient, and unobtrusive. They say, "if a buyer is serious, they'll change their schedule to see your home." Or "I'll meet people at your home for showings."
Sounds great, but...
The reality is too often the seller's agent never even calls back to schedule a showing. Or the seller can't be reached so the home can't be shown. Or the buyer is only available on their lunch break, but the seller's agent can't make it til 3pm.
Homebuyers and their agents are just too busy today to bend their schedules around for a hard-to-see home. They just move on to the next one--costing sellers of hard-to-show homes $1,000's from lack of showings, and sometimes resulting in NO SALE.
To sell your home faster, easier, and for the most money,
I and other experts advise you to use a lockbox. http://www.garykenteverywhere.com/inspection.asp
"I'm planning to exchange my San Diego rental house for an apartment building in Texas. I know there's different kinds of exchanges. I heard I should do a Starker Exchange. What exactly is that?"
The name is from a 1979 court case: T.J. Starker vs. US. A Starker exchange is one name for a delayed exchange, the most common type of 1031 tax-deferred exchange of investment property. You close your sale, then close your purchase one to 180 days later and defer all your capital gains tax.
A tax advisor and a knowledgeable San Diego Realtor can
help you comply with the IRS exchange rules. They're much
simpler than people think. But if you don't follow them
exactly, you'll get hit with a big tax bill. http://www.sandiegorealestateinsider.com/free1031.htm
Should I buy a foreclosure home?
"Hello Gary. I've learned a lot from reading your newsletters and I was wondering....do you deal with foreclosure homes at all? If you do, what are the advantages and disadvantages of buying a foreclosure compared to a regularly listed home on the market?"
In Southern California, foreclosures are the "holy grail" of real estate investing that people pursue for months or years. As it's so hard to actually get one at a good price, the vast majority of foreclosure-seekers realize this and eventually give up.
BTW, A resource we developed for finding great deals is ANDRE, our Automated Notification of Distressed Real Estate http://www.sandiegorealestateinsider.com/andre.htm
Nevertheless, if you're still interested, let me explain the 3 stages of foreclosure, along with their pro's and con's for investors:
When an owner falls behind on their mortgage, the lender starts foreclosure by filing a "Notice of Default". As this notice is public record, these owners get inundated by mail, phone calls, and unannounced visits by aggressive investors, lenders, and agents.
Advantage: Potential good price if you're extremely lucky and/or ruthless and aggressive.
Disadvantage: Heavy competition. Very low percentage. Generally must be ruthless and aggressive to get a "good deal"
The actual foreclosure occurs at the trustee's sale or auction. Most buyers at foreclosure sales are sophisticated and well-heeled investors.
Advantage: Can get a good price.
Disadvantage: Savvy competition. Must pay all cash, possible legal and title risks, can't see interior of property prior to auction.
If no one bids at the auction, the lender gets the property. These are then called R.E.O. (Real Estate Owned by the lender) properties. Banks do NOT like to own R.E.O.'s, so a few will deal a little to get them off their books.
Advantage: Can occasionally get a good price or attractive financing.
Disadvantage: Heavy competition. Currently there are virtually ZERO San Diego R.E.O.s.
There are just WAY too many people chasing WAY too few foreclosures. In fact, I'm a real estate investor and in 21 years I've bought all of one foreclosure property, a "pre-foreclosure."
Unless you want to waste a lot of your valuable time, I'd focus on having a skilled agent find you a home or investment. You may want to call us at (858)457-KENT, as we often find our clients properties that are NOT listed on the multiple listing service.
"I know sometimes people buying a home ask the seller to pay their closing costs. Why would a homeseller ever agree to do that?"
Great question. Many of my seller-clients have objected LOUDLY when asked to pay a buyer's closing costs.
My advice is it doesn't matter if a buyer wants you to pay closing costs or even buy them a VW Beetle, so long as you're happy with the net. There's little difference between 600K vs. 610K less 10K in costs.
And if it means you get your property sold, why not?
"Hi Gary, I receive your informative emails and I truly enjoy them. Thanks. My question is this: I have investment properties but some have negative cash flow. In reading real estate books, negative cash flow is discouraged but I strongly believe that a real estate investment is just like a 401(k). One contributes to a 401(k) fund so why not real estate investment? What are your thoughts?"
I applaud you. That's a very intelligent way to look at it. Here are some thoughts on what you said:
My bet is that the authors of the books you read live and invest in other areas of the U.S. With the real estate prices in San Diego and many other high-priced markets, it's hard to get a positive cash flow off the bat unless you're willing to put 40%+ down.
So keep up the real estate investing and you'll make a bundle long-term.
"We'd like a newer home and we've been looking in north county and Carmel Valley. Many of them have those Mello-Roos payments. Is Mello-Roos tax deductible?"
If you're not familiar, Mello-Roos is a fee LIKE an extra property tax. You'll find it on a lot of local homes built after around 1990.
A tax expert told me Mello-Roos is NOT deductible...but he felt many professional tax-preparers deduct it anyway. He said deductible taxes must be for "general public welfare" and not "local benefits" (e.g. streets, sidewalks, irrigation) only for a group of properties, even if it provides "incidental benefit to the public welfare". The latter describes Mello-Roos.
Interestingly, since Mello-Roos payments are on your county TAX bill and paid to the TAX assessor, he thought an IRS auditor could be persuaded to allow the deduction.
Another tax expert felt at least the interest portion of the Special Tax is deductible (49.24% of the Special Tax for Fiscal Year 2001/02), but the entire payment may or may not be deductible.
Opinions are mixed, so consult with your tax
Search homes for sale in San Diego http://www.sandiegorealestateinsider.com/searchsdmls.htm
What about making Contingent Offers?
"We have a new pair of twins and need a bigger home. We're very picky and won't list our current home until we find one to buy. We need the money from that to buy, so we'll have to make a contingent offer and then sell our place. Do you think this is a good approach?"
No, and here's why...
Homesellers don't like contingent offers. If they'll even consider one, they'll want a premium price and a "72-hour clause". That says they keep trying to sell their home and if they get another offer, you'll have 72 hours to remove your contingency of selling your home. And if you can't, your offer is cancelled and you lose the home (but you do get your deposit back).
And that's only the half of it...
Being under the gun with that contingency, you'll want a fast sale, which usually leads to a discounted price.
So let's go through this: you overpay for your new home and undersell your old home. Sound good to you?
If not, here's a better idea, step-by-step:
1. "Scout" to see if you like the homes for sale in your price range. The goal isn't to find THE home; it's just to get a good feeling if there are homes out there close to what you'd consider. If so, then...
2. List your home for sale (with a skilled agent!) contingent on you buying your another home. The contingency means if you don't buy a home, you don't have to sell, so you won't be out on the street with no home.
3. Watch the market you want to buy in while your home is for sale.
4. Accept an offer on your home contingent on you buying another.
5. Find a home and offer contingent only on your home CLOSING. Since it's already in escrow, more sellers will seriously consider your offer and less will want a premium price.
6. Close both and move!
This plan takes most of the pressure off and can save you
thousands of dollars. Feel free to call me and we can sit
down and go into greater detail...
What exactly is a “Home Selling Marketing Plan?”
"Gary, please give me a call. My husband is being transferred to Florida and we'll be putting our home on the market next week. We've heard a lot about you and want to find out about your marketing plan..."
I'd love to meet with you...and I'd like to give you some advice.
There's SO much more to selling your home than just the
"marketing plan"... There's:
- pricing strategy
- fix-up tips
- loads of other forms
- managing the transaction
- protecting you from legal liability
- keeping you updated on everything
- much more
Asking an agent just to tell you about his or her "marketing plan" may just gets you a rehearsed sales pitch, which often plays up:
1. Things that have no bearing on selling your home ("my big office", "my national firm", "my 3 hours on the phones every day", etc.)
2. Things they brag about but do poorly (internet marketing, open houses, etc.)
3. Things they do sporadically or possibly NEVER even do (newspaper ads, calling other agents about your home, etc.)
Instead, do these three things:
A) Ask to hear their ENTIRE plan to sell your home.
B) Get a written guarantee that you can cancel your listing if you're not happy.
And, most importantly...
C) Choose an agent based on his PERSONAL track record--not his firm's. After all...
PAST SUCCESS IS NO GUARANTEE OF FUTURE SUCCESS, BUT WHAT ELSE CAN YOU GO BY?
"I've been looking for a home in Mission Valley for 2 months and agents keep pushing me to talk to a lender. I'm looking for a good deal and if I don't find one I won't buy. So I don't want to waste my time or share my personal information unless I find a home. I make good money and I'll qualify no problem. "
I didn't hear a question, but let me comment.
When your write your offer on a home, the seller’s agent is going to ask, “has the buyer been pre-qualified or pre-approved?” If the answer is “no”, your offer may be delayed until you pre-qualify or rejected entirely.
Timing can be everything when you buy a home in San Diego. And if you find that "good deal", there will likely be other offers and you won't get the home.
So buck up and talk with a lender and get pre-approved.
It's not going to hurt.
Do I have to have 20% down before I buy a home in San Diego?
"Hi Gary. My wife and I are working to save the 20% down before we buy our first home, but it's slow going. Is it possible to buy with less than 20% down?"
Yes! You're not alone with the crazy belief that you actually need MONEY to buy a home.
When I started in real estate way back in 1984, 20% down was the norm in San Diego. A lucky few could buy with 10% down or less. VA loans (for active & retired military) allowed zero down.
But for many years financing has been quite loose and 10%, 5%, and zero down loans are common. Call me at (858)457-KENT and I'll put you in touch with our preferred lender and he can go over your options with such loans.
The Truth about property appraisals.
"Hi Gary. My neighbor's home next door was appraised at $825,000. My home is in better condition, so I know mine is worth over $850,000. How can I find out a realistic value without paying for an appraisal?"
Before you go any further, let's look at three questionable assumptions you've made to arrive at your 850K+ figure:
1. The neighbor told you their correct appraisal figure
2. That appraiser was accurate
3. Your home is worth more than your neighbor's
Re #1: While your neighbor was probably telling you the truth, many out of poor memory or foolish pride will quote a different, often higher number than it was actually appraised for
Re #2: Many appraisals are pinpoint accurate, others are WAY off. I've seen them off as much as 30%! Reasons include: the appraiser doesn't know the area, the appraiser isn't good at his/her job, the appraiser had a "target" price he/she was shooting for.
Re #3: Most homeowners think their home is nicer than their neighbor's, but that's not always the case. And even if it is, there are many other factors influencing value such as square footage, yard size, view, etc., that can outweigh the "niceness factor".
If you're thinking of selling your home, I'd be happy to
come by and give you an accurate idea of its value at no
charge. Just call me at (858)457-KENT.
Joint Credit Scores
"Is it true that since credit scores are pulled by social security number and not by name, credit cards/accounts that are just in my husband's name (I'm not even listed as an authorized user) will never impact my personal score?"
Our preferred lender tells us that credit is run based on name, social security number, and address. Name and social security number must match or else the credit report will run an "error" instead of a credit score.
Credit only in your spouse's name won't show on your credit report. But because most spouses buy property together, a JOINT credit report will pick up both spouse's credit history and affect the ability of the COUPLE to purchase a property together.
I hope that answers your question. If you have any other questions, please give us a call at 858-457-KENT and we'll put you in touch with our lender.
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