Grace Morioka

There's no doubt about it...the times are changing. Short sales, foreclosures and auctions have changed the types of homes that today's home buyers want to buy, and the availability of information through the internet has changed how consumers shop for homes to purchase.

Often posted on Trulia.com, Zillow.com and other real estate websites are comments and questions by buyers...why do we need to use a Realtor? After all, I found the home! I found the loan! What did the Realtor do, except get the commission? Invariably, the response from real estate professionals range from: 1) you don't know everything that the agent does and never will to 2) you'll be sorry if you try to go this alone, things happen and you'll be ill-prepared to handle the problems. Technically, both statements are true--buyers don't know what agents do (and agents often disclose all of their job duties) and, as a responsible Realtor, I would be hard-pressed to tell any seller or buyer to "go it alone" without help because "stuff "really does happen and without someone there to help, it could very messy, very quickly. But it's also equally true that sellers and buyers want to take on more of the responsibilties traditionally handled by real estate professional. So what to do to bridge the gap?

It's time for real estate professionals to begin a metamorphosis from "driver of the bus" to "navigator/passenger." How? By providing interested and qualified buyers and sellers with the opportunity to work with a real estate facilitator who will perform carefully defined tasks that the seller or buyer lack the skills (or license) to perform.

The opportunity to work as a real estate facilitator first occurred in 2008 when I worked for my friends and clients. My friend, a head-strong homebuyer and her polar opposite husband met with me to discuss how I could represent them as their buyer's agent. My friend who was clearly in control of this purchase, made it very clear to me the scope of my job duties and, most notably, made note of what those duties would NOT include. Interestingly, one of the job duties deleted from my job as Facilitator would be "showing homes." My clients had determined to find their own home and, while they might ask me for the occasional list of available homes, they would choose their own property and contact me when they were ready to buy. For and in consideration of my time, the buyers and I agreed that I would be paid a "fixed fee" for my services, and they would agree to take upon themselves certain liabilities regarding the deal and acknowledge my limited role as their facilitator. After obtaining the necessary broker approval, I agreed to be prepared to "start" the job when they found their perfect home. About one month later, I received my call and we were off. My clients understood immediately that the "traditional real estate world" had not yet caught up to their real estate "new think", so I was allowed to be the "point person" in the home sale and negotiation (which worked out well as the lower commission to the buyer's agent resulted in an overall lower price to the buyer), but, thereafter, my role was to return to the "passenger seat" where I could coordinate the "trip" but did not determine the destination.

While I set up appointments and introduced my clients to key vendors, it was the client who attended each and every inspection. The clients followed all of the inspectors around so that they could learn, first hand, what the inspector saw and what he/she recommended as required repairs. It was the client who was told personally of the inspector's assessment of the overall condition of the home. The clients worked directly with the loan officer and shopped the best deals. They trailed the appraiser around the building, and they followed up with all of the various removal of loan conditions after the appraisal was submitted. When it came time to close escrow, I noted with interest that while my involvement in the transaction was limited, the client's satisfaction with the deal appeared to be far greater than in other more traditional real estate transactions where the buyers are "informed" of events, but not "involved" in the intricacies of the home sale.

Admittedly, this type of home transaction is not intended for every buyer and there will always be buyers who neither have the time nor the inclination to know as much about the home as did my clients. But for those who take satisfaction in knowing the details of their home purchase and wish to be an integral part in the purchase of the most expensive investment in their lifetime, using a real estate facilitator may be the best plan for you.

For more information on this new form of buyer or seller represntation, please feel free to give me a call! Good luck and happy house hunting!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
Tel 408-426-1616
Office 408-261-7156
Fax 408-261-9729
Email: graceareaprorealty@att.net
website: http://gracemorioka.areaprorealty.com

As part of the Housing and Economic Recovery Act of 2008 (HR3221), Congress enacted changes via the Housing Act, Section 3092, that will--starting from January 1, 2009, change how home sellers determine the gains to be excluded from capital gain taxes. Below is an excerpt from monthly probate and realty newsletter of the American Bar Association at www.abanet.

New Restriction on Exclusions of Gain from Home Sales(Housing Act § 3092)

One of the most disadvantageous provisions in the Housing Act is the new restriction on the exclusion of gain from home sales. Under current law, a taxpayer can exclude up to $250,000 in gain ($500,000 for married couples) from the sale of a residence if the taxpayer has both owned and used the home as the taxpayer's principal residence for at least two of the five years before the sale. Thus, a taxpayer could move into a nonqualifying property (in other words, a vacation or rental property) and, after meeting the two-year residence requirement, sell the property and take advantage of the entire exclusion.

The new restriction is intended to substantially restrict tax-free home sale gains for any taxpayer who benefits from the exclusion after he or she has converted a vacation home or rental property to his or her principal residence. After December 31, 2008, gain from the sale of a principal residence will not be excluded from income to the extent the property was used for a nonqualified use, as defined under Code § 121(b)(4), as amended by Housing Act § 3092. This new restriction only applies to nonqualified uses occurring after December 31, 2008. A nonqualifed use consists of any period, beginning after December 31, 2008, in which the property is not used as the principal residence of the taxpayer.

To calculate the amount of gain that is allocated to periods of nonqualified use, the total amount of gain is multiplied by the following fraction: the aggregate periods of nonqualified use while the property was owned by the taxpayer divided by the period the taxpayer owned the property. Nonqualified use, however, does not include any portion of the five-year period that occurs after the last date the property is used as the principal residence of the taxpayer. For example, suppose John buys a home on January 1, 2009, for $400,000 and uses it as rental property for two years, claiming $20,000 of depreciation. On January 1, 2011, John begins using the property as his principal residence. On January 1, 2013, John moves out of the house and sells it for $700,000 on January 1, 2014. John used the property for a nonqualifying use for the first two years he owned it. The year after John moved out, however, is treated as a qualifying use. Therefore, 40% (two out of five years owned), or $120,000, of John's $300,000 gain is not eligible for the exclusion. The balance of the gain, $180,000, may be excluded. In addition, John must include $20,000 of the gain attributable to depreciation as ordinary income (unrecaptured Code § 1250 gain).

Nonqualified use also does not include any period during which the taxpayer or the taxpayer's spouse is serving on qualified official extended duty (not to exceed an aggregate period of 10 years), nor does it include any other period of temporary absence because of change of employment, health conditions, or other unforeseen circumstances as may be specified by the IRS (not to exceed an aggregate period of two years).

The Housing Act is intended to restrict gain exclusion when property is transferred from a nonqualifying use to a principal residence, so the new provisions do not restrict gain exclusion when property is transferred from a principal residence to a nonqualifying use. Again, this provision only applies to nonqualified uses beginning January 1, 2009.

**It's important to note that, in determining the percentage of exclusion, the owner must use the four or five year period prior to sale. The last year, to be considered as "qualified" use provided the home is not again converted to rental or investment property. Also, note that any depreciation taken during the period of non-qualified use is to be treated, upon sale, as ordinary gain and subject to a subtantially higher income tax rate. Keep this new provision in mind when counseling your clients who may be interested in selling their primary home this year.

The latest home sales statistics for Santa Clara County, California are as follows. This information is based on property tax records for the county.

Sales Statistics for SANTA CLARA County CA

Realist's most recent recording date for this county is 03/27/2009

Single Family Residence
Time Period	Number of Sales	Median Sale Price
Feb 2009	634	$450,000
Feb 2008	528	$750,000
Jan 2009	626	$450,000
Jan 2008	438	$720,000
2009 YTD	1,824	$450,000
2008	10,325	$645,000

Condominium
Time Period	Number of Sales	Median Sale Price
Feb 2009	233	$410,000
Feb 2008	239	$526,500
Jan 2009	204	$359,500
Jan 2008	222	$500,500
2009 YTD	655	$335,000
2008	3,883	$456,500

Overall, the number of homes sold in 2009 for the months of January and February have exceeded the total number of homes sold during the same period last year. However, the median price of the home has fallen from $750,000 in February 2008 to $450,000 in 2009 (a reduction of $300,000 or 45 percent). Condominiums have fared a bit better with slightly lower unit sales in January and Februray 2009 from the same period in 2008, but with a more modest drop in the median pricing from $526500 in February 2008 to $410,000 in 2009 (a reduction of $116,500 or 22 percent). The glimmer of good news here is, of course, that typically January and February are slower sales months than the period from March through July each year. The improved unit sales for both months portends that our spring and summer sales may be stronger than was previously anticipated.

For the the most recent market information or to obtain data about a specific area within Santa Clara, check out my website at gracemorioka.areaprorealty.com or call me at (408) 426-1616. Thanks!

Thinking of purchasing an REO or Bank Owned property in California? For many, the lower sales price of most REO or bank-owed property has allowed them to purchase homes in previously unpurchasable California communities. If you are not already actively engaged in a purchase of short sale or REO property, in many parts of California, you may have missed the "boat." Homes in desirable locations (especially Silicon Valley and the Peninsula in Northern California) are now getting as many as five and six offers--above asking--on a bank-owned home. For those still interested in purchasing a bank owned or REO property, here's a quick guide regarding some of the more interesting aspects of purchasing homes from banks and lenders.

Buying a Home from a Lender Will Require Patience - Most bank owned properties are managed by "asset managers" who are hired by the lender to negotiate and sell the lender's inventory of homes. The asset manager will value the property and will be given a "range" within which the home may be sold without obtaining further instructions directly from the lender. However, within the asset management company, there will also be "tiers" of managers that are authorized to make decisions, and offers that must "work their way" through the different tiers of managers and then the lender will take time (sometimes weeks) to approve. While one can still get a real "bargain" in purchasing an REO property, a "low ball" offer that sits for weeks on the asset manager's desk will give someone else with a higher offer the opportunity to steal away the home of your dreams. Work with your Realtor to make a reasonable offer on a home.

The Buyer May be Forced to Use a Specific Lender - Certain REO or bank owned properties require prequalification or preapproval through a specific lending institution before the offer may be submitted to the asset manager for review and, hopefully, approval. Check with the listing agent to determine if there are any lending qualifications needed before submitting an offer.

The Seller Makes No Representation Regarding the Condition of the Property - The first thing you'll learn if you purchase an REO property is that the seller (the bank) makes no warranties or guarantees regarding the condition of the property. So be careful as you are buying a property with ALL of its blemishes and no way to get out of or rescind the sale if the home turns out to require $100,000 worth of repairs. Further, the bank will not know or even tell you about what may be wrong with the home. You can ask, but you'll only be told that the bank has no knowledge of the condition of the property.

The Buyer Will Pay for All Inspections - Even if the prevailing practices within your county or state require the seller (the bank) to pay for certain inspections, expect that you--as the buyer--will be required to pay for all inspections for the property. Although it can be tempting to want to save money by not getting inspections, do not do it! Pay for the inspections and be aware of the problems in the home BEFORE you close escrow--add about $1500 for the cost of most of the inspections you'll need.

As the Buyer, You May Be Required to Pay All (or Most) of the Closing Costs - Depending on the asset manager or lender, the buyer may be required to pay a large portion of the closing costs including items typically paid for by the seller--escrow fees, title fees, documentary fees, notary fees, recording fees, transfer taxes, reports, etc. Work with your Realtor to learn what fees will not be paid by the bank and the total of the costs that the buyer is expected to pay at close of escrow.

There are still incredible bargains out there for interested buyers in California. Before you engage in the purchase of an REO or bank owed property, remember to get all the facts about the home and the lender's expectations of what will be required of a qualifed buyer, and, of course, talk with a qualified Realtor who can help guide you through this much more complicated purchase. Good luck!!

Economists and housing experts are now saying that interest rates may now have "bottomed" and are at their lowest interest rates ever! Low interest rates on conventional loans are now at 4.85%, and are poised to increase, rather than decrease, in the future. If you are like me, these lower interest rates may finally be the reason to sell or buy your home or to refinance your existing home loan. When rates started dipping below 6 percent, I ran to my favorite mortgage broker, only to find a completely different credit world. So learn from my experience, and follow these simple steps BEFORE trying to sell, buy or refinance because getting a low interest rate loan is both a factor of a good market and being prepared to obtain a loan.

STEP 1 - CHECK YOUR CREDIT REPORT AND KNOW WHERE YOU STAND.

Nothing derails or halts a new loan more than a credt report with errors, problems or negative notes regarding payment. Thanks to a 2004 Federal Law, every person is entitled to one free credit report each year from each of the main credit reporting agencies--Equifax, Experian and TransUnion. The credit report must be requested through a centralized source.

To get your FREE credt report online, visit www.annualcreditreport.com. By telephone, you may request your FREE annual credit report by calling (877) 322-8228 and then following a few simple steps to verify your identification. By mail, you may request your FREE credit report by filling out the request form available at www.annualcreditreport.com and mailing it to Annual Credit Report Request Service, PO Box 105281, Atlanta, GA, 30348-5281. Reports requested by mail are processed in 15 days and should be received by the requester within 2-3 weeks.

Once you receive your report, make certain that the following information is correct:

1. Your name or names and marital status

2. Your social security number(s)

3. Dates or birth

4. Addresses of the places where you now live and have lived in the recent past

5. Names of places where you have worked

6. Pending accounts or any accounts that have been closed

If you find problems or inaccuracies with any of the information on your report, take the time to contact the creditors to make corrections or work with a consumer credit advocate to help repair any problems.

STEP 2: FILE YOUR TAXES!

Okay, I'll admit it, I'm often the last person filing taxes each year and I usually file an extension on April 15. If you're contemplating a new loan or home purchase, however, tax returns must be filed for the past TWO (2) years and will, in many cases, be verified through the IRS. If you are just starting to file your taxes for 2008, a lender may ask to see the returns for 2006 and 2007. If you just filed amended returns for any period (as I had), it takes between 10-16 WEEKS for taxes to be received, processed and verified through the IRS, so anticipate a wait if you're just starting to file taxes for any prior years before 2008.

STEP 3: Gather Financial Documents

Depending on the loan program you choose, you may be required to provide more or less of the following documents. However, to make it easy to get your new lower interest rate loan, gather these important papers now and have them ready to show your mortgage broker or lending institution:

1. Pay Stubs for Six (6) Months

2. Year End 1099s, W-2s and Annual Reports

3. Three Months worth of bank statements for each bank account

4. Three Months worth of statements for any investment accounts, stock plans, 401Ks, SEPs or IRA accounts.

5. Self-Employed? Have the CPA prepare your financial statements--balance sheet and income statement for the year end and for the most recent quarter end.

6. Copies of Driver's License or Photo ID

7. Copies of Social Security Cards - the actual card, not just your social security number.

8. If you receive social security benefits, have copies of your annual social security benefit statement for 2008 and 2009.

Having documents available and ready for your loan application will go a long way toward getting your low interest rate refinance or money for the purchase of your new home! Good luck!

Questions, write to me here!