Friday, February 5, 2016

Short Sales are still selling in Sacramento, but they are a significantly smaller piece of the puzzle than before...

I met with a new buyer client last week, and during the course of our appointment, she asked me my thoughts about the possibility of  purchasing a short sale home. I explained that short sales, foreclosures, and "distressed properties" generally were far less prevalent in the Sacramento real estate market today than they were a few years ago.

Just the pure ratio of short sales to other types of listings in the market is low, so I suppose statistically buyers these days are less likely to purchase a short sale. Last quarter (November, December, January) there were 381 short sales in Sacramento County out of 5597 total homes for sale. That's less than 7% of all inventory.

This graph above portrays the market for short sale listings only in Sacramento County over the last 6 years. I remember there was a time about 5-6 years ago when ALL of my listings were short sales. All of them. 100% of them. That was a chaotic time in the market. An a chaotic time to be a short sale listing agent. I had many active listings, all of them short sales at varying stages of negotiation, and had to wake at 5am to start calling banks with loss mitigation departments on the east coast to negotiate payoffs. And most of my listings had both a first loan, and a second loan or home equity line of credit (HELOC), not to mention a few that had 3rd loans, or maybe IRS or FTB tax liens. Eh, I've done it all.

In 2015, only 20% of my listings were short sales. That is significantly fewer than 5-6 years ago, though proportionately more than double of the market in general. Considering I cultivated a deep skill set in negotiating short sales, it makes sense that while they are a tiny piece of the overall Sacramento real estate market right now, that I am still closing a fair number of them.

Friday, January 29, 2016

Buyers - be sure to check those property tax bills before you make an offer!

I am working with several buyer clients right now, and all of them are pre-approved for their mortgage financing with various lenders of their choosing. Generally speaking, loan officers  qualify buyers for a loan amount and monthly payment based on the buyers' income, assets, and credit score.

There are four elements that make up the monthly mortgage payment - loan principle, loan interest, property taxes, and homeowners insurance. Many buyers do not realize that their loan officer's estimate for annual property taxes is usually based on 1.25% of the purchase price, then divided by 12 months in the year to estimate what amount gets factored into the total estimated monthly payment. Well, let me tell you - depending on where the home you are purchasing is located, the annual property taxes may be much higher than that estimated number. AND depending on the buyer's circumstances and debt-to-income ratio, a higher tax bill could mean you don't qualify for enough to purchase that particular house after all.

What do you mean Erin?? Well, there are several VARIABLE elements that make up the property taxes for a home...not just the standard property tax based on the value of the house - but also things like school bonds, mello roos, parcel taxes, local assessments, flood control, etc. These are called "Direct Levies" on a property tax bill.

Let me illustrate this with an example. I am working with a buyer client who wants to purchase a home in a neighborhood that has LOTS of these little variable elements. The house my client wants to purchase is $315,000. So when my client was pre-approved, the loan officer calculated his approval based on annual property taxes estimated at $3,937.50, or $328.13 per month ($315,000 x 1.25%, divided by 12 months) layered into the monthly mortgage payment. OK, that's great. BUT, the reality of this particular property is that in addition to the standard property tax amount, there are several local assessments and Mello Roos. Here is how the tax bill for the house breaks down:

BASE PROPERTY TAX $3,150.00
COSUMNES CSD - DIST. WIDE L & L $318.48
ELK GROVE SCHOOL DIST MR - CFD #1 $200.00
WATER & DRAINAGE STUDIES - SCWA 13 $6.92
POPPY RIDGE CFD NO. 2003-01 $939.64
STREET MAINTENANCE DISTRICT NO. 1 $155.58
STREET LIGHTING MAINT DISTRICT #1 $17.88
POPPY RIDGE SERVICES DISTRICT $173.10

Total - $4,961.60 per year, or $413.47 per month. That is a substantially higher amount than the loan officer's estimate of $328.13 per month used to qualify my buyer client for his loan...in fact, that extra amount of the property taxes decreases my client's spending power by $16,000 in purchase price...so now that $315,000 house is out of reach for them.

SO - when out home shopping, make sure you or your agent looks into the property tax situation, specifically for those "Direct Levies" that increase the property tax bill! For Sacramento County, you can find this information online at http://eproptax.saccounty.net/.

What properties are most likely to be loaded up with these goodies on the tax bill? Generally (but not always) the homes will be newer construction, built within the last 10-15 years. Mello Roos and other bonds usually have a lifespan of 10-30 years, so if you want to purchase a home built in 1999, there's a decent chance that some or all of those additional fees will have aged out, or will disappear soon.

Tuesday, January 26, 2016

New Listing - 500 Alhambra Blvd, East Sacramento, CA 95816

Charming 3 bedroom, 1 bathroom, 1,300sf 1920's bungalow directly across the street from McKinley Park in East Sacramento. Enjoy the view while hanging out on your front porch, or relaxing in your living room or formal dining room. You will love the perfect combination of classic features with modern amenities: beautiful wood floors, high coved ceilings, stunning woodwork and trim. Updated kitchen, remodeled bathroom, dual pane windows, central heat and air, composition roof. Quarter basement and cute yard. Close proximity to all the things you love in East Sac! Zoned R/O for potential office use. Don't wait! Offered at $439,000. For more photos and information please visit 500 Alhambra Blvd, Sacramento, CA 95816.

Friday, January 15, 2016

Do I personally think it is a good time to buy? Yes, and I just did myself again...

I get asked pretty frequently "is now a good time to buy a home?" As a Realtor I feel this is a bit of a loaded question, because everyone's personal and financial situation, what neighborhood we are talking about, price range, and other factors will play a large role in determining if and when is the right time for that person or family to buy a house...but very generally yes, I do think now is an opportune time to buy a home in Sacramento. Prices are increasing slowly and steadily (aka, sustainably, with no large spikes one way or another), interest rates are good (right now in the low 4% range), and the economy seems to be back on track in the Sacramento region.

So given all that, my husband and I just purchased a home in the summer of 2014. That purchase was a fixer property that we spent some time and effort remodeling. It was never intended to be a home we would live in long-term.

This last summer, we got the itch again and started looking to purchase either an investment property or another home for ourselves. We were lucky to find a great home that is a much better fit for our needs, also located in the Arden area. This home is a little dated cosmetically but we will add our own personal touches over time. It's a bit more space, with larger yard now that we have our dog Citra, and a better neighborhood. We will be turning our current home into a rental.

I am not a fan of moving, so after suffering through this next move, I think this is a home we will probably stay in a little while and our future purchases will likely be investment properties.

Wednesday, January 13, 2016

My personal experience with using home warranty coverage to make a major claim on my central heating and air system...

I have always been an advocate of home warranties, and I thought I would share my own personal experience dealing with a major repair claim that I had on my own home recently. The short version of the story is the experience was extremely unpleasant. Here is the long version:

So first off, some of you may be wondering: just what is a home warranty? Well, unlike homeowner's insurance, a home warranty policy can be purchased to cover the repair of items in the home that break and need to be fixed. So for example, coverage may include things like fixing a leaking shower valve, fixing or replacing a broken dishwasher, fixing or replacing a water heater, etc. Coverage from plan to plan can vary to include a lot or a little, and there is usually a small service call fee of $60 when a contractor visits the house.

So in my case, when my husband and I purchased our current home in June 2014, we negotiated in our purchase that the seller pay for a 1-year home warranty policy for us. During our first year of ownership, we used the plan to repair a leak under our kitchen sink, to snake a backed-up shower drain, and make a repair to our air conditioning unit when the blower motor stopped working. Generally those repairs went pretty smoothly: we placed a claim with our warranty company, within a day a contractor called to schedule a time to visit the house, and within a couple days of that the repair was complete.

After a year of owning the home, in June 2015 we paid to extend the plan for another year, primarily because our HVAC unit was really old and we figured we would continue to have repair issues with it. This brings us to current day...

In early December, we re-roofed our home. The job started on December 9th, and the roofing contractor had to temporarily disconnect our HVAC unit, which sits on our roof. When they reconnected the unit after the job was complete on December 11th, they could not get it to turn on. So....

On Saturday December 12th, we made a claim with the home warranty company. It was immediately assigned to HVAC Contractor A (not going to disparage anyone). Then for some odd reason, the next day on December 13th we were notified by email it was re-assigned to another contractor, HVAC Company B. HVAC Company B called the next afternoon (a Monday) and the soonest both the contractor and I were available was Thursday, December 17th. Ugh, I guess a few more days without heat is manageable. We had already gotten out a couple electric blankets and a space heater, had a fire in the fireplace. So inconvenient yes, the end of the world, no.

HVAC Contractor B came out as scheduled on the 17th and diagnosed we had a cracked heat exchanger. Our unit was toast! It was not a repairable item, especially for a really old unit. He said the entire HVAC unit on our roof needed to be replaced. Unfortunately he was a one-person operation and said the job to replace this unit was beyond his capabilities. He called into the warranty company that afternoon, reported our unit needed to be replaced, and said a new contractor needed to be assigned for the replacement.

So that evening we were notified by email that HVAC Contractor C was assigned to our file. Ok...I guess a few more nights huddled with electric blankets and space heaters wouldn't kill us. The next day the newly assigned contractor contacted us and asked to come out on Sunday, December 20th. And he did. The technician spent less than 5 minutes at my house, didn't even get on the roof to look, didn't look at our ductwork...said he had enough information to bid the job. Umm, ok? He said he would call in the bid to the warranty company.

On Tuesday, December 22, I had not heard anything from the contractor or warranty company and was getting a little concerned. We were approaching 2 weeks with no heat and it was the week of Christmas. I called the warranty company, and the rep there told me they were waiting on information from HVAC Contractor C. I called the contractor and they said they had sent everything over. I asked them to again. I called the warranty company the next day on the 23rd, and again they said they did not have what they needed. I left a voicemail for the contractor asking them to send it in. Then over the next few days we heard nothing...granted it was Christmas Eve, Christmas Day, and then the weekend. We enjoyed the holidays with our family and tried not to think about how cold our home was.

On December 26th I left another voicemail for HVAC Contractor C. The warranty company's call center was closed. I escalated the situation by contacting a local representative of an affiliated title company. She tried to help but really could not do too much except give me a direct phone number for a supervisor at the call center. So I called again on December 27th. Let's say by this point I was pretty irritated. I got a warranty company supervisor on the phone. She then informed me that HVAC Contractor C had refused the job. WHAT!? I was irate. This process was taking a ridiculous amount of time. Until that point I had not mentioned I am a Realtor and referred clients to this company pretty frequently, but I let her know that and how awful and frustrating this experience had been for my family.

The morning of Monday, December 27th I called the warranty company again. The rep I spoke to told me another contractor, HVAC Contractor D had been assigned. I never received email notification of that...she gave me their contact information and I called the company immediately. To that company's credit, they were able to send someone out to look at the job within a few hours. Progress!! The technician arrived, spent probably 30 minutes getting up on the roof, taking measurements, etc. Much better. That afternoon I heard from the contractor that the complete replacement had been approved by the warranty company. YAY! There would be some parts of the project not covered by the warranty -- the warrant company would pay up to $250 of the permit, up to $1000 for new ductwork, and would not cover the $400 testing of the ductwork for energy efficiency...but everything else would be covered. It was about a $10,000 total project, so paying a small fraction of that was ok by us.

BUT...then another set-back. Instead of being able to start the job right away, the warranty company had to ship a new HVAC unit to the contractor. Huh? So they could not just go down to a local supplier and get a unit and install it...no they had to wait. It took another week to arrive.

On January 5th, HVAC Contractor D arrived and replaced all of our ductwork in the attic...and that day the HVAC unit arrived! YAY! But it was raining and since the unit had to be installed on the roof, we had to wait for a clear day. Ok, that's understandable. So on Thursday January 7th, the unit was finally installed. I came home that day to a warm house for the first time in a month. Hallelujah! But the drama doesn't end there.

Remember those uncovered costs?  The office manager from HVAC Company D called Friday asking for payment. Since the warranty company was covering part of the job and we were covering a small portion, I asked her to email me an itemized bill that showed exactly what the warranty company was paying and what we were paying. That email never came, and I arrived home on Friday evening to find a rep from the contractor standing in my driveway demanding payment. Luckily my husband and I arrived home at the same time because the guy was a little scary. He handed us a bill with three items on it: Permit $150, Ductwork $2,200, HERS Test $400.

The amount of the bill was more or less what we had expected, but the bill was not itemized as we had requested...AND, we had not been provided a copy of a permit, the work had not been inspected by Sacramento County and signed off, nor had the HERS testing happened. So the contractor was billing us in full for a job that was not yet complete. We had some unpleasant words with the guy in our driveway, and ultimately we wrote him a check for 10% of the job, and told him we would pay the rest once everything was indeed complete. We got a call over the weekend from the owner of HVAC Contractor D demanding payment again. We asked where the permit was, when the HERS test was scheduled, and when final inspection would take place. He claimed the permit was at their office, and it would be weeks before the HERS test and inspection. He then accusing us of never intending to pay them. Once we threatened to contact the Contractors State License Board for their behavior he backed off. That evening, Sunday the 10th, I checked online with Sacramento County -- they have an online permit look-up -- sure enough, no permit had been obtained for our job.

So on Monday, the 11th, my husband spoke with the contractor again...and that morning they had obtained the permit and they scheduled the HERS test and final inspection for Wednesday January 13th. Hmm, I thought that would take weeks to get scheduled? My husband and I think that if we had indeed paid in full when the contractor demanded payment a few days prior, we probably never would have heard from them again, and no permit, no HERS test, and no final inspection that we would have already paid for. So unprofessional. What a joke.

So at 8am this morning, the HERS test was completed, and by 10am the Sacramento County building inspector arrived and signed off the permit.

I'm still waiting for an itemized bill, and after speaking with the contractor again earlier, it seems they have over-charged us $400 for an extra duct. They charged us for 8 ducts instead of the 7 we have. So tonight, assuming the contractor provides a corrected itemized bill, we will pay them in full for the remainder of the job.

So I know this was a long story...while saving $8,000 on our new HVAC system was definitely awesome, I think that folks should be prepared for a long, drawn out process, and be prepared to stay on top of both the home warranty company and the contractor assigned to the job.

Monday, January 11, 2016

Sacramento Real Estate Statistics for December 2015

Years from now, I will look back on Sacramento real estate in 2015 and probably think, "wow, what a nice enjoyable year." I say this because from my perspective, 2015 was the year that things seemed more or less normal.

What do I mean by normal anyway? Isn't complete and total chaos normal?

Gosh, it doesn't have to be. Have you ever been in a totally volatile personal relationship, and after a while the craziness just becomes status quo? Yeah. We all have, whether it has been a significant other, friend, acquaintance, child, fill-in-the-blank-in-law, or someone else. Then, the time that follows the once that toxic person has been extricated from your life can only be described as one thing: nirvana. And not the kind that smells like teen spirit. I mean heaven.

The last several years of Sacramento real estate have been so volatile, the local economy so precarious, that 2015 by comparison was nirvana. At least for me. Sure, certain transactions were stressful, but the market conditions were such that there was no unnecessary external chaos.

So back to real estate statistics for Sacramento. Aside from the bounce back from a slight dip in value that ended 2014, values were nice and steady with a slight value appreciation. This is nice and sustainable. No wild value swings up, no wild value swings down. Despite the Federal Reserve Board announcement that they would raise the short term rate for the first time in 9 years, this action did not really increase mortgage rates much, and those 30 year fixed mortgage rates are hovering in the low 4% range right now. The number of short sale and foreclosure continue to decline. The number of homeowners with equity in their homes is increasing.

I think we will see more of the same in 2016, and with that I am hopeful that at the end of the coming year I can describe 2016 much the same way.

Tuesday, January 5, 2016

New Listing - 2316 Coconut Way, Sacramento, CA 95833

Elegant 3 bedroom, 3 bathroom, 1,836sf home tucked away off the Garden Highway near the Sacramento River. You will love the open layout, vaulted ceilings, custom shutters, laminate flooring, upgraded light fixtures, remodeled kitchen w/granite counters and stainless appliances. Bedroom and full bathroom downstairs. Upstairs hallway bedroom has ensuite bathroom, master bedroom retreat has dual sinks, separate tub and shower, walk-in closet. Whole house fan, new HVAC 2015, comp roof 2012. Short distance to Virgin Sturgeon, shopping, schools & more. Don't wait! Offered at $349,000. For more photos and information please visit 2316 Coconut Way, Sacramento, CA 95833.

Saturday, January 2, 2016

Be sure your water heater is properly strapped when you sell a home...

While I doubt this water heater would fall over in an earthquake, this is an example of what not to do when strapping a water heater. In California, it is state law to make sure a water heater is seismically strapped at the time of sale.

First, the water heater should be strapped with approved materials...that little metal "plumber's tape" is not acceptable. 

Second, the water heater must be strapped in two locations: the upper third and lower third. The lower strap must be a minimum of 4 inches above the water heater control unit. As you can see, the top strap here is the wrong material and too low, and the lower strap is also the wrong material and closer than 4 inches from the control unit. That middle strapping is the correct material, but is not anchored or wrapped around the unit properly. You can buy a kit at Home Depot or Lowe's with the approved material.

I highly suggest that sellers make sure their water heaters are properly strapped before listing a home. The buyer's home inspector and appraiser will be looking for this to be strapped correctly. If it is not done correctly, it must be modified before a purchase loan can be made on the house.