Affording Less Big Macs

Do you remember way back in September of this year California signed law to raise minimum wages?  Yes, September 2013 may be a long time ago and you have already forgotten, but California signed into law pushing minimum wage towards $10.00 an hour!  Minimum wage will go up to $9.00/hr by July 2014, then $10 by January 2016.  Woohoo!  Our pay will go up now right?  Probably not.

Life will be more expensive for everyone.  Inflation.  You will lose purchasing power.  Feel free to use the same tool economists do use to determine purchasing power;  Big Macs from McDonald.  Economist use the amount of time that an average worker in a given country must work to earn enough to buy a Big Mac.  In simple terms, at the end of the day, if you can afford more Big Macs than the other guy, then you have more purchasing power...which means you can buy more goods than the other person. 

How will any of this affect a buyer or seller in the real estate world?  Well, you may have noticed there are a lot of homes, especially this pass year that have been bought in a condition where it needs remodeling.  Then that wealthy purchaser makes it pretty for the next home owner by doing some remodeling and sells it for a profit.  Viola!  Usually that’s only doable when construction costs are low.  When minimum wages go up, don’t you think that will push up construction costs?  That’s where their declining purchasing power will be apparent.  They can’t afford as much construction as they used to.  So if it doesn’t make sense money wise for a wealthy purchaser to buy, remodel, and resell any more, then there won’t be as many homes out there remodeled waiting for you!

Buyers will have to do the construction themselves.  However, after putting up the down payment and paying closing costs...you really doesn’t have too much to spend.

It really can be a lose lose situation for you...and of course Big Mac lovers when the minimum wage moves up.  You may not be able to afford remodeling before selling, and you can’t afford much either after buying a new home.

Luckily for you, you still have some time before that minimum wage affects you!

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email -james.kuang@coldwellbanker.com

www.EasyHomePricing.com
www.facebook.com/JamesYKuang

You May Need Noah's Ark One Day

Flood Insurance Rate Hike Imminent

More than 1 million home owners living in older houses along the coastlines and riverbanks of the United States are preparing for federal flood insurance rate hikes effective Oct. 1 under a law passed in the wake of devastating storms.

Congress passed the law in an effort to balance a $24 billion deficit in the National Flood Insurance Program, which had growing losses from Hurricane Katrina in New Orleans in 2005 and earlier disasters. The rate increase is designed to make property owners pay for the true risk of living in high flood hazard areas, including coastal areas of Florida, New Jersey, New York, Texas, and Louisiana, and inland states prone to river flooding.  Members of Congress from high-risk flood states want to delay the higher rates so they can gather more information on the impact on property owners, but with next Tuesday's deadline, time is running out.

The act requires the Federal Emergency Management Agency to phase out insurance subsidies enjoyed for decades by owners of homes that were built in high-risk flood zones before the creation of the original federal flood insurance rate maps and building standards, which in most communities occurred in the 1970s and 1980s.

The act comes on top of a nationwide remapping of flood zones, which in some coastal areas has moved some properties into newly widened hazard zones, exposing them to rate increases.  More than 80 percent of the 5.6 million properties nationwide covered by the $1.12 trillion program already comply with existing standards and would not see any change in their policies, at least for the time being, FEMA director Craig Fugate told a hearing of the U.S. Senate Banking, Housing and Urban Affairs Committee on Sept. 18. He acknowledged that the rates of those homeowners in compliance could go up, too, if new maps reveal higher flood risks.

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email -james.kuang@coldwellbanker.com

www.cbprosperity.ca
www.facebook.com/JamesYKuang

Source: "Coastal, Riverbank Homeowners Brace for U.S. Flood Insurance Hike," Reuters (09/24/13)

Be A Psychic, Read Some Minds

Once upon a time I took a psychology class.  I expected to be able to read people’s mind if I am in contact with them after I complete the course.  Well, immediately the instructor made it plain and clear to everyone in the class what the results will be.

“You will not be able to read anyone’s mind after this class.  It wasn’t what psychology is about”

First of all, why would I, or anyone want to read people’s mind?

For me it was simply just having that advantage of knowing what someone’s next step or plans are so I can take the initiative.  It’s pretty much similar to knowing the future.  Imagine you know what tomorrow’s winning lottery numbers will be?  Wouldn’t that be something to dream about.

So, same concept if you can read a seller’s mind, you gain an advantage, or know better than to bother with them.  Well, I have worked with sellers representing them, and still dealt with sellers when I am representing with buyers.  Working with sellers have allowed me to pretty much read their mind.  They mainly have 3 ways of thinking that will determine their decisions.

1.) MONEY MONEY MONEY - These sellers only have money on their mind.  Their sole purpose of selling is to make a profit.  They don’t want to hold on to their property but they do have to sell at a certain price or else they take a loss.  If worse comes to worst, they would have to take a loss of course.

2.) TESTING THE WATER - These sellers don’t really have an urgency or need to sell.  I mean the idea of what they can do after they sell their property has tickled their dreams but not enough to motivate them to be serious about selling.  However, they figure if they can and only if they can get an “X” amount of dollars, then they wouldn’t mind selling.  Otherwise, they will continue with what they are already doing with their home, whether it be living in there or renting it out.  This is where you see expired listings and they never try to sell again.

3.) LIFE EVENT - It could be a job, family, or just want a new life that motivates these sellers.  These sellers are the serious and motivated sellers you want to work out a deal with.  They need to sell and are much more likely to work with you.

Ultimately every seller is selling so they can move on to their next step in life.  Some are more urgent and serious about it than others.  What you know about a seller can give you a winning edge.

So, if you are selling, would you want a buyer to read your mind?  Let me help you cast a spell on buyers to make them pay top dollar for your home.  Let my “demand creation strategy” do the trick for you and no buyer will bother trying to read your mind.

Either that, or have me help you buy your next home and I will read the sellers mind for you so we can strategize!

By The Way...if you know someone who would appreciate the personal service I provide and is thinking of buying or selling a home I'd love to help them, please call or email me with their name, number and email address and I will be happy to follow up with them for you.

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email -james.kuang@coldwellbanker.com

www.cbprosperity.ca
www.facebook.com/JamesYKuang

Exposing Real Estate Disclosures For What They Really Are

Most of the times real estate disclosures aren’t taken seriously enough by the buyer or seller.  They really do protect both the buyer and seller.  Disclosures can cost both parties thousands of dollars if not taken seriously.

By law, sellers are required to disclose all known defects regarding the property and buyers will have the right to approve what the sellers discloses and thereby move forward with the purchase of the home.  However, what most sellers do is mindlessly mark down that they don’t know about anything down the line for every section.  This can be dangerous for a seller especially if they know there is a defect with the home and knowingly or mistakenly, in writing say they don’t know about it on the disclosure statements. 

Will the buyer know about it right away?  Nope, they will have no idea until they feel the effects of  whatever the defect is.  However, what a buyer can do is go after the seller for failure to disclose what they do know since by law that is a seller responsibility.  The seller will then be responsible for the repair and end up having to foot the bill since the defect was known and not disclosed to the buyer.

In a real life situation, my client, George, bought a home and a few weeks later he discovered a major leak.  The seller had failed to disclose this and he was easily able to prove that the seller had knowledge of this and didn’t disclose because the leak stains were covered up in paint.  The seller had intent to hide this problem.  This is not the way for sellers to go.  In real estate as well as in life, it is always better to be honest in everything we do.  The seller had to foot the bill and take care of it.

Buyers in turn need to understand what it means to approve all the disclosures.  Pretty much as long as a seller discloses a defect and you approve it, the seller is off the hook for that specific defect.  If a seller tells you there’s a hole in the roof where rain water pours in, come Winter when that rain pours through that hole in the ceiling, you can’t go after the seller after it has been disclosed to you, and you okayed it.  So make sure you understand what’s disclosed before approving it.

Don’t expect too much out of a disclosure either.  Sellers are only required to disclose to you what they actually know.  They aren’t responsible for investigating further or paying for a professional to look into the home.  You would have to get inspectors on your own which is why a professional home inspection is always recommended.  I will go more into that another time.

Simply put, it’s like buying a car and the seller tells you it can go from 0 to 60 mph in 3 seconds, and there are minor damages to the brakes on the right side of the car, but the seller hasn’t driven the car in 5 years and that is honestly to the sellers best of knowledge.  The info may be wrong, it may take 15 seconds instead of 3 and all the brakes are do not work at all, but the seller has performed the required seller duties by disclosing what is known best to their knowledge.  Nothing more is required.  The seller does not need to pay for a professional to verify anything for you.  You are however, allowed to do your own investigations and verify all aspects of what you are buying on your own.

Real estate disclosures in a nutshell works exactly like that.  So next time you are dealing with real estate disclosures, take them seriously.



If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email - james.kuang@coldwellbanker.com

www.cbprosperity.ca
www.facebook.com/JamesYKuang

6 Ways A Home May Turn Off Buyers

Bankrate.com recently featured a list of the top ways buyers back away from a home listed for sale. Its list includes these items, among others: 

1. Dirt: "The No. 1 biggest mistake is not getting the home in the best possible condition. That's huge," says Chad Goldwasser of Goldwasser Real Estate in Austin, Texas. "I won't even represent sellers at this point unless they are fully aware of how important it is to get their home in the absolute best condition that they've ever had it in." Goldwasser suggests also steam-cleaning tile and grout and carpets and replacing carpets if necessary. 

2. Odors: "Odors are a big one, especially kitchen odors," says Julie Dana, co-author of The Complete Idiot's Guide to Staging Your Home to Sell. "I advise my clients not to cook fried food, fish, or greasy food while the house is on the market. ... Interestingly, next to the kitchen, the smelliest room in the house is actually the living room. That's typically the room that has the most fabric, so that is where odors get absorbed." She recommends having curtains and upholstery cleaned, particularly if someone in the home is a smoker, and taking steps to eliminate any pet odors. 

3. Old fixtures: "You need to change out old fixtures in your house," Goldwasser says, adding outdated ceiling fans and light fixtures should be replaced prior to listing a home. "New cabinet hardware and doorknobs will probably cost all of $400 or $500, but it makes a huge difference."

4. Wallpaper: When buyers see wallpaper, they think of another thing to add to their to-do list, says Dana.  "Wallpaper is extremely personalized. You've spent hours looking over books to pick out the wallpaper you want," she says. "What are the odds that the person walking in the door will also like that wallpaper that you picked out?"

5. Popcorn acoustic ceilings: These ceiling were popular in the 1960s and 1970s but now can date a home. Still, it can be a mess and costly to remove, so real estate professionals say sellers may need to be prepared to credit a buyer in certain markets if they decide to keep the popcorn ceiling when selling a home. 

6. Too many personal items: Cluttered homes make it difficult for buyers to see past the home owner’s belongings and start envisioning themselves there. "Anything that makes your house scream 'you' is what you don't want," Dana says. "I tell all my clients that how we decorate to live and how we decorate to sell are different, and right now, we're decorating to sell."

Source: DAILY REAL ESTATE NEWS

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email - james.kuang@coldwellbanker.com

www.cbprosperity.ca

www.facebook.com/JamesYKuang

Social Benefits

Owning real estate is more than having a tangible asset you can call home.

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email - james.kuang@coldwellbanker.com

VISIT MY WEBSITE FOR MORE INFO!

www.cbprosperity.ca

www.facebook.com/JamesYKuang

The Slowly But Surely Price Creeper

Yesterday, the S&P Case-Shiller report was released.

The S&P/Case-Shiller Home Price Indices are the leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions.

Home prices in all 20 metro areas included in the index rose for the second month running.  Phoenix led, with a 23% annual increase followed by San Francisco (18.9%), Las Vegas (17.6%) and Atlanta (16.5%).  Los Angeles came in with an annual increase of (14.1%).  Still, Robert Shiller, co-creator of the index, is cautious. “There’s a lot of excitement in the housing market now but it might be just short term,” he tells The Daily Ticker.

In case you didn’t know, Robert Shiller, leading economist and contributor to the Case-Shiller report correctly predicted the recent housing bust and is highly respected.  Because of this he tends to be subtle with his responses and only hints at what he truly feels.

When asked where this all leaves the housing market 10 years from now, Shiller says home prices will be “about where they are now” after adjusting for inflation.

That is important to take note of because ‘about where we are now, after adjusting for inflation’ could mean a world of difference.  Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.  Consider the fact that interest rates will not stay at record lows for long since the Feds will eventually stop buying bonds at its current levels to keep the mortgage rates low, so increased monthly payments alone will leave buyers out.  Then there’s the home prices that will be adjusted upwards for inflation and in theory be around where we are now.  Inflation is often offset by rising employee wages so the effects of the rise in prices will be unnoticed.  However, lately and forward looking, do you think there will be many pay raises?

So in reality, home prices will not be around where they are now after adjusting for inflation for the average buyer if their income isn’t going to rise fast enough to catch up with inflation.  Therefore in essence home prices will rise, but along the line of inflation. 

The good news is home prices won’t be an exploding bubble that will bust so that should be reassuring for buyers and homeowners to know that their home will be on a stable rise through the next 10 years.  After all, it is still a good time to buy or move up given the low interest rates and steady but rising home prices.

SOURCE: S&P Case-Shiller Report

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email - james.kuang@coldwellbanker.com

VISIT MY WEBSITE FOR MORE INFO!

www.cbprosperity.ca

www.facebook.com/JamesYKuang

Giving The "Boot"

Did you know real estate investing is hot right now?  Over half of my buyers are buying to invest.  It isn’t always fun and games though.  I recently had to give notice to one of my tenants to leave so I thought right now would be a good opportunity to dip into the topic of property management again since I haven’t touched on this for a while. (SIDE NOTE - Not having a lot going with your investment property is a good thing, means your tenants are hassle free and the money is coming in passively)

It is important to know that tenants have rights and landlords can’t just do whatever they want.  This recent tenant I asked to vacate has occasionally been late with rent, parks his car where he shouldn’t, and I am sick of delivering 3 Day Notices to threaten him into compliance.  His one year lease is ending on June 1, 2013 and I decided he has to go.  I had to give him the “boot.”  He has been a tenant for almost two years.  As much as I would like to say “be gone” and not see him there anymore, he has rights and I have procedures I must follow.  California law states that tenants that have stayed for over a year, landlords must give them at least 60 days advance notice in order for them to move and find another place.  The proper way give that notice is through a letter which I have attached to show you how it’s done.  That is the exact original I used to politely ask my tenant to leave. 

Had I made him leave without proper notice and time for him to find a new place, he could have easily come after me with the force of the law backing him.  As a landlord, it is important that you do not let your instincts get out of control and protect yourself by having all notices done properly in writing.

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email james.kuang@coldwellbanker.com

VISIT MY WEBSITE TO LEARN MORE

www.cbprosperity.ca

www.facebook.com/JamesYKuang

Where Is My Dream Property?

If you have been in the market or started searching for property, you probably haven't seen much to choose from or if you saw something you like it has been sold already.  I often times have to give the bad news to my clients over and over again but I tell them not to give up of course.  I encourage them to keep making offers until one is accepted.  It really comes down to making a strong offer and the more offers you make the more you realize what you need to do to get an offer accepted.  Usually it comes down to offering a higher price.  

One reason for this competitiveness is the LACK OF INVENTORY!  Inventory meaning property since we are talking real estate here.  Besides the fact that investors are snatching up homes and turning it around for profit, lack of inventory is the main reason for the rising prices.  There isn't even enough inventory for investors to keep flipping which makes their profit margins shrink.  SO WHY THE LACK OF INVENTORY?

One simple answer is that sellers do not want to sell.  Why don't they want to sell?  Because they don't feel like it's a good time to sell.  Why don't they feel like it's a good time to sell?  If you remember not too long ago, home prices sky rocketed and many homeowners bought during that time, however, home prices have gone down so now many homeowners do not have much equity in their property.  Therefore, if they sell, they would be left with nothing!

Until home prices go up further where it makes sense for the homeowners that bought at high prices to sell, we will continue to see a lack of inventory and rising prices.  Good for sellers, bad for buyers.

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email - james.kuang@coldwellbanker.com

VISIT MY WEBSITE FOR MORE RESOURCES!

www.cbprosperity.ca

www.facebook.com/JamesYKuang

Seller Shortage Plagues Many Markets

The low inventory of for-sale homes is creating a seller’s market throughout the country.

"Buyers and agents are literally waiting for the next house," says Rick Turley, president of Coldwell Banker Residential Brokerage for the San Francisco Bay Area.

The supply of existing homes for sale reached nearly an eight-year low in January, according to the National Association of REALTORS®. Nationwide, there is a 4.2-month supply of existing homes for sale. 

A more balanced market with a six-month supply will occur when home prices rise another 20 percent, says John Burns, CEO of John Burns Real Estate Consulting. Such an increase would then lure sellers to match demand coming in from renters and investors, and the rise in prices will also lead to more home building, Burns says. 

Still, a return to healthy inventory levels could be years off, some say. “Many home owners can't afford to sell because they don't have enough equity to put into buying another house — or would have to write a check to sell,” USA Today reports. “The supply of distressed houses for sale is thinning as the foreclosure crisis recedes, especially in some states. Home building, while improving, is still at low levels. And, after years of holding on, few home owners want to sell when prices are just coming off the bottom, REALTORS® say.”

Source: DAILY REAL ESTATE NEWS

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email - james.kuang@coldwellbanker.com

www.cbprosperity.ca

www.facebook.com/JamesYKuang

How Are Buyers Feeling?

'Zombie Titles' Plague Home Owners

Some refer to “zombie titles” as a little-known horror in the fallout of the foreclosure crisis. Thousands of home owners are discovering they may be legally liable for a home they thought they no longer owned. 

In some of these cases, home owners receive a notice of a foreclosure sale and move out to give the home to the bank. But then the bank never completes the foreclosure. 

"The banks are just deciding not to foreclose, even though the home owners never caught up with their payments," Daren Blomquist, vice president at RealtyTrac, told Reuters. 

According to housing experts, the problem of “zombie titles” is worsening, although no national databases track such titles. 

"There are thousands of foreclosures in limbo, just hanging out there, just sitting, with nothing being done," says Raymond Pianka, a Cleveland Housing Court. He says the problem is due to home owners who leave the home before an imminent foreclosure sale. Later, the home owners discover they’re legally responsible for the home. By that time, the house may have greatly deteriorated. And some home owners don’t even discover it until years later, such as when a municipality finally fines them for failing to keep the property.

If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email james.kuang@coldwellbanker.com

Source: DAILY REAL ESTATE NEWS