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Recently I received a call from a friend who was looking to rent a house here in Los Angeles. He was looking at a house that was posted on Craigslist.org for rent. He contacted the person posting the ad. The person posting the ad claimed that they were the onwer, and if the renter would send a cashiers check to an address that he would send them the keys. My friend contacted me and asked me to check into this. Upon further research, I found the person claiming to be the owner was not the owner at all. Consequently, it is relative to say, this is a scam. So a couple of Do’s and Don’ts are in order here.
- Never send a cashiers check to someone claiming to be the owner of a house whom you have never met.
- If you are an owner, use a Licensed Professional to help you get the property leased.
- Never rent a place without walking the property and the inside first.
- Always put Rental Agreements in writing, and have deposits verified in writing.
While some of this may seem obvious, there are people out there who would take advantage of vacant homes and units for profit. Contact a Professional should you feel like you recognize an unscrupulous owner.
If you haven’t been to an open house or brokers open lately in Los Angeles, you may be surprised to see what’s happening. The houses are full of buyers. Without the distraction of an election, prices have contracted in most areas, summer job transfers happening, and New Years resolutions to be filled; people are looking to move.
Reviewing the Los Angeles Westside, it is clear that the buyers are first time and upgrade buyers many of which are families. For the first time buyers, prices in combination with low interest rates have made the current market affordable. The properties that are really moving are single family homes in the price range of $400 – $800,000 with $800,000 – $1,000,000 still moving. In the most desirable locations, some houses are on average seeing 5 – 10 offers. Here is the key, the houses that are receiving the multiple offers are under priced allowing the market to decide their value. Great homes in great locations are selling. Examples of this are evident everywhere. In the Melrose area in Fairfax district, there were only a few sales in March while there are over 20 homes pending in April, many with several offers.
The challenge for sellers in this market is not to be greedy. Many of the homes that go into escrow were at or below market. Those that are over priced, buyers are overlooking right now. The sellers that listen to their agent, and allow the market to work are being rewarded. The others lag on the market until the pricing moves to the buyers liking and do not receive multiple offers. When looking at your home and where to price it, an important question to ask is, “who is my buyer?” “Who would buy this house?” Be realistic. If you think that an all cash buyer is going to come in and buy your home on an alley that has no upgrades located on a busy street that is over-priced by 10%, it would be wise to reconsider your pricing. Also, avoid online pricing quotes from companies like Zillow. These software programs have the tendency to be off on their pricing by as much as 10%. Real estate, especially in Los Angeles, is a hypersensitive micro market. Only a good agent can really give you an accurate analysis of your property. Avoid agents that tell you what you want to hear to take the listing. If it is not backed up with numbers from the current market, move on. The market is moving, don’t be left behind. Currently, 30 – 50% of homes that don’t sell with an expired contract are back on the market priced to high to attract buyers. Be aggressive.
Buyers are facing their own challenges as well. They are discovering that the great deal they find online will more than likely not be the sales price. Who are the buyers out there buying currently? Many are renters leaving the rental market place. The cost of renting an apartment or house increased to the point where it is cheaper to own, and qualified renters are buying. Families are also moving, many of whom are having more children and are looking for more space. Finally, parents whom are wanting to put their kids into a good school without paying for a private school. It is more cost effective as private schooling in Los Angeles can grow into tens of thousands of dollars per year. Many of the current buyers have been on the sideline for several years waiting for their opportunity, and the time has come.
It is important to stress the importance of using a good agent. Good agents know the market, know the areas, and know the financing do’s and don’ts to make a purchase or sale effective. Agents will know when to turn loose “lowball Larry” and when to negotiate. This is one of the most prized and expensive purchases and sales in your life, get help.
I’m sitting here at the grove with a day off thinking about what is happening in the market. Many people for the past 6 months since the crash have been re-examining the market, their goals, and life (what it means to them) including myself. I guess one could say it has been a spiritual awakening of sorts. With all of this stuff swirling around in our heads, a moment of clarity is happening. Many people are redifining their plans. This is the heart of my thought.
What is your plan? Where are you going? Where do you want to live? The stock market is making a bear market rally currently. How do I know it is a bear market rally? No one can believe it is going up and every indicator says to the contrary. So, what does one do? Personal opinion, take profits and get out.
Real estate on the other hand in prime locations at least in los angeles on the west side, prices seem to be stable for the moment. There is still some adjusting going on, at least in the pricing. This is normal.
What is happening in your life right now? Do you need a place to live? Is your career going well? While I can’t answer these questions for you, I would be happy to go over them win you and help you to define a plan that works for you. A written plan will get you to the goal. Thoughts are always welcome.
April 2009 Numbers
A bluesy look at the sales and market numbers for the Los Angeles West-side, downtown to the ocean.
The Federal Government enacted new tax credits for first time homebuyers who purchase homes between January 1, 2009 and December 1, 2009. In an effort to encourage qualified buyers to purchase homes, the Fed is offering a tax credit of up to $8,000 to qualified individuals.
How do I know if I am qualified? What are the qualifications?
1. If you are single, your modified adjusted gross income must not exceed $75,000 per year. If you are married or filing jointly, then the modified adjusted gross income must not exceed $150,000. After the limits previously mentioned, the credit is phased out meaning that you only will qualify for a portion of the credit. Modified adjusted gross income is calculated by your income less deductions. This can be calculated by an accountant or licensed tax preparer.
2. A first-time homebuyer is defined as someone who has not owned a primary residence during the three years prior to the date of purchase. In the case of a married couple, both spouses may not have owned a primary residence within the past three years.
3. You must live in the home for a minimum of 3 years.
Can I claim it on my 2008 returns or my 2009 returns? Yes to both, but there are advantages to waiting until you file your 2009 returns. Those include the additional mortgage interest deduction from the purchase and non-reoccurring closing costs. These additional write offs can lower the modified adjusted gross income more, especially if you are above the allowable limit. Speak with your tax preparer for further advice.
California has enacted legislation offering up to $100,000,000 for homebuyers purchasing new homes or new construction. The credit for each buyer is a $10,000 credit or up to 5% of the purchase price, whichever is less, payable over three years. As of April 1, 2009, $25.58M worth of applications has been applied for. There are some specific guidelines so lets review them here.
• This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied.
• The buyer must reside in the new home for a minimum of two years immediately following the purchase date.
• Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.
• A qualified buyer is a taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowner’s exemption under California Revenue and Taxation Code Section 218.
• The following types of property qualify for the credit: a single family residence, a condominium, a unit in a cooperative project, a houseboat, a manufactured home, or a mobile home.
• It must be a primary residence and qualify for the homeowners tax exemption.
• Owner-built homes do NOT qualify for this exemption.
• The home must never have been previously occupied.
• The credit will not be issued if it is not received within one week after the close of escrow or the total available credits ($100,000,000) has been allocated.
There are specific terms and guidelines to this credit, and most have been covered here. This is on a first come first serve basis, and once depleted will no longer be available. Please contact if you have further questions.