Wednesday, October 17, 2018

8 Steps to Follow When Buying a Newly Constructed Home

Buying a newly constructed home can give you more options than a previously owned home. You can choose the cabinets, flooring and possibly the floor plan. And you will be the first family to live this home!

However, buying a new home can also create some challenges: additional expenses, location, unreliable builders, and having the home finished in a timely manner.

Follow these 8 steps before buying a newly constructed home and the process will be smoother.

Get Preapproved First

When buying a previously owned or a newly constructed home, get funding preapproval so you know how much you can spend on a home. Keep in mind the total cost will also include any additional upgrades you want before your home is built.

Consider the Pros and Cons of New Construction

First decide if you want to buy a spec home; a home built as part of a development; or a custom home built to your specifications on your site. Before you decide on a newly built home, consider the following:

·         Will you have a reasonable commute to work or areas you normally spend time in?

·         Are you willing to put in the work for new landscaping and to wait years for trees to mature?

·         Do you mind having a home that has a floor plan and paint scheme similar to your neighbors?

·         Today many developments have homes built closer together with little space between them. Do you mind being that close to your neighbors?

Use Your Own Realtor

Many builders will want you to use their lender and their real estate agents.  Get your own real estate agent! The builder’s team is looking out for the builder’s interest, not yours.

Have your agent introduce you to the builder first.  Don’t go there without having representation.  Some builders will not let you bring in an agent if you’ve gone to them first so contact your agent before looking at new construction.  In addition, many builder’s will pressure you to use their agents if you come in without your own agent.

Research the Builder

Do as much research on the builder as you can.  Are they reputable?  Have they built other developments like the one you’re interested in.  Do they have any complaints or legal action against them?

Check out their websites. Research the internet. Check with the Better Business Bureau. In California, you also can check the Contractor’s State License Board for any complaints against the builder.

Understand the Floor Plan and What Customizations or Upgrades You Can Have

First, look closely at the floor plans and if you have a choice, choose the one that will fit your needs the best. If you don’t understand anything on the floor plan, ask questions.  The builder’s sales rep will assume you understand what is on the plans and that can cause problems later. Ask lots of questions!

Also, understand what customizations or upgrades you can make before building.  Some developments will limit the customizations while others will provide a broader range of items you can customize. Some builders will give you only 2 or 3 options for flooring, while others may have 5 or more options.

Don’t forget to ask the cost. If you want marble counters but the builder was putting in solid surface countertops, it may cost you more. Don’t forget to include all upgrades in the total costs.

Make decisions on customizations and upgrades as soon as possible.  This will save money later. Deciding you want the house wired for a built-in security system after the electrical is finished will result in more work for the builder. This will cost you more and it may delay your closing time. So make all upgrade and customization decisions before construction starts.

Check to see if the development will have a Home Owner’s Association (HOA).  Ask for fees and rules.  Many fees can be very expensive and many HOA’s can fine homeowners for any infractions of the rules.  Make sure you know what is expected and if those rules will fit your lifestyle.  Many will restrict what color you can paint your house, what remodeling you can and can’t do, if you can a vegetable garden or not, and so on.

Don’t forget to ask if there are any amenities included with the purchase.  Will there be a clubhouse, a park, a gated community, a playground, etc.

Get Everything in Writing

Once you’ve decided on the floor plan and upgrades, have all the information put into a contract.  Then have a real estate lawyer review the contract before you sign it.

Make sure there is information about the timeline to complete the home and what happens if it isn’t completed by the agreed upon time. 

Ask About Warranties

Most builders offer warranties on workmanship and materials.  Make sure you understand what is and what isn’t covered by the warranties.  In addition, make sure you know what steps to follow if you need to have something repaired under a warranty.

Get an Independent Home Inspector

New homes can have as many issues as a previously owned one so make sure you have the home inspected by an independent certified home inspector.  Don’t use an inspector the builder recommends. Don’t use your father-in-law or friend.  Certified home inspectors will look at everything: the roof, the electrical and heating systems, the plumbing, the foundation, etc.

Be there for the inspection and ask questions.  You and your family will be living in this home and you should understand as much about it as you can.  If you don’t understand something, ask for clarification.

As the closing time approaches, rely on your team (your real estate agent, your lender, and your lawyer) to help through the last few steps.  Once escrow has closes, you’re ready to be the first family to live in your new home.  Congratulations!

Contact me if you’re interested in a newly constructed home, and I'll guide you through the steps outlined above!

Tuesday, June 5, 2018

Rental Scammers!

Due to soaring house prices and interest rates, many people are unable to purchase a home
and are having to rent instead of buy. Although this may be okay in the short-term, the
long-term benefits of home ownership can severely outweigh any positives of renting. The
steady increase in renting has the attention of internet scammers, who are using rental
properties as a cover to steal your hard-earned money. These are called “Craigslist Rental
Scammers,” but they can happen anywhere online. Here are a few ways to help protect you
in a search for a rental property:
It’s Too Good To Be True
If you feel as though a rental is too good to be true, it probably is. Often times, scammers use
extremely low prices and overly flexible leases to spark your interest. In the current market,
renting is not that simple.
Landlord Wants Too Much Before You See Anything
If the landlord asks you to wire money or provide your information before you even see the
inside, it is a scam. Often time scammers will tell you to drive by the outside, instead of letting
you visit the property. This is a huge red flag.
No Information
If they don’t ask for information from you before prompting for money, this is a scam. Most
legitimate landlords need you to fill out an application, legal documents and provide
documentation before a deposit is requested.
Bad Grammar, Illegitimate Emails & Screening Phone Calls
If the potential landlord has error-ridden emails/texts, illegitimate email addresses, or refuses to
take phone calls, there is a good chance you are being taken advantage of.
Overseas Landlord
If the property is being handled by someone for an owner who is “overseas”, be cautious.
They will insist they are managing the property for the real owner but disappears with your
Although the housing market is very competitive, our team has experienced professionals that
will guide potential home buyers and make them feel at ease. Call us today find out how we
can help you or your clients get into a new home.
*Information provided courtesy of Summit Funding

Monday, February 12, 2018

Should You Install Solar Panels?

Deciding to install solar panels is a significant decision with many variables.  Should you lease or buy? How should you finance the installation? How much savings will you receive from leasing or buying? How do you find a reputable company?

Determine if Solar is Right for You

The first step is to determine if your home is appropriate for solar.  You don’t need to have sun all the time for solar power but you do need to determine if your property has the right amount of sunlight.

If you want roof mounted panels, look closely at your roof and determine if sunlight is hitting the right spot.  South facing roofs are best but East and West facing roofs work almost as well.  If your roof faces North, don’t mount panels on the roof. Consider a ground mounted system if feasible.  Even in sunny California, you may not get enough sun in the right spot for solar power.

Also determine if there are any obstacles to the sunlight: trees, other homes, hills, etc. You want the spot to receive as much sun as possible.

Calculate Your Savings

The first step is to determine how much your utility company is charging you for each kilowatt-hour (kWh) of electricity you use.  This cost can vary widely depending on where you live.

A solar system is basically a small power plant installed on your roof similar to the large power plant a utility company employs to provide electricity.  Keep in mind that homeowners with higher electricity rates will have greater savings when they switch to solar.

There are several online options for determining how much you will save with a solar system. You can use a search engine by inputting solar system calculator or visit sites likes You can also search your local utility company to see if they offer calculators programmed for your area. In San Diego, San Diego Gas & Electric offers such a calculator to it’s customers.

Determine if You Will Lease or Buy

For many years, most homeowners opted to lease their solar systems. However, more homeowners are now buying their systems.

When you lease or enter into a Power Purchasing Agreement (PPA), you do not own the system; you are renting the system from the company. Leasing is very convenient but doesn’t offer the same savings as buying the system would give you.

With leasing, there is little or no upfront money required; you are not responsible for any maintenance; and you may still acquire federal, state and local tax credits if offered. However, your savings will be less; you lose control of your roof since the company can determine where and how many panels to install; buyers may not want a leased system if you try to sell your home; and leasing maintenance plans are not always favorable to the homeowner.

Buying a solar system requires more research and decision making for the homeowner.  It’s recommended that you get several estimates from various companies.  Sometimes the best deal is not with the largest company in your area.  Numerous small companies offer better deals than larger ones. Look closely at what you want and how you’re going to finance the project.

As with other services, check the Better Business Bureau to find a reputable and reliable company.  Don’t forget to ask for recommendations from your friends and family. Also check online reviews but don’t rely solely on one source.  Look at all sources before making a decision on which company to choose. Once you have chosen a company, ask for references and call them.  Buying a solar system is a sizable expense; use all your resources to get the best deal for you.

Buying a system has both pros and cons.  First, buying provides you with flexible financing options. You can pay cash, use a home equity loan or obtain a solar loan. Second, a solar system that is bought and paid for improves the selling value of your home. Finally, as with leasing, you may still acquire federal, state and local tax credits if offered.

On the negative side, buying a system requires a lot of upfront money if you use cash for the purchase.  The return on investment may take anywhere from five to ten years. In addition, the owner is responsible for any maintenance costs.

Don’t forget to contact your insurance company before installing the system. You may need to increase your policy to cover the panels. Also, check with your homeowner’s association before installing and find out if there are any rules or restrictions that need to be considered first.

After you’ve installed the system, stay connected to your utility company.  There may be times when you will need to supplement your electricity in case there’s an emergency; your system may go down; or not produce enough electricity during less sunny seasons.


Thursday, December 28, 2017

Summary from the National Association of REALTORS on How the New Tax Bill will Affect Homeowners

With the passing of the new tax bill, everyone wants to know how it will affect them. Below is a summary created by the National Association of REALTORS for current and prospective homeowners and provisions that affect commercial real estate. 

Major Provisions Affecting Current and Prospective Homeowners

  • Tax Rate Reductions

    • The new law provides generally lower tax rates for all individual tax filers. While this does not mean that every American will pay lower taxes under these changes, many will. The total size of the tax cut from the rate reductions equals more than $1.2 trillion over ten years.
    • The tax rate schedule retains seven brackets with slightly lower marginal rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
    • The final bill retains the current-law maximum rates on net capital gains (generally, 15% maximum rate but 20% for those in the highest tax bracket; 25% rate on “recapture” of depreciation from real property).
  • Exclusion of Gain on Sale of a Principal Residence

    • The final bill retains current law. A significant victory in the final bill that NAR achieved.
    • The Senate-passed bill would have changed the amount of time a homeowner must live in their home to qualify for the capital gains exclusion from 2 out of the past 5 years to 5 out of the past 8 years. The House bill would have made this same change as well as phased out the exclusion for taxpayers with incomes above $250,000 single/$500,000 married. 
  • Mortgage Interest Deduction

    • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
    • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
    • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
    • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.
    • The House-passed bill would have capped the mortgage interest limit at $500,000 and eliminated the deduction for second homes.
  • Deduction for State and Local Taxes

    • The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.
    • The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.
    • When House and Senate bills were first introduced, the deduction for state and local taxes would have been completely eliminated. The House and Senate passed bills would have allowed property taxes to be deducted up to $10,000. The final bill, while less beneficial than current law, represents a significant improvement over the original proposals.
  • Standard Deduction

    • The final bill provides a standard deduction of $12,000 for single individuals and $24,000 for joint returns. The new standard deduction is indexed for inflation.
    • By doubling the standard deduction, Congress has greatly reduced the value of the mortgage interest and property tax deductions as tax incentives for homeownership.Congressional estimates indicate that only 5-8% of filers will now be eligible to claim these deductions by itemizing, meaning there will be no tax differential between renting and owning for more than 90% of taxpayers.
  • Repeal of Personal Exemptions

    • Under the prior law, tax filers could deduct $4,150 in 2018 for the filer and his or her spouse, if any, and for each dependent. These exemptions have been repealed in the new law.
    • This change alone greatly mitigates (and in some cases entirely eliminates) the positive aspects of the higher standard deduction.
  • Mortgage Credit Certificates (MCCs)

    • The final bill retains current law.
    • The House-passed legislation would have repealed MCCs.
  • Deduction for Medical Expenses

    • The final bill retains the deduction for medical expenses (including decreasing the 10% floor to 7.5% floor for 2018).
    • The House bill would have eliminated the deduction for medical expenses.
  • Child Credit

    • The final bill increases the child tax credit to $2,000 from $1,000 and keeps the age limit at 16 and younger. The income phase-out to claim the child credit was increased significantly from ($55,000 single/$110,000 married) under current law to $500,000 for all filers in the final bill.
  • Student Loan Interest Deduction

    • The final bill retains current law, allowing deductibility of student loan debt up to $2,500, subject to income phase-outs.
    • The House bill would have eliminated the deduction for interest on student loans.
  • Deduction for Casualty Losses

      • The final bill provides a deduction only if a loss is attributable to a presidentially-declared disaster.
      • The House bill would have eliminated the deduction for casualty losses with limited exceptions.
    • Moving Expenses

      • The final bill repeals moving expense deduction and exclusion, except for members of the Armed Forces.
      • The House-introduced bill would have eliminated the moving expense deduction for all filers, including military.

    Major Provisions Affecting Commercial Real Estate

    • Like-Kind Exchanges

      • The final bill retains the current Section 1031 Like Kind Exchange rules for real property. It repeals the use of Section 1031 for personal property, such as art work, auto fleets, heavy equipment, etc.
      • The exclusion of real estate from the repeal of 1031 like-kind exchanges is a major victory for real estate stakeholders, who had fought hard to preserve the provision for several years, and against long odds.
    • Carried Interest

      • The final bill includes the House and Senate language requiring a 3-year holding period to qualify for current-law (capital gains) treatment.
      • Again, real estate stakeholders prevailed against long odds to preserve the incentive of capital gains treatment for carried interests in the final legislation.
    • Cost Recovery (Depreciation)

      • The final bill retains the current recovery periods for nonresidential real property (39 years), residential rental property (27.5 years) and qualified improvements (15 years). The bill also replaces separate definitions for qualified Restaurant, Leasehold, and Retail improvements with one definition of “Qualified Improvement Property.”
    • Qualified Private Activity Bonds

      • The final bill retains the deductibility of qualified private activity bonds used in constructing affordable housing, local transportation and infrastructure projects and for state and local mortgage bond programs.
      • The House bill would have eliminated the use of private activity bonds.
    • Low Income Housing Tax Credit

      • The final bill retains current law. However, a lower corporate rate will negatively impact the value of the credits in the future, and will result in less low-income housing being developed.
    • Rehabilitation Credit (Historic Tax Credit)

      • The final bill repeals the current-law 10% credit for pre-1936 buildings, but retains the current 20% credit for certified historic structures (but modified so the credit is allowable over a 5-year period based on a ratable share (20%) each year).
      • The House bill would have entirely eliminated the Historic Rehabilitation Credit.