Winterbauer's Wisdom & Wit Blog: March 2008

Sunday, March 30, 2008

REO's and Working With Financial Institutions...

I wanted to share an article that I recently read by Troy Fowler that address's REO Properties and Auctions that may help shed some light.

REO's and Working With Financial Institutions...

REO Properties
An REO (Real Estate Owned) is a property that goes back to Lender after an unsuccessful foreclosure auction. Most foreclosure auctions result in adequate bids. Typically there is rarely enough equity in the property to satisfy the loan(s) full repayment.

With regard to REO properties, the bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may manage some of the repair process. They will typically negotiate with the IRS for removal of tax liens and pay off any homeowner's association dues.

Selling REO's
Each bank/lender manages the REO process based on guidelines that are individually defined, but they all have similar goals. They want to get the best price possible and have often negotiated to achieve the highest possible price. However the market and expectations of asset managers may vary as inventories have swelled and markets have slowed. Generally, banks have an entire department set up to manage their REO inventory.

Generally, banks have an entire department set up to mange their REO inventory.

Property Condition
Banks always desire to sell a property in an "as is" condition. You may choose to obtain professional inspection services companies to determine the condition of the property. This is usually done to assist a potential bidder to better understand the highest price they are willing to offer based on the property condition.

Your offer should include an inspection contingency to ensure that your offer represents the best interest and appropriate price for both parties.

Banks are increasingly partnering with auction houses to offer multiple properties though the auction process. Depending on the property, location, condition, numbers of bidders etc. This is an excellent alternative to find great deals in purchasing real estate.

The auction Method Advantage
Choosing the auction method actually allows a property owner a specific timeline for selling real estate. In today's slowing real estate marketplace, having the option to spotlight your property and maximize visibility is a critical benefit to getting it sold. It is by far the best possible method of attracting as many possible bidders on a single day and using a competitive bidding process to achieve the highest possible sale price. Buyers act on your schedule by complying with the terms, conditions and sale date of the auction.

They are committed to sale on a specific date; therefore, they conduct their due diligence in advance and are prepared to bid on the day of the sale. Closings typically never exceed 45 days beyond the sale/auction date, offering you a complete timeline from the minute you agree to move forward. Whether your property has been on the market longer than you expected, you wish to avoid a long drawn out sales and negotiation process, or are just ready to make that move that will enable you to move forward on your schedule.

Saturday, March 29, 2008

Home Office....Can You Deduct on Your Taxes

This article is by CRS instructor, Chris Byrd who is well known for his tax strategy seminars. He has been a speaker for the Northern CA CRS Chapter and we find him to be very good! Chris@ChrisBirdSeminars.com or http://www/.chrisbirdseminars.com

Qualifying for the Home Office Deduction
The deduction allows you to deduct a pro-rata portion of your residential costs as a business expense when it's used as your principal place of business. The percentage of allowable expense (found by dividing the square footage of the office by the home's total square footage) can be applied to mortgage interest, insurance, property tax, rent, depreciation, utilities, and other home-related expenses.

The two requirements:

1. The space is exclusively used for business

2. You must regularly conduct some kind of business activity in the space

The home office deduction can only be taken if a portion of the home is used "exclusively and primarily" for business. That means the designated space cannot be used for any other purpose, like a guest room.

Although the space must be "separately identifiable," it needn't be blocked off with a permanent partition. This deduction can also apply to a separate structure not attached to the dwelling unit.

Your Home Office Needs to be Your Principal Place of Business
More taxpayers qualify since the definition of "principal place of business" was broadened to include a place where administrative or management activities are conducted on a substantial basis, if there is no other fixed location where they conduct substantial administrative or management activities (Taxpayer Relief Act of 1997). In short, this means that a self-employed person needs to spend more time running their business from home, not the brokerage sales office.

In my experience, real estate agents often fail to qualify for this deduction because they already have a brokerage sales office, where most of their activities in running their business are conducted.

Also, if you are an employee who works at home, the rules state that the home office must be for your employer's convenience, rather than your own. As popular as tele-commuting has become, make sure this point is clarified with your employer. That way you can document that the office space is specifically required by them.

One caveat for anyone taking this deduction. It cannot be taken for any year when the amount claimed will generate a net loss for the business. However, the untaken deduction can be carried forward to a year when there is sufficient profit to avoid that limitation.

Selling a Residence with a Home Office
In December, 2002, the US Treasury approved a change that removed a major negative for those who'd been taking the home office deduction. (And for those who feared taking it.) Normally, gain on the sale of a principal residence (where you resided two or more years) is tax free. Until that change, homeowners who sold would owe tax on the gain allocated to the office portion of their home.

The new Treasury rules change mean that a seller must no longer allocate the amount of gain between their business and personal use. The home office had to be within the house, however. And the new rules don't excuse any depreciation recapture that may have been taken for the home office.

Make Your House "Pay its Way"
Whether taking the home office deduction is tax-wise depends on your circumstances. Study the details in IRS Publication 587 http://www.irs.gov/publications/p587/Here's a tax strategy that every self-employed person should reconsider. Especially since several of the "traps" regarding the home-office deduction have been dismantled. Its tax advantages are substantial and could bring you significant savings-year after year

As always, please always consult withe your CPA or tax person regarding tax advice!

Tuesday, March 25, 2008

Just vapors and where did that gas go!

Here is some tips on how to save Gas from a friend......

TIPS ON PUMPING GAS I don't know what you guys are paying for gasoline.... but here in California we are also paying higher, up to $3.50 per gallon. But my line of work is in petroleum for about 31 years now, so here are some tricks to get more of your money's worth for every gallon..

Here at the Kinder Morgan Pipeline where I work in San Jose , CA we deliver about 4 million gallons in a 24-hour period thru the pipeline. One day is diesel the next day is jet fuel, and gasoline, regular and premium grades. We have 34-storage tanks here with a total capacity of 16,800,000 gallons.

Only buy or fill up your car or truck in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening....your gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.

When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, ther eby mi nimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.

One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY. The reason for this is, the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every gallon is actually the exact amount.

**Another reminder, if there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up--most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom.

Hope this will help you get the most value for your money. Here is a link to check where to find inexpensive/cheap gas. http://autos.msn.com/everyday/gasstations.aspx?zip&src=Netx

DO SHARE THESE TIPS WITH OTHERS!

**(It always felt like the gas lasted longer if it was above ½ a tank!!!)

Monday, March 24, 2008

The Housing Market is Fine, It's the High Cost of Oil that is messing us all up!

I read an article today by Linda Tremblay that I wanted to pass along that says alot about our market.

Everywhere you go, the news has been about foreclosures and the real estate market going downhill. I hate to tell the press, but if they would leave the housing market alone, we would be fine. Historically, the market has always had peaks and valleys. Along with this the press has send that home ownership is getting beyond our reach. As i have said before, I wish I would of bought about ten houses back then. If I sold them now, even at a reduced sale price now, I would be a millionaire.

The oil industry on the other hand is another story. The oil companies are making billions in profit as we are having to cut back on certain things to be able to drive our cars. That is bad enough and somehow we need to get away from depending on oil for our automobiles. But today I heard that the independent truckers are possibly going on strike because they can not afford the high cost of diesel. This weekend I saw regular gas at $3.15 and deisel was $4.20. Ouch!

Apparently it is costing the trucking industrymore money to run a load than they are making.
This is going to cause the price of everything to go up. Look at all the materials and food that is transported by the trucking industry. This is crazy. There ae so many smart people out there, hopefully someone can come up with an alternative method to run our trucks, our homes and our cars. After all, we can send a man to the moon.

Saturday, March 22, 2008

Got Cookies and maybe some Milk

One of my dear friends sent me an email this evening with cookie recipes on it. This is so cool and remarkable! Even if you have no particular interest, please pass on to the bakers in your life. They'll appreciate it.

Just click on the name of the cookie and bam the recipe is there. Good to keep handy

About Trivia on the Date of Easter

Easter this year is Sunday, March 23,2008 and that makes it special. As you may know, Easter is always the 1st Sunday after the 1st full moon after the Spring Equinox which is March 20. This dating of Easter is based on the lunar calendar that Hebrew people used to identify Passover. This is why the date of Easter moves around on our Roman calendar. Based on the above, Easter can actually be one day earlier (March 22) but that is very rare.

Only the most elderly of our population (95 years old and above) have ever seen Easter this early before. The last time it was this early was 1913. For the most of us this year will be the earliest that we will ever seeEaster, and none of us will ever see Easter a day earlier ! The next time Easter will be this early (March 23) will be the year 2228 (that's 220 years from now).The next time Easter will be a day earlier March 22, will be in the year 2285 (that's 277 years from now). The last time Easter was on March 22 was 1818. So no one alive today has seen or I would say that makes this Easter special

WOW! New England's Largest MLS Joined with Zillow!!

WOW! The largest MLS in New England is really being progressive! They are the first MLS who recently joined with Zillow 's Listings Feed program to provide a daily feed of their active listings. Agents, MLS companies or vendors are allowed to upload listings to Zillow's site and can include a description of the property, photos, contact information of listing agent and links to the listing brokerage's website.

In my area some of us would love to see that happen but because we are on a joint platform of 3 MLS's the politics become a problem. Many agents have that fear of losing control of our information and "They" will take over! In my opinion the more information that the public can access the better off we will be as an industry! Realtor.com is a good example The public loves receiving the information We still have the buyers and sellers seeking out Realtors to negotiate and get them into a property.Over the past six months, several top brokerages have signed similar deals with Zillow.com to participate in the Listings Feed program, including Realogy, RE/MAX Allegiance, Real Living, Prudential

California/Nevada/Texas Realty and ERA Real Estate. Zillow also has forged partnerships with real estate publisher Network Communications, Inc. and some 282 newspapers across the country that now feed classified real estate listings to the site.

Great work New England for leading the way in our industry!!!

Friday, March 21, 2008

Could it be.....Easter

This week we celebrated the first day of spring, the flowers are in bloom and we celebrate the time of new beginnings.

The market settled down a bit and interest rates dipped below 6%. Be sure to click on the market update link and listen to the weeks report.

Spring makes its own statement, so loud and clear that the gardener seems to be only one of the instruments, not the composer. ~Geoffrey B. Charlesworth

Eggs make ducks

And ducks make eggs

So ducklings can quack quack!

The chicks go peep

Emerged from sleep,

Resurfacing out back.

Wishing you a Happy Easter!

Pam & her pupp....murphy brown

What's Going on with Your Signs?

We seem to be in an area where our local cities are adopting sign ordinances on how many and where the Realtors and the public can place their open house signs.

Here is what Bay East Association is posting on the issue and our Local Government Relations Committee will be meeting on Monday mornign the discuss the issue. More to follow.

Sign Ordinance Violations on the Rise: On Monday (3/17), the Bay East Board of Directors held their monthly meeting. One topic that was discussed was the increasing number of illegally-placed open house signs. This is an issue Bay East has been dealing with as the number of homes on the market and the number of open homes increases.

REALTOR® Impact: Open house signs are a key component of most REALTOR® marketing plans. Continued violation of sign ordinances could lead to even more restrictive regulations or the out-right banning of signs.

Next Steps: It is critical that all REALTORS® understand and comply with local sign ordinances. If our profession fails to follow these regulations it is likely that city governments will crack down on violators and, possibly, make their ordinances more restrictive or ban signs completely. Bay East has prepared an easy-to-use summary of sign ordinances for all of the cities in southern and eastern Alameda County. The summary is available online.

Please feel free to chime and let us know what is going on in your area.

Thursday, March 20, 2008

What Is Predatory Lending?

The real estate industry, consumer groups and legislators all agree that predatory or abusive lending practices are wrong and should be curbed, but considerable disagreement exists over what constitutes such practices. It's clear that a loan isn't predatory just because it carries a high interest rate, although inflated costs or high rates are a common feature.

In addition, predatory loans often also involve a dishonest home improvement contractor who works with the lender or even outright fraud in loan documents. Other traits of predatory loans include "flipping" (repeated refinancing of debt in order to drain the borrower's equity by multiple commissions and charges); "packing" or other fraudulent non-disclosure (where loan terms or additional charges are financed or added to the transaction without the borrower's consent); and "failing down" or steering a borrower to a loan product that is worse for the borrower than other available loans, but more profitable for the lender/broker. Common targets for equity predators include unsophisticated consumers with money troubles who still have home equity or vulnerable groups like low-income, elderly and minority borrowers.

Predatory lending continues to be a key issue to watch at the local, state, and federal levels because of the lack of consensus over how to protect consumers without eliminating higher-risk borrowers' access to credit.

What’s the Solution?
There's a lack of consensus over how to crack down on predatory lenders. While these loan initiators are clearly in the wrong, there are companies that provide loan products to informed and willing high-risk customers for higher interest rates or higher fees. This "subprime" lending is a fair and necessary practice. These subprime loans often are the only option for high-risk consumers--such as borrowers with very little, bad, or overextended credit--who need loans.

Most of these consumers understand that they receive higher interest rates or have other strings attached to their loan products because they constitute a higher risk for lenders. They often are satisfied to pay the extra costs associated with the subprime market in order to receive the loans they need, and are fully aware of the financial implications of using such loan products. The difficulty arises when unscrupulous lenders or contractors conspire to take unfair advantage of subprime borrowers.

Unfortunately, many of the measures recently put forth by consumer groups and legislators to address predatory lending have been overly broad. They would have not only curbed illegal or inappropriate lenders, but would have also restricted consumers' access to subprime loans and severely limited borrowers' mortgage loan product choices.