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LA Digs - Northeast LA Real Estate Blog

Welcome to LA Digs, the real estate and Northeast Los Angeles community blog written by Realtors Tracy King and Keely Myres.

Here, we share tips, market updates, and local news bits to keep you informed on what's happening in Northeast Los Angeles and the surrounding neighborhoods. Read on to learn about the latest in your neighborhood!

Real Estate Myths and Misunderstandings


If the Buyer backs out, I can keep their deposit, right?


 

That is what Sellers assume, but today’s California Association of Realtors Residential Purchase Agreement (RPA) is a little more complex. If the Buyer and Seller have initialed the Liquidated Damages clause, the Buyer has removed the Inspection Contingency, and the Buyer cancels for no reason, then yes, the Seller may keep up to the amount of the Earnest Money Deposit (EMD). However, it is extremely rare that a Buyer would actually forfeit their deposit with all the loopholes available today.



1. Any new disclosure from the Seller’s side can trigger a new disclosure period.


2. From the CAR website FAQ: Q 8. Does a liquidated damages clause automatically entitle the seller to the buyer's deposit if a transaction does not close?


A No. As already stated, a liquidated damages clause only determines the amount of money a seller can recover from a buyer, and then only if the seller can prove that the buyer breached the contract. A buyer may fail to close a transaction for a variety of acceptable reasons (e.g., where the buyer's obligation to purchase was contingent on the buyer obtaining financing, and the buyer could not reasonably obtain financing). To recover liquidated damages, the seller generally must prove in court or arbitration that the buyer's failure to close the transaction was wrongful.


 

Bottom line, in a real estate transaction today, there are no guarantees that the buyer will close the escrow until you receive the call that the recording is confirmed. As Bette Davis said in All About Eve, “Fasten your seat belts, it’s going to be a bumpy night.

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1579 Hits

Home Buyer Tip #1

Why you should change the locks on your newly purchased home:

Illustrating the advice that you have no idea who might have copies of the keys to the home, how about this story from the blog LAist.

It is just common sense when you think about it, but it's amazing how many people don't get around to having the locks re-keyed when they take ownership of their new homes. The cost is negligible compared to the potential damage and loss that could happen.

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Supplemental Property Tax: a confusing story

Supplemental Property Tax is just about the most confusing aspect of purchasing a home
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5963 Hits

What's the market like now?

This is probably the most common question I am asked as we launch into an exciting new year in real estate. Everyone is happy to be done with 2009 and to look forward with hope to a much better year. The most common answer I hear from various experts is that, in general, don't expect much different from last year. I think it's better than that in our special corner of the LA area.

Here is my personal experience so far since the beginning of this year, a bit over 3 weeks.

I've taken two listings, one of which hasn't come on the market yet. Sellers are seeing that the prices aren't necessarily as dismal as this time last year, so it might be a good time to sell and figure out a good next step. I've been on about 9 listing appointments and several of them may decide to move forward in the next month or two. I also opened escrow with some people who have been looking hard for many months.

Of the two listings in Eagle Rock that I have on the market now, we are having a good turnout at our open houses. That means over 30-40 people at the $699,000 listing at 5320 Rock View Terrace at each the last 3 open houses. Yesterday was the first open house for 4902 Wiota, listed for $429,000, and we had over 60 people!

5320 Rock View Terrace, Eagle Rock

5320 Rock View Terrace, Eagle Rock

So the first-time buyer crowd is out in force for the under $500,000 price range, with good interest for higher price ranges as well. And we don't have just looky-loos walking through (though you are always welcome at my open houses), we have serious talk of offers at both properties.

The First-Time Buyer Tax Credit deadline of April 30, 2010, is having a positive effect both on buyers and on sellers. I think there is a real urgency to take advantage of that opportunity, so buyers are about to have a better choice of interesting properties to consider. The inventory is extremely low right now as properties are being snapped up.

4902 Wiota Street, Eagle Rock

4902 Wiota Street, Eagle Rock

For you homeowners who have been in your primary residence 5 of the last 8 years, you have a very brief opportunity for a tax credit as well.  Check out my previous blogpost at http://www.tracyslarealestate.com/federal-tax-credit-for-home-buyers-expanded-and-approved-for-eagle-rock-home-buyers. You can also go to www.federalhousingtaxcredit.com for the complete information.

But whether or not you qualify for tax credits, this year is starting off with an active real estate market fueled by relatively low interest rates and prices higher than last year, but lower than the peak. Opportunity is everywhere!

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Another Rent vs. Buy Analysis

Many people are asking if now is a good time to buy real estate, especially those who have lost money and equity in the recent mortgage crisis. Bernice Ross lays out an excellent analysis of how buying for the long term is a hedge against inflation http://www.inman.com/buyers-sellers/columnists/berniceross/breaking-down-buy-vs-rent?page=0%2C1. There are many other important reasons to consider as well, though they aren't as easily quantifiable.

Pride of ownership is key to this discussion. And I don't just mean that when you own, you take better care of your property. That tends to be true, but in a way it's all about self-expression. My home is an extension of me”my accomplishments, my creativity, my style. Whether you have an architect design your home from the ground up to your specifications, you buy a home in a development , you have an historic home that has all the original details preserved, or you buy a starter home that needs a lot of work, you will imprint something about you and your personality on that property, even if it's only on the inside. Home tours and open houses are popular because so many of us love to see what other people have done with their homes.

Pride of ownership is also about civic involvement, security and freedom. As homeowners, we have more of a stake in our communities. If a new commercial development threatens to change the character of our neighborhood, we are much more likely to show up and protest, or vote, or question how it will affect our property values. It even affects how likely we are to pick up litter from the sidewalk. If we feel like the sidewalk is ours, we'll pick up the trash. Otherwise, the city should be doing it. J0090386

If you have ever gone door to door for a community issue, the most common response from the non-property owner is Oh, I'm just renting here. Most renters have a temporary feeling about their home”and they should, because the landlord can ask them to move out. Even in a rent-controlled area, there are ways to move a tenant out. If you own your own home, it is yours to keep as long as you make your payments and pay your taxes. That means a great deal to many of us.

At the end of the day, with any rent vs. buy analysis, if you own your home free and clear you have a place to live regardless of its value and if you rent you don't. Many of us are a long way from being mortgage-free, but small steps taken every day move us forward on the path to freedom.

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What’s on the Market in Eagle Rock Today?

There are 25 active listings today, October 7, 2009, priced from $129,000 for a gutted fixer that requires a cash offer to $825,000 for a 4 bedroom home with a pool located above Hill Drive. Most of these properties have been on the market over 2 weeks, some over 6 months. The field is open for a well-price home that is in decent condition in a good location, folks. Call me…


Active Listings from MLS for Eagle Rock, 90041

Active Listings from MLS for Eagle Rock, 90041

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Buyer/Seller Alert!

Today, Tuesday, September 1, 2009, there are 23 active listings on the market in the Eagle Rock 90041 zip code. That's fewer than there were in the Spring of 2005, or in 2006, the pinnacle of the hot Seller's market.

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Why You Should Help Your Kid Buy A House This Year

I can't say it better than this mortgage broker did, so check out Janet Guilbault's blog here:
http://activerain.com/blogsview/1051983/3-2-1-LIFTOFF-Prevent-Failure-to-Launch-Help-Your-Kid-Buy-A-House-This-Year

It's a great opportunity for us parents as well as the kid. How else could we take advantage of the 3.5% down payment possibility that FHA offers? To qualify for FHA, you have to intend to occupy the property as your primary propertythat's the kid part. Plus, you can have a non-occupant co-signerthat's you. If you buy units, as long as your child lives in one, you can do that, too! The First Time Buyer Tax Credit is a bonus. If you do an equity-sharing partnership with your kid, you both can prosper. This is not coddling your kid so much as creating a dynamic investing machine.

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How I Bought My First Piece of Real Estate, or What Do You Mean There’s No Foundation?

When I was nine years old, my father proclaimed that we were going to buy a house in Springfield, Missouri, and I should draw a plan of what I wanted it to look like. That never happened, but the seed was planted and I thought and dreamed and schemed for the next 15 years. At one point right after I had graduated from college and started my first job, I went into a local bank and asked how I could go about getting a mortgage to purchase a home. I was told that single women didn't buy homes usually, and that they didn't offer any loans to people like mefresh out of college, not long at my job, no real assets except my 1960 Volkswagen bug with the McGovern sticker still on it.

In 1975, I had just received my final divorce decree, had $3,000 in my savings account, and was working for the Monterey County Department of Social Services as a caseworker. I lived in Pacific Grove, a foggy little town on the Monterey Bay that had started life as a Methodist beach retreat. Many of the lots were about 20 by 40 feet and were originally for people to come and pitch their tents on for their beach vacation. Later, little board and batten cottages were built on those same little lots. I rented one, but I couldn't afford to buy a house in my neighborhood because they were selling for $35,000 and up. I watched the ads in the paper and eventually found one of the least expensive homes on the entire Monterey Peninsulajust around the bay, in Seaside, for $20,000.

It was a Victorian cottage behind a white picket fence and it had a guest house in the back. And here was the best partthe seller was willing to carry the loan on the property! I could put down $2,000, the seller would carry the first loan of about $16,000 plus he'd carry a second of $2,000, and I'd have $1,000 for closing costs and incidentals. Sounds perfect, right? Well, the house was rented to a guy who had lived there for many years, didn't take care of the property, and apparently did little besides smoke, drink and play cards. I think the seller figured the best way to get rid of the guy was to just sell the property.

My real estate agent (the listing agent who ran the ad in the paper) helped me write up a contract that included a clause that the property had to be vacant before I would close escrow. We didn't do things like property inspections back then, but I had my stepfather look the place over and he thought it seemed ok. Also, I had a friend who was a plumber and he looked at the place for me. I remember we were all amazed that it had a basement, which was rare in that area. We worked out all the details, I waited about 4 months for the tenant to finally move out, and then I took possession of my first property! Now, you probably thought when I said it was a Victorian with a white picket fence that it was a cute charming cottage and I would move in and live happily ever after? Not hardly. It had lots and lots of deferred maintenance. I had no intention of moving into the place anyway because it was in a pretty sketchy neighborhood not far from a commercial area, in what was known to be about the poorest neighborhood on the coast between Los Angeles and San Francisco.

I rented both the house and the guest house for just enough to cover my monthly mortgage expense, to people who were willing to do a little fixing up in exchange for cheap rent. It was a good deal for everyone involved. Then a few problems came up, mostly because the two sets of tenants had trouble getting along. So the first tenants in the house moved out, but the second tenants were even better because the husband was a house painter by trade and agreed to paint the house as part of his rent. Unfortunately, the new tenants didn't get along too well with the back house tenants either, so I received complaining phone calls from one or the other tenant on a pretty regular basis.

Oh, then my landlord decided that I had to move out of the place I was renting in Pacific Grove. So now I had spent my savings on this first place and I needed to move. I went to my mother and asked her for help. She lent me some money for another down payment and co-signed on a real bank loan, and I bought another house in Seaside for $27,000, that was further up the hill and I could move into it. It was a stressful situation and I have to tell you, I was often afraid that the whole arrangement would unravel and leave me with some big expense I couldn't handle.

It worried me enough that I finally decided I should just sell the rental. The real estate market was pretty hot at the time, so we listed the Victorian for $33,000 and immediately got 3 full price offers, so I sold the place, also agreeing to carry back a 10% second. Now, remember how when I bought the house there was no bank involved? Well, this time there was a lender who sent out an appraiser, plus the title company sent out some kind of inspector, and lo and behold, we discovered that the house had no foundation! What? It had a basement, how could it not have a foundation? It turns out that the house had been moved onto the property at some point and set over an old basement from some previous structure that had been removed. Who knew?

Before you get too carried away with how stupid you think I was, you have to know that many houses in Carmel, Monterey, and Pacific Grove had no foundations. They were built on what they called aœmudsill,which was pretty much a redwood frame with the house built on top, and gravity keeping everything in place. Remember, this was originally a vacation home for the most part, near the beach. Years later I found out that it had been moved from Pacific Grove by floating it across the bay on a barge and that was why it was the only Victorian home in Seaside.

So a crew jacked up the house and poured a foundation, which cost me about $3,000. After all was said and done, I netted about $8,000 on the sale, $3,300 of which was a second which I didn't get for about 5 years, so it was kind of a forced savings account that paid a bit of interest at the end. Doing the math, I spent about $3000 to buy the place and I netted about $8000 at the end, meaning I made about 270% on my initial investment. So I paid my mother back for the down payment on the other house and still had money left over. Not too bad for a kid from the Ozarks, don't you think? Here's the kicker: this whole drama took about 9 months from the time I closed escrow in the beginning to when I closed escrow at the end. It was intense, but it all worked out and I ended up owning the home that I lived in, though not in the neighborhood I wanted, and I had been thoroughly bitten by the real estate bug. Here was the germ of my motto, Interesting Homes for Interesting People.

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