It is fitting that a discussion of debt relief should take place on April 15th–the date for filing ones Federal and State income taxes. Good grief, we all can use tax relief!

Well, on Monday, Governor Schwarzenegger signed SB 401 (Wolk) into law providing distressed homeowners with state tax exemption on debt forgiven in a short sale, foreclosure, or loan modification. So what does this new bill mean in plain English, and how can you, Mr./Ms. Seller take advantage of this new debt relief?

California State Tax Law is now Aligned with the Federal Tax Law

Bear in mind, that California homeowners generally were exempt from owing federal taxes on the forgiven mortgage debt, but still were required to pay California taxes on the so-called “phantom income.” For debt forgiven on a loan secured by a “qualified principal residence,” borrowers now will be exempt from both federal and state income tax consequences.

What is a Qualified Principal Residence?

“Qualified principal residence indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence, including both first and second mortgages. It also includes refinance loans to the extent the funds were used to payoff a previous loan that would have qualified under these guidelines”

What Do I Do If I’ve Already Filed My 2009 Tax Returns?

If you’ve already filed your 2009 tax returns –and if you haven’t, you have a few short hours in which to do so without penalty–(unless, you have filed for an extension),  you may amend your returns and claim the exemption by filing a Form 540X amendment. This tax relief applies to debts discharged from 2009 through 2012.

How Do I Know if I Qualify for California Tax Relief SB 401?

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) still may be exempt from paying taxes on forgiven mortgage debt under other provisions. Most notably, bankrupt taxpayers are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

To read the full story, please click here: http://bit.ly/cR2hrS

On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan. The plan has two components to it–one offers homeowners who qualify a plan that would refinance mortgages that are greater than the current market value of their home or condo into a more affordable monthly payment thereby reducing the possibility of a future foreclosure.

The second component offers homeowners a way to modify their existing mortages into a housing payment that would enable the borrower to stay in their home/condo and avoid possible mortgage default and/or foreclosure.

Beware of Foreclosure Rescue Scams–Help is Free! Let me preface by saying there are many scams out there that prey on troubled homeowners. There are people who purport to be experts in loan modifications and ask homeowners to pay for their services when you can obtain all the information and help you need for free.

This is one reason why I prefer to pass along the real source of information, so that you, the consumer, can determine after reviewing the eligibility requirements of each of these government sponsored programs whether you are a candidate for either one or the another.

The following web site explains in detail each of the programs–the Home Affordable Refinancing and Home Affordable Modification–eligibility requirements and the information you will need to gather before you contact your mortgage/loan servicer.

Go to: http://www.makinghomeaffordable.gov/

If you would like to read the detailed report released by the U.S. Department of the Treasury on March 4, 2009:

See: http://www.ustreas.gov/press/releases/reports/housing_fact_sheet.pdf

Open Houses can be a viable, valuable marketing tool under certain circumstances and in particular niche markets. Real estate is after all local, and buyers often like to check out neighborhoods and houses up close and in person without having to commit to using the services of a real estate agents in the beginning stages of their search.

Just as many buyers prefer to view homes first online, anonymously, and educate themselves before actually making contact with a real estate professional, buyers also utilize Open Houses as a way to familiarize themselves with those particular communities in which they may ultimately have an interest in purchasing a home or condo.

We have found greater success in holding Open Houses than the average statistics may indicate in our local, niche markets. We hold Open Houses regularly in and around the University of California at Irvine in the villages of the University Town Center, Quail Hill, and Turtle Ridge in Irvine where homeowners and prospective buyers stop in to find out about about the current available listings, recently sold properties, types of properties, number of bedrooms and baths, floor plans, price per square foot, and proximity to specific schools in which they are interested. They ask about the current interest rates, whether housing prices are trending up or down, and ask us about our interpretation of local real estate market conditions.

An added benefit of holding Open Houses is the increased exposure these homes receive from showings by out-of-area real estate agents, who do not have local Board MLS access and, therefore, have an easier time showing our properties.

Because the demand/need for housing is driven by the proximity to the top-rated schools, in the villages in which we specialize, many of the potential buyers come from quite a distance to view the Open Houses. These communities are not only in close proximity to U.C. Irvine, but are within the school boundaries which include the top-rated elementary schools, including Turtle Rock elementary that feed into the villages of Turtle Rock and the University Town Center in 92603 and 92612, Alderwood Basics Plus elementary located in Quail Hill (92603), Vista Verde elementary (an award-winning year-around school), within the school boundaries of Turtle Ridge (92603), Bonita Canyon elementary in Turtle Rock (92603), Rancho San Joaquin Middle school, and nationally-ranked University High school which serve all of the local Irvine neighborhoods, south of the 405 Freeway, and near the University of California at Irvine.

Parents of both prospective and currently enrolled UC Irvine students visiting the UCI campus from a distant city, or from northern or central California, or, perhaps from out-of-state, or even from outside of the country, will stop by an Open House in the University Town Center, Quail Hill, Turtle Rock, and Turtle Ridge neighborhoods. They appreciate begin able to discuss the availability of off-campus housing during their short visit and can get a good sense of the area, view the current inventory on our laptop at the Open House, and schedule an appointment at the end of the day after the Open House has concluded to see the comparable homes/condos in the area.

As a direct result of holding Open Houses, we recently opened escrow on two of our listings in which we represented both buyer and seller, and assisted buyers in the purchase of two of our colleges listings in the same neighborhood. Moreover, as a result of an Open House we held in which a buyer happened to see, the buyer’s agent contacted us, an appointment was made to take the buyer through for a second look, which ultimately resulted in the sale of the property.

The bottom line is, as real estate agents, we are facilitators–enablers who strive to bring buyers and sellers together in a successful home purchase and/or sale. When it works, it fulfills the hopes and dreams of real people in their pursuit of homeownership. It’s an enduring and an endearing experience for all parties.

So the long answer (as it turns out, longer than I had anticipated), is yes, under certain circumstances, there ought to be a place for Open Houses in a real estate agent’s marketing strategy. But it’s a qualified yes. If it works, by all means use it; if it doesn’t, lose it.

We lived in Tucson, Arizona when our children were infants, and, in the desert climate, we socialized around the pool. To ensure that our kids were pool safe, we enrolled them in a program that would help them survive in the event that they fell or found their way into the pool in an unguarded moment. The swim program taught babies 6 months to 6 years old to save themselves in an accidental water encounter. This was a first-step in trying to avert a tragedy.

In the Friday, May 30th edition of the Orange County Register, Michael Mello, in his article entitled “Take Steps for Safer Swimming,” sums it up in a few words: “Three seconds. One inch of water.” This is the time and the amount of water needed for an infant or toddler to drown. A kiddie pool holding water only an inch deep demonstrates all it takes to drown a small, unattended child.”

Were you aware that drowning is the leading cause of death in children under five? Fire officials urge homeowners to install multiple barriers, as well as other safety measures around pools and spas, such as fences with self-closing and locking gates, and net covers. Other approaches to pool safety include the following: adult supervision, barriers, and classes such as swim lessons and CPR.

The U.S. Consumer Product Safety Commission recommends multiple safety measures such as “pool and spa drain covers to help keep children from becoming entrapped and an alarm that will go off after seven seconds if a door to the back yard is opened by a child.”

Even if one doesn’t have children of their own, homeowners need to be mindful that their neighbor’s children can get into their yard, where the pool or spa may not have a cover or a fence.

Photo Courtesy of the Orange County Register On-Line, 05/29/08

For further information, please visit the following web sites:

http://www.abcpoolsafety.org

http://www.usla.org

http://www.swimforlife.org

http://www.choc.org/community/safetycenter.cfm

If you’ve watched Sabrina Soto on HGTV’s “Get It Sold”, you know that she takes a home that’s been languishing on the market, makes some changes, rearranges, spruces it up, stages it, and it sells… Even if you haven’t watched the program, a home that is well presented will sell faster.

Take a good look at your home… Is it ready for its debut–it’s entrance–in our current Buyer’s market? Would you buy it if it was for sale? In today’s market, it needs to stand out among the inventory. If not…

Here are some low-cost ideas:

• The Brush-Off: Freshly painted interior and exterior walls in neutral colors are appealing, and tell the prospective buyer that your home has been well maintained. Call your Home Owner’s Association (if you have one) for exterior paint brands and colors. There are several “green” paints–low Volatile Organic Compounds or VOC’s available for interior paint.
• A Place for Everything: Remove clutter from exterior and interior stairways, bedrooms, kitchen and bathroom counters. Observe the one-appliance kitchen rule: just one on the counter, whether it’s your coffeepot, toaster, or food processor. This says there is plenty of cupboard and counter space.
• Counter Proposal: Your kitchen should sparkle and give the impression of plenty of working space. Be sure the faucets don’t drip, and the built-in appliances work.
• It Makes Scents: Borrow a friend’s bread maker if you don’t have one. The smell of fresh bread is almost irresistible, and gives a warm welcome. Do not use floral room sprays; they make the buyer wonder what you’re trying to cover up.
• Take a Powder: Put away shavers, makeup, curling irons, hair dryers, etc. Shine bathroom tubs, sinks, fixtures, and mirrors, and put out fresh towels. The caulking around the tub/shower and grout around tiles should be free of cracks and dirt. A good way to clean the caulk is with a toothbrush and liquid sink cleaner.
• Plenty of Hang-ups: Neat and orderly closets reveal plenty of storage space is available. Dispose of unwanted or unneeded clothing to a favorite charity. Store boxes of files, holiday decorations, etc. in the garage or at a storage facility.
• Beauty by the Yard: Make a great first impression by having the lawn neatly mowed and edged, flowers planted (especially fragrant ones), bushes trimmed, and the yard of free of garden tools and toys (swing sets excepted).
• Doing your Homework: You will rarely recoup the dollars invested in major home improvements just prior to selling your home. Exceptions: upgraded kitchens and baths.
• Take a Good Look at Yourself: Would you buy your home if it was for sale? If not, use these low cost investments that will return greater dividends.

The key to selling your home in a reasonable time frame and maximizing your sales price, especially in today’s market where there are many homes from which to choose, is to prepare your home for sale before its debut. Remove the clutter, the personal effects and paint the walls in neutral colors. Create an environment that can suit many buyer’s tastes. By depersonalizing your home, buyers will visualize your home as their home, and it will be as good as sold.

Photo is Courtesy of HGTV’s “Get It Sold,” by Sabrina Soto

“Sex and the City,” the movie, opened Friday to the tune of $26.9 Million based on the strength of sales by women and their friends (the buzz) resulting in sold out shows.

Your home for sale is the equivalent of an opening–it has to have the right “buzz” to be included on the buyer’s short list. Whether or not you have a successful opening can impact how many dollars you may gain or lose in terms of the sales price of your home. You usually do not get a second chance to make that all important first impression.

Your house for sale has to entice the buyer. If you were meeting a blind date, you would not don an ordinary “house dress,” but rather you might slip into that killer Little Black Dress, and accessorize it, perhaps, with a pair of strappy Manolo Blahnik heels, the latest “it” handbag, and an alluring “come hither” scent–in other words you would be “dressed to kill.” Your house needs to be “dressed to sell,” when a prospective buyer drives up to the front of your home for sale. Does your house have that all important “it” factor?

If not, you would be well advised to obtain a makeover (and it doesn’t necessarily require an extreme makeover) prior to putting your house on the market for sale.

In her article entitled Staging is House Marketing, Marion Duffy aptly points out that “You want your house displayed so as to give shoppers an idea of how your home may fit into their lifestyle. This is staging. Staging sets your house apart from the houses on the rack or the rows of houses.” Indeed, your house needs to appeal to the emotions of the buyer.

In a related article entitled Intuitive Home Finding, Lynne Pope paints a picture of how a buyer perceives their home: “When you think of a home, you look into your heart and you picture it, a picture so clear you feel it in your soul, the place you’ve dreamt about and longed for, ” namely, your Ideal Home. Indeed, your home may well be compared to one’s perception of an ideal soul mate. The image arises from our dreams…Your house is now the star of the Silver Screen: Ready, lights, camera, action!

Photo is Courtesy of StarPulse.com

If you are considering an Adjustable Rate Loan Program be an informed consumer by asking the following questions:
1. Ask what the initial interest rate will be (your start rate).
2. Ask how often the interest rate will adjust and the dates upon which the interest rate changes will occur.
3. Ask the name of index used to adjust the interest rate (e.g. Libor, COFI, etc.)
4. Ask what the interest rate spread will be or what your interest rate will adjust to when your rate change does occur.
5. Ask how often your interest rate will adjust.
6. Ask what the lifetime cap of the interest rate will be above the initial start rate.
7, Ask how many points you will have to pay (each point translates into a percent of the loan amount for which you are paying) and what your total fees will be.
8. Ask what your APR or Annual Percentage Rate will be (your interest rate plus the total cost of your loan)
9. Ask if there is a pre-payment penalty associated with your loan and what the cost will be (No, you do not want one!)
10. Ask as many questions as you need in order to understand the loan program you are obtaining. You should have received a written Truth-in-Lending Statement outlining the interest rate you were promised, along with all of the charges associated with the loan, at the beginning of the loan process. Don’t sign the loan documents if they do not appear to be correct.

For more information on the subject, click here

I usually make it a point to scan the Real Estate sections of the L.A. Times, the Orange County Register, and the New York Times at some point over the weekend. However, I overlooked an article regarding 10 zip codes in Southern California that actually experienced price appreciation in the 1st quarter of 2008 as compared with the 1st quarter of 2007. Thankfully I came across Elaine Carlson’s article in PalosVerdesSource.com entitled Hottest SoCal Zip Codes.

The numbers were based on at least 20 sales in each of the zip codes as reported by DataQuick Information Systems. In Orange County, Irvine’s zip code 92603, which encompasses the villages of Quail Hill, Turtle Rock (including Shady Canyon), and Turtle Ridge, experienced an 18.0% increase in the median sales prices for existing single family detached homes as compared to the 1st quarter of 2007, Newport Coast’s 92657 zip code had an increase of 27.4% in the median sales price, and Newport Beach’s 92663 zip code encompassing Lido Isle and Balboa Peninsula had a 66.8% in the median sales price as compared to the 1st quarter of 2007.

Why do “some markets sizzle, while others fizzle?” Proximity to the beach where demand is high and inventory is relatively low has a great deal to do with price appreciation. These coastal areas have buyers who are able to qualify for good fixed rate loans, whereas the interior part of the state had borrowers who were stretching to afford homes, many of whom fell victim to the sub-prime mortgage debacle. (See my article entitled Which Cities are on Top for Home Sellers in California).

To view the cities with the biggest losses, Click here.

The question arises time and time again: If I buy such and such property in Irvine, will my child be able to attend X elementary, middle, high school? The answer is: Don’t assume anything! If you want your child to attend a specific school within the Irvine Unified School District, the best course of action is to check, and then, double-check again!

All too often, buyers do not verify the school boundaries prior to purchasing a home. They assume that if a particular school is within a few blocks of the property they wish to purchase, then it follows that the school is within the property’s school attendance boundary. Wrong! In fact, a school can be within walking distance of the property, and still be outside the school’s designated attendance boundary.

I’ve seen real estate agents make the mistake of inputing the wrong school in the multiple listing service. In so doing, they are unwittingly misleading prospective buyers. For instance, today I had a prospective buyer e-mail me regarding whether University High School is within the attendance boundary of the high-rise condos in the 92612 zip code. This would include the airport area’s mid and high-rise condos of Watermarke, Avenue One, the Plaza, and the Marquee–all of which happen to fall within the Santa Ana Unified School District, not the Irvine Unified School District. There are some buyers (and, indeed, even some real estate agents) who are under the assumption that just because these condos are located in the city of Irvine (92612), that they necessarily fall within the Irvine Unified School District’s attendance boundaries. Not so.

One other caveat: Be sure to check the attendance boundary changes for future years. Just because a school is located in an attendance boundary for 2008 doesn’t preclude the school from a future boundary change. Again, in the airport area, the Metropolitan neighborhood used to be within the Irvine Unified School District’s boundary. However, now the attendance boundary of the Metropolitan falls within the Santa Ana Unified School District. Similarly, the neighborhood of Las Palmas, within the village of Westpark, used to be within the University High School attendance boundary. A homeowner of a Las Palmas condo wound up selling her condo and moving to the University Town Center just so her daughter would be able to attend University High School. She sold her condo because University High was removed from the attendance boundary of Las Palmas a few years ago. To her chagrin, her former neighborhood was recently re-installed and is now again within the University High School attendance boundary.

Therefore, I always recommend that if parents are bent on having their child/children attend a specific school, then the best way to verify if a particular school falls within the desired attendance boundary is to go to the Irvine Unified School District’s web site and check. This is very easy do. Scroll down to Enrollment, and then over to Assigned Neighborhood Schools. Click on this and it will bring you to an area where you can type in the address of the property, and it will display the elementary, middle, and high school attendance area for that particular address. You may also wish to click on the Irvine Unified School District’s School Boundaries. The site also provides a future map indicating boundary changes.

Currently the attendance boundaries for University High School include the villages of Quail Hill, Rancho San Joaquin, Turtle Ridge, Turtle Rock, University Park, and University Town Center.
Better to be informed than sorry!

The buyers out there, (and, yes, there are lots of buyers looking and comparing homes and prices) are savvy buyers. They are looking for the best deals. If there’s one thing of which Buyers are aware, it is the prices/values of homes and condos for which they have been looking–often for the better part of a year or more. Moreover, buyers are acutely aware of the foreclosure and short-sale market. These properties scream motivation–even if they are, in fact, a past buyer’s folly or mistake. That’s the buzz, and the buyers are sticking to it…at least that’s what we’re seeing.

Buyers are comparison shopping. Their antennae goes up when a new home comes on the market. Prospective buyers have frequented all of the comparable new homes around and have visited many Open Houses. Buyers are searching on the internet for those real estate web sites and blogs for active real estate listings and comparable home sales, or are seeking the advise of friends and family who may have purchased homes or read about properties for which the debt now exceeds the market value. Thus, buyers are very cautious about the real estate market in general.

Laurie Manny of LongBeachRealEstateHome.com correctly suggests in her article entitled, 8 Deadly Selling Mistakes, that overpricing a home may lead to the opposite result–ultimately a lower price–in other words, chasing the market down. Indeed, overpricing your home will send buyers off to look at and choose to purchase those homes that are reasonably priced in today’s market, leaving the overpriced home a bridesmaid, and never the bride. Moreover, chasing the market down not only can result in a greater loss in the home seller’s net equity, but may also could push a financially shaky seller into a short-sale or foreclosure situation.

On the other hand, homeowners who price their homes to sell can entice multiple offers and actually wind up selling the home for above the asking price–an anomaly in this market, but an increasing event. In her article of April 13th in the New York Times entitled, “Bidding Wars? In This Market?, Elsa Brenner, writes, of an owner in the Westchester area of New York who originally listed their house at $1.2 million, much less than they would have hoped for in better times, but, instead, the relatively low price drew three offers in five days. “In the end, the house sold for $1.35 million, which is what the asking price probably would have been in 2005, when the market was far stronger.”

It is also important to keep in mind most home sellers are, at the same time, home buyers –looking to either size up or down or, if relocating to a new city, purchase a home once they have settled in a new area. So, if the seller can get their home sold fairly quickly, then they can typically negotiate a better price on their new home purchase rather than having a contingency fettering their sale, or, perhaps, the lost opportunity to buy a great home value.