A Real Estate Blog - Report from the Trenches

April 1, 2008

Oakland Chinatown Condo Auction - Make Out Like a Bandit?

Filed under: Home Buyers, Home Sellers — kenkho @ 11:10 am

This past Sunday (March 30), 41 luxury condos of the Eight Orchids, a new European-style 157-unit high rise complex located in Oakland Chinatown, at Broadway and 7th, were auctioned off. The auction, conducted by Accelerated Marketing Partners, a professional auction company, was well attended. The ballroom of the Marriott Oakland City Center was packed with a diverse mix of buyers, about 400 ot them, based on my own count, which may of course not be reliable.

Minimum bids were pegged low: $245K for 13 of the 1 bed/1 bath units, with the highest minimum bid set at $475K for the only two 3 bed/2 bath units. The previous asking prices of the 1 bed/1 bath ranged from $520,888 to $385,888, while the 3 bed/2 bath had asking prices of $805,888 and $775,888. For all the 41 units being auctioned, the total of the minimum bids amounted to 57.89% of the total of the asking prices. The first home to be auctioned, a 1 bed/1 bath had a minimum bid of $245,000, or 47% of the previous asking of $520,888: this minimum bid has the lowest percentage compared to the previous asking. On the high side, a 2 bed/1 bath had a minimum bid of $325,000, almost 70% of the previous asking of $465,888.

The auction went on quickly and smoothly; in about an hour and a half, all 41 homes were sold. So who made out like a bandit? The developers or the buyers? Well, the total of the final bid amounts was just 17.36% above the total of the minimum bids. The buyer who did the best paid 1.54% above minimum bid: the 1 bed/1 ba had a previous asking of $545,888, a minimum bid of $325,000 and a winning bid of $330,000. The highest percentage was 43%: a minimum bid of $245,000 and a winning bid of $350,000.

As for the developers, BayRock Residential, they were able to sell 41 homes, certainly a good number compared to the 20 or so units they have sold since February of 2007. The total of the winning bids is around 68% of the total of the previous asking prices, reflecting a 32% discount.

I look at this as a win-win situation for both buyers and developers. Buyers were able to buy a unit at a high-end luxury condo complex in Oakland Chinatown at a significant discount and the developers were able to do two years’ of sales on one day, and make their complex a lot more attractive.

March 6, 2008

List of Counselors for Homeowners Facing Foreclosure

Filed under: Home Sellers, Uncategorized — Tags: , — kenkho @ 12:05 am

On February 27, 2008, Governor Arnold Schwarzenegger announced a new $8 million grant that will dramatically expand free counseling services to homeowners having trouble paying their mortgages and needing help to avoid foreclosure.

“These counseling services are one tool to help prevent the American dream from turning into a nightmare for thousands of Californians at risk of losing their homes,” said Governor Schwarzenegger. “More than a half million Californians have subprime loans that will jump to higher rates over the next two years and many are in danger of foreclosure. But there are options - your lender may be willing to work with you and counseling is available. The key is: don’t be afraid to ask for help.”

The $8 million grant, awarded to the California Housing Finance Agency (CalHFA) and HUD-approved counseling groups in partnership with the Rural Community Assistance Corporation (RCAC), is part of a new federal program to help homeowners avoid foreclosures.

“Mortgage counselors are critical to keeping Californians in their homes,” said Stan Keasling, chief executive officer of Rural Community Assistance Corporation. ”This grant will allow organizations to increase staffing so that they can meet the increasing demand for help. Another critical piece to winning this grant was the matching funds raised by the California Reinvestment Coalition, and their advocacy increasing awareness of the magnitude of this problem.”

The counseling will be available to homeowners who have defaulted on their mortgages or are in danger of defaulting on their mortgages. Below is a list of counseling agencies:

San Francisco Bay Area
ACORN Housing Corporation, Oakland, 510-436-6532
ACORN Housing Corporation, San Jose, 408-297-3053
Asian, Inc., San Francisco, 415-292-8555 
California Human Development Corporation, Santa Rosa, 707-372-4588
East Palo Alto Community Alliance & Neighborhood Development Organization (EPA CAN DO), East Palo Alto, 650-473-9838
Mission Economic Development Agency, San Francisco, 888-780-5850 or 415-282-3334
Pacific Community Services, Pittsburg, 800-914-6874
Project Sentinel, Inc., Sunnyvale, 888-331-3332 (Santa Clara County, San Mateo County, Southern  Alameda County)
Richmond Neighborhood Housing Services, Incorporated, Richmond, 510-237-6459
San Francisco Housing Development Corporation, San Francisco, 415-822-1022

Central Coast
Monterey County Housing Alliance, Salinas, 831-757-4657 ext. 118
Peoples’ Self-Help Housing Corporation, San Luis Obispo, 805-781-3088

Central Valley
ACORN Housing Corporation, Fresno, 559-221-0217
ByDesign Financial Solutions, Fresno, Merced, Modesto, Stockton, 800-750-2227
Community Housing and Shelter Services, Modesto, 209-527-0444
Community Housing Council, Fresno, 559-234-1492
Community Services & Employment Training, Inc. (CSET), Visalia, 559-732-4194
Visionary Home Builders of California, Inc., Stockton, 209-466-6811
Project Sentinel, Inc., Sunnyvale, 888-331-3332 (Stanislaus County)
 
Los Angeles
ACORN Housing Corporation, Los Angeles, 213-748-1345
ByDesign Financial Solutions, Los Angeles, Granada Hills, Palmdale, 800-750-2227
Los Angeles Neighborhood Housing Services, Los Angeles, 213-381-2862
Multi-cultural Real Estate Alliance for Urban Change, Los Angeles, 866-494-0507
Operation HOPE, Inc, Los Angeles, 888-388-4673

Northern California/Sacramento Valley
ACORN Housing Corporation, Sacramento, 916-451-9659
ByDesign Financial Solutions, North Highlands, Redding, 800-750-2227
Community Housing Improvement Program (CHIP), Chico, 530-891-6931 or 888-423-6333
Sacramento Home Loan Counseling Center, Sacramento, 916-646-2005

San Diego
ACORN Housing Corporation, San Diego, 619-521-2940
San Diego Home Loan Counseling & Education Center, San Diego, 619-624-2330

Southern California
ACORN Housing Corporation, San Bernardino, 909-804-4000
ByDesign Financial Solutions, San Bernardino, 800-750-2227
Fair Housing Council of Riverside County, Riverside, 800-655-1812 or 951-682-6581
Inland Fair Housing and Mediation Board, Upland, 909-984-2254 ext. 118 or 119
Operation HOPE, Inc, Los Angeles, 888-388-4673

March 3, 2008

Form 982 Software Updates

Filed under: Home Sellers — Tags: , , — kenkho @ 7:29 pm

In an earlier post on the Mortgage Forgiveness Debt Relief Act of 2007, I mentioned that tax software users should ensure their software is updated to include the revised Form 982.

Here are links to the Product Updates of the leading tax softwares:

Intuit’s Turbo Tax

While the latest update was done on February 27, an earlier update, on February 13, included the revised Form 982.

H&R Block’s Tax Cut

The latest update was done on February 16, 2008, and does not include the revised Form 982. If you use Tax Cut, you may want to check back on this page at a later date.

February 28, 2008

Mortgage Debt Forgiveness - Tax Implications?

Filed under: Home Sellers — Tags: , — kenkho @ 11:26 pm

Late December 20 of 2007, President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007, which freed taxpayers from having to pay tax on mortgage debt that was forgiven. The fact that debt forgiveness normally resulted in taxable income had made home sellers reluctant to go through short sales and willing to brave foreclosures.

Now, homeowners may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing separately. Details can be found in the revised IRS Form 982. The Form 982 should be filled out and attached to the 2007 federal income tax return.

This new law applies to mortgage debt forgiven in 2007, 2008 or 2009, and covers not just mortgage debt forgiven in a foreclosure, but also in a mortgage restructuring. This debt, however, must have been used to buy, build or substantially improve the homeowner’s principal residence and must have been secured by that property. Debt used to refinance qualifying debt is likewise eligible for the exclusion, but only up to the amount of the old loan principal, prior to the refinancing.

What kind of mortgage debt does not qualify? Examples are debt on second homes, rental property, investment property, business property.

Since the new law was enacted late December, most tax preparation softwares may not have the revised Form 982. I suggest you check with your software publisher for updates.

Oh, one other important point. This law applies to federal income tax, not to state income tax. As of today, Californians do not have a similar mortgage forgiveness debt relief act yet, but we probably will have one early March.  Senate Bill (SB) 1055, authored by Sen. Michael J. Machado, recently passed the Senate Revenue and Taxation Committee on an 8-0 vote and is now before the full Senate.

February 24, 2008

Why Own?

Filed under: Home Buyers — Tags: , , , — kenkho @ 11:31 pm

Below is a short article from Freddie Mac’s website enumerating some reasons for owning a home. This article, entitled, “Why Own?” is reproduced below verbatim:

– beginning of article –

There are many great reasons to consider owning a home:

  • You’ll have a place that is yours!
    You’ll own it, have a place to raise your children and become a part of your community. You can pass your home down to your children, and their children, creating security for generations to come.
  • You may pay less to own a home than you would to rent – and it’s yours at the end!
    Homeownership can reduce the federal income taxes you pay. You can deduct the interest on your home mortgage and property taxes you pay on your home on the tax returns you file each year. These tax savings partially reduce, or offset somewhat, the actual cost of owning your home.
  • Your monthly payments won’t ever go up if you choose a fixed-rate mortgage!
    If you choose a mortgage with a fixed-interest rate (one that stays the same for the life of the loan, say 30 years), you’ll pay the same mortgage payment each month for the entire 30 years of the loan (if your taxes go up, your escrow will go up – increasing your monthly payment).
  • You’ll build a good nest egg!
    Owning a home and building equity is the single greatest source of financial security and independence for the majority of people who’ve taken this step.

 – end of article –

 The Freddie Mac website has a number of useful tools. I suggest you try them out:

Comparison Calculator - Find out if it is better for you to rent or buy.

Tax Savings Calculator - How much taxes will you save as a homeowner?

February 19, 2008

Study: Home buyers pay more for precisely priced property

Filed under: Home Buyers, Home Sellers — Tags: , , , , , — kenkho @ 10:09 pm

Today’s ANG Newspapers (Oakland Tribune/Daily Review/Argus) have an article on how the list price affects the actual selling price. A research team at Cornell University found that buyers will pay more for a house with a “precise” rather than a round number for a list price ($345,500 versus $345,000). This may initially seem odd, but does make sense if you consider the study’s reason: consumers are used to seeing precise figures for small-ticket items and round figures for high-ticket ones.

Now in this Bay Area market, where there is a large number of Chinese buyers, I wonder if using a price with several 8s (e.g. $500,888)  will increase the likelihood of generating full-price offers? And what about the high tech buyers in Silicon Valley? Perhaps if a seller would use a prime number for a list price, the mathematically-inclined buyer would appreciate the use of the prime number and use the same figure for the offer? Or maybe a perfect number? Anyway, here is the link to the article:

http://www.insidebayarea.com/business/ci_8303002

Now, to all the sellers out there, if you need help figuring out a prime or perfect number, well, you can certainly contact me!

February 15, 2008

The Army offering help to home buyers

Filed under: Home Buyers — Tags: , , — kenkho @ 9:00 am

The U.S. Army recently introduced the Army Advantage Fund (AAF), an innovative recruitment program that offers qualified recruits up to $40,000 down payment assistance for homeownership or seed money for a business. This program is being tested in five markets: Albany, NY; Montgomery, AL; Cleveland, OH; Seattle, WA; and San Antonio, TX for the next six to nine months. Availability for AAF on a national level depends on the results of the pilot test.

Qualified soldiers who commit to five years of active service are eligible up to $40K, and those who enlist in a reserve component for five years are eligible up to $20K. Studies have shown that home and business ownership are highly appealing to young Americans. In the test markets, 95% of young adults surveyed agree that it is important for them to own a home.
 
“America’s Soldiers truly are the strength of our nation, and they deserve the best support, stability and compensation available in return for their dedication to our country,” said Lt. Gen. Benjamin Freakley, Commanding General, U.S. Army Accessions Command. “The Army has a long legacy of preparing young Americans for success through skills training and education-based programs such as the GI Bill and the Army College Fund. This new offering demonstrates the Army continues to understand what young Americans consider critical to their future.”
 

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