Chico Home Blog

NAR has videos to explain the lead-based paint RRP rules

2011-05-26T14:24:00.000-07:00

NAR has put together a series of videos to help Realtors understand lead testing, and why it is important to our clients.

If you start with one video, the others will play automatically. They are all less than two minutes long, and will help Realtors understand their part in the EPAs RRP rules.

NAR: Is it possible to avoid this (RRP) rule?

What is RRP? Pre78.com has lots of info!

2011-05-25T18:14:00.000-07:00

"Pre '78 Know Your Paint" blog posted this video. If you are in a home built before 1978, you will find this very interesting.

A step by step explanation of RRP by an attorney

New focus for Choice Properties in Chico

2011-05-22T11:35:00.000-07:00

Choice Properties in Chico, CA, announces today a new focus for their real estate team.

With all of the recent laws that are affecting older homes in our country, especially pre-1978 homes, Choice Properties has decided to provide an extra level of service to sellers and buyers of these homes.

Buying a pre-78 home without knowing your paint can be very costly. All paint in homes built prior to 1978 in California is considered to be lead-based, unless certified by a state certified inspector/assessor to be free of lead. All untested paint must be handled as lead-based, and comply with all the Renovation, Repair, and Painting rules recently enforced by the EPA. Any contractors disturbing paint must be certified lead-safe. More detailed information can be found here.

Choice Properties will provide a lead-based paint inspection at half-price to all of our clients that are buying or selling a home built before 1978. Upon close of escrow, this amount will be rebated, effectively making the inspection free. This is a value of over $480.00. (Some restrictions apply.)

The test will be done by Choice Property Services, a state certified inspector/assessor, using an XRF analyzer to determine if the home contains lead-based paint. Choice Property Services is owned by Mike and Debbie Brodie.

*Buyers: The home must be under contract and an escrow opened, with Choice Properties as the buyer's broker. Buyer will be charged only one half of the inspection amount (approx. $240.00) at the time of inspection. This amount will be rebated with a closed escrow.

**Sellers: The home must be listed with Choice Properties for a minimum of three months, at a price within the range of the market analysis provided by Choice Properties. Seller will charged only one half of the inspection amount, (approx. $240.00), at time of inspection. This amount will be rebated with a closed escrow.

Chico housing market update

2010-09-23T10:42:00.000-07:00

As a Realtor I am continually asked about the state of the Chico housing market. Are prices going up? Down? Should I wait? Should I pounce?

People often gather information on the state of the housing market from the national news. Even our local news reports on stories from the state or national level. This information is not going to tell you what is happening in Chico.

Housing markets are very localized. What is happening in Chico is different than what is going on in Oroville, Redding, or Corning. There are some areas in California that are seeing housing prices heading upward, and other areas that are still on the decline.

Let's look at Chico. Year-to-date 618 homes have sold. Of those homes, 121 were REO's - homes that have been foreclosed on by the bank and put back onto the market. 83 homes were distress sales where the seller owed more than the house was worth, and had to negotiate with the bank to take less than owed to close the sale, commonly called a short sale.

Yet over two thirds of our sales, 414, were normal transactions between a buyer and seller. For California, this is a very good percentage and shows some health in our local market. We do not have a glut of distressed homes stalling out the market.

Forecasts show that we will have a steady stream of foreclosure and distressed sales over the next several years, but not a raging river. This will keep our housing market stable, or moving slightly lower.

I don't believe that the housing market will bounce back, or move up to the 2005 levels anytime soon. The new prices are ones that can be supported by the job market. Buyer's have to qualify for loans and prove all of their income.

As the jobs come back and pay increases, we will see housing values rise. If jobs and pay decrease, housing will follow it down. The disconnect of jobs and housing from the past is gone. That link is now strong and the two will move in tandem once again.

Zillow says my house is worth...

2010-08-25T18:17:00.000-07:00

A recent article in the Sacramento Bee explores the pros and cons of online appraisal sites such as zillow.com, cyberhomes.com and eppraisal.com. While it may be fun to track the value of your home on one of these sites, it may be highly inaccurate.

In Chico, the value can be plus or minus $100,000 or more! If you would like to check the value of your home, please email me at hidebb@aol.com, and include your name and the property address. Also tell me about any upgrades. And the tough one, tell me about any damage or oders or neighborhood problems.

I won't be able to give you a totally accurate opinion without going inside, but I will get closer than an auto web site value from out of town!

Here are some tips from the California Association of Realtors:

Online home appraisal Web sites assign home values without knowing the features or upgrades of a home or the neighborhood in which it is located. Some Web sites offer a price range of $20,000 - $40,000 more or less than the actual value of the home.
Since housing markets are local and not every home of a certain size is the same value, consumers can be misled into believing a home is worth more or less than the actual value. Working with a local REALTOR® can help minimize inaccuracies in home values. REALTORS® can provide local housing market data and show homeowners and buyers recent sales of comparable homes in the area, to help determine an accurate list or offer price.
While some agents report that Web estimates can educate clients and provide a reasonable assessment of market conditions and the home-buying process, working with a local REALTOR® is the best option.

To read the full story, please click here.

Hard to Believe - Scammers are still a-scamm'n

2010-08-04T12:03:00.000-07:00

Watch out for Foreclosure scams! Even with all the new laws and regulations, some people still want to scam you when you are distressed. They hunt down the people in the most trouble, and offer to save them.

Being informed is your best tool. I have posted this one page Foreclosure primer from the California Association of Realtors on how to avoid foreclosure scams.

Outwardly, scam artists do not appear or act dastardly. On the contrary, scam artists may look nice and clean cut, and they may seem to be kind, helpful and trustworthy....

Follow this link, or call me and I can mail or email you a copy.

Don't pretend to understand the tax rules on Foreclosures, Short Sales and Deeds in Lieu

2010-07-23T15:50:00.000-07:00

Some things in life are easy to understand, especially if they are concepts you are familiar with. Taxes are not one of those things. Even CPAs have to check the IRS website and do research to find the right answers.

If you are someone in Chico, CA who is considering a short sale of your home, or perhaps letting your home go back to the bank, I strongly suggest you speak with a knowledgeable tax professional. Otherwise, you could be in for a very unpleasant surprise!

Here is an article that helped me understand some of the complications. Maybe it will give you some insight as well. Also, at the end there is a link to the IRS's explanation. This article is from OREXO, a 1031 Exchange company.

Foreclosures, Short Sales and Deeds in Lieu
While most people understand that foreclosures, short sales and deeds in lieu of foreclosure have significant economic consequences (loss of property; loss of equity; and loss of credit rating), what is not apparent to most people is that there are significant taxable consequences even if the owner walks away with no cash. While an IRC §1031 tax deferred exchange can, in theory, be utilized under these circumstances to defer the capital gain tax consequences, certain practical and technical challenges may make a tax deferred exchange problematic for many taxpayers.

Foreclosures, Short Sales and Deeds in Lieu, are defined, as follows:

Foreclosure: Foreclosure is an involuntary process whereby a lender repossesses property that was pledged as collateral for mortgage debt. Foreclosure can occur judicially (i.e. through a court action) or non-judicially, where a third party, such as a trustee, has the power to conduct a sale of the property after the lender has declared a default of the loan.

Short Sale: A short sale occurs when an owner sells property for less than the debt owed on the property. The lender must consent to the sale, agree to accept less than the full loan amount, and agree to release the property from the mortgage lien.

Deed in Lieu of Foreclosure: A deed in lieu of foreclosure occurs when an owner conveys property to the existing lender in exchange for cancellation of the mortgage debt—i.e. “in lieu” of a foreclosure by the lender.

Taxable Consequences of Foreclosures, Short Sales and Deeds in Lieu:

Each of the above circumstances results in two potential taxable consequences to the owner; (1) tax on gain; and/or (2) tax on cancelled or forgiven debt. Whether the debt is recourse or non recourse dictates whether there is one or both of these tax consequences.
Non-Recourse Debt: (borrower not personally liable)

There is one tax consequence. Capital gain is taxed at the applicable capital gains rate—either 5% (for those in the 10% and 15% income tax brackets) or 15% (for those in the 25% or higher income tax brackets). The amount taxed is the difference between the debt and the adjusted basis. There is no tax on cancellation or forgiveness of debt.
Recourse Debt: (personal liability to borrower)

There are two tax consequences:
(1) Cancellation or forgiveness of debt is taxed as ordinary income. The amount taxed is the difference between the debt and the fair market value (“FMV”); and
(2) Capital gain is taxed at the applicable capital gains rate—either 5% (for those in the 10% and 15% income tax brackets) or 15% (for those in the 25% or higher income tax brackets). The amount taxed is the difference between the adjusted basis and the FMV.
Given the foregoing, there is always the possibility that there is a taxable gain even when the owner receives no cash.
For example: Smith buys an apartment building in 1978 for $400,000 cash. The property appreciates in value, and in 1992, he obtains a loan of $350,000. The property continues to appreciate and—by 2004—the building’s FMV is $2 million. Smith obtains a second loan of $850,000. However, in 2010, the property diminishes in value to $1 million, but his outstanding loans total $1.2 million and he is struggling to make the payments. Smith considers a short sale for the FMV of $1 million. Since Smith has owned the building for over 33 years, he has fully depreciated it and the adjusted basis is $0.

Tax consequences if debt is non-recourse:
If the debt which is the subject of the foreclosure, short sale or deed in lieu of foreclosure, is non-recourse, capital gain must be recognized to the extent the debt exceeds the owner’s adjusted basis.
In the example above, Smith’s debt is $1.2 million and his adjusted basis is $0. Hence, he must pay federal capital gains tax (either 5% or 15%, depending on his income tax bracket) on $1,200,000 (5% would be $60,000—15% would be $180,000). Additionally, unless he lives in a state with no income tax, he will pay state income tax on his capital gain.
Tax consequences if debt is recourse:

If the debt which is the subject of the foreclosure, short sale or deed in lieu of foreclosure, is recourse, capital gain must be recognized to the extent of the difference between the FMV of the property (here, $1 million) and the adjusted basis (here, $0). Hence, Mr. Smith must pay capital gains tax (either 5% or 15%) on $1 million.
In addition, there is a second tax consequence—i.e. cancellation of debt income. Mr. Smith must pay ordinary income tax (anywhere between 10% and 35%, depending on his income) on the difference between the FMV ($1 million) and the existing debt ($1.2 million). Thus, he must pay income tax on $200,000.
In sum, if the debt is non-recourse, Mr. Smith pays capital gains tax on $1.2 million. Alternatively, if Mr. Smith’s debt is recourse, he will pay capital gains tax on $1 million and he will pay ordinary income tax on $200,000....

In sum, owners should recognize that even though their property is under water and they will receive no cash from its disposition, the tax consequences remain significant. Owners facing foreclosure, short sale or a deed in lieu should plan as far in advance as possible for the taxable consequence resulting from the transaction.

For further information regarding the above, you may wish to visit the following link located on the IRS website.

Compliments of Old Republic Exchange Company
Toni Esposti, CES®/CSEO
(888) 677-1031 toll free

Confused about Short Sales and Foreclosures? GTK (Good to Know)

2010-07-16T14:57:00.000-07:00

Wouldn't it be great if someone put together a chart showing a side by side comparison of short sales and foreclosures? Well, someone has!

If you have thought of buying a home through a short sale or one that has been through foreclosure (REO), this chart is a must read.

Or, if you have thought of selling your home, and you do not have any equity, you may find the answers to your questions.

Foreclosure or Short Sale

Short sales, hurry up and wait!

2010-07-14T13:04:00.000-07:00

Ready to buy a house in Chico? Read this primer and get up to speed on the short sale experience.

It may be a buyer’s market, but the buyers are not always in control.

Remember my clients, the Smiths? I wrote about them in this column a while back, when they were out looking for a home. They were interested in finding a good deal, on a house priced under $250,000.

The first week in April, the Smiths made an offer on a house. After three long, uncertain months, they finally have a real contract on the house. In April, the offer was accepted by the seller, but “subject to the bank’s approval of a short sale.” It took three months to hear “boo” from the bank!

Because the seller owed more against the house than the market value, she had no power to sell the home without the bank signing an agreement. The bank had absolutely no obligation to agree to the terms of the short sale. And the bank had no obligation to return phone calls, give out updates, or hint about what they were thinking.

When I first met the Smiths, I sat them down and explained the new ways of the real estate market. I explained, “If you want to buy a property where the seller is ‘under water,’ you have to prepare yourself. You’ll be going on a wild ride, blindfolded.” Luckily, I am a good guide for the blind, partly because I have been on this ride with other clients.

Here is how the short sale process goes in Chico. The buyers look and look and look, and finally take the plunge and make an offer on a house. If the price was too low for the market, they would be competing with dozens of other offers, and enter a bidding war.

If their offer, or counter-offer, was just right, they may get it signed. Do they have a contract now? Yes, but not really. The bank may require the home to remain actively on the market until they get around to approving the contract. During this time, the buyers don’t know what they have, and neither does their real estate agent … or the seller’s real estate agent. It’s like being in a dark tunnel, and seeing a few shadows. You can kinda make things out once in a while, but it is difficult.

If a better offer comes in, the bank might reject the lower offer, even if it was signed by the seller first. Maybe the seller's bank offers the seller a work out plan, and the sellers decide to stay in the house. Maybe the bank decides to foreclose on the property instead.

Now, let’s think about the Smiths. They are not investors. They are buying their first home. They are real people. They have real lives. They have to make plans to move, or not to move. Make plans to get a loan, or not get a loan. Should they buy different house? Maybe pay more, but know what they are getting? Or hold out and hope they can make it to the end of the ride?

In this case, the Smiths were champions. They held on tight, in the dark, and rode out the process until it finally came out into the light.

OK, now for the light. Or lightning. The Smiths spent months in a dark tunnel with very little information. All of a sudden, the bank finds the (electronic) paperwork under their huge pile, and ta-da! They issue a letter saying they will take less money, and agree to the sale of the home.

But, it has to close escrow in three weeks. But wait. The Smiths just now found out the contract is accepted by the bank. They have not done any inspections, or had an appraisal done, and interest rates and loan programs have changed. Oh, and there is a holiday week in there.

Now, as the Realtor, I have to put superpressure on everyone to make things come together quickly. I am begging the bank to get the loan pushed through. I am pushing inspectors to make room in their schedules and do inspections in a few days. We’re asking the appraiser to get his report out yesterday.

And the Smiths, wow. Now they have to live and breathe paperwork. I am meeting them after work in the paint aisle at Walmart with piles of papers to sign. Any small thing could hold up the process. Good thing they were forewarned this would happen! They have to get everything done at the speed of lightening.

Hopefully, everything will go smoothly at the end. Sometimes, the buyers can work like crazy and do everything right, and the bank suddenly gets busy and takes a week or two to sign the final documents. And the Smith’s landlord is not going to like that a bit.

So, yes, there are some good deals out there, but hold on tight, and make sure your Realtor can guide you through the dark, and then speed you to the finish!

Note: Since the Smith's bought their house, some banks have been getting better at communication. I recently completed a deal with Wells Fargo that was exceptionally smooth, and closed it in under three months. I have even heard tell of shorts sales closing within 30 days, but that might just be a wild rumor.

Things that should make you pay say hmmmm

2010-07-13T01:18:00.000-07:00

Every so often my husband the electrician brings home little tid- bits from his day. Some of them are worth sharing.

Question:
If your electrical outlet looks like this, is it a problem?

Answer:
If it is melted on the outside, something is really, really hot on the inside, and something needs to be fixed.

Reason:
You don't want to burn your house down.

Question:
If just the top outlet is melted, can I still use the bottom one?

Answer:
No!
It all sounds pretty simple, but it is amazing how many people let things like this slide. Just changing the outlet may not fix the problem in your wiring that is causing the over heating. Don't wait until you smell burning to get this fixed!

Craigslist rental scams abound, but lockboxes are secure

2010-07-08T12:15:00.000-07:00

It is a common story. A house is for sale. All of the house information, including interior and exterior photos, is on several websites. The house is only for sale, never for rent.

Some cleaver scammer in Nigeria right-clicks and saves the photos, prints out the bedrooms, bathrooms and square footage, and lists the house as a rental on craigslist. The rent is too good to be true, so renters are anxious to get the home.

So anxious in fact, that they are willing to send a deposit out of the country to secure the lease. Then the scammer promises to send them a key, overnight delivery.

An article published in the Chico Enterprise Record tells a recent Chico story, but then speculates on how the renters get a key.

Willard said he found out the scammers were offering to supply whoever rented his home with a key. He had no idea how they might actually might get a key to his home, but in the past scammers falsely renting homes have figured out ways to get into Realtor lock boxes by obtaining the code online.

As local Realtors, we want to reassure you that lock box codes are not available to the public online, and that there have not been any breaches locally, or even at the corporate level. In a recent letter sent to the Enterprise Record, Phil Serna, President of the Paradise Association of Realtors writes:

I contacted Peggy Mead, Ellie McGovern, and Noelle Adams, the Association Executives for the Chico, Oroville, and Paradise Association of Realtors the day this article ran and asked each of them if their respective associations have had any complaints regarding unauthorized lockbox access to any of the REALTOR member’s listings. Each Association Executive was unaware of any unauthorized access. I was told that this renter scam has been an issue in Chico for at least two years. I then contacted Al Voorheis, a representative for Sentrilock, the company that provides the computerized lockboxes for Chico, Oroville and Paradise. I spoke with him about your article and asked him if there was any way that someone involved in this type of scam could gain access to the lockbox codes. Without disclosing too much information regarding access codes, Mr. Voorheis advised that his company is unaware of anyone accessing the lockboxes that shouldn’t be. In fact he was surprised to hear this. He told me that there are many security measures in place to prevent this from happening.

Changes coming for Chico FEMA maps

2010-07-07T19:17:00.000-07:00

FEMA, the Federal Emergency Management Agency, has released new flood threat maps for Butte County, including the Chico area. For some in Chico, this will mean obtaining flood insurance when it was not required in the past.

Check out the story in the Chico Enterprise Record for more information.

You can also check out the Butte County website, where you will find several links that will help you understand and view the new maps.

Chico Breaking News

2010-07-07T18:41:00.000-07:00

CBN or Chico Breaking News is a great way to keep up on the 'happenings in Chico. http://www.chicobreakingnews.com/ will get you there. Then bookmark it.

This site will link you to stories in the Chico Enterprise Record, TV News and Weather, local events.

Check it out and let me know what you think!

City of Chico First Time Home Buyer Mortgage Subsidy Program is Back!

2010-06-30T14:46:00.000-07:00

The City of Chico first time home buyer mortgage subsidy program is ramping up for the new fiscal year.

If you need assistance in purchasing your new home, this is an excellent program to consider. Check out the details, then call me for more information.

Realty World Choice Properties is now Choice Properties

2010-06-30T14:01:00.000-07:00

Realty World Choice Properties is now Choice Properties. Still located at 452 Manzanita Ave, Chico, CA. Still the same Broker: Debbie Brodie. Still the same great service you have come to rely on.

Debbie Brodie can be reached at 530-895-5400. Check out the new website at http://www.choicepropertieschico.com/. From there you will be able to search properties for sale, learn about Choice Properties and even sign up for property emails