Category: Advice

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Writing a Successful Offer in a Low Inventory Market

Writing a successful offer is critical in a low inventory market.

Currently there are at least 40% fewer homes on the market now than there were a year ago. Many serious buyers have lost a property they wanted because of the increased competition. Today’s buyers should be looking for ways to improve the odds that their contract will win without needing to use purchase price as their only tool. Writing a successful offer is critical in a low inventory market.

Buyers should reconsider, rethink, and re-evaluate their “must have” features and amenities. It’s unrealistic in a normal market to get your perfect home at the price you want. But in today’s market, it is even less possible. Start by listing the things you must have, and the things you would like to have, then prioritize them. Identify the critical from the convenient.

The next step is to put together your “home” team. You are the captain of this process, but it is essential to have a strong first officer and that is your real estate agent. This professional will oversee the process, advise you on current market conditions and normal procedures. Your agent will even help you assemble the rest of the assets you will need such as a mortgage officer, title, insurance, warranty, inspectors and service providers.

Your agent can advocate your cause personally to the listing agent by personally delivering the offer and pointing out your strengths to lobby your position. Obviously, your agent will not share anything that you do not expressly give them permission to.

Even before you write your offer, your agent can ask the listing agent about any preferences of the seller not mentioned in the listing agreement, as well as which contract forms and addendums to use.

The following list of suggestions are provided for your consideration realizing that some may not be appropriate for your individual financial situation or comfort level.

  • Get pre-approved from a local lender and include documentation with offer to purchase.
  • Have your lender phone and email the listing agent to verify that you are pre-approved.
  • Increase the amount of earnest money.
  • Acknowledge flexibility on closing and occupancy dates.
  • Eliminate unnecessary contingencies.
  • Waive the appraisal and have proof of funds to meet the difference in the purchase price.
  • Avoid concessions like asking the seller to pay the buyer’s closing costs or points.
  • Avoid including personal property to go with the sale unless specified in the listing agreement.
  • Purchase “as is” with right of quick inspection to cancel contract if condition is unacceptable.
  • Shorten time frames on necessary contingencies.
  • Attach proof of funds for down payment or full purchase price if cash.
  • Arrange bridge financing to be able to pay cash.
  • Buyer should pay their own normal closing costs.
  • Write a personal note to the seller explaining why you like and want their home. Some listing agents are advising sellers to not accept them due to potential discrimination liability.
  • Escalation clause … offer to pay $X,000 more than highest acceptable offer up to a limit.
  • If you physically sign the offer, use a contrasting color ink to add a personal touch. If using a digital contract, change the font and color to distinguish the signature.
  • Make your best offer first because they may not make a counteroffer.

When a new listing hits the market, it is common for there to be a rush of interested buyers that result in multiple offers. Because of this, it’s prudent for you to research and consider which of these ideas you can implement before you find the home. It is much better to have more time to make these decisions, especially, if it involves a mortgage officer or an attorney.

Your real estate professional will be able to tell you which of these suggestions are viable and may be able to offer additional recommendations for writing a successful offer. If you do not have an agent, contact me at 510.244.0081 or rdwilson@soundnvest.com to discuss a plan to craft your offer in the most favorable way possible.

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Rent Out Your Home Tax Free

There is a little-known provision in the tax code that allows homeowners to rent their principal residence or second home for up to 14 days a year without having to recognize the income. In this situation, the taxpayer does not deduct the rental expenses associated with the income. That means you can rent out your home tax free.

There is no restriction on how much you earn. If your first or second home is in a desirable area where people are looking for short-term rentals, it could provide a windfall to the homeowner.

In cities where any big sports championships are played, there could be a market for a temporary rental of a home. Events like PGA tournaments, college basketball tournaments, Bowl games, NFL playoffs and others can create a demand for this type of rental.

For instance, there are people in Augusta, Georgia who rent their homes during the Master’s Golf Tournament each year. There are not a lot of hotel rooms in the area relative to the number of people who usually attend in non-pandemic years and the homes can fetch a nice daily rate.

There can be confusion about the different types of properties and what constitutes a home. The intended use coupled with actual experience will usually determine the type of property.

There are four types of property. A principal residence is the home you live in. There is income property that you rent and do not live in. There is investment property that is primarily held for an increase in value. And, there is inventory, which is related to your business like homes that are built or purchased to be flipped.

A second home is one that is used for the primary enjoyment of the owner in addition to their principal residence. Taxpayers are allowed to deduct the mortgage interest and property taxes on a first and second home up to specific limits. A vacation home could be another name for a second home but more accurately, it is a rental property that has more than 14 days of personal use during the year. It becomes a hybrid.

And even though you could be able to rent out your home tax free, you might want to check with your insurance agent to see if your current policy covers temporary rentals, including liability in case of an accident involving personal injury. This could affect your decision as to whether you want to consider the rental.

For more information, see IRS facts about renting out a residential property or consult your tax professional.

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Mortgage Forgiveness in 2020

Mortgage forgiveness in 2020

The deadline for filing taxes for 2020 is May 17, 2021. And one thing you should note is that this year, mortgage forgiveness on your property is being treated differently than usual and that could benefit you.

Normally, debt forgiven on your property is considered income and therefore taxable. However, due to the unusual circumstances during the COVID-19 Pandemic, qualified principal residence indebtedness is excluded as income by the Internal Revenue Service through 2020. This applies to some taxpayers who have had debt forgiven due to foreclosure, loan modification, short sale or deed in lieu of foreclosure.

This is an important fact to note. Mortgage forgiveness has the potential to make a significant change to how much taxable income you need to declare. If you were involved in discharged debt on your principal residence, you should consult with a tax advisor to determine how this affects your taxes.

If you need assistance with this, contact Sound Investments, Inc. by clicking here or by calling 510.377.8853.

Unfortunately, the deadline to file for the 2020 Recovery Rebate Credit was May 17, 2024. If you haven’t filed for it already, you will not be able to. If you have any other tax questions related to how mortgage is handled, Sound Investments, inc. can help you since we have a tax advisor on staff who can answer your questions.

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Optimize Your Sales Price

Whenever you sell anything you own, you want to optimize your Sales Price. Doing a lot of work to a car before you trade or sell it to a dealer is not generally a good idea. In most cases, you won’t recapture the cost of the repairs. They can do the repairs for a less than you can. Not to mention, you are selling to a wholesaler who needs to sell it again to the end user and still make a profit.

A home sale is totally different. The owner is selling the home to an end user. Since the buyer, in many cases, is using their available funds for the down payment and purchase costs, they don’t have money to spend on repairs or decorating the home. They would need to live in it “as is” for a while which may not be as appealing as finding a home that is refurbished, up-to-date, and ready to move into.

Even if the buyer would be willing to get a home improvement loan after the sale, it would be a separate loan. This is often at a higher interest rate making their payment higher than financing it all in one mortgage. So, doing the improvements before sale can be a good way to optimize your sales price for the buyer.

The seller may experience some inconvenience going through the remodeling process, but it will, most likely, result in a higher sales price in less time. Occasionally, sellers say they’ll let the buyer choose their own colors but not all people have the imagination to know what something will look like after it is finished. It is better to go ahead and get the work done before putting it on the market.

The bathrooms and kitchen are the most important rooms to update. If the finish on the cabinets is bad, have them painted. New countertops and appliances can make a world of difference. Paint, countertops, and fixtures in the bath give the home a great feel.

In addition to the repairs, a major cleaning and decluttering can make a home look and feel better than the competition.

The first step is to go through the home and pack up or get rid of things you don’t need or things that detract from the home like excess furniture, exercise equipment, personal artwork, etc. Now, do the same with the closets and cabinets. By getting rid of things, there will be more room and they’ll look larger.

Next, walk across the street from your house and give it a critical look. How is the drive-up appeal? Would you want to go inside to see the rest if you were a buyer? Are the trees and shrubs trimmed? Yard cleaned up? Do you have blooming flowers in the beds? Does the front door and mailbox need a new coat of paint? Do you need to power wash the outside of the home and the sidewalks and driveway? Do the windows need washing?

Buyers are visual people and beauty is always rewarded. Restaurants know that people eat with their eyes first and they go to a lot of effort to plate the food so it is visually appealing. The same approach works for selling a home. Ask your agent if they have ever taken a buyer to a home that refused to go inside because they didn’t like the looks from the street.

Your real estate professional can make specific recommendations and assist you in finding someone to do the work. This is what they do. TRUST THEM!

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The 2021 “Love Your Pet Contest!”

Saturday, February 20th is “Love Your Pet Day” in the United States. But those of us who are pet owners, we know that EVERY DAY is Love Your Pet Day. Let’s take a moment our of our busy schedules to give a little extra attention and love to our wonderful furry, feathered or scaly friends who have been especially helpful to our mental and emotional well-being during the current pandemic. Enter them into our “Love Your Pet Contest.”


In honor of “Love Your Pet Day,” Sound Investments, Inc. is sponsoring our first annual “Love Your Pet Contest.” We invite you to post a picture of your special pet to our Facebook page by March 14th. We’ll gather them together and on March 15, we’ll open up voting so people can start select who they think should be “The 2021 #1 Pet.” On March 14th, we’ll tally up the votes and the person who submits the pet with the most votes will receive a $25 Amazon Gift Card from Sound Investments that can be used to get a special treat for your special pet. In March, we urge you to get your family and friends to check out the “Love Your Pet Contest” on this Facebook page and vote for their favorite four, two or no-legged personality!


Follow us on Facebook at https://www.facebook.com/SoundInvestmentsInc/ to keep learn more about this contest, and about other fun activities we have in store for 2021!

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Grilling Safety

Peppers, Green Chilies, Corn, Onion, Hamburgers, Brats, and Kabobs arranged on a charcoal grill

Close to 20,000 patients per year visit the emergency room due to injuries involving grills.

More people grill in July, June & August than any other months and correspondingly, there are more injuries, as well as fires, due to grilling accidents in those months. Even though Labor Day is in September, we still need to be aware of safety.

Close to 20,000 patients per year visit the emergency room due to injuries involving grills. Approximately half of the injuries involving grills are thermal burns. If you are around fire, there’s a chance of getting burned.

About 2/3 of American households own at least one outdoor barbecue, grill or smoker. Interestingly, gas grills contribute to more fires than charcoal grills. In addition, there are over 10,600 home fires started by grills each year.

While grilling is associated with celebrations, good food, fun and friends, it is important to make sure that accidents don’t interrupt your activities.

BBQ GRILL

  • Only use BBQ grills outdoors and in ventilated areas
  • Place the grill away from home or anything that could be flammable
  • Keep grill stable
  • Keep fire under control
  • Keep children away from grill
  • Never leave the grill unattended
  • The grill lid should always be open before lighting it.
  • Grease should not be allowed to build up in the grill
  • Use long-handled utensils

GAS/PROPANE

  • Check the tank hose for leaks before using it for the first time each year by using a light soapy water solution to see if bubbles appear.
  • You should not smell gas when the grill is lit. Move away from the grill and call the fire department.
  • If the flame goes out, turn off the gas for 15 minutes and open the lid before re-lighting it.
  • Charcoal
  • Never add any starter fluid or other flammable liquid to a fire
  • Only use charcoal starter fluid and not gasoline, kerosene or other flammable liquid.
  • Keep starter fluid away from heat sources and out of reach of children.
  • Electric starters have a coil that ignites the charcoal.
  • When finished cooking, close off the grill vents to suffocate the fire and save some of the remaining charcoal.

Practice safe grilling and enjoy any occasion to cook outdoors and share time with your family and friends.

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How to Keep Your Debit Card Transactions Safe

Excerpted from Investopedia.com (see complete article here)


A little vigilance can go a long way

By MICHELE LERNER
Updated Feb 24, 2020
General-purpose and private-label debit cards purchase value for goods and services totaled $3.019 trillion in 2017, the most recent figures available as of February 2020, according to the Nilson Report. While many consumers choose to use a debit card to avoid accumulating credit card debt, you may not be aware that you could lose more hard-earned money through debit card fraud than if you used a credit card for a purchase.

As you probably know, when you make a purchase with a debit card, the money is taken instantly from your checking account. If someone fraudulently uses your debit card number, you could be responsible for some or all of those charges.

KEY TAKEAWAYS

  • Check your bank statements on a regular basis and report any suspected fraudulent activity to the bank immediately.
  • The faster you report a problem, the more quickly you can cancel your debit card and prevent additional charges.
  • Only utilize ATMs that are associated with a bank; stay away from potential “skimming” locations such as gas stations and deli kiosks.
  • If you lose your card or suspect it has been stolen, report it immediately to your bank and cancel the missing card.
  • Change your personal identification number (PIN) and password every few months.
  • Unauthorized Charges on Your Debit Card
  • According to the National Consumer Law Center, if a consumer’s debit card has not been lost or stolen but there are unauthorized charges on the account, the consumer will be protected if he or she reports those charges within 60 days of when the statement was sent.

When a physical card goes missing or is stolen, consumers have just two business days after learning about the loss to notify the card issuer. Those who do so will limit their losses to $50. Otherwise, they could lose up to $500. If they take months to notify the bank, they may not recoup any money at all.

Many banks have improved their debit card protections for their customers and will go beyond the above rules and not make consumers responsible for any charges deemed to be fraudulent. This is especially true if consumers report the unauthorized transactions as soon as possible.

Experts advise debit card holders not to make a financial transaction on an e-commerce site that doesn’t have the “s” following http, as in https://. This symbol is an indication of a higher level of security.


8 Rules for Keeping Your Debit Card Safe
Take the time to follow these rules.

  1. Check your bank statements often
    As time is of the essence to receive full fraud protection from your bank, make it a habit to review your bank account online at least once a week or even daily.
  2. Protect your PIN number
    Don’t give your personal identification number (PIN) to anyone who asks, and don’t keep it written down anywhere in your purse or wallet. Don’t use your PIN at the gas pump. Instead, use your card in the credit purchase function to avoid someone seeing it. In fact, using your debit card in credit card mode may offer you extra liability protection, depending on your bank.
  3. Consider avoiding debit card use online
    Some consumers choose to use only credit cards online, because a fraudulent credit card transaction takes more time for your bank to process and can become an item of dispute rather than an instant removal of cash from your checking account. The Federal Reserve Bank of San Francisco recommends checking for a security symbol, such as an unbroken key or a padlock, on each website before you order anything because these symbols mean your information will be encrypted and therefore safer.
  4. Only use ATMs at a bank
    Automated teller machines (ATMs) located in convenience stores, subway stations, airports, and other places have a greater risk of having a “skimming” device attached by a thief, which could intercept and store your debit card data. This sometimes happens at banks, too, but it is easier to do in a place without surveillance cameras.
  5. Don’t use public wireless access for financial transactions
    Make sure you are using a password-protected wireless signal to check your bank account balance, pay bills, and shop, so that hackers have less chance to capture your password and account information.
  6. Report problems immediately
    While you would certainly report it right away if your wallet were stolen and your credit and debit cards were missing, you should also report any unauthorized transactions immediately.
  7. Consider filing a police report
    If your debit card is stolen, you may want to contact the police and keep a copy of the police report, so that you have extra support when you want your bank to reimburse the charges.
  8. Create your own security profile
    As long as you remember the answers, you can make up anything you want for your security questions. Using a pet’s name or your mother’s maiden name makes it too easy for cons to get into your account. The answers just have to be consistent; they don’t have to be true.

The Bottom Line
While you may find constantly using a debit card to be a great convenience, it won’t be so convenient if someone manages to drain your checking account. A little vigilance and some new habits can go a long way toward preventing a damaging debit card experience.

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Check Your Attic Insulation

If you are handy, this could be a DYI project. Some stores will loan you the blower if you purchase the insulation from them.

HOMEOWNER TIP!
CHECK YOUR HOME’S INSULATION

Look at the insulation in your attic to check that it is adequate to keep your home cool in the Summer and warm in the Winter. Over time, the original insulation will become compacted and less effective. You can have sheets of new, unbacked insulation added, or new insulation can also be installed with a blower.

Either way, taking care of your attic insulation can save you money while making your home more comfortable year-round!

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Forbearance is NOT Forgiveness

Shot of a young couple looking stressed while going over their finances at home

Forbearance is a temporary postponement of mortgage payments. The lender can grant this option to a borrower instead of forcing the property into foreclosure. The CARES Act provides protections for homeowners with mortgages that are federally or Government Sponsored Enterprise backed or funded such as FHA, VA, USDA, Fannie Mae and Freddie Mac.

A mortgage holder should contact the lender to explain the temporary difficulty they are having making payments and ask for relief under forbearance or other options. Once the lender grants approval, it is important for the borrower to get the terms of the forbearance agreement in writing to be clear about when the payments will resume and how the missed payments will be recovered.

Generally speaking, homeowners in a forbearance plan will not incur late fees and it should not adversely affect their credit. Unfortunately, borrowers must be vigilant to see that the lender is protecting them from delinquent credit marks according to their agreement.

Forbearance is easy to receive but not so easy to recover from. Free credit reports can be obtained on a weekly basis until April 21, 2021 at www.AnnualCreditReport.com. Reports are available from Experian, Equifax and TransUnion. This will allow borrowers to monitor whether the lender has inadvertently reported items inaccurately.

Prior to the end of the forbearance period, borrowers should contact their loan servicer, the company that accepts their payments. Review the terms of the forbearance plan and expectations for repayment. Verify the unpaid balance and that there are not any payments marked as late or delinquent during the forbearance period.

One more item to discuss with the loan servicer is the payment of the property taxes and insurance. Since multiple mortgage payments may have been missed and most payments include 1/12 of the annual amounts for these items, there may not be enough to pay for them when they become due.

Since it is estimated that there are over four million borrowers in forbearance currently, it may be difficult to talk to the servicer but starting the process early and being persistent will be helpful.

At the end of forbearance, the borrower needs to resume regular payments and establish a plan with the lender to repay the missed payments. The terms are negotiated between the borrower and the lender.

One way is through a loan modification which can restructure the loan. In some cases, it would add the missed payments to the loan balance and recalculate the payments for the remainder of the term.

A borrower could pay the forbearance money in cash but the practicality of that is not realistic. If the person couldn’t make the payments during forbearance, they probably don’t have the liquidity to pay them afterward. This option is entirely at the buyer’s election.

Forbearance is a temporary way to postpone the mortgage payments with the understanding that you will be able to resume repaying the loan. If the circumstances that caused the issue initially become permanent, then, other remedies must be considered. If there is equity in the property, selling the home may be the way to materialize it for the homeowner.

Please contact us at (510) 244-0085 if you need to know what your home is worth and how long it would take to sell it. We’re happy to provide this information as a service without obligation so you can be aware of your options.

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