Elke H. Duffy

Your Multinational Broker

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This page was last updated: April 19, 2008

3/11/2006

REAL ESTATE CORNER

Real estate plays an important part in many people’s lives. It does not just deal with home ownership but with investments in land, rental property, commercial buildings and subdivisions. Even people who do not own any real estate yet take an active interest in the fluctuations in the national and local markets.

Here are some recent California numbers in general: median price for a home in California is at $548,430 – up 15.6% for last year; sales indicated a drop of 17.6%. For the first time since mid-2004 mortgage rates are above 6% (6.27% during December). The time that a property has been on the market remained fairly steady at 40 to 45 days.

For Amador County, here are some general numbers: The median list price for listed residential property is $349,000, with 244 listings. For the 4th quarter of 2005 the median sales price for residential property is $350,000, with 187 sales. (Courtesy of Bob Wynne, CEO of ACAR).

In our next issue we will look at some new Amador County regulations that will affect real estate and future construction.

March 2007

In my last column I told you that we would look into some proposed/new Amador County regulations that will affect real estate.

Some important changes are being proposed to County Code Chapter 15.30; Fire & Life Safety Regulations. A copy of the DRAFT document can be obtained from the Public Works Agency. The revisions were developed by

Amador County’s Planning, Public Works, Building, Fire Protection, and County Counsel’s Departments.

One significant change involves the elimination of the “common driveway” provision.  The current version allows a common shared driveway (18 foot wide) to serve up to four dwelling units (meaning two parcels zoned R1 or R1A) due to Amador County’s “Second Unit” Provision.

Under the proposed revisions, however, a driveway now could serve only one parcel with up to three dwelling units on that single parcel.  When this is exceeded, or when more than one parcel with three units per zoning is served, or any commercial or industrial use I proposed, then they must be served by a road as defined and specified in existing County Regulations in Chapter 17.90.

By the way, the DRAFT consists of a total of 14 pages of detailed information which makes for very interesting reading.

February 2007

A few weeks ago three young men came into our office asking if we had any rentals available. During the course of our conversation they mentioned that three prospective landlords whose ads they had answered, had told them point blank: “I don’t rent to single men.” Oops, not a good idea. Discrimination in the rental business is very clearly defined and it is very easy to run afoul of the law.

Many people have one or a few small rental properties such as a single family home or perhaps a duplex or a couple of townhouses. These property owners feel that they can manage their rental properties without engaging the services of a property management company – and most of them handle their rentals just fine.

When you run an ad in the paper be sure it cannot be construed as discriminatory. Ads should not mention age, sex, race, religion, disability or adults-only – unless your rentals are senior citizens housing.

California law also requires you, the landlord, to make certain disclosures to prospective tenants. It is very important that you are well informed what these disclosures are and that you supply each prospective tenant with the proper forms prior to occupancy.  If you are not sure what is required under the law, you may want to consult your attorney.

You may also wish to purchase “The California Landlord’s Law Book: Rights & Responsibilities.” It is available from Nolo in Berkeley, CA and is a great self-help legal tool. It gives any California landlord a clear understanding of all aspects of landlord/tenant law.

January 2007

REAL ESTATE CORNER  # 4

Wealth Building with a tax-deferred exchange under Section 1031 of the Internal Revenue Code: The 1031 exchange is a great tool which allows the investor to

defer federal capital gains taxes while using sales proceeds to the fullest in acquiring more property.  Any real property can be exchanged as long as it is

being held “for productive use in a trade or business” or “for investment” and is exchanged for property of like kind that will also be held for the same purpose.

Let’s say you own a single-family rental unit; you may use it to acquire another like it or to buy an office building, a warehouse or a retail center.

The rules that apply to a 1031 tax deferred exchange are simple but must be strictly adhered to:

a) The property you are purchasing has to be identified within 45 days of the transfer of the first sold (“relinquished”) property.

b) The purchase of the replacement property must be completed within 180 days from the transfer of the relinquished property or the due date of your tax return for the year the relinquished property was transferred (whichever is the earlier date).

c) The property you are purchasing must have value and equity at least equal to, or greater than, the relinquished property in order to be fully tax deferred.

At the beginning of the whole process you need to talk with one of the excellent “exchange facilitators” in the industry who will guide you through the whole

exchange process.  The fee for this service is money well spent.

Please remember, I am neither an attorney nor a CPA and secondly, this is a “tax deferred” exchange not a “tax free” exchange.  If done right and by following the

rules it is an excellent vehicle to reap the biggest rewards from your real estate investments.

REAL ESTATE CORNER # 5 10/21/2006

How not to show your home or ….being on cat patrol

Quite some time ago several of my fellow agents and I were previewing homes on tour. One of the homes on tour had a large, hand written notice tacked to the front door which read: “PLEASE DON’T LET THE CAT OUT.”  So all of us quickly moved into the home through the front door but we never saw the precious kitty. Upon locking up the house on our way out we happened to see a cat run off the front porch with lightening speed. Several of the more nimble agents ran after the cat, finally caught it and gently put it back into the house we had just viewed. Later that day I received a call from a very irate agent who had just had a call from her seller: the cat in the house was not their cat!

So, what is the purpose of this little tale?

First of all, when we, as agents, show homes to prospective buyers we should not be required to “be on cat patrol.” I fail to understand that sellers would entrust the safe keeping of their precious pets to total strangers. Perhaps the cat could be put in the laundry room or a special area in the garage. The second point is this: if the sellers have a large sign pinned to their front door saying: “PLEASE DON’T LET THE CAT OUT” any would-be burglar would be very happy, wouldn’t he? Well you may not think that this little tale is important, but I just wanted to point out that showing a seller’s home should not be complicated by extra obstacles.

REAL ESTATE CORNER # 7

Last week I had a phone call from a friend who is also a client. She sounded frightened and frantic. "I can't stay down here" she said, "I want to move back." About 12 years ago my client and her husband had moved from Sunnyvale in the Bay Area to their "dream home" in the woods in a lovely area of Pioneer. They both enjoyed the rural setting and watching the daily parade of all the wildlife on their property. Then, about 11 months ago, she was widowed. A little while later she was bombarded with phone calls from friends, relatives and her well-meaning (or not so well-meaning) grown children who urged her to move from her mountain home.  Against her better judgement she moved back to the Bay Area and found she was terribly unhappy in her new (old) surroundings.  Sometimes when the memories are special and very precious it may not be wise to move from your "dream home" right after you are widowed. Listen to your inner voice and make your decision based on what pleases the heart.

REAL ESTATE CORNER # 6 9/21/2006

What is happening in the California Real Estate market?

The following information comes to us from C.A.R. (California Association of Realtors) via Bob Wynne of the Amador County Association of Realtors. Home sales decreased 29.9 percent in July in California, compared with the same period a year ago. C.A.R.'s Unsold Inventory Index for existing, single family detached homes in July 2006 was 7.5 months, compared with 2.9 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.  The median number of days it took to sell a single family home was 49 days in July 2006, compared with 29 days for the same period a year ago.  We need to keep in mind, however, that there really is no statewide market; we can realistically only look at a small sector of any given regional market to get a real picture of what is happening. Several real estate agents I talked to recently stated that they are getting a little busier again. This probably means that buyers are realizing that the market has turned in their favor.

REAL ESTATE CORNER # 8 12/22/2006

"As this year draws to a close it might be helpful to look at some housing statistics as they affect California overall and Amador County in particular.  The latest information indicates that sales of California single-family homes totaled 450,930 in November. Statewide sales decreased 22.2 % from 2005, with steady seasonally adjusted basis in the 445K to 450K range. California median price was $555,290, actually up 1.5% over 2005 and up 0.7% from the prior month. Days on Market was 71 days, compared with 39 days in 2005. For Amador County, November 2006 saw 49 single-family residential sales at an average price of $364,821 and 137 days on the market. In 2005, there were 93 sales averaging $376,068 and 93 days on he market for the same time period.

Let's always keep in mind that we are primarily focused on our regional market which differs greatly from the overall California real estate market.

REAL ESTATE CORNER # 8  1/22/2007

When it comes to selling a home, we all want to have a fairly accurate estimate of what the selling costs might be. If we want top dollar for our property we know that it should be in good shape with as little deferred maintenance as possible. Sellers who have lived in their home for many years are usually aware of some of the problem areas, but human nature being what it is, we often procrastinate and ignore the obvious.

Many years ago I decided to counsel my clients to call in a reputable termite inspector and have a pest inspection done every 3 to 4 years. This way, small repairs can be done on a routine basis and there will be few surprises when it is time to sell. One of the costliest items to repair are wooden decks and if the deck needs to be replaced the cost can run into many thousands of dollars. So, perhaps a routine pest inspection every few years might be money well spent.

REAL ESTATE CORNER # 9  2/22/2007

GETTING YOUR HOME READY FOR SALE

Preparing your home for sale is not always easy. Perhaps a few tips might be of help. The first and most important step is to "de-personalize" your home and prepare it in such a way that it will appeal to the greatest number of potential home buyers. You need to do everything you can to emphasize all the best features of your home. This means that you should consider making it almost "anonymous" because you want buyers to picture it as their future home. So, what can you do? Put away most of your family photos, trophies, knickknacks and - ouch - those collectibles you so lovingly dust each week. If at all possible rent a storage unit during the listing period rather than stacking all those boxes in the garage. Removing clutter, opening up spaces and even rearranging some furniture will create the feeling of space. Remember that "perception" is a very powerful motivator and when you take the steps outlined above, prospective buyers will be able to imagine your home being THEIR home.

BENEFITS OF HOME OWNERSHIP

We have all heard it over and over again: homeownership is part of the American Dream. But there is more to it than just the financial rewards which come from building a nest egg. Homeownership does not only provide shelter and a sense of security, it also has immense social benefits. Families tend to be more involved in their communities and they have a sense of pride and "belonging." According to a 2006 NAR (National Association of Realtors) study, homeowners are more likely to vote and they tend to volunteer time for political and charitable causes more frequently than renters. Also, since owners move less often than renters, they provide more neighborhood stability. This leads to better crime prevention and supports neighborhood upkeep.

In the fourth quarter of 2006, the national homeownership rate was an impressive 68.9 percent. One interesting note: foreign-born Americans buy homes at about the same rate as native-born Americans. As a matter of fact the U.S. Census Bureau shows that immigrants who have lived 30 years or more in the United States have a higher homeownership rate than the national average!

April 2007

PERCEPTION VS. REALITY

Please hum with me: "Where have all the buyers gone?" You hum this to the notes of "where have all the flowers gone?" Does sound silly, doesn't it? If you believe everything you read in the paper or see on TV you might start to participate in all the negative thoughts about the real estate industry.  Perception might be: the interest rates are climbing, every other house is going into foreclosure, the value of my property will be affected by this, etc., etc. But the reality is that there are still buyers purchasing property as we speak and they are the smart ones. The reality is that a 30 year fixed loan carries an interest rate of about 6.29% vs 6.25% a year ago. That is still a great rate.

Here are some statistics for the month of February 2007 for the California market only (courtesy of Bob Wynne of the Amador County Association of Realtors): February sales are up 6.2% vs January 2007 February median price is UP 1% vs January 07 February DOM (days on market) down 3.3 days vs January 07.

We also need to remember that these figures are for the whole State of California and do not apply to any particular area. Amador County is still a sought after area and though the numbers are not comparable to 2005, just about every real estate professional I have talked to lately can see a definite improvement.

That is reality, not perception!

MAY 2007

How To Find The Right Real Estate Agent

Quite often clients who buy in Amador County need to sell a home elsewhere. If I know of a good agent/broker to refer them to in the area they are relocating from, the match is usually very good. But I cannot always refer them to an agent in their area and I have addressed the “finding the right agent for you” issue several times in my client newsletter. The best agent for you does not necessarily work at the largest brokerage or the smallest, or necessarily earn the most money. What you are looking for is an agent who is very experienced in the real estate field, knows your market area and has your best interest at heart.  When you interview agents before you make your final choice make sure you are not inundated with a lot of hype or self-aggrandizement. Yes, you want to know about the agent’s strengths and his/her marketing strategy but you don’t need to sit through 30 minutes of self-promotion either. One question sellers seldom seem to ask an agent is this: “What is the percentage of transactions you were involved in during the past two (or three) years which did not close escrow?”  An agent, who consistently and diligently works on your behalf, yet manages to co-operate with all parties to a transaction, will most likely see it through to a successful close.  An agent or broker who is very successful at closing escrows may be better than an agent with the largest number of properties “for sale.”   Last, but not least, you should look for an agent who will commit to being in contact with you on a regular basis.

July 2007

EASING THE PAIN OF THAT BIG HOUSE PAYMENT

We have all been bombarded with negative news on top of negative news.  We constantly hear about sub-prime loans, homeowners with ARMs (adjustable rate mortgages) whose interest rates on these loans have increased considerably, etc. etc. We can’t make light of these issues because many homeowners are really hurting.  What, if anything, can a homeowner do to avoid losing his/her home due to a greatly increased monthly mortgage payment? The worse thing to do is to panic because of the fear of possible foreclosure.  Most homeowners could consider renting out a portion of their home.  It’s a little risky, of course, but there are many ways to check out anyone whom you might consider as a house mate.  A personal referral is usually best.  How about a hobby that could be turned into a home-based business? You may be amazed at the possibilities of making an extra $400 to $500 per month (check with local regulations before starting a home business).  Then, there is always the option of changing our spending habits.  Make a list of your expenses for, say, the past 6 months and then place a check mark next to the items on which you could either spend less or which you could eliminate altogether.  Here are some examples: instead of getting your hair done every 4 weeks, go every 6 weeks instead. Consult your friends to see if you could start carpooling with one or two of them.  Every time you are tempted to buy a soda, drink some water instead (it really is healthier anyway). Or, do you have some of those “white elephants” around the house that are just gathering dust?  Could you sell them on consignment or sell them at a garage sale?  There really are many opportunities out there.  We just need to be open to accept the fact that we need to DO SOMETHING in order to improve our situation.

August 2007

REAL ESTATE CORNER

HOME IMPROVEMENTS THAT WILL PAY OFF IN A SLOWER MARKET

In this changed real estate market, it is important to know exactly what type of home improvements might pay off and what type of home improvements to avoid. Improvements to your kitchen and to the bathrooms usually pay off well while others will not do much to improve the value of your home. Kitchen remodels usually pay big dividends. Many homes of today feature kitchens which are the center of the family's activities. But if money is tight, don't go overboard with fancy and costly improvements. Sometimes it is enough to exchange old, worn door handles with new, shiny ones. If you can spend a little more money, it might be a good idea to re-face the old cabinets or - perhaps - update old, outdated appliances.

Bathroom remodels can also add substantial value to your home. Consider installing new double sinks (if space allows) and new fixtures and faucets. Personally, I am always amazed that home owners don't at least replace toilet seats;this is a really inexpensive improvement.

Other improvements might include re-staining a worn, old deck, trimming shrubbery around the house and painting the front door. Simple, inexpensive cosmetic improvements can go a long way to make your home look fresh, bright and appealing without spending too much money.

September 2007

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"SOME STATISTICS FOR OUR AMADOR COUNTY HOUSING MARKET

If we look at the numbers for year-to-date for 2005, 2006 and 2007, we can see what the story is for our Amador County Market (courtesy of Bob Wynne, CEO of the Amador County Association of Realtors). Total single family sales were 501, 345 and 304 respectively, while the average sales price was $369.7, $392.9, and $372.2, actually $3,000 higher than in 2005.

The total dollar amount sold was down $4,000,000 this year but is still $2,000,000 above 2005. The category which took the largest hit is the actual number of sales, down 31% for this same time period in 2006 and down an additional 12% for 2007. One major reason we are down the 12% for this year can be traced to the months of January and February of this year. Since March of this year, SALES ARE DOWN ONLY 8% FROM THE PRIOR YEAR. This is certainly food for thought."

--

Elke Duffy, Broker/e-PRO

Amador Realty, Inc.

209-223-4567

FAX: 209-223-4550

sales@amadorrealty.com

October 2007

Seller Financing Might Facilitate The Sale

In the current real estate market, buyers tend to expect more than reduced asking prices for the houses they are considering. If you are a seller who does not need all of the equity from the sale of your home at close of escrow, you might offer seller financing at a much lower fixed rate than those currently available from mortgage lenders. Let’s assume the asking price for your home is $450,000 but you need only $85,000 to pay off the balance on your current mortgage. So, if the buyer can make a down payment of $85,000, you could offer to carry the remaining balance of $365,000 at, say, 4.25% (your CPA can assist you with determining what the lowest rate is that the IRS will allow). It might be advantageous for both the seller and the buyer to agree to the following terms: the balance to be calculated over 30 years but due in 15 years with a balloon payment due the seller at that time. This way you will be paid off in 15 years and you would pay taxes only on the amount you receive each year.

If the buyer were to obtain a conventional mortgage at 6.5%, amortized over 30 years his/her monthly payment would be $2307.04. If the seller carried the loan at 4.25%, the monthly payment would only be $1795.58. This is a whopping difference of $511.46 per month.

The buyer would, of course, also have to pay insurance and property taxes and each party would incur normal closing costs but this scenario might just prove to be a good solution for both the buyer and the seller. Remember that I am neither a CPA nor a tax attorney and you should consult these professionals before offering low interest seller financing.

November 2007

Working with your Listing Agent

By Elke Duffy, Broker

Amador Realty, Inc.

sales@amadorrealty.com

A few months ago I addressed the topic of how to find the right real estate agent. Naturally, you, as the seller have certain expectations of the agent who will represent you in the sale and marketing of your property.

There are, however, certain expectations your agent has of you. It is very, very important that the seller co-operates with his/her agent. Yes, you are the owner of your property and you could certainly set the price yourself but it is highly advisable that you listen to your agent when it comes to setting the right asking price for your property, especially in the current market. Once you have hired the agent who you feel will do the best job for you, let him/her go to work without too much interference from you. It is very difficult when we hear comments from our clients, such as:  “My aunt in Texas (or Kentucky or Florida) was a real estate agent for many years and she says we should ……(whatever it may be she said).”  Another point to remember is this: Do negotiate the commission right up front before you sign the listing agreement but it is not a good idea to ask your agent for yet another reduction in commission at the point when an offer comes in that is quite acceptable except it will not give you the exact net amount you were hoping for. How would you like it if your boss suggests to you that you give up one half of your monthly salary because he cannot quite pay all his monthly bills? In this market most agents will have to work harder than before and they will certainly appreciate your co-operation more than ever.

December 2007

REAL ESTATE CORNER

The Changing Bed and Breakfast Scene

By Elke Duffy, Broker

Amador Realty, Inc.

sales@amadorrealty.com

During the last few months, I have had several inquiries from past clients as well as people close to retirement who are wondering if they can or should realize their dream of owning and running a B&B. I have listed and sold several B&Bs during the past 15 years, each one quite unique. Many of the sellers barely survived while others flourished. The B&B scene has changed considerably over the last couple of decades: back then guests did not mind walking down the hall to a shared bath. They were content with far fewer amenities as long as they felt “warm and fuzzy” by that special, personal touch that only the interaction with the innkeeper can provide.

Today’s guests are quite different. They will spend quite a bit of time searching websites for that special experience they are after. They also expect a lot more amenities such as private baths, fireplaces, high speed internet, special events, nearby restaurants and more.

Innkeepers of today definitely have to create a very special niche based in large part on what type of guests they want to attract, in other words what sort of people they would be most comfortable with.

Aspiring innkeepers need to spend considerable time to gather a great deal of information before they purchase that special B&B. They need to consider not only the type of inn they might want to buy (Victorian, log home, Art Deco building, farm house) but also the location (downtown, country setting, seaside location). Then there are all the other issues which need to be addressed: down payment, startup costs, marketing strategies, local zoning ordinances and much more. There are many good online courses available for aspiring innkeepers which will answer many questions. Armed with all that information as well as advice from a knowledgeable CPA, the decision to purchase a B&B will become less and less daunting.

January 2008