A HUGE thank you for making 2022 my best year ever! |
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Real Estate
e-Newsletter
by Cynthia S. Radom
Award-winning Certified Seniors Specialist REALTOR® - Specializing in Trust Sales
Since 1994
Coldwell Banker Realty - Beverly Hills CA
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NEWS & ISSUES for BABY BOOMERS to GOLDEN-AGERS |
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** Writer and Publisher since October 1999 **
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After a 10-year run for Sellers, the LA area real estate market has shifted to a Buyer’s market. Home prices have been on the rise since 2012 and recent years have seen double-digit increases. Unprecedented rises in mortgage rates are creating less Buyer demand and, despite low inventory, Buyers are digging in their heels wanting “a deal”. Longer days on the market if a home is not priced right, Buyers are circling, waiting for price reductions…or low-balling an offer. In today's shifting environment the way you price your home matters more than ever. But, what is market value?
During the pandemic, Sellers could price their home above market value because demand was so high, money was cheap and supply was very low. As we continue the shift, that means the approach to pricing a home needs to shift too. Sellers need to recog-nize that today is different than it was even three months ago, and we are returning to a normal selling strategy.
The initial asking price for a property sends an instant message to potential Buyers. A price that is too high runs the risk of deterring Buyers and results in no offers, and no sale. When that happens, a price reduction is needed to reignite interest in the property as it remains unsold. But, be aware that a price drop can be seen as a red flag. Buyers may wonder if there is something wrong with the house or if, in fact, it is still over-priced.
Avoid lowering the asking price by pricing it right from the start. Your REALTOR® knows how to deter-mine the right price as they balance the value of homes in your neighborhood, current market trends, the condition of your house, Buyer demand, and more. Pricing below market value also increases the chance of multiple offers and a greater likelihood your home will sell quickly and for more money.
Don't hesitate to price below what your neighbor's house sold for 3-6 months ago. A home for sale will always find its equilibrium, a.k.a. market value. If it is worth more than the asking price the Buyers may offer more. Remember, there is only one chance to make a good first impression.
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Side Note: The eviction morator-ium is finally ending January 31st. Hopefully this will encourage more people back to work in LA.
CA can't afford an exodus of middle America, those essential workers are sorely needed.
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Measure ULA in Los Angeles City and Measure GS in Santa Monica were passed in November increasing the property transfer tax on sales over $5M. Revenue from the tax will go toward housing for the homeless.
Effective April 1, 2023, there will be an added expense to a Seller’s closing cost on every LA City-based property that sells above $5M. Homeowners as well as land, commercial, and multi-family property owners will be subject to an extra tax (some exemptions do apply). The tax includes 4% on sold values between $5M to $9,999M and 5.5% over $10M. This is in addition to the City and County transfer tax already imposed in LA.
Effective March 1, 2023, Santa Monica voters approved a third tier to the existing documentary transfer tax which includes a $56/$1,000 Seller cost on sales of $8M and above. This tier was increased from $6/$1,000. SM now has the highest mansion tax in the country.
But, ULA and GS taxes that keep on giving. While touted as a “one-time tax”, both taxes will be collected each time a property sells. For example, when an investor buys a property to redevelop, the property will be taxed again as the property is built or updated. And, like New York City, the ULA tax will be ultimately passed to the Buyer in the form of a higher asking price or higher rent. Buyer and Seller can opt to split the tax equally.
When NYC’s "mansion tax" took effect in 2022 it was presented as a Buyer’s closing cost. Based on a sliding scale, NYC's tax ranges from 1% to 3.9% of the purchase price on sales of $1M and higher. (Side note: Did you know that NYer’s stop paying property tax after the age of 65-years-old?)
Prior to the activation of the mansion tax in NYC, the previous quarter real estate market saw a dramatic increase in property sales, despite rising interest rates. Will LA and SM estate owners get off the fence and sell before the March or April deadlines? Avoiding the ULA or GS tax is something to consider...let's talk.
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2023 Economic Forecast: Per-sistent and aggressive means to curb inflation, rising interest rates at 1/2 pt. vs. 3/4 pt. increments, forthcoming will be a modest recession, and mortgage rates to peak in the Spring (lowest at 7.5% to highest at 8.5%).
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When selling CA real estate, the term "closing" refers to the date and time that the Deed records and ownership changes. The acronym, COE, is often used to indicate the close of escrow.
The process of closing happens in three separate events:
1. Loan signing: When all loan documents are signed by the Buyer and notarized.
Several days before closing, the borrower is given a Closing Disclosure containing all the loan terms and costs. They have three business days to review and if anything has changed, the Buyer can rescind the loan. HOWEVER, this does not relieve the Buyer from the purchase obligation. If the Disclosure is approved, the Buyer will sign the loan docs at least three days ahead of closing.
2. Loan Funding: When the lender and escrow release the money to Title.
Escrow will also release the Buyer's initial deposit and any other monies (when paying all cash) that were wired to fund the purchase. This occurs one day before the close.
Note: When negotiating the purchase, pay attention to the closing date, preferred on a Wednesday or Thursday. A Buyer does not want their money sitting in escrow over a weekend or during a holiday break accruing interest and not having access to the home they are buying.
In the interim, the Seller will be asked by the escrow officer to sign the Deed with a notary, which relinquishes ownership at the time of closing. If your plans take you out of town, make arrangements to sign before leaving.
3. Recording: When the Deed of Trust and any other required documents are recorded at the County Recorder's office. This signifies the COE and change of ownership.
Escrow verifies all the charges and prorated expenses and sends each principal a final settlement statement. It is a good idea to request an estimated closing sheet early in the escrow period.
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2023 Market Expectations:
Buyers: Less competition as people can't qualify for a loan, slightly lower purchase prices, higher mortgage rates, and less borrowing power.
Sellers: Less competition as inventory will remain low, ask below market price to attract Buyers, fewer sales overall, and CA prices down 8.8%.
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When a Seller determines the asking price for their home, but a REALTOR® believes the price is too high, an agent has second thoughts about accepting the listing. An asking price is simply a place to start and the Seller may be right, or not. Only the "market" determines the property value. A new listing peaks during the first two weeks, thereafter Buyer interest begins to wane. Statistical reporting systems by the MLS track activity and can show the Seller who is viewing their listing (public or agents), how many, and from which websites. Invaluable information.
Over 25 years ago, I started a process of waiting 7-10 days after the listing was activated before reviewing offers with the Seller. Whether we got one offer or multiple, only one solid Buyer is needed to close escrow. Today is no different. Owners need to realize that the "market" talks by providing Buyer feedback about their home and price. It is not the Seller and it is not the listing agent who determines property value...it is the Buyer. Sellers: if you only get one offer, work with that Buyer to reach a mutually acceptable agreement. Don't wait longer in hopes of more offers...that may not materialize and the one Buyer in-hand may not wait. If no offers are received, certainly within the first month, then the Buyer's "market" is speaking once again. It is time for a price reduction. No offers, no sale.
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Article: The New York Times
A smaller footprint, less costly to build and easier to maintain is a plunge pool, the latest residential chic design. In CA, a top priority is certainly less water usage when installing a plunge pool.
A traditional backyard pool is 15' wide and 30' long. A plunge pool tends to be 10' by 20', flat-bottom-ed and five feet deep. Far from a new concept, the ancient Romans installed small circular pools as part of their baths. The Roman-inspired tiny pools then became a part of British gardens in the 18th century.
A small pool is all that is needed. Just having a small body of water to cool off and relax is what many truly want. There are jet streams used by swimmers to exercise against a current even in a narrow lap pool. Also, when the kids move out, pools are seldom used.
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Tidbits of News!
- THANK YOU! Despite rising mortgage rates, Buyer fallout, and lower prices, I had my best year ever in 2022, my 29th year as a REALTOR®. Several clients were longtime homeowners and readers of this Newsletter. They requested their Successor Trustee(s) to have Realtor Radom handle the sale of their home. Some had been on my contact list since the beginning, and some had kept every Newsletter that I ever wrote. So, I thank the Successor Trustee(s) for honoring the request of their friend, family member or client. My loyalty and commitment to longtime homeowners remain. My gratitude goes to all my clients; past and future.
- Leasing agent: When a REALTOR® completes a lease transaction, the relationship between a property owner and an agent is finished, once the tenant moves into the property. Unless a separate agreement is signed, the agent is not the property manager. Therefore, any subsequent issues that occur with a tenant are the responsibility of the landlord to resolve.
- Seller Financing: Don't reduce your selling price, become a Buyer's lender while earning a higher interest rate than money markets and stock returns.
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News from Jeffrey Prang:
The 2022 Assessment Roll for LA County grew by a record $122 Billion, (or 6.95%), over the prior year to a $1.89 Trillion in total net value. The total net value trans-lates to nearly $19 Billion in property tax dollars for vital public services such as public education, infrastructure, first responders, and healthcare workers as well as other services. This reflects economic growth for the 12th-consecutive year, with the increase in assessed value of all taxable property countywide.
The 2022 Assessment Roll comprises 2,589,521 real estate parcels and business assess-ments, including 1,889,000 single-family homes, 250,000 apartment complexes, 248,000 commercial and industrial properties and more than 165,000 business property assessments.
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Listing Exposure
MLS-CLAW (the Multiple Listing Service for the Combined LA Westside) services REALTOR® members from the Westside, east to Highland Park, south to West Athens and west to Malibu. Every CLAW listing has shared recipro-city with other area MLS's and properties can be viewed by agents as far north as Ventura, south to San Diego, and east to Palm Springs.
In addition, when selling a home with Coldwell Banker Realty, no other Brokerage comes close to property listing exposure. From local to the worldwide buying public, CB listings are exposed on 30+ partner real estate websites and within pages of ads in the LA Times Hot Property real estate section.
Estate listings can be seen in the exclusive CB View magazine inserted in the Saturday LA Times and on the CB exclusive weekly TV program called At Home in SoCal. The Homes & Estates magazine is another CB exclusive and available to the public.
Stay tuned, the next issue of my Newsletter will include a new and exciting feature to expose every property listing.
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What are the non-recurring closing costs referred to in your previous Real Estate Newsletter?
Every property sale has closing costs in addition to the purchase price. Escrow provides an item-ized list of expenses for each principal at the closing, or an estimated breakdown prior to the sale. Costs are defined in two categories:
1. Non-recurring: Costs that are paid only once, and are estimated to be 1.5% to 2% of the purchase price, plus Broker commission:
- Escrow fees and title policy
- Appraisal
- Lender fees (credit report)
- Wire/delivery fees
- City/County transfer taxes
- Home inspection and Seller disclosure reports
- Recording fee
2. Recurring: Charges that will be paid again:
- Property taxes, fire/flood insurance, loan interest payments
A lender may allow a Buyer and Seller to use 2% maximum of the loan's non-recurring closing costs as a credit for negotiation purposes. For example, to buy down and reduce the loan rate or as a credit for repairs.
NOTE: The lender must first approve how the credit will be used before it can be officially incorporated into the Agreement.
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Water-Wise
The average Californian uses 196 gallons of water per day, and 60% of that is used outdoors. Ways to save:
- Watering one day less a week saves 20% more water
- Using water-wise plants saves 30-60 gals. per 1,000 sq. ft.
- Lawnmower blades set to 3" saves 16-50 gals. creating deeper roots
- Using mulch keeps water in the soil and saves up to 30 gals. per watering
- Early morning watering saves 50% of sprinkler water lost to wind evaporation and heat
- Broom cleaning outdoor areas saves 6 gals. every minute the hose is not running
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Respecting your privacy and confidentiality, names and e-mails will only be used for providing pertinent material from Cynthia S. Radom and will not be shared with any other organization.
©2023 Coldwell Banker Real Estate LLC. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Owned By a Subsidiary of NRT LLC. This is not intended as a solicitation if your property is already listed.
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