Monday, June 23, 2008
From Marriage Partners to Business Partners
Dear Sue,
I am in the middle of divorcing my husband. Thank God it is an amicable separation, but we still must divide over 25 years of accumulated assets.
Since the real estate market isn’t very kind to sellers right now, we both think that trying to sell our home right now would be a bad idea. We want to sever the attachments of our relationship as soon as possible, but we think it is better to wait to sell our home when prices may be higher.
Is there any way of selling our home later while going our separate ways now?
Separated Sally
Dear Sally,
In my experience working with attorneys and divorce, the division of community property is never easy. In many cases it is down right messy! I am happy to hear that your separation is amicable.
The last asset to be divided in a divorce is usually the home. Since it is symbolically the last connection in the relationship, frequently the ex-partners can have great difficulty letting go. Did you ever see the movie, “War of the Roses?”
Since letting go is really a process, it may be wise to take your time and not rush into a sale, especially in the current downturn.
As I see it, you have several options. The first option, which is the most common, is to sell immediately and divide the remaining equity, if any. If there is no equity, a short sale or foreclosure may be the only options if you choose to sell now.
If you choose to sell later you must treat your home as a business asset or investment property. This requires an evolution from romantic partners to business partners. It requires that you both be objective and analytical in your dealings. This can be very difficult if not impossible unless you engage a neutral third party such as a mediator, business advisor or property manager.
Selling later will require that your home become an investment or rental property. If one of the partners wants to live in the property, the partner will become a tenant while also being a landlord. This means that the tenant partner will pay rent but also share in the expenses of principal and interest payments, maintenance, repair, taxes and insurance.
For example, if the rent is $1400 a month (determined by the current rental market) and the payment including taxes and insurance is $1000 a month, the partners divide the $400. If repairs or maintenance are required, both parties share the burden 50/50. The write-offs and tax benefits of owning the investment property are also shared.
For tax purposes, don’t hold the home as rental property more than three years if you want to take advantage of the $250,000 each, tax free gain only available on personal residences.
You may find that you are better business partners than romantic partners and decide to keep the investment property.
Making the transition from romantic partners to business partners can be a matter of Good Home $$s and Sense.
I am in the middle of divorcing my husband. Thank God it is an amicable separation, but we still must divide over 25 years of accumulated assets.
Since the real estate market isn’t very kind to sellers right now, we both think that trying to sell our home right now would be a bad idea. We want to sever the attachments of our relationship as soon as possible, but we think it is better to wait to sell our home when prices may be higher.
Is there any way of selling our home later while going our separate ways now?
Separated Sally
Dear Sally,
In my experience working with attorneys and divorce, the division of community property is never easy. In many cases it is down right messy! I am happy to hear that your separation is amicable.
The last asset to be divided in a divorce is usually the home. Since it is symbolically the last connection in the relationship, frequently the ex-partners can have great difficulty letting go. Did you ever see the movie, “War of the Roses?”
Since letting go is really a process, it may be wise to take your time and not rush into a sale, especially in the current downturn.
As I see it, you have several options. The first option, which is the most common, is to sell immediately and divide the remaining equity, if any. If there is no equity, a short sale or foreclosure may be the only options if you choose to sell now.
If you choose to sell later you must treat your home as a business asset or investment property. This requires an evolution from romantic partners to business partners. It requires that you both be objective and analytical in your dealings. This can be very difficult if not impossible unless you engage a neutral third party such as a mediator, business advisor or property manager.
Selling later will require that your home become an investment or rental property. If one of the partners wants to live in the property, the partner will become a tenant while also being a landlord. This means that the tenant partner will pay rent but also share in the expenses of principal and interest payments, maintenance, repair, taxes and insurance.
For example, if the rent is $1400 a month (determined by the current rental market) and the payment including taxes and insurance is $1000 a month, the partners divide the $400. If repairs or maintenance are required, both parties share the burden 50/50. The write-offs and tax benefits of owning the investment property are also shared.
For tax purposes, don’t hold the home as rental property more than three years if you want to take advantage of the $250,000 each, tax free gain only available on personal residences.
You may find that you are better business partners than romantic partners and decide to keep the investment property.
Making the transition from romantic partners to business partners can be a matter of Good Home $$s and Sense.
Wednesday, June 18, 2008
Make the Price Right!
Warren Buffet attributes much of his wealth to buying when other people are fearful and selling when they are feeling greedy.
The recent increase in sales volume in Placer County appears to indicate just that some people must be taking this advice.
When I returned from my vacation I picked up my phone and started interviewing several top producing, real estate agents. I wanted to know what was going on in the market today. I asked each agent if they had any advice to offer.
Pam Moore of Lyon’s insists that price is the key! Pam believes that when a seller lists their home for sale, they must be ready to move. They need to have their home “show ready” at all times.
Pam’s advice, “Take the advice of your agent!”
Pam explained that the longer an over priced property stays on a declining market, the less money a seller will ultimately get. Sellers continue to pay taxes, insurance, HOA dues, maintenance and house payments while the home’s value continues to go down.
Pam says, “If you don’t need to sell now, I suggest keeping your home off the market!”
Mike Robinson of Remax Gold agrees. He says that if you don’t have to sell right now, don’t put your home on the market.
“I think we are sitting on 2003 prices. Buyers and sellers just have to understand that prices go up and down but in the long run the trend is up.”
Patrick Hake of Remax Gold, like Mike Robinson, enjoys analyzing the numbers.
“Sales volume is up in Placer County while prices are down about 25% since last year,” Patrick says.
Sellers wouldn’t bring their prices down last year to a level that buyers were willing to pay. Patrick thinks that as soon as last year’s wave of foreclosures swept the area, the shear volume brought prices down and forced the sellers that were not distressed to compete and bring the prices in line with the competition.
Patrick reported that of the 2544 residential properties currently on the market in Placer County, approximately 28% are short sales and 10% are bank owned. An astounding 38% of the current inventory is distressed.
There are currently 801 pending sales. 21% are short sales and 37% are bank owned. 58% of the pending sales are distressed.
In March through May of 2008 there were 1116 closed sales. 7% were short sales and 44% were foreclosures. 51% of the closed sales were distressed.
Patrick continued to explain that the magic number for an even market is 6 months of inventory. In other words, if no new inventory was added, and the current rate of sales continued, the inventory would be depleted in 6 months.
Patrick said that we IWW have 6.25 months or inventory in Placer County compared to over 10 months of inventory in Auburn.
Auburn doesn’t have nearly the troubled inventory that south Placer has. Auburn didn’t create a lot of new inventory. Consequently the troubled properties are due to refinances not purchases.
Kelly Richardson of Hometown Realtors sees flurries of activity in the market right now, particularly in short sales and foreclosures. The areas of activity are primarily in Lincoln and below. In our immediate area we now have a lot of activity in the under $400,000 market range. One can now find homes in the Auburn area under $300,000, which was unheard of 2 years ago.
Kelly says, “Buyers are crazy if they aren’t armed with pre-approval letters and out there buying! The buyers in today’s market are a combination of investors, move-up and first-time buyers.”
“Sellers that are priced right are receiving multiple offers. The banks are the ones receiving most of the multiple offers because they are pricing to sell. Sellers that aren’t priced right are missing out!” she continued.
Pricing your home right is a matter of good Home $$s and Sense.
The recent increase in sales volume in Placer County appears to indicate just that some people must be taking this advice.
When I returned from my vacation I picked up my phone and started interviewing several top producing, real estate agents. I wanted to know what was going on in the market today. I asked each agent if they had any advice to offer.
Pam Moore of Lyon’s insists that price is the key! Pam believes that when a seller lists their home for sale, they must be ready to move. They need to have their home “show ready” at all times.
Pam’s advice, “Take the advice of your agent!”
Pam explained that the longer an over priced property stays on a declining market, the less money a seller will ultimately get. Sellers continue to pay taxes, insurance, HOA dues, maintenance and house payments while the home’s value continues to go down.
Pam says, “If you don’t need to sell now, I suggest keeping your home off the market!”
Mike Robinson of Remax Gold agrees. He says that if you don’t have to sell right now, don’t put your home on the market.
“I think we are sitting on 2003 prices. Buyers and sellers just have to understand that prices go up and down but in the long run the trend is up.”
Patrick Hake of Remax Gold, like Mike Robinson, enjoys analyzing the numbers.
“Sales volume is up in Placer County while prices are down about 25% since last year,” Patrick says.
Sellers wouldn’t bring their prices down last year to a level that buyers were willing to pay. Patrick thinks that as soon as last year’s wave of foreclosures swept the area, the shear volume brought prices down and forced the sellers that were not distressed to compete and bring the prices in line with the competition.
Patrick reported that of the 2544 residential properties currently on the market in Placer County, approximately 28% are short sales and 10% are bank owned. An astounding 38% of the current inventory is distressed.
There are currently 801 pending sales. 21% are short sales and 37% are bank owned. 58% of the pending sales are distressed.
In March through May of 2008 there were 1116 closed sales. 7% were short sales and 44% were foreclosures. 51% of the closed sales were distressed.
Patrick continued to explain that the magic number for an even market is 6 months of inventory. In other words, if no new inventory was added, and the current rate of sales continued, the inventory would be depleted in 6 months.
Patrick said that we IWW have 6.25 months or inventory in Placer County compared to over 10 months of inventory in Auburn.
Auburn doesn’t have nearly the troubled inventory that south Placer has. Auburn didn’t create a lot of new inventory. Consequently the troubled properties are due to refinances not purchases.
Kelly Richardson of Hometown Realtors sees flurries of activity in the market right now, particularly in short sales and foreclosures. The areas of activity are primarily in Lincoln and below. In our immediate area we now have a lot of activity in the under $400,000 market range. One can now find homes in the Auburn area under $300,000, which was unheard of 2 years ago.
Kelly says, “Buyers are crazy if they aren’t armed with pre-approval letters and out there buying! The buyers in today’s market are a combination of investors, move-up and first-time buyers.”
“Sellers that are priced right are receiving multiple offers. The banks are the ones receiving most of the multiple offers because they are pricing to sell. Sellers that aren’t priced right are missing out!” she continued.
Pricing your home right is a matter of good Home $$s and Sense.
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