Better Homes and Gardens Real Estate LLC

You can search their website to see how a community you are interested in stacks up against several lifestyle criteria. The screenshot above is for Saratoga, CA.

Most California real estate Purchase Agreements (CAR or PRDS contracts) are also escrow instructions, that give authority to the escrow company to transfer title when all terms of the Purchase Agreement are met i.e. loan documents are properly signed; all funds are in; Federal or state statutory disclosures such as FIRPTA and Environmental disclosures are properly signed and delivered; the grant deed is properly signed, notarized and recorded; etc.

In northern California, by custom, escrow and title companies are generally the same company, while they are generally different entities in southern California.

Homesellers in California are already familiar with escrow, but homebuyers may not be, particularly if they are relocating from out of state, where closings are sometimes handled by attorneys and all parties “sit down together at the closing table” – this does not happen in California because of escrow procedures.

The California Department of Real Estate has published a Consumers Guide about the escrow process.

Escrow helps protect the parties agains fraud and guides homebuyers and home sellers through the process of transferring clear title to real estate.

The California Department of Corporations scrupulously regulates licensed escrow companies.  Each licensee is required by law to be a member of the Escrow Agents’ Fidelity Corporation, which provides fidelity coverage for member trust accounts in the amount of $5 million.  This fidelity bond guarantees that, in the event of theft of trust accounts, consumer funds are protected.

Escrow processing times are not always exactly the same as stated in the Purchase Agreement if there are complicating conditions that need to be resolved first.

Selection of the Escrow Company is often, but not always made by the home seller or their agent that orders the Preliminary Title Report. Call me if you need a referral to a Realtor or other real estate professional to help you through the process.

Rick Bonetti | APR Referral Network | 408-857-8800 | DRE #01237009

I am not a foreclosure expert, but I have received training from Alain Pinel Realtors that empowers me to represent buyers of distressed properties.

As I have previously noted on this blog, Saratoga, Monte Sereno and Los Gatos are now experiencing some distressed property sales, but they are generally random (in terms of neighborhoods and price ranges) nor do they dominate most neighborhood markets.

From Google searches I receive phone calls from potential buyers interested in purchasing homes for investment in Saratoga, Monte Sereno and Los Gatos.  In particular, Sunday I received an inquiry from an investor about a home on Saraview Court in Saratoga – it was already scheduled for a trustee foreclosure sale on Tuesday.  It was too late to mobilize for a purchase, but I was curious about the process so I attended the auction and videoed excerpts of the proceedings because I though my readers would be interested.  Perhaps this will help make clear that trustee foreclosures sales are not an easy arena for making a quick buck.  You may choose to focus your search on standard listings or REO (real estate that is already owned by the bank), as these transactions are more likely to close escrow.

In this video you will hear the auctioneer’s clear disclaimers about the condition of a property and the buyer’s lack of assurances of even clear title; cash is king if you want to play this game.

There is a sad and unfortunate story about every distressed property sale. One of the auctioneers Tuesday asked repeatedly not to be photographed (a request I honored), not because he was “wanted by the law”, but presumably because he did not want to be the focus for displaced anger of someone whose home was sold at auction. The Saraview Ct. property is part of an very unseemly tale of the destruction of greed and even murder. This is not genteel real estate.

One point I hope that the video makes clear is that most foreclosure trustee sales are usually redeemed by the second trust deed holder if they think they have sufficient investment to recover.  When the auctioneer said that the property was “sold” on the court house steps for $884,904 ($1 over the opening bid price) this really means that the second TD lender was merely trying to protecting their interest to eventually recover a portion of the amount they had loaned on the property.  The property is still subject to the $1 million encumbrance for the first TD lender!  Even though this property was “sold” to the second trust deed holder the initial first trust deed obligation remains, so the eventual REO list price is likely to be the sum of both, not the “sold” price.

The second point is that the foreclosure process (including attempted short sales) is typically frustratingly long and unpredictable.  The process often extends beyond the three month statutory minimum. The closer an attempted short sale is to the foreclosure date, the less likely it is to close escrow.  Over 100 properties scheduled to sold at auction on Tuesday were canceled or delayed! This video shows just a condensed, edited snapshot of a auction process that took place over 40 minutes.  There were several other private potential bidders there, but were effectively shut off by the second TD lender’s winning bid.  If there were other active bidders it could have taken hours.

Most Realtors don’t plan to make a habit of attending trustee foreclosure sales in the future; I suggest you might not want to do so either.  There are other more effective ways of purchasing a good real estate investment – that’s what I specialize in!

Related articles:

• Trustee Sale vs. Judicial Foreclosure (mortgagesloans.suite101.com)
• Foreclosure – Short Sale – REO – Bank-Owned – What’s the difference? (teachstreet.com)

Short sales, (sales of homes for less than the amount of their outstanding mortgage debt) have tripled since 2008, particularly in California, according to a recent article in the Los Angeles Times.

The number of transactions rose to more than 160,000 in 2009 from roughly 96,000 in 2008, with more than a quarter of the transactions occurring in California.  The increasingly common transactions are projected to rise to 400,000 in 2010, and such sales will likely remain routine as the mortgage industry attempts to stabilize.  As I have stressed before, real estate is very local, so not all markets are effected the same.

Last week I participated in an Alain Pinel Realtors seminar to become certified as a Distressed Property Educated Buyers Agent “ this allows me to represent buyers in purchasing a short sale property, but I have chosen not to represent sellers of such properties as part of my real estate practice.  If you know a seller with this need I can refer you to someone in our company who is Certified in this aspect.

Among the things that were discussed by APR Trainer Jim Pojda for selling agents were:

• Questions to Ask the Listing Agent
• Identifying the Seller Hardship
• Setting Proper Buyer Expectations
• Methods to Help Ensure Lender Package Delivery
• Suggested Contract Items to Protect Your Buyer
• Notice of Default  Investor Buyers’ CAR NODPA Contract
• Items to Review Upon Receiving Short-Sale Approval from the bank
• Forms to Protect Commissions

Real estate agents are licensed under California law in very narrow areas and they are not lawyers nor are they foreclosure advisers.  We may have general knowledge of changes in the law or banking policies affect these transactions, forgiveness of debt, tax law, credit, rehabilitation, or mortgage relief, but it is standard practice to recommend in writing to our clients that they seek out and obtain the advice of competent lawyers, accountants or other licensed professionals with respect to the individual issues which may impact them.

Last summer, 2009 when I took the California Association of Realtors Distressed Properties Training I noted that a local agent active in short sales said that “probably only 10% of short sales actually close escrow!”  Last Friday I asked Jim Podja whether the percentage has improved since 2009 and he said “it has because both banks and real estate agent are now more experienced in the short sale process, but he did not have an updated percentage estimate. There is still a wide variance in practices among various banks/investors and agents.

Alain Pinel is a leader in training its agents about the nuances of distressed property sales; unfortunately, there are still too many licensed agents working for smaller brokerages who do not have either training or experience.  Call me if you need help with your real estate transaction.

There are currently (Mid August, 2010) only 11 Los Gatos or Monte Sereno distressed homes currently available for sale listed on the MLS (multiple listing service).

Home buyers often ask me if there are distressed home bargains available and I caution them that shorts sales are often frustrating to buyers, sellers and real estate agents; REO properties, already owned by the bank are much more likely to close escrow.

National Distressed Property Trends – To put local markets in perspective with what you may read in the newspaper, the National Association of Realtors reported that “in the past year approximately 33 percent of existing home sales at the national level have involved distressed properties (foreclosures, short sales) selling at discounts of 15 to 20 percent from non-distressed market prices”exerting a major negative impact on overall market prices.

Shadow Inventory – There is still national concern over a potential shadow inventory of distressed properties – “as of the first quarter of 2010 over 6.5 million homes were in foreclosure or had overdue mortgage payments. Possibly as much as 75 percent of the shadow inventory will ultimately be sold as distressed. However, given the ongoing time delays for problem resolution it appears that distressed properties will enter the market at approximately the current or a slightly increased rate for the next few years.

In summary NAR says: “Foreclosures are a major negative market influence in terms of price, consumer confidence, and expectations; however, a tsunami of shadow inventory appears unlikely.”

The West Valley of Silicon Valley does not follow the national trend.  It is still one of the better places for homebuyers concerned about stable property values.

I love interactive maps and potential homebuyers can get lots of important information online at the official Los Gatos City website about property they are considering purchasing.  You can search by street address or assessors parcel number and get maps showing topography, zoning, general plan designation, buildings, lot size and more – even street sweeping schedules!  Check it out.

(PS: You have to used Internet Explorer and download a MapGuide Viewer).

Today I was contacted by a young woman who did a Google search for 7129 Cerro Crest and found my Saratoga Voice site.  She assumed that I was the listing agent, but the property is listed as a rental by another agent.  The reason it came up on my site is that I have an IDX search engine that displays detailed information about all listings currently available in areas I serve (a great service for home buyers, home sellers and renter, I might add). 

Well, the real owners have the property listed to rent at $3,500 per month, which is reasonable for a newer 4 bedroom home.  Craigslist showed the property as: $1000 / 4br – BEAUTIFUL NEW SINGLE FAMILY HOME NEAR SILVER CREEK AREA (san jose south)! 

The young woman looking for a rental had the good sense to check it out online through another source.  She thought something was fishy when the email correspondence with the supposed owner was asking her to send a $1000 deposit and shipment of keys will “take place via FedEx and take 24hours to delivered to your door step.”

The supposed owner said  in the email that they “just traveled to Africa for a program called Empowering Youth to Fight Racism, HIV/AIDS, Poverty and Lack of Education, the program is taking place in three major countries like, Spain, and South Africa France,And some other West Africa Countries.And Presently we are collaborating with the UNICEF to  support UNICEF? for emergency response in Haiti.”  Sounds like nice, honest people with a good heart – right??  Unfortunately this appears to be a scam.  I am glad the young woman used common sense and did not get burned.  If you are entering into a real estate transaction and you have a question, please feel free to call me.

Rick Bonetti | Alain Pinel Realtors | 408-857-8800

As a result of age, most areas have big beautiful street trees, but it also means that the land is more valuable than many of the older house structures. As a result, many homes are either being remodeled or torn down and replaced with much larger homes (particularly were there is estate acreage).

Rick Bonetti | Alain Pinel Realtors | 408-857-8800

Here’s my response: “Well, you know when people are buying or selling a home how nervous and stressed out they can get? I take care of all the details and paper work; I support and protect them through the process; and make the whole thing a relaxing, enjoyable experience for my client.”

At the end of the transaction my goal is to have my clients affirm that I have always acted in their best interests.  Negotiation and marketing are more an art than a science – skills learned from many years of experience; but trust and care are equally important.  I call the process the “art and heart of real estate.”

Home buyers and home sellers feel empowered by all the information now available on the internet, but there is lot of misinformation out there too. Knowledge  is how you interpret and use information; integrity is an expression of your motive.

Because I blog, some Realtors think I get most of my clients through the use of social media. Actually, most of my business is by referral from really nice people who share my values and who appreciate the knowledge, experience and care I bring to a real estate transaction. Thank you for your trust, respect and friendship!

For a very real and funny take on the real estate business, check out Kris Berg’s Vook.

Rick Bonetti | Alain Pinel Realtors | 408-857-8800 | DRE #01237009

Ease of Settling An Estate – In an attempt to avoid probate costs, court supervision, and public access to private information, many California homebuyers set up Revocable Living Trusts into which they place their assets, including their home.

Important Notes: Some people forget to transfer all property into their trust (particularly after they refinance), which effectively nullifies the purpose of setting up the trust in the first place;  assets omitted from the trust may trigger a probate they were trying to avoid.  Correspondingly, if recorded quitclaim documents are not signed properly “_____, as trustee of the ____ trust” this can create a cloud on title that may complicate issuance of title insurance until corrections are made.

Community Property – Normally, unless the trust instrument expressly provides other wise, community property that is transferred into a revocable living trust remains community property during the marriage, regardless of the identity of the trustee, if the trust provides that the power to modify the trust may be exercised only with the joinder or consent of both spouses.

Capital Gains Tax – Merely setting up a Revocable Living Trust and placing property in it does not avoid capital gains tax.  Here’s a summary of some current federal capital gains tax laws:

• The Taxpayer Relief Act of 1997 (the “1997 Act”) and the IRS Restructuring and Reform Act of 1998 (the “1998 Act”) provide for an exclusion from income for certain amounts of gain from the sale of a principal residence.
• The Mortgage Forgiveness Debt Relief Act of 2007 (the “2007 Act”) also provides clarification regarding certain capital gains issues.
• The Jobs and Growth Tax Relief Reconciliation Act of 2003 (the “2003 Act”) made important changes to the federal taxation laws including, among other matters, lower capital gains tax rates, acceleration of a reduction in tax rates, increased child tax credits and a reduction in the so-called marriage penalty.
• Sunset provisions in the 2003 Act were extended by the Tax Increase Prevention and Reconciliation Act of 2005 (the “2005 Act”).
• Recently, with the passage of H.R. 3221, the Housing and Economic Recovery Act of 2008, further changes were made to capital gains exclusions for a principal residence that wasn’t used as a principal residence part of the time of ownership.

Exclusions from Gain – a $250,000 exclusion ($500,000 if married filing jointly) applies to a sale or exchange by a revocable living trust so long as the grantor of the trust and owner of the property before it was conveyed to the trust are the same person and that person, either as owner or grantor, has owned and used the property as his or her principal residence for two of the previous five years.

Transferring Property into a Revocable Living Trust should not create a taxable event - IRC 676 provides that a grantor (the person who creates and funds the trust) is treated as the owner of the property when the grantor retains the power to revoke the trust and revest title in him or herself.  The 2003 Act does not change this provision. In other words, because the grantor is still treated as the owner of the property, the transfer into the trust is not a taxable event.

Disclosures and Revocable Living Trusts – Since 1987 sellers or other transferors of real property containing one-to-four residential units have been required to furnish prospective buyers or other transferees with a completed Real Estate Transfer Disclosure Statement (TDS) on a specific form prescribed by law–unless exempt.

Exception to TDS disclosure exemption - Transfers by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust normally are exempt;  however, an exception to this exemption occurs when the property is held in a revocable trust and the trustee is a natural person who is the sole trustee of the trust as well as the former owner of the property or an occupant in possession of the property within the year preceding the transfer.  Further, it is always good practice for sellers to disclose everything (except as restricted by law) they know about the property that effects its value.

Disclaimer – Again, the information above is from the California Association of Realtors legal questions and answers and is not to be construed as legal advice by this Realtor.  Please consult with your CPA or attorney for questions regarding your specific situation.

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