Category Archives: Home Selling

Wind-Water Knowledge in Real Estate

I’ve had several clients in the past that caused me to think more seriously about feng shui and pushed me to get a bit more educated on the topic.  This was especially the case when we would find, what I thought was the perfect home, yet the responses were, “Yeah, but it’s located on a ‘T’,” or “I really wish you could see the fireplace when you walk in,” or simply, “There’s not enough natural light.”  I understood people like natural like, but some of the other comments left me scratching my head.  I began to ask more questions and do some simple research.  Each one of these items and more stop the flow of the home for me have gotten in the way of a home sale.  Some things can be corrected with simply measures, while other items are almost impossible to over-come.   Here are some basic examples I’ve come across and a few links at the bottom of the page to guide you deeper.

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The term feng shui literally translates as “wind-water” in English.  While a fad to some or superstition to others, feng shui has been popularized among people with money and hipsters alike, others take it more seriously, as a deeply rooted practice and way of being.

Colors are important, which can also be easily changed.  The placement of color in specific areas of your home can enhance your mood and demeanor.  Others would say that colors attract or magnify the energies of your life.  For example, certain colors in the bedroom can spice up one’s love life (or maybe just picking up dirty clothes would help!  My wife gets turned on when I clean the bathroom – ha ha).  Green is known to be the color of health and family – it makes sense to add plants to the living/family room of your home.

Flow and Organization – If a home is built a certain way not conducive to good flow, this may be hard to overcome, while arranging one’s furniture in a congruent, life-given way can be an easy enhancement.  The same goes for getting rid of clutter and cleaning – this a personal decision that takes just a little effort.  Entries and exits are important in feng shui.  Attracting good energies and blocking negative forces is key.  Open up the entryway for the good to flow in.   Some guru’s attest that a toilet lid must be kept down!  This “waterway” can suck positivity out of a home.  Fireplaces that can be seen from the entry encourage prosperity to leave one’s home, or be sucked out of one’s life (so I’m told).

The direction the house faces or is oriented is key … I’ve heard East is good.  But another friend said that the entrance to the North is better, due the sun exposure.

Numbers seem to be important.  Eights are good.  I know some agents price their listings with $_____, 888 at the end.  I’ve had buyers tell me to write the offer with 8’s (for good luck).  Someone told me that if the last two digits of the address adds up to eight, that’s good too.

Corners – I’ve heard that sharp corners are not good, say when it comes to small eating tables.  Some don’t like corner houses.  Homes located on a “T” are definitely bad feng shui.  Practically speaking, cars can run into a home easier in this case (nothing that some scrubs/trees or a few blockades won’t fix).  We had a neighbor whose parents warned them about bad spirits entering into their home since they lived on a “T.”  The fix was simply to hang a small crystal (like you’d see on an old chandelier) from a string at the entrance, as well as a small mirror and this did the trick.  When I asked why these objects, they said that this confused and repelled the bad spirits.

Death – Dead plants, trash around the house, a cluttered table, and dead people… many buyer’s have a hard time seeing through a mess, and many more clients buying a home want nothing to do with a property where a death has taken place – Some just want to know that it was peaceful, or not violent.  Whereas, I had an investor client who was not happy (or just not alarmed) to find out that a gang shooting had taken place at the house they were purchasing!  Really?  This became a negotiating tool for a deep discount.  A friend of mine had a dying tree in front of this home.  His father sternly told him, “Get rid of it… it’s blocking your wealth!”  He swears that they very next day his stock portfolio began to soar!

Whether your desire is to gain deeper soul-strength or just have a better flow in your home, I hope you found some inspiration, creativity and practical help in this post.  I’d love to hear some of your stories on how feng shui has affected your life.

Here’s some links to explore future.

http://fengshui.about.com/od/glossaryofterms/ss/Feng-Shui-Basics-Create-Good-Feng-Shui-Home.htm

http://inhabitat.com/9-simple-tips-to-feng-shui-your-home/

http://inhabitat.com/feng-shui-101-getting-started-with-the-basics-of-feng-shui/

 

Cheers,

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Keith Klassen, Broker

Klassen & Associates

916.595.7900

Income Properties in : Is it better to sell vacant or with tenant in property?

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A good portion of my business has trended toward investors and investment properties, I get this question/scenario posed to me often.  If the question is not asked directly, I’m usually bringing up the issues revolving around selling with a tenant in the property.  There are a lot reasons why the answer could go either way on this topic, but let’s explore some of the main concepts that will help you make a good decision based on your situation.  (Qualification:  This discussion mainly has to do with single family income properties, rather than multi-family units).

Many agents just don’t want to deal with the hassle of selling with a tenant. There are scheduling conflicts, posting of notices, and high emotions when treading on someone’s living situation – all potentially emotionally charged and exasperating situations.  While these can be good reasons to sell vacant, they may not be the best.  A good agent knows how to handle and deal with tenants in a caring and professional manner.  It does, however, make the process a bit more grueling and cumbersome.

I find the main issue boils down to is loss of income. Most owners balk at asking tenants to leave, because they don’t want to lose the monthly rents.  In most cases I’ve found that the loss in rent is less than the higher amount a home will fetch when vacant.  Why?

  1. Home buyer’s (people who want and need to live in the home) will pay more than an investor (someone buying a property to rent for income purposes). The reasons for buying are different.  An investor will want a deal to make money.  A home buyer wants a place to live and call home.
  2. Many investors have cash for purchase or a loan that requires 25+% down payment. Home-owner loans (like FHA) require only 3.5% down payment.  VA loans are virtually 100% financed!  Less money out-of-pocket, less skin in the game for an owner occupied loan, which means the purchase price can go higher.  Or another way to say it, money is cheaper for a home-buyer with an owner occupied loan.
  3. A typical home buyer’s loan (Conventional or FHA) requires the buyer to live in the home. If the tenant is on a lease, then tenant’s rights say that the lease must be honored and a home buyer cannot buy the property.

Call or write to discuss your situation in more depth.

Best,

Ketih Klassen, Real Estate Broker – 916.595.7900

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Net Sheets: What Are The Cost of Selling a Property in Sacramento?

Whether you are selling retail, wholesale, or analyzing a flip project, the costs can sometimes be tricky to figure out.  It’s not just estimating the sales price and backing the loan amount out of the proceeds.  There are many fees involved that can sting a seller if unaware.  This is where experience and some simple tools come in handy.

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For retail sales, your favorite title company can drum up an estimated cost sheet with your potential sales price.  Or, you can usually get the title company to give you a net sheet spreadsheet or a link to their website, which many of them have a seller’s and buyer’s net sheet program.  If you are an agent, doing it yourself can save time and help establish your expertise.  Remember to remind the seller that this is an estimate, however, the better you get at filling in the net sheet (and comping properties) the closer you will be to the exact net number.  I like to give a worst case scenario, then the client is happy when I negotiate a better deal.  The following are included in a typical net sheet:

  • CA Withholdings: If this is an investment property and you are not selling in a corporation and you are receiving a gain, the state of California withholds 3 1/3% of the sales price .  Ugh – no one likes to pay this and it’s a surprise to your clients at closing if they are unaware.
  • Purchase Price:  Again, if you don’t have an accepted offer/contract on the property, then this is an estimate based on your ability to know the market.  This is selling 101 for any agent – become good at valuing properties.
  •   Title Insurance / Escrow Fee / City and County Transfer Tax – All of these are part of the real estate purchase contract and can be negotiated as to who pays.  Currently in Sacramento, CA the custom is for the seller to pay for title fees, city and county transfer taxes.  The escrow fee is usually split 50/50 between the buyer and seller.  Title and Escrow fees are set and published yearly by the companies and tend to be competitively price so that there is not a huge price variation between one company to the next
    • City transfer taxes are calculated by multiplying the [potential] sales price by $2.75 and dividing by 1000.  I see this one split more often as the sale price rises.
    • County transfer taxes are calculated by multiplying the [potential] sales price by $1.10 and dividing by 1000.
  • Real Estate Commissions – usually split between listing and buyer’s agent, unless one agent handles both sides of the deal.  In Sacramento, commissions typically ranges between 5-6% depending on the experience, services provided, and what is negotiated
  • Loan amount, plus fees associated with payoff.
  • Natural Hazard Disclosure Report – 99% of the time, the seller pay for this.  The main company in town charges $99, but there are a few that charge less.
  • Pest Report – typically the buyer pays for this and their home inspection, unless the buyer has a VA loan, then the seller is required to purchase the pest report.  Also, this specialized company is mainly looking for termites, wood-boring beetles, and fungus that causes dry rot, not mice, rat, bats, and other pest.  Depending on the size of the house, you can get a report and inspection for $100-150.
  • Home Warranty – many buyers ask for the seller to provide a year home warranty.  Depending on the size of the house and item covered, typically they range between $350-500.
  • Other Costs and Credits:  Depending on what is negotiated, there can be other costs associated with closing the deal
    • Credit to buyer for closing costs – lenders typically allow up to 3% of the purchase priced to be credited to a buyer
    • After inspection and due diligence has been completed by the buyer, many times a request for repairs or credit is issued to the seller.  Is it nearly impossible to estimate or predict.
    • I some times charge a transaction coordination fee to pay for the file auditing ($350-400)
    • “Junk Fees” – There are about 4-8 escrow/title fees that fall under this category.  Doc. prep, courier, notary, drawing fee, etc. – think $250-500.  The net sheet I use through a title co. auto-fills these categories.

Here’s a sample net sheet:

SELLER’S NET SHEET

 

Seller: xxx Date: 6/28/2016
Address: SACRAMENTO, CA 95818 Est. Close Date: 6/28/2016
Prepared by: Keith Klassen, Klassen & Associates, 916.595.7900 Annual Taxes: $0.00

 

Estimated Sales Price: $645000.00 1st Loan Balance: $385000.00 Interest: $
Approx. Gross Equity: $260000.00 2nd Loan Balance: $0 Interest: $

 

CLOSING COSTS
CA Withholding (3 1/3% of sales price): $
County Transfer Tax: Paid by: Seller $709.50
City Transfer Tax: Paid by: Seller $1773.75
Title Insurance Premium (Owner’s Policy): Paid by: Seller $1815.00
Escrow Fees: Paid by: Both $712.50
Notary Fees: $150.00
EWC Drawing Fee: $0.00
Courier Fee (includes Federal Express): $40.00
Total Commission: 6.00% + $0 $38700.00
Transaction Coordination Fee: $350.00
First Loan Balance: $385000.00
        Interest on 1st Loan: $
        Prepayment Penalty: $
        Statement Fee: $30.00
        Reconveyance Fee: $45.00
Second Loan Balance: $0
        Interest on 2nd Loan: $
        Prepayment Penalty: $
        Statement Fee: $
        Reconveyance Fee: $
Recording Fees: $50.00
Natural Hazard Disclosure Report: $99.00
Pest Control Report: $125.00
Work Required for Pest Clearance: $
Home Warranty: $400.00
Tax Proration (if not paid to date of recording): $
Security Deposit(s): $
Total Estimated Costs to Seller: $429999.75

 

CREDITS TO SELLER
Tax Proration: $
Total Estimated Credits to Seller: $0

 

CASH TO SELLER
Estimated Sales Price: $645000.00
Plus Estimated Credits: $0
Less Estimated Costs: $429999.75
Estimated Sale Proceeds to Seller: $215000.25

Contact me if you’d like a complimentary value assessment done on your property, or to discuss the costs of selling in detail.

Enjoy,

Keith Klassen – Real Estate Broker

916.595.7900

 

 

 

 

 

 

 

 

Power of Attorney – A Simple Real Estate Solution

A little experience sometimes goes a long way.  Currently I am working on a deal for a buyer (actually there are three buyers), where one of them flies for a commercial airliner.  It is getting down to a few weeks before closing and the loan officer was exacerbating me with the blow-by-blow details of how they are going to get a notary to the airport for the buyer to sign on his 20 minute turn-around from Sacramento CA to Tokyo Japan.  I finally said, “Have you thought about having the husband give the wife power of attorney?”  The loan guy kind of blew me off, as he was entrenched in his master plan of getting the notary to the airport terminal.

Power of attorney is a simple form that one can buy at any office supply store or buy online, fill it out, and have it notarized.  It gives the assigned person the right to sign on behalf of – in this case real estate and loan documents.

I just chatted with the buyer’s wife this morning.  She called to tell me that they got the power of attorney in place, and thanked me profusely for suggesting this action.  Why didn’t the loan person think of this?  At the end of the day, we are a team and I hope that someone gets by back when I am fumbling or dropping the pieces.  There are many roads to get the deal done, but a little experience may save a lot of pain, emotions, time, and hardship.

In my undergraduate studies in business and public administration, the picture used for administration was that of a duck – graceful on the surface, yet paddling feverishly underneath the water.  I really enjoy thinking creatively on behalf of my clients and tend to get compliments on how smooth things go, despite the “roller coaster ride” of the transaction and feverish paddling that no one may ever see.

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

Short Sales – Taking it Personal

I have landed in a place where I am selling a few of the properties I own, in a short sale position.  It seems like a year ago there would have been ridicule and maybe a little pity for those poor folks who find themselves in this situation.  I struggled to come to grips with this reality and felt some remorse.  Now we all know someone who is facing foreclosure, being “upside-down,” late on their mortgage payments, or trying to short sell their home.

Short sales may currently comprise up to 75% of the market right now.  All arrows are pointing to 2010 to be the year of short sales.  Supposedly banks are getting government incentives and getting a clue in general.  Oppose to letting these homes foreclose, a short sale is now the most workable route for both the owners and banks.  Personally I’ve had successes with short sale at the end of last year and one already this year, which has changed my demeanor toward them.  Now I trudge through the grueling process of pushing my own properties through.

I met with an agent and his buyer at my 4-plex that is up for short sale yesterday.  After handing me the offer we discussed the short sale process.  The other agent commented, “They should be called long sales, not short sales!”  For the most part, very true.  I just closed one that took the bank 4 months to approve.  While another one that I listed got approval in 1 week!  I still stand in unbelief.  I just contacted an agent representing a short sale property, where they had a buyer waiting for ….. 15 months!!!! before they said, “Uh, this is ridiculous!  We’re outta here! [my conjecture]”

I hold my breath and wait to see how my own experience will transpire.

Enjoy,

Keith Klassen

Real Estate Broker

Short Sales Revisited

In past posts I’ve been adamantly against short sales due to all the hiccups involved.  It is still true that a buyer needs patience, emotional disconnect, and a reality check, however, this year and the years to come might be much different.

Definition – Short Sale:  When a home’s value is less than the money owed on the note/mortgage; This produces a scenario where the lender (one holding the note) is given the opportunity to approve or reject an offer to “forgive” the difference between the offer amount (and real estate fees) and the current amount owed on the loan.

To reiterate:

1) Patience – I closed a few short sales this year for buyers and the average wait to hear back from the bank on an approval was 2 months.  I currently have an offer out there for a client on a short sale and we’ve waited about 4 months with no approval from the bank as of yet.  The other agent keeps saying, “soon, soon… hopefully soon.”

2) Emotional Disconnect – This is a tough one… How does one make an offer on a home to live in and not become somewhat emotionally attached?  It can be such an emotional roller coaster!  Here’s the real picture – one can make an offer and finally hear back from the bank 2 months later, only to find out that the sale is not approved.  Or, what is more common, there is no approval or call back, just the information that the home has gone to foreclosure.

3) Reality check – Much of the time short sales are listed in better condition and less expensive than REO/Bank Owned properties.  Why is that?  That’s what I ask my clients.  Here is the answer – the agent is never sure what the bank will accept until an offer is received and submitted to the bank.  So, in fact, the listing price is not completely accurate.  And it stands to reason that an agent might just list it for lower in an attempt to garner offers.

Here’s the other side of the coin.  I just took a short sale listing.  The seller’s were very cooperative in filling out our short sale package.  My staff and I were diligent to contact the bank.  We did out own Broker Price Opinion (BPO) and due diligence.  We priced it fairly and receive multiple offers.  We picked the best one and submitted it to the bank with all of the information they requested (we knew this ahead of time).  The offer was accepted and approved by the bank within ONE WEEK! I add the emphasis because my jaw also dropped with I heard this news.  I can’t really take too much credit either, but I do know that the banks appreciate a complete package and agents that have their act together.

Bottom line, my faith is renewed for short sales.  Also this coming year I believe that along with government incentive, laws being pasted, and banks getting more adept at dealing with short sales, this segment of the market will be huge.

My company is primed and geared to entertain many short sales in the year to come.  Let me know if you have questions, or think you are a candidate for short selling your home.

Enjoy,

Keith Klassen

Real Estate Broker

The Front Porch – Curtis Park, Sacramento and Beyond

[This was an article I wrote for a monthly newsletter I used to produce for my neighborhood (Curtis Park) each month.  A friend of mine inspired me with his writings “The Relevance of the Front Porch for a Community” to re-post my article.

[this is from “The Front Porch” March 2006]IMG_4380

Some of you have asked me about the significance of the news letter’s name.  The name, for me, evokes a feeling and concept that many of our homes already have built in – namely the front porch.  The front porch can be the equivalent of an outdoor sitting room, a place for discussion and relaxation.  As I walk the streets of our neighborhood I see people cooking/barbequing, reading, children playing, writing and even business being done (with the advent of wireless technology) on the front porch.  You might catch some just sitting, gazing at the street or in the trees, entertained by a bird or squirrel.  The front porch welcomes the passer-by, and invites conversation between neighbors.

IMG_4382The word “porch” originally derived from “the Latin word porticus, or the Greek word portico, both of which signify the columned entry to a Classical temple”(Kahn 1).  As history unfolded and the Middle Ages arrived, the porch came to represent a cathedral’s vestibule, “where worshippers could gather to socialize before and after the service”(Kahn 2).  By Victorian times, the word “porch” became interchangeably used with the words “veranda,” “piazza,” “loggia,” and “portico,” each of which could connote individual meanings.  From this period until the second half of the nineteenth century, “the word ‘porch’ itself most often described a small, enclosed vestibule or covered rear entrance” (Kahn 1).  At this time, at the end of the nineteenth century, the word “porch” began to represent its present meaning. This meaning, in its American sense, generally refers to a “roofed, but incompletely walled living area”(McAlester 52) contiguously attached to the frame of a house. Generally, in America, this area would be found attached to the front of a house, offering a covered and shaded area for an array of uses and would be known as the American front porch.

Between the rise of the front porch in the middle nineteenth century and its decline in the post World War II era, the front porch developed a cultural significance. It represented the cultural ideals of family, community, and nature.IMG_4381

The new technological development of air conditioning further aided in the decline of the front porch. Providing a cool environment indoors, the front porch was no longer needed as a cool shaded area during the day or as a place to enjoy the cool night air. Families remained indoors comfortably, and a primary use of the front porch was no longer needed. Air conditioning, in a sense, also contributed to another technological development which would affect the front porch: the television. The television, which could exist only inside, provided endless hours of entertainment indoors. As a result, family life shifted from the porch to a family room or TV room, where families could watch the evening news, sporting events, or the early sitcoms, all while enjoying the newly invented “TV dinner.” No longer would families relax outside on the front porch.

Some of our friends, who live in the “burbs,” lament, “Our neighbors just open their garage, pull in, and you never see them – Or, “Everyone hides out in their backyard.”  And, “We still don’t know many people on our street, after all these years.”  Notice what might be missing from these homes… the front porch or at least the “front porch attitude.”  Granted, this home feature will never guarantee a gregarious disposition in life or an abundance of neighbors who are open and friendly, however it does give us a head start.  Why do you think the street side café or coffee shop with outdoor seating will always be a hit?  It’s for the same reason why front porches exist.  Is yours lying dormant?  You may not be the one who throws a block party or is best friends with everyone on your street, yet you may try dusting off those beautiful Adirondack chairs (or whatever furniture you have – pull out a folding chair, it doesn’t matter) and become a part of the front porch culture.

A while back, I received an email from a friend in the community saying, “I came by to visit today, but you were not home.  Hope you don’t mind, but we just sat on your front porch for a while and enjoyed the neighborhood.  We may be back soon, even if you are not home. J  Thanks! “

While my day job consist of real estate investing, property management, and real estate consultation, I hope to also be one who helps draws the community together.  So whether you have one or not, you can still enjoy the ethos and attitude of the front porch.

See you soon, walking by or enjoying a beverage … on the front porch.

McAlester, Virginia and Lee. A Field Guide to American Houses New York: Alfred A. Knopf, 1996.