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Category Archive: ‘Ideas/Solutions’

Modern Communes

Because millennials are more likely to stay single longer, these communal living arrangements should flourish.

They are probably an extension of the mini-dorms around college campuses.  Next year, our youngest will be splitting $9,800 per month to live with 13 other women in one apartment.  Their landlord inherited a dozen apartment houses, all in Westwood! H/T daytrip:

LINK

Zander Dejah, 25, pays $1,900 a month rent to live in a downtown San Francisco house with at least 40 other people, many of whom sleep in bunk beds.

Dejah is a resident of The Negev, a communal living space that styles itself as a home for millennial tech workers to brainstorm ideas, write code and create apps, even if they have to share toilets and bathrooms with dozens of others. (Related photo essay: here)

Houses like The Negev, located in a neighborhood known as “SoMa” or South of Market, have cropped up around San Francisco as an influx of young professionals, many of whom are tech workers, have faced the city’s notoriously high rents and apartment shortages. It has three floors and roughly 50 rooms, filled with bunk beds, beer bottles and laptops, according to residents.

Dejah, born and raised in New York, graduated last year with a degree in computer science and math from McGill University. Unemployed, he moved to California six months ago and found his room at The Negev on Craigslist.

“I thought New York was expensive,” said Dejah, who quickly landed a job as a virtual reality engineer at consulting firm moBack. “It’s basically an extension of college. We sort of live in a frat house.”

The home is certainly filled with parties on weekends, but the residents make sure to sit down every Sunday for a communal dinner, akin to a traditional family gathering.

While some say communal housing provides a solution for many first-time workers fresh out of college, such housing also has created its share of controversy. Housing advocates have complained that this new dorm-like style of living has pushed up rents and forced longtime residents to move out.

Alon Gutman, who co-founded a company called The Negev and began leasing the building on Sixth street in 2014, said, “We have never made somebody move out of that building,” adding that his tenants pay 30 percent to 50 percent less than others in the neighborhood.

“We are trying to solve the housing crisis and increase density in a positive way.”

The Negev company runs nine communal properties, three of which are in San Francisco. The others are in Austin, Texas, and Oakland, California.

The Negev properties, generally in run-down, low-income neighborhoods, are restructured to accommodate a large number of tenants, Gutman explained.

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Posted by on Mar 12, 2017 in Ideas/Solutions, Jim's Take on the Market, Market Conditions | 5 comments

120% Mortgages

In the last downturn, there were a surprising amount of people who were underwater but hung on – and today with record-high prices, they are glad they did.  We learned that whether you had equity or not, the chance of default was influenced by other factors.  If that’s the case, lenders might as well finance the whole enchilada, and price in the same or similar percentage of defaults as last time.

http://www.housingwire.com/articles/39288-burkeyloan-to-offer-120-ltv-mortgage-that-also-pays-student-loans

BurkeyLoan launched its BurkeyLoan Mortgage division Tuesday which included its 120% loan-to-value mortgage product that funds both a home purchase and the borrower’s student loans.

BurkeyLoan, a portfolio mortgage lender, will issue, hold and service BurkeyLoan mortgages. The company’s 120% LTV product will allow Millennials to pay off or reduce their student loan debt in order to buy a home.

“After considerable research, review and analysis, we needed to build an access to capital product for the millennial generation,” BurkeyLoan Chairman and CEO John Burkey said. “Many millennials feel they are on a financial treadmill, making every effort to pay off student loans and save for a home while interest rates and home prices escalate.”

“Our mortgage product offers features and benefits that support the needs of the millennial generation,” Burkey said. “The company will utilize sound conservative underwriting that incorporates borrower credit, character, skin-in-the-game and risk mitigation.”

The program is available to community, regional and other banks as well as credit unions that broker residential mortgages.

But BurkeyLoan isn’t the first company to reach out to first time homebuyers struggling with student loans. Back in November, SoFi and the government-sponsored enterprise Fannie Mae announced a new loan option allowing homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.

The average student graduates with just over $30,000 in student loan debt, according to the Institute for College Access and Success. The median home price increased to $228,900 in January, according to the National Association of Realtors. The new LTV 120% program may enable homebuyers to pay off the average student loan amount, while offering a change to invest in their housing.

Posted by on Feb 23, 2017 in Ideas/Solutions, Jim's Take on the Market, Mortgage News | 5 comments

Lowball Strategy

typical agent

Have you seen a home sale close at a surprisingly-low price, and you said,

“Geez, I would have paid that!”

Usually the house has been on the market for months, and everyone else has forgotten about it. The seller doesn’t want to lower the price, but tells his agent, “Just bring me an offer”.

The agent revises the MLS remarks, adding gems like ‘Extremely Motivated’, and ‘All Offers Considered”.  A buyer who saw it earlier with another agent decided to approach the listing agent directly with an offer 20% below list – take it or leave it.

With visions of two commissions twirling around in their head, the agent tells the seller this is the best they could do. The seller really is motivated, so after months of failure at a too-high price, frustration sets in and he signs it.

If any seller is tempted to take a lowball offer – more than 10% below list – they should instruct the listing agent to immediately lower their list price to the midpoint between the offered price and current list price.

Let’s see who else is out there!

Watch how many you see that close at 15% to 20% below list and the listing agent represents both parties.  It isn’t enough to change the market, but a notable strategy.

You shouldn’t burn your old agent though – there are enough listing agents who are wimpy about dual agency and prefer that you have your own agent anyway. It is the same net to the seller, so he won’t care either.

Posted by on Jul 20, 2016 in Ideas/Solutions, Jim's Take on the Market, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

Home Design in 2015

home design

Hat tip to daytrip for sending this in:

http://www.bbc.com/capital/story/20150901-luxury-for-the-pinterest-crowd

For the Pinterest generation, which is used to browsing and pinning glamorous photos of home decor, showcasing their own magazine-worthy spaces online is now a must. And with good design easily accessible online on home decor sites such as Houzz.com, there’s an increased interest in a DIY approach. Furniture and other items are also more easily sourced than ever before, as some start-ups now cater directly to the consumer by selling wares online that were once only available to the trade.

When Jen Bailey, 33, moved in with her boyfriend, she was eager to incorporate both of their ideas when decorating their new Los Angeles home. But they faced a challenge: Bailey’s boyfriend held frequent American football parties, which didn’t exactly mix with her sophisticated tastes.

“Having 15 guys over watching football [was our] design issue,” Bailey said.

The couple turned to Laurel & Wolf, a one-year-old interior design start-up that allows customers to choose from at least four high-end interior designers who submit “first looks” of their ideas.

Customers choose the design they like and pay from $199 to $499 per room for design advice. Bailey and her boyfriend paid $299 for a package and communicated with their designer via an online platform that allowed them to chat and send photos during the process.

Call it high-style luxury for the masses.

Read full article here:

http://www.bbc.com/capital/story/20150901-luxury-for-the-pinterest-crowd

Posted by on Sep 10, 2015 in Ideas/Solutions, Jim's Take on the Market | 1 comment

House Lottery

The first few house lotteries were shut down due to their gambling nature, but now there are new twists.  First it was the flipper who is unloading a 1906 Craftsman-style home to the person who submits $100 and the best dessert-recipe HERE

Now these folks in Phoenix who paid $350,000 for their house want you to submit an essay and $150 to have a chance to win their flip:

http://www.housefor150.com/

lucia

From KTAR – click HERE for link:

PHOENIX — Valley residents with an extra $150 lying around might want to think about investing that in real estate.

That money could actually go a long way as a Phoenix real estate investor says that’s all it takes to have a shot at purchasing one of his properties.

“We purchased the house with the sole intention of making it beautiful and selling it for profit,” said Erin O’Connor.

O’Connor intends to make a profit by selling the nearly 4,000-square-foot, five bedroom home at 6517 W Lucia Dr. through an essay contest that costs $150 to enter.

Any adult can submit an essay up to 250 words, O’Connor will then narrow the essays down to the best 300 and an attorney will pick the final winner.

“If you win the essay contest, then you’re given the exclusive right to purchase the home for $10 and your normal closing fees,” he said.

Those title and escrow fees are estimated to be roughly $3,000, according to O’Connor’s website.

O’Connor said there needs to be a minimum of 4,500 essays submitted for the contest to be valid and only the first 5,500 will be accepted. That ensures at least $675,000 in revenue for the home and at the most, $825,000.

Michael Weinstein of the YourRealEstateWorld.com team at West USA Realty wrote in an email the property has an estimated value of $418,210, so 2,788 entries would be needed to simply break even on the property.

Weinstein called it a fun idea for those that have the resources but was skeptical about the business model for sellers. O’Connor however, said he hopes it is a business model that not only works, but also will catch on.

“I do believe that it could catch on (and) we could make a business out of it,” he said.

A portion of the revenue from the essay entries will go to benefit St. Jude Children’s Hospital, O’Connor said.

Posted by on Jul 30, 2015 in Ideas/Solutions, Listing Agent Practices, Thinking of Selling? | 3 comments

Super Pantry

2014-02-09 16.46.15

Read two articles – an excerpt from the first:

Fournier’s new home is about 3,840 square feet. Her superpantry is a perk that her previous home, also in Carlsbad, didn’t have.

In the old home, she didn’t even have a basic walk-in pantry. She kept her bulky Costco items and second refrigerator in the garage. As a result, most of the time, she could only fit one car instead of two in the garage.

“This way, we keep the garage neat and can fit two cars,” she said. The superpantry is a place for the family “to keep our mess organized.”

http://www.utsandiego.com/news/2015/feb/14/tp-the-new-supersized-pantry/?#article-copy

An excerpt from the second article:

The pantry is super-sizing.

No longer just for storing potato chips and soup cans, the traditional kitchen closet is becoming bigger, more luxe and more multifunctional. Architects, contractors and real-estate agents say upscale homeowners are asking for walk-in rooms that serve as workspaces for everything from food prep to gift wrapping to bill-paying.

These new “super pantries” are becoming more common as American kitchens have become more open, merging with living rooms and family rooms—with kitchen islands serving as the entertainment hub of the home. Now, some homeowners are moving the clutter and clatter of kitchen activities behind the scenes, where they are less visible to guests.

“An open floor plan is great. But not all aspects of the kitchen are great to look at all the time,” says Peter Pfeiffer of Austin-based Barley & Pfeiffer Architects.

A report by the National Association of Home Builders last year showed 85% of respondents put a walk-in kitchen pantry on their “most wanted list,” with 31% saying it was an essential/must have” and 54% said it was “desirable.”

http://www.wsj.com/articles/the-rise-of-the-super-pantry-1410449896

super pantry

 

Posted by on Mar 1, 2015 in Ideas/Solutions, Local Flavor | 4 comments

Capital-Gains Tax on Real Estate

tax

Last night we heard a proposal to raise the capital-gains tax.  Can we cut to the chase and dive into reforming the tax code instead?

I don’t want to get into the politics of it, let’s leave that for other bloggers.  Everyone can agree that some sort of tax reform is wanted and needed – and hopefully somebody will pull it off someday.

Realtors hear about it all the time, especially from the long-time owners of rental properties.  The thought of paying a huge tax bill makes them immediately dismiss the idea of selling, because they know if their leave it to their heirs, the stepped-up basis will apply.

We shouldn’t have a tax code that influences real estate decisions. Tax reform should include a neutral stance on when you sell real estate – it should be taxed the same, whether you are dead or alive.

What about the MID, the mortgage-interest deduction?  Let’s get rid of that too, and create a pure marketplace where people buy homes to live in, and raise a family, and not because they get a tax break.

If you have any other reason to buy a house – investment, etc. – then great, but tax benefits shouldn’t be one of those motivators, because they won’t apply to all citizens.

‘Oh Jim, now you’re asking for it. The NAR is going to punch your ticket and throw you out of the club for that kind of crazy talk.’

Yeah?  The National Association of Realtors needs to play a bigger game.  The millions they spend on lobbying could help champion tax reform, instead of sounding like a broken record on the MID.

Here are two articles discussing the topic:

1.  This guys says that something has to give:

http://www.forbes.com/sites/anthonynitti/2015/01/20/why-republicans-should-embrace-a-28-tax-on-capital-gains/

2.  This guy points out how small the MID benefit really is:

http://www.latimes.com/business/hiltzik/la-fi-mh-capital-gains-20150119-column.html

Posted by on Jan 21, 2015 in Ideas/Solutions, Jim's Take on the Market, Real Estate Investing, This Is America | 8 comments

Flipper Grande

screensht

I would agree that the business of selling homes hasn’t changed much.  Internet technology has provided great assistance, but nobody has figured out how to replace realtors yet.

But outsiders think our industry is ripe for a change.

Here’s another start-up coming this summer:

http://venturebeat.com/2014/05/29/heres-investor-keith-rabois-bold-new-home-selling-startup-opendoor/

An excerpt:

Rabois’s startup was code-named HomeRun, and the seed for the idea was planted more than a decade ago, as VentureBeat reported in April.

“My friend [PayPal and Palantir cofounder] Peter Thiel suggested that I come up with an idea to innovate in residential real estate,” Rabois told VentureBeat in April. “It’s the largest part of the economy unaffected by the Internet. And that was definitely true then, and even with things like Trulia and Zillow, it’s fundamentally true today. But the process of [selling a home] hasn’t been transformed by technology.”

Now, that could change. OpenDoor will launch in July, its website promises.

The startup will “work with sellers directly to purchase home[s],” “work with local partners to rehab, maintain, and improve our portfolio of properties,” and “partner with local brokers and Realtors to market, list on [the multiple listing service], and resell to retail buyers and investors,” according to the site online now at opendoor.com.

That description sounds even more interesting than what Rabois told us originally. It shows that OpenDoor will do a lot more than just run a self-service website.

“We don’t have more information to add at this time,” Rabois wrote in an email to VentureBeat after this article was posted.

Their website (click HERE) promises to provide:

  • A transparent and simple sales process.
  • Full certainty on the price and close date.
  • Receive an instant offer online and funding in as soon as three days.

They expect that sellers will contact them, looking to sell their house for a small discount in order to close in a few days.  The I-News said HERE that the discount would be less than 8%.

But sellers already think their home is worth at, or above, actual market value, so the 8% will sound more like a 10% to 15% discount to them.  If there are sellers willing to dump and run, then guys like Tom Tarrant will be much more efficient in procuring the sale, because the folksy personal visit will be more effective than a website offer.

Even though it doesn’t sound like he has sold homes previously, the opendoor guy has confidence in his model:

“We have to value the home, sight unseen,” he said. “You can put in your address and we tell you what it’s worth instantly. And we’ll want to buy it from you for that price.”

Underneath the covers, HomeRun will analyze lots of data — some being proprietary, some not — to make an split-second calculation, with minimal human interaction. It’s “pretty complicated stuff,” Rabois said.

To do such work at scale would be vastly more complicated. So, at least initially, HomeRun will focus exclusively on the U.S..

“This can be a $10 billion to $100 billion [business] if we just do the U.S. correctly,” Rabois said. “I don’t want to get distracted. Focus is the most important thing for startups.”

They are going to determine what to pay for your house from a central command tower, pay out the cash in a few days, and then rehab and flip?

A better idea would be for a start-up to hire the best agents in town and create an exclusive marketplace.

http://venturebeat.com/2014/05/29/heres-investor-keith-rabois-bold-new-home-selling-startup-opendoor/

http://venturebeat.com/2014/04/03/keith-rabois-homerun/

Posted by on May 31, 2014 in Ideas/Solutions, Jim's Take on the Market | 0 comments