Mixed Feelings About Californians

The Twitter squall below is linked to the tweets. Susie, what is it really like?

This city sure knows how to roll up the welcome mat — that is, if you happen to move here from California.

Just consider last week’s mayoral election. It was the most competitive race in recent memory, a referendum on growth in the rapidly expanding capital of Idaho. And candidate Wayne Richey ran on a very simple platform: Stop the California invasion.

His basic plan to fulfill that campaign promise? “Trash the place.”

Richey figured that would be the best way to keep deep-pocketed Golden Staters from moving to his leafy hometown. He blames them for pushing home prices and rents up so high that Boiseans can’t afford to live here on the meager wages most Idaho jobs pay.

At a candidate forum in late October, he had a terse answer for the question: “If you were king or queen for the day, what one thing would you do to improve Boise?”

“A $26-billion wall,” he said, laughing, drawing out each word for maximum emphasis. As in build one. Around Idaho.

California bashing is a cyclical sport with a long history in the heart of Idaho’s Treasure Valley. Growth spurts have more than doubled Boise’s population since the 1980 census. Four months before federal counters hit the streets here that year, a Washington Post headline crowed, “To Most Idahoans, A Plague of Locusts Is Californians.”

In this current wave, California concerns have made their way into a heated mayor’s race. They have taken up residence on Nextdoor social networks.

And they erupted into a recent tweet storm that swirled around two beloved institutions, Boise State University and football. The electronic uproar caused residents all the way up to Mayor David Bieter to defend their city’s welcoming nature and insist that they like Californians, really they do, despite evidence to the contrary.

The Twitter squall started in late September, when former Boise State University football player Tyler Rausa went out to his car one day. There he found a professionally printed card, white with an elegant charcoal gray and gold border. It had a nicely centered, two-line message in all capital letters.

  GO BACK TO CALIFORNIA

WE DON’T WANT YOU HERE

He posted it online with a very short response: “Hmmmm didn’t think I’d ever find this on my car in Boise. #ThankYou.”

Rausa was a talented kicker for the Broncos in the 2015 and 2016 seasons. He scored 219 points for the team then. He is now an NFL free agent. He still lives in Boise. But he kept his California license plates.

The response to his tweet was swift, voluminous and mostly open-hearted. “I hope they are ashamed of themselves,” wrote @NitroJen. “Idaho: The PNW’s Mississippi,” posted @AbsoluteKit, referring to the Pacific Northwest. “Screw them!” @someone tweeted. “You are more than welcome here!”

Then Bieter chimed in. “@T_Rausa, I hope you take all of the positive comments you received here as the real spirit of Boise and #BoiseKind,” the mayor wrote. “We are glad you are here and part of our great community.”

One bit of advice Rausa got during the online fracas was that he should change those California plates — and fast. That’s been a longtime refrain from friendly Boiseans to their newest neighbors.

The Rev. Bill Roscoe, chief executive of the Boise Rescue Mission Ministries, heard it from his Realtor when he moved to Boise from Redding in 2002. He keeps a sign on his desk that says, “I am not from Idaho but I got here as fast as I could.”

“If you come here and love it, everything’s fine,” Roscoe said. “If you come here and fly that California flag in your driveway and have stickers on your car that say, ‘Santa Cruz,’ there’s going to be some hard feelings.”

Link to LAT article

Taxation on Inherited Property

When you drive around older neighborhoods, you see homes in original condition or in a state of disrepair, which are signs of senior homeowners. It makes you think, “They should sell and move – are they just waiting around to die?”

The answer is YES, and it’s because of how the IRS taxes the gain from the sale of your home. Once a property is inherited, the tax basis is stepped up to fair-market value.

Excerpted from the IRS website:

Inherited Property

The basis of property inherited from a decedent is generally one of the following.

  • The FMV of the property at the date of the individual’s death.
  • The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation. For information on the alternate valuation date, see the Instructions for Form 706.
  • The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. This method is discussed later.
  • The decedent’s adjusted basis in land to the extent of the value excluded from the decedent’s taxable estate as a qualified conservation easement. For information on a qualified conservation easement, see the Instructions for Form 706.

If a federal estate tax return doesn’t have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes.

For more information, see the Instructions for Form 706.

Appreciated property.

The above rule doesn’t apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent’s death. Your basis in this property is the same as the decedent’s adjusted basis in the property immediately before his or her death, rather than its FMV. Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis.

Community Property

In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), married individuals are each usually considered to own half the community property. When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. For this rule to apply, at least half the value of the community property interest must be includible in the decedent’s gross estate, whether or not the estate must file a return.

For example, you and your spouse owned community property that had a basis of $80,000. When your spouse died, half the FMV of the community interest was includible in your spouse’s estate. The FMV of the community interest was $100,000. The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). The basis of the other half to your spouse’s heirs is also $50,000.

For more information on community property, see Pub. 555, Community Property.

https://www.irs.gov/publications/p551

First Day at the Office

I describe the strategy for sellers here, because buyers need to be on alert 12 months out of the year. Why? Because you only care about buying the right house at the right price – which isn’t affected by the general market conditions. You are looking for the one-off.

Tenancy In Common

Aisling Swindell was paying so much for rent last year—$2,100 per month to live in a studio in Downtown LA—she figured she might as well buy a place.

“The house I ended up buying was $440,000, which is insane, right?” says Swindell, who works for an online fashion company.

That price tag, which is $178,000 below the median in LA County, sounds unbelievable, especially for what she bought: 870 square feet in the city, plus a little yard, lots of natural light, some stylish updates, and charming, 1930s-era details, like wainscoting and solid wood doors.

But while she’s no longer a renter, she still doesn’t, technically, own a house.

Her $440,000 bought her a share of a larger property: a triplex on an 8,344-square-foot lot in Jefferson Park. Her right to occupy the unit, and her responsibility for maintaining it, are spelled out in a contract with her neighbors, who live in the triplex and, with her, are its joint owners.

Read full article here:

https://la.curbed.com/2019/8/8/20751845/tenancy-in-common-los-angeles-rental-girl

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Are you thinking this would be a great way to sell your multi-unit building in San Diego?

I can help you with that!

Buyers can get mortgages up to $850,000 with a 10% down payment.

Contact me today at (858) 997-3801 or klingerealty@gmail.com.

Getting the Price Right

I don’t know if they surveyed actual home sellers, but if these stats demonstrate the current sentiment, it shows how critical it is to list a home at ‘market price’ vs. ‘dream price’.

An excerpt from this HW article:

You’ve listed your home for sale, and no one is taking the bait. One month passes, then two. How long do you wait before you increase the odds of an offer by dropping the price?

According to a recent survey, most American home sellers opt to reduce their asking price after three months of zero offers.

Specifically, a survey of 1,000 consumers revealed that 33% would opt for a price reduction after three months, making it the most common choice.

Just under 20% said they would wait one month, while 17% would wait five months. For about 9%, it would take an entire year before they’d reconsider their price.

But for others, they’d rather not sell at all as opposed to selling for less than they originally wanted, with about 12% said they would never lower the price of their home.

The 33% would wait three months, but 38% would wait at least five months or longer to lower their price, if at all (17%+9%+12%).

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Zillow says that the average price reduction is 2.9%, which isn’t going to impress buyers much.  When prices were rising 5% to 10% annually, the market would catch up with a wrong price before too long.  But now that pricing is flat, we don’t have that luxury – and we need to be smarter about price strategy.

https://www.zillow.com/sellers-guide/when-to-reduce-house-price/

Tax Reform Winners and Losers

The folks at JBREC have completed their own tax-reform study:

Link to Article

They say the high-earners who buy a million-dollar house are the losers, but those folks can still deduct the roughly $30,000 per year in mortgage-interest paid on a loan amount of $750,000 (though if they were renting previously they now have to pay property taxes).

Reasons for High-Earners to Buy a House:

  1. Deduct mortgage interest of $30,000 paid on your $750,000 loan (or higher).
  2. Secure where you are going to live over the next 5-50 years.
  3. Build equity with each payment.
  4. Gamble that the value will go up.
  5. Make the family happy.

Reasons for High-Earners Not to Buy a House:

  1. Have landlord pay property taxes, HOA, etc.
  2. Have landlord fix stuff.
  3. Stay flexible on where to live.
  4. Hope prices go down and buy later.

Numbers 1-4 on both lists probably offset each other, so the focus is on #5.

Compass Concierge

Are you thinking of selling your home, and curious about the idea of out-fitting it for a multi-gen buyer?  Or want help in getting the home into top condition in order to sell it for top dollar?

We’re here for you!

The Compass Concierge program is willing to pay for repairs/improvements to your home, and be reimbursed at the close of escrow.  At first, the program was just for the basics, but it’s been expanded to include virtually everything!

And it’s free – the service comes with listing your home with us, at no extra charge!

Here are examples of what’s been done lately:

In Los Angeles, an agent used Compass Concierge to buy — not stage, but buy outright — $900,000 worth of furniture in order to win two listings, one worth $23 million and the other worth $87 million.

In Philadelphia, an agent was in the midst of a contentious divorce sale. The husband and wife weren’t talking and neither wanted to pay for the staging, painting, and cosmetic repairs the home needed. So the agent pitched Concierge as the solution, and solved the problem!

There was a buyer looking at a million-dollar property listed by a Compass agent that needed a lot of work, but the buyer couldn’t afford to pay a $200K down payment and then shell out another $200K in cash for remodeling. The seller and buyer came to an agreement that the seller would use Concierge to do a $200K remodel first — raising the sale price to $1.2 million but only increasing the down payment by $40K. The buyer was floored.

To get started, click below:

https://www.bubbleinfo.com/compass-concierge/

Sweeteners

A combination of mine and Leonard’s lists of sweeteners:

In an increasingly competitive environment – especially on the high end – it may be wise to sweeten the package you are selling by including some value or time-savings item.

Some mega-homes include expensive fancy cars or artwork and other gimmicks, but of course those items are factored into the purchase price and often appear as somewhat desperate. Some may want to increase the commission incentive for the buyer’s agent.

It may be wiser to include certain items that are more focused on time-savings…..and something that may have practical value to make a buyer feel there is less to be spent after closing.  Here are 10 ideas:

1.  A buydown of the mortgage rate probably has the best financial impact – it can last for 30 years!

2.  Pre-paid real estate taxes for the first year could be appealing, or paying HOA/Mello-Roos fees.

3.  How about $5-10,000 worth of new landscaping, or window coverings?

4.  One year’s worth of weekly yard maintenance would be appreciated.

5.  $1,000 worth of Home Depot, Amazon, or UBER dollars could be appealing.

6.  If a home has gorgeous views and big windows, include a year’s worth of window cleaning.

7.  Offer to have the interior painted to colors of the buyer’s choice at closing.

8.  Pay for a maid service to come weekly for a year.

9.  If the house is staged, offer a price list of all the furnishings that could be bought. The buyer may see great time-savings value in not having to furnish themselves.

10. Lower the price!

These are just some simple ideas that may make your listing more memorable and more appealing to some buyers…..and possibly sweeten the deal enough to make them choose your listing over another one!

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