American Trust Escrow

Eco-Friendly Real Estate on the Rise

There’s a lot of talk these days about sustainable and “green” living, and new construction is no exception to this new way of life. Heavy hitters such as Goldman Sachs, JP Morgan Chase, and IBM Corporation have recently started making their mark in the eco-friendly building space.

Accordingly to MSN Money, sustainable building is currently one of the fastest growing areas of the commercial building industry, as evidenced by Bank of America, who recently made plans to build a 52-story “green” skyscraper in Times Square in New York City. In addition, Accenture has arranged the leasing of dozens of eco-friendly office spaces throughout the United States.

Currently, approximately 10% of all new commercial construction in the country received the LEED certification – Council’s Leadership in Energy and Environmental Design. In addition to new construction, existing buildings aren’t being left out.  Developers are on the hunt for partially unoccupied office buildings, with plans to renovate them to be in line with green standards.

Of course there are benefits to the environment through these practices, but more importantly to builders, there is also the potential for an increase in revenues. Transforming a traditional building into a green certified building can often produce up to a 3% increase in rents and up to a 7% increase in the building’s overall value. In addition, there are maximized savings in utility bills when building in an eco-friendly manner.

According to many environmental and real estate experts, the trend will definitely continue to gain popularity – providing consumers with greener options and builders the opportunity to increase their profitability.

Using Geographic Based Applications to Connect With Your Clients

Over the last year, geographic based applications have been popping up like wild flowers.  Yelp is probably one the best known, which started out as a place to review restaurants and locate venues close to your physical location. To date, there are dozens of applications that have set out to accomplish the same thing, and Foursquare is one of the most popular.

If you’re not already on Foursquare,  you can download the application to your Android device or iPhone.  Here’s how it works: The GPS on your phone will track your location and pull up a list of all the business you are nearby. Once you check in, your location is then shared with the people you have chosen to connect with via the app. In addition to sharing your whereabouts, you have the ability to see your connections that are within close proximity to you, and also view deals that are available in the area.

Since it looks like these types of technologies are here to stay, real estate professionals across the country are now exploring ways to use them to increase their business and stay in touch with clients.  There are several ways this application can be used to accomplish this goal.

Place your office on the map: If your office isn’t already a location of Foursquare, add it. You can then check into your office, leave tips and connect with others who might be familiar with your office and real estate in general.

Connect with friends and clients: Similar to Facebook, Foursquare allows you to connect with people who are also using the application. Connecting via Foursquare is just one more avenue for building online relationships and potential business.

Gain Status: Foursquare awards Mayor status to the person checks in at a location most frequently. Gaining Mayorships not only opens doors for discounts and specials, but is also a great way to position yourself as the community expert in your area.

Understanding the Intricacies of Home Warranty Plans

The process of buying a home most often entails a great deal of time, research and planning. As such, the last thing a new homeowner needs is the stress and aggravation associated with broken appliances in the home. One step that can assist in avoiding this involves securing a home warranty plan.

The cost of a home warranty plan is a common question that homebuyers have. Unfortunately, there is no definitive cost that can be attached. Plans can vary in cost from $200 – $500, depending on the coverage and provider.

Although plans vary based on coverage and provider, they traditionally work in the same fashion. If a homeowner encounters a problem with an appliance, they contact the warranty company. The warranty company then gets in touch with the provider it has an agreement with. The provider normally gets in touch with the homeowner to schedule an appointment to come out and fix the problem. If the problem cannot be fixed, the warranty company typically pays for the repair and the homeowner pays a small deductible.  Of course, it ultimately depends on the warranty and provider.

Here are several items that may cause an appliance to not be covered by a home warranty plan:

• Wear and tear that isn’t deemed as natural
• Improper care of an item
• Faulty installation

Although the specific plan will dictate what is covered. These are items typically covered:

• Air conditioning
• Dishwashers
• Furnace / heating
• Water heater
• Garbage disposal
• Ceiling fans
• Electrical systems
• Range and oven

Similarly, items that are not normally covered may vary based on the plan and provider, but may include:

• Sprinklers and other outdoor items
• Washers and dryers
• Pools and spas

A real estate agent can often be a great source for learning more about home warranty plans, pricing and typically coverage. Homeowners may also consider conducting some of their own research as well, prior to the purchase of the new home.

Beware: National Mortgage Scams on the Rise

Los Angeles Times recently published an article that outlines a mortgage scam currently affecting residents across the United States. According to reports by the United States government, the individuals running the scam are selecting current homeowners to whom they are sending letters. The letter explains that the homeowner’s loan payment needs to be mailed to a new address. The new location is not a legitimate company, but rather an address that gets the check to the scammers.

Those who have been affected by the scam may not recognize they have been scammed until months after sending payments to the false address. Often times, the discovery didn’t come until the actual lender contacted the homeowner and explained they had defaulted on their payment. By this time, the homeowner may have already sent several payments to the fake company.

There are times when a lender’s address does changes. Therefore, homeowners should take time to review any requests they receive regarding their payments to identify their authenticity. If the notification is legitimate, the lender will include the loan account number. If this information isn’t present, it is a good indicator that the request may be false.

One other red flag is if the letter is the only form of communication. Genuine requests are usually followed by another package within a week’s time. The package typically includes the homeowner’s payment structure, principal details, and unique escrow details.

Authorities have recommended that if a homeowner is unsure about a request, they should contact the lender directly to verify the request.

New IRS Change Aims to Save Americans Money on Mileage Deductions

It’s pretty rare that we receive good news from the Internal Revenue Service, but this is one instance of savings they are sending your way. If you use your personal vehicle for business purposes, you will be able to deduct an additional $0.04 a mile from your taxable income as of July 1.

Typically the IRS updates its mileage rates at the end of the year for the next calendar year, but they decided to push the savings ahead earlier this year. It is no surprise given that the average gas price is now $3.61 per gallon – an increase of over one dollar a gallon from last year. According to the IRS commissioner, the increase in gas prices have had an immense effect on Americans. The bureau hopes that this change will in some way assist those Americans who use their vehicles for business purposes.

One common challenge still remains…keeping track of miles used for business reasons. To help, we wanted to provide you with several very useful applications that might assist you in getting the highest deduction possible when it comes to mileage.

Mileage Pad: This application is for iPhone and Android users and allows you to track your miles via a simple interface. One of this app’s best features is that is automatically pulls in IRS data so you never need to worry about configuring the mileage deduction.

Gas Log: This application is only available for iPhones. Use two personal vehicles for business purposes? This app allows you to track mileage incurred on multiple cars.

Mile Bug: This application is only available for Android users. It possesses some additional functionality, as it also allows you to track general expenses such as food, travel, and general office expenses.

Understanding Capitalization (CAP) Rates

Commercial real estate properties include:

• Investment (tenant occupied) properties
• Owner occupied properties

Most commercial real estate properties are for investment, and therefore the decision by an investor to purchase a commercial property is primarily based upon a financial performance analysis of the asset. One of the fundamental components of the financial analysis is the Capitalization (CAP) Rate.

What is the CAP Rate?

The CAP Rate is calculated as follows:

CAP Rate = NOI/Price, where NOI is the Net Operating Income of the asset and Price is the price of the property. The CAP Rate is analogous to a simple Rate of Return (ROR) calculation for an investment. For example, if you invest $100,000 into a CD (Certificate of Deposit) and your annual return is $10,000, then your ROR = $10,000/$100,000 = 10%.

Similarly, if an investor purchases a commercial property for $1,000,000 and the Net Operating Income is $70,000, then the CAP Rate = $70,000/$1,000,000 = 7%.

Of course, the commercial property’s Net Operating Income (NOI) is needed for the CAP Rate calculation. The NOI is determined from the asset’s gross income and expenses. An investor (buyer) typically obtains the necessary financial information by requesting it from the seller or the seller’s agent prior to executing a commercial real estate sales transaction.

It is customary that the sale transaction purchase contract sets forth the details by which the buyer and his agent verifies or determines a CAP Rate and other important components of his financial analysis by his own due diligence work while in escrow.

Four Things Home Buyers Are Looking for in Their Next Home

According to a recent study, home buyer’s are getting much more particular about the items they “require” in a home. As a whole, the home buyer segment is well aware that many home sellers are eager to sell as quickly as possible. As such, expectations have expanded beyond things that weren’t commonly thought of as “must haves.” Outlined below are a list of the top four things home buyers are keeping a close eye on when viewing properties.

#1 – Well Maintained Property

Fixer-upper homes have lost some popularity.  If a property requires major work, home buyer’s are more apprehensive, worrying that costs might hit them further down the road.  In addition, finding the funds required to complete such work can be more difficult than it was years ago.

#2 – The Great Outdoors

Today’s generation of home buyers appreciate outdoor living spaces, such as sun rooms, screened porches, decks, and outdoor entertaining areas, complete with kitchens and fireplaces, as they have a deep desire to expand their living space well beyond the indoor living quarters.

#3 – A Green Home

The world is going green!  New trends include a home solar system, energy saving windows and appliances, along with sustainable, bamboo flooring and countertops.  This “must have” hits a hot button with a good number of homebuyers, especially Generation Y and Millennial segments.

#4 – Little Doses of Luxury

Even though the space may be small and the materials sustainable, homeowners are still looking for the small luxurious touches in homes. Such doses include high-quality crown moldings, windows, and doors.

A Few Things to Know About Earnest Money

Earnest money, also known as a good faith deposit, dates back to ancient times.  In the old days, it was known as the earnest penny and represented the payment binding a purchase, often times an animal or a piece of land.  It has since evolved to be a fairly important step of the home buying or selling process.

Today, earnest money represents the money that serves as the deposit for a real estate purchase.  The money is used to represent that the potential buyer of the property is serious about wanting to complete the purchase.  In real estate, when a buyer makes an offer to buy a home, he or she signs a contract that states earnest money will be paid. This amount is completely dependent on the market and the price of the home in question.

In addition, the seller must accept the offer that the buyer has proposed.  Often times, negotiations take place until the buyer and the seller both agree on an amount that works for both of them.  Once the amount has been agreed upon, the money is held in escrow until the closing of the property.  Typically, the money is put towards the buyer’s costs at closing.

If for some reason the offer is rejected, the money normally is returned to the buyer.  If the buyer decides that he or she no longer wishes to purchase the property, there are several circumstances that come into play.  On many occasions, the buyer forfeits the money if he or she retracts the offer.

While earnest money’s role has changed over the centuries, it still plays a crucial role in the home buying and selling process.  If you have any additional questions about the escrow process, please feel free to contact us.  We’d be happy to assist you!

Three Steps of the Escrow Process Simplified

Whether you are a first time homebuyer or in the process of selling your second home, the escrow process can come across as unfamiliar territory to both homebuyers and sellers. The knowledge and expertise that is required of an experienced escrow officer often takes years to develop and refine, and although your escrow company will take care of each step of the process, we believe it is never a bad idea to educate yourself. So to help, we’ve created a simplified version of the “Three Steps of the Escrow Process.”

Step One: Opening Escrow

This phase entails obtaining basic information crucial to your escrow, which may include names of parties involved, financing information, conditions placed on escrow and sale price of home. Once the escrow officer has this required information, he or she prepares instructions that pertain to the escrow moving forward. These directions entail what must occur for the escrow to successfully close.

Step Two: Processing Escrow

This step also entails a great deal of “information gathering,” ultimately in preparation for closing. Signatures of parties involved, preparation of the Deed, opening the Title order, calculating required funds, and obtaining a preliminary Title Report are all occurrences that take place during this time.

Step Three: Closing Escrow

This step involves working with the Title company, following the instructions initially laid forth as they pertain to lenders involved, preparing statements and checks to parties involved, and paying off old loans. In addition to executing all of these items, the pivotal aspect involves getting them done accurately and in the timeframe set forth by the real estate contract. Once all of these items are complete and the instructions have been fulfilled, the escrow closes and the property and money are transferred.

If you have additional questions about the escrow process, please contact us. We’d be happy to speak with you in further detail.

Tips To Help Make Your Home Buying Experience As Seamless as Possible

If you’ve ever purchased a home, or are in the process of buying, it will come as no surprise to you that the home buying process is one of the biggest decisions you’ll ever make.Although some aspects of your new home purchase will be handled with your qualified real estate agent, escrow officer and title company, educating yourself can also be a huge asset. To help, we’ve compiled a list of items that can help make the transition as stress-free as possible.

1. Ensure that you have an established closing date.

As a team, your real estate agent and title company will work together to schedule the closing date for your new home. Just make sure that this timeline coincides with the sale of your current home or the end of your current lease. This will make the transition much smoother.

2. Coordinate your funds.

A common requirement is that you must bring funds to the closing of your new home. If you have money tied up in stock or a savings account work to make those funds liquid so that they can be easily accessed.

3. Conduct a final walk through of the home.

A final walk through is never a bad idea. Work with your real estate agent to take a peek at the home one final time prior to closing. This will ensure that no major changes have taken place prior to the last time you saw the property. This also gives you the opportunity to verify that all of the agreed upon alterations have been made.

We wish you the best of luck in new home search and hope these tips come in handy!  If you would like additional information about the home buying or the escrow process, please feel free to contact us.  We’d be more than happy to help!