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Archive for the 'Important Information' Category

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.

Commercial Property Receivers: Who Are They And What Do They Do?

 

 

 

 

 

 

 

In a commercial property foreclosure, the lender will usually ask the judge to assign a Receiver to take “control” of the property. Receivers are normally nominated by the lender; however, they are considered agents or officers of the court and are a neutral third party. The Receiver (typically individuals, companies, or attorneys) will “protect, preserve and secure rents” and aid in restoring order to the business after a loan default on the foreclosed property.

Receivers have authority to:
Hire tradesmen to maintain the building
Make decisions about the operation of the property and the business
Notify tenants of the receivership
Execute leases
Collect Rents
Pay Taxes
Pay Utilities
Maintain insurance
Hire a real estate broker to list and sell the property

To learn more about foreclosure and receivership laws, visit: www.receivers.org

 

Residential Real Estate Statistics for Buyers and Sellers

Buyers and sellers often find residential real estate statistics confusing. In this blog we will shed some light on these numbers. We’ll take a look at the most widely used statistics and we’ll review each one to better understand them.

What are the some of the more important statistics?

“Existing-Home Sales” is one of the commonly used statistics. This number represents completed resale transactions of single-family, townhomes, and condominiums. New homes are not included. This statistic is prepared and reported monthly by the National Association of REALTORS (NAR) and is considered to be a good indication of trends in residential real estate. NAR’s “Housing Affordability Index” is also an important statistic. NAR develops this index by expressing the typical monthly mortgage principal and interest payment as a fraction of gross household income. A low index indicates very good housing affordability. The “Median Existing Home Price” (reported by NAR) is reported both nationally and by region, and represents the sale price at which half of all homes sold at a higher price and half of all homes sold at a lower price. NAR also reports its “Total Housing Inventory” which is an accounting of existing homes that are available for sale. This number is then divided by the current sales pace (homes being sold per month) to establish the current number of months of supply of homes for sale.

The U.S. Census Bureau and the Department of Housing and Urban Development (HUD) jointly release their monthly estimate of “Sales of New Single-Family Houses” and the “Median Sales Price of New Homes Sold” and “New Houses for Sale.” All of these numbers arseasonally adjusted, and the “New Houses for Sale” statistic is used to develop an estimate of the number of months of supply of new houses in inventory on the market and available for sale.

San Diego-based DataQuick monitors real estate activity nationwide and each month reports “New and Resale Houses and Condos Sold” nationally, statewide, and by metropolitan area. Another important statistic prepared by DataQuick is its monthly-reported “Median Price Paid for a Home.” DataQuick also provides statistics on distressed property sales (foreclosures, short sales) and “Typical Mortgage Payments” by home buyers.

Zillow Inc prepares and reports quarterly its “Home Value Index.” This number is widely used to demonstrate possible trends in improving or deteriorating home prices.

“Inventories of Unsold Homes” is shown in the Wall Street Journal’s quarterly survey of housing market conditions in 28 major metropolitan areas. Inventories are expressed as the number of months of supply of homes listed for sale in each market at the current sales pace.

 What should I look for when reading these statistics?

“Existing Home Sales” is a good number to follow to get a good broad sense of the direction and strength of the market. If the month-to-month number is generally rising, this would indicate an improving sales pattern, and if the number is falling it would indicate a deteriorating sales pattern. The same is true for DataQuick’s “New and Resale Houses and Condos Sold.” The rate at which it rises or falls will indicate the relative strength or weakness in the market.

Also watch the “Total Housing Inventory” and the “Inventories of Unsold Homes.” A large inventory would typically indicate a weak real estate market and a small inventory would indicate a strong market. A balanced market typically has a six-month supply. And, for an understanding of price appreciation or depreciation, watch the “Median Existing Home Price” and the “Median Price Paid for a Home” and the “Home Value Index.”

With all of these numbers, always be attentive to local statistics, not to national or even state-wide figures. This is because real estate markets can vary substantially across the nation, across your state, and even across metropolitan areas.

Updated Guidance from HUD regarding Loan Originator Compensation

On March 18^th HUD issued important information pertaining to how mortgage loan originators comply with the Real Estate Settlement Procedures Act (RESPA) with regard to the Federal Reserve Board’s Loan Originator Compensation rule, effective April 1^st.  This information clarifies RESPA requirements related to proper disclosure on the GFE and HUD-w settlement statement.

The guidance addresses:

(1) mortgage broker transactions where the broker is compensated indirectly from the lender by means other than an amount that is computed based on the interest rate, such as by a flat fee or an amount that is based on any other computation;
(2) no cost transactions where the credit for the interest rate chosen covers third party settlement charges;
(3) using a credit/charge calculation prior to completing Block 2 on the GFE; and
(4) payments by lenders to borrowers to correct tolerance violations in transactions involving a mortgage broker.

Click Here to view the complete guidance.

Short Sale Fraud

Several months ago, the California Department of Real Estate issued a publication regarding Short Sale Fraud.  Due to the increase in Short Sales in the market today, instances of fraud are continuing to grow.  Typically, fraud occurs when there is an intentional failure to disclose information to the short sale lender.  This will result in lenders approving the sale based on false or purposefully excluded information.

Click here to download and learn more about Short Sale practices and the growing fraud in this area.

We Speak Your Language!

At American Trust Escrow and our sister companies, Glen Oaks Escrow and Coachella Valley Escrow, we speak many different languages.

We know our community is very diverse and understand the importance of making your clients feel comfortable during the escrow process.  We believe that delivering exceptional escrow service begins with our team!  Our escrow officers will work with one another to help translate in order to best accommodate you and your client.

If your client is foreign or local, and speaks any of the languages listed below, they can be confident their escrow will be managed professionally and expeditiously.  Please don’t hesitate to contact us today.

Armenian
Cantonese
English
Farsi
Japanese
Korean
Mandarin
Sign Language
Spanish
Tagalog
Vietnamese

American Trust Escrow represents service at its best with experience you can trust.  All of our escrow officers are licensed and bonded, and we have office locations in Brentwood, Los Angeles, Los Feliz, Pasadena, and San Marino.