Bank Owned Homes: Buying Opportunity

“Fixers” Reward Patience, Prudence, and Realism

These days the words “bank owned homes” have become practically synonymous with a single word: “opportunity.”  With prices and mortgage rates this low, first time home buyers, investors and seasoned property owners alike are looking at a raft of buying options unlike any any one has seen in a very long time. 

That option of buying a bank owned home has certainly opened a viable route for those looking to own a home at the fraction of what it cost just a few years ago. But not without a price:  the best  bank owned home bargains are almost certain to fall into the ‘fixer-upper’ category.

When considering the purchase of one of our   bank owned homes, I’ve found that    my most successful clients have a few qualities in common:

• patience – they wait until they’ve found a house that suits all their needs
• prudence – they resist the temptation to take out too big of a loan

• realism – they know how much hard work they will be willing to put into the house

Finding the right fixer-upper should be approached as a process: in other words, never buy the first home you see until after you’ve checked out some of its competition. There are more foreclosures on the market than ever – a phenomenon that works to your advantage. When you do find the right home, make sure to take out a loan that makes sense. Often people who are in a hurry to buy a house are tempted to take out a loan without giving enough consideration to its immediate and long-term implications.  Being coolly realistic as you work out the numbers will pay off for a long time.

Once a bank owned home is officially yours, the hard (often fun!) work begins. Buying a home in need of repair has always been the surest way to find a deal, but it is also the way to improve or develop home maintenance skills, bond with family members, and keep a tight rein on the family budget. Here, too, you need to be careful not to get carried away– you don’t want to overbuild or overdevelop beyond what is appropriate for the neighborhood setting. In other words, keep your end goals in mind.  My advice to clients varies depending on their individual needs: Is it an income property?  Or the family home for the next 15 years? 

Foreclosures show no signs of slowing down in the near future, so this May’s buying market is opportune.  If you’re considering buying a bank owned property on Maui, call me today to go over your options and to put a plan into action! 

Lulu Williams 808-283-3783    http://Mauiluluforproperty.com  for Maui MLS listings

  Homeowner's Springtime Checklist

  Spring/Deep Cleaning: a Stitch in Time

May is Prime Time to Prevent Property Maydays 

There’s nothing like being able to bask in the warm glow of well-being a Maui homeowner gets after finishing a thorough spring/deep cleaning. It's especially true when you realize how important the annual ritual can be in protecting your greatest asset: your  property.

That warm glow results from doing more than just cleaning your home's interior, though. It involves maintaining the property in the ways that will prevent having to take more costly steps later. There are three different tasks you can complete to get your home ready for the warm weather that's on the way. If you follow these basic tips, your home will be looking its best – and the resulting beauty will be more than skin deep.

One of the most overlooked areas for most  properties is its foundation. It is important to check your foundation for damage, and to patch and seal any cracks as soon as you discover them. The foundation is one of the first areas potential buyers (and their inspectors) examine when they get serious about writing an offer on a home. A sound foundation is essential for the obvious structural reasons -- and it can even have an impact on utility bills. 

May is also prime time for cleaning out all of the gutters on your property. When gutters clog, you can end up with leaks inside walls and into basements.  For the ladder-shy, the cost of a once-yearly gutter clearing service can be a prudent and cost-conscious choice (as anyone who's experienced the major costs that result from neglecting the gutters will tell you)! 

Spring is also a great time to paint the outside of your home. A fresh paint job gives your local property the fresh look nothing else can. You don't have to be selling your property to appreciate the 'curb appeal' – the real difference a fresh coat gives to any house. That paint job will also be more than just attractive: it will also prevent premature aging of the whole exterior. 

Whether your current plans are to sell, rent, or stay put in your Maui property, you’ll be rewarded by taking a day or two each spring to focus on these preventative care details.  If you need a referral for a handyman or other maintenance service, I'm always happy to recommend some of our reliable local vendors. Call me anytime!

Lulu Williams  283-3783  or  http://mauiluluforproperty.com

For property info or Maui info

Building Value Without Rebuilding!

Quick-Fix Primer for Maui Sellers

Local House for Sale? 3 Quick Fixes

For those who are just about ready to list their Maui property for sale this May, several simple yet cost-effective projects can be sure-fire buyer-pleasers. I am often asked to help my clients identify areas in their home that will benefit from improvements. I like to point to some simple changes that materially help a property’s ability to compete with any other house for sale in our area.

Here are three of my favorite inexpensive fixes:

1. Painting walls in pale neutral colors.  Freshly painted walls erase years of wear from any room. They send prospective buyers a subtle message: here is a home where your family can create your own memories.  Neutral tones are important, too. While you may personally prefer rich or bright colors, potential buyers may not. Beyond ensuring that rooms look as big, bright and airy as possible, you want potential buyers to picture spaces where their furnishings will fit in without redecorating. Pale beige or grey rooms work with furnishings of all colors, and wind up appealing to the greatest number of potential buyers.

2. Clearing clutter. Clear kitchen and bathroom countertops, consign heavy furniture to storage, and stow the kids' toys neatly out of sight. The object is to emphasize the impression of sufficient space. When buyers visit any house for sale, they are most drawn to those where it’s easy to picture all of their belongings fitting in easily – and that takes space. 

3. Keeping your cool. You want buyers to be comfortable as they walk through your house for sale, and at the same time want to signal that heating and cooling are not going to be problematic. Have your heating and air conditioning systems serviced so that they are in efficient working order. If you have a working fireplace, have the chimney swept, and light the fire in case we run into an unexpected chilly rainy day during a springtime open house.  If the weather cooperates and the sun is shining, open windows and doors to create a nice fresh breeze. But if it’s too hot, be willing to crank up the AC!

Whenever you list a house for sale, it's important that you put yourself in the buyers’ shoes. Ask what are the key factors you would look for, and be sure your home reflects the answers. For any and all other questions you might have about selling your local home, I’m here to help!  

Lulu Williams  808-283-3783

http://www.mauiluluforproperty.com        check this site to see the properties listed on the

 Maui MLS

  Residents Keep Ears Tuned to Tax Issues

Tax Season is Over! (Or is it?)

TGTSO (Thank Goodness Tax Season’s Over)

This is usually the time of year when  residents have gotten through tax season, heaved a sign of relief, and gone back to working on more important matters – like earning enough to make reducing taxes a goal worth pursuing. 

This year, the latter part of April may be a little different. Because this is an election year, tax matters are already being widely debated, and changes that could affect everyone are more possible than usual. I am bringing these topics up for discussion with the firm caveat that your own planning (including  home buying decisions) should always be made after consultation with the financial experts you trust. Currently, federal and state rules carry tax benefits that can greatly reduce a homeowner’s tax liability. They are very unlikely to be eliminated, but you may want to keep your ear tuned whenever you hear these topics under discussion, because seemingly minor changes can have major impacts.

Mortgage Interest and Points

Many renters found that they were able to use the standard deduction tables to simplify their federal filings.  Homeowners, on the other hand, were usually better off using itemized deductions because of the welcome mortgage interest deduction. Qualifying points paid to obtain a mortgage can also generally be deducted in the year they are paid.

IRA Penalties

Everyone with a standard Individual Retirement Account has heard about the penalties for withdrawing funds before retirement age. But currently there is an exception in some home buying situations. Generally, some IRA funds can be applied to home buying (or building) a first home without those tax penalties. The catch is that you can only withdraw up to $10,000 over your entire lifetime (not annually). Those with Roth IRAs may find additional tax advantages, too.

Real Estate Taxes

Qualifying local and state property taxes can amount to sizeable deductions. If, in the home buying process, you reimbursed a seller for prepaid property taxes, that amount can qualify, too.

As in all financial planning, you should consult your accountant or other tax professional before making any important decisions.  And whenever buying or selling a local property makes sense for your family, I’m standing by to answer all of your real estate questions.

Being Smart About Maxing A Home’s Value

Thinking About Bending Home Prices Curve

When it comes time to put their home on the market, the Number One topic Maui sellers focus on is local home prices:  home prices historically, home prices this April, projected home prices in the future. What many sellers don’t truly realize is that they have more control over the price their home fetches than they may think. 

Smart application of remodeling dollars to maximize a property’s salability is the earliest and most important action a homeowner can take. If you plan to remain in your home for the foreseeable future, lifestyle and personal preference issues will rightly get your attention. But if a move is on your planning horizon, remodeling decisions should be hard-eyed business decisions. In my experience, there are three rooms that buyers are particularly interested in – and homeowners bent on raising their own Maui home prices should share that interest!

Kitchens can drastically raise or lower home prices.  Since kitchens have evolved into the major social hubs of American homes, increasing its size can be superbly cost-effective. If there is a possibility of and opening it up to living space by knocking down a non load-bearing wall, it is well worth considering. Upgrading appliances to stainless steel, replacing countertops with granite or other stone, and refinishing kitchen cabinets can absolutely give some much-needed appeal to an outdated kitchen. Just switching out old hardware for contemporary substitutes can add appreciably to a kitchen’s appeal.

Families spend much of their time in their living rooms – and even if they don’t, psychologically, it can seem the center of family activity. A cramped, cluttered and dark space will detract from other more attractive features of a home. A living room can be made into a bright and welcoming space by making inexpensive changes, such as removing all but essential furniture, painting walls a neutral color, and removing drab window coverings to let in as much light as possible. Replacing worn carpet with a wood laminate -- or refinishing long-covered wooden floors -- can take a bit more elbow grease and budget, but can be worth the cost.

In the master bedroom, homebuyers want to visualize a sanctuary where they can escape from the trials of their busy lives. Simple but effective changes can make all the difference. Remove large pieces of furniture (particularly desks and computers)…in other words, aggressively de-clutter.  Find pale, tranquil and soothing colors for the walls, and choose simple bed linens in complimentary colors (think “hotel luxury”). Make sure that clothes are not on show and that closet spaces are tidy, even if it means putting some of your apparel into storage.

The goal is always to make changes that allow buyers to see the potential in a home; it’s how individual local home prices can rise above general market trends.  If you’re considering selling a property and would like to discuss home prices in our Maui  areas  and ways to maximize values, give me a call today so we can schedule a free consultation!  

When the time comes to list your local home for sale, it can be tempting to stick one of those “for sale by owner” signs in your lawn and just try to sell it yourself. Daydream visions of trips to Europe, new Lamborghinis and stacks of gold ingots (all bought with the commission fees saved) can crowd out more realistic thoughts.

Images of craven real estate agents, twirling their mustachios as they plot to under-price your home, may compete with more practical notions… such as the actual hassle of learning to deal in a specialized marketplace without specialized tools and resources.

Still, it is tempting. After all, in town “For Sale by Owner” signs cost just $8.99 at any hardware store! And how hard could it be to find out what forms you’re supposed to use to accept a good faith deposit? Or where to put the deposit so it’s in escrow (or whatever they call it)…???

The fact is, about 70% of homeowners who try to sell their homes themselves eventually hire an agent. Some of the others give up altogether -- having now established a record of owning a house they didn’t sell.

So it’s probably more practical to forget the Lamborghini, right? Well, maybe not entirely. According to the National Association of Realtors, represented sellers get higher prices for their homes than do owners of comparable homes who eventually complete a sale. Often, the difference in price is more than enough to cover the broker's fees.

Marketing your home is only part of my job. Things really swing into gear once a prospective buyer makes an offer. That offer includes more than an offering price: it also establishes how the buyer wants to structure the deal and sets forth a timeline. It’s really difficult for a homeowner to evaluate the offer and the possible consequences of each term in the contract. As a result, it is also very difficult for the seller to negotiate the offer to his best advantage. I will make sure you understand the offer and its implications -- and keep you from making a costly mistake.

A lot happens between your acceptance of the offer and closing day. The buyer usually orders numerous inspections and, depending on the results, may request repairs. These requests often lead to further negotiations. If the buyer isn't satisfied, your deal can fall apart. And a deal can collapse over financing and title delays. It’s a stressful, emotional time for the buyer and seller both.

From the moment you sign your listing agreement, I am legally and ethically bound to work in your best interest and to ensure that your sale is as profitable as possible.  If you’re considering selling your home, before you decide to just stick one of those local “For Sale By Owner” signs in your lawn, contact me for a complimentary consultation to see how I can help you succeed!

With the National Mortgage Settlement (aka ‘Robo-Settlement’) finally negotiated, major lenders are now able to re-examine their plans for dealing with the backlog of bank-owned homes. Local bank-owned homes may be only a tiny portion of the almost 1 million in play nationally, but are nonetheless subject to the wider phenomenon. Banks well realize that at some point, these homes have to enter the housing market. 

That development is a large part of why some analysts believe that for homeowners who want to sell, now might be the time to list. In our town as well as across the nation, their reasoning goes like this:

1. With housing prices at or near record lows, potential buyers who had been on the sidelines are seriously considering a home purchase. Many are aware that the bottom of the market may have been reached. They feel a sense of urgency to take advantage of that combined with record today’s low mortgage rates. For home sellers who have set the right price, it can mean that March is the beginning of a spring selling season filled with newly-motivated buyers.

2. The number of bank-owned homes is predicted to increase over the next few years. Lenders had put foreclosure activities on hold while negotiating the government settlement. But the coast is now clear for them to resume, with the number of bank-owned homes rising as a result. When that glut of bank-owned homes hits the market, it could end in a crowded market and prices driven back down.

3. Individual home sellers have a built-in advantage over banks because they can move a sale significantly faster. Banks are not well equipped to sell their inventory of bank-owned homes – most do not have the staff to handle listing properties or pushing the kind of energetic follow-through that gets deals done in a reasonable amount of time. Tales of frustrating delays are already widespread, and they make dealing with a homeowner and his agent all the more appealing. To some experienced buyers, the difference is worth a premium.

All these factors mean that now might just be the opportune time local sellers have been waiting for.  If you have been delaying your home sale, why not call me today to schedule a complimentary home price evaluation?

lesson:  People who share a common direction and sense of community can get where they are going quicker and easier because they are traveling on the thrust of each other.

2.When a goose falls out of formation, it suddenly feels the drag and resistance of flying alone.  It quickly moves back into formation to take advantage of the lifting power of the bird immediately in front of it.

lesson: If we have as much sense as a goose, we stay in formation with those headed in the direction we want to go. We are willing to accept their help and give our help to others.

C E L E B R A T E

Vets give up a lot of family life and other things we all take for granted.   Let me know if any vets are out there that would like to attend a free seminar on VA financing here on Maui in April

Beyond your personal situation, local market conditions, financing costs,   future expectations must also be evaluated.

The following list of quetions can help you decide if you are ready to move forward with a property purchase.  It will be my pleasure to assist you sort through these issues and prove essential local market perspectives.

PURCHASING CONSIDERATIONS

• If you purchase a home or investment property, how long do you expect to live there or own there
• What can you afford to pay each month for housing related ?

What are the total costs of home ownership?  These may include:

• Mortgage payments (based on various interest rate and term assumptions)
• Property taxes
• Homeowner's insurance
• Utilities
• Maintenance costs
• Any other special fees

Do you expect these housing related expenses to increase or decrease? (changes in interest rates may be a bigger factor than others)

What additional expenses are required to complete a purchase? (closing costs, moving expenses, etc)

How much will your home ownership costs decline after adjusting for interest expense deductions and property taxes (if applicable)?

Do you qualify for any special purchasing assistance programs?

What are your long term personal and financial goals with regard to housing and or investments?

A sales tax is a tax imposed on consumers who purchase goods at retail. Sellers are required to charge and collect sales taxes from consumers, usually a percentage of the retail sales price of an item, and pay the sales tax collected to the state or locality imposing the tax on behalf of the consumer. If a seller fails to collect the sales tax from the buyer, then that seller must pay the tax out of his or her own pocket. The bottom line, however, is that a sales tax is a tax which is imposed on customers, and which retailers are required to collect for the state or locality.

The general excise tax, on the other hand, is a tax levied on gross income (i.e., total business income before any business expenses are deducted) derived from business activity in Hawaii. It is different from sales taxes in two major ways.

First, the general excise tax is imposed on the business instead of on the customer. Rather than merely acting as tax collectors, businesses are themselves taxed on their income. The general excise tax, therefore, is considered to be an expense which businesses incur in the normal course of doing business in Hawaii, along with other expenses such as labor costs, utility bills, supplies, cost of inventory, and the like.

Second, the general excise tax is levied on gross income from almost all types of business activities. These include sales of tangible personal property at both wholesale and retail, services, contracting, commissions, interest, lease or rental activities, and more. The general excise tax rate varies depending on the business activity; it is 0.15% on insurance commissions, 0.5% on certain activities such as wholesaling, and 4% on most activities at the consumer level. The 0.5% and 4% rates are the same rates imposed by the Hawaii use tax. As discussed in Tax Facts No. 95-1,
the use tax is levied on the landed value of tangible personal property imported into Hawaii, and complements the general excise tax by requiring persons importing goods from outside Hawaii to pay the same rate of tax that an in-State seller would have paid in general excise tax had those goods been purchased in Hawaii.

compliments of Anthony Alosi of First American.

Demystifying the New 3.8% “Medicare” Tax

On January 1, 2013, a new 3.8% federal tax on some, but not all, investment income will go into effect. The tax is sometimes called a “Medicare Tax” because the proceeds of the tax are earmarked for the Medicare Trust Fund.  This tax has the potential to increase taxes for owners who sell their primary residence and investors who sell investment property, so it is important for all owners of real estate and their advisors to have a basic understanding of how the tax will work.

The new tax is an additional 3.8% tax on “unearned income” which is generally defined as interest, dividends, rents and capital gains.  The tax is only imposed to the extent the taxpayer’s adjusted gross income (AGI) is higher than $200,000 for an individual or $250,000 for a married couple. 

For example, assume that in 2013 you sell investment real estate for $1.2 million and you have a gain (including depreciation recapture and appreciation) of $670,000.  Your wages are $315,000 and your AGI (in this case, your wages plus the gain from the sale of the real estate asset) is $985,000. 

The tax is computed on the lesser of:

1. The total gain from the investment or
2. The excess of your AGI over $200,000 (assuming you are filing as a single person). 

Please note that for purposes of this article, this example is simplified and your situation may be more complicated.  

A. Total gain from the sale of real estate:   $670,000

B.  AGI: 
    

C.  Excess of AGI over $200,000:  $785,000

D.  Taxable amount is lesser of (A) $670,000 or (C) $785,000.

E.  Tax is $25,460, which is computed by multiplying $670,000 by 3.8%.

Please also note that:

• The 3.8% tax is in addition to capital gains tax that may be imposed; 
• Taxpayers with an adjusted gross income lower than the threshold of $200,000 ($250,000 for married couples) will not have to pay the additional tax; and
• Although no regulations have been issued yet, you should be able to defer paying this tax by doing a 1031 exchange.  The tax is imposed on “net investment income” which the statute says includes net gain, to the extent taken into account in computing taxable income.  Since gain deferred in an exchange is not included in taxable income, such gain should not be subject to the 3.8% tax. 

The example used in this article was taken from a recent publication by the National Association of REALTORS® (in slightly modified form).  The full publication including other examples can be found on NAR’s website at www.realtor.org/healthreform.  

Investors and owners of real estate should consult with their advisors to determine whether this tax may affect them.  This article does not cover every instance where the tax may be due and First American Exchange cannot give tax or legal advice. 

If you are selling your property and would like to set up a tax-deferred exchange, please contact First American Exchange Company.  

In a 1031 exchange, the taxpayer must acquire all replacement property by the earlier of the date that is 180 days from the date the relinquished property closes, or the date the taxpayer’s federal income tax return is due, including extensions.  This means that for exchanges where the relinquished property closes late in the year, the calendar-year taxpayer may need to get an extension of the tax filing deadline in order to benefit from the full 180-day exchange period.

For example, if the taxpayer is an individual who closes the sale of his relinquished property on December 1, 2011 and he does not get an extension, he will only have until April 17, 2012 to acquire all replacement properties.  If he gets an extension, however, he will have until May 30, 2012 to acquire all replacement properties.  For corporations on a calendar-year tax basis that close their sale late in the year and do not apply for an extension, they will only have until March 15, 2012 to complete their exchange.  Even though the granting of the extension is “automatic” remember that you must still file with the IRS to claim it.  (Form 4868 for individuals)

Once a tax return is filed, it cannot be amended to include the exchange or to obtain an extension of time to complete the exchange. If the exchange is incomplete, the sale will need to be reported as a taxable event.

compliments of Anthony Alosi

First American Exchange

Some absentee owners may be exempt from HARPTA. Speak to your finance person for full information on this withholding at time of sale.

If the collected amount is too high how do you obtain a refund?  The owner files a form N-288C after closing. Escrow will normally assist Sellers with this.

HARPTA has the buyer responsible for paying the withholding if appropriate documentation is not provided by the seller. Therefore, escrow will automatically withhold 5% of the sales price unless the seller documents that no such withholding is required.

Overwhelmingly international buyers pay cash................Indeed, the Senate bill would require buyers to pay cash for the home to qualify for the new "homeowner" VISA. They would also need to pay US taxes and spend at least 180 days a year in the county. they cannot work here or take out home equity loans against the properties.  In return, they would get to live here for at least three years...................................

Interesting concept.

Call me at 808-283-3783for information or email me

• Honesty,Market Knowledge, Integrity, Negotiation Skills, Organizational Skills, Follow through Skills,  Follow up skills, Community Connections

2.Prepare your property for selling

• Access condition and worth of improving:
  • Flooring, paint, windows, window treatments, entry mats, garden/lawn, pet odors
• Put away clutter
• Have future plans in mind before listing.

3. List your property with Lulu

• Study the comparative market analysis
• Determine the "sale time" you need
• Determine List Price
• Sign Listing agreement

4. Showings

• Be flexible with short notice showings
• Allow a lock box
• Keep property tidy and free of clutter
• Use scented candles
• Try to be away during showings; take pets away or outside during showings
• Maintain lawn and garden, including watering

5. Negotiate offers

• 12 page contract, presented by Buyer's Agent
• Addenda, Dual Agency (CBIP)
• Counter offer/s
• Executed Contract

6. Open Escrow

• Open escrow (contract and earnest money deposit check)
• Survey
• Building Inspection
• Title Report
• Seller's Disclosure
• Condominium Docs or CC&R's
• Loan approval
• Termite inspection
• Document signing
• Wiring of funds
• Closing or recordation

C E L E B R A T E