How Low Are Mortgage Interest Rates?

I sat down with Ray Kay of Searchlight Financial today. He reminded me of how low rates are… and I don’t mean the average 3.5% rates. I’m talking about rates even closer to zero. This is how it works. You get an interest rate of 3.5% but you’re in a 40% combined federal and state tax bracket so you get the 40% tax deduction. This calculates out to: 3.5% X .6 = 2.1% after your deduction.
Essentially you are paying 2.1% on the money you have borrowed!

Here’s another important perspective that Ray points out: You buy a home for $500,000 with 20% down and that home is worth $750,000 in 10 years. (I think you will agree that this is pretty conservative.) What is your profit? Most people would say 50% because $750,000 – $500,000 = $250,000 which is 50% of the original $500,000 sales price. But this is wrong. You only put 20% of the $500,000 down so let’s see:

Initial Capitial Investment = $100,000 (20% of $500,000)
Value of Home After 10 Years = $750,000
Increase in Equity = $250,000 ($750,000 – $500,000)
Profit on Your Original $100,000 is $250,000 or 250%
That’s not a bad investment!

Design Tip – Travertine

Home buyers still appreciate travertine. It’s elegant and has a crisp, clean look. Travertine can be a challenge to keep clean however because it is porous. It’s important to seal the travertine – a couple of coats – to make it easier to clean. Otherwise, polishing powders, and such, can accumulate in the holes. Travertine is great for floors, but not as good an idea for highly used countertops.

North Redondo For Sale vs. Sold Aug 2012 – Jan 2013

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In this graph you can see that inventory continues to dwindle. And in the past few months, the number of transactions that have closed actually out numbers the number of homes for sale. Buyers are desperate for properties. This could be a great time to put your home on the market, if you have been considering it. As I stated in an earlier post today, many properties are get multiple offers and the prices are being pushed up.

The Redondo Beach Market Continues to Rise

Prices continue to go up in Redondo Beach. Case in point, 1625 Morgan Lane came on the market last week (brokered by KW). This is a 3 bedroom Tall & Skinny in the Golden Hills, close to Jefferson Elementary. It has been nicely remodeled. The kitchen has been redone, There are hardwood floors downstaris. And unlike most Tall & Skinnys, all the bedrooms are upstairs which is a huge selling point. The bathrooms were not remodeled, but are very clean. The biggest down side, in my opinion is that the living space (on the first floor) does not get much light. Anyway, it was priced at $759,000. In a few days, the seller had amassed 16 offers, going well over asking. I can reveal the final price once the property closes. This home is ultimately going to sell for more than it may even appraise at. However, the winning bidder may have removed the appraisal contingecny, eliminating this issue altogether.

A few more examples are:

1641 Ford Ave: Listed at $699,000. Sold at $720,000

1517 Stanford Ave: Listed at $739,000. Sold at $769,000. This was my listing. I had 4 offers and the winning bidder was all cash, no appraisal contingency.

1503 Stanford Ave: Listed at $759,000. Sold at $7990,000

1610 Van Horne Lane: Listed at $825,000. Sold at $840,000.

Buyers are being aggressive. If inventory continues to remain low, this marke could continue to rise. The question is are we creating another bubble?

2210 Robinson St Redondo Beach – New Construction Coming

The well recognized fencing has just gone up around the small 1967 built home at 2210 Robinson St in Redondo Beach. Just purchased for $505,000 which is, effectively, lot value, the owner/builder is going to tear it down and build a brand new single family home. This is a 5,000 sq. foot lot, zoned R-1. Redondo Beach will only allow a single family on this property which is largely the case up and down the south side of Robinson St. The north side of Robinson has larger lots and therefore town homes greatly populate this side of the street.
Construction is scheduled to take approximately 7 months and the finished product should be ready by October 2013.

New Listing in Redondo Beach – 1615 Van Horne Lane

Beautiful View of the mountains and LA from the Rooftop Deck!

This single family just came on the market in Redondo Beach. It’s listed at $829,000. I previewed it this afternoon during Broker’s Open. It has a unique and fun layout although it might not be for everyone. It’s been nicely updated and gets great light. There’s a 700 sq. foot bonus room along with 3 bedrooms and 2.5 baths. It gets great city and mountain views from the rooftop deck. (Brokered by RE/MAX Estate Properties)

Home Remodeling Tip: How much does it cost to install wood floors?

It depends on what type of wood you choose. I just helped a client get their home ready for sale and we replaced the carpet with bamboo. It cost them $8 per square foot. Stairs are more expensive. The treads were $40 per lineal foot and the risers were $10 per lineal foot. They did a total of 425 sq feet of flooring which came to approximately $3690 (not including stairs) including removal of existing tile/carpeting, subfloor prep,and some additional items.

We chose bamboo because it was already installed in other rooms in the house. But the good news was that bamboo is less expensive than hardwoods. You could spend $10, $20, maybe more, per square foot, for some hardwoods.

You can also look into reengineered hardwood floors. I believe they are less expensive. The top is hardwood and underneath is plywood. It’s less thick than a real hardwood floor, but you can still sand them down a couple of times and refinish them unlike laminate floors.

Lease to Own in the South Bay

It’s not that commom but there are sellers out there that will consider a “lease option”. In plain English, this is a property that you can rent with the option to buy. Now, you have to pay for the right to this option. Your offer should be structured in such a way that it dictates the rental fee, the sales price, and the cost and expiration of the option. If you decide to purchase the home, then the option normally gets applied to the sales price. If you decide not to purchase the home, then you forfeit the option money.

Otherwise, if you’re renting a property, you can always ask the seller if they would be willing to sell it to you. Or just make sure that they know you are interested, if they decide to put it on the market.

Real Estate Advice: Am I Able to do an Inspection before I close?

Yes, you should have the option to do inspections before you close. In California, buyers typically have 17 days from acceptance to do their inspections. If within those 17 days, the buyers decide that they don’t like what they find, then they can walk away. If the buyers do their inspections, then remove their contingencies, then they are committed to the property and the deposit becomes nonrefundable.

It’s extremely important for you to get your inspections done as soon as possible especially if you want to do any further negotating with the seller on repairs, a credit or a price reduction. If your looking at a single family home, I would always recommend a home inspection and a mold inspection. The home inspection will give you a general understanding of the roof, foundation, plumbing, electrical, appliances, HVAC, fireplace, etc. The mold inspection focuses on water/mold issues. So many buyers don’t do a mold inspection, but it’s so important. Water is absolutely damaging to a home and so many times there can be leaks or mold problems that the homeowner is not even aware of. Needless to say, I have all my buyers do a mold inspection. And depending on the age of the home and the existence of large trees on the property, I also suggest a video sewer line inspection which will let you know if there are any obstructions (such as tree roots) or clogging issues. Replacing a sewer line can be expensive and it’s a good idea to know up front what you’re dealing with.

Real Estate Advice: how do we make our condo stand out to sell if there are others asking less $?

If you think your home has been upgraded or has somthing special that separates you from the rest than asking more money will be okay, but these attributes need to be apparent to the buyers. And if it’s not apparent to you, then for sure it’s not going to be apparent to them. So let’s go over some of the possible features or selling points:
1.You can talk about the amount of money you spent on upgrades.
2. Point out any high end features such as granite, hardwood, travertine, updated windows, etc.
3. Maybe you’re in a great location or a reputable school district.
4. The floorplan can be a huge selling point.
5. Do you get a lot of light in your condo? End units and top floor units tend to do better in sales.
6. Can you put a washer & dryer in your unit?
7. How may parking spaces do you have?
8. The other thing to consider is the building. Does it have a lot of amenities? What type of condition is it in? This could add or take away from the value of your unit.

If you have things listed above that your competition doesn’t have, then you may be able to get the higher price.

And remember, you need to make sure your condo shows well. Keep it clean; keep it well lit. You could put together a sheet (handout) of all the features of your home that make it worth more money.

If you haven’t already, you may want to check the recent sales for condos similar to yours. If they’re selling for less than what you’re asking, then you may want to reconsider your price.