Tag: Sellers

How Landlords Can Recover From Shelter-in-place

Posted on by Julie Tsai

In any crisis, like a recession or the current pandemic, there will be winners and losers. Single-family rentals are showing signs of being on the winning side.

 

 

Advantages For Landlords

“The COVID-19 pandemic will make homeownership more difficult for many Americans suffering employment loss and potential reduction in credit scores,” says Ted Jones, chief economist at Stewart Title Guaranty Company. “However, this will continue to drive rental demands, particularly for certain products. I think single-family rental markets is in the catbird seat as we speak right now.”

The new generation of home-dwellers is more inclined to rent than buy. According to Pew Research, the millennial generation—which accounts for roughly half of US households with children—are more likely to rent than own a home compared to previous generations. 

According to “The Dream on Hold,” a study by RENTCafe, an online apartment-finding service, census data showed that over the last decade homeownership by families declined by nearly 3.6 million. By contrast, the number of families living in rentals rose by 1.9 million.

Another factor benefitting single-family rentals is the impact COVID-19 is having on America’s biggest cities. Writing for the New York Times, Sabrina Tavernise reports that “the virus has found fertile ground in the density that is otherwise prized. And it comes as the country’s major urban centers were already losing their appeal for many Americans as skyrocketing rents and changes in the labor market have pushed the country’s youngest adults to suburbs and smaller cities often far from the coasts.”

 

 

Necessary Adaptations

 

Along with these favorable conditions for single-family rentals comes a series of challenges for property owners who must quickly adapt to the ever-changing guidelines and regulations concerning essential services, showings, property maintenance, and cleaning and eviction protocols. Because we are still in the thick of the pandemic, these directives are constantly changing, so be sure to keep abreast of your county and city guidelines and let your tenants be aware of them as well.

 

  • Showings

 

Like real estate agents, most landlords have halted in-person property tours and replaced them with virtual tours. Video conferencing services like Zoom, Google Hangouts, Skype, and FaceTime have come to the rescue as we continue to practice social distancing. 

Instead of doing individual virtual walk-throughs, you can streamline the process. Record a video on your phone as you walk through your rental property. It’s also helpful to take pictures of amenities you wish to highlight. Then, post it online to both advertise the property and replace the need for in-person tours.

 

  • Maintenance

 

Perform emergency repairs only. Let your tenants know that in order to keep everyone safe and healthy, non-essential repairs are suspended. If there is an emergency repair that must be fixed in a timely manner, follow the CDC’s safety guidelines. 

The following would classify as essential repairs:

  • Leaking pipes
  • Broken furnace or air conditioner
  • Broken washing machine or dryer
  • Leaking roof
  • Smells of gas or noxious fumes
  • Growing mold
  • Broken stove or refrigerator
  • Backed up toilet or sewage drain
  • Power outage
  • Broken key to unit
  • Fire or smoke damage
  • Water heater isn’t working–no hot water

For non-essential repairs, property owners and managers around the country are assisting renters via technology, such as:

  • How-to videos with step-by-step instructions
  • Video calls (via FaceTime, Skype, etc.)
  • Asking for pictures or videos of maintenance issues and assisting tenants virtually and/or giving access to necessary tools.

 

Evictions

California Governor Gavin Newsom has extended the executive order issued in March that allowed local governments to enact COVID-19 eviction moratoriums. The statewide order was pushed back through July 28 and applies to any local orders that were set to expire as well.

The California Apartment Association has issued the following advice for landlords weighing the concurrent legislative, executive, and judicial orders:

“Continue to follow any applicable local moratorium and the federal eviction moratorium if a property is federally assisted, as these measures may limit the ability to serve a three-day notice to pay or quit. Local moratoria also may also limit the ability to carry out ‘no fault’ evictions and give tenants financially affected by the pandemic an extended repayment period. If a property is not subject to the federal moratorium or a local ordinance, the owner can serve a three-day notice to pay rent or quit but cannot enforce it in court.”

Many landlords have also decided to stop charging late fees for rent. This takes even more pressure off of tenants and shows that you’re willing to work with them to provide some relief. You may also want to consider allowing renters to break their lease, if necessary.

For more detailed information on Landlord-Tenant Regulations during Covid-19, click here.

 

Can We Help?

Amid this rapidly changing environment with both opportunities and challenges for single-family renters, rely on the industry knowledge and experience of Julie and her team to stay on top of the game.

Call Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

A Primer On Home Evaluation Tools

Posted on by Julie Tsai

Advances in information technology, artificial intelligence, and algorithms have given rise to a number of online home valuation tools. Most major online real estate databases have some tool or another, but they all seem to give varying estimates of the same property. This raises quite a few questions from many of our sellers, including “How do they work? Are their estimates accurate? Is there a better alternative?”

 

How Do They Work?

Every tool has its own algorithm and criteria by which it filters its estimate. For example, Zestimates®, the assessment tools used by leading real estate marketplace Zillow, are perhaps some of the most useful starting points to help you obtain an independent, unbiased assessment of what your home might be worth in today’s market.

Zillow cranks out Zestimate home valuations for close to 100 million homes across the country. Its platform utilizes millions of statistical and machine-learning models, reviewing hundreds of data points for each individual home. To calculate one Zestimate, Zillow uses a sophisticated algorithm, incorporating data from county and tax assessor records with direct feeds from hundreds of multiple listing services and brokerages. The Zestimate also factors in features unique to the home, like:

Square footage, geographic location/proximity, and the number of bathrooms and bedrooms.
Selling-points like hardwood floors, granite countertops, or a landscaped backyard.
On-market data, including listing price, description, comparable homes nearby, and the days they’ve been on the market.
Off-market data, including tax assessments, prior sales, and other publicly available records.

 

 

Are Their Estimates Accurate?

The Zestimate’s accuracy is computed by comparing the final sales price to the estimate published by Zillow on or just prior to the sale date. It also depends on the location and availability of data in an area. Some areas have more detailed home information available; others do not. The more data available, the more accurate the Zestimate value will be. For San Francisco, for example, Zillow has valuation data for over eight thousand homes, 86% of which fell within 10% of the final selling price.

Besides providing a relatively accurate valuation, some online services allow homeowners to update their home’s facts and features and modify results. Reporting all updates to your local tax assessor is also recommended. Bear in mind though: home improvements can increase your property taxes. Reporting them to your tax assessor only makes sense when you are ready to sell, and only if the upgrades are significant enough to raise your home’s value and/or offset the increase in property taxes.

Is There A Better Alternative?

Zillow’s valuation tool, as well as the others out there, are only that – a tool. They are not a firm appraisal nor a method to arrive at a set price. For that, further research is required in the form of a Comparative Market Analysis (CMA).

A CMA is an evaluation of a home’s value based on similar, recently sold homes (called comparables or “comps”) in the same neighborhood. The similarity is key since it gets you closest to an apples-to-apples comparison. Comparable homes should be in the same or similar neighborhood, have the similar square footage, number of bedrooms, bathrooms, features, and upgrades.

Many home sellers make the mistake of looking only at the property prices listed by online tools and assume those are realistic comps. However, those numbers may be inflated based on the sellers’ hopes of what they’ll rather get in reality. A CMA looks only at recent sales, thus painting a much more factual and realistic portrait of what your selling expectations should be.

Can We Help?
As a sign of our dedication to giving you the best possible value, our team compiles a comprehensive CMA of each listing client they represent. This provides you with the in-depth data you need to make informed real estate decisions.

For more information on how we can best help you with your home-selling goals, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Why Professional Copywriting Is Essential

Posted on by Julie Tsai

Imagine you’re sitting inside a restaurant looking at the menu, and you have only two choices:

  • BBQ Peach Chipotle Chicken Wings – $13.00
  • Smothered Crisp Chicken Wings in Smoky Peach-Chipotle Glaze. A summertime favorite for years at the South Street block party! – 14

What you may not know is that both choices are the same dish, with the same ingredients.

Like most people, you’d probably choose the second dish, making the restaurant earn an extra 8% just by having used mouth-watering adjectives (smothered, crisp, smoky), de-emphasizing price (14 vs $13.00), and spicing the dish with a story no one wants to miss out on (South Street block party!).

“Chefs write the music and the menu becomes the lyrics. When the music is gorgeous but has the wrong lyrics, the lyrics will torpedo the music.”

—Danny Meyer, Founder & CEO of New York’s Union Square Restaurant Group

Why Good Copywriting Matters

As with food, so it is with everything else people purchase—including real estate. 

A keen understanding of consumer psychology under the pen of a professional wordsmith accompanied by top-quality images (insert link to article, “Homesellers, Why Professional Photography Is Essential”) is a three-punch approach of sheer marketing artistry at your service when you team up with Julie and our team.

When listing homes, we don’t just describe them. We paint lively pictures and write captivating stories to create a vivid feel in buyers’ imaginations of what it will be like to own and live in one of them. For example, under our creative touch, ‘large windows’ become ‘panoramic windows which permit plenty of natural light.’ A ‘large backyard’ is transformed into a ‘spacious outdoor gathering space for friends and loved ones.’ ‘Great views’ become ‘sweeping vistas.’ While we never exaggerate (a tactic which always results in home-shoppers’ disappointment), we creatively embellish the best a home has to offer.

If your house happens to be ‘at the epicenter of a vibrant culinary scene,’ or if your neighborhood has a ‘staggering number of artisan coffee shops,’ we’ll leverage these distinctions to pique buyers’ interest by appealing to their senses. Or, perhaps your home is ‘located in a world-class school district’ (a top choice for millennial parents in the Bay Area), or ‘within walking distance to miles of pristine nature trails.’ Our team strives to weave the unique selling-points of your neighborhood in an irresistible narrative bound to draw multiple offers.

Our Copywriting Goals

When highlighting the features of a home, our expert copywriting team are also rigorous grammarians and will never, ever describe your home’s ‘spacious walk-in closet’ as a ‘walking closet.’ Grammar and spelling DO matter. In fact, more than 40% of 1,291 people surveyed online say they would be much less inclined to tour a home if its online listing contained misspellings or improper grammar.

It all boils down to either selling plain old chicken wings or showcasing a mouthwatering plateful of smothered, crisp delicacies meant exclusively for discerning palates.

Your home is special and deserves to have its story written only by the best.  Let our creative team craft its unique narrative for maximum appeal.

Furthermore, Julie realizes that home-selling is a very personal endeavor. She believes all sellers deserve the best marketing available for their homes, especially in the Bay Area where homes command premium prices. By partnering with dedicated real estate copywriters, Julie and her team ensure that your home will be presented at the highest caliber possible.

Can We Help?

Making your home stand out in written form is an invaluable advantage. That’s why so many savvy Bay Area home-sellers have relied on Julie’s cutting-edge marketing tactics to sell their properties fast and for top value.

If you want your property to stand out from the pack, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Why You Need An A-Team To Market Your Home

Posted on by Julie Tsai

Gone are the days when a portable FOR SALE sign and a one-page flyer were enough to sell a house. In today’s digital age, you need a comprehensive multi-media marketing campaign run by professionals. 

In other words, you need an ‘A-Team’—a group of specialists who are skilled in positioning your property in the best possible light. This ultimately attracts the greatest number of qualified buyers who will pay a premium price. If the agent you are interviewing for your listing does not offer a similar approach to the following, then it’s in your best interest to find an agent who does.

Bringing The Most Value

For instance, Julie and other top Realtors® know that a property with attractive curb appeal can increase perceived home value by 5 to 11% and will help sell a home faster. So, they offer their clients expert guidance on key projects.

Savvy agents also have a constant finger on the pulse of the rapidly changing media preferences of the upcoming generation of homebuyers. Thus, they connect across generations by deploying a multi-channel strategy to span various audiences and interests. This reach can include social media and online platforms, messaging apps, public-facing websites like Zillow, Trulia, and Realtor.com, agent-specific groups like the MLS, Top Agent Network (TAN), VLS Homes, and private online networks exclusive to an agent’s brokerage.

 

Enhanced Marketing

 

High-caliber real estate marketing IS effective—and the proof is in the numbers. Agents like Julie know that 87% of buyers who search online for a home find photos to be among the most useful features, and that homes with high quality photography sell 32% faster. Thus, top agents choose to recruit first-rate photographers (insert link to article, “Homesellers, Why Professional Photography Is Essential”) whose professional and artistic eyes capture the distinct essence and features of a property in stunning, high-resolution images. This imagery is capable of capturing the attention of the most discriminating buyers by standing out from the many low-quality images out there.

 

The winning power of storytelling in marketing is employed by expert Realtors® through the use of skilled copywriters (insert link to article, “Homesellers, Why Professional Copywriting Is Essential”). These writers are tasked with creating a vivid feel in buyers’ imaginations of what it will be like to own a particular home and live in it, while weaving the unique selling-points of its neighborhood in an irresistible narrative bound to draw multiple offers.

An Elevated Perspective

Top agents like Julie have been in the industry for years, even decades. They understand the importance of keeping the quality of every piece of marketing collateral—both print and media—consistent with the quality and distinction of the property being offered. A premium home advertised through poor-quality mediums will automatically make it lose value in a buyer’s mind.

On the other hand, agents are just now beginning to understand how crucial it is to expertly stage a home (insert link to article, “Homesellers, Owner-Occupied Vs. Vacant Homes”). In fact, surveys show that 40% of buyers’ agents say staging has a direct effect on most buyers’ view of the home, and 83% percent say it makes it easier for a buyer to visualize the property as a future home.

Only truly forward-thinking agents offer their clients access to a network of staging professionals, which increases the chances of a potential buyer falling in love with a home at first sight.

Can We Help?

Marketing a home in today’s world is a big-league game where winning requires sellers to team up with the best players. Recognized as one of the top agents in the nation, Julie and our ‘A-Team’ of marketing professionals stand ready to help you win. 

Recruit our excellence and experience. Contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Why internet marketing is important

Posted on by Julie Tsai

In today’s digital age, getting noticed is harder than finding the proverbial needle in a haystack. 

 

Today’s average person is inundated by over 30 gigabytes of daily information. So, getting someone’s attention requires sophisticated knowledge of how the internet works and ready access to a broad platform and network of communication channels. Putting all eggs in one basket no longer works. These dramatic changes require casting the widest net possible to attract the eyes of prized homebuyers.

 

Shifts In Marketing

In 1981, 22% of buyers read newspaper ads to find a home. By 2018, 44% were first looking for properties online. Buyers now have apps that allow them to search by location and neighborhoods. Online listings have virtual tours so viewers can look at many potential homes while narrowing their search to a select few in an effort to save time. Online searching maximizes the ability to compare and contrast homes by selected features. Most of this is done before a potential homebuyer connects with a real estate agent.

81% of older millennials, 80% of younger millennials, and 78% of Generation X found their home on a mobile device compared to 68% of younger boomers. 

—REALTORS® 2019 Report: ‘Real Estate in a Digital Age’

How Does Internet Marketing Help?

What this means is that savvy agents must now make use of all online access they can get their hands on. This may include social media and online platforms, messaging apps, public-facing websites like Zillow, Trulia, and Realtor.com, agent-specific groups like the MLS, Top Agent Network (TAN), VLS Homes, and any private online networks exclusive to your agent’s brokerage.

 

It means deploying the persuasive power (insert link to article “Homesellers, Why Professional Photography Is Essential”) of high-quality, professional images to make your home stand out from the rest.

 

It requires an up-to-date understanding of the ever-changing preferences in social media use by the majority of today’s buyers (millennials) while simultaneously responding to their desire for personal connection, authenticity, and honest dealings. It also means knowing how to use technology to make real estate transaction processes simple and straightforward. 

Finding the right property was ranked highest among all generations as the most difficult step in homebuying.

—REALTORS® 2019 Report: ‘Real Estate in a Digital Age’

How Do Agents Stay Relevant?

Part art and part science, today’s real estate marketing landscape requires cutting-edge knowledge, keen insight, and skillful use of a wide range of promotional tools.

 

In what seems a real-time race toward excellence, Julie and our team remain one step ahead, always adapting and refining our marketing approach to reach the greatest number of prized buyers to meet the timeline and value objectives of home-sellers.

 

But we always knew that (insert link to article “Homesellers, Selling Your Home With Julie”).

Our constant reach toward greater excellence is what’s kept us in business for close to twenty years, and it’s the reason why we’re recognized as one of the top agents in the nation.

Can We Help?

Securing attention is hard to come by in the digital age. That’s why so many savvy Bay Area home-sellers have relied on Julie’s cutting-edge marketing approach to sell their properties fast and for top value.

If you want your property to stand out from the pack, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Why Professional Photography Is Essential

Posted on by Julie Tsai

Let’s face it: We now live in a digital age, and there’s no turning back.

By 2011, Americans were absorbing five times as much information per day as they did in 1986—the equivalent of 174 newspapers! During our leisure time (not including periods of work), experts estimate that each of us processes 34 gigabytes, or 100,000 words, every 24 hours. This doesn’t mean we read that much a day. It means that 100,000 words cross our eyes and ears in a single 24-hour period.

Photo Marketing Makes A Difference

With so much information, the most valuable commodity for marketers and advertisers is now our attention—and the most effective way of capturing it is through images. Images are crucial in marketing because they’re digested quicker. It takes readers almost ten seconds to process and decide on the value of written text, not to mention the time required to read it. On the other hand, the mental and emotional impact from an image happens almost instantly. 

Images also help make sales.

When people hear or read information, they’re likely to remember only 10% of that information three days later. However, if a relevant image is paired with that same information, studies show that people retain 65% of the information three days later. That’s the reason 80% of marketers today use visual assets in their social media marketing.

Quality Matters

Recent studies reveal that 67% of online shoppers consider the quality of an image as very important when choosing and purchasing products. Customers also think that image quality is more valuable than product information, a detailed product description, or customer ratings and reviews. 

In real estate marketing, the impact of using high-quality, professional images could not be more convincing:

  • Eighty-seven percent of homebuyers who searched online for a home found photos to be among the most useful features of REALTOR® websites, according to the 2018 NAR Profile of Home Buyers & Sellers.
  • Homes with high-quality photography sell 32% faster.
  • Homes with more photos sell faster, too. A home with one photo spends an average of 70 days on the market, but a home with 20 photos spends an average of 32 days on the market.
  • For homes in the $200,000 to $1 million range, those that include high-quality photography in their listings sell for thousands of more dollars.

Keeping Up With The Times

Julie fully realizes the revolutionary transformation in the way homebuyers now search, view, select, and purchase a home. So, her team has partnered with a first-rate real estate photographer whose professional and artistic eye captures the distinct essence and features of a property. This attention to detail results in each home’s spaces being showcased by stunning, high-resolution images. The high level of professionalism these photos exemplify is capable of capturing the attention of the most discriminating buyers, standing out from the many low-quality listing images that inundate the local real estate marketplace.

Furthermore, Julie realizes that home-selling is a very personal endeavor. She believes all sellers deserve the best marketing available for their homes, especially in the Bay Area where homes command premium prices. By partnering with a dedicated real estate photographer, Julie and her team ensure that your home will be presented at the highest caliber possible.

Can We Help?

Securing attention is hard to come by in the digital age. That’s why so many savvy Bay Area home-sellers have relied on Julie’s cutting-edge marketing approach to sell their properties fast and for top value.

If you want your property to stand out from the pack, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Increase Curb Appeal For Higher Returns

Posted on by Julie Tsai

Love at first sight. Is it real?

A recent study conducted at the University of Groningen in the Netherlands not only confirmed that the phenomenon is real, but also found strangers were more likely to experience love at first sight with physically attractive others.

This is reportedly true in love, and we also know firsthand that it is true when selling your home. First impressions matter—a LOT.

 

Why Do First Impressions Count?

“When buyers see the outside taken care of, they have a better attitude that the inside will be just as nice! First impressions make lasting impressions.” – Suzette Peoples, Owner of Peoples Properties

According to a Michigan State University study, a home with landscaping and effort put into curb appeal can increase perceived home value between 5% and 11%. Curb appeal can also sell a home faster.

Perceived value is very personal and highly subjective. It has nothing to do with numbers or logic. It has everything to do with perception. Emotion is the ruler of perceived value, and people buy on emotions. In fact, according to Harvard Professor Gerald Zaltman, 95% of our purchasing decisions are made by our unconscious mind.

 

How To Get Great Curb Appeal

So, what are the smartest curb-appeal projects?

Based on the 2019 report from Remodeling magazine and the 2019 Remodeling Impact Report from the National Association of REALTORS®, these are the projects with the highest emotional appeal and return on investment:

Wash your home’s face. Cleaning up the home’s exterior with a thorough power-washing can add $10,000 to $15,000 to the sales price.

 

Freshen the paint job. The most commonly offered curb appeal advice from real estate pros and appraisers is to give the exterior of your home a tasteful new color scheme. Selecting an attractive palette may be tough, but Julie and her team know the colors that are most popular with current buyers, so we can give you savvy advice on choosing the right colors. Buyers will instantly notice a new paint job, and appraisers will value it.

 

Mind the roof. The condition of your roof is one of the first things buyers notice and appraisers assess. A new roof has a return on investment as high as 109%. For more roof tips, click here.

 

Neaten the yard. The Associated Landscape Contractors of America says landscaping can add as much as 14% to the resale value of a home and speed up its sale significantly.

 

Add attractive colors. Color attracts and pleases the eye of would-be buyers. If you’re planning to sell your house in spring, add colorful flowering plants to your front yard so they’ll be in full bloom at the time of showing. If you have a front porch, consider adding a couple of brightly colored chairs or a bench. If you’re feeling a little daring, paint the front door, too. For more tips, click here.

 

Glam-up your mailbox. If you have a standing mailbox, digging a flowerbed by it and adding pretty flowers like pansies or primroses will amp up curb appeal. A chic mailbox, elegant house numbers, or address plaques can also help make your house stand out.

 

Fence it up. A picket fence with a garden gate to frame your yard is an attractive feature. It adds visual punch to your property and extra value during the appraisal. If you already have a fence, make sure it’s clean and in good condition. For more tips, click here.

 

Little details matter. Nothing looks worse from the curb – and sets off subconscious alarms – like hanging gutters, cracked or missing bricks from the front steps, or peeling paint. They can make potential buyers immediately think the entire property has suffered from deferred maintenance. They can also decrease the value of your house by as much as 10%.

 

Can We Help?

Attractive curb appeal is a smart move, one which will make potential buyers fall in love with your home at first sight.

For more home-selling tips, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

How A 1031 Exchange May Help You

Posted on by Julie Tsai

If you’re an investor who is looking to upgrade your investment property, but want to avoid the capital gains tax, a 1031 exchange might be the way to go.

The IRS assesses capital gains taxes on the difference between what you pay for an asset and what you sell it for. Capital gains taxes can apply to investments, such as stocks or bonds, and tangible assets like cars, boats, and real estate.

A 1031 exchange is an alternative that could be utilized to help you achieve your financial goals. However, it cannot be used in conjunction with other IRS capital gains exemptions.

How Can It Help?

Thanks to IRC Section 1031, a properly structured exchange allows an investor to sell a property to reinvest the proceeds in a replacement property and defer all capital gain taxes. By utilizing the money otherwise paid to the IRS in taxes, investors can increase their overall buying power to acquire a more expensive and profitable replacement property, which could mean the purchase of a larger, better investment property.

NOTE: Section 1031 is intended for real estate investors. If you are looking for ways to save money while upgrading your primary residence, Julie and her team can connect you with tax professionals who can advise you accordingly.

Are There Requirements? 

Although the tax code doesn’t exactly state how long you must hold the investment property for rental purposes to enact a 1031 exchange, most tax professionals agree that one to two years is long enough.

The IRS, though, is clear on two points:

  • Merely declaring your house is a rental property isn’t enough. You can’t live in your house at all and you must actually rent it out for some period of time. You can rent out the residence to a relative, provided: 1) the rent you charge represents fair market value for that type of property, and 2) your rental agreement is in writing, and the terms of the agreement are enforced. Most important is the clause dealing with the late payment of rent.
  • Once you’ve established that your property is a rental property, you can perform a 1031 exchange and defer the capital gains from the sale. Section 1031 requires the larger, better property acquired be of “like-kind”—meaning it must also be an income-generating residence.

Additional Points

There are several other stipulations that must be followed to validate a 1031 exchange.

These include:

  • All proceeds from the sale of the original investment property must go towards the replacement investment property, or else they will be taxed.
  • The purchase price of the replacement investment property must be the same as or more than the sales price of the original property.
  • There are strict deadlines by which you will need to identify and then obtain the title of the replacement property. 

Consult A Professional 

1031 exchanges are complex transactions. If you plan to eventually upgrade your current investment property by purchasing another investment property through a 1031 exchange, check with a real estate lawyer or tax professional to ensure you’re 100% compliant with IRS rules and regulations at every stage of the process. Julie is familiar with these proceedings, and can refer you to the proper professionals to make your 1031 exchange a success.

Click here for a detailed look at Section 1031 of the United States Internal Revenue Code. 

 

Can We Help?

For more information on how we can help with your upgrade needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

How An ADU Can Boost The Value Of Your Home

Posted on by Julie Tsai

SELLERS: HOW AN ADU CAN BOOST THE VALUE OF YOUR HOME

 

Most of us would like to live close to our loved ones. We’d love our children to raise their own families nearby. We also would prefer to spend our golden years in the place we call “home.” But the continued rise in the cost of living, particularly in California, makes that a tough dream to achieve.

In 2018, more people left the Golden State than entered – the second year in a row for this negative trend, according to the US census. A recent survey found 53% of residents and 63% of young adults were considering leaving because of the high cost of living.

Bay Area rents continue their strong upward trend. In May 2019, the median rent for a 1-bedroom unit reached $1,975. Two-bedroom units average $2,800 per month.

Now consider the cost of nursing home care, which now averages $86,000 per year across the state and a staggering $125,000 in San Francisco.

 

How ADUs Can Help

All these factors present a unique opportunity for Bay Area homeowners in the form of auxiliary dwelling units, or ADUs. For reference, read our article “New ADU Housing Bills Could Add Significant Value to Your Home”.

ADUs — also referred to as in-law units or granny flats — are additional living quarters on single-family lots that are independent of the primary dwelling unit. The separate living spaces are equipped with kitchen and bathroom facilities and can be either attached or detached from the main residence.

Some of the most common uses for ADUs are:

  • Housing older parents or grandparents independently
  • Low-cost housing for adult children
  • Long- or short-term rental income

 

Multigenerational Living Options For ADUs

ELDERLY CARE

Worrying about the health and safety of an aging parent living far away is a major stressor for everyone involved. Having mom or dad just a few steps out the back door provides convenience and alleviates anxiety. ADUs allow elderly individuals to maintain their independence and offer families the privilege to care for them while saving money otherwise spent on nursing home care. 

HELPING THE KIDS

In high-cost regions like the Bay Area, many people are building ADUs to give their children the opportunity to stay in the place in which they grew up, raise their own families, and/or save money for college or for an eventual down payment on their own home. In some cases, as parents age, they will move into the ADU and make the primary residence available to their grown children.

AGING IN PLACE

In his 2013 book How to Retire the Cheapskate Way, Jeff Yeager tells of a couple in Washington state who are planning to age in place by raising their single-story house to accommodate a new apartment beneath it. Yeager recounts how the couple loves their charming, village-like community and would like to stay there indefinitely. As they age in place, they will have several options: to live in the new ground-floor apartment and rent out the rest of their house, or live in the house and rent out the new apartment below.

This mentality is shared by many who are looking for cost-effective alternatives to leaving their increasingly more expensive neighborhoods.

RENTAL POTENTIAL

What does it cost to build an ADU and what is its rental potential?

A leading ADU builder in Northern California ran a detailed financial projection on building, financing, and renting out a 1-bedroom, 1-bath, 400-square-foot unit in San Jose.

The all-in cost to build this (fully loaded) ADU is projected at $161,358. Financed at 90% loan to cost, this creates a monthly payment of $560 over a 30-year period.

The projected rent for the unit is $1,554/month.

After the projected monthly loan payment, increase in property taxes and insurance, plus a few other expenses, the anticipated net return can be $900/month.

 

Can We Help?

Whether you are looking to care for your aging parents, help your grown children save money and afford living close to home, increase the value of your property, or generate extra income, an ADU is the perfect vehicle.

 

For more about how an ADU may benefit you, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

 

What Are Disclosures? How Do You Prepare For Them?

Posted on by Julie Tsai

After signing the listing agreement with your agent, filling out your home’s disclosures is one of the next steps in the home-selling process. 

So what are disclosures, and how open should you be about them?

 

What Are They?

 

Disclosure laws are meant to protect both sides. Disclosing any issues about major home components, systems, and conditions puts your buyer on notice and prevents you, the seller, from being held liable for future problems.

 

Providing disclosures doesn’t mean you’re giving a buyer guarantees about your home. You must, however, give truthful information about defects you know about or should have known about, but were perhaps ignoring. In most states, it’s illegal for a home seller to knowingly conceal major defects from buyers (click here for disclosure obligations in California).

After your home is under contract and before the sale is finalized, the buyer will typically hire a property inspector. The better prepared you are for the results of this inspection, the better the outcome. 

How To Prepare 

To put yourself in the best position before disclosures and the ensuing buyer inspection, you should have at least a basic understanding of the most probable defects that a home inspector is likely to find. 

According to the National Association of Certified Home Inspectors, these defects include:

  • foundation drainage trouble
  • electrical defects
  • roof problems (drainage, leaks, or rot)
  • heating combustion problems
  • improperly done repairs
  • structural damage
  • plumbing problems
  • infiltration by water or air
  • inadequate ventilation of attic or crawlspace
  • construction flaws.

Knowing what issues to look for and how to quickly and effectively resolve them is half the battle. To ensure a smooth inspection, take these steps before the inspector arrives:

  • If your home is vacant, make sure the power is on.
  • Make sure all light bulbs are working.
  • Pare down the clothes in your closets so the inspector can see inside them.
  • Remove items away from basement walls so they can be inspected for cracks and water penetration.
  • If there is access to the attic in a closet, make sure it’s accessible.
  • Change the filters to your furnace and leave any service tags so the inspector can see them.
  • Do not try to conceal any defects you know are present in the home. Trying to cover up problems will throw up a major red flag.
  • Ask your real estate agent to be present during the inspection.

The Benefits Of A Pre-Inspection

The buyer’s inspection will most likely uncover defects, and you will be expected to repair them if you want to get full asking price for your home. However, you will only have until closing to get the repairs done. This is why we always recommend our clients to conduct an inspection before listing to get ahead of any issues. Typically, an inspection costs between $200 and $500, but the advantages far outweigh the cost:

  • You’ll find out what condition your home is in. 
  • Pricing the home accurately is much easier. Even the best real estate agent will struggle with effective pricing if the state of your home is unclear.
  • Minimized stress. You’ll be putting your home on the market with confidence you’ve corrected any large problems.
  • You’ll be in full control of the scope, timing, and price of the repairs.
  • Less likelihood of extreme negotiations.
  • You’ll improve the buyer’s confidence.

The buyer, of course, will still conduct their own inspection. But if you have a pre-inspection, you can proactively resolve major issues which would otherwise make a sale fall apart. As your real estate agent, we want you to make sure you are as prepared as possible. 

Can We Help?

Trust Julie and her team to guide you through the disclosures and inspection stages. Their goal is to eliminate stress while helping you achieve the results you want.

For more information on how we can help with your selling needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

JULIE TSAI LAW REALTY GROUP

JULIE TSAI LAW

650.799.8888

JULIE@JULIETSAILAW.COM

DRE #01339682

KRISTIN TSAI

408.605.80000

KRISTIN@JULIETSAILAW.COM

DRE #01294153

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