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SD Realtor
ParticipantSD Appraiser you hit it on the head…
“Many real estate agents simply don’t understand how to run an accurate CMA.”
Oh so true…I cannot argue with you about that. However what you said really rings true,
“When I use a range I’m for the low end.” However most sellers are for the middle at the very least. I guess in your case if you prep your client well and tell them, “Look, if I am gonna list this range, then you cannot poo poo low end offers” then I guess that is fair.
I think again, that if you do your CMA correctly then that is great and your single price point is valid. Also even if you do your CMA correctly in a rapidly depreciating market, it may not matter… you end up chasing the market anyways.
Again, it is simply personal choice, I always recommend a single point…
ParticipantI would agree…Although there are tax breaks involved with owning a home you would be better served holding off for now. Learn about how you can take advantage of the upcoming downturn in the market. The next couple of years will provide really good opportunities for people if they play thier cards right. To be specific, save as much cash as you can. You may find that by saving cash now, then getting a great deal in a few years, that you will be VERY well positioned for the future.
ParticipantDefinitely look for rentals on
http://www.craigslist.org, http://www.sdreader.com, http://www.signonsandiego.com.
Also any realtor can check the mls for rentals for you as well.
ParticipantI agree. I wish I was able to stay longer. I had a great time meeting everyone. It was very cool.
ParticipantMy first comment is that I am a Realtor so my answers should be taken with a grain of salt. For tax implications ALWAYS talk to a CPA or tax professional…
Since I like to chat here goes.
1 – I am assuming he is not going to sell the home, and then defer the taxes by purchasing a like property. This is known as a 1031 exchange.
2 – Make sure you calculate his tax liability correctly. If he indeed will have a 400k capital gain MAKE SURE you recapture his depreciation expense. Recapture is calculated as follows, for every year he took a depreciation expense, he will need to add all those deductions back to his cost basis.
Example –
Lets say I buy a home for 300k and rent it out for 10 years. Each year I rent it out I also claim a 3k depreciation expense. Now 10 years later I sell it for 350k. So my capital gains expense is 50k PLUS 30k. The 30k is 10 years multiplied by 3k per year. So my total tax liability is for 80k.
3 – Even IF YOU DID NOT take a depreciation expense each year you owned the property, you still may be liable for depreciation recapture. That is the first question I would ask my tax guy if I were you. However, any owner of rental property should be taking that depreciation expense.
Okay if you do not invest the money back into a like property there are a few alternatives.
1 – If you are carrying any previous capital losses from say stock losses or something of that nature, then you could use those to offset your gains. I had and still have very substantial losses from previous market forays and I had a sale of rental property that had great appreciation. Those gains were totally absorbed by my mountain of capital loss. (OBVIOUSLY DONT TAKE INVESTMENT ADVICE FROM ME)
2 – There are Private Annuity Trusts. I am not to knowledgeable of these vehicles but from what I know they are kind of cool for defering capital gains on highly depreciated property.
– first you put your property in the name of the private annuity trust.
– when you sell the property the proceeds go into the trust.
– while the assets are in the trust they can be reinvested into other investment vehicles, and they can be different then real estate.
– Now your father would receive annual payments from the trust. The amount of those payments is what i do not understand. Losely they would be based on mortality tables. Each time your father receives a payment he would have a tax liability but since each annual payment is much less then the 40k the tax is spread out.
Note PATS do not make the tax go away, however they do defer the tax and essentially spread it out over a long period of time. Meanwhile all the money in the trust can be reinvested and earning a return.
Double note, I only know a little bit about PATs so hopefully someone will add to this post and correct me where I am wrong.
ParticipantAll I can do is shake my head…
Same profession… different worlds. Yet if there would be ANY Realtor to come with a take like that it doesnt surprise me that it is a Prudential agent.
July 21, 2006 at 10:39 PM in reply to: Why I predict a 55% nominal price drop in North County #29233ParticipantI recently closed an escrow in a small complex called Casa Del Rey in Carlsbad. It is at 2251 Altisma Way and is off of Via Alicante and has an awesome view of the La Costa club and the ocean. The condos are all 2/2s. Note all units in this complex have the same floorplan. The solds are as follows from the MLS:
Close date – 7/13/06 391k #103
Close date – 3/30/05 424,750k #102
Close date – 5/24/05 405k #107
Close date – 7/13/04 375k #103So for this complex we are not far away from 2004.
I know it is only a single data point.
ParticipantAgreed totally jg….
Figuring out the “value” is definitely the key…
Like you guys I am also renting and squirreling away cash and hope to buy a nice home in a good school district… some day….
ParticipantMy observation about SDCIA are that there alot more brokers/agents/people working on deals, then what I would consider the norm. That is the norm being a mix of people who may have alot more independent opinions, experiences, not as much money invested in real estate.
I mean SDCIA – San Diego Creative Investors Association to me would represent a mix of people with investments in all kinds of different investment vehicles. However it seems to me that the majority of talk is real estate to say the least.
There are other ways to make money…
KOS –
Kind of scary…
I had posted on there advertisement board one time about my company and I had quite a row with a member who couldn’t accept I could do as good (or in my opinion) a better job then her and charge people 1/3 of what she charges. I thought she was gonna track me down or something!
ParticipantAbsolutely agree with Perry don’t ever leave that deal!
On the larger topic of the Fundamental Value of the home that is somewhat subjective isn’t it? You are getting a smokin deal most like cuz your landlord owns the home outright, pays pennies in property tax, etc… There may be an identical home (from a square footage and age perspective) that is much more expensive to own. I think Perry recently we both answered a post about the person who had the elderly aunt in UC. Perry didn’t you use a 12x multiplier to come up with 250k for a 2/2 UC condo?
Anyways the point is that I think that once more the fundamental value of a home is always determined by the market. I know I am straying off the subject but I have been reading alot about information theory and how it can be applied to markets. These markets can be the stock market, or even games of chance like vegas gaming. Of course the housing market, to me is just another market. Value of the commodity is determined by the market. People make money by entering or leaving the market correctly.
Sorry for not answering the question but I guess my point is that I really do not think there is a numerical answer. These math geek books I am reading would state at some point the probability is high that you will make money on the purchase of that home and at other points the probability is low. Right now the probability is low. So a math guy, or people subscribing to this sort of stuff, never put value on the commodity itself, they use distributions to know when the commodity is overpriced or underpriced verses the probability distribution they create for the market that they are analyzing…
Maybe I should stop reading this stuff (these information theory books) as they are warping my brain.
ParticipantSorry for the late response…
Murray your comment –
“Up to now sellers have not blinked hoping to obtain top $$ for their house. It’s been estimated that 60% of sellers are just fishing and don’t need to sell though. (SD Realtor pls comment)”
I cannot confirm or deny that. I can tell you that those percentages are not true for my personal listings. Here are the profiles for my sellers:
– a couple moving to washington to retire. no rush and they wanted top dollar (against my advice) and are now repriced 50k lower. these guys fit the profile you mentioned Murray.
– a couple who is breaking up and dividing assets.
– a lady who is moving to texas (not listed yet)
– a lady who is moving to orange county (not listed yet)
– a couple who is moving to havasu (listing hits mls tonite)
– a young couple moving to north carolina
– an unfortunate guy who inherited a home and used a high risk loan to buy out his two sisters. his 2 year arm period is up and he cannot afford to make the new payments. he is retired on a fixed income.
– a lady who has already moved to oregon and the house is vacated.
– a guy who bought a new condo on speculation in north county and is flipping it.
– a couple with a home in north county that wants to move to la jolla.
I will say this though… In many of the above cases the price I listed the homes for sale at WAS NOT what I recommended to the client. In most (not all) cases the client asked me to list at what they wanted to get out of the home and I told them I could do that but in my opinion the home would not only not sell, but could get little to no traffic.
ParticipantThis is from the other SD Realtor – (who joined a few days ago) AND who has taken some lumps from his wife for being so addicted to this forum….
I will try to make it as well. I am working out a deal with my wife….So it may involve me taking the kids (at least one if not both) up there. We have dinner with some friends scheduled for 6 but I would like to stop by just to say hello and dispense free sales agents horror stories for those who ask.
I to have really enjoyed this website and have recommended it to a few people already. I have personally learned alot….
I just wish I had more time to investigate some of the articles and paths that posters discuss.
ParticipantI meant NLA not NLS in my last posting. NLA hang in there, your home will sell.
ParticipantI meant NLA not NLS in my last posting. NLA hang in there, your home will sell.
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