What Happens When An Owner Dies While Selling Their Property?

Do you think everything continues on as though that owner were still alive?  Can a spouse just slide in and continue on their merry way? Well this very thing is happening right now on a piece of property I have listed.  The property is unique in itself and had been on the market for over a month when we got an offer.  This property is an investment property and the sellers bought it a couple of years ago so they could "flip" it.  For whatever reason, they did nothing with it until this year.  One of the reasons is because it is so unique and needed a lot of work.  Then at the beginning of the year, they finished getting it ready for market and at the beginning of this month, an offer came in that the sellers were entertaining. There are 3 sellers, two of them are are married to each other and the third one, who is unrelated, lived in Arizona and I have never had contact with him.  All conversations were only with the married sellers. When this offer came in, I had heard that the seller in Arizona was not feeling well but he and his family thought he would be fine.  Just as the offer was being sent to him, he passed away.  What a shock to all involved. So, what happens now?  The buyer wants his offer accepted so they can move forward; as does the remaining 2 sellers.  However, this is a sensitive situation.  So it was decided to wait until after the funeral before letting the heirs know about this offer, which we all felt was the right thing to do. The other problem was no one knew if the seller who passed away had a trust or even a will. You see, if the property is not in a trust, then the property would have had to go through probate.  That could take a long time before this property would sell.  If it was in a trust, who is the successor trustee?  Would that person be cooperative in the sale or would this person want to keep the property? Since this seller died in Arizona, his attorney had to refer the heirs to an attorney in California.  We are all in a waiting mode right now and hope we can move forward soon with selling the property. The moral of the story - Make sure you have your affairs in order in case the unthinkable happens.

Avoiding Loan Modification Hoaxes

  The New York Times Avoiding loan-modification hoaxes Homeowners wary of being taken in by bogus “loan modification specialists” should not assume that a law office is the most reliable way to work with their lender.  Consumer advocates say a growing number of fraudulent modification services involve lawyers, or people who say they are lawyers. Making sense of the story
  • Increasingly, lawyers are lending “their names, their offices, their credentials” to fraudulent operations that vaunt superior skills in obtaining loan modifications, according to a senior counselor at the Lawyers’ Committee for Civil Rights Under Law in Washington.
  • While Federal Trade Commission rules generally prohibit demanding upfront fees for mortgage relief services, there is a narrow exception for lawyers.
  • Under the rules, a lawyer may charge clients in advance for assistance if the service is part of their general practice of law, and not outside of that practice.
  • Certainly, many lawyers provide legitimate foreclosure-avoidance services, but borrowers should know that when going to a lawyer whose sole business is loan modifications, that is a red flag.
  • As more homeowners become aware of these tactics, some operations are changing their practices.  Instead of selling loan modification services, they are advertising so-called loan workouts and forensic loan audits. Some are even posing as nonprofit groups.
  • The Homeownership Preservation Foundation and the Lawyers’ Committee both belong to a coalition of public and private agencies that maintain a national database of loan-modification complaints.  Since March 2010, some 28,000 homeowners have reported potential fraud.  Their reported monetary losses total around $66 million.
Read the full story

No More Home Inspections for Sellers in South San Francisco!!!

A victory has been won for the sellers of real property in South San Francisco thanks to the Realtors of San Mateo County Association of Realtors (SAMCAR).  Mayor ProTem Karyl Matsumoto at the City Council meeting tonight said she was "tired of this whole thing and wanted to shelve" the whole inspection issue.  As Mark Addiego said "What a nice surprise!"  And you could see he was totally surprised. City Council member shared that there were so many emails and phone calls received and were probably the reason for the decision not to go forward with the ordinance. I spoke with Karyl Matsumoto after the meeting to thank her for allowing this to happen.  My concern about this coming back to a vote at some future date was immediately put to rest by her comments.  She said that it probably won't come up again for another 10 years or so when she was probably off City Council.  We both laughed at that. So, if you were thinking about selling your property but decided not to due to those bogus and invading  inspections, you may now want to change your mind.  Please share your thoughts on City Council's decision not to have these Home Inspection.

Another Point of Sale Inspection Study Session this Wednesday, January 16

South San Francsco has scheduled another Study Session regarding the Point of Sale Inspections that the Fire Department is trying to bring into law before a property owner can sell their home. The session is schedule for : 6:30 pm Wednesday, January 16, 2013 South San Francisco Municipal Service Building 333 Arroyo Drive South San Francisco, CA 94080 If you have read my posts before you know the Fire Department has been subjecting its owners to warrentless searches by "requiring" first a smoke detector inspection and then onto a Home and Safety Inspection.  Over the years the owners and agents have ultimately been lied to when asked point blank if there was an ordinance for these inspections by responding "Yes, there is an ordinance".  However, when asked for that actual ordinance, we were given the "run around" by giving bogus sections of the municipal code.  We were told it was "tied to the State code". Many agents assumed it was the truth and so it was not questioned.  Why would anyone question the Fire Department? The first Study Session was last October 17, 2012 where SAMCAR  and the Fire Chief were directed to meet and come up with a solution.  We have a couple of meetings, but it seems the Fire Chief, as nice as he appears to be, does not quite understand the meaning of "warrantless searches" or that the 4th Amendment of our Constitution does not allow entry without "reasonable cause".  As I've said before, selling your home is not reasonable cause to enter the privacy of your home. So, please join us this Wednesday if you like.  You can even speak to losing your rights if you want. Oh, and if anyone thinks this is about costing the Realtors any money, they are dead wrong.   We feel it is unfair and very, very costly to the sellers.  But read my other posts regarding this.  It is hurting the owners financially.  It is unfair, costly and unconstitutional.

Brief Real Estate Provisions for 2013

Here is information I received today from the National Association of Realtors. Real Estate Provisions in “Fiscal Cliff” Bill On January 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama. Below are a summary of real estate related provisions in the bill. Real Estate Tax Extenders
  1. Mortgage Cancellation Relief is extended for one year to January 1, 2014
  2. Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
  3. Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
  4. Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.
  5. Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by 3%. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80% of the filer’s itemized deductions. These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income. Capital Gains Capital Gains rate stays at 15% for those the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%. The 250/500k exclusion for sale of principle residence remains in place. Estate Tax The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation. So, what do you think about these changes?

Mortgage Forgiveness Debt Relief Act Has Been Extended!!

Just received this news from the California Association of Realtors. "Late last night, Congress reached a settlement in the “fiscal cliff” negotiations.  As a result, the Mortgage Forgiveness Debt Relief Act has been extended for another year.  The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction) or foreclosure."  REALTORS® should tell their clients to keep their short sales on the market and encourage them to consult with their own tax advisers about their tax situation." It was through the help of over  26,000 California REALTORS ® who sent messages to Congress plus over 1,800 calls to make this happen. This will help the many short sale sellers who purchased when prices were over inflated and interest rates were higher.  Or homeowners who refinanced and now owe more than their property is worth. So if you have a home that is "upside down" and owe more than it is worth, now just might be a great time to sell it before our members of Congress change their minds next year.  And, if you think you want to wait, just know that it can take months to get an offer approved by the seller's lender.  The way it works now, the sale must close before the end of this year.  Sometimes buyers back out and you have to start all over again.  So if you are considering selling your property that will be a short sale, I wouldn't wait, especially while interest rates are down and many buyers are out there. However, be sure to always check with your tax adviser as to how this could affect you.  In fact, anytime you buy or sell real estate, it is always wise to check with your tax adviser to be sure this is the financially correct thing to do A question many people have - Why should these homeowners receive relief while there are others who are still struggling to make those higher payments on a home that is upside down because they can afford it?  What do you think?

FHA Waiver For Property Flipping

Good News!!  FHA just announced that if a buyer finds a single family property that an investor has recently purchased, and done some fixups, they are waiving the 90-day  "flip" rule until December 31, 2014.  Before this waiver came into place, if a buyer wanted to purchase a home using FHA financing, it could not be a "flip" house.  In other words, the FHA buyer could not buy a home that had been resold within 90 days.  This waiver has now been extended until December 31, 2014. This is good news for both the investor and the FHA buyer.  Many times FHA buyers are limited on the type of home they can purchase.  FHA does not like their borrower to buy homes that need repair becasue the borrower is only putting down 3.5-5% down payment.  So there is not much equity in the property and they don't want the new buyer to have to worry about repairing anything.  However, lately, FHA has made the purchase easier and quicker,  that is if sellers will accept their offer. Some sellers are hesitant to accept FHA offers mainly because of the low down payment.  If the appraisal does not match the sales price, there is no way to negotiate with the borrower due to the low down payment.  However, lately, I have noticed that when an FHA offer is accepted, the process goes very smoothly and in some cases do not take any longer than a regular, larger down payment purchase.  It really is a  nice feeling to help someone get a home who doesn't have much money for a down payment buy they first home. Here is the full report from FHA: https://www.federalregister.gov/articles/2012/11/29/2012-28918/federal-housing-administration-fha-temporary-waiver-of-fhas-regulation-on-property-flipping