Reports of foreclosures by the millions have been in the news so much over the past few years that to some, it might seem like the new normal. 

But as a real estate professional who is in the trenches with financially stressed homeowners every day, it never for a second feels to me like business-as-usual.

The prospect of losing ones home is right up there among the major sources of grief, and often, it goes hand in hand with other tragic setbacks such as the loss of a job, a divorce, death of a loved one, mounting medical bills or skyrocketing mortgage payments.

Unfortunately, the first stage of grief is denial, and that’s even more the case when the threat of foreclosure is looming. No one wants to talk about or admit financial troubles—even when millions of others have founds themselves in a similar spot.  It’s completely understandable, but for homeowners who are behind on mortgage payments, decisive action is often the most critical step toward ensuring the best possible solution.

As a real estate professional who has sought out the Certified Distressed Property Expert (CDPE) designation, I help homeowners to deal with every aspect of the grief and uncertainty that accompanies a mortgage which is no longer manageable. In the process, I help them to get on a path of financial solvency.

If you or someone you care about would like to change the course of a life that’s facing foreclosure, I get it and I can help.

Contact me today at (408) 445-5165 or rmsjsu@pacbell.net

Ron Mason

Renewed trust for tough times

Does it feel like trust is one of the major casualties of the economic meltdown of 2008 – followed by the “Great Recession,” the “Jobless Recovery” and now the threat of a “Double Dip Recession?”

Weren’t we assured that home values were destined to go up and up and up?

There have been lots of promises that help is on the way—and lots of warnings of scams and schemes that have only served to confuse the matter. So where’s a homeowner who’s underwater or overleveraged to turn?

Here’s the bottom line: the choices that homeowners make when they feel they are at the end of their rope will have ramifications for years to come on their ability to qualify for credit, their job prospects, their security clearance and their overall finances. When a family’s financial trajectory is rapidly heading in a negative direction, there’s no substitute for the helping hand of a knowledgeable expert who has the integrity, the experience and the training to reverse the course—someone who is tapped into regulatory initiatives and can separate fact from fiction.

It is my mission to serve as a credible source of information and perspective to homeowners who have found themselves in a tough situation and need help sorting through their options. That’s why I sought out the Certified Distressed Property (CDPE) designation—the most renowned and recognized credential in the distressed property field, and it’s why I continue to stay on top of regulatory and industry developments that impact options available to homeowners who are struggling with their current financial situations.

My message to homeowners who do not know where to turn: there is hope. Foreclosure is not inevitable and neither the government nor your bank wants to see that happen. No one expected to find themselves on the brink of foreclosure, but I have worked with countless clients who have managed to turn their financial trajectory around and get on a path of financial recovery. 

It CAN be done! And it would be my privilege to help.

A recent study in Nevada (a state that holds the nation’s highest foreclosure rate), found that only 5% of distressed homeowners knew they had alternatives to foreclosure, and only 3% took advantage of them. It was also found that 1 in 4 homeowners chose to “strategically default,” or allow their homes to be foreclosed upon on purpose! California and Santa Clara County have similar statistics for distressed homeowners.

 Clearly, too few distressed homeowners know their options and the fallout of foreclosure. If they did, they’d soon realize that there’s nothing ‘strategic’ about foreclosure, and that avoiding foreclosure is always the best plan to create financial stability.

 Millions of Americans feel alone and trapped by mortgage payments they can no longer afford. In fact, 27% of Americans with mortgages now owe more than what their home is worth. However, more and more of them are finding education on the responsible alternatives to foreclosure is helping them move toward financial stability.

 Education is key! The more distressed homeowners know about solutions, the more likely they are to overcome their financial challenges. I’ve seen this firsthand

 I can help with the education part, please visit the following link:  http://hosted.cdpe.com/80784/Home.aspx) or call Ron Mason to discuss!

 Top Tax Deductions for Investment Property

Since we are in tax season, I thought it best to review some of the top tax deductions for real estate investors.  When filing your taxes, don’t forget to take full advantage of all the deductions available for owners of rental property. 
 
Mortgage Interest – The interest owed on a loan used to acquire or improve an investment property is a tax deductible expense.  In addition, interest payments on credit cards for goods or services used in rental activity is also deductible. 
 
Depreciation – Residential income property can be depreciated over 27.5 years; commercial 39 years.  Depreciation is often the largest deduction a real estate investor can take. 
 
Repairs  – The cost of repairs to rental property are fully deductible in the year in which they are incurred. The repairs must be ordinary, necessary, and reasonable in amount.  Some examples of deductible repairs include painting and fixing broken fixtures.   Replacing a roof would not be considered a ‘repair’, but rather a capital improvement and the cost associated with replacing the roof would increase the basis of the property. 
 
Travel Expenses -  Property owners are entitled to deduct the costs associated with traveling to and from the rental property.   The drive to a property to deal with a tenant complaint would qualify  as a tax deductible expense.  Likewise, flying to Hawaii to repaint a rental property would also qualify as a tax deductible expense.  For overnight travel, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.  Please note however that IRS auditors closely scrutinize deductions for overnight travel. To stay within the law and avoid unwanted attention from the IRS always properly document long distance travel expenses.
 
Home Office – Landlords may be able to deduct home office expenses provided certain minimum requirements are met. 
 
Employee, Independent Contractor and Professional Services Expenses – Fees paid to gardeners, painters, attorneys, accountants, property management companies, real estate investment advisors, and other professionals  can be deducted as operating expenses as long as the fees are paid for work related to the rental activity.
 
Advertising – Any advertising costs associated with marketing the property for rent or for sale can be deducted.
 
Insurance – Insurance premiums can be deducted for almost any insurance policy related to the rental property.  This includes, fire, theft, and flood insurance for rental property, as well as landlord liability insurance.
 
Vacant Property -Keep in mind: if the property is vacant either  because the property is either up for sale or is waiting to be re-tenanted, the owner may still be able to deduct all  ordinary and necessary expenses (including depreciation) for managing, conserving and maintaining the property while the property is vacant. 

Trying to figure out whether you should rent a home or buy one?

A new interactive map from Trulia.com may be able to help.

The map is based on Trulia’s latest calculations of the rent versus buy ratio in the 50 largest American cities. Trulia calculated the ratio by comparing the median list price to the median rent of two-bedroom apartments, condos and town houses listed on its site.

A ratio of 1 to 15 (shown with green circles on the map) means owning a home is much less expensive than renting in that particular city, while a ratio of 16 to 20 (or a lighter green circle) means the total cost of ownership in that city is greater than renting but buying still “might still make financial sense,” depending on the situation. Finally, according to Trulia.com, a ratio score above 21 (yellow and red circles) means “renting in this city is much less expensive than owning a home.”

The map also shows data regarding the median annualized rent and median list price of homes and has some surprising findings on the cities where it may make more sense to buy.

The map, of course, may be most helpful to those considering a two bedroom. Yet prices for other size homes may follow similar trends. The general trend now is toward home ownership in most cities, as many former homeowners are now renting.

Check out the map and let us know whether it accurately captures the situation in your city. Also, how do you decide whether to buy or rent where you live?

Industry Facts for the United States

1. The National home ownership rate in the U.S. is nearly 67%
2. 78% of all homes purchase were single family detached homes
3. The average homeowners net worth is more then 10 times that of the average renter
4. 22% of listing on the market went through at least one price reduction in June of 2010, a decrease from 23.6% in June 2009
5. 1 in 10 buyers purchased a home through a foreclosure in 2010
6. 90% of buyers use the Internet to search for homes
7. Typical age of first-time home buyer – 30
8. Typical age of repeat home buyer – 48

San Jose, CA 12/15/10 – Local Certified Distressed Property Expert (CDPE)-designated agent, Ron Mason of Coldwell Banker, has developed a website providing information describing several opportunities for homeowners to avoid the negative financial impact of foreclosure, starting with mortgage modification.

This community resource is available at http://hosted.cdpe.com/80784/Home.aspx and defines foreclosure alternatives, including short sales, loan modifications and forbearance.

“The holidays are a time of joy and family, but for many in Santa Clara County, this is also a time of increased strain”, Mason said.  With this report, I’m helping homeowners in my community to learn more about their options so they can have hope to carry them through the holidays.”

Foreclosure alternatives such as mortgage modifications and short sales – have become prime solutions for both struggling homeowners and lenders to find common ground in this challenging housing environment.

“At this time of year, distressed homeowners are easily overwhelmed by finances, obligations and the added stress of the holidays”, Mason said,  “The best course of action for homeowners looking for options is to gather more information.  The report on my site is a strong first step.

The CDPE designation Ron Mason has acquired provides real estate professionals with specific understanding of the complex issues confronting distressed homeowners.  Through comprehensive training and experinece, CDPE disignated agents are able to provide solutions for homeowners facing financial hardship in today’s market.

For more information – contact Ron Mason @ (408) 445-5165 or www.RonMasonRealtor.com

While the nation’s housing market has bounced back from the depths of the recession, the nascent recovery has been slow and sporadic in many parts of the country, including here in the Bay Area. The question on everyone’s mind is, “When will the market return to normal?”  No one knows for sure when that will happen  (the definition of “normal” is rather subjective  – it seems today’s market is the “new normal”), but there are a number of signs out there that we should be watching for – economic indicators that will point to a  more robust recovery in the market.

 On a macro-economic level, consumer confidence and unemployment levels are crucial, along with overall economic growth figures such as the nation’s GDP. Buyers won’t take the chance on purchasing a home if they’re out of work, or concerned they may be before long. If they don’t have confidence that things will be getting better, they’re not likely to move forward with a major purchase.

 Additionally, because real estate is such a local business, our local market indicators will also give us some clear signals. In addition to seeing overall sales rise in our local communities, we will be looking for inventory levels to fall, median prices to edge higher, the average days on market figure to drop, and the upper end of the market to heat up. Historically, it’s been the high-end market that comes out of a recession first because buyers have the means to take advantage of good values.

 So are we seeing these signs yet? Nationally, it was a mixed bag this week.  We enjoyed a slew of positive economic data points early in the week – rising car sales, upward revisions to growth and productivity and a busy start to the holiday retail season. Private sector payrolls rose by the most in three years in November. And finally, the Conference Board reported Tuesday that the Consumer Confidence Index jumped to 54.1 in November, up from a level of 49.9 a month earlier. Although the index remains well below its prerecession levels (which were above 100), the boost provides an encouraging sign for the economy.

 But as we took two steps forward with the positive economic data, we went one step backwards on Friday when the nation’s jobs report was released. November’s job growth came in far lower than expected and the unemployment rate rose to 9.8%. U.S. employers added 39,000 jobs to their payrolls in November, the Labor Department reported. That marks a major slowdown from October, when the economy added an upwardly revised 172,000 jobs. The number also fell short of the 150,000 jobs economists were generally expecting.  However, most economists are concluding by week’s end that the mixed bag of employment data was overall a bit more positive than negative.

 Sales of million-dollar homes in Silicon Valley and the median sale price edged higher in October, according to Coldwell Banker Residential Brokerage’s luxury home report.  It was the eighth time in the past nine months that year-over-year sales in the luxury market increased.  Luxury sales also edged higher in the East Bay. In Marin, although sales dipped slightly in October, the median price rose 7 percent.

 The broader Bay Area housing market, however, is still working to move back to normalcy. Sales in October were off sharply from year ago levels. Analysts believe much of the drop had to do with the fact that 2010 home sales were “front-loaded” earlier in the year as buyers rushed to take advantage of the tax credit before it expired. But certainly tighter credit and concerns over jobs played a role. 

 So where does this all leave us as we head toward year-end? Our local housing market recovery – like those in many regions – has been slow and choppy at times. Yet we are seeing enough positive signs overall to believe better days are ahead of us as we move into the new year. For those looking to buy a home, the stars are in perfect alignment. Interest rates are at historic lows in the low-4% level in 30-year fixed-rate loans. Home prices are very attractive. And housing affordability is at the highest point in years. Buyers need to examine their own “personal economy” and decide if they’re in a position to invest in a home. If they are, there may never be a better time.

The average sales prices for a home in Santa Clara County rose 5.97 percent in October from September, signaling strong demand and increased buyer confidence reports the Santa Clara County of Realtors.  The average sales price for homes, including single family residences, town-homes, and condos, went up to $699,175 in October of 2010 from $659,798 in September, 2010.  The spike in year over-year comparison is even bigger:  It jumped 11.09 percent from the same month last year.  The price increase indicates that home buyers recognize the value of owning a home or buying investment properties in Santa Clara County said Karl Lee, president of the Realtors Association.  This continues to demonstrate that Santa Clara County is way ahead of most other markets in the nation on the path to full recovery.    Savvy buyers are now snapping up bargains while those who wait may look back a decade from now and wonder how they missed this opportunity.

Choosing a Fixed Rate Loan

Fixed rate loans generally come with one of two options; the 30-Year Fixed and the 15-Year Fixed. If a borrower is planning on being in the same home for a long period of time, a 30-Year Fixed may be more attractive because it offers stability. The monthly payment will remain consistent over the life of the loan. If interest rates are at historic lows at the time the borrower is seeking to obtain financing, this is a good program to consider.

A 15-Year Fixed loan program offers the same stability, but the accelerated amortization schedule makes the monthly payment substantially higher. While the interest rate may be lower on this type of loan, the borrower must be willing to commit to a higher monthly payment. If the borrower wishes to retire in 15 years and be debt-free at that time, this loan program may be more suitable to the borrower’s long-term needs.

It is also possible to make pre-payments on a 30-Year loan and reduce the life of the loan, as well as the overall interest payment, without committing to the higher monthly payment of a 15-Year program. As long as there is no pre-payment penalty associated with the 30-Year mortgage, pre-payment offers the borrower the latitude to make additional payments when it is affordable. If cash flow becomes difficult, this arrangement will not put the borrower in a compromising position.