A few weeks ago I was contacted by a potential client who owned two homes in Olympic Valley, CA home of the 1960 Winter Olympics and the Squaw Valley ski resort. The client was looking for an appraiser to perform 2 appraisals and provide discount appraisals for the two properties. He went on to explain that he has 4 kids, is getting older in age, and is setting up his estate. Based on advice from the clients tax attorney he wants to gift each kid a 25% interest in each of the homes.
Due to tax laws, fractional interest shares are valued at a discounted rate based on 10 different variables. Therefore the value of each share in this scenario is discounted 30%. If you were to think of the properties as a whole with a market value of +/- $1.65M the discounted/taxable value would only be $1.15M. Thats alot of lift tickets at Squaw, not to mention it will save each of the kids thousands of dollars in estate taxes.
There are many reasons why people have their homes appraised and each scenario involves a different purpose. This was a great appraisal for me to perform as I got to help my client keep 2 homes within the family for years to come.
Please feel free to contact me anytime for information on appraisals, market information, or to get a better understanding of how an appraisal can benefit you and your family.
Best regards, Dave Westall
530-448-9882
david@aag-inc.net
Wednesday, May 27, 2009
Friday, November 14, 2008
Can't Sell Your Home? Why Not Rent it?
Can't Sell Your Home? Why Not Rent it?
by Phoebe Chongchua
It may not always make sense to sell your home. If that's the case, renting it could be a good option. But understanding the rental process and using expert help will alleviate extra stress.
Dr. Danielle Babb is the author of The Accidental Landlord. She shared five top tips for homeowners who are considering renting their home.
Emotionally disconnect from your home. As you can imagine, this can be a very difficult thing to do -- especially if you've lived in the house for a long period of time and maybe your kids have grown up in it -- but it's an important step.
“It can cause some emotional distress and you may find yourself too attached for the new tenants liking and their privacy rights. When you make the decision to rent out your home, it needs to feel similar to how it would if you were selling it to someone else,” says Babb.
Screen your tenants. Don't fast forward to thinking about having wonderful tenants in your home so much that you skip over the screening process. Attending to this process alone, can eliminate huge headaches in the future.
Babb cautions landlords about scams aimed at landlords who don't screen. “There are actually "professional tenants" out there that do nothing but find susceptible landlords, usually those renting without a management company, that don't screen tenants. They will give a deposit, and live rent free (not paying rent), knowing you won't know what to do or how to kick them out,” says Babb.
She outlines several steps in her book that help landlords learn more about removing tenants but she says, “The most important thing is not to let the bad ones in to begin with.”
Babb says in her book as well as on the Landlord Protection Agency website there are screening worksheets that help landlords know what types of questions to ask and what red flags to look for.
“For instance, are they not taking care of their car? Maybe they won't take care of your house either and make sure you call those references! Compare what they tell you to what is on their credit report, and make sure you do a credit and background check. Know who you are renting to, and don't be afraid to say no,” says Babb.
Know the law. There are specific laws to protect the tenant. How much the tenant is protected differs greatly from state to state.
“The laws you must abide by are the laws the home is in. You have to tailor your lease or rental agreement to that state's rules. You can easily find these on the Landlord Protection Agency site and then modify the lease agreement accordingly,” says Babb.
To learn more visit the LPA: thelpa.com
She says, “Common changes are how much notice you must give for them to vacate, the maximum deposit you can collect, and notifications for entrance.”
How much rent? “It's easy to say, 'Okay, I have $2000 in expenses, Ill charge $2100,'” says Babb.
But just like when selling your home, it doesn't work that way.
“The market may only bear a rental comp of $1500. You have to make the decision if that $500/month is worth the long-term gain or whatever your initial reason was for holding rather than selling,” says Babb.
Real estate agents can be a great resource for helping to determine what the best rental price should be. They can show you homes in the area that are also for rent and, just as when selling, taking a look, or at least, driving by the homes gives you an idea about the competition.
“You may get more if you leave it furnished; sometimes you can lease furniture and up-charge and make a profit on it, particularly in areas where young families are starting out or college students frequently live. Just be sure you price it right -- all of those extra months on the market eat into that profit or breakeven point. No matter what, be sure you collect a sufficient deposit -- usually one months rent, plus a pet deposit and additional monies for other reasons, like appearing to be a risky tenant,” says Babb.
Who is responsible for what? Important, but tricky question. Depending on which side of the fence you sit, you, of course, may see this differently.
Babb says, “If something breaks, you have an obligation and lawful duty to fix it immediately if it affects quality of life or poses a hazard. But, if the tenant just wants something upgraded, that isn't a requirement. You have to walk the line between having your tenant stay long term because you're easy to work with and paying too much for little things. You can let the tenant make upgrades that they pay for if you wish.”
Babb adds that incentive programs also help a good tenant to stay longer. “For instance, I give my tenants a $25.00 or $50.00 off rent coupon if they pay 5 days early and pay direct deposit. This saves me considerable time.” She says landlords should beware of partial rental payments such as a tenant paying only $100. “If a tenant sends you a partial rental payment, say for $100, and you cash it, it may start the clock ticking all over again on evictions! These are the types of things that professional tenants do.”
Renting doesn't have to be a scary process; it does have to be a well-researched and carefully planned process to ensure the best outcome for all.
Published: November 7, 2008
For information on rental analysis, current market rents, or other real estate information please contact Alpine Appraisal Group, Inc. 530-582-0591 or AAG@AAG-INC.NET
Thursday, October 9, 2008
Tahoe In Turmoil
Since the fall of 2005 appraisers in the Tahoe/Truckee area started to notice a new trend as home prices went from a feverish upward momentum to a a slowdown. Nobody knew whether the slowdown would last a few months, a few years, or a decade. As we enter one of the worst financial crisis' since the great depression it appears that until the global credit situation rights itself we are going to be in a period of instability.
I remember talking to some Realtors in 2004 when house pricing in the Tahoe area was going through the roof and I was constantly asking when they thought a slowdown would take place. Some of these Realtors stated that it would be a long time due to supply constraints and that possibly Tahoe is one of the areas of the country that would not slow down. In 2004 we were seeing home appreciation of 1+ percent on a monthly basis. For appraisers it was hard to appraise home purchases because of the limited availability of comparables. If an appraiser were to use a comp that was 2 months old it would support a lower value for the purchase due to appeciation in the market. It was a hard time to put the pieces together and support value.
In the summer of 2005 we started seeing the dream of a Tahoe home fall to the wayside for more and more people as house pricing started to fall out of line with demand. A basic ranch style house with a 2 car garage in Glenshire was selling for over $500,000! By the fall of 2005 it had started, people were sitting on the sidelines and home prices began to fall. This started a ripple effect through the Tahoe economy which is more like a tidal wave today. The Tahoe economy relies heavily on the real estate market, whether it is construction, sales, appraisals, property management, etc. and when there is a slowdown it is felt by many.
Today we have seen the start of one of the most destructive financial crisises in modern history and we are unsure of what the future holds. A bailout of $700 billion has been passed, but this only accounts for about 7% of the total mortgages out there and does little to help "Joe 6 Pack" that is struggling to make ends meet. It is going to take job creation and consumer confidence to bring us back to where we need to be to have a healthy economy. For many of us that meens that we are going to have to do what it takes to make ends meet. Whether that is taking a second job, cutting back all non esential costs, eliminating travel, or other cost saving measures.
I still feel that Tahoe is one of the best parts of the country to own a home or second home. The recreation is world class, the people in this area are vivid and full of life, and if you can make it here you can make it anywhere, sorry New York. Alpine Appraisal Group, Inc. is dedicated to helping their clients meet their real estate goals with dedication to honesty and integrity. If you ever want to go over market information please contact us, we would be glad to answer your questions, and help you in this time of instability.
I remember talking to some Realtors in 2004 when house pricing in the Tahoe area was going through the roof and I was constantly asking when they thought a slowdown would take place. Some of these Realtors stated that it would be a long time due to supply constraints and that possibly Tahoe is one of the areas of the country that would not slow down. In 2004 we were seeing home appreciation of 1+ percent on a monthly basis. For appraisers it was hard to appraise home purchases because of the limited availability of comparables. If an appraiser were to use a comp that was 2 months old it would support a lower value for the purchase due to appeciation in the market. It was a hard time to put the pieces together and support value.
In the summer of 2005 we started seeing the dream of a Tahoe home fall to the wayside for more and more people as house pricing started to fall out of line with demand. A basic ranch style house with a 2 car garage in Glenshire was selling for over $500,000! By the fall of 2005 it had started, people were sitting on the sidelines and home prices began to fall. This started a ripple effect through the Tahoe economy which is more like a tidal wave today. The Tahoe economy relies heavily on the real estate market, whether it is construction, sales, appraisals, property management, etc. and when there is a slowdown it is felt by many.
Today we have seen the start of one of the most destructive financial crisises in modern history and we are unsure of what the future holds. A bailout of $700 billion has been passed, but this only accounts for about 7% of the total mortgages out there and does little to help "Joe 6 Pack" that is struggling to make ends meet. It is going to take job creation and consumer confidence to bring us back to where we need to be to have a healthy economy. For many of us that meens that we are going to have to do what it takes to make ends meet. Whether that is taking a second job, cutting back all non esential costs, eliminating travel, or other cost saving measures.
I still feel that Tahoe is one of the best parts of the country to own a home or second home. The recreation is world class, the people in this area are vivid and full of life, and if you can make it here you can make it anywhere, sorry New York. Alpine Appraisal Group, Inc. is dedicated to helping their clients meet their real estate goals with dedication to honesty and integrity. If you ever want to go over market information please contact us, we would be glad to answer your questions, and help you in this time of instability.
Monday, September 15, 2008
Lake Forest Glen Townhomes
For years the Lake Forest Glen townhomes have been appreciating and enjoying market stability. In the last 12 months there has only been 1 sale in the complex and that was in December of 2007 and currently there are 1o units for sale. Without any sales in 2008 the Lake Forest complex is considered to have an oversupply of inventory and prices have been falling within the complex.
After a review of market data over the last 24 months we are seeing condo and townhome prices down 12% year over year, the number of sales are down 44%, and the average days on market are up 31%. In the last 12 months there have only been 9 condo/townhome sales in MLS area 2, 3, and 4(Agate Bay, Carnelian bay, and Tahoe City) and currently there are 21 units for sale which is going to pull prices down further.
We are seeing units in the Lake Forest Glen complex that used to fetch prices in the $500K+ range now being listed for the mid $400K's and now there are units that are in the sub $400K price range that are not selling.
MLS areas 2, 3, and 4 used to be the most stable areas around the Lake due to the proximity to amenities, Tahoe City, and ski resorts, but now we are seeing that no neighborhoods are immune to the current market/economic conditions. It just took about a year for these neighborhoods to suffer where other neighborhoods have been in a declining state for over a year.
It appears that until national economic conditions strengthen we are going to see prices continue to tumble making it more difficult for those who purchased homes within the last 2 years to refinance or sell there properties.
After a review of market data over the last 24 months we are seeing condo and townhome prices down 12% year over year, the number of sales are down 44%, and the average days on market are up 31%. In the last 12 months there have only been 9 condo/townhome sales in MLS area 2, 3, and 4(Agate Bay, Carnelian bay, and Tahoe City) and currently there are 21 units for sale which is going to pull prices down further.
We are seeing units in the Lake Forest Glen complex that used to fetch prices in the $500K+ range now being listed for the mid $400K's and now there are units that are in the sub $400K price range that are not selling.
MLS areas 2, 3, and 4 used to be the most stable areas around the Lake due to the proximity to amenities, Tahoe City, and ski resorts, but now we are seeing that no neighborhoods are immune to the current market/economic conditions. It just took about a year for these neighborhoods to suffer where other neighborhoods have been in a declining state for over a year.
It appears that until national economic conditions strengthen we are going to see prices continue to tumble making it more difficult for those who purchased homes within the last 2 years to refinance or sell there properties.
Wednesday, September 3, 2008
It Just Got Worse
Just when you think you have heard all the news about the economy, housing market, and politics we learn that East West Partners (developers of Old Greenwood, Gray's Crossing, etc.) have just let numerous employees know that they have been laid off or are going to be laid off in the near future. EWP is letting these employees go due to decreased revenues and a slow real estate market.
This is not good news for the people of Tahoe/Truckee that have worked hard for years to make sure that the projects that EWP have developed have been successful. These people are now going to have to find new jobs in the Tahoe market which can be challenging to say the least as full time work in this area is very limited.
What does this mean for the community? This means that with fewer jobs in the area that fewer full time residents will be able to make a living in this beautiful area. When that happens more homes come on the market for sale and this increased inventory coupled with a struggling economy can lead to home prices falling.
AAG, Inc. wishes all those that have been laid off recently the best of luck finding new work in the Tahoe area or abroad.
This is not good news for the people of Tahoe/Truckee that have worked hard for years to make sure that the projects that EWP have developed have been successful. These people are now going to have to find new jobs in the Tahoe market which can be challenging to say the least as full time work in this area is very limited.
What does this mean for the community? This means that with fewer jobs in the area that fewer full time residents will be able to make a living in this beautiful area. When that happens more homes come on the market for sale and this increased inventory coupled with a struggling economy can lead to home prices falling.
AAG, Inc. wishes all those that have been laid off recently the best of luck finding new work in the Tahoe area or abroad.
Wednesday, August 27, 2008
LABOR DAY WEEKEND EVENTS
· August 27 -September 1: Best in the West Nugget Rib Cook Off. Enjoy great food and music all weekend long! Food booths open 11am -9pm Wednesday-Sunday, 11am-5pm on Monday. Victorian Square, Sparks Nevada.For more information and directions visit www.nuggetribcookoff.com
· August 29: Squaw Valley USA. Star Gazing. The stars shine brighter in Tahoe! Enjoy the use of high powered telescopes and night binoculars and learn about stars, constellations and the night sky. Free with every Cable Car ticket.
· August 29-30: Squaw Valley USA. Sunset Hikes. A guided tour from the top of Squaw. Registration at the top of the Cable Car between 5:30-6pm. Hike lasts approximately 1-2 hours.
· August 30: Tahoe Donner's Free Concert Series. 6-9pm. Northwoods Clubhouse, Northwoods Blvd. Just past the stop sign, on the right.
· August 30: Old Fashioned BBQ and horse drawn carriage ride. BBQ with all the fixin's followed by wagon rides and games: horseshoe, egg toss, and treasure hunt. 5-7:30pm.Tahoe Donner Equestrian Center. Call 530.587.9740 for more information.
· August 29-September 1: Northstar at Tahoe. Labor Day Street Fair and Sidewalk Sale. Huge sales and outdoor activities all weekend long with live music, face painting, roller skating, balloon twisters, clowns and more!
· August 30: Northstar at Tahoe. Road Ride. For those cyclists looking for a first hand Tour de Nez experience! Approximately 13 miles and 1,200 feet of climbing. Promptly leaves at 5pm from the Plaza Bike Shop at Northstar. Call 530.562.2268 for more information.
· August 30: Northstar at Tahoe. Complimentary Wine Tasting: Grapes + Grounds. Take advantage of complimentary wine tasting this Saturday from 4-5pm. (Every Saturday through September 27th).
· August 29-31: Northstar at Tahoe. Movie Series. Free outdoor summer movie series. Chairs provided. Movies start 15 minutes after sunset. Friday: What about Bob? Saturday: Hairspray. Sunday: Bedknobs & Broomsticks. (Outside beverages and coolers are not permitted).
· August 31: 20th Annual Alpen Wine Festival: Hosted by The Village at Squaw Valley and Uncorked Wine Bar. Benefiting the Heuga Center for multiple sclerosis. Former Olympic racer Jimmie Heuger will be in attendance. Guests receive a commemorative spiegalau wine glass, unlimited wine tasting from 2-5pm, and can participate in a Silent Auction while enjoying live music. $40 donation.
Upcoming Events ...September 5-7: Lake Tahoe Autumn Food and Wine Festival. Northstar at Tahoe.
Monday, August 25, 2008
Why do I need an appraisal?
During this time of market instability there are many reasons why you should have your home appraised. Here is a top ten list of reasons to have your home appraised.
TOP 10 REASONS TO HAVE YOUR HOME APPRAISED
10. Concerned homeowners. Many people are scared that their biggest investment is declining in value. This will help clients make smart decisions about refinancing, home improvement loans, the best time to sell.
9. Pre-listing appraisals to Realtor's and homeowners. In today's market an appraisal is needed to validate their asking price. This can be a great marketing tool for a seller.
8. Retirees considering a reverse mortgage.
7. Estate Purposes. Clients often need appraisals to set a base line for taxation.
6. Divorce and dissolution of partnership appraisals for use with attorneys.
5. Appraisal reviews. If you think you had a bad appraisal you can hire an appraiser to review the report and write a review.
4. If you are considering renting a property it is a good idea to have an appraisal that takes into consideration the income approach to value.
3. Date of death valuations to attorneys.
2. Pre-foreclosure valuations to financial counselors and CPAs.
1. Appraisals for FSBO properties. Buyers are still more skittish of FSBO properties, but a current appraisal backing the price adds credibility and makes a buyer feel more secure.
TOP 10 REASONS TO HAVE YOUR HOME APPRAISED
10. Concerned homeowners. Many people are scared that their biggest investment is declining in value. This will help clients make smart decisions about refinancing, home improvement loans, the best time to sell.
9. Pre-listing appraisals to Realtor's and homeowners. In today's market an appraisal is needed to validate their asking price. This can be a great marketing tool for a seller.
8. Retirees considering a reverse mortgage.
7. Estate Purposes. Clients often need appraisals to set a base line for taxation.
6. Divorce and dissolution of partnership appraisals for use with attorneys.
5. Appraisal reviews. If you think you had a bad appraisal you can hire an appraiser to review the report and write a review.
4. If you are considering renting a property it is a good idea to have an appraisal that takes into consideration the income approach to value.
3. Date of death valuations to attorneys.
2. Pre-foreclosure valuations to financial counselors and CPAs.
1. Appraisals for FSBO properties. Buyers are still more skittish of FSBO properties, but a current appraisal backing the price adds credibility and makes a buyer feel more secure.
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