Team Reba Real Estate

City of Tacoma ~
Side Sewer Inspection Requirement Postponed Until October 1, 2010
The City of Tacoma passed an emergency ordinance last night that postpones the effective date of the new side sewer inspection requirement from July 1, 2010 to October 1, 2010. Beginning on October 1, 2010, Tacoma property owners are required to have a certified inspection of their private side sewers prior to the sale or transfer of a home or business, major remodel, or any construction over an existing side sewer. More information about the requirement is available on City of Tacoma’s website.

I’ll be interested to know how they expect things like this to be paid for in short sale and bank owned properties.

Over the past 10 years when the go-go markets of real estate were flying high and lots of people were jumping into the real property investment pool, not too many people worried about the consequences of losses.  It was an easy game where everyone was making what they thought was easy money - who cared if the property didn’t cash-flow for a few years, you’d just hold onto it for 2-3 years and then flip it for a much higher appreciated value.  Or, if you’d owned the property longer than since 2000 you could pull out equity and utilize it for more investment purchases, buying expensive personal toys like boats, flat-screen TV’s, and more.  Well, in mid-2007 those days came to an end.

What we’ve been seeing since then are a lot of investment properties (1-4 units, small multi-family, small and large commercial) coming on market that are in distressed condition, meaning, the owners are in default or they’ve lost so much money over time paying out to subsidize the monthly losses of negative cash-flow that the individual(s) is in their own financial distress having burned through their other assets to maintain this one.  In many cases the properties are coming back on market at prices below what the seller purchased them for so usually there is a short sale involved.  In these cases, if there is forgiven debt then there are typically tax consequences involved.  Some folks who are familiar with what are called tax deferred exchanges may wonder if perhaps using one of these programs might help avert the tax consequence of an investment short sale.

Read this link from OREXCO 1031 Exchange to get the info on whether or not foreclosures, deed-in-lieu, and/or short sales qualify.

Here is a link to my “August Real Estate Update“:

This Newsletter is full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.

This month’s issue includes topics such as:

“Five Keys To Successful Negotiations”;
“How to Recognize a Sellers Market”;
“Most Neighbors Still Connect The Old Fashioned Way”;
“Making Your Home Appealing On A Budget”;
“Final Walk-Through Tips”;

Plus a roundup of July real estate activity as well as much more advice and information.

I hope you enjoy this monthly newsletter. If you have any comments, please e-mail them to me. Or, if you would like to see a certain topic covered in future months, let me know that too!

Found on Yahoo Real Estate pages online is this great article by Amy Fontinelle of www.Investopedia.com.  For anyone who is considering purchasing a home for the first time, it’s worth the time to read.

I’d have to say that in addition to what she wrote here, it’s important for first time buyers to set realistic expectations for themselves. Today’s younger generations have grown up in much bigger homes than was common in generations past.  The concept of a “starter home” is a little foreign to many. 

The other big benefit of working with an agent is that it’s a great way to use their experience to get an overall view of the process and walking through it so you know what to expect in addition to a professional viewpoint of what’s going on in the market for housing and with pricing trends.  Plus, there is the added advantage of them being a personal resource for referrals to lenders, inspectors, escrow and more as you go through the purchase process.

Recently we had a situation where a couple client of ours was going through a divorce. We’d been asked at one point to provide a Comparative Market Analysis (CMA) on a rental property (former personal residence) so that it’s value could be considered in part of the splitting of assets.  Our analysis looking at current and recent sale data showed the home to be valued in the mid-$200’s.  Some time went by and as the timeline for the end of the divorce proceeding loomed, we were asked to update our analysis to confirm the prior value and/or to see if the value had changed at all.

During that time we were still in the declining market for our area so the value stayed in the mid-$200’s.  I was surprised to hear that one of the homeowners had been told by one of the attorneys that if a market analysis couldn’t be completed that they’d have to use the Zillow valuation for the home.  Yikes!  I took a look at it and the “Zestimate” was at $313,000 with a range of $278k - 332k. Not a realistic value for this property at all.  Perhaps if the one owner was actually getting something out of the divorce this might be a good thing to hear, but the reality of the divorce was that it was a splitting of debt mostly. Having the value be higher meant she’d be shouldering more debt than would have been appropriate for her.

If you’re going through a divorce and splitting of assets includes real estate, be sure to look at all your options for valuation - including paying an appraiser or a real estate broker to put a market analysis together for you. We do these regularly for estates where the stepped up cost basis needs to be determined and it can be done for divorce cases as well.